-----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, N7GUm16MEb/5ZcdQSeBu2jOGDGWABNcW4iJibdWaquu/6N2gpxC+TXS7eFrQF8dC YTi2De1ZTuQKAojfG5ktbQ== 0000928385-96-000368.txt : 19960822 0000928385-96-000368.hdr.sgml : 19960822 ACCESSION NUMBER: 0000928385-96-000368 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19960426 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN NATIONAL CORP /NC/ CENTRAL INDEX KEY: 0000092230 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 560939887 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-02899 FILM NUMBER: 96551974 BUSINESS ADDRESS: STREET 1: 500 N CHESTNUT ST CITY: LUMBERTON STATE: NC ZIP: 28358 BUSINESS PHONE: 9196712000 MAIL ADDRESS: STREET 1: 500 NORTH CHESTNUT STREET CITY: LUMBERTON STATE: NC ZIP: 28358 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 26, 1996 REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ____________________ SOUTHERN NATIONAL CORPORATION (Exact name of registrant as specified in its charter) NORTH CAROLINA 200 WEST SECOND STREET 56-0939887 (State or other WINSTON-SALEM, NORTH CAROLINA 27101 (I.R.S. Employer jurisdiction of (910) 733-2000 Identification No.) incorporation or organization) (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ____________________ JERONE C. HERRING, ESQ. 200 WEST SECOND STREET, 3RD FLOOR WINSTON-SALEM, NORTH CAROLINA 27101 (910) 733-2180 (Name, address, including zip code, and telephone number, including area code, of agent for service) ____________________ COPIES TO: GARZA BALDWIN, III, ESQ. STEVEN R. FINLEY, ESQ. WOMBLE CARLYLE SANDRIDGE & RICE, PLLC GIBSON, DUNN & CRUTCHER 3300 ONE FIRST UNION CENTER 200 PARK AVENUE CHARLOTTE, NORTH CAROLINA 28202-6025 NEW YORK, NEW YORK 10166-0193 (704) 331-4900 (212) 351-4000 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this registration statement as the registrant may determine. 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, please check the following box and list the Securities Act registration statement 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 MAXIMUM PROPOSED MAXIMUM AMOUNT OF OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE - -------------------------------------------------------------------------------------------------------------------------- Debt Securities $1,000,000,000 100% $1,000,000,000 $344,828 - --------------------------------------------------------------------------------------------------------------------------
(1) Or, if any Debt Securities are issued at original issue discount, such greater amount as shall result in an aggregate initial offering price of $1,000,000,000. (2) Estimated solely for purposes of calculation of the registration fee. 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 THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ SUBJECT TO COMPLETION, DATED APRIL 26, 1996 SOUTHERN NATIONAL CORPORATION DEBT SECURITIES Southern National Corporation (the "Company" or "SNC") may offer from time to time pursuant hereto up to $1,000,000,000 aggregate principal amount (or, at the option of the Company if so specified in the applicable prospectus supplement or prospectus supplements to this Prospectus (each, a "Prospectus Supplement"), the equivalent thereof in any other currency or currency unit such as the European Currency Unit), of its unsecured debt securities (the "Debt Securities") consisting of unsecured senior debt securities (the "Senior Debt Securities") and/or unsecured subordinated debt securities (the "Subordinated Debt Securities"). The Debt Securities may be offered as separate series in amounts, at maturities, at prices and on terms to be determined at the time of sale as set forth in a Prospectus Supplement or Prospectus Supplements. Although the aggregate initial offering price of the Debt Securities is limited as set forth above, the respective indentures pursuant to which the Senior Debt Securities and the Subordinated Debt Securities are to be issued do not contain any limitation on the aggregate principal amount of the debt securities covered thereby. The Senior Debt Securities when issued will rank on a parity with all other unsecured and unsubordinated indebtedness of the Company, and the Subordinated Debt Securities when issued will be subordinated as described herein under "Subordinated Debt Securities -- Subordination". When a particular series of Debt Securities is offered, a Prospectus Supplement or Prospectus Supplements will be delivered setting forth the terms of such Debt Securities, including the specific designation, aggregate principal amount, the currency or currency unit in which payments are to be made, denominations, maturity, premium, if any, rate (which may be fixed or variable) and time of payment of interest, if any, terms for redemption at the option of the Company or the holder, if any, terms for sinking fund payments, if any, subordination terms, if any, and any other terms of such Debt Securities or otherwise in connection with the offering and sale of the Debt Securities in respect of which the Prospectus Supplement or Prospectus Supplements are being delivered. In addition, the Prospectus Supplement or Prospectus Supplements will set forth the initial public offering price, the names of any underwriters or agents, the principal amounts, if any, to be purchased by underwriters, the compensation of such underwriters and agents, if any, and the net proceeds to the Company. The Debt Securities may be issued in definitive or permanent global form. The Company may sell Debt Securities to or through underwriters acting as principals for their own account or as agents, and also may sell Debt Securities directly to other purchasers or through agents designated from time to time. If the Company, directly or through agents, solicits offers to purchase the Debt Securities, the Company reserves the sole right to accept and, together with its agents, to reject in whole or in part any proposed purchase of Debt Securities. See "Plan of Distribution". Any underwriters, dealers or agents participating in the offering may be deemed "underwriters" within the meaning of the Securities Act of 1933 (as amended, the "Securities Act"). See "Plan of Distribution" for possible indemnification arrangements for underwriters, agents and their controlling persons. This Prospectus may not be used to consummate the sale of Debt Securities unless accompanied by a Prospectus Supplement. THE DEBT SECURITIES WILL BE UNSECURED OBLIGATIONS OF THE COMPANY AND WILL NOT BE OBLIGATIONS OF A BANK INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS APRIL ___, 1996. (Red herring language appears on the left side of cover page, as follows: Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any State.) AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (as amended, the "Exchange Act") and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices in New York (Seven World Trade Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661), and copies of such materials can be obtained from the Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company's Common Stock, $5 par value per share, is listed and traded on the New York Stock Exchange, Inc. (the "NYSE"). Reports, proxy statements and other information of the Company can also be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. This Prospectus does not contain all of the information set forth in the Registration Statement on Form S-3 of which this Prospectus is a part (together with all amendments and exhibits thereto, the "Registration Statement"), which the Company has filed with the Commission under the Securities Act, certain portions of which have been omitted pursuant to the rules and regulations of the Commission, and to which reference is hereby made for further information. Statements contained herein concerning the provisions of documents are necessarily summaries of such documents, and each statement is qualified in its entirety by reference to the copy of the applicable document filed with the Commission. Copies of the Registration Statement and the exhibits thereto are on file at the offices of the Commission and may be obtained upon payment of the fee prescribed by the Commission, or may be examined without charge at the public reference facilities of the Commission described above. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following reports filed by the Company with the Commission (File No. 1-10853) under Section 13(a) or 15(d) of the Exchange Act are hereby incorporated by reference in this Prospectus: (i) Annual Report on Form 10-K for the year ended December 31, 1995; and (ii) Current Report of Form 8-K filed with the Commission on April 15, 1996. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the termination of the offering of any Debt Securities are hereby incorporated by reference into this Prospectus and shall be deemed a part hereof from the date of filing of such documents. Any statement contained herein, in any Prospectus Supplement or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of the Registration Statement and this Prospectus to the extent that a statement contained herein, in any Prospectus Supplement or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Registration Statement, this Prospectus or any Prospectus Supplement. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN, EXCEPT FOR CERTAIN EXHIBITS TO SUCH DOCUMENTS. WRITTEN REQUESTS SHOULD BE SENT TO INVESTOR RELATIONS, SOUTHERN NATIONAL CORPORATION, 223 WEST NASH STREET, WILSON, NORTH CAROLINA 27893. TELEPHONE REQUESTS MAY BE DIRECTED TO (919) 246-4219. 2 THE COMPANY The Company is a multi-bank holding company headquartered in Winston-Salem, North Carolina. It conducts its operations in North Carolina, South Carolina and Virginia primarily through its commercial banking subsidiaries and, to a lesser extent, through its other subsidiaries. Substantially all of the Company's loans are to businesses and individuals in the Carolinas and Virginia. The Company has no material amount of foreign loans and no loans that can be defined as highly- leveraged transactions. The principal assets of the Company are all of the outstanding shares of common and preferred stock of Branch Banking and Trust Company ("BB&T-NC"); BB&T Financial Corporation of South Carolina ("BB&T Financial-SC"), which in turn owns all the outstanding shares of Branch Banking and Trust Company of South Carolina ("BB&T-SC"); and BB&T Financial Corporation of Virginia, which in turn owns all the outstanding shares of Commerce Bank ("Commerce"), located in Virginia Beach, Virginia. At December 31, 1995, the Company had assets of $20.5 billion, deposits of $14.7 billion, loans of $13.8 billion and shareholders' equity of $1.7 billion. At December 31, 1995, the Company ranked thirty-fifth among bank holding companies in the United States in terms of assets and thirty-fourth in terms of deposits. The Company and BB&T Financial Corporation (the former parent of BB&T-NC and BB&T-SC) consummated a merger-of-equals transaction on February 28, 1995, and the combined bank holding company operates 317 banking offices throughout North Carolina, South Carolina and Virginia. BB&T-NC, the Company's largest subsidiary, is the oldest bank in North Carolina. At December 31, 1995, BB&T-NC had assets of $16.0 billion, deposits of $11.5 billion, loans of $10.6 billion and shareholders' equity of $1.1 billion. At December 31, 1995, BB&T-NC ranked fourth among banks in North Carolina in terms of assets and in terms of deposits. BB&T-NC focuses on providing a wide range of banking services in its local market for retail and commercial customers, including small and mid-size businesses, public agencies and local governments, trust customers and individuals. BB&T Leasing Corp., a wholly owned subsidiary of BB&T-NC, offers lease financing to commercial businesses and municipal governments. BB&T Investment Services, Inc., a wholly owned subsidiary of BB&T-NC, offers customers investment alternatives, including discount brokerage services, fixed- rate and variable-rate annuities, mutual funds and municipal and other government bonds. BB&T-NC has numerous additional subsidiaries, including BB&T Insurance Services, Inc., which offers credit life, credit accident and health, life, and property and casualty insurance on an agency basis; Goddard Technology Corporation, which engages in the design and production of imaging and security devices and programs; and Prime Rate Premium Finance Corporation, Inc., which provides insurance premium financing and services to customers in Virginia and the Carolinas. BB&T-SC serves South Carolina through 103 banking offices. BB&T-SC focuses on providing a wide range of banking services in its local market for retail and commercial customers, including small and mid-size businesses, public agencies, local governments, trust customers and individuals. BB&T-SC's subsidiaries include BB&T Investment Services of South Carolina, Inc., which is licensed as a general broker/dealer of securities and is currently engaged in retailing of mutual funds, U.S. Government securities, municipal securities, fixed and variable insurance annuity products and unit investment trusts. At December 31, 1995, BB&T-SC had assets of $3.8 billion, deposits of $2.9 billion, loans of $2.7 billion and shareholders' equity of $360.3 million. At December 31, 1995, BB&T-SC ranked second among banks in South Carolina in terms of assets and in terms of deposits. Commerce was acquired by the Company on January 10, 1995 and operates 21 banking offices in the Hampton Roads region of southeastern Virginia. Commerce offers a full range of commercial and retail banking services and provides the Company with a strong initial presence in a Virginia market contiguous with the Company's North Carolina market. At December 31, 1995, Commerce had assets of $737.5 million, deposits of $669.0 million, loans of $505.8 million and shareholders' equity of $60.7 million. At December 31, 1995, Commerce ranked ninth among banks in Virginia in terms of assets and in terms of deposits. 3 USE OF PROCEEDS The Company currently intends to use the net proceeds from the sale of any Debt Securities for general corporate purposes, which may include the reduction of other indebtedness of the Company, investments at the holding company level, investments in, or extensions of credit to, its banking and other subsidiaries, possible acquisitions, stock repurchases and such other purposes as may be stated in any Prospectus Supplement. Pending such use, the net proceeds may be temporarily invested or used to reduce short-term indebtedness. The precise amounts and timing of the application of proceeds will depend upon the funding requirements of the Company and its subsidiaries and the availability of other funds. Except as may be described in any Prospectus Supplement, specific allocations of the proceeds to such purposes will not have been made at the date of such Prospectus Supplement. If the Company elects at the time of issuance of Debt Securities to make a different use of the proceeds other than as set forth herein, such use will be described in the applicable Prospectus Supplement. Based upon the historical and anticipated future growth of the Company and the financial needs of the Company and its subsidiaries, the Company may engage in additional financings of a character and amount to be determined as the need arises. CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES The following are the Company's consolidated ratios of earnings to fixed charges for the periods indicated:
Year Ended December 31, --------------------------------- 1995 1994 1993 1992 1991 ----- ----- ----- ----- ----- Earnings to fixed charges: Excluding interest on deposits ....... 2.02x 3.46x 3.28x 4.12x 2.90x Including interest on deposits ....... 1.32 1.61 1.38 1.39 1.22
For purposes of computing these ratios, earnings represent income from continuing operations before extraordinary items and cumulative effects of changes in accounting principles plus income taxes and fixed charges (excluding capitalized interest). Fixed charges, excluding interest on deposits, represent interest (other than on deposits, but including capitalized interest), one-third (the proportion representative of the interest factor) of rents and all amortization of debt issuance costs. Fixed charges, including interest on deposits, represent all interest, one-third (the proportion representative of the interest factor) of rents and all amortization of debt issuance costs. CERTAIN REGULATORY CONSIDERATIONS GENERAL As a bank holding company, the Company is subject to regulation under the Bank Holding Company Act of 1956 (as amended, the "BHCA") and its examination and reporting requirements. Under the BHCA, bank holding companies may not directly or indirectly acquire the ownership or control of more than five percent of the voting shares or substantially all of the assets of any company, including a bank, without the prior approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). In addition, subject to certain exceptions, bank holding companies are generally prohibited under the BHCA from engaging in nonbanking activities, unless such activities are so closely related to banking or managing and controlling banks as to be a proper incident thereto. In addition, BB&T-NC, BB&T-SC and Commerce (collectively, the "Banks") are extensively regulated under state and federal law. As state-chartered commercial banks, the Banks are subject to regulation, supervision and examination by state banking authorities in their respective home states, including the North Carolina 4 Commissioner, in the case of BB&T-NC, the South Carolina Commissioner, in the case of BB&T-SC, and the Virginia State Corporation Commission, Bureau of Financial Institutions, in the case of Commerce. As federally-insured, nonmember banks, each of the Banks is also subject to regulation, supervision and examination by the Federal Deposit Insurance Corporation (the "FDIC"). The earnings of the Company's subsidiaries, and therefore the earnings of the Company, are affected by general economic conditions, management policies and the legislative and governmental actions of various regulatory authorities, including those referred to above. In addition, there are numerous governmental requirements and regulations which affect the activities of the Company and its subsidiaries. The following description summarizes some of the state and federal laws to which the Company and the Banks are subject. To the extent statutory or regulatory provisions or proposals are described, the description is qualified in its entirety by reference to the particular statutory or regulatory provisions or proposals. PAYMENT OF DIVIDENDS The Company is a legal entity separate and distinct from its banking and other subsidiaries. A major portion of the revenues of the Company result from amounts paid as dividends to the Company by its bank subsidiaries. The Company's banking subsidiaries are subject to state laws and regulations that limit the amount of dividends they can pay. The Company does not expect that these laws and regulations will materially impact the ability of its banking subsidiaries to pay dividends. During the year ended December 31, 1995, the Banks paid $88.0 million in cash dividends to the Company. During the first quarter of 1996, the Banks paid $161.0 million in cash dividends to the Company, including $125.0 million paid as a special dividend to the Company in order to finance repurchases of the Company's Common Stock. In addition, both the Company and the Banks are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The appropriate federal or state regulatory authority is authorized to determine under certain circumstances relating to the financial condition of a bank or bank holding company that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. The Federal Reserve Board, which regulates the activities of the Company and BB&T Financial-SC, has indicated that dividends should generally be paid only out of current operating earnings. CAPITAL The Company. The minimum requirement for a bank holding company's ratio of capital to risk-weighted assets (including certain off-balance-sheet activities, such as standby letters of credit) is eight percent. At least half of the total capital is to be composed of common equity, retained earnings and qualifying perpetual preferred stock, less certain intangibles ("Tier 1 capital"). The remainder may consist of subordinated debt, qualifying preferred stock and a limited amount of the loan loss allowance ("Tier 2 capital" and, together with Tier 1 capital, "total capital"). At December 31, 1995, the Company's Tier 1 and total capital ratios were 13.0 percent and 14.3 percent, respectively. In addition, the Federal Reserve Board has established minimum leverage ratio requirements for bank holding companies. These requirements provide for a minimum leverage ratio of Tier 1 capital to adjusted average quarterly assets ("leverage ratio") equal to 3 percent for bank holding companies that meet certain specified criteria, including that they have the highest regulatory rating. All other bank holding companies will generally be required to maintain a leverage ratio of at least 4 to 5 percent. The Company's leverage ratio at December 31, 1995, was 7.8 percent. The requirements also provide that bank holding companies experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the requirements indicate that the Federal Reserve Board will continue to consider a "tangible Tier 1 leverage ratio" (deducting all intangibles) in evaluating proposals for expansion or new activity. 5 The Banks. The FDIC has adopted minimum risk-based and leverage ratio guidelines to which the Banks are subject. Under the risk-based capital requirements of the FDIC, each of the Banks is required to maintain a minimum ratio of total capital (Tier 1 plus Tier 2 capital) to total risk-adjusted assets (which include the credit risk equivalents of certain off-balance sheet items) of 8 percent, of which half (4 percent) must be Tier 1 capital. In addition, the FDIC requires a minimum leverage ratio (Tier 1 capital to average total consolidated assets) of 3 percent. These risk-based capital and leverage ratios are minimum supervisory ratios generally applicable to banks that meet certain specified criteria, including that they have one of the two highest regulatory ratings. Banking institutions not meeting these criteria are expected to operate with capital positions well above the minimum ratios. In addition, the FDIC may set capital requirements for a particular bank that are higher than the minimum ratios when circumstances warrant. The FDIC's risk-based capital standards explicitly identify concentrations of credit risk and the risk arising from non-traditional activities, as well as an institution's ability to manage these risks, as important factors to be taken into account by the agency in assessing an institution's overall capital adequacy. The capital regulations also provide that an institution's exposure to a decline in the economic value of its capital due to changes in interest rates be considered by the agency as a factor in evaluating a bank's capital adequacy. The banking agencies issued for comment a proposed joint policy statement that describes the process the banking agencies will use to measure and assess the exposure of a bank's net economic value to changes in interest rates. The agencies may, ultimately, establish an explicit capital charge for interest rate risk. Under federal banking laws, failure to meet the minimum regulatory capital requirements could subject a banking institution to a variety of enforcement remedies available to federal regulatory authorities, including, in the most severe cases, the termination of deposit insurance by the FDIC and placing the institution into conservatorship or receivership. The capital ratios of each of the Banks exceeded all minimum regulatory capital requirements as of December 31, 1995. As of December 31, 1995, the ratio of total capital to total risk-adjusted assets for BB&T-NC, BB&T-SC and Commerce were 11.6%, 15.3% and 12.5%, respectively, and the Banks' leverage ratios (Tier 1 capital to average total consolidated assets) were 6.4%, 9.0% and 8.2%, respectively. FIRREA The Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), among other things, imposes liability on an institution the deposits of which are insured by the FDIC, such as the Banks, for certain potential obligations to the FDIC incurred in connection with other FDIC-insured institutions under common control with such institution. Under Federal Reserve Board policy, the Company is expected to act as a source of financial strength to each of the Banks and to commit resources to support each of such subsidiaries. This support may be required at times when, absent such Federal Reserve Board policy, the Company may not find itself able to provide it. Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary banks. In the event of a bank holding company's bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment. PROMPT CORRECTIVE ACTION UNDER FDICIA The prompt corrective action provisions of the Federal Deposit Insurance Company Improvement Act of 1991 ("FDICIA") significantly expanded the regulatory and enforcement powers of federal banking regulators, including the FDIC. Among other things, FDICIA establishes additional capital standards for insured depository 6 institutions and requires specific enforcement actions by the appropriate federal regulatory agencies against institutions that fail to meet these standards. The extent of these powers depends upon whether the institutions in question are "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" or "critically undercapitalized." The FDIC's regulations establish specific actions that are permitted or, in certain cases, required to be taken by regulators with respect to institutions falling within one of the three undercapitalized categories. Depending on the level of an institution's capital, the agency's corrective powers can include: requiring a capital restoration plan; placing limits on asset growth and restrictions on activities; requiring the institution to issue additional stock (including voting stock) or to be acquired; placing restrictions on transactions with affiliates; restricting the interest rate the institution may pay on deposits; ordering a new election for the institution's board of directors; requiring that certain senior executive officers or directors be dismissed; prohibiting the institution from accepting deposits from correspondent banks; requiring the institution to divest certain subsidiaries; prohibiting the payment of principal or interest on subordinated debt; prohibiting the holding company from making capital distributions without prior regulatory approval; and, in the most severe cases, appointing a receiver for the institution. A bank that is undercapitalized is required to submit a capital restoration plan, and such a plan will not be accepted unless, among other things, the bank holding company guarantees the capital plan, up to a certain specified amount. Under certain circumstances, a "well capitalized," "adequately capitalized" or "undercapitalized" institution may be required to comply with restrictions applicable to the next lowest capital category. As of December 31, 1995, the Company and each of the Banks were classified as "well capitalized." CONSERVATORSHIP AND RECEIVERSHIP POWERS OF THE FEDERAL AND STATE BANKING AGENCIES The federal banking agencies have broad enforcement powers over depository institutions, including the power to terminate deposit insurance, impose substantial fines and other civil penalties and to appoint a conservator or receiver. Certain federal statutes to which the Company and its subsidiaries are subject also contain criminal penalties. In addition to the grounds discussed under "Prompt Corrective Action Under FDICIA," the FDIC may appoint itself as conservator or receiver for each of the Banks if any one or more of a number of circumstances exist, including, without limitation, the fact that the bank is undercapitalized and has no reasonable prospect of becoming adequately capitalized; fails to become adequately capitalized when required to do so; fails to submit a timely and acceptable capital restoration plan; or materially fails to implement an accepted capital restoration plan. State regulatory authorities have broad enforcement powers over state banking institutions chartered in each of their states including powers to impose fines and other civil penalties and to appoint a conservator (with the approval of the Governor in the case of North Carolina) in order to conserve the assets of any such institution for the benefit of depositors and other creditors thereof. The state statutes to which the Company and its subsidiaries are subject also contain criminal penalties. In addition, the North Carolina Commissioner has the authority to take possession of a state bank in certain circumstances, including, among other things, when it appears that such bank has violated its charter or any applicable laws or is conducting its business in an unauthorized or unsafe manner, or is in an unsafe or unsound condition to transact its business or has an impairment of its capital stock. A conservator has the authority, under the direction of the applicable state authority to take possession of the books, records and assets of a bank and to exercise all powers of such state authority in order to preserve the assets of such bank. The FDIC may provide federal assistance to a "troubled institution" without placing the institution into conservatorship or receivership. In such a case, preexisting debtholders and shareholders may be required to make substantial concessions and, insofar as practical, the FDIC will succeed to their interests in proportion to the amount of federal assistance provided. 7 INSOLVENCY, LIQUIDATION OR OTHER DEFAULT BY THE BANKS In the event of the liquidation or other resolution of any federally- insured depository institution, such as each of the Banks, the claims of depositors of such an institution (including claims by the FDIC as subrogee of insured depositors) and administrative expenses of the receiver are entitled to priority in payment over the claims of any other senior or general creditors of the institution, other than secured creditors. A substantial majority of the liabilities of each of the Banks are deposits or secured liabilities. A depository institution insured by the FDIC can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC in connection with (i) the default of a commonly-controlled depository institution or (ii) any assistance provided by the FDIC to a commonly-controlled depository institution in danger of default. However, such liability to the FDIC would be subordinated in right of payment to deposit liabilities and to most secured, senior, general or subordinated obligations, other than obligations owed to any affiliate of the depository institution (with certain exceptions) and any obligations to shareholders of such depository institution in their capacity as such. As conservator or receiver for an insured depository institution, and in order to promote the orderly administration of the institution's affairs, the FDIC may disaffirm or repudiate any contract or lease to which such institution is a party. The FDIC as conservator or receiver is also permitted to enforce most types of contracts pursuant to their terms notwithstanding any acceleration provisions therein, and may transfer to a new obligor any of the institution's assets and liabilities, without approval or consent of the institution's creditors. Pursuant to FDICIA, the FDIC is also authorized to settle all uninsured and unsecured claims in the insolvency of an insured bank by making a final settlement payment at a percentage rate reflecting an average of the FDIC's receivership recovery experience and constituting full payment and disposition of the FDIC's obligations to such uninsured and unsecured claimants. Should a state regulatory authority elect to take possession of any bank for the purpose of liquidation, administrative claims and claims of depositors are entitled to priority in payment over the claims of creditors. Each of the state authorities may appoint the FDIC as its agent for the purpose of liquidation of a bank, provided that the liabilities of such bank to its depositors are insured by the FDIC. If the FDIC or state regulatory agency were appointed receiver of a bank, the amount paid on claims in respect of the bank's obligations to its creditors would depend upon, among other factors, the amount of assets in the receivership and the relative priority of the claim. DEPOSIT INSURANCE ASSESSMENTS The deposits of each of the Banks are insured by the FDIC, up to applicable limits. Most of the deposits of the Banks are subject to deposit premium assessments of the Bank Insurance Fund ("BIF") of the FDIC. In addition, approximately 40 percent of the Banks' deposits (which are related to the acquisition of thrift deposits) is subject to assessments by the Savings Association Insurance Fund ("SAIF") of the FDIC. Under the FDIC's risk-based insurance system, BIF-assessed deposits are currently subject to premiums of between $.00 and $.27 per $100 of deposits, depending upon the institution's capital position and other supervisory factors. The current premiums reflect a reduction, effective January 1, 1996, from a range of $.04 to $.31 per $100 of deposits. The rate applicable to the BIF-assessed deposits of each of the Banks is currently $.00 per $100 of eligible deposits, with a minimum semiannual assessment of $1,000. The range of premiums applicable to SAIF-assessed deposits is between $.23 and $.31 per $100 of deposits, and the assessment rate for each of the Banks' SAIF-assessed deposits is $.23 per $100 of eligible deposits. Proposed budget reconciliation legislation that contains provisions to recapitalize the SAIF was passed by both houses of Congress and reconciled in conference committee. However, the President vetoed the proposed 8 budget reconciliation legislation on December 6, 1995, for reasons unrelated to the SAIF recapitalization issue. The vetoed legislation included provisions for a one-time special assessment, as determined by the FDIC, on SAIF-assessable deposits of insured depository institutions in an amount adequate to cause the SAIF to achieve its specific designated reserve ratio of 1.25 percent (which would have called for a special assessment in the range of $.80 per $100 of SAIF-assessable deposits). Under the vetoed legislation, the special assessment would have been applied to the amount of SAIF-assessable deposits held as of March 31, 1995. (The actual cut-off date in any final legislation cannot be determined with certainty at this time.) The SAIF-assessable deposits of BB&T-NC and BB&T-SC as of March 31, 1995 totaled approximately $4.1 billion and $1.5 billion, respectively. Under the vetoed legislation, BB&T-NC would have received a 20 percent discount on the assessment, because the bank's SAIF-assessable deposits were less than 50 percent of its total assessable deposits as of June 30, 1995. The pre-tax impact on the Company of a one-time assessment of the type included in the vetoed legislation would not be expected to exceed $41 million. The Company expects to record this expense following the enactment of any such legislation. In the event that the SAIF is recapitalized pursuant to any such legislation, it is expected that future assessment rates applicable to SAIF-assessable deposits would be reduced. The vetoed legislation contains additional provisions that, among other things, would require BIF-member institutions to share pro rata in the obligations of SAIF members for certain government bonds. Although the SAIF-recapitalization provisions discussed in the preceding paragraphs were included in legislation that was vetoed and therefore have not been enacted into law, similar provisions are still being discussed and may be included in other proposed legislation. The final form of the proposed legislation, including whether the legislation will contain some or all of the provisions discussed above, cannot be determined with certainty at this time. Similarly, the date of passage of the final form of any such legislation, or whether this or any such legislation will be passed during this session of Congress, cannot be determined with certainty at this time. Under the federal banking laws, a federally-insured institution is prohibited from paying interest on its capital notes or debentures (if such interest is required to be paid only out of net profits) or distributing any of its capital assets while it remains in default in the payment of any assessment due to the FDIC. SAFETY AND SOUNDNESS STANDARDS Effective August 9, 1995, the federal banking agencies published final agency guidelines that establish safety and soundness standards addressing operational and managerial, including compensation matters for certain insured financial institutions, as required by FDICIA. Banks failing to meet these standards are required to submit compliance plans to their appropriate federal regulators. On this same date, the agencies issued for comment proposed guidelines regarding asset quality and earnings standards for insured institutions. INTERSTATE BANKING AND BRANCHING LEGISLATION The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("IBBEA") authorizes interstate acquisitions of banks and bank holding companies without geographic limitation. In addition, beginning June 1, 1997, IBBEA authorizes a bank to merge with a bank in another state as long as neither of the states has opted out of interstate branching between the date of enactment of IBBEA and May 31, 1997. IBBEA further provides that states may enact laws permitting interstate bank merger transactions prior to June 1, 1997. A bank may establish and operate a de novo branch in a state in which the bank does not maintain a branch if that state expressly permits de novo branching. Once a bank has established branches in a state through an interstate merger transaction, the bank may establish and acquire additional branches at any location in the state where any bank involved in the interstate merger transaction could have established or acquired branches under applicable federal or state law. A bank that has established a branch in a state through de novo branching may establish and acquire additional branches in such state in the same manner and to the same extent as a bank having a branch in such state as a result of an interstate merger. If a state opts out of interstate branching within the specified time period, no bank in any other state may establish a branch in the opting out state, whether through an acquisition or de novo. 9 The North Carolina law permits de novo branching on a reciprocal basis until June 1, 1997, and unrestricted de novo branching thereafter. Virginia has enacted an early opt-in law permitting interstate bank merger transactions effective July 1, 1995. The Virginia law permits de novo branching on a reciprocal basis. At this time, South Carolina has not enacted an early opt-in law. DESCRIPTION OF THE DEBT SECURITIES The Debt Securities will constitute either Senior Debt Securities or Subordinated Debt Securities. The Senior Debt Securities will be issued under a senior indenture (the "Senior Indenture"), between the Company and _______________, as senior trustee (the "Senior Trustee"). The Subordinated Debt Securities will be issued under a subordinated indenture (the "Subordinated Indenture"), between the Company and ____________, as subordinated trustee (the "Subordinated Trustee"). The Senior Indenture and the Subordinated Indenture collectively are referred to as the "Indentures" and the Senior Trustee and the Subordinated Trustee collectively are referred to as the "Trustee." In the event of the resignation or removal of the Trustee prior to the issuance of a particular series of Debt Securities, the trustee for such series of Debt Securities will be identified in the Prospectus Supplement for such series, and all references to "Trustee" shall be deemed to mean the trustee so identified. No Trustee shall be responsible for the acts, obligations, liabilities or responsibilities of any other trustee. The following summaries of certain provisions of the Indentures do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Indentures, including the definitions therein of certain terms. Wherever particular sections or defined terms of the Indentures are referred to, it is intended that such sections or definitions shall be incorporated herein by reference. The following sets forth certain terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement (the "Offered Securities") and the extent, if any, to which such general provisions may apply to the Debt Securities so offered, will be described in the Prospectus Supplement relating to such Offered Securities. GENERAL The Indentures do not limit the aggregate principal amount of Debt Securities that may be issued thereunder and provide that Debt Securities may be issued from time to time in one or more series. The Debt Securities will be direct, unsecured obligations of the Company and will not be obligations of a bank insured by the FDIC or any other government agency. Neither the Indentures nor the Debt Securities will limit or otherwise restrict the amount of other indebtedness that may be incurred or other securities that may be issued by the Company or any of its subsidiaries. Reference is made to the Prospectus Supplement relating to the particular series of Offered Securities for the following terms of such Offered Securities: (1) the title; (2) any limit on the aggregate principal amount; (3) whether such Offered Securities are Senior Debt Securities or Subordinated Debt Securities; (4) the price or prices (expressed as a percentage of the aggregate principal amount thereof) at which such Offered Securities will be issued; (5) the date or dates on which such Offered Securities will mature; (6) the rate or rates (which may be fixed or floating) per year at which such Offered Securities will bear interest, if any, or the method of determining the same; (7) the date from which such interest, if any, on such Offered Securities will accrue, the dates on which such interest, if any, will be payable, the date on which payment of such interest, if any, will commence and the Regular Record Dates for such Interest Payment Dates, if any; (8) the extent to which any of such Offered Securities will be issuable in the form of one or more temporary or permanent Global Securities, and if so, the identity of the Depositary for such Global Securities, or the manner in which any interest payable on temporary or permanent Global Securities will be paid; (9) the dates, if any, on which, and the price or prices at which, such Offered Securities will, pursuant to any mandatory sinking fund provisions, or may, pursuant to any optional sinking fund or to any purchase fund provisions, be redeemed by the Company, and the other detailed terms and provisions of such sinking and/or purchase funds; (10) the date, if any, after which, and the price or prices at which, such Offered Securities may, pursuant to an optional redemption provision, be redeemed at the option of the Company or of the holder thereof and the other detailed terms and provisions of such optional redemption; (11) the denomination or denominations in which such Offered Securities are authorized to be issued; (12) whether such Offered Securities will be issued as Registered Securities, Bearer Securities, or both and any limitations on the issuance of such Bearer Securities (including exchange for Registered Securities of the same series); 10 (13) information with respect to book-entry procedures; (14) each office or agency where, subject to the terms of the applicable Indenture, such Offered Securities may be presented for registration of transfer or exchange; and (15) any other terms of such Offered Securities (which will not be inconsistent with the provisions of the applicable Indenture). Debt Securities may be issued as Original Issue Discount Securities to be sold at a substantial discount below their principal amount. Special federal income tax and other considerations relating thereto will be described in the applicable Prospectus Supplement. The Debt Securities may be issuable as Registered Securities, Bearer Securities or both. Unless otherwise indicated in the applicable Prospectus Supplement, each series of Debt Securities will be issued as Registered Securities. Debt Securities issued as Bearer Securities shall have interest coupons attached, unless issued as zero coupon securities. Unless otherwise indicated in the applicable Prospectus Supplement, Registered Securities will be issued only in denominations of $1,000 or integral multiples thereof and Bearer Securities will be issued only in denominations of $5,000 or integral multiples thereof. Bearer Securities shall not be offered, sold, resold or delivered in connection with their original issuance in the United States or to any United States person (as defined below) other than to offices located outside the United States of certain United States financial institutions. "United States person" means any citizen or resident of the United States, any corporation, partnership or other entity created or organized in or under the laws of the United States or any estate or trust the income of which is subject to United States federal income taxation regardless of its source, and "United States" means the United States of America (including the States and the District of Columbia) and its possessions. Purchasers of Bearer Securities will be subject to certification procedures and may be affected by certain limitations under United States tax laws. Such procedures and limitations will be described in the Prospectus Supplement relating to the offering of the Bearer Securities. The applicable Prospectus Supplement will include a description of the requirements for certification of ownership by non-United States persons that will apply prior to (1) the issuance of Bearer Securities or (2) the payment of interest that occurs prior to the issuance of Bearer Securities. Unless otherwise indicated in the applicable Prospectus Supplement, Registered Securities of any series (other than a Global Security, except as set forth below) will be exchangeable into an equal aggregate principal amount of Registered Securities of the same series, tenor and terms of different authorized denominations and Bearer Securities may be exchanged for Registered Securities on the terms set forth in the applicable Prospectus Supplement. In no event will Registered Securities be exchangeable for Bearer Securities. Unless otherwise indicated in the applicable Prospectus Supplement, Debt Securities may be presented for exchange, and Registered Securities (other than a Global Security) may be presented for registration of transfer, at the offices of the appropriate Trustee. The Company also may designate in the applicable Prospectus Supplement the corporate trust department of BB&T-NC as an office where the transfer of the Registered Securities may be registered. No service charge will be made for any registration of transfer or exchange of the Debt Securities, but the Company may require payment sufficient to cover any tax or other governmental charge payable in connection therewith. PAYMENT AND PAYING AGENT Unless otherwise indicated in the applicable Prospectus Supplement, payment of principal of and any premium and interest on Registered Securities will be made at the office of the appropriate Trustee, except that at the option of the Company interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the Security Register (Section 3.02 of the Senior Indenture; Section 4.02 of the Subordinated Indenture). The Company also may designate in the applicable Prospectus Supplement the corporate trust department of BB&T-NC, as an office where principal and any premium and interest on Registered Securities may be paid. Paying Agents will be named in the Prospectus Supplement and may be terminated at any time. 11 Unless otherwise indicated in the applicable Prospectus Supplement, payment of principal of and any premium and interest on Bearer Securities will be made, subject to applicable laws and regulations, at such paying agencies outside the United States as the Company may designate from time to time. Any such payment may be made, at the option of the holder, by check or by transfer to an account maintained by the payee with a bank located outside the United States. Unless otherwise indicated in the applicable Prospectus Supplement, payment of interest on Bearer Securities will be made only against surrender of the coupon relating to the relevant Interest Payment Date. No payment with respect to any Bearer Security will be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States. GLOBAL SECURITIES The Debt Securities of a series may be issued in whole or in part in the form of one or more Global Securities that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the Prospectus Supplement relating to such series. Global Securities may be issued in either registered or bearer form and in either temporary or permanent form. Unless and until it is exchanged in whole or in part for the individual certificates evidencing the Debt Securities represented thereby, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. The specific terms of the depositary arrangement with respect to a series of Debt Securities will be described in the Prospectus Supplement relating to such series. The Company anticipates that the following provisions will apply to all depositary arrangements although no assurance can be given that such will be the case. Upon the issuance of a Global Security, the Depositary for such Global Security or its nominee will credit, on its book-entry registration and transfer system, the respective principal amounts of the Debt Securities represented by such Global Security to the accounts of institutions that have accounts with such Depositary ("participants"). The accounts to be credited shall be designated by the underwriters or agents of such Debt Securities or by the Company if such Debt Securities are offered and sold directly by the Company. Ownership of beneficial interests in a Global Security will be limited to participants or persons that may hold interests through participants. Ownership of such beneficial interests will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary or its nominee for such Global Security (with respect to interests of participants) and the records of participants (with respect to persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Security. So long as the Depositary for a Global Security, or its nominee, is the owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented by such Global Security for all purposes under the Indenture governing such Debt Securities. Except as set forth below, owners of beneficial interest in a Global Security registered in their names will not receive or be entitled to receive physical delivery of Debt Securities of such series in definitive form and will not be considered the owners or holders thereof under the Indenture governing such Debt Securities. Payments of principal of and any premium and interest on Debt Securities registered in the name of or held by a Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner or the holder of the Global Security representing such Debt Securities. None of the Company, the Trustee for such Debt Securities or any Paying Agent or the registrar for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security for such Debt Securities or for maintaining, supervising or reviewing any records relating to or payments made on account of beneficial ownership interests in a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. 12 The Company expects that the Depositary for Debt Securities of a series, upon receipt of any payment of principal, premium or interest in respect of a permanent Global Security, immediately will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Security as shown on the records of such Depositary or its nominee. The Company also expects that payments by participants to owners of beneficial interests in such Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such participants. If the Depositary for a series of Debt Securities is at any time unwilling, unable or ineligible to continue as Depositary and a successor Depositary is not appointed by the Company within 90 days, the Company will issue Debt Securities of such series in definitive form in exchange for the Global Security or Securities representing the Debt Securities of such series. In addition, the Company at any time and in its sole discretion, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities, may determine not to have any Debt Securities of a series represented by one or more Global Securities and, in such event, will issue Debt Securities of such series in definitive form in exchange for the Global Security or Securities representing such Debt Securities. Further, if the Company so specifies with respect to the Debt Securities of a series, an owner of a beneficial interest in a Global Security representing Debt Securities of such series may receive, on terms acceptable to the Company and the Depositary for such Global Security, Debt Securities of such series in definitive form in exchange for such beneficial interest, subject to any limitations described in the Prospectus Supplement relating to such Debt Securities. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery in definitive form of Debt Securities of the series represented by such Global Security equal in principal amount to such beneficial interest and to have such Debt Securities registered in its name (if the Debt Securities of such series are issuable as Registered Securities). Debt Securities of such series so issued in definitive form will be issued (a) as Registered Securities in denominations, unless otherwise specified by the Company, of $1,000 or integral multiples thereof if the Debt Securities of such series are issuable as Registered Securities, (b) as Bearer Securities in denominations, unless otherwise specified by the Company, of $5,000 or integral multiples thereof if the Debt Securities of such series are issuable as Bearer Securities or (c) as either Registered or Bearer Securities, if the Debt Securities of such series are issuable in either form. CERTAIN COVENANTS OF THE COMPANY Limitation on Certain Dispositions and on Merger and Sale of Assets. Except as described below under "Consolidation, Merger, Sale, Conveyance and Lease," each Indenture prohibits the sale or other disposition by the Company of shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of a Principal Constituent Bank, the merger or consolidation of a Principal Constituent Bank with any other corporation (unless the surviving corporation is the Company or a Controlled Subsidiary), and the lease, sale or transfer of all or substantially all the assets of a Principal Constituent Bank to any corporation or Person, except to the Company or a Controlled Subsidiary or a Person that, upon such lease, sale or transfer, will become the Company or a Controlled Subsidiary. The Indentures, however, do not prohibit any such sale, assignment, transfer or disposition of securities, any such merger or consolidation or any such lease, sale or transfer of properties and assets if required (i) by law or (ii) as a condition imposed by law to the acquisition by the Company or any Controlled Subsidiary, directly or indirectly, of any Person if, thereafter, (a) such person would be a Controlled Subsidiary; (b) the Consolidated Net Banking Assets of the Company would not be decreased; and (c) BB&T-NC would still be a Controlled Subsidiary (Section 3.06 of the Senior Indenture; Section 4.06 of the Subordinated Indenture). "Controlled Subsidiary" means any Subsidiary of which more than 80% of the aggregate voting power of the outstanding shares of the Voting Stock is at the time owned directly or indirectly by the Company or by one or more Controlled Subsidiaries or by the Company and one or more Controlled Subsidiaries, after giving effect to the issuance to any Person other than the Company or any Controlled Subsidiary of Voting Stock of the Subsidiary issuable on exercise of options, warrants or rights to subscribe for such Voting Stock or on conversion of securities convertible into such Voting Stock. "Principal Constituent Bank" means BB&T-NC and, at any time, any other bank subsidiary the total assets of which (as set forth in the most recent statement of condition of such bank subsidiary) equal more than 30% of the total assets of all bank subsidiaries as determined from the most recent statements of condition of the bank subsidiaries. 13 Limitation on Creation of Liens. Each Indenture provides that the Company will not create, assume, incur or suffer to exist any pledge, encumbrance or lien, as security for indebtedness for borrowed money, upon any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of a Principal Constituent Bank now or hereafter owned by the Company, directly or indirectly, if, treating the pledge, encumbrance or lien as a transfer to the secured party, the Principal Constituent Bank would not be a Controlled Subsidiary (Section 3.07 of the Senior Indenture; Section 4.07 of the Subordinated Indenture). No Other Restrictive Covenants. Neither of the Indentures restricts the Company from incurring, assuming or becoming liable for any type of debt nor from creating, assuming, incurring or permitting to exist any mortgage, pledge, encumbrance, lien or charge on its property (except the Voting Stock of a Principal Constituent Bank). In addition, the Indentures do not require the Company to maintain any financial ratios or specified levels of net worth or liquidity and do not contain any other provisions which would provide protection to holders of the Debt Securities due to a sudden or dramatic decline in the credit quality of such Debt Securities caused by a change in control, recapitalization or other capital restructuring of the Company. MODIFICATION OF THE INDENTURES; WAIVER OF COVENANTS Each Indenture contains provisions permitting the Company and the Trustee to modify the Indenture with the consent of the holders of not less than a majority in aggregate principal amount of the outstanding Debt Securities of each series affected thereby, except that, without the consent of the holder of each Debt Security affected thereby, no such modification may, among other things: (a) change the stated maturity date of the principal of or any premium, or any installment of interest on, any Outstanding Security; (b) reduce the principal amount of, or any premium or interest on, any Outstanding Security; (c) reduce the amount of principal of an Original Issue Discount Security payable upon acceleration of the maturity thereof; (d) change the place of payment of principal of, or any premium or interest on, any Outstanding Security; (e) impair the right to institute suit for the enforcement of any payment on or with respect to any Outstanding Security; (f) reduce the percentage in principal amount of Outstanding Securities of any series the consent of whose holders is required for modification or amendment of the Indenture or for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults and their consequences; or (g) in the case of the Subordinated Indenture, make any change in the subordination provisions that adversely affects the rights of any holder of Subordinated Debt Securities. Prior to any acceleration of the Debt Securities of any series, the holders of a majority in aggregate principal amount of the outstanding Debt Securities of such series may waive any past default or Event of Default under the applicable Indenture, except a default under a covenant that cannot be modified without the consent of each holder of a Debt Security of the series affected thereby (Section 4.07(b) of the Senior Indenture; Section 5.07(b) of the Subordinated Indenture). In addition, the holders of a majority in aggregate principal amount of the outstanding Debt Securities of any series may rescind a declaration of acceleration of the Debt Securities of any series before any judgment has been obtained if (i) the Company pays the Trustee certain amounts due the Trustee plus all matured installments of principal of and any premium and interest on the Debt Securities of such series (other than installments due by acceleration) and interest on the overdue installments to the extent provided in the applicable Indenture and (ii) all other defaults with respect to Debt Securities of that series under the applicable Indenture have been cured or waived (Section 4.01 of the Senior Indenture; Section 5.01 of the Subordinated Indenture). CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE Each Indenture provides that the Company may not consolidate with or merge into another corporation, or convey, transfer or lease its properties and assets substantially as an entirety to any Person unless: (a) the successor is organized under the laws of any domestic jurisdiction and assumes the Company's obligations on the Debt Securities and under the applicable Indenture; (b) after giving effect to the transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, has occurred and is continuing; and (c) certain other conditions are met (Section 9.01 of the Senior Indenture; Section 10.01 of the Subordinated Indenture). In that event, the successor will be substituted for the Company and except in the case of a lease, the Company will be relieved 14 of its obligations under the applicable Indenture and the Debt Securities of each series (Section 9.02 of the Senior Indenture; Section 10.02 of the Subordinated Indenture). THE TRUSTEE The Company will have no material relationship with the Trustee other than as Trustee. Any Principal Constituent Bank may transact business with the Trustee in the ordinary course. The Indenture, under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), is deemed to contain certain limitations on the right of the Trustee, as a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received in respect of any such claim, as security or otherwise. The Trustee will be permitted to engage in transactions with the Company, provided that such transactions do not result in a material relationship between the Company and the Trustee. The occurrence of a default under either Indenture with respect to Subordinated Debt Securities or Senior Debt Securities could create a conflicting interest for the Trustee under the Trust Indenture Act. If the default has not been cured or waived within 90 days after the Trustee has or acquires a conflicting interest, the Trustee generally is required by the Trust Indenture Act to eliminate such conflicting interest or resign as Trustee with respect to the Senior Debt Securities or the Subordinated Debt Securities. In the event of the Trustee's resignation, the Company promptly will appoint a successor trustee with respect to the affected securities. SENIOR DEBT SECURITIES The Senior Debt Securities will be direct, unsecured obligations of the Company and will rank equally and ratably with all outstanding unsecured and unsubordinated indebtedness of the Company. EVENTS OF DEFAULT The Senior Indenture defines an Event of Default with respect to any particular series of Senior Debt Securities as being any one of the following events unless it is either inapplicable to a particular series or specifically deleted or modified for the Senior Debt Securities of such series: (a) default for 30 days in the payment of any interest upon any of the Senior Debt Securities of that series; (b) default in the payment of the principal of or any premium on any of the Senior Debt Securities of that series when due; (c) default in the payment of any sinking fund installment or analogous obligation with respect to any of the Senior Debt Securities of that series when due; (d) a default or event of default under any instrument under which there may be issued or borrowed, or by which there may be secured or evidenced, any indebtedness of the Company (other than the Senior Debt Securities of such series or indebtedness to a Subsidiary) or any Subsidiary (other than indebtedness of any Subsidiary owing to the Company or to another Subsidiary) shall happen and not less than $1,000,000 of such indebtedness shall be past due, or become due by acceleration, and such indebtedness or acceleration is not discharged or rescinded within 15 days after notice by the Senior Trustee or holders of at least 25% in aggregate principal amount of the outstanding Senior Debt Securities of that series (calculated in accordance with the formula set forth in such series in the case of a series of Senior Debt Securities issued as Original Issue Discount Securities); (e) final judgment(s) or order(s) for the payment of money in excess of $1,000,000 is entered against the Company or one or more Principal Constituent Banks and within 90 days of entry is not discharged or the execution thereof is not stayed pending appeal, or within 90 days after the expiration of the stay the judgment(s) or order(s) is not discharged; (f) default in the observance or performance of any other covenant or agreement in the Senior Debt Securities of such series or the Senior Indenture for 90 days after notice by the Senior Trustee or holders of at least 25% in aggregate principal amount of the outstanding Senior Debt Securities of the series (calculated in accordance with the formula set forth in such series in the case of a series of Senior Debt Securities issued at an Original Issue Discount); or (g) certain events of bankruptcy, insolvency or reorganization of the Company or a Principal Constituent Bank (Section 4.01). In case an Event of Default with respect to the Senior Debt Securities of any series shall occur and be continuing, the Senior Trustee or the holders of not less than 25% in aggregate principal amount (in the case of a series of Senior Debt Securities issued at an Original Issue Discount, calculated in accordance with the formula set forth in such series) of all the outstanding Senior Debt Securities of such series may declare the principal (or in the case of a series 15 of Senior Debt Securities issued at an Original Issue Discount, the amount calculated in accordance with the formula set forth in such series of Senior Debt Securities) of all the securities of such series to be immediately due and payable (Section 4.01). The Senior Indenture provides that the Senior Trustee, within 90 days after the occurrence of a default with respect to Senior Debt Securities of any series under the Senior Indenture, shall mail to the holders of the Senior Debt Securities of such series notice of all uncured defaults known to it that have not been waived (the term defaults to include events specified above which, after notice or lapse of time or both, would become an Event of Default); provided that, except in the case of default in the payment of principal of or any premium or interest on any of the Senior Debt Securities of that series or in the making of any sinking fund payment or analogous obligation with respect to the Senior Debt Securities of such series, the Senior Trustee may withhold such notice if it in good faith determines that withholding such notice is in the interest of the holders of the securities of that series (Section 4.08). Subject to the provisions of the Senior Indenture relating to the duties of the Senior Trustee in case an Event of Default shall occur and be continuing, the Senior Trustee is under no obligation to exercise any of the rights or powers vested in it under the Senior Indenture at the request, order or direction of any of the holders of the Senior Debt Securities, unless such holders offer to the Senior Trustee reasonable security or indemnity (Section 5.02(d)). Subject to certain limitations contained in the Senior Indenture (including among other limitations that the Senior Trustee will not be exposed to personal liability), the holders of a majority in aggregate principal amount of the outstanding Senior Debt Securities of all series affected (voting as one class) have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Senior Trustee, or exercising any trust or power conferred on the Senior Trustee (Section 4.07). No holder of any Senior Debt Security of any series will have any right to institute any proceeding with respect to the Senior Indenture or for any remedy thereunder, unless such holder previously shall have given to the Senior Trustee written notice of a continuing Event of Default with respect to Senior Debt Securities of that series and unless also the holders of not less than 25% in aggregate principal amount (in the case of a series of Senior Debt Securities issued at an Original Issue Discount, calculated in accordance with the formula set forth in such series) of the outstanding Senior Debt Securities of that series shall have made written request, and offered reasonable indemnity, to the Senior Trustee to institute such proceeding as trustee, and the Senior Trustee shall not have received from the holders of a majority in principal amount of the outstanding Senior Debt Securities of that series a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days (Section 4.04). However, the holder of any Senior Debt Security will have an absolute right to receive payment of the principal of and any premium and interest, if any, on such Senior Debt Security on or after the due dates expressed in such Senior Debt Security and to institute suit for the enforcement of any such payment (Section 4.04). The Company is obligated to furnish annually to the Senior Trustee a statement as to the performance by the Company of its obligations under the Senior Indenture and as to any default in such obligations (Section 3.04). DEFEASANCE The Company may terminate certain of its obligations under the Senior Indenture with respect to the Senior Debt Securities of any series on the terms and subject to the conditions contained in the Senior Indenture, by (a) depositing irrevocably with the Senior Trustee as trust funds in trust (i) U.S. dollars or U.S. Government Obligations (as defined below) in an amount which through the payment of interest, principal and premium, if any, in respect thereof in accordance with their terms will provide (without any reinvestment of such interest, principal or premium), not later than one business day before the due date of any payment, money or (ii) a combination of money and U.S. Government Obligations sufficient to pay the principal of and any premium and interest on the Senior Debt Securities of such series as such are due and (b) satisfying certain other conditions precedent specified in the Senior Indenture. Such deposit and termination are conditioned among other things upon the Company's delivery of an opinion of independent counsel that the holders of the Senior Debt Securities of such series will have no federal income tax consequences as a result of such deposit and termination. Such termination will not relieve the Company of its obligation to pay when due the principal of and premium and interest on the Senior Debt Securities of such series if the Senior Debt Securities of such series are not paid from the money or U.S. Government Obligations held by the Senior Trustee for payment thereof (Section 13.05). 16 "U.S. Government Obligations" means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit are pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, under clause (i) or (ii) are not callable or redeemable at the option of the issuer thereof. SUBORDINATED DEBT SECURITIES The Subordinated Debt Securities will be direct, unsecured obligations of the Company and will rank equally and ratably with all outstanding subordinated indebtedness of the Company. The Subordinated Debt Securities will have a minimum weighted maturity of at least five years. SUBORDINATION The obligation of the Company to make any payment of principal, premium or interest on the Subordinated Debt Securities, to the extent set forth in the Subordinated Indenture, will be subordinate and junior in right of payment to the prior payment in full of all existing and future Senior Indebtedness (as defined). Upon any distribution of assets of the Company upon any dissolution, winding up, liquidation or reorganization of the Company, the holders of Senior Indebtedness are entitled to receive payment in full of principal and any premium and interest before the holders of the Subordinated Debt Securities are entitled to receive any payment on account of the principal of and any premium or interest on the Subordinated Debt Securities, except holders of the Subordinated Debt Securities, in a reorganization or readjustment of the Company, may receive securities of the Company or any other corporation subordinated to both Senior Indebtedness and any securities received in the reorganization or readjustment by holders of Senior Indebtedness (except to the extent that any securities so received are by their terms expressly not superior in right of payment to the Subordinated Debt Securities) (Section 3.03). The dissolution, winding up, liquidation or reorganization of the Company following a conveyance, transfer or lease of its properties and assets substantially as an entirety in compliance with the terms described above under "Consolidation, Merger, Sale, Conveyance and Lease" will not be deemed to be a dissolution, winding up, liquidation or reorganization for this purpose (Section 3.03(d)). In addition, the Company may not pay principal of, or any premium or interest on, the Subordinated Debt Securities and may not acquire any Subordinated Debt Securities for cash or property other than capital stock of the Company if: (1) a default on Senior Indebtedness occurs and is continuing that permits holders of such Senior Indebtedness to accelerate its maturity; and (2) such default is the subject of judicial proceedings or the Company receives written notice of such default from a representative of all holders of such Senior Indebtedness. If the Company receives any such notice, a similar notice received within 360 days thereafter relating to the same default on the same issue of Senior Indebtedness shall not be effective for such purpose. The Company may resume payments on the Subordinated Debt Securities and may acquire them when: (i) such default is cured or waived or shall have ceased to exist, or the Senior Indebtedness to which such default relates shall have been paid in full in cash or cash equivalent; or (ii) if such default is not the subject of judicial proceedings, 120 days pass after such written notice is received by the Company (Section 3.02(b)). By reason of this subordination, in the event of the Company's insolvency, holders of Senior Indebtedness may receive more, ratably, and holders of the Subordinated Debt Securities may receive less, ratably, than other creditors of the Company. However, such subordination will not prevent the occurrence of any Event of Default (Section 3.12). The Subordinated Indenture does not restrict the incurrence of additional Senior Indebtedness. "Senior Indebtedness" means the principal of, and premium, if any, on (a) all obligations of the Company for money borrowed, whether outstanding on the date of execution of the Subordinated Indenture or thereafter created, except (i) such indebtedness as is by its terms expressly stated to be junior in right of payment to the Subordinated Debt Securities and (ii) such indebtedness as is by its terms expressly stated to rank pari passu in right of payment with the Subordinated Debt Securities, and (b) any deferrals, renewals or extensions of any such Senior Indebtedness. 17 LIMITED RIGHTS OF ACCELERATION Unless otherwise specified in the Prospectus Supplement relating to any series of Subordinated Debt Securities, payment of principal of the Subordinated Debt Securities may be accelerated only in the case of an "Acceleration Event" which is defined in the Indenture as any of the bankruptcy, insolvency or reorganization events with respect to the Company that constitute an Event of Default (as defined below). There is no right of acceleration in the case of a default in the payment of principal of or any premium or interest on the Subordinated Debt Securities or the performance of any other covenant of the Company in the Subordinated Indenture. EVENTS OF DEFAULT The Subordinated Indenture defines an Event of Default with respect to any particular series of Subordinated Debt Securities as being any one of the following events unless it is either inapplicable to a particular series or specifically deleted or modified for the Subordinated Debt Securities of such series: (a) default for 30 days in the payment of any interest on any of the Subordinated Debt Securities of that series; (b) default in the payment of the principal of or any premium on any of the Subordinated Debt Securities of that series when due; (c) default in the payment of any sinking fund installment or analogous obligation with respect to that series when due; (d) a default or event of default under any instrument under which there may be issued or borrowed, or by which there may be secured or evidenced, any indebtedness of the Company (other than the Subordinated Debt Securities of such series or indebtedness to a Subsidiary) or of any Subsidiary (other than indebtedness of any Subsidiary owing to the Company or to another Subsidiary) shall happen and not less than $1,000,000 of such indebtedness shall be past due, or become due by acceleration, and such indebtedness or acceleration is not discharged or rescinded within 15 days after notice by the Subordinated Trustee or holders of at least 25% in aggregate principal amount (in the case of a series of Subordinated Debt Securities issued at an Original Issue Discount, calculated in accordance with the formula set forth in such series) of the outstanding Subordinated Debt Securities of that series; (e) final judgment(s) or order(s) for the payment of money in excess of $1,000,000 is entered against the Company or one or more Principal Constituent Banks and within 90 days of entry is not discharged, or the execution thereof is not stayed pending appeal, or within 90 days after the expiration of the stay, the judgment(s) or order(s) is not discharged; (f) default in the observance or performance of any other covenant or agreement in the Subordinated Debt Securities of such series or the Subordinated Indenture for 90 days after notice by the Subordinated Trustee or holders of at least 25% in aggregate principal amount (in the case of a series of Subordinated Debt Securities issued at an Original Issue Discount, calculated in accordance with the formula set forth in such series) of the outstanding Subordinated Debt Securities of the series; or (g) certain events of bankruptcy, insolvency or reorganization of the Company or a Principal Constituent Bank (Section 5.01). Rights of acceleration in case an Event of Default occurs are limited. See "Limited Rights of Acceleration." In case an Acceleration Event shall have occurred and be continuing, the Subordinated Trustee or the holders of not less than 25% in aggregate principal amount (in the case of a series of Subordinated Debt Securities issued at an Original Issue Discount, calculated in accordance with the formula set forth in such series) of the outstanding Subordinated Debt Securities of such series may declare the principal (or, in the case of a series of Subordinated Debt Securities issued at an Original Issue Discount, the amount calculated in accordance with the formulas set forth in such series of Subordinated Debt Securities) of all the securities of such series to be immediately due and payable (Section 5.01). The Subordinated Indenture provides that the Subordinated Trustee, within 90 days after the occurrence of a default with respect to Subordinated Debt Securities of any series under the Subordinated Indenture, shall mail to the holders of the Subordinated Debt Securities of such series notice of all uncured defaults known to it that have not been waived (the term defaults to include events specified above which, after notice or lapse of time or both, would become an Event of Default); provided that, except in the case of default in the payment of principal of or any premium or interest on any of the Subordinated Debt Securities of that series or in the making of any sinking fund payment or analogous obligation with respect to the Subordinated Debt Securities of such series, the Subordinated Trustee may withhold such notice if it in good faith determines that withholding such notice is in the interest of the holders of the Subordinated Debt Securities of that series (Section 5.08). 18 Subject to the provisions of the Subordinated Indenture relating to the duties of the Subordinated Trustee in case an Event of Default shall occur and be continuing, the Subordinated Trustee is under no obligation to exercise any of the rights or powers vested in it under the Subordinated Indenture at the request, order or direction of any of the holders of the Subordinated Debt Securities, unless such holder offers to the Subordinated Trustee reasonable security or indemnity (Section 6.02(d)). Subject to certain limitations contained in the Subordinated Indenture (including among other limitations that the Subordinated Trustee will not be exposed to personal liability), the holders of a majority in aggregate principal amount of the outstanding Subordinated Debt Securities of all series affected (voting as one class) have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Subordinated Trustee, or exercising any trust or power conferred on the Subordinated Trustee (Section 5.07). No holder of any Subordinated Debt Security of any series will have any right to institute any proceeding with respect to the Subordinated Indenture or for any remedy thereunder unless such holder previously shall have given to the Subordinated Trustee written notice of a continuing Event of Default with respect to Subordinated Debt Securities of that series and unless also the holders of not less than 25% in aggregate principal amount (in the case of a series of Subordinated Debt Securities issued at an Original Issue Discount, calculated in accordance with the formula set forth in such series) of the outstanding Subordinated Debt Securities of that series shall have made written request, and offered reasonable indemnity, to the Subordinated Trustee to institute such proceeding as trustee, and the Subordinated Trustee shall not have received from the holders of a majority in principal amount of the outstanding Subordinated Debt Securities of that series a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days (Section 5.04). However, the holder of any Subordinated Debt Security will have an absolute right to receive payment of the principal of and any premium and interest on such Subordinated Debt Security on or after the due dates expressed in such Subordinated Debt Security and to institute suit for the enforcement of any such payment (Section 5.04). The Company is obligated to furnish to the Subordinated Trustee annually a statement as to the performance by the Company of its obligations under the Subordinated Indenture and as to any default in such obligations (Section 4.04). VALIDITY OF OFFERED SECURITIES The validity of any Offered Securities will be passed upon for the Company by Womble Carlyle Sandridge & Rice, PLLC, Charlotte, North Carolina, and for any underwriters or agents by Gibson, Dunn & Crutcher, New York, New York. Gibson, Dunn & Crutcher will rely upon the opinion of Womble Carlyle Sandridge & Rice, PLLC as to matters of North Carolina law, and Womble Carlyle Sandridge & Rice, PLLC will rely upon the opinion of Gibson, Dunn & Crutcher as to matters of New York law. EXPERTS The consolidated financial statements and schedule included in the Company's 1995 Annual Report on Form 10-K incorporated by reference in this Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated by reference herein upon the authority of said firm as experts in giving said reports. PLAN OF DISTRIBUTION The Company may offer and sell Debt Securities to or through underwriters to be designated from time to time, and also may offer and sell Debt Securities directly to other purchasers or through agents. The distribution of the Debt Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Debt Securities will be new issues of securities with no established trading market. It has not presently been established whether the underwriters, if any, of the Debt Securities will make a market in the Debt Securities. If a market 19 in the Debt Securities is made by any such underwriters, such market making may be discontinued at any time without notice. No assurance can be given as to the liquidity of the trading market for the Debt Securities. In connection with the sale of Debt Securities, underwriters may receive compensation from the Company or from purchasers of Debt Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Debt Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Debt Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Company and any profit on the resale of Debt Securities by them may be deemed to be underwriting discounts and commissions under the Securities Act. Any such underwriter or agent will be identified, and any such compensation received from the Company will be described, in the applicable Prospectus Supplement(s) relating to such Debt Securities. Unless otherwise indicated in the applicable Prospectus Supplement(s), the obligations of any such underwriters to purchase the Debt Securities will be subject to certain conditions precedent, and each of the underwriters with respect to a sale of Debt Securities will be obligated to purchase all of its Debt Securities if any are purchased. Unless otherwise indicated in the applicable Prospectus Supplement(s), any such agent involved in the offer and sale of the Debt Securities in respect of which this Prospectus is being delivered will be acting on a best efforts basis for the period of its appointment. Under agreements which may be entered into by the Company, underwriters, agents and their controlling persons who participate in the distribution of Debt Securities may be entitled to indemnification by the Company against certain liabilities, including liabilities under the Securities Act. If so indicated in the applicable Prospectus Supplement(s) relating to any Offered Securities, the Company will authorize dealers or other persons acting as the Company's agents to solicit offers by certain institutions to purchase any Offered Securities from the Company pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by the Company. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of any Offered Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. Underwriters or agents and their associates may be customers of (including borrowers from), engage in transactions with, and/or perform services for, the Company and its subsidiaries, the Senior Trustee and the Subordinated Trustee, in the ordinary course of business. 20 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses, other than underwriting or broker-dealer fees, discounts and commissions, in connection with the offering are as follows: Securities Act Registration Fee...................................... $344,828 Printing and Engraving............................................... 20,000 Legal Fees and Expenses.............................................. 40,000 Accounting Fees and Expenses......................................... 40,000 Blue Sky Fees and Expenses........................................... 15,000 Fees of Indenture Trustee............................................ 20,000 Rating Agency Fees................................................... 155,000 Miscellaneous........................................................ 40,172 -------- Total........................................................ $675,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Sections 55-8-50 through 55-8-58 of the North Carolina Business Corporation Act contain specific provisions relating to indemnification of directors and officers of North Carolina corporations. In general, such sections provide that (i) a corporation must indemnify a director or officer who is wholly successful in his defense of a proceeding to which he is a party because of his status as such, unless limited by the articles of incorporation, and (ii) a corporation may indemnify a director or officer if he is not wholly successful in such defense, if it is determined as provided by statute that the director or officer meets a certain standard of conduct, provided when a director or officer is liable to the corporation or is adjudged liable on the basis that personal benefit was improperly received by him, the corporation may not indemnify him. A director or officer of a corporation who is a party to a proceeding may also apply to the courts for indemnification, and the court may order indemnification under certain circumstances set forth in the statute. A corporation may, in its articles of incorporation or bylaws or by contract or resolution, provide indemnification in addition to that provided by statute, subject to certain conditions. The Company's bylaws provide for the indemnification of any director or officer of the Company against liabilities and litigation expenses arising out of his status as such, excluding (i) any liabilities or litigation expenses relating to activities which were at the time taken known or believed by such person to be clearly in conflict with the best interest of the Company and (ii) that portion of any liabilities or litigation expenses with respect to which such person is entitled to receive payment under any insurance policy. The Company's articles of incorporation provide for the elimination of the personal liability of each director of the Company to the fullest extent permitted by law. The Company maintains directors and officers liability insurance which, in general, insures (i) the Company's directors and officers against loss by reason of any of their wrongful acts and/or (ii) the Company against loss arising from claims against the directors and officers by reason of their wrongful acts, all subject to the terms and conditions contained in the policy. Effective April 1, 1996, certain rules of the Federal Deposit Insurance Corporation will limit the ability of certain depository institutions, their subsidiaries and their affiliated depository institution holding companies to indemnify affiliated parties, including institution directors. In general, subject to the ability to purchase directors and officers liability insurance and to advance professional expenses under certain circumstances, the rules will prohibit such institutions from indemnifying a director for certain costs incurred with regard to an administrative or enforcement action commenced by any federal banking agency which results in a final order or settlement pursuant to which the director is assessed a civil money penalty, removed from office, prohibited from participating in the affairs of an insured II-1 depository institution or required to cease and desist from or take an affirmative action described in Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. (S) 1818(b)). ITEM 16. EXHIBITS. 1 Form of proposed Underwriting Agreement 2(a) Agreement and Plan of Reorganization dated as of July 29, 1994 and amended and restated as of October 22, 1994 between Southern National Corporation and BB&T Financial Corporation, incorporated herein by reference to the Company's Registration Statement on Form S-4 (Registration No. 33-57861) 2(b) Plan of Merger as of July 29, 1994 as amended and restated as of October 22, 1994 between Southern National Corporation and BB&T Financial Corporation, incorporated herein by reference to the Company's Registration Statement on Form S-4 (Registration No. 33-57861) 4(a) Form of Articles of Amendment to Articles of Incorporation of Southern National Corporation relating to Cumulative Convertible Preferred Stock, Series A, incorporated herein by reference to the Company's Registration Statement on Form S-3 (Registration No. 33-44557) 4(b) Agreement to furnish copies of documents defining the rights of the holders of the Capital Notes of Southern National Corporation, filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1993 4(c) Form of Senior Indenture (including form of Senior Debt Security), between Southern National Corporation and ______________, as Trustee 4(d) Form of Subordinated Indenture (including form of Subordinated Debt Security), between Southern National Corporation and __________, as Trustee 5 Opinion of Womble Carlyle Sandridge & Rice, PLLC 12 Computations of Consolidated Ratios of Earnings to Fixed Charges 23(a) Consent of Arthur Andersen LLP 23(b) Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibit 5) 24 Power of Attorney (included on signature page) *25(a) Form T-1 Statement of Eligibility of Senior Trustee *25(b) Form T-1 Statement of Eligibility of Subordinated Trustee ________________ * To be filed by amendment. 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: II-2 (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (as amended, 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 end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (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 (1)(A)(i) and (1)(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 with 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) 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 (4) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of section 310 of the Trust Indenture Act ("Act") in accordance with the rules and regulations prescribed by the Commission under section 305(b)(2) of the Act. (5) 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, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 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 its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, State of North Carolina, on April 26, 1996. SOUTHERN NATIONAL CORPORATION By: Jerone C. Herring Name: Jerone C. Herring Title: Senior Vice President and Secretary POWER OF ATTORNEY ----------------- Each of the undersigned, being a director and/or officer of Southern National Corporation (the "Company"), hereby nominates, constitutes and appoints John A. Allison, Scott E. Reed and Jerone C. Herring, or any one of them severally, to be his or her true and lawful attorney-in-fact and to sign in his or her name and on his or her behalf in any and all capacities stated below, and to file with the Securities and Exchange Commission (the "Commission"), any and all amendments, including post-effective amendments, to this Registration Statement, making such changes in the Registration Statement as such attorney- in-fact deems appropriate, and generally to do all such things on his or her behalf in any and all capacities stated below to enable the Company to comply with the provisions of the Securities Act of 1933 and all requirements of the Commission. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-3 has been signed by the following persons in the capacities indicated on April 26, 1996. John A. Allison IV Scott E. Reed - ------------------------------------------ ----------------------------------------- Name: John A. Allison IV Name: Scott E. Reed Title: Chairman of the Board and Title: Executive Vice President Chief Executive Officer and Chief Financial Officer (principal executive officer) (principal financial officer) Sherry A. Kellett Paul B. Barringer - ------------------------------------------ ----------------------------------------- Name: Sherry A. Kellett Name: Paul B. Barringer Title: Executive Vice President Title: Director and Controller (principal accounting officer) W. R. Cuthbertson, Jr. - ------------------------------------------ _________________________________________ Name: W. R. Cuthbertson, Jr. Name: Ronald E. Deal Title: Director Title: Director A. J. Dooley, Sr. Joe L. Dudley, Sr. - ------------------------------------------ ----------------------------------------- Name: A. J. Dooley, Sr. Name: Joe L. Dudley, Sr. Title: Director Title: Director Tom D. Efird O. William Fenn, Jr. - ------------------------------------------ ----------------------------------------- Name: Tom D. Efird Name: O. William Fenn, Jr. Title: Director Title: Director
II-5 Paul S. Goldsmith L. Vincent Hackley - ------------------------------------------ ----------------------------------------- Name: Paul S. Goldsmith Name: L. Vincent Hackley Title: Director Title: Director Ernest F. Hardee Richard Janeway, M.D. - ------------------------------------------ ----------------------------------------- Name: Ernest F. Hardee Name: Richard Janeway, M.D. Title: Director Title: Director J. Ernest Lathem, M.D. - ------------------------------------------ ----------------------------------------- Name: J. Ernest Lathem, M.D. Name: James H. Maynard Title: Director Title: Director Joseph A. McAleer Albert O. McCauley - ------------------------------------------ ----------------------------------------- Name: Joseph A. McAleer Name: Albert O. McCauley Title: Director Title: Director Dickson McLean, Jr. Charles E. Nichols - ------------------------------------------ ----------------------------------------- Name: Dickson McLean, Jr. Name: Charles E. Nichols Title: Director Title: Director L. Glenn Orr, Jr. A. Winniett Peters - ------------------------------------------ ----------------------------------------- Name: L. Glenn Orr, Jr. Name: A. Winniett Peters Title: Director Title: Director Richard L. Player C. Edward Pleasants, Jr. - ------------------------------------------ ----------------------------------------- Name: Richard L. Player, Jr. Name: C. Edward Pleasants, Jr. Title: Director Title: Director Nido R. Qubein A. Tab Williams, Jr. - ------------------------------------------ ----------------------------------------- Name: Nido R. Qubein Name: A. Tab Williams, Jr. Title: Director Title: Director
II-6 EXHIBIT INDEX 1 Form of proposed Underwriting Agreement 2(a) Agreement and Plan of Reorganization dated as of July 29, 1994 and amended and restated as of October 22, 1994 between Southern National Corporation and BB&T Financial Corporation, incorporated herein by reference to the Company's Registration Statement on Form S-4 (Registration No. 33-57861) 2(b) Plan of Merger as of July 29, 1994 as amended and restated as of October 22, 1994 between Southern National Corporation and BB&T Financial Corporation, incorporated herein by reference to the Company's Registration Statement on Form S-4 (Registration No. 33-57861) 4(a) Form of Articles of Amendment to Articles of Incorporation of Southern National Corporation relating to Cumulative Convertible Preferred Stock, Series A, incorporated herein by reference to the Company's Registration Statement on Form S-3 (Registration No. 33-44557) 4(b) Agreement to furnish copies of documents defining the rights of the holders of the Capital Notes of Southern National Corporation, filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1993 4(c) Form of Senior Indenture (including form of Senior Debt Security), between Southern National Corporation and ______________, as Trustee 4(d) Form of Subordinated Indenture (including form of Subordinated Debt Security), between Southern National Corporation and __________, as Trustee 5 Opinion of Womble Carlyle Sandridge & Rice, PLLC 12 Computations of Consolidated Ratios of Earnings to Fixed Charges 23(a) Consent of Arthur Andersen LLP 23(b) Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibit 5) 24 Power of Attorney (included on signature page) *25(a) Form T-1 Statement of Eligibility of Senior Trustee *25(b) Form T-1 Statement of Eligibility of Subordinated Trustee _________________ * To be filed by amendment. II-7 EX-1 2 EXHIBIT 1 UNDERWRITING AGREEMENT EXHIBIT 1 UNDERWRITING AGREEMENT DATED AS OF ____________, 1996 BETWEEN SOUTHERN NATIONAL CORPORATION AND MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED TABLE OF CONTENTS
UNDERWRITING AGREEMENT................................................................................1 SECTION 1. Representations and Warranties.......................................................3 ------------------------------ (a) Representations and Warranties by the Company........................................3 (1) Compliance with Registration Requirements.....................................3 (2) Incorporated Documents........................................................4 (3) Authorization of this Underwriting Agreement and Terms Agreement..............5 (4) Authorization of Senior Debt Securities and/or Subordinated Debt Securities...5 (5) Authorization of the Indentures...............................................6 (6) Descriptions of the Debt Securities and Indentures............................6 (b) Officers' Certificates...............................................................7 SECTION 2. Sale and Delivery to Underwriters; Closing...........................................7 ------------------------------------------ (a) Debt Securities......................................................................7 (b) Payment..............................................................................7 (c) Denominations; Registration..........................................................8 SECTION 3. Covenants of the Company.............................................................8 ------------------------ (a) Compliance with Securities Regulations and Commission Requests.......................8 (b) Filing of Amendments.................................................................8 (c) Delivery of Registration Statements..................................................9 (d) Delivery of Prospectuses.............................................................9 (e) Continued Compliance with Securities Laws............................................9 (f) Blue Sky Qualifications.............................................................10 (g) Earnings Statement..................................................................10 (h) Use of Proceeds.....................................................................10 (i) Listing.............................................................................10 (j) Restriction on Sale of Securities...................................................10 (k) Reporting Requirements..............................................................10 SECTION 4. Payment of Expenses.................................................................11 ------------------- (a) Expenses............................................................................11 (b) Termination of Agreement............................................................11
i SECTION 5. Conditions of Underwriters' Obligations.............................................11 --------------------------------------- (a) Effectiveness of Registration Statement.............................................11 (b) Opinion of Counsel for Company......................................................12 (c) Opinion of Counsel for Underwriters.................................................12 (d) Officers' Certificate...............................................................12 (e) Accountant's Comfort Letter.........................................................13 (f) Bring-down Comfort Letter...........................................................13 (g) Ratings.............................................................................13 (h) Approval of Listing.................................................................13 (i) No Objection........................................................................13 (j) Additional Documents................................................................14 (k) Termination of Terms Agreement......................................................14 SECTION 6. Indemnification.....................................................................14 --------------- (a) Indemnification of Underwriters.....................................................14 (b) Indemnification of Company, Directors and Officers..................................15 (c) Actions against Parties; Notification...............................................15 (d) Settlement without Consent if Failure to Reimburse..................................16 SECTION 7. Contribution........................................................................16 ------------ SECTION 8. Representations, Warranties and Agreements to Survive Delivery......................17 -------------------------------------------------------------- SECTION 9. Termination.........................................................................18 ----------- (a) Underwriting Agreement..............................................................18 (b) Terms Agreement.....................................................................18 (c) Liabilities.........................................................................18 SECTION 10. Default by One or More of the Underwriters.........................................18 ------------------------------------------ SECTION 11. Notices............................................................................19 ------- SECTION 12. Parties............................................................................19 ------- SECTION 13. Governing Law and Time.............................................................20 ---------------------- SECTION 14. Effect of Headings.................................................................20 ------------------
ii SOUTHERN NATIONAL CORPORATION (a North Carolina corporation) Debt Securities UNDERWRITING AGREEMENT ---------------------- ___________, 1996 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1209 Ladies and Gentlemen: Southern National Corporation, a North Carolina corporation (the "Company"), proposes to issue and sell up to $1,000,000,000 aggregate principal amount of its senior or subordinated debt securities (the "Debt Securities"), from time to time, in or pursuant to one or more offerings on terms to be determined at the time of sale. The Debt Securities will be issued in one or more series as senior indebtedness (the "Senior Debt Securities") under an indenture, dated as of _____________, 1996 (the "Senior Indenture"), between the Company and ___________, as trustee (the "Senior Trustee"), or as subordinated indebtedness (the "Subordinated Debt Securities") under an indenture, dated as of __________, 1996 (the "Subordinated Indenture", and collectively with the Senior Indenture, the "Indentures", and each, an "Indenture"), between the Company and _____________, as trustee (the "Subordinated Trustee", and collectively with the Senior Trustee, the "Trustees", and each, a "Trustee"). Each series of Debt Securities may vary, as applicable, as to title, aggregate principal amount, rank, interest rate or formula and timing of payments thereof, stated maturity date, redemption and/or repayment provisions, sinking fund requirements and any other variable terms established by or pursuant to the applicable Indenture. Whenever the Company determines to make an offering of Debt Securities through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), or through an underwriting syndicate managed by Merrill Lynch, the Company will enter into an agreement (each, a "Terms Agreement") providing for the sale of such Debt Securities to, and the purchase and offering thereof by, Merrill Lynch and such other underwriters, if any, selected by Merrill Lynch (the "Underwriters", which term shall include 1 Merrill Lynch, whether acting as sole Underwriter or as a member of an underwriting syndicate, as well as any Underwriter substituted pursuant to Section 10 hereof). The Terms Agreement relating to the offering of Debt Securities shall specify the aggregate principal amount of Debt Securities to be initially issued, the name of each Underwriter participating in such offering (subject to substitution as provided in Section 10 hereof) and the name of any Underwriter other than Merrill Lynch acting as co-manager in connection with such offering, the aggregate principal amount of Debt Securities which each such Underwriter severally agrees to purchase, whether such offering is on a fixed or variable price basis and, if on a fixed price basis, the initial offering price, the price at which the Debt Securities are to be purchased by the Underwriters, the form, time, date and place of delivery and payment of the Debt Securities and any other material variable terms of the Debt Securities. The Terms Agreement, which shall be substantially in the form of Exhibit A hereto, may take the form of an exchange of any standard form of written telecommunication between the Company and Merrill Lynch, acting for itself and, if applicable, as representative of any other Underwriters. Each offering of Debt Securities through Merrill Lynch as sole Underwriter or through an underwriting syndicate managed by Merrill Lynch will be governed by this Underwriting Agreement, as supplemented by the applicable Terms Agreement. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 333-_______) [and pre- effective amendment[s] no[s]. __ thereto] for the registration of the Debt Securities under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"), and the Company has filed such post-effective amendments thereto as may be required prior to the execution of the applicable Terms Agreement. Such registration statement (as so amended, if applicable) has been declared effective by the Commission and each Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such registration statement (as so amended, if applicable), including the information, if any, deemed to be a part thereof pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule 430A Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434 Information"), is referred to herein as the "Registration Statement"; and the final prospectus and the prospectus supplement relating to the offering of the Debt Securities, in the form first furnished to the Underwriters by the Company for use in connection with the offering of the Debt Securities, are collectively referred to herein as the "Prospectus"; provided, however, that all references to the "Registration Statement" and the "Prospectus" shall be deemed to include all documents incorporated therein by reference pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to the execution of the applicable Terms Agreement; provided, further, that if the Company files a registration statement with the Commission pursuant to Section 462(b) of the 1933 Act Regulations (the "Rule 462 Registration Statement"), then, after such filing, all references to "Registration Statement" shall be deemed to include the Rule 462 Registration Statement; and provided, further, that if the Company elects to rely upon Rule 434 of the 1933 Act Regulations, then all references to "Prospectus" shall be deemed to include the final or preliminary prospectus and the applicable term sheet or 2 abbreviated term sheet (the "Term Sheet"), as the case may be, in the form first furnished to the Underwriters by the Company in reliance upon Rule 434 of the 1933 Act Regulations, and all references in this Underwriting Agreement to the date of the Prospectus shall mean the date of the Term Sheet. A "preliminary prospectus" shall be deemed to refer to any prospectus used before the registration statement became effective and any prospectus that omitted, as applicable, the Rule 430A Information, the Rule 434 Information or other information to be included upon pricing in a form of prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was used after such effectiveness and prior to the execution and delivery of the applicable Terms Agreement. For purposes of this Underwriting Agreement, all references to the Registration Statement, Prospectus, Term Sheet or preliminary prospectus or to any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). All references in this Underwriting Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" (or other references of like import) in the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be; and all references in this Underwriting Agreement to amendments or supplements to the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include the filing of any document under the 1934 Act which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be. SECTION 1. Representations and Warranties ------------------------------ (a) The Company represents and warrants to Merrill Lynch, as of the date hereof, and to each Underwriter named in the applicable Terms Agreement, as of the date thereof, and as of the Closing Time (as defined below) (in each case, a "Representation Date"), as follows: (1) Compliance with Registration Requirements. The Company ----------------------------------------- meets the requirements for use of Form S-3 under the 1933 Act. Each of the Registration Statement and any Rule 462(b) Registration Statement has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with. In addition, each Indenture has been duly qualified under the 1939 Act. At the respective times the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendments thereto (including the filing 3 of the Company's most recent Annual Report on Form 10-K with the Commission (the "Annual Report on Form 10-K")) became effective and at each Representation Date, the Registration Statement, any Rule 462(b) Registration Statement and any amendments and supplements thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission under the 1939 Act (the "1939 Act Regulations") and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. At the date of the Prospectus and at the Closing Time, the Prospectus and any amendments and supplements thereto did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Company elects to rely upon Rule 434 of the 1933 Act Regulations, the Company will comply with the requirements of Rule 434. Notwithstanding the foregoing, the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter through Merrill Lynch expressly for use in the Registration Statement or the Prospectus. Each preliminary prospectus and prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all material respects with the 1933 Act Regulations and, if applicable, each preliminary prospectus and the Prospectus delivered to the Underwriters for use in connection with the offering of Debt Securities will, at the time of such delivery, be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (2) Incorporated Documents. The documents incorporated or ---------------------- deemed to be incorporated by reference in the Registration Statement and the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations") and, when read together with the other information in the Prospectus, at the date of the Prospectus and at the Closing Time, did not and will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4 (3) Authorization of this Underwriting Agreement and Terms ------------------------------------------------------ Agreement. This Underwriting Agreement has been, and the applicable Terms --------- Agreement as of the date thereof will have been, duly authorized, executed and delivered by the Company. (4) Authorization of Senior Debt Securities and/or ---------------------------------------------- Subordinated Debt Securities. The Debt Securities have been, or as of the ---------------------------- date of the applicable Terms Agreement will have been, duly authorized by the Company for issuance and sale pursuant to this Underwriting Agreement and such Terms Agreement. Such Debt Securities, when issued and authenticated in the manner provided for in the applicable Indenture and delivered against payment of the consideration therefor specified in such Terms Agreement, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles, and except further as enforcement thereof may be 5 limited by (A) requirements that a claim with respect to any Debt Securities denominated other than in U.S. dollars (or a foreign or composite currency judgment in respect of such claim) be converted into U.S. dollars at a rate of exchange prevailing on a date determined pursuant to applicable law or (B) governmental authority to limit, delay or prohibit the making of payments outside the United States. Such Debt Securities will be in the form contemplated by, and each registered holder thereof is entitled to the benefits of, the applicable Indenture. (5) Authorization of the Indentures. Each applicable ------------------------------- Indenture has been, or prior to the issuance of the Debt Securities thereunder will have been, duly authorized, executed and delivered by the Company and, upon such authorization, execution and delivery, will constitute a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles. (6) Descriptions of the Debt Securities and Indentures. The -------------------------------------------------- Debt Securities being sold pursuant to the applicable Terms Agreement and each applicable Indenture, as of the date of the Prospectus, will conform in all material respects to the statements relating thereto contained in the Prospectus and will be in substantially the form filed or incorporated by reference, as the case may be, as an exhibit to the Registration Statement. 6 (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any assets, properties or operations of the Company or any subsidiary pursuant to, any Agreements and Instruments, except for such conflicts, breaches, defaults, events or liens, charges or encumbrances that would not result in a Material Adverse Effect, nor will such action result in any violation of the provisions of the charter or by- laws of the Company or any subsidiary or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any subsidiary or any of their assets, properties or operations. As used herein, a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any subsidiary. (b) Officers' Certificates. Any certificate signed by any officer of the Company or any subsidiary and delivered to any Underwriter or to counsel for the Underwriters in connection with the offering of the Debt Securities shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby on the date of such certificate and, unless subsequently amended or supplemented, at each Representation Date subsequent thereto. SECTION 2. Sale and Delivery to Underwriters; Closing. ------------------------------------------ (a) Debt Securities. The several commitments of the Underwriters to purchase the Debt Securities pursuant to the applicable Terms Agreement shall be deemed to have been made on the basis of the representations and warranties herein contained and shall be subject to the terms and conditions herein set forth. (b) Payment. Payment of the purchase price for, and delivery of, the Debt Securities shall be made at the office of Gibson, Dunn & Crutcher, 200 Park Avenue, New York, New York 10166, or at such other place as shall be agreed upon by Merrill Lynch and the Company, at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day after the date hereof (unless postponed in accordance with the provisions of Section 10 hereof), or such other time not later than ten business days after such date as shall be agreed upon by Merrill Lynch and the Company (such time and date of payment and delivery being herein called "Closing Time"). Payment shall be made to the Company by certified or official bank check or checks drawn in New York Clearing House funds or similar next day funds payable to the order of the Company, against delivery to Merrill Lynch for the respective accounts of the Underwriters of the Debt Securities to be purchased by them. It is understood that each Underwriter has authorized Merrill Lynch, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Debt Securities which it has severally agreed to purchase. Merrill Lynch, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Debt Securities to 7 be purchased by any Underwriter whose check has not been received by the Closing Time, but such payment shall not relieve such Underwriter from its obligations hereunder. (c) Denominations; Registration. The Debt Securities shall be in such denominations and registered in such names as Merrill Lynch may request in writing at least one full business day prior to the Closing Time. The Debt Securities will be made available for examination and packaging by Merrill Lynch in The City of New York not later than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time. SECTION 3. Covenants of the Company. The Company covenants with ------------------------ Merrill Lynch and with each Underwriter participating in the offering of Debt Securities, as follows: (a) Compliance with Securities Regulations and Commission Requests. The Company, subject to Section 3(b), will comply with the requirements of Rule 430A of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations, if and as applicable, and will notify the Representative(s) immediately of (i) the effectiveness of any post- effective amendment to the Registration Statement or the filing of any supplement or amendment to the Prospectus, (ii) the receipt of any comments from the Commission, (iii) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Debt Securities for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes. The Company will promptly effect the filings necessary pursuant to Rule 424 and will take such steps as it deems necessary to ascertain promptly whether the Prospectus transmitted for filing under Rule 424 was received for filing by the Commission and, in the event that it was not, it will promptly file the Prospectus. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) Filing of Amendments. The Company will give Merrill Lynch notice of its intention to file or prepare any amendment to the Registration Statement (including any filing under Rule 462(b) of the 1933 Act Regulations), any Term Sheet or any amendment, supplement or revision to either the prospectus included in the Registration Statement at the time it became effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will furnish Merrill Lynch with copies of any such documents a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which Merrill Lynch or counsel for the Underwriters shall object. 8 (c) Delivery of Registration Statements. The Company has furnished or will deliver to Merrill Lynch and counsel for the Underwriters, without charge, signed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and signed copies of all consents and certificates of experts, and will also deliver to Merrill Lynch, without charge, a conformed copy of the Registration Statement as originally filed and of each amendment thereto (without exhibits) for each of the Underwriters. If applicable, the copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (d) Delivery of Prospectuses. The Company will deliver to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter may reasonably request, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Company will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the Prospectus as such Underwriter may reasonably request. If applicable, the Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (e) Continued Compliance with Securities Laws. The Company will comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Debt Securities as contemplated in this Underwriting Agreement and the applicable Terms Agreement and in the Registration Statement and the Prospectus. If at any time when the Prospectus is required by the 1933 Act or the 1934 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to amend the Registration Statement in order that the Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or to amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such statement or omission 9 or to make the Registration Statement or the Prospectus comply with such requirements, and the Company will furnish to the Underwriters, without charge, such number of copies of such amendment or supplement as the Underwriters may reasonably request. (f) Blue Sky Qualifications. The Company will use its best efforts, in cooperation with the Underwriters, to qualify the Debt Securities for offering and sale under the applicable securities laws of such states and the jurisdictions (domestic or foreign) as Merrill Lynch may designate and to maintain such qualifications in effect for a period of not less than one year from the date of the applicable Terms Agreement; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. In each jurisdiction in which the Debt Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the date of such Terms Agreement. (g) Earnings Statement. The Company will timely file such reports pursuant to the 1934 Act as are necessary in order to make generally available to its security holders as soon as practicable an earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act. (h) Use of Proceeds. The Company will use the net proceeds received by it from the sale of the Debt Securities in the manner specified in the Prospectus under "Use of Proceeds." (i) Listing. The Company will use its best efforts to effect the listing of the Debt Securities prior to the Closing Time, on any national securities exchange or quotation system if and as specified in the applicable Terms Agreement. (j) Restriction on Sale of Securities. Between the date of the applicable Terms Agreement and the Closing Time or such other date specified in such Terms Agreement, the Company will not, without the prior written consent of Merrill Lynch, directly or indirectly, issue, sell, offer to sell, grant any option for the sale of, or otherwise dispose of, the securities specified in such Terms Agreement. (k) Reporting Requirements. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. 10 SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay ------------------- all expenses incident to the performance of its obligations under this Underwriting Agreement or the applicable Terms Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the preparation, printing (if applicable) and delivery to the Underwriters of this Underwriting Agreement, any Terms Agreement, any Agreement among Underwriters, the Indentures and such other documents as may be required in connection with the offering, purchase, sale and delivery of the Debt Securities, (iii) the preparation, issuance and delivery of the Debt Securities to the Underwriters, (iv) the fees and disbursements of the Company's counsel, accountants and other advisors or agents, as well as the fees and disbursements of the Trustees and their respective counsel, (v) the qualification of the Debt Securities under state securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation, printing and delivery of the Blue Sky Survey and any Legal Investment Survey, and any amendment thereto, (vi) the printing and delivery to the Underwriters of copies of each preliminary prospectus, any Term Sheet, and the Prospectus and any amendments or supplements thereto, (vii) the fees charged by nationally recognized statistical rating organizations for the rating of the Debt Securities if applicable, (viii) the fees and expenses incurred with respect to the listing of the Debt Securities if applicable, (ix) the filing fees incident to, and the reasonable fees and disbursements of counsel to the Underwriters in connection with, the review, if any, by the National Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Debt Securities and (x) the fees and expenses of any Underwriter acting in the capacity of a "qualified independent underwriter" (as defined in Section 2(l) of Schedule E of the bylaws of the NASD), if applicable. (b) Termination of Agreement. If the applicable Terms Agreement is terminated by Merrill Lynch in accordance with the provisions of Section 5 or Section 9(b)(i) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters in connection with the offer and sale of the Debt Securities contemplated by this Agreement. SECTION 5. Conditions of Underwriters' Obligations. The obligations --------------------------------------- of the Underwriters to purchase and pay for the Debt Securities pursuant to the applicable Terms Agreement are subject to the accuracy of the representations and warranties of the Company contained in Section 1 hereof or in certificates of any officer of the Company or any subsidiary delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions: (a) Effectiveness of Registration Statement. The Registration Statement, including any Rule 462(b) Registration Statement, has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, and any request on the part of the Commission for 11 additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters. A prospectus containing information relating to the description of the Debt Securities, the specific method of distribution and similar matters shall have been filed with the Commission in accordance with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any required post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A), or, if the Company has elected to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet including the Rule 434 Information shall have been filed with the Commission in accordance with Rule 424(b)(7). (b) Opinion of Counsel for Company. At Closing Time, Merrill Lynch shall have received the favorable opinion, dated as of Closing Time, of Womble Carlyle Sandridge & Rice, counsel for the Company, in form and substance satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, to the effect set forth in Exhibit B hereto and to such further effect as counsel to the Underwriters may reasonably request. (c) Opinion of Counsel for Underwriters. At Closing Time, Merrill Lynch shall have received the favorable opinion, dated as of Closing Time, of Gibson, Dunn & Crutcher, counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters, with respect to the matters set forth in (1), (5) to (8), (9) (solely as to the information in the Prospectus under "Description of the Debt Securities" or any caption purporting to describe any such Securities), (15), (16) and the penultimate paragraph of Exhibit B hereto. In giving such opinion, such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York, the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to Merrill Lynch. Without limiting the generality of the foregoing, such counsel may rely upon the opinion of Womble Carlyle Sandridge & Rice with respect to all matters governed by the laws of the State of North Carolina. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and its subsidiaries and certificates of public officials. (d) Officers' Certificate. At Closing Time, there shall not have been, since the date of the applicable Terms Agreement or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and Merrill Lynch shall have received a certificate of the President or a Vice President of the Company and of the chief financial officer or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the 12 representations and warranties in Section 1 are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (e) Accountant's Comfort Letter. At the time of the execution of the applicable Terms Agreement, Merrill Lynch shall have received from Arthur Andersen & Co. L.L.P. a letter dated such date, in form and substance satisfactory to Merrill Lynch, together with signed or reproduced copies of such letter for each of the other Underwriters, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (f) Bring-down Comfort Letter. At Closing Time, Merrill Lynch shall have received from Arthur Andersen & Co. L.L.P. a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (e) of this Section 5, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time. (g) Ratings. At Closing Time, the Debt Securities shall have the ratings accorded by any "nationally recognized statistical rating organization", as defined by the Commission for purposes of Rule 436(g)(2) of the 1933 Act Regulations, if and as specified in the applicable Terms Agreement, and the Company shall have delivered to Merrill Lynch a letter, dated as of such date, from each such rating organization, or other evidence satisfactory to Merrill Lynch, confirming that the Debt Securities have such ratings. Since the time of execution of such Terms Agreement, there shall not have occurred a downgrading in the rating assigned to the Debt Securities or any of the Company's other securities by any such rating organization, and no such rating organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Debt Securities or any of the Company's other securities. (h) Approval of Listing. At Closing Time, the Debt Securities shall have been approved for listing, subject only to official notice of issuance, if and as specified in the applicable Terms Agreement. (i) No Objection. If the Registration Statement or an offering of Debt Securities has been filed with the NASD for review, the NASD shall not have raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements. 13 (j) Additional Documents. At Closing Time, counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Debt Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Debt Securities as herein contemplated shall be satisfactory in form and substance to Merrill Lynch and counsel for the Underwriters. (k) Termination of Terms Agreement. If any condition specified in this Section 5 shall not have been fulfilled when and as required to be fulfilled, the applicable Terms Agreement may be terminated by Merrill Lynch by notice to the Company at any time at or prior to the Closing Time and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 6 and 7 shall survive any such termination and remain in full force and effect. SECTION 6. Indemnification. --------------- (a) Indemnification of Underwriters. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (1) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (2) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 6(d) below) any such settlement is effected with the written consent of the Company; and (3) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by Merrill Lynch with the consent of the 14 Company, which consent shall not be unreasonably withheld), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (1) or (2) above; provided, however, that this indemnity agreement shall not apply to any loss, - -------- ------- liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto), including the 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (b) Indemnification of Company, Directors and Officers. Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information and the Rule 434 Information deemed to be a part thereof, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) Actions against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 6(a) above, counsel to the indemnified parties shall be selected by Merrill Lynch with the consent of the Company (which consent shall not be unreasonably withheld), and, in the case of parties indemnified pursuant to Section 6(b) above, counsel to the indemnified parties shall be selected by the Company with the consent of the Merrill Lynch (which consent shall not be unreasonably withheld). An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to 15 any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Settlement without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel for which the indemnifying party is liable under this Section 6, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 6(a)(2) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. SECTION 7. Contribution. If the indemnification provided for in ------------ Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Debt Securities pursuant to the applicable Terms Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and of the Underwriters, on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Debt Securities pursuant to the applicable Terms Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of such Debt Securities (before deducting expenses) received by the Company and the total underwriting discount received by the Underwriters; in each case as set forth on the cover of the Prospectus, or, if Rule 434 is 16 used, the corresponding location on the Term Sheet bears to the aggregate initial public offering price of such Debt Securities as set forth on such cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Debt Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Underwriters' respective obligations to contribute pursuant to this Section 7 are several in proportion to the aggregate principal amount of Debt Securities set forth opposite their respective names in the applicable Terms Agreement, and not joint. SECTION 8. Representations, Warranties and Agreements to Survive ----------------------------------------------------- Delivery. All representations, warranties and agreements contained in this - -------- Underwriting Agreement or the applicable Terms Agreement or in certificates of officers of the Company submitted pursuant hereto or thereto shall remain operative and in full force and effect, 17 regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company, and shall survive delivery of and payment for the Debt Securities. SECTION 9. Termination. ----------- (a) Underwriting Agreement. This Underwriting Agreement (excluding the applicable Terms Agreement) may be terminated for any reason at any time by the Company or by Merrill Lynch upon the giving of 30 days' prior written notice of such termination to the other party hereto. (b) Terms Agreement. Merrill Lynch may terminate the applicable Terms Agreement, by notice to the Company, at any time at or prior to the Closing Time, if (i) there has been, since the time of execution of such Terms Agreement or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) there has occurred any material adverse change in the financial markets in the United States or, if the Debt Securities are denominated or payable in, or indexed to, one or more foreign or composite currencies, in the international financial markets, or any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of Merrill Lynch, impracticable to market the Debt Securities or to enforce contracts for the sale of the Debt Securities, or (iii) trading in any securities of the Company has been suspended or limited by the Commission or the New York Stock Exchange, or if trading generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by either of said exchanges or by such system or by order of the Commission, the NASD or any other governmental authority, or (iv) a banking moratorium has been declared by either Federal or New York authorities or, if the Debt Securities are denominated or payable in, or indexed to, one or more foreign or composite currencies, by the relevant authorities in the related foreign country or countries. (c) Liabilities. If this Underwriting Agreement or the applicable Terms Agreement is terminated pursuant to this Section 9, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 1, 6 and 7 shall survive such termination and remain in full force and effect. SECTION 10. Default by One or More of the Underwriters. If one or ------------------------------------------ more of the Underwriters shall fail at the Closing Time to purchase the Debt Securities which it or they are obligated to purchase under the applicable Terms Agreement (the "Defaulted Securities"), then Merrill Lynch shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, 18 to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, Merrill Lynch shall not have completed such arrangements within such 24-hour period, then: (a) if the aggregate principal amount of Defaulted Securities does not exceed 10% of the aggregate principal amount of Debt Securities to be purchased on such date pursuant to such Terms Agreement, the non- defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations under such Terms Agreement bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the aggregate principal amount of Defaulted Securities exceeds 10% of the aggregate principal amount of Debt Securities to be purchased on such date pursuant to such Terms Agreement, such Terms Agreement shall terminate without liability on the part of any non- defaulting Underwriter. No action taken pursuant to this Section 10 shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of the applicable Terms Agreement, either Merrill Lynch or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or the Prospectus or in any other documents or arrangements. SECTION 11. Notices. All notices and other communications hereunder ------- shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to Merrill Lynch at World Financial Center, North Tower, New York, New York 10281-1201 attention of ; and notices to the Company shall be directed to it at 200 West Second Street, Winston-Salem, North Carolina 27101, attention of Jerone C. Herring, Esq. SECTION 12. Parties. This Underwriting Agreement and the applicable ------- Terms Agreement shall each inure to the benefit of and be binding upon the Company, Merrill Lynch and, upon execution of such Terms Agreement, any other Underwriters and their respective successors. Nothing expressed or mentioned in this Underwriting Agreement or such Terms Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 hereof and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Underwriting Agreement or such Terms Agreement or any provision herein or therein contained. This Underwriting Agreement and such Terms Agreement and all conditions and provisions hereof and thereof are intended to be for the sole and exclusive benefit of the parties hereto and thereto and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit 19 of no other person, firm or corporation. No purchaser of Debt Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING AGREEMENT AND ---------------------- ANY APPLICABLE TERMS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 14. Effect of Headings. Article and Section headings herein ------------------ and the Table of Contents are for convenience only and shall not affect the construction hereof. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this Underwriting Agreement, along with all counterparts, will become a binding agreement between Merrill Lynch and the Company in accordance with its terms. Very truly yours, SOUTHERN NATIONAL CORPORATION By: ____________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: _____________________ Authorized Signatory 20 Exhibit A SOUTHERN NATIONAL CORPORATION (a North Carolina corporation) Debt Securities TERMS AGREEMENT --------------- [Date] To: Southern National Corporation 200 West Second Street Winston-Salem, North Carolina 27101 Ladies and Gentlemen: We understand that Southern National Corporation, a North Carolina corporation (the "Company"), proposes to issue and sell $ aggregate principal amount of its [senior] [subordinated] debt securities (the "Debt Securities"). Subject to the terms and conditions set forth or incorporated by reference herein, we [the underwriters named below (the "Underwriters")] offer to purchase [, severally and not jointly,] the principal amount of Debt Securities [opposite their names set forth below] at the purchase price set forth below. A-1 Principal Amount Underwriter of Debt Securities - ----------- ------------------ ____________________ Total [$] ------------ The Debt Securities shall have the following terms: Title: Rank: Ratings: Aggregate principal amount: Denominations: Currency of payment: Interest rate or formula: Interest payment dates: Regular record dates: Stated maturity date: Redemption provisions: Sinking fund requirements: Conversion provisions: Listing requirements: Black-out provisions: Fixed or Variable Price Offering: [Fixed] [Variable] Price Offering If Fixed Price Offering, initial public offering price per security: % of the principal amount, plus accrued interest [amortized original issue discount], if any, from __________________. Purchase price per share: ___% of principal amount, plus accrued interest [amortized original issue discount], if any, from _________________ (payable in next day funds). Form: Other terms and conditions: Closing date, time and location: All of the provisions contained in the document attached as Annex I hereto entitled "SOUTHERN NATIONAL CORPORATION-- Debt Securities -- Underwriting Agreement" are hereby incorporated by reference in their entirety herein and shall be deemed to be a part of this Terms Agreement to the same extent as if such provisions had been set forth in full herein. Terms defined in such document are used herein as therein defined. A-2 Please accept this offer no later than ____ o'clock P.M. (New York City time) on ______________ by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us. Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By ______________________ Authorized Signatory [Acting on behalf of itself and the other named Underwriters.] Accepted: SOUTHERN NATIONAL CORPORATION By ___________________ Name: Title: A-3 Exhibit B FORM OF OPINION OF COMPANY'S COUNSEL TO BE DELIVERED PURSUANT TO SECTION 5(b) (1) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of North Carolina. (2) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under, or as contemplated under, the Underwriting Agreement and the applicable Terms Agreement. (3) The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. (4) Each Subsidiary is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus. (5) The Underwriting Agreement and the applicable Terms Agreement have been duly authorized, executed and delivered by the Company. (6) The Debt Securities have been duly authorized by the Company for issuance and sale pursuant to the Underwriting Agreement and the applicable Terms Agreement. The Debt Securities, when issued and authenticated in the manner provided for in the applicable Indenture and delivered against payment of the consideration therefor specified in such Terms Agreement, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles, and except further as enforcement thereof may be limited by (A) requirements that a claim with respect to any Debt Securities denominated other than in U.S. dollars (or a foreign or composite currency judgment in respect of such claim) be converted into U.S. dollars at a rate of exchange prevailing on a date determined pursuant to applicable law or (B) governmental authority to limit, delay or prohibit the making of payments outside the United States. The Debt Securities are in the form contemplated by, and each registered holder thereof is entitled to the benefits of, the applicable Indenture. (7) The [Each] applicable Indenture has been duly authorized, executed and delivered by the Company and (assuming due authorization, execution and delivery B-1 thereof by the applicable Trustee) constitutes a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally or by general equitable principles. (8) The Debt Securities being sold pursuant to the applicable Terms Agreement and the [each] applicable Indenture conform, in all material respects, to the statements relating thereto contained in the Prospectus and are in substantially the form filed or incorporated by reference, as the case may be, as an exhibit to the Registration Statement. (9) The information in the Prospectus under "Description of the Debt Securities" or any caption purporting to describe any such Debt Securities, "Certain Regulatory Considerations" and in the Annual Report on Form 10-K under "__________", to the extent that it constitutes matters of law, summaries of legal matters, the Company's charter and bylaws or legal proceedings, or legal conclusions, has been reviewed by us and is correct in all material respects. (10) To the best of our knowledge, neither the Company nor any of the Subsidiaries is in violation of its charter or by-laws and no default by the Company or any subsidiary exists in the due performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument that is described in the Registration Statement or the Prospectus or filed or incorporated by reference as an exhibit to the Registration Statement. (11) The execution, delivery and performance of the Underwriting Agreement, the applicable Terms Agreement and the [each] applicable Indenture and the consummation of the transactions contemplated in the Underwriting Agreement and such Terms Agreement and in the Registration Statement and the Prospectus (including the issuance and sale of the Debt Securities) and compliance by the Company with its obligations thereunder do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any Subsidiary pursuant to, any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any other agreement or instrument to which the Company or any subsidiary is a party or by which it or any of them may be bound, or to which any of the assets, properties or operations of the Company or any subsidiary is subject, and that is filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 or to the Registration Statement except for such conflicts, breaches, defaults, events or liens, charges or encumbrances that would not result in a Material Adverse Effect, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any Subsidiary or any applicable law, statute, rule, regulation, judgment, order, writ or decree, known to us, of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any subsidiary or any of their assets, properties or operations (provided that we are not rendering B-2 any opinion in this paragraph 11 with respect to state securities or blue sky laws or the disclosure provisions of the 1933 Act or the 1934 Act). (12) To the best of our knowledge, there is no action, suit, proceeding, inquiry or investigation before or by any court or governmental agency or body, domestic or foreign, now pending or threatened, against or affecting the Company or any subsidiary thereof which is required to be disclosed in the Registration Statement and the Prospectus (other than as stated therein), or which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the assets, properties or operations thereof or the consummation of the Underwriting Agreement, the applicable Terms Agreement or the [any] applicable Indenture or the transactions contemplated therein. (13) All descriptions in the Prospectus of contracts and other documents to which the Company or the Subsidiaries are a party are accurate in all material respects. To the best of our knowledge, there are no franchises, contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed or incorporated by reference as exhibits thereto, and the descriptions thereof or references thereto are correct in all material respects. (14) To the best of our knowledge, there are no statutes or regulations that are required to be described in the Prospectus that are not described as required. (15) The Registration Statement has been declared effective under the 1933 Act. Any required filing of the Prospectus pursuant to Rule 424(b) has been made in the manner and within the time period required by Rule 424(b). To the best of our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission. (16) The Registration Statement, [the Rule 430A Information,] [the Rule 434 Information,] the Prospectus, excluding the documents incorporated by reference therein, and each amendment or supplement to the Registration Statement and Prospectus, excluding the documents incorporated by reference therein, as of their respective effective or issue dates (other than the financial statements and supporting schedules included therein and each Trustee's Statement of Eligibility on Form T-1 (the "Form T-1s"), as to which no opinion need be rendered) complied as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations. (17) The documents incorporated by reference in the Prospectus (other than the financial statements and supporting schedules therein, as to which no opinion need be rendered), when they were filed with the Commission complied as to form in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder. B-3 (19) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations under the Underwriting Agreement or the applicable Terms Agreement or in connection with the transactions contemplated under the Underwriting Agreement, such Terms Agreement or the [any] applicable Indenture other than under the 1933 Act, the 1933 Act Regulations, the 1939 Act and the 1939 Act Regulations, which have been obtained, or as may be required under state securities or blue sky laws. Nothing has come to our attention that would lead us to believe that the Registration Statement (except for financial statements and schedules and other financial data included therein and for the Form T-1s, as to which we make no statement), at the time the Registration Statement or any post-effective amendment thereto (including the filing of the Company's Annual Report on Form 10-K with the Commission) became effective or at the date of the applicable Terms Agreement, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus or any amendment or supplement thereto (except for financial statements and schedules and other financial data included therein as to which we make no statement), at the time the Prospectus was issued, at the time any such amended or supplemented prospectus was issued or at the Closing Time, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In rendering such opinion, such counsel may rely as to matters of fact (but not as to legal conclusions), to the extent they deem proper, on certificates of responsible officers of the Company and public officials. In rendering the opinion set forth in paragraph (3) and the second sentence of paragraph (5) above, such counsel may rely exclusively upon certificates of appropriate officials of each such jurisdiction. Such opinion shall not state that it is to be governed or qualified by, or that it is otherwise subject to, any treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991). In rendering such opinion, such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of North Carolina, the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to Merrill Lynch. Without limiting the generality of the foregoing, such counsel may rely upon the opinion of counsel for the Underwriters with respect to all matters governed by the laws of the State of New York. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and its subsidiaries and certificates of public officials. B-4 Annex I FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e) We are independent public accountants with respect to the Company within the meaning of the 1933 Act and the applicable published 1933 Act Regulations (i) in our opinion, the audited financial statements [and the related financial statement schedules] included or incorporated by reference in the Registration Statement and the Prospectus comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations thereunder; (ii) on the basis of procedures (but not an examination in accordance with generally accepted auditing standards) consisting of a reading of the unaudited interim consolidated financial statements of the Company for the [three month periods ended _________, 19__ and _________, 19__, the three and six month periods ended _________, 19__ and _________, 19__, and the three and nine month periods ended _________, 19__ and _________, 19__, included or incorporated by reference in the Registration Statement and the Prospectus (collectively, the "10-Q Financials")] [, a reading of the unaudited interim consolidated financial statements of the Company for the _____-month periods ended _________, 19__ and _________, 19___, included in the Registration Statement and the Prospectus (the "_____-month financials")] [, a reading of the latest available unaudited interim consolidated financial statements of the Company], a reading of the minutes of all meetings of the stockholders and directors of the Company and its subsidiaries and the _______ and ___________ Committees of the Company's Board of Directors and any subsidiary committees since [day after end of last audited period], inquiries of certain officials of the Company and its subsidiaries responsible for financial and accounting matters, a review of interim financial information in accordance with standards established by the American Institute of Certified Public Accountants in Statement on Auditing Standards No. 71, Interim Financial Information ("SAS 71"), with respect to the [description of relevant periods including all interim unaudited condensed consolidated financial statements included or incorporated by reference in the Registration Statement and the Prospectus and such other inquiries and procedures as may be specified in such letter, nothing came to our attention that caused us to believe that: [(A) the 10-Q Financials incorporated by reference in the Registration Statement and the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the 1934 Act Regulations applicable to unaudited financial statements included in Form 10-Q or any material modifications should be made to the 10-Q Financials incorporated by reference in the Registration Statement and Annex I-1 the Prospectus for them to be in conformity with generally accepted accounting principles;] [( ) the _____-month financials included in the Registration Statement and the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations applicable to unaudited interim financial statements included in registration statements or any material modifications should be made to the _____-month financials included in the Registration Statement and the Prospectus for them to be in conformity with generally accepted accounting principles;] ( ) at [the most recent balance sheet date and at] a specified date not more than five days prior to the date of the applicable Terms Agreement, there was any change in the __________ of the Company and its subsidiaries or any decrease in the __________ of the Company and its subsidiaries or any increase in the __________ of the Company and its subsidiaries, in each case as compared with amounts shown in the latest balance sheet included in the Registration Statement and the Prospectus, except in each case for changes, decreases or increases that the Registration Statement and the Prospectus disclose have occurred or may occur; or ( ) [for the period from _______, 19__ to _______, 19__ and] for the period from _________, 19__ to a specified date not more than five days prior to the date of the applicable Terms Agreement, there was any decrease in _________, __________ or __________, in each case as compared with the comparable period in the preceding year, except in each case for any decreases that the Registration Statement and the Prospectus disclose have occurred or may occur; (iii) based upon the procedures set forth in clause (ii) above and a reading of the [Selected Financial Data] included in the Registration Statement and the Prospectus [and a reading of the financial statements from which such data were derived], nothing came to our attention that caused us to believe that the [Selected Financial Data] included in the Registration Statement and the Prospects do not comply as to form in all material respects with the disclosure requirements of Item 301 of Regulation S-K of the 1933 Act [, that the amounts included in the [Selected Financial Data] are not in agreement with the corresponding amounts in the audited consolidated financial statements for the respective periods or that the financial statements not included in the Registration Statement and the Prospectus from which certain of such data were derived are not in conformity with generally accepted accounting principles]; (iv) we have compared the information in the Registration Statement and the Prospectus under selected captions with the disclosure requirements of Annex I-2 Regulation S-K of the 1933 Act and on the basis of limited procedures specified herein, nothing came to our attention that caused us to believe that this information does not comply as to form in all material respects with the disclosure requirements of Items 302, 402 and 503(d), respectively, of Regulation S-K; [(v) based upon the procedures set forth in clause (ii) above, a reading of the unaudited financial statements of the Company for [the most recent period] that have not been included in the Registration Statement and the Prospectus and a review of such financial statements in accordance with SAS 71, nothing came to our attention that caused us to believe that the unaudited amounts for _____________ for the [most recent period] do not agree with the amounts set forth in the unaudited consolidated financial statements for those periods or that such unaudited amounts were not determined on a basis substantially consistent with that of the corresponding amounts in the audited consolidated financial statements;] [(vi)] [Include only if pro forma financial statements are included or incorporated by reference in the Registration Statement -- ] we are unable to and do not express any opinion on the [Pro Forma Combining Statement of Operations] (the "Pro Forma Statement") included in the Registration Statement and the Prospectus or on the pro forma adjustments applied to the historical amounts included in the Pro Forma Statement; however, for purposes of this letter we have: (A) read the Pro Forma Statement; (B) performed [an audit] [a review in accordance with SAS 71] of the financial statements to which the pro forma adjustments were applied; (C) made inquiries of certain officials of the Company who have responsibility for financial and accounting matters about the basis for their determination of the pro forma adjustments and whether the Pro Forma Statement complies as to form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X; and (D) proved the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the Pro Forma Statement; and on the basis of such procedures and such other inquiries and procedures as specified herein, nothing came to our attention that caused us to believe that the Pro Forma Statement included in the Registration Statement does not comply as to form in all material respects with the applicable requirements of Rule 11-02 of Regulation S-X or that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements; and Annex I-3 [(vii)] in addition to the procedures referred to in clause (ii) above, we have performed other procedures, not constituting an audit, with respect to certain amounts, percentages, numerical data and financial information appearing in the Registration Statement and the Prospectus, which are specified herein, and have compared certain of such items with, and have found such items to be in agreement with, the accounting and financial records of the Company; and [(viii)] [Include only if financial forecasts are included in the Registration Statement --] in addition, we [comfort on a financial forecast that is included in the Registration Statement and the Prospectus]. Annex I-4 EX-4.C 3 EXHIBIT 4(C) SOUTHERN NATIONAL CORPORATION TO [NAME OF TRUSTEE], TRUSTEE INDENTURE REGARDING SENIOR SECURITIES DATED AS OF _______________, 1996 Reconciliation and Tie Sheet* between Provisions of the Trust Indenture Act of 1939 and Indenture, dated as of _______________, 1996 between SOUTHERN NATIONAL CORPORATION and [NAME OF TRUSTEE], Trustee Section of Act Section of Indenture - -------------- -------------------- 310(a)(1), (2)............................ 5.08 310(a)(3), (4)............................ Inapplicable 310(a)(5)................................. 5.08 310(b).................................... ** 310(c).................................... Inapplicable 311(a), (b)............................... ** 311(c).................................... Inapplicable 312....................................... ** 313(a).................................... ** 313(b)(1)................................. Inapplicable 313(b)(2)................................. ** 313(c), (d)............................... ** 314(a).................................... ** 314(b).................................... Inapplicable 314(c)(1) and (2)......................... 15.05 314(c)(3)................................. Inapplicable 314(d).................................... Inapplicable 314(e).................................... 15.05 314(f).................................... Inapplicable 315(a)(c) and (d)......................... 5.01 315(b).................................... 4.08 315(e).................................... 4.09 316(a)(1)................................. 4.01 and 4.07 316(a)(2)................................. Omitted 316(a) last sentence...................... 6.04 316(b).................................... 4.04 316(c).................................... 6.05 317(a).................................... 4.02 317(b).................................... 3.04(a) 318(a).................................... 15.07 _____________________ * This Reconciliation and Tie-sheet is not a part of the Indenture. ** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939. TABLE OF CONTENTS* -----------------
Page ---- PARTIES............................................................. 1 RECITALS............................................................ 1 ARTICLE ONE DEFINITIONS SECTION 1.01. Definitions........................................ 1 ARTICLE TWO THE SECURITIES AND SECURITY FORMS SECTION 2.01. Amount Unlimited; Issuable in Series............... 8 SECTION 2.02. Form of Securities and of Trustee's Certificate of Authentication.................................. 11 SECTION 2.03. Securities in Global Form.......................... 12 SECTION 2.04. Denomination, Authentication and Dating of Securities......................................... 12 SECTION 2.05. Execution of Securities............................ 16 SECTION 2.06. Exchange and Registration of Transfer of Securities......................................... 17 SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Securities.....21 SECTION 2.08. Temporary Securities............................... 22 SECTION 2.09. Payment of Interest; Interest Rights................24 SECTION 2.10. Cancellation of Securities Paid, etc................26 ARTICLE THREE PARTICULAR COVENANTS OF THE COMPANY SECTION 3.01. Payment of Principal and Interest.................. 26 SECTION 3.02. Offices for Notices and Payments, etc...............26 SECTION 3.03. Provisions as to Paying Agent...................... 28 SECTION 3.04. Statement as to Compliance......................... 29
__________________ * This table of contents is not part of the Indenture. i
Page ---- SECTION 3.05. Notice of Defaults................................. 30 SECTION 3.06. Limitation on Certain Dispositions and on Merger and Sale of Assets................................. 30 SECTION 3.07. Limitation on Creation of Liens.................... 31 SECTION 3.08. Corporate Existence................................ 31 ARTICLE FOUR REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 4.01. Events of Default.................................. 31 SECTION 4.02. Payment of Securities on Default; Suit Therefor.... 35 SECTION 4.03. Application of Money Collected by Trustee.......... 37 SECTION 4.04. Proceedings by Securityholders..................... 38 SECTION 4.05. Proceedings by Trustee............................. 38 SECTION 4.06. Remedies Cumulative and Continuing; Delay or Omission Not Waiver................................ 39 SECTION 4.07. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders........................ 39 SECTION 4.08. Notice of Defaults................................. 40 SECTION 4.09. Undertaking to Pay Costs........................... 40 ARTICLE FIVE CONCERNING THE TRUSTEE SECTION 5.01. Duties and Responsibilities of Trustee............. 41 SECTION 5.02. Reliance on Documents, Opinions, etc............... 42 SECTION 5.03. No Responsibility for Recitals, etc................ 44 SECTION 5.04. Trustee, Paying Agents or Registrar May Own Securities......................................... 44 SECTION 5.05. Money to Be Held in Trust.......................... 44 SECTION 5.06. Compensation and Expenses of Trustee............... 44 SECTION 5.07. Officers' Certificate as Evidence.................. 45 SECTION 5.08. Eligibility of Trustee............................. 45 SECTION 5.09. Resignation or Removal of Trustee.................. 45 SECTION 5.10. Acceptance by Successor Trustee.................... 47 SECTION 5.11. Succession by Merger, etc.......................... 48
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Page ---- ARTICLE SIX CONCERNING THE SECURITYHOLDERS SECTION 6.01. Action by Securityholders.......................... 49 SECTION 6.02. Proof of Execution by Securityholders.............. 50 SECTION 6.03. Who Are Deemed Absolute Owners..................... 50 SECTION 6.04. Company-Owned Securities Disregarded............... 51 SECTION 6.05. Revocation of Consents; Future Holders Bound....... 52 ARTICLE SEVEN SECURITYHOLDERS' MEETINGS SECTION 7.01. Purposes of Meetings............................... 52 SECTION 7.02. Call of Meetings by Trustee........................ 53 SECTION 7.03. Call of Meetings by Company or Securityholders..... 53 SECTION 7.04. Qualifications for Voting.......................... 54 SECTION 7.05. Regulations........................................ 54 SECTION 7.06. Quorum............................................. 55 SECTION 7.07. Voting............................................. 55 SECTION 7.08. No Delay of Rights by Meeting...................... 56 ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.01. Supplemental Indentures Without Consent of Securityholders.................................... 56 SECTION 8.02. Supplemental Indentures with Consent of Securityholders of a Series........................ 58 SECTION 8.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures............................ 59 SECTION 8.04. Notation on Securities............................. 59 SECTION 8.05. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee............................ 60 ARTICLE NINE CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE SECTION 9.01. Company May Consolidate, etc., on Certain Terms.... 60 SECTION 9.02. Successor Corporation Substituted.................. 61
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Page ---- ARTICLE TEN REDEMPTION OF SECURITIES SECTION 10.01. Applicability of Article........................... 61 SECTION 10.02. Election to Redeem; Notice to Trustee.............. 62 SECTION 10.03. Selection by Trustee of Securities to Be Redeemed.. 62 SECTION 10.04. Notice of Redemption............................... 62 SECTION 10.05. Deposit of Redemption Price........................ 63 SECTION 10.06. Securities Payable on Redemption Date.............. 63 SECTION 10.07. Registered Securities Redeemed in Part............. 64 ARTICLE ELEVEN SINKING FUNDS SECTION 11.01. Applicability of Article........................... 65 SECTION 11.02. Satisfaction of Sinking Fund Payments with Securities......................................... 65 SECTION 11.03. Redemption of Securities for Sinking Fund...........66 ARTICLE TWELVE REPAYMENT AT THE OPTION OF HOLDERS SECTION 12.01. Terms Set Forth in the Securities.................. 66 ARTICLE THIRTEEN SATISFACTION AND DISCHARGE OF INDENTURE SECTION 13.01. Discharge of Indenture..............................66 SECTION 13.02. Deposited Money to Be Held in Trust by Trustee......68 SECTION 13.03. Paying Agent to Repay Money Held....................68 SECTION 13.04. Return of Unclaimed Money...........................68 SECTION 13.05. Discharge of Indenture as to Certain Series of Securities..........................................69 SECTION 13.06. Repayment to Company of Deposits Made Pursuant to Section 13.05....................................71 SECTION 13.07. Deposits Irrevocable................................71 SECTION 13.08. Reinstatement.......................................71
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Page ---- ARTICLE FOURTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS SECTION 14.01. Indenture and Securities Solely Corporate Obligations.........................................72 ARTICLE FIFTEEN MISCELLANEOUS PROVISIONS SECTION 15.01. Provisions Binding on Company's Successors......... 72 SECTION 15.02. Official Acts by Successor Corporation............. 72 SECTION 15.03. Addresses for Notices, etc......................... 73 SECTION 15.04. Governing Law...................................... 73 SECTION 15.05. Evidence of Compliance with Conditions Precedent... 73 SECTION 15.06. Legal Holidays..................................... 74 SECTION 15.07. Trust Indenture Act to Control..................... 74 SECTION 15.08. No Security Interest Created....................... 74 SECTION 15.09. Benefits of Indenture.............................. 74 SECTION 15.10. Payments to Be Made in U.S. Dollars................ 74 SECTION 15.11. Table of Contents, Headings, etc................... 74 SECTION 15.12. Execution in Counterparts.......................... 75
v THIS INDENTURE, dated as of _____________, 1996, is executed and delivered from SOUTHERN NATIONAL CORPORATION, a North Carolina corporation (such corporation or, subject to Article Nine, its successors and assigns, the "Company"), and [NAME OF TRUSTEE], a ____________ banking corporation (such corporation or, subject to Article Five, its successors and assigns as Trustee under this Indenture, the "Trustee"). RECITAL OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured senior debentures, notes or other evidences of indebtedness or warrants therefor to be issued in one or more series (the "Securities"), as provided herein. For and in consideration of the premises and the purchase of the Securities by the holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of the Securities, as follows: ARTICLE ONE DEFINITIONS SECTION 1.01. Definitions. The terms defined in this Section 1.01 ----------- (except to the extent the application of such definitions is expressly limited to certain instances, and except as otherwise expressly provided in this Indenture or unless the context otherwise requires) for all purposes of this Indenture will have the respective meanings specified in this Section 1.01. Except as otherwise expressly provided in this Indenture or unless the context otherwise requires, all other terms used in this Indenture that are defined in the Trust Indenture Act or that the Trust Indenture Act defines by reference to the Securities Act of 1933 or by Commission rule under the Trust Indenture Act will have the meanings assigned to such terms in the Trust Indenture Act, in such rule thereunder or in such Securities Act as in force at the date of the execution of this Indenture. "Bank" means (i) any institution organized under the laws of the United States, any State, the District of Columbia, Puerto Rico or any territory of the United States that (a) accepts deposits that the depositor has a legal right to withdraw on demand and (b) engages in the business of making commercial loans and (ii) any trust company organized under any of the foregoing laws. Unless otherwise provided, for purposes of this Indenture a Bank also will be considered a "corporation". "BB&T-NC" shall mean Branch Banking and Trust Company, a North Carolina Corporation, and any successor or successors thereto. "Bearer Security" means any Security established pursuant to Section 2.02 that is payable to bearer. "Bearer Security Tax Certificate" or "Certificate of non-U.S. Ownership", when used with respect to a Bearer Security, means a certificate satisfying the requirements of Treasury Regulation (S) 1.163-5(c)(2)(i)(D)(3), as that provision may be amended or redesignated from time to time, which certificate shall be in a form approved by the Company. "Board of Directors" means the Board of Directors of the Company or, with respect to any matter, any committee of the Board of Directors duly authorized to act for the Board of Directors with respect to such matter. "Business Day", with respect to each series of Securities, means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or obligated by law or regulation to close in either The City of New York or, with respect to Registered Notes that will bear interest based on a specified percentage of London interbank offered quotations ("LIBOR"), in London, England, or, in the case of Bearer Securities, in any Place of Payment. "CEDEL, S.A." means Centrale de Livraison de Valeurs Mobilieres S.A. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this Indenture the Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Company" means the corporation identified as the Company in the first paragraph of this Indenture until a successor corporation shall succeed to and be substituted for the Company pursuant to the provisions of Article Nine, and thereafter shall mean such successor corporation. 2 "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, any Vice Chairman, its Chief Executive Officer, its President, any Executive Vice President or any Senior Vice President and its Treasurer, any Assistant Treasurer, its Secretary or any Assistant Secretary, and delivered to the Trustee. "Consolidated Net Banking Assets" means all net assets owned directly or indirectly by each Subsidiary that is a Bank as such net assets would be reflected on a consolidated balance sheet of the Company prepared in accordance with generally accepted accounting principles at the time. "Constituent Bank" means any Subsidiary that is a Bank. "Controlled Subsidiary" means any Subsidiary of which more than 80% of the aggregate voting power of the outstanding shares of the Voting Stock at the time is owned directly or indirectly by the Company or by one or more Controlled Subsidiaries or by the Company and one or more Controlled Subsidiaries, after giving effect to the issuance to any Person other than the Company or any Controlled Subsidiary of Voting Stock of the Subsidiary issuable on exercise of options, warrants or rights to subscribe for such Voting Stock or on conversion of securities convertible into such Voting Stock. "coupon" means any interest coupon appertaining to a Bearer Security. "Defaulted Interest" has the meaning specified in Section 2.09. "Depositary", with respect to the Securities of any series issuable or issued in the form of one or more Global Securities, means The Depository Trust Company, New York, New York, or such other Person designated as Depositary by the Company in the manner provided in Section 2.01, until a successor Depositary shall have been appointed pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" means or includes each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Global Securities of any such series means the Depositary with respect to the Securities of that series. 3 "Euro-clear" means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euro-clear System. "Event of Default" means any event specified in Section 4.01, continued for the period of time, if any, and after the giving of the notice, if any, designated in Section 4.01. "Global Security" means a Security issued to evidence all or part of a series of Securities in accordance with Section 2.03. "Indenture" means this instrument as originally executed or, if amended or supplemented as provided in this Indenture, as so amended or supplemented. "interest", when used with respect to an Original Issue Discount Security that by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. "Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by the declaration of acceleration, call for redemption, repayment at the option of the holder or otherwise. "Officers' Certificate", when used with respect to the Company, means a certificate signed by the Chairman of the Board, any Vice Chairman, the Chief Executive Officer, the President, any Executive Vice President or any Senior Vice President and by the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company. Except as otherwise provided in this Indenture, each such certificate shall include the statements provided for in Section 15.05. "Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, and who shall be acceptable to the Trustee. Except as otherwise provided in this Indenture, each such opinion shall include the statements provided for in Section 15.05. "Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of 4 acceleration of the Maturity thereof pursuant to Section 4.01. The term "principal amount" or "aggregate principal amount", when used with respect to Original Issue Discount Securities, has the meaning (or meanings) specified in the manner contemplated by Section 2.01 for purposes of: determining the amount due and payable in the event of an acceleration of Maturity as provided in Section 4.01; the redemption provisions in Article Ten; determining whether the holders of the requisite principal amount of Outstanding Securities of any series have given any request, demand, authorization, direction, notice, consent or waiver under this Indenture; and determining whether a quorum is present at a meeting of Securityholders. "Outstanding", when used with reference to Securities of any series or the related coupons, subject to the provisions of Section 6.04, means, as of any particular time, all Securities of such series or any related coupons authenticated and delivered by the Trustee pursuant to this Indenture, except: (a) such Securities and coupons theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) such Securities and coupons, or portions thereof, for the payment or redemption of which money in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent), provided that if such Securities are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been provided as specified in Article Eleven, or provision satisfactory to the Trustee shall have been made for mailing such notice; and (c) such Securities or coupons in lieu of or in substitution for which other Securities or coupons shall have been authenticated and delivered pursuant to the terms of Section 2.07, except to the extent that a bona fide holder in due course of any such Securities shall have presented proof satisfactory to the Trustee that such holder is a bona fide holder in due course of any such Securities or coupons. "Paying Agent", when used with respect to Securities of any series, means any Person authorized by the Company to pay the principal of and any premium or interest on any Securities of that series on behalf of the Company. 5 "Person" means a corporation, an association, a partnership, an organization, a trust, an individual, a government or a political subdivision thereof or a governmental agency. "Place of Payment" has the meaning stated in Section 2.01(5). "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt that was evidenced by such particular Security. For the purposes of this definition, any Security authenticated and delivered under Section 2.07 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Principal Constituent Bank" means BB&T-NC and, at any time, any other Constituent Bank the total assets of which (as set forth in the most recent statement of condition of such Constituent Bank) equal more than 30% of the total assets of all Constituent Banks as determined from the most recent statements of condition of the Constituent Banks. "principal office of the Trustee" or any other similar term means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office, at the date of this Indenture, is located at ______________________________. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registered Security" means any Security, in the form of registered securities established pursuant to Section 2.02, that is registered in the Security Register. "Regular Record Date", with respect to the interest payable on any Interest Payment Date on the Securities of any series, means the date specified for that purpose as contemplated by Section 2.01. "Responsible Officer", when used with respect to the Trustee, means the Chairman or Vice Chairman of its board of directors, the Chairman or Vice Chairman of the executive committee of the board of directors, the 6 President, any Vice President, the Cashier, any Assistant Cashier, any senior trust officer, any trust officer, any assistant trust officer or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be the above- named officers, or to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Security" or "Securities" has the meaning stated in the recitals of this Indenture and means any Security or Securities, as the case may be, authenticated and delivered pursuant to this Indenture. Whenever this Indenture refers to any interest on or with respect to any Security that is represented by a coupon, such reference to the Security also shall include reference to a coupon. "Security Register", when used with respect to a Registered Security, has the meaning specified in Section 2.06(b). "Securityholder", "holder of Securities", "holder" or other similar term, when used with respect to a Registered Security, means any Person in whose name at the time a particular Registered Security is registered on the Security Register and, when used with respect to a Bearer Security or coupon, the bearer thereof. "Special Record Date" has the meaning specified in Section 2.09. "Stated Maturity", when used with respect to any Security or any payment of premium or any installment of interest thereon, means the date specified in such Security or a coupon representing such installment of interest as the fixed date on which the principal of such Security or such payment of premium or such installment of interest is due and payable. "Subsidiary" means any corporation of which a majority of the aggregate voting power of the outstanding Voting Stock at the time shall be owned by the Company or by the Company and one or more Subsidiaries or by one or more Subsidiaries. "Trust Indenture Act" means the Trust Indenture Act of 1939 as it was in force at the date of execution of this Indenture, except as provided in Section 8.03. "Trustee" means the Person identified as the Trustee in the first paragraph of this Indenture until a successor shall succeed to the trusts created by this 7 Indenture pursuant to the provisions of Article Five, and thereafter shall mean such successor. "United States" means the United States of America (including the District of Columbia) and its possessions. "U.S. Government Obligations" has the meaning specified in Section 13.05(b). "Vice President", when used with respect to the Company or the Trustee, means any such officer whether or not designated by a number or a word or words added before or after such title. "Voting Stock" of a corporation or other entity means stock of the class or classes having general voting power in an election of the board of directors, managers or trustees of such corporation or other entity (irrespective of whether, at the time, stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency). ARTICLE TWO THE SECURITIES AND SECURITY FORMS SECTION 2.01. Amount Unlimited; Issuable in Series. The aggregate ------------------------------------ principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. Securities may be issued in one or more series. The terms and conditions listed below, as applicable, of any series of Securities shall be established either in an indenture supplemental hereto or in or pursuant to a resolution of the Board of Directors: (1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of all other series); (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, other Securities of the series pursuant to Section 2.05, 2.06, 2.07, 8.04 or 10.07); (3) the date or dates on which the principal of the Securities of the series is payable; 8 (4) the rate or rates (which may be fixed or variable) at which the Securities of the series shall bear interest, if any, or the formula by which interest shall be calculated by the Company or an agent designated for such purpose, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Registered Security on any Interest Payment Date; (5) the place or places, if any, in addition to those specified herein, where the principal of and any premium or interest on Securities of the series shall be payable (the "Place of Payment"), any Registered Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange and notices and demands to or upon the Company in respect of the Securities of the series and this Indenture may be served and where notices to holders pursuant to this Indenture will be published; (6) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise; (7) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a holder thereof and the price or prices at which, the period or periods within which and the other terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation, which in the case of Securities of any series that are repayable at the option of a holder thereof shall be set forth in the form of such Security; (8) whether Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Securities of the series are to be issuable with or without coupons or both and, in the case of Bearer Securities, the date as of which such Bearer Securities shall be dated if other than the date of original issuance of the first Security of such series of like tenor and term to be issued; (9) whether the Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities and, in such case, the 9 Depositary (if other than The Depository Trust Company) for such Global Security or Securities and whether such global form shall be permanent or temporary; (10) if Securities of the series are to be issuable initially in the form of one or more temporary Global Securities, the circumstances under and the manner in which such temporary Global Securities can be exchanged for definitive Securities of the series and whether such definitive Securities will be Registered Securities, Bearer Securities or both and will be in global form; (11) the denominations in which Registered Securities of the series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof, and the denominations in which Bearer Securities of such series, if any, shall be issuable if other than the denomination of $5,000; (12) any Event of Default with respect to the Securities of such series, if not set forth herein or if different from those set forth herein; (13) the form of Securities of such series; (14) the Person or Persons who shall be Security registrar for the Securities of such series if other than as provided for in this Indenture, and the place or places where the Security Register for such series shall be maintained and the Person or Persons who will be the initial Paying Agent or Agents, if other than as provided for in this Indenture; (15) if warrants for Securities of any series are to be issued, the form in which the warrants shall be issued, the circumstances under and the manner in which the warrants may be exercised, any obligation of the Company concerning any Securities underlying the warrants and any other terms or conditions regarding the warrants and any Securities underlying the warrants; and (16) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any series and the coupons appertaining to Bearer Securities of such series, if any, issued under this Indenture in all respects shall be equally and ratably entitled to the benefits hereof with respect to such series without preference, priority or distinction on 10 account of actual time or times of authentication and delivery or Maturity of the Securities of such series. All Securities of the same series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except as to denomination and except as may otherwise be provided either in an indenture supplemental hereto or a resolution of the Board of Directors. SECTION 2.02. Form of Securities and of Trustee's Certificate of -------------------------------------------------- Authentication. The Registered Securities, if any, and the Bearer Securities - -------------- and related coupons, if any, of each series and the certificates of authentication on the Securities shall be in substantially the form as shall be established as provided in Section 2.01 with such appropriate insertions, omissions, substitutions and other variations 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 any law or with any rules made pursuant thereto or with any rules of any securities exchange or as may be determined consistently herewith by the officers executing such Securities or coupons, as evidenced by their execution of the Securities or coupons. If the form of Securities of any series or coupons (including any Global Security) is established by action taken pursuant to a resolution of the Board of Directors, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect as of the date of such certificate, and shall be delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 2.04(b) or the authentication and delivery of such Securities. The definitive Securities and coupons, if any, shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange, all as determined by the officers executing such Securities or coupons, as evidenced by their execution of such Securities or coupons. The form of Trustee's certificate of authentication for all Securities shall be as follows: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities issued under the within-mentioned Indenture. 11 [NAME OF TRUSTEE], as Trustee By___________________________________ Authorized Signatory SECTION 2.03. Securities in Global Form. (a) If Securities of a ------------------------- series are issuable in whole or in part in global form, as specified in the manner contemplated by Section 2.01, then, notwithstanding the provisions of clause (11) of Section 2.01 or Section 2.04, such Global Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby from time to time may be reduced to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any increase or decrease in the amount, of Outstanding Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified in such Global Security or in the Company Order to be delivered to the Trustee pursuant to Section 2.04(b). (b) The provisions of the last sentence of Section 2.05(b) shall apply to any Securities represented by a Global Security if such Securities were never issued and sold by the Company (whether because of failure of settlement or otherwise) and the Company delivers to the Trustee the Global Security together with written instructions with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 2.05(b), notwithstanding the absence of delivery of such Securities as contemplated thereby. (c) Global Securities may be issued in either registered or bearer form and in either temporary or permanent form. SECTION 2.04. Denomination, Authentication and Dating of Securities. ----------------------------------------------------- (a) Securities of each series shall be issuable in such form and denominations as shall be specified in the form of Security for such series approved or established pursuant to Section 2.02. In the absence of any specification, as provided in Section 2.01, with respect to the Securities of any series, the Registered Securities of such series, if any, shall be issuable in denominations of $1,000 and any integral multiple thereof and the Bearer Securities of such series, if any, shall be issuable in the 12 denomination of $5,000. Each Registered Security shall be dated as of the date of its authentication. Each Bearer Security shall be dated as of the date specified in the manner contemplated by Section 2.01. (b) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication. Except as otherwise provided in this Article Two, the Trustee thereupon shall authenticate and deliver such Securities in accordance with a Company Order; provided, however, that in connection with its original issuance a Bearer Security may be delivered only outside the United States and, except in the case of a temporary Global Security, only if the Company or its agent shall have received from the Person entitled to receive the Bearer Security a Bearer Security Tax Certificate and only if the Company and the Trustee have no reason to know that such certificate is false. (c) To the extent authorized in or pursuant to a resolution of the Board of Directors or established in an indenture supplemental hereto, such Company Order may be electronically transmitted and may provide instructions as to registration of holders, principal amounts, rates of interest, Stated Maturities and other matters contemplated by such resolution of the Board of Directors or supplemental indenture to be so instructed in respect thereof. (d) In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and, subject to Section 5.01, shall be fully protected in relying upon: (i) a copy of the resolution or resolutions of the Board of Directors in or pursuant to which the terms and form of the Securities were established, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect as of the date of such certificate; (ii) an executed supplemental indenture, if any; (iii) an Officers' Certificate delivered in accordance with Section 15.05; and (iv) an Opinion of Counsel which shall state: 13 (A) that the form of such Securities and coupons, if any, has been established by a supplemental indenture or by or pursuant to a resolution of the Board of Directors in accordance with Sections 2.01 and 2.02 and in conformity with the provisions of this Indenture; (B) that the terms of such Securities and coupons, if any, have been established in accordance with Section 2.01 and in conformity with the other provisions of this Indenture; (C) that such Securities, when authenticated and delivered by the Trustee and issued (with coupons attached, if applicable) by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization and moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (D) that all conditions precedent, if any, provided for in this Indenture have been complied with; and (E) that the execution and delivery by the Company of such Securities and coupons, if any, do not conflict with any law, administrative regulation or court decree known by legal counsel furnishing the Opinion of Counsel to be applicable to the Company. (e) If the Company shall establish pursuant to Section 2.01 that the Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee, in accordance with this Section 2.04 and the Company Order with respect to such series, shall authenticate and deliver one or more Global Securities in permanent or temporary form that (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by one or more Global Securities, (ii) shall be registered in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary and (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instruction. 14 (f) The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section 2.04 if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors or trustees or vice presidents shall determine that such action would expose the Trustee to personal liability to existing holders. (g) Notwithstanding any contrary provision herein, if all Securities of a series are not to be originally issued at one time, it shall not be necessary for the Company to deliver to the Trustee a Company Order, Officers' Certificate, resolution of the Board of Directors, supplemental indenture or Opinion of Counsel otherwise required pursuant to Section 2.04(b) or Section 2.04(d) at or prior to the time of authentication of each Security of such series if such documents are delivered to the Trustee or its agent at or prior to the authentication upon original issuance of the first Security of such series to be issued. In such event, any subsequent request by the Company to the Trustee to authenticate Securities of such series upon original issuance shall constitute a representation and warranty by the Company that, as of the date of such request, the statements made in the Officers' Certificate or other certificates delivered pursuant to Section 2.04(d) shall be true and correct as if made on such date. A Company Order, Officers' Certificate, resolution of the Board of Directors or supplemental indenture delivered by the Company to the Trustee in the circumstances set forth in this Section 2.04(g) may provide that Securities that are the subject thereof will be authenticated and delivered by the Trustee or its agent on original issue from time to time in the aggregate principal amount established for such series pursuant to such procedures acceptable to the Trustee as may be specified from time to time by Company Order upon the telephonic, electronic or written order of persons designated in such Company Order, supplemental indenture or resolution of the Board of Directors (any such telephonic or electronic instructions to be promptly confirmed in writing by such persons) and that such persons are authorized to determine, consistent with such Company Order, supplemental indenture or resolution of the Board of Directors, such terms and conditions of said Securities as are specified in such Company Order, supplemental indenture or resolution of the Board of Directors. (h) Each Depositary designated pursuant to clause (9) of Section 2.01 for a Global Security in registered form, at the time of its designation and at all times while it serves as Depositary, shall be a clearing 15 agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. SECTION 2.05. Execution of Securities. (a) The Securities and the ----------------------- related coupons shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chairman of the Board, its Chief Executive Officer or its President or, in lieu thereof, of any Senior Vice President or its Treasurer and attested by its Secretary, under its corporate seal (which may be printed, engraved or otherwise reproduced thereon, by facsimile or otherwise). For the purpose of any such signature or attestation, the Company may adopt and use the facsimile signature of any person who has been or is or shall be such officer. (b) No Security or appurtenant coupon shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose unless such security bears thereon a certificate of authentication substantially in the form set forth in Section 2.02, manually executed by an authorized signatory of the Trustee. Such certificate by the Trustee upon any Security executed by the Company shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered under this Indenture. Except as permitted by Section 2.07, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured have been detached and canceled. Notwithstanding the foregoing, if any Security or portions thereof shall have been duly authenticated and delivered hereunder but never issued and sold by the Company (whether because of failure of settlement or otherwise), and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 2.10 together with a written statement stating that such Security or portion thereof has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall not be entitled to the benefits of this Indenture. (c) In case any officer of the Company whose manual or facsimile signature appears on any of the Securities or coupons shall cease to be such officer before the Securities or coupons so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Securities or coupons nevertheless may be authenticated and delivered or disposed of as though the person whose manual or facsimile signature appears on such Securities or coupons had not ceased to be such officer of the Company; and any Security or coupon may bear the manual or facsimile signature on behalf of the Company by such 16 persons as, at the actual date of the execution of such Security or coupon, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer. SECTION 2.06. Exchange and Registration of Transfer of Securities. --------------------------------------------------- (a) Registered Securities of any series may be exchanged for a like aggregate principal amount of Registered Securities of other authorized denominations and of like tenor and terms of the same series. Registered Securities to be exchanged shall be surrendered at the office or agency to be maintained by the Company pursuant to Section 3.02 in each Place of Payment for such series of Registered Securities, and the Company shall execute and cause to be registered, and the Trustee shall authenticate and deliver in exchange therefor, the Registered Security or Securities which the Securityholder making the exchange shall be entitled to receive. (b) For each series of Registered Securities, the Company shall cause to be kept in at least one such office or agency a Security register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for registration of Registered Securities and registration of transfer of Registered Securities as provided in this Article Two. Each such Security Register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times such Security Registers shall be open for inspection by the Trustee. Upon due presentment for registration of transfer of any Registered Security of any series at any such office or agency, the Company shall execute and register and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Securities of the same series and of like tenor and terms for an equal aggregate principal amount. Unless otherwise provided (pursuant to Section 2.01 or otherwise), the Company initially appoints the Trustee, at the principal office of the Trustee, as a Security registrar for each series of Registered Securities. (c) All Registered Securities presented for registration of transfer or for exchange or payment, if so required by the Company or the Trustee, shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the holder or his attorney duly authorized in writing. (d) To the extent specified in the manner provided by Section 2.01, Registered Securities or Bearer 17 Securities of any series may be issued in exchange for Bearer Securities (except as otherwise specified in the manner contemplated by Section 2.01 with respect to a Bearer Security in global form) of the same series, of any authorized denomination and of like tenor and terms and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any office or agency specified in the manner provided by Section 2.01, with all unmatured coupons and all unpaid matured coupons thereto appertaining. If the holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or unpaid matured coupon or coupons, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the amount represented by such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to hold harmless each of them and any Paying Agent. If thereafter the holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such holder shall be entitled to receive the amount of such payment; provided, however, that, except as otherwise provided in Section 3.02, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the holder making the exchange is entitled to receive. (e) If at any time the Depositary for the Global Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities of such series or if at any time the Depositary for the Registered Securities of such series shall no longer be eligible under Section 2.03 because it no longer is a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to the Global Securities of such series. If a successor Depositary for the Global Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 2.01(9) shall no longer be effective with respect to the Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form in an aggregate principal amount equal to 18 the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. (f) The Company at any time and in its sole discretion may determine that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. (g) If specified by the Company pursuant to Section 2.01 with respect to a series of Securities, the Depositary for such series of Securities may surrender a Global Security for such series of Securities in exchange in whole or in part for Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver: (i) to each Person specified by such Depositary a new Security or new Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (ii) to such Depositary a new Global Security of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities delivered to holders thereof. (h) In any exchange provided for in Section 2.06(e), Section 2.06(f) or Section 2.06(g), the Company will execute and the Trustee will authenticate and deliver Securities (i) in definitive registered form in authorized denominations, if the Securities of such series are issuable as Registered Securities, (ii) in definitive bearer form in authorized denominations, with unmatured coupons attached, if the Securities of such series are issuable as Bearer Securities or (iii) as either Registered or Bearer Securities, if the Securities of such series are issuable in either form; provided, however, that (A) no definitive Bearer Security shall be delivered in exchange 19 for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a Bearer Security Tax Certificate, (B) delivery of a Bearer Security shall occur only outside the United States and (C) no definitive Bearer Security will be issued if the Company or the Trustee has reason to know that such certificate is false. (i) Upon the exchange of all of a Global Security for Securities in certificated form, such Global Security shall be canceled by the Trustee. The exchange of any portion of a Global Security for Securities in certificated form shall be subject to Section 2.03(a). Registered Securities issued in exchange for all or part of a Global Security shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Registered Securities to the persons in whose names such Securities are so registered. The Trustee shall deliver Bearer Securities issued in exchange for all or part of a Global Security to the persons, and in such authorized denominations, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee; provided, however, that (A) no definitive Bearer Security shall be delivered in exchange for all or part of a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a Bearer Security Tax Certificate, (B) delivery of a Bearer Security shall occur only outside the United States and (C) no definitive Bearer Security will be issued if the Company or the Trustee has reason to know that any such certificate is false. (j) No service charge shall be made for any exchange or registration of transfer of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such exchange or registration of transfer. (k) The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any particular series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of such series selected for redemption under Section 10.03 and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Registered Security so selected for redemption in whole or in part, except the unredeemed 20 portion of any Registered Security being redeemed in part or (iii) to exchange any Bearer Security so selected for redemption except that such a Bearer Security may be exchanged for a Registered Security of that series, provided that such Registered Security shall be surrendered immediately for redemption with written instruction for payment consistent with the provisions of this Indenture. (l) Notwithstanding anything herein to the contrary: the exchange of Bearer Securities for Registered Securities shall be subject to applicable laws and regulations in effect at the time of exchange; and neither the Company nor the Trustee or any Security registrar shall exchange any Bearer Securities into Registered Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company could suffer adverse consequences under the United States Federal income tax laws and regulations then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Order to the Security registrar. SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Securities. ----------------------------------------------- (a) In case any temporary or definitive Security of any series or any related coupon shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon its request and in the absence of notice to the Company and the Trustee that such Security or coupon has been acquired by a bona fide purchaser, the Trustee shall authenticate and deliver a new Security of the same series or related coupon, of equal aggregate principal amount and of like tenor and terms bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Security or coupon, or in lieu of and in substitution for the Security or coupon so destroyed, lost or stolen. In every case the applicant for a substituted Security or coupon shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to hold each of them harmless, and, in every case of destruction, loss or theft, the applicant also shall furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of such security or coupon and of the ownership of such Security or coupon. (b) The Trustee may authenticate any such substitute Security and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substitute Security or coupon, the Company may require the payment of a sum sufficient to cover 21 any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security or coupon which has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company, instead of issuing a substitute Security or coupon, may pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security or coupon) if the applicant for such payment shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to hold each of them harmless and, in case of destruction, loss or theft, evidence satisfactory to the Company and the Trustee of the destruction, loss or theft of such Security or coupon and of the ownership of such Security or coupon. (c) Every substitute Security or coupon issued pursuant to the provisions of this Section 2.07 by virtue of the fact that any Security or coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security or coupon shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities or coupons of the relevant series duly issued under this Indenture. All Securities or coupons shall be held and owned by the holders upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. (d) Notwithstanding the foregoing, the payment of principal of and any premium and interest on Bearer Securities, except as otherwise provided in Section 3.02, shall be payable only at an office or an agency located outside of the United States, and, with respect to any coupons, interest represented thereby shall be payable only upon presentation and surrender of such coupons. SECTION 2.08. Temporary Securities. (a) Pending the preparation -------------------- of definitive Securities of any series, the Company may execute and the Trustee shall authenticate and deliver temporary Securities (printed or lithographed). Temporary Securities shall be issuable in any authorized denomination, and substantially in the form of the definitive Securities of such series (and of like tenor and terms) in lieu of which they are issued in registered form or, if authorized, in bearer form with one or more coupons 22 or without coupons, but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. In the case of Securities of any series issuable as Bearer Securities, such temporary Securities may be in global form, representing all or any part of the Outstanding Securities of such series. (b) Unless otherwise provided pursuant to Section 2.01: (i) Except in the case of temporary Securities in global form, every such temporary Security shall be authenticated by the Trustee in substantially the same manner, and with the same effect, as the definitive Securities. Without unreasonable delay the Company will execute and deliver to the Trustee definitive Securities of such series and thereupon any or all temporary Securities of such series (accompanied, if applicable, by all unmatured coupons and all unpaid matured coupons appertaining thereto) may be surrendered in exchange therefor at the principal office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series of authorized denominations. Such exchange shall be made at the Company's expense and without any charge to the holder. Until so exchanged, the temporary Securities of any series in all respects shall be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered under this Indenture. Notwithstanding the foregoing, no Bearer Security shall be delivered in exchange for a Registered Security, and a Bearer Security shall be delivered in exchange for a Bearer Security only in compliance with the conditions set forth in Section 2.06. (ii) If Securities of any series are issued in temporary global form, any such temporary Global Security, unless otherwise provided pursuant to Section 2.01, shall be delivered to the Depositary for the benefit of Euro-clear and CEDEL S.A. for credit to the respective accounts of the beneficial owners of such Securities or to such other accounts as they may direct. (iii) Any such temporary Global Security shall be exchangeable, on the terms and in the manner set forth therein, in whole or in part, for an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor 23 and terms as the portions of such temporary Global Security to be exchanged. Any definitive Bearer Security shall be delivered in exchange for a portion of a temporary Global Security only upon receipt by the Trustee from the Person entitled to receive such definitive Bearer Security of a Bearer Security Tax Certificate. (iv) Until exchanged in full as hereinabove provided, the temporary Securities of any series shall be entitled in all respects to the same benefits under this Indenture as definitive Securities of the same series and of like tenor and terms authenticated and delivered hereunder, except that any interest payable with respect to a temporary Global Security will be paid as specified therein. SECTION 2.09. Payment of Interest; Interest Rights. Interest on ------------------------------------ any Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Registered Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency in a Place of Payment for such series) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the holder of such coupon when due in accordance with the provisions of this Indenture. Payment of interest on any Registered Security may be made as provided in Section 3.02. Except as otherwise provided in the terms of any particular series pursuant to Section 2.01. interest will be calculated on the basis of a year consisting of twelve 30-day months. Any interest on any Security that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") forthwith shall cease to be payable to the holder on the relevant Regular Record Date by virtue of having been such holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below: (i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names 24 such Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this clause (i). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor fewer than ten days prior to the date of the proposed payment and not fewer than ten days after the receipt by the Trustee of the notice of the proposed payment. The Trustee promptly shall notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each holder at his address as it appears in the Security Register, not fewer than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been given as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (ii). (ii) The Company may make payment of any Defaulted Interest on any such Security in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of that series may be listed, and upon such notice as may be required by any such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (ii), such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 2.09, each Security of any series delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security of such series 25 shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security. Subject to the limitations set forth in Section 3.02, the holder of any coupon appertaining to a Bearer Security shall be entitled to receive the interest payable on such coupon upon presentation and surrender of such coupon on or after the Interest Payment Date of such coupon at an office or agency maintained for such purpose pursuant to Section 3.02. SECTION 2.10. Cancellation of Securities Paid, etc. All Securities ------------------------------------- and coupons surrendered for the purpose of payment, exchange or registration of transfer, if surrendered to the Company or any Paying Agent or any Security registrar, shall be delivered to the Trustee and promptly canceled by the Trustee or, if surrendered to the Trustee, promptly shall be canceled by it; and no Securities or coupons shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee may destroy canceled Securities or coupons and will deliver a certificate of such destruction to the Company. ARTICLE THREE PARTICULAR COVENANTS OF THE COMPANY SECTION 3.01. Payment of Principal and Interest. The Company duly --------------------------------- and punctually will pay or cause to be paid the principal of and any premium and interest on the Securities of each series at the places, at the respective times and in the manner provided in this Indenture and in the Securities. Any interest due on Bearer Securities on or before Maturity shall be payable only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature. SECTION 3.02. Offices for Notices and Payments, etc. So long as any -------------------------------------- Securities of a series remain Outstanding, the Company will maintain in each Place of Payment for such series of Securities an office or agency where the Securities of that series (but, except as otherwise provided below, unless such Place of Payment is located outside the United States, not Bearer Securities) may be presented for payment, for registration of transfer and for exchange as provided in this Indenture and where notices and demands to or upon the Company in respect of the Securities or of this Indenture may be served. If Securities of a series are issuable as Bearer Securities, 26 the Company will maintain, subject to any laws or regulations applicable thereto, an office or agency in a Place of Payment for such series that is located outside the United States where Securities of such series and the related coupons may be presented for payment. The Company will give to the Trustee prompt written notice of the location of each such office or agency and of any change of location thereof. In case the Company shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the principal office of the Trustee, and the Company hereby initially appoints the Trustee its agent to receive all such presentations and demands, except that Bearer Securities of that series and the related coupons may be presented for payment at the place specified for that purpose pursuant to Section 2.01(5). Unless otherwise provided pursuant to Section 2.01, the Company hereby initially designates as the Place of Payment for each series of Securities (other than Bearer Securities of that series and the related coupons) the Borough of Manhattan, The City of New York, New York and appoints the Trustee, at the principal office of the Trustee, as Paying Agent in such city. Notwithstanding any other provisions to the contrary, the Company at its option may make payment of principal and any premium and interest --------- ------------------------ with respect to any Registered Security by check mailed to the Person entitled thereto, as such address appears on the Security Register, except that a holder of $10,000,000 or more in aggregate principal amount of Securities of such series and of like tenor and terms will be entitled to receive payments by wire transfer of immediately available funds if appropriate wire transfer instructions shall have been received in writing by the Trustee not later than ten Business Days prior to the applicable payment date. No payment of principal of or any premium or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, that payment of principal of and any premium and interest on any Bearer Security may be made at an office or agency of, and designated by, the Company located in the United States if (but only if) payment of the full amount of such principal, premium or interest at all offices outside the United States maintained for the purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions and the Trustee receives an Opinion of Counsel that such payment within the United States is legal. Unless otherwise provided as contemplated by Section 2.01 27 with respect to any series of Securities, at the option of the holder of any Bearer Security or related coupon payment may be made by mailing a check to an address outside the United States or by transfer to an account maintained by the payee with a bank located outside the United States. The Company also from time to time may designate one or more offices or agencies (in or outside of such Place of Payment) where the Securities of one or more series and any appurtenant coupons (subject to the preceding paragraph) may be presented or surrendered for any and all such purposes, and from time to time may rescind such designations. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. SECTION 3.03. Provisions as to Paying Agent. (a) The Company, with ----------------------------- respect to the Securities of each series, prior to each due date of principal of or any premium or interest on such Securities, will deposit with the Paying Agent for such Securities a sum sufficient to pay the principal, premium or interest so becoming due, such sum to be held in trust for the benefit of the persons entitled to such principal, premium or interest. If the Company shall appoint a Paying Agent other than the Trustee with respect to the Securities of any series, the Company will notify the Trustee of its making, or failure to make, any such payment; and the Company also shall cause any such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 3.03, as follows: (1) that it will hold all sums held by it as such agent for the payment of the principal of or any premium or interest on such Securities (whether such sums have been paid to it by the Company or by any other obligor on such Securities) in trust for the benefit of the Persons entitled thereto; (2) that it will give the Trustee notice of any failure by the Company (or by any other obligor on such Securities) to make any payment of the principal of or any premium or interest on such Securities when the same shall be due and payable; and (3) that it forthwith will pay to the Trustee, at any time during the continuance of an Event of Default, upon the written request of the Trustee, all sums so held by it as such agent. (b) If the Company shall act as its own Paying Agent with respect to the Securities of any series, on or 28 before each due date of the principal of or any premium or interest on the Securities of such series, it will set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay such principal, premium or interest so becoming due and will notify the Trustee of any failure to take such action and of any failure by the Company (or by any other obligor under such Securities) to make any payment of the principal of or any premium or interest on such Securities when the same shall become due and payable. (c) Notwithstanding anything in this Section 3.03 to the contrary, the Company, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture or for any other reason, may pay or by Company Order direct any Paying Agent to pay to the Trustee all sums held in trust by the Company or any Paying Agent under this Indenture, such sums to be held by the Trustee upon the trusts contained in this Indenture. (d) Notwithstanding anything in this Section 3.03 to the contrary, the agreement to hold sums in trust as provided in this Section 3.03 is subject to Section 13.03 and Section 13.04. SECTION 3.04. Statement as to Compliance. The Company will deliver -------------------------- to the Trustee, within 120 days after the end of each calendar year commencing with the first calendar year following the issuance of Securities of any series under this Indenture, a written certificate of the principal executive officer, the principal financial officer or the principal accounting officer of the Company, covering the period from the date of issuance of such Securities to the end of the calendar year in which such Securities were issued, in the case of the first such certificate, and covering the preceding calendar year, in the case of each subsequent certificate, stating, as to each signer of such certificate, that: (1) a review of the activities of the Company during the year and of performance under this Indenture has been made under his supervision; (2) to the best of his knowledge, based on such review, the Company has fulfilled all its conditions and covenants under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such condition or covenant, specifying each such default known to him and the nature and status of such default; and 29 (3) such certificate sets forth as of the end of such year a list of all Principal Constituent Banks. SECTION 3.05. Notice of Defaults. The Company will deliver to the ------------------ Trustee within five days after the occurrence thereof written notice of any event which with the giving of notice or the lapse of time or both would be an Event of Default under Section 4.01. SECTION 3.06. Limitation on Certain Dispositions and on Merger and ---------------------------------------------------- Sale of Assets. Except as otherwise provided in Article Nine, the Company will - -------------- not: (a) sell, assign, transfer or otherwise dispose of any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of a Principal Constituent Bank, and will not permit a Principal Constituent Bank to issue any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, such Voting Stock if, in each case, after giving effect to any such transaction, the Principal Constituent Bank would cease to be a Controlled Subsidiary; or (b) permit a Principal Constituent Bank to: (i) merge or consolidate with any other corporation, unless the surviving corporation is, or upon consummation of the merger or consolidation will become, the Company or a Controlled Subsidiary; or (ii) lease, sell or transfer all or substantially all its properties and assets to any corporation or other Person, except to the Company or a Controlled Subsidiary or a Person that, upon such lease, sale or transfer, will become the Company or a Controlled Subsidiary. Notwithstanding the foregoing, any such sale, assignment, transfer or other disposition of securities, any such merger or consolidation or any such lease, sale or transfer of properties and assets shall not be prohibited if required (i) by any law or any rule, regulation or order of any governmental agency or authority or (ii) as a condition imposed by any law or any rule, regulation or order of any governmental agency or authority with respect to the acquisition by the Company or any Controlled Subsidiary, directly or indirectly, through purchase of securities or assets, or a merger, consolidation or otherwise, of any 30 Person, provided that after giving effect to such acquisition (A) such Person will be a Controlled Subsidiary, (B) the Consolidated Net Banking Assets of the Company will be at least equal to the Consolidated Net Banking Assets of the Company prior thereto and (C) BB&T-NC will be a Controlled Subsidiary. SECTION 3.07. Limitation on Creation of Liens. So long as any of ------------------------------- the Securities shall be outstanding, the Company will not create, assume, incur or suffer to be created, assumed or incurred or to exist any pledge, encumbrance or lien, as security for indebtedness for borrowed money, upon any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of a Principal Constituent Bank now or hereafter owned by the Company, directly or indirectly, if, treating such pledge, encumbrance or lien as a transfer of the shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock subject thereto to the secured party, the Principal Constituent Bank would not be a Controlled Subsidiary. SECTION 3.08. Corporate Existence. Except as otherwise provided in ------------------- Article Nine, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Securityholders. ARTICLE FOUR REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT SECTION 4.01. Events of Default. "Event of Default", when used with ----------------- respect to Securities of any series, means each of the following events unless it is either inapplicable to a particular series or is specifically deleted or modified in the supplemental indenture or resolution of the Board of Directors under which such series of Securities is issued or in the form of Security for such series: (a) default in the payment of any installment of interest upon any of the Securities of that series as 31 and when the same shall become due and payable, and continuance of such default for a period of 30 days; (b) default in the payment of the principal of or any premium on any of the Securities of that series as and when the same shall become due and payable at their Stated Maturity, upon redemption, by declaration or otherwise; (c) default in the payment of any sinking fund installment or analogous obligation as and when the same shall become due and payable by the terms of the Securities of that series; (d) a default or event of default as defined or designated in any mortgage, indenture, loan agreement or instrument under which there may be issued or borrowed, or by which there is secured or evidenced, any indebtedness of the Company (other than Securities of such series or indebtedness owed by the Company to any Subsidiary) or any Subsidiary (other than indebtedness of any Subsidiary owing to the Company or to another Subsidiary), whether such indebtedness now exists or shall be created hereafter, shall happen and (i) not less than $1,000,000 of such indebtedness shall be past due under such mortgage, indenture, loan agreement or instrument or such default or event of default shall result in not less than $1,000,000 of such indebtedness becoming or being declared due and payable and (ii) such indebtedness or such declaration, as the case may be, shall not have been discharged or rescinded or annulled within 15 days after the date on which written notice thereof is given to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Securities of that series then Outstanding; (e) a final judgment or judgments or order or orders for the payment of money in excess of $1,000,000 shall be entered against the Company or one or more Principal Constituent Banks and within 90 days after entry thereof such judgment or judgments or order or orders shall not have been discharged or the execution thereof stayed pending appeal or within 90 days after the expiration of any such stay such judgment or judgments or order or orders shall not have been discharged; (f) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Securities of such series or in this Indenture (other than a 32 covenant or agreement a default in the performance of which or the breach of which specifically is provided for elsewhere in this Section 4.01 or which expressly has been included in this Indenture solely for the benefit of one or more series of Securities other than such series), and continuance of such failure for a period of 90 days after the date on which written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee, or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Securities of such series at the time Outstanding; (g) a court or governmental authority having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company or a Principal Constituent Bank in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or a Principal Constituent Bank or for any substantial part of its property, or ordering the winding up or liquidation of its affairs and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (h) the Company or a Principal Constituent Bank shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or similar official) of the Company or a Principal Constituent Bank or for substantially all of its property, or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due or shall take any corporate action in furtherance of any of the foregoing. If an Event of Default with respect to the Securities of any series at the time Outstanding occurs and is continuing, then and in each such case, unless the principal of all the Securities of such series already shall have become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the principal amount of all 33 the Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable. This provision, however, is subject to the condition that, at any time after such a declaration of acceleration, and before any judgment or decree for the payment of the money due shall have been obtained or entered as hereinafter provided, the holders of a majority in aggregate principal amount of the Securities of such series then Outstanding, by written notice to the Company and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, if: (1) the Company shall pay or shall deposit with the Trustee a sum sufficient to pay: (A) all matured installments of interest on all the Securities of that series and the principal of and any premium on any and all Securities of that series that shall have become due otherwise than by acceleration (with interest on overdue installments of interest (to the extent that payment of such interest is enforceable under applicable law) and on such principal and premium at the rate borne by the Securities of that series, to the date of such payment or deposit); and (B) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) any and all defaults with respect to Securities of that series under this Indenture, other than the nonpayment of principal of and any premium and accrued interest on Securities that shall have become due by acceleration, shall have been cured or waived as provided in Section 4.07. No such waiver or rescission and annulment shall extend or shall affect any subsequent default or shall impair any right consequent thereon. In case the Trustee or any Securityholder shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee or any Securityholder, then and in every such case the Company, the Trustee and such Securityholders, subject to any determination in such proceeding, shall be restored 34 respectively to their several positions and rights under this Indenture, and all rights, remedies and powers of the Company, the Trustee and such Securityholders shall continue as though no such proceeding had been taken. SECTION 4.02. Payment of Securities on Default; Suit Therefor. ----------------------------------------------- (a) In case default shall be made in the payment of (i) any installment of interest upon any of the Securities as and when the same shall become due and payable, and such default shall have continued for a period of 30 days, or (ii) the principal of or any premium on any of the Securities as and when the same shall have become due and payable whether at Maturity of the Securities, by declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Securities, the whole amount that then shall have become due and payable on all such Securities for principal, premium or interest, or any combination thereof, as the case may be, with interest upon the overdue principal and premium and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest, at the rate borne by the Securities; and, in addition, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation, expenses, disbursements and advances of the Trustee, its agents, attorneys and counsel. (b) In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or any other obligor on the Securities and coupons and collect in the manner provided by law out of the property of the Company or any other obligor on the Securities and coupons, wherever situated, the money adjudged or decreed to be payable. (c) In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Securities and coupons under Title 11 of the United States Code or any other applicable law, or in case a receiver or trustee shall have been appointed for the property of the Company or such other obligor, or in the case of any other similar judicial proceedings relative to the Company or other obligor on the Securities and coupons, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due 35 and payable as expressed in the Securities or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 4.02, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and any premium and interest owing and unpaid in respect of the Securities, and, in case of any judicial proceedings, (i) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Securityholders allowed in such judicial proceedings relative to the Company or any other obligor on the Securities and coupons, its or their creditors, or its or their property, and (ii) to collect and receive any money or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Securityholders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee any amount due it for reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel and any other amounts due the Trustee under Section 5.06. To the extent that such payment of reasonable compensation, expenses and counsel fees out of the trust estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other property which the holders of the Securities and coupons may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise. (d) Nothing contained in this Section 4.02 shall be deemed to authorize the Trustee to authorize or consent to or adopt on behalf of any Securityholder any plan of reorganization or arrangement affecting the Securities or related coupons or the rights of any Securityholder, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. (e) All rights of action and of asserting claims under this Indenture, or under any of the Securities or related coupons, may be enforced by the Trustee without the possession of any of the Securities or coupons, or the production thereof in any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the 36 Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, shall be for the ratable benefit of the holders of the Securities and related coupons. SECTION 4.03. Application of Money Collected by Trustee. Any money ----------------------------------------- collected by the Trustee with respect to any series of Securities or related coupons pursuant to Section 4.02 shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such money, upon presentation of the several Securities of such series or coupons, or both, as the case may be, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: FIRST: To the payment of all amounts then due the Trustee under Section 5.06; SECOND: In case the principal of the Outstanding Securities of that series shall not have become due and be unpaid, to the payment of interest on the Securities of that series in the order of the Maturity of the installments of such interest, with interest (to the extent enforceable under applicable law) upon the overdue installments of interest at the rate borne by the Securities of that series, such payments to be made ratably to the persons entitled thereto; and THIRD: In case the principal of the Outstanding Securities of that series shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Securities of that series for principal and any premium and interest, with interest on the overdue principal and any premium and (to the extent enforceable under applicable law) upon overdue installments of interest at the rate borne by the Securities of that series; and in case such money shall be insufficient to pay in full the whole amounts so due and unpaid upon the Securities of that series, then to the payment of such principal and any premium and interest without preference or priority of principal over interest, or of interest over principal, or of any premium over principal or interest, or of principal or interest over any premium or of any installment of interest over any other installment of interest, or of any Security of that series over any other Security of that series, or of any coupon related to a Security of a series over any other coupon related to a Security of the same series, ratably to the 37 aggregate of such principal and any premium and accrued and unpaid interest. SECTION 4.04. Proceedings by Securityholders. No holder of any ------------------------------ Security of any series or any related coupon shall have any right to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy under this Indenture, unless such holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as provided in Section 4.01, and unless also (i) the holders of not less than 25% in aggregate principal amount of the Securities of that series then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee under this Indenture and shall have offered to the Trustee such reasonable indemnity as the Trustee may require against the costs, expenses and liabilities to be incurred in compliance with such request, (ii) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding and (iii) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended, and being expressly covenanted by each Person who acquires and holds a Security or related coupon with every other such Person, that no one or more holders of Securities shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other holder of such Securities or coupons, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner provided in this Section 4.04 and for the equal, ratable and common benefit of all holders of Securities and coupons. Notwithstanding any other provision of this Indenture, however, the right of any holder of any Security to receive payment of the principal of and any premium and interest on such Security on or after the respective Stated Maturities, or to institute suit for the enforcement of any such payment on or after such respective dates against the Company, shall not be impaired or affected without the consent of such holder. SECTION 4.05. Proceedings by Trustee. In case of an Event of ---------------------- Default under this Indenture, the Trustee in its discretion may proceed to protect and enforce its rights and the rights of the Securityholders by such appropriate 38 judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 4.06. Remedies Cumulative and Continuing; Delay or Omission ----------------------------------------------------- Not Waiver. All rights, powers and remedies conferred upon or reserved to the - ---------- Trustee or to the Securityholders, to the extent permitted by law, shall be deemed cumulative and not exclusive of any thereof or of any other rights, powers and remedies available to the Trustee or the holders of the Securities and related coupons, now or hereafter existing, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture; and no delay or omission of the Trustee or of any holder of any of the Securities or related coupons to exercise any such right, power or remedy shall impair any such right, power or remedy, or shall be construed to be a waiver of any default or an acquiescence in such default; and, subject to the provisions of Section 4.04, every power and remedy conferred upon or reserved to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. The assertion of any right, power or remedy shall not prevent the concurrent assertion of any other right, power or remedy. SECTION 4.07. Direction of Proceedings and Waiver of Defaults by -------------------------------------------------- Majority of Securityholders. (a) The holders of a majority in aggregate - --------------------------- principal amount of the Securities of all series affected (voting as one class) at the time Outstanding determined in accordance with Section 6.04 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, however, that (i) such direction may not be in conflict with law or this Indenture or expose the Trustee to personal liability or be unduly prejudicial to the holders of the Securities and related coupons not joining in the direction, and (ii) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with this Indenture and such direction. (b) Prior to any declaration that the principal of the Outstanding Securities of any series is due and payable, the holders of a majority in aggregate principal 39 amount of the Securities of that series at the time Outstanding on behalf of the holders of all of the Securities of that series may waive any past default or Event of Default under this Indenture and its consequences except a default under a covenant in this Indenture that, pursuant to Section 8.02, cannot be modified without the consent of each holder of a Security of the series affected thereby. Upon any such waiver, the Company, the Trustee and the holders of the Securities of that series and the related coupons shall be restored to their former positions and rights under this Indenture, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default under this Indenture shall have been waived as permitted by this Section 4.07, such default or Event of Default, for all purposes of the Securities, the related coupons and this Indenture, shall be deemed to have been cured and to be not continuing. SECTION 4.08. Notice of Defaults. The Trustee, within 90 days ------------------ after the occurrence of a default with respect to Securities of any series, shall mail to all Securityholders of that series, at their addresses shown on the Security Register, notice of all such defaults known to the Trustee, unless such defaults shall have been cured or waived before the giving of such notice (the term "default" for the purpose of this Section 4.08 being hereby defined to mean any event which constitutes or after notice or lapse of time or both would constitute an Event of Default); and provided that, except in the case of default in the payment of the principal of or any premium or interest on any of the Securities of that series or in the making of any sinking fund payment or analogous obligation with respect to Securities of that series, 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 determines that the withholding of such notice is in the interest of the Securityholders of that series. SECTION 4.09. Undertaking to Pay Costs. All parties to this ------------------------ Indenture agree, and each holder of any Security or coupon by his acceptance thereof shall be deemed to have agreed, that any court in its discretion may 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 in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party 40 litigant; provided, however, that the provisions of this Section 4.09 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of that series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or any premium or interest on any Security on or after the respective Stated Maturities (or, in the case of redemption or repayment, on or after the redemption date or repayment date). ARTICLE FIVE CONCERNING THE TRUSTEE SECTION 5.01. Duties and Responsibilities of Trustee. In case an -------------------------------------- Event of Default has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, its own willful misconduct or any action or failure to act taken or omitted by it in bad faith, except that: (a) except during the continuance of an Event of Default: (1) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on the part of the Trustee, the Trustee conclusively may rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions of this Indenture specifically are required to be 41 furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of not less than a majority in principal amount of the Securities of any series at the time Outstanding (determined as provided in Section 6.04) relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 5.01. The provisions of this Section 5.01 are in furtherance of and subject to Sections 315 and 316 of the Trust Indenture Act. SECTION 5.02. Reliance on Documents, Opinions, etc. Subject to the ------------------------------------- applicable provisions of the Trust Indenture Act and in furtherance thereof and subject to the provisions of Section 5.01: (a) the Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; 42 (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company; (c) the Trustee may consult with counsel and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it under this Indenture in good faith and in accordance with such Opinion of Counsel; (d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, coupon or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books and records of the Company to the extent reasonably necessary to verify such facts or matters; and (g) the Trustee may execute any of the trusts or powers under this Indenture or perform any duties under this Indenture either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care under this Indenture. 43 SECTION 5.03. No Responsibility for Recitals, etc. The recitals ------------------------------------ contained in this Indenture and in the Securities (except in the Trustee's certificate of authentication) and in any coupons shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or the coupons. The Trustee shall not be accountable for the use or application by the Company of any Securities or the proceeds of any Securities authenticated and delivered by the Trustee. SECTION 5.04. Trustee, Paying Agents or Registrar May Own Securities. ------------------------------------------------------- Subject to the applicable provisions of the Trust Indenture Act, the Trustee or any Paying Agent or Security registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same rights it would have if it were not Trustee, Paying Agent or Security registrar. SECTION 5.05. Money to Be Held in Trust. Subject to the provisions ------------------------- of Section 13.03 and Section 13.04, all money received by the Trustee, until used or applied as herein provided, shall be held in trust for the purposes for which it was received. Money held by the Trustee need not be segregated from other funds except as provided by law. The Trustee shall be under no liability for interest on any money received by it under this Indenture, except as the Company and the Trustee otherwise may agree. SECTION 5.06. Compensation and Expenses of Trustee. The Company will ------------------------------------ pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it under this Indenture (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct. The Company also covenants to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence, bad faith or willful misconduct on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the reasonable costs and expenses of defending itself against any claim of liability in connection with the 44 exercise or performance of any of its powers under this Indenture. The obligations of the Company under this Section 5.06 shall constitute additional indebtedness under this Indenture. SECTION 5.07. Officers' Certificate as Evidence. Subject to the --------------------------------- provisions of Section 5.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action under this Indenture, such matter (unless other evidence in respect thereof be herein specifically prescribed), in the absence of negligence, bad faith or willful misconduct on the part of the Trustee, may be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such Officers' Certificate, in the absence of negligence, bad faith or willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith of such Officers' Certificate. SECTION 5.08. Eligibility of Trustee. The Trustee under this ---------------------- Indenture shall at all times be a corporation organized and doing business under the laws of the United States or any State thereof 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, State or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 5.08 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. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 5.08, the Trustee shall resign immediately in the manner and with the effect specified in Section 5.09. Neither the Company nor any person directly or indirectly controlling, controlled by, or under common control with the Company shall serve as Trustee under this Indenture. SECTION 5.09. Resignation or Removal of Trustee. (a) The Trustee --------------------------------- may resign at any time by giving written notice of such resignation to the Company, by mailing notice of such resignation to the holders of Registered Securities at their addresses as they shall appear on the Security Register and, if any Bearer Securities are Outstanding, by 45 publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week. (b) In case at any time any of the following shall occur: (1) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, or (2) the Trustee shall cease to be eligible in accordance with the provisions of Section 5.08 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or (3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed or a public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee by written instrument, executed by Company Order authorized by the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor Trustee (with written notice of such removal mailed to the holders of Registered Securities at their address as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week), or, subject to the provisions of Section 4.09, any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, on behalf of himself and all others similarly situated, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (c) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company promptly shall appoint a successor Trustee by a Company Order authorized by the Board of Directors, one copy of which instrument shall be delivered to the retiring Trustee and 46 one copy to the successor Trustee. If, within one year after such resignation, removal or incapability or the occurrence of such vacancy, a successor Trustee shall be appointed by the holders of a majority in principal amount of the Securities (voting as a single class) at the time Outstanding by instrument or instruments delivered to the Company and the retiring Trustee, the successor Trustee so appointed, forthwith upon its acceptance of such appointment, shall become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Securityholders and accepted appointment in the manner provided in Section 5.10 within 60 days after notice of the resignation or removal of the Trustee is mailed to the Securityholders, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, or any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, subject to the provisions of Section 4.09, on behalf of himself and all others similarly situated, may petition any court of competent jurisdiction for the appointment of a successor Trustee. (d) The holders of a majority in aggregate principal amount of the Securities (voting as a single class) at the time Outstanding at any time, upon notice to the Trustee, may remove the Trustee. (e) Any removal of the Trustee and appointment of a successor Trustee pursuant to any of the provisions of this Section 5.09 shall become effective upon acceptance of appointment by the successor Trustee as provided in Section 5.10. Any resignation of the Trustee shall become effective only upon the appointment of a successor Trustee and upon the acceptance of appointment by the successor Trustee as provided in Section 5.10. SECTION 5.10. Acceptance by Successor Trustee. Any successor Trustee ------------------------------- appointed as provided in Section 5.09 shall execute, acknowledge and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment under this Indenture, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor under this Indenture, with like effect as if originally named as Trustee in this Indenture; but, nevertheless, on the written request of the Company or of the successor Trustee, the Trustee ceasing to act, upon payment of any amounts then due it pursuant to the provisions of Section 5.06, shall execute and deliver an 47 instrument transferring to such successor Trustee all the rights and powers of the Trustee so ceasing to act and shall transfer, assign and deliver to such successor all property and money held by such predecessor Trustee under this Indenture. Upon request of any such successor Trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers. Any Trustee ceasing to act, nevertheless shall retain a lien upon all property or funds held or collected by such Trustee to secure any amounts then due it pursuant to the provisions of Section 5.06. No successor Trustee shall accept appointment as provided in this Section 5.10 unless at the time of such acceptance such successor Trustee shall be qualified under the provisions of Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 5.08. Upon acceptance of appointment by a successor Trustee as provided in this Section 5.10, the Company shall mail notice of the succession of such Trustee under this Indenture to the holders of Registered Securities at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed and, if necessary, published at the expense of the Company. SECTION 5.11. Succession by Merger, etc. Any corporation into which -------------------------- the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor Trustee under this Indenture without the execution or filing of any paper or any further act on the part of any of the parties to this Indenture provided such corporation shall be qualified under the provisions of Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 5.08. In case at the time such successor Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor Trustee may adopt the certificate of 48 authentication of any predecessor Trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor Trustee may authenticate such Securities either in the name of any predecessor Trustee under this Indenture or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. ARTICLE SIX CONCERNING THE SECURITYHOLDERS SECTION 6.01. Action by Securityholders. Whenever in this Indenture ------------------------- it is provided that the holders of a specified percentage in aggregate principal amount of the Securities of any or all series may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the holders of such specified percentage have joined in such action may be evidenced (i) by any instrument or any number of instruments of similar tenor executed by Securityholders in person or by agent or proxy appointed in writing, (ii) by the record of the holders of Securities voting in favor of such action at any meeting of Securityholders duly called and held in accordance with the provisions of this Article Six or (iii) by a combination of such instrument or instruments and any such record of such a meeting of Securityholders. The Company may set a record date for purposes of determining the identity of holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall be the later of ten days prior to the first solicitation of such consent or the date of the most recent list of holders furnished to the Trustee pursuant to the provisions of Section 312(a) of the Trust Indenture Act prior to such solicitation. If a record date is fixed, those persons who were holders of Securities at such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consents or to revoke any vote or consent previously given, whether or not such persons continue to be holders after such record date. No such vote or consent shall be valid or effective if such 49 vote occurs or such consent is obtained more than 120 days after such record date. SECTION 6.02. Proof of Execution by Securityholders. (a) Subject to ------------------------------------- the provisions of Sections 5.01, 5.02 and 7.05, proof of the execution of any instrument by a Securityholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. (b) The ownership of Registered Securities of any series shall be proved by the Security Register or by a certificate of the Security registrar of such series. (c) The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities in the amount and with the serial numbers therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (i) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, (ii) such Bearer Security is produced to the Trustee by some other Person, (iii) such Bearer Security is surrendered in exchange for a Registered Security or (iv) such Bearer Security is no longer Outstanding. The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 6.02(c). (d) The record of any Securityholders' meeting shall be proved in the manner provided in Section 7.07. SECTION 6.03. Who Are Deemed Absolute Owners. Prior to due ------------------------------ presentation of a Registered Security for registration of transfer, the Company, the Trustee, any Paying Agent and any Security registrar may treat the Person 50 in whose name such Registered Security is registered as owner of such Registered Security for the purpose of receiving payment of principal of and any premium and (subject to Section 2.09) interest on such Registered Security and for all other purposes whatsoever, whether or not such Registered Security is overdue and notwithstanding any notation of ownership or other writing on such Registered Security made by anyone other than the Company or any Security registrar, and neither the Company, the Trustee, any Paying Agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such holder as shown in the Security Register, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for money payable upon any such Registered Security. The Company, the Trustee, any Paying Agent and any Security registrar may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Bearer Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Bearer Security or coupon is overdue, and neither the Company, the Trustee, any Paying Agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such bearer shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for money payable upon any such Bearer Security. None of the Company, the Trustee, any Paying Agent or the Security registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. SECTION 6.04. Company-Owned Securities Disregarded. In determining ------------------------------------ whether the holders of the requisite aggregate principal amount of Securities have concurred in any direction, consent, waiver or other action under this Indenture, Securities that are owned by the Company or any other obligor on the Securities or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided, however, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or other 51 action, only Securities that the Trustee knows are so owned shall be so disregarded. SECTION 6.05. Revocation of Consents; Future Holders Bound. At any -------------------------------------------- time prior to (but not after) the evidencing to the Trustee, as provided in Section 6.01, of the taking of any action by the holders of the percentage in aggregate principal amount of the Securities of any or all series specified in this Indenture in connection with such action, any holder of a Security the serial number of which is shown by the evidence to be included in the Securities the holders of which have consented to such action, by filing written notice with the Trustee at the principal office of the Trustee and upon proof of holding as provided in Section 6.02, may revoke such action so far as concerns such Security. Except as provided in this Section 6.05, any such action taken by the holder of any Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, irrespective of whether or not any notation in regard thereto is made upon such Security or any Security issued in exchange or substitution for such Security. ARTICLE SEVEN SECURITYHOLDERS' MEETINGS SECTION 7.01. Purposes of Meetings. A meeting of Securityholders of -------------------- any or all series may be called at any time and from time to time pursuant to the provisions of this Article Seven for any of the following purposes: (1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default under this Indenture and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article Four; (2) to remove the Trustee and nominate a successor Trustee pursuant to the provisions of Article Five; (3) to consent to the execution of an indenture or indentures supplemental to this Indenture pursuant to the provisions of Section 8.02; or (4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of the Securities 52 under any other provision of this Indenture or under applicable law. SECTION 7.02. Call of Meetings by Trustee. The Trustee at any time --------------------------- may call a meeting of Securityholders of any or all series to take any action specified in Section 7.01, to be held at such time and at such place in The City of New York for Registered Securities and the City of London, England for Bearer Securities, as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders, if any, of Registered Securities of each series affected at their addresses as they shall appear on the Security Register, and shall be provided to holders, if any, of Bearer Securities of each series affected by publication thereof in a newspaper of general circulation, in each Place of Payment for each such series, customarily published at least once a day for at least five days in each calendar week. Such notice to holders of Registered Securities shall be mailed not fewer than 20 nor more than 90 days prior to the date fixed for the meeting. Such notice to holders of Bearer Securities shall be made by the required publication on at least two dates, the first such publication to be not more than 90 days and the second such publication to be not fewer than 20 days prior to the date fixed for the meeting. Any meeting of Securityholders shall be valid without notice if the holders of all Securities then Outstanding of each series affected are present in person or by proxy or if notice is waived before or after the meeting by the holders of all Outstanding Securities of each series affected, and if the Company and the Trustee are either present by duly authorized representatives or, before or after the meeting, have waived notice. SECTION 7.03. Call of Meetings by Company or Securityholders. In ---------------------------------------------- case at any time the Company, pursuant to a resolution of its Board of Directors, or the holders of at least 10% in aggregate principal amount of the Securities then Outstanding of any or all series, as the case may be, that may be affected by the action proposed to be taken, shall have requested the Trustee to call a meeting of Securityholders of any or all series, as the case may be, that may be so affected, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed or published (as appropriate under Section 7.02) the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place in the city designated in Section 7.02, as the 53 case may be, for such meeting and may call such meeting to take any action authorized in Section 7.01, by mailing or publishing notice of such meeting as provided in Section 7.02. SECTION 7.04. Qualifications for Voting. To be entitled to vote at ------------------------- any meeting of Securityholders of any series a person shall (i) be a holder of one or more Securities of such series as set forth in the Security Register for such series or (ii) be a person appointed by an instrument in writing as proxy by a holder of one or more Securities of such series, subject to the provisions of Section 6.02. The only persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 7.05. Regulations. (a) Notwithstanding any other provisions ----------- of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. (b) The Trustee, by an instrument in writing, shall appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 7.03, in which case the Company or the Securityholders calling the meeting, as the case may be, in like manner shall appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the holders of a majority in principal amount of the Securities represented at the meeting and entitled to vote. (c) Subject to the provisions of Section 6.04, at any meeting each Securityholder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities. (d) No vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or instruments in writing duly designating him as the person to vote on behalf of other Securityholders. Any meeting of 54 Securityholders duly called pursuant to the provisions of Section 7.02 or Section 7.03 may be adjourned from time to time by a majority of those present and the meeting may be held as so adjourned without further notice. SECTION 7.06. Quorum. The Persons entitled to vote a majority in ------ principal amount of the Outstanding Securities affected by the action proposed to be taken shall constitute a quorum for a meeting of such Securityholders. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting, if convened at the request of holders of Securities, shall be dissolved. In the absence of a quorum in any other case the meeting may be adjourned for a period of not fewer than ten days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not fewer than ten days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 7.02, except that such notice need be given only once not fewer than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities affected by the action proposed to be taken which shall constitute a quorum. SECTION 7.07. Voting. The vote upon any resolution submitted to any ------ meeting of Securityholders shall be by written ballots on which shall be subscribed the signatures of the holders of Securities or of their representatives by proxy and the principal amount of the Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of votes on any vote by ballot taken at such meeting and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that such notice was mailed or published as provided in Section 7.02 or Section 7.03. The record shall show the principal amount of the Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of 55 the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee. Any record so signed and verified shall be conclusive evidence of the matters stated in such record. SECTION 7.08. No Delay of Rights by Meeting. Nothing in this ----------------------------- Article Seven shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Securityholders or any rights expressly or impliedly conferred under this Article Seven to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Securityholders under any of the provisions of this Indenture or of the Securities. ARTICLE EIGHT SUPPLEMENTAL INDENTURES SECTION 8.01. Supplemental Indentures Without Consent of ------------------------------------------ Securityholders. The Company, when authorized by the resolutions of the Board - --------------- of Directors, and the Trustee from time to time and at any time may enter into an indenture or indentures supplemental to this Indenture for one or more of the following purposes: (a) to evidence the succession of another corporation to the Company, or successive successions, and the assumptions by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article Nine; (b) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the holders of any series of the Securities or coupons as the Board of Directors and the Trustee shall consider to be for the protection of the holders of such Securities or coupons, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions or conditions a default or an Event of Default permitting the enforcement of all or any of the several remedies set forth in this Indenture; provided, however, that in respect of any such additional covenant, restriction or condition such supplemental indenture may provide for notice or a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such 56 default or may limit the remedies available to the Trustee upon such default; (c) to cure any ambiguity or to correct or supplement any provision contained in this Indenture or in any supplemental indenture that may be defective or inconsistent with any other provision contained in this Indenture or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture that shall not adversely affect the interests of the holders of Outstanding Securities of any series or any related coupons; (d) to establish the form or terms of Securities of any series as permitted by Section 2.01; (e) to add to, change or eliminate any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal or any premium on Registered Securities or of principal or any premium or interest on Bearer Securities, to permit Bearer Securities to be issued in exchange for Registered Securities or to permit or facilitate the issuance of Securities in uncertificated form, provided any such action shall not adversely affect the interests of the holders of Outstanding Securities of any series or any related coupons; (f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture; provided, however, that such action shall not adversely affect the interests of the holders of Outstanding Securities of any series; (g) to provide for the documentation necessary for the issuance of Securities outside the United States of America; (h) to provide for the documentation necessary for the issuance of Securities at an issue price lower than the principal amount thereof, including to provide that upon the redemption or acceleration of the Maturity thereof an amount less than the principal amount thereof shall become due and payable and that such amount shall be used to determine the relative voting rights of the holders thereof; or (i) to conform the Indenture to the provisions of the Trust Indenture Act as then in effect. 57 The Trustee hereby is authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be contained in such supplemental indenture and to accept the conveyance, transfer and assignment of any property under such supplemental indenture, but the Trustee shall not be obligated to, but in its discretion may, enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 8.01 may be executed by the Company and the Trustee without the consent of the holders of any of the Securities at the time Outstanding, notwithstanding any provisions of Section 8.02. SECTION 8.02. Supplemental Indentures with Consent of Securityholders ------------------------------------------------------- of a Series. With the consent (evidenced as provided in Section 6.01) of the - ----------- holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of each series affected by such supplemental indenture or indentures, the Company, when authorized by the resolutions of the Board of Directors, and the Trustee from time to time and at any time may enter into an indenture or indentures supplemental to this Indenture 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 Securities of each such series; provided, however, that without the consent of the holder of each Outstanding Security affected thereby no such supplemental indenture shall: (a) change the Stated Maturity of the principal of or any premium or any installment of interest on, any Security, or reduce the principal amount of any Security or any premium or interest on any Security, or reduce the amount of principal payable upon acceleration of the Maturity of any Original Issue Discount Security, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or interest on any Security is payable, or impair the right to institute suit for the enforcement of any such payment on or after its Stated Maturity; (b) reduce the percentage in principal amount of Securities of any Series the consent of whose holders is required for any such supplemental indenture or the consent of whose holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults under this Indenture and their consequences provided for in this Indenture; or (c) modify the provisions of Section 4.01 providing for the rescinding and annulment of a declaration accelerating the Maturity of the Securities of any series, or any of the provisions of 58 this Section 8.02 or Section 4.07(b), except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived. Upon the request of the Company, accompanied by a copy of the resolutions of the Board of Directors certified by its Secretary or Assistant Secretary authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders of such series as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee in its discretion may, but shall not be obliged to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section 8.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. SECTION 8.03. Compliance with Trust Indenture Act; Effect of ---------------------------------------------- Supplemental Indentures. Any supplemental indenture executed pursuant to the - ----------------------- provisions of this Article Eight shall comply with the Trust Indenture Act as then in effect. Upon the execution of any supplemental indenture pursuant to the provisions of this Article Eight, this Indenture shall be and be deemed to be modified and amended in accordance with such supplemental indenture and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of the series of Securities affected thereafter shall be determined, exercised and enforced under this Indenture subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 8.04. Notation on Securities. Securities authenticated and ---------------------- delivered after the execution of any supplemental indenture pursuant to the provisions of this Article Eight may bear a notation in form acceptable to the Trustee as to any matter provided for in such supplemental indenture. If the Company so shall determine, new Securities of any series and any related coupons so modified as to conform, in the opinion of the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Company, authenticated by the Trustee and delivered in 59 exchange, as provided in Section 2.06, for the Outstanding Securities of such series and any related coupons, upon surrender of such Outstanding Securities of such series and any related coupons. SECTION 8.05. Evidence of Compliance of Supplemental Indenture to Be ------------------------------------------------------ Furnished Trustee. The Trustee, subject to the provisions of Section 5.01 and - ----------------- Section 5.02, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article Eight complies with the requirements of this Article Eight. ARTICLE NINE CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE SECTION 9.01. Company May Consolidate, etc., on Certain Terms. The ----------------------------------------------- Company shall not consolidate with or merge into another corporation or convey, transfer or lease its properties 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 or which leases the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and expressly shall assume, by a supplemental indenture executed and delivered to the Trustee in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on the Securities, according to their terms, and the performance of every covenant of this Indenture and in such series on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and supplemental indenture comply with this Article Nine and that all 60 conditions precedent provided for in this Indenture relating to such transaction have been complied with. SECTION 9.02. Successor Corporation Substituted. Upon any --------------------------------- consolidation by the Company with or merger by the Company into any other corporation or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 9.01, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company in this Indenture, and thereafter, except in the case of a lease, the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities of each series and any related coupons. Such successor corporation may cause to be signed, and may issue either in its own name or in the name of the Company prior to such succession, any of or all the Securities of each series issuable under this Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor corporation instead of upon the Company Order, and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee on its behalf for that purpose. All the Securities so issued shall have in all respects the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Securities had been issued at the date of the execution of this Indenture. ARTICLE TEN REDEMPTION OF SECURITIES SECTION 10.01. Applicability of Article. Securities of any series ------------------------ that are redeemable before their Stated Maturity shall be redeemable only in accordance with their terms and (except as otherwise specified as contemplated by Section 2.01 for Securities of any series) in accordance with this Article Ten. 61 SECTION 10.02. Election to Redeem; Notice to Trustee. The election ------------------------------------- of the Company to redeem any Securities shall be evidenced by a Company Order. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), shall notify the Trustee of such Redemption Date, of the tenor and terms of the Securities of such series to be redeemed and of the principal amount of such Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. SECTION 10.03. Selection by Trustee of Securities to Be Redeemed. ------------------------------------------------- If less than all the Securities of any series of like tenor and terms specified by the Company are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and of such tenor and terms not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denominations for such Securities or any integral multiple thereof) of the principal amount of such Registered Securities or such Bearer Securities or a denomination larger than the minimum authorized denomination for such Registered Securities or such Bearer Securities. The Trustee promptly shall notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 10.04. Notice of Redemption. Notice of redemption shall be -------------------- given in the manner provided in Section 7.02 not fewer than 30 or more than 60 days prior to the Redemption Date. All notices of redemption shall state: (1) the Redemption Date; 62 (2) the Redemption Price; (3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed; (4) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after such date; (5) the Place or Places of Payment where such Securities, together in the case of Bearer Securities with all coupons, if any, appertaining thereto maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price; (6) that Bearer Securities may be surrendered for payment only at such place or places that are outside the United States, except as provided in Section 3.02; and (7) that the redemption is for a sinking fund, if such is the case. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 10.05. Deposit of Redemption Price. On or prior to any --------------------------- Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 3.04(b)) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be the same date as the Stated Maturity of an installment of interest thereon) accrued interest on, all the Securities that are to be redeemed on that date; provided, however, that deposits with respect to Bearer Securities shall be made with a Paying Agent or Paying Agents located outside the United States except as otherwise provided in Section 3.02, unless otherwise specified as contemplated by Section 2.01. SECTION 10.06. Securities Payable on Redemption Date. Notice of ------------------------------------- redemption having been given as aforesaid, the Securities so to be redeemed shall become due and payable, on the Redemption Date, at the Redemption Price 64 therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that: (i) installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of coupons for such interest (at an office or agency located outside the United States except as otherwise provided in Section 3.02); and (ii) installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant record date for the payment of such interest according to the terms of such Securities. If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Bearer Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to hold each of them and any Paying Agent harmless. If thereafter the holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such holder shall be entitled to receive the amount so deducted on account of such coupon without interest thereon; provided, however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside of the United States except as otherwise provided in Section 3.02. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium, until paid, shall bear interest from the Redemption Date at the rate prescribed therefor in the Security or related coupon. SECTION 10.07. Registered Securities Redeemed in Part. Any -------------------------------------- Registered Security that is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due 64 endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the holder of such Security without service charge, a new Registered Security or new Registered Securities of the same series and of like tenor and terms, of any authorized denomination as requested by such holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. ARTICLE ELEVEN SINKING FUNDS SECTION 11.01. Applicability of Article. The provisions of this ------------------------ Article shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.01 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 11.02. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of the Securities of such series. SECTION 11.02. Satisfaction of Sinking Fund Payments with Securities. ----------------------------------------------------- The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series that have been repurchased at the option of a holder or redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such 65 series required to be made pursuant to the terms of such Securities as provided for by the terms of such series, provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund, and the amount of such sinking fund payment shall be reduced accordingly. SECTION 11.03. Redemption of Securities for Sinking Fund. Not fewer ----------------------------------------- than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment of that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 11.02 and also will deliver to the Trustee any Securities to be so delivered. Not fewer than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 10.03 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 10.04. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 10.06 and Section 10.07. ARTICLE TWELVE REPAYMENT AT THE OPTION OF HOLDERS SECTION 12.01. Terms Set Forth in the Securities. Securities of --------------------------------- any series which in accordance with their terms are repayable at the option of the holders thereof before their Stated Maturity shall be repaid in accordance with the terms set forth in such Securities. ARTICLE THIRTEEN SATISFACTION AND DISCHARGE OF INDENTURE SECTION 13.01. Discharge of Indenture. When (a) the Company shall ---------------------- deliver to the Trustee for cancellation all Securities of any series and any related coupons theretofore authenticated (other than any Securities of such series and any related coupons that shall have been mutilated, destroyed, lost or stolen and in lieu of or in 66 substitution for which other Securities or coupons shall have been authenticated and delivered) and not theretofore canceled, or (b) all the Securities of any series and any related coupons not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee, in trust, funds sufficient to pay upon Stated Maturity, redemption or repayment at the option of a holder all the Securities of such series and related coupons (other than any Securities of such series and related coupons that shall have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06) not theretofore canceled or delivered to the Trustee for cancellation, including principal and any premium and interest due or to become due prior to such Stated Maturity, Redemption Date or date of repayment, as the case may be, but excluding, however, the amount of any money for the payment of principal of or any premium or interest on the Securities (1) theretofore deposited with the Trustee and repaid by the Trustee to the Company in accordance with the provisions of Section 13.04, or (2) paid to any State or the District of Columbia pursuant to its unclaimed property or similar laws, and if in either case the Company also shall pay or cause to be paid all other sums payable under this Indenture by the Company then this Indenture shall cease to be of further effect with respect to Securities of such series and any related coupons, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel as required by Section 15.05 and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to Securities of such series and any related coupons. The obligations of the Company to the Trustee under Section 5.06 shall survive the termination of this Indenture. The Trustee shall notify the Securityholders of such series, at the expense of the Company, of the immediate availability of the amount referred to in clause (b) of this Section 13.01 by mailing a notice, first class postage prepaid, to the holders of Registered Securities of such series at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are 67 Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week. SECTION 13.02. Deposited Money to Be Held in Trust by Trustee. ---------------------------------------------- Subject to Section 13.04, all money deposited with the Trustee pursuant to Section 13.01 shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company if acting as its own Paying Agent, other than as to Bearer Securities, except as provided in Section 3.02), to the holders of the particular Securities and related coupons for the payment of which such money has been deposited with the Trustee, of all sums due and to become due thereon for principal and any premium and interest. SECTION 13.03. Paying Agent to Repay Money Held. Upon the -------------------------------- satisfaction and discharge of this Indenture all money then held by any Paying Agent of the Securities (other than the Trustee), upon demand of the Company, shall be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such money. SECTION 13.04. Return of Unclaimed Money. Any money deposited with ------------------------- or paid to the Trustee or any Paying Agent for payment of the principal of or any premium or interest on Securities of any series, or then held by the Company in trust for the payment of the principal of or any premium or interest on Securities of any series, and not applied but remaining unclaimed by the holders of Securities of that series for two years after the date upon which the principal or any premium or interest on such Securities, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee on demand or, if then held by the Company, shall be discharged from such trust, and all liability of the Trustee thereupon shall cease; and the holder of any of such Securities thereafter, as an unsecured general creditor, shall look only to the Company for payment of such Securities, 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, thereupon shall cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, at the expense of the Company, in the case of Registered Securities or Bearer Securities, may cause to be published once, in a newspaper of general circulation in each Place of Payment for such series customarily published on each Business Day (whether or not published on Saturdays, Sundays or holidays) or, in the case of Registered Securities, to be mailed to each such holder, or in the case 68 of Registered Securities to be mailed and published, notice that such money remains unclaimed and that, after a date specified in such notice, which shall not be fewer than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 13.05. Discharge of Indenture as to Certain Series of ---------------------------------------------- Securities. (a) If this Section 13.05 is specified in the manner contemplated - ---------- by Section 2.01 to be applicable to the Securities of any series, the Company shall be deemed to have paid and discharged the entire indebtedness on all the Securities of any such series at the time Outstanding and, upon Company Order, the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction, discharge and defeasance of such indebtedness, when: (1) either: (A) with respect to all Securities of such series at the time Outstanding, the Company shall have deposited or caused to be deposited irrevocably with the Trustee for such series as trust funds in trust, U.S. dollars, U.S. Government Obligations or a combination thereof, in an amount that through the payment of interest and principal and premium in respect thereof in accordance with their terms will provide (without any reinvestment of such interest or principal), not later than one Business Day before the due date of any payment in respect of the Securities for such series, money in an amount sufficient (in the case of a deposit including any U.S. Government Obligations, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee at or prior to the time of such deposit) to pay and discharge each installment of principal of (including any mandatory sinking fund payments), and any premium and interest on, the Outstanding Securities of such series on the dates such installments of principal and any premium and interest are due or upon the Stated Maturity, Redemption Date or repayment at the option of a holder of such series, as applicable; or (B) the Company properly has fulfilled such other means of satisfaction and discharge as is specified, in the manner contemplated by 69 Section 2.01, to be applicable to the Securities of such series; (2) no Event of Default or event (including such deposit) which, with notice or lapse of time, or both, would become an Event of Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit as evidenced to the Trustee in an Officers' Certificate delivered concurrently with such deposit to the Trustee; (3) the Company shall have paid or caused to be paid all other sums payable with respect to the Securities of such series at the time Outstanding; (4) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound, or the Company has obtained a waiver of any such breach, violation or default; (5) unless otherwise specified in the manner contemplated by Section 2.01, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that holders of the Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of the Company's exercise of its option under this Section 13.05 and will be subject to Federal income tax on the same amount and in the manner and at the same times as would have been the case if such option had not been exercised and, in the case of the Securities of such series being discharged, accompanied by a ruling to that effect received from or published by the Internal Revenue Service; and (6) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction, discharge and defeasance of the entire indebtedness on all Securities of any such series at the time Outstanding have been complied with. (b) "U.S. Government Obligations" means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and 70 credit obligation by the United States of America which in either case under clauses (i) or (ii) are not callable or redeemable at the option of the issuer thereof. (c) Upon the satisfaction of the conditions set forth in this Section 13.05 with respect to all the Securities of any series at the time Outstanding, the terms and conditions of such series, including the terms and conditions with respect thereto set forth in this Indenture, shall no longer be binding upon, or applicable to, the Company (except as to any surviving rights of conversion or registration of transfer or exchange and rights relating to mutilated, destroyed, lost and stolen Securities pursuant to Section 2.07 of Securities of such series expressly provided for herein or in the form of Security of such series); provided, however, that the Company shall not be discharged from any payment obligations in respect of Securities of such series which are deemed not to be Outstanding under clause (c) of the definition thereof if such obligations continue to be valid obligations of the Company under applicable law. SECTION 13.06. Repayment to Company of Deposits Made Pursuant to ------------------------------------------------- Section 13.05. After the payment in full of the entire indebtedness of a - ------------- series of Securities with respect to which a deposit has been made with the Trustee pursuant to Section 13.05, the Trustee and any Paying Agent for such series upon Company Order promptly shall return to the Company any money or U.S. Government Obligations held by them that are not required for the payment of the principal of and any premium and interest on the Securities of such series. SECTION 13.07. Deposits Irrevocable. Any deposit referred to in -------------------- Section 13.01 and Section 13.05(a)(1)(A) shall be irrevocable. If any Securities of a series with respect to which a deposit has been made pursuant to Section 13.01 and Section 13.05(a)(1)(A) at the time Outstanding are to be redeemed prior to their Stated Maturity, whether pursuant to any optional redemption provisions or in accordance with any mandatory sinking fund requirement, the Company shall make such arrangements as are satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company. SECTION 13.08. Reinstatement. If the Trustee is unable to apply ------------- any money or U.S. Government Obligations in accordance with Section 13.01 or Section 13.05 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 71 Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 13.01 or Section 13.05 until such time as the Trustee is permitted to apply all such money or U.S. Government Obligations in accordance with Section 13.01 or Section 13.05. ARTICLE FOURTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS SECTION 14.01. Indenture and Securities Solely Corporate Obligations. ----------------------------------------------------- No recourse for the payment of the principal of or any premium or interest on any Security, or for any claim based on any Security or coupon or otherwise in respect of any Security or coupon, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any Security, or because of the creation of any indebtedness represented by any Security or coupon, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Securities and coupons. ARTICLE FIFTEEN MISCELLANEOUS PROVISIONS SECTION 15.01. Provisions Binding on Company's Successors. All the ------------------------------------------ covenants, stipulations, promises and agreements contained in this Indenture by the Company shall bind its successors and assigns whether so expressed or not. SECTION 15.02. Official Acts by Successor Corporation. Any act or -------------------------------------- proceeding by any provisions of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company. 72 SECTION 15.03. Addresses for Notices, etc. Any notice or demand --------------------------- that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Securities on the Company may be given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company with the Trustee) to Southern National Corporation, Attention: Treasurer, 200 West Second Street, Winston-Salem, North Carolina 27101. Any notice, direction, request or demand by any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the principal office of the Trustee, Attention: Corporate Trust Administration. SECTION 15.04. Governing Law. THIS INDENTURE AND EACH SECURITY ------------- SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 15.05. Evidence of Compliance with Conditions Precedent. ------------------------------------------------ Upon any application or request by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture (other than certificates provided pursuant to Section 4.04, which certificates shall comply with the requirements of Section 4.04) shall include: (i) a statement that the person making such certificate or opinion has read such covenant or condition; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinion contained in such certificate or opinion are based; (iii) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. 73 The provisions of this Section 15.05 are in furtherance of and subject to Sections 314(c)(1), 314(c)(2) and 314(e) of the Trust Indenture Act. SECTION 15.06. Legal Holidays. Unless otherwise specified in the -------------- manner contemplated by Section 2.01, in any case where the Stated Maturity of principal of or any premium or interest on the Securities will not be a Business Day, payment of such principal, premium or interest need not be made on such date but may be made on the next following Business Day with the same force and effect as if made on the Stated Maturity and, if such principal, premium or interest is duly paid on such next following Business Day, no interest shall accrue for the period from and after such Stated Maturity to such next following Business Day. SECTION 15.07. Trust Indenture Act to Control. If and to the that ------------------------------ extent that any provision of this Indenture limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any provision of the Trust Indenture Act, such required provision shall control. SECTION 15.08. No Security Interest Created. Nothing in this ---------------------------- Indenture or in the Securities or coupons, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction where property of the Company or its Subsidiaries is located. SECTION 15.09. Benefits of Indenture. Nothing in this Indenture or --------------------- in the Securities or coupons, express or implied, shall give to any Person, other than the parties to this Indenture, any Paying Agent, any Security registrar and their successors under this Indenture and the holders of Securities or coupons any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 15.10. Payments to Be Made in U.S. Dollars. Notwithstanding ----------------------------------- anything in this Indenture to the contrary, any payments on or relating to any Security or related coupon shall be made only in U.S. dollars. SECTION 15.11. Table of Contents, Headings, etc. The table of --------------------------------- contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions of this Indenture. 74 SECTION 15.12. Execution in Counterparts. This Indenture may be ------------------------- executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. _________________________________________________ [NAME OF TRUSTEE] hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions set forth above in this Indenture. 75 IN WITNESS WHEREOF, SOUTHERN NATIONAL CORPORATION has caused this Indenture to be signed and acknowledged by its [Vice] President, and its corporate seal to be affixed hereunto, and the same to be attested by its Secretary, and [NAME OF TRUSTEE] has caused this Indenture to be signed and acknowledged by ______________________________, and has caused its corporate seal to be affixed hereunto and the same to be attested by ______________________________, as of the day and year first written above. SOUTHERN NATIONAL CORPORATION By:__________________________________ [Name] [Title] [SEAL] Attest: _______________________________ Secretary [NAME OF TRUSTEE] By:__________________________________ [Name] [Title] [SEAL] Attest: _______________________________ Title: 76 STATE OF ) ) ss.: COUNTY OF ) On the ___ day of _______________, 1996, before me personally came _______________, to me known, who, being by me duly sworn did depose and say that he resides at ______________________________; that he is the [Vice] President of SOUTHERN NATIONAL CORPORATION, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by the authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _____________________________________ Notary Public [NOTARIAL SEAL] STATE OF ) ) ss.: COUNTY OF ) On the ___ day of _______________, 1996, before me personally came ___________________, to me known, who, being by me duly sworn did depose and say that he resides at _____________________________________________; that he is a _______________ of [Name of Trustee], one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by the authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _____________________________________ Notary Public [NOTARIAL SEAL] EX-4.D 4 EXHIBIT 4(D) SOUTHERN NATIONAL CORPORATION TO [NAME OF TRUSTEE], TRUSTEE INDENTURE REGARDING SUBORDINATED SECURITIES DATED AS OF _______________, 1996 Reconciliation and Tie Sheet* between Provisions of the Trust Indenture Act of 1939 and Indenture, dated as of , 1996 between SOUTHERN NATIONAL CORPORATION to [NAME OF TRUSTEE], Trustee Section of Act Section of Indenture - -------------- -------------------- 310(a)(1), (2).......................... 6.08 310(a)(3), (4).......................... Not applicable 310(a)(5)............................... 6.08 310(b).................................. ** 310(c).................................. Not applicable 311(c).................................. Not appliable 312..................................... ** 313(a).................................. ** 313(b)(1)............................... Not applicable 313(b)(2)............................... ** 313(c), (d)............................. ** 314(a).................................. ** 314(b).................................. Not applicable 314(c)(1) and (2)....................... 16.05 314(c)(3)............................... Not applicable 314(d).................................. Not applicable 314(e).................................. 16.05 314(f).................................. Not applicable 315(a)(c) and (d)....................... 6.01 315(b).................................. 5.08 315(e).................................. 5.09 316(a)(1)............................... 5.01 and 5.07 316(a)(2)............................... Omitted 316(a) last sentence.................... 7.04 316(b).................................. 5.04 316(c).................................. 7.05 317(a).................................. 5.02 317(b).................................. 4.04(a) 318(a).................................. 16.07 _________________ * This Reconciliation and Tie Sheet is not a part of the Indenture. ** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939. TABLE OF CONTENTS -----------------
Page ---- Parties .......................................................... 1 Recitals .......................................................... 1 ARTICLE ONE DEFINITIONS SECTION 1.01. Definitions........................................ 1 ARTICLE TWO THE SECURITIES AND SECURITY FORMS SECTION 2.01. Amount Unlimited; Issuable in Series............... 8 SECTION 2.02. Form of Securities and of Trustee's Certificate of Authentication.................................. 11 SECTION 2.03. Securities in Global Form.......................... 12 SECTION 2.04. Denomination, Authentication and Dating of Securities......................................... 13 SECTION 2.05. Execution of Securities............................ 16 SECTION 2.06. Exchange and Registration of Transfer of Securities......................................... 17 SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Securities.... 21 SECTION 2.08. Temporary Securities............................... 23 SECTION 2.09. Payment of Interest; Interest Rights............... 24 SECTION 2.10. Cancellation of Securities Paid, etc............... 26 ARTICLE THREE SUBORDINATION OF SECURITIES SECTION 3.01. Agreement of Securityholders That Securities Subordinated to Extent Provided.................... 26 SECTION 3.02. Company Not to Make Payments with Respect to Securities in Certain Circumstances................ 27
i SECTION 3.03. Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of Company.......................... 28 SECTION 3.04. Securityholders to Be Subrogated to Rights of Holders of Senior Indebtedness..................... 30 SECTION 3.05. Obligation of the Company Unconditional, etc....... 30 SECTION 3.06. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice............................... 31 SECTION 3.07. Application by Trustee of Money Deposited with It.. 31 SECTION 3.08. Article Applicable to Paying Agents................ 32 SECTION 3.09. Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of Senior Indebtedness....................................... 32 SECTION 3.10. Securityholders Authorize Trustee to Effectuate Subordination of Securities........................ 32 SECTION 3.11. Right of Trustee to Holder Senior Indebtedness..... 32 SECTION 3.12. Article Three Not to Prevent Events of Default..... 33 SECTION 3.13. Trustee Not Fiduciary for Holders of Senior Indebtedness....................................... 33
ARTICLE FOUR PARTICULAR COVENANTS OF THE COMPANY SECTION 4.01. Payment of Principal and Interest.................. 33 SECTION 4.02. Offices for Notices and Payments, etc.............. 33 SECTION 4.03. Provisions as to Paying Agent...................... 35 SECTION 4.04. Statement as to Compliance......................... 36 SECTION 4.05. Notice of Defaults................................. 36 SECTION 4.06. Limitation on Certain Dispositions and on Merger and Sale of Assets................................. 37 SECTION 4.07. Limitation on Creation of Liens.................... 38
ii SECTION 4.08. Corporate Existence................................ 38
ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT OR ACCELERATION EVENT SECTION 5.01. Events of Default.................................. 38 SECTION 5.02. Payment of Securities on Default; Suit Therefor.... 41 SECTION 5.03. Application of Money Collected by Trustee.......... 43 SECTION 5.04. Proceedings by Securityholders..................... 44 SECTION 5.05. Proceedings by Trustee............................. 45 SECTION 5.06. Remedies Cumulative and Continuing; Delay or Omission Not Waiver................................ 45 SECTION 5.07. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders............ 46 SECTION 5.08. Notices of Defaults.................................47 SECTION 5.09. Undertaking to Pay Costs............................47 ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.01. Duties and Responsibilities of Trustee............. 48 SECTION 6.02. Reliance on Documents, Opinions, etc............... 49 SECTION 6.03. No Responsibility for Recitals, etc................ 50 SECTION 6.04. Trustee, Paying Agents or Registrar May Own Securities......................................... 50 SECTION 6.05. Money to Be Held in Trust.......................... 51 SECTION 6.06. Compensation and Expenses of Trustee............... 51 SECTION 6.07. Officers' Certificate as Evidence.................. 51 SECTION 6.08. Eligibility of Trustee............................. 52 SECTION 6.09. Resignation or Removal of Trustee.................. 52 SECTION 6.10. Acceptance by Successor Trustee.................... 54
iii SECTION 6.11. Succession by Merger............................... 55
ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.01. Action by Securityholders.......................... 55 SECTION 7.02. Proof of Execution by Securityholders.............. 56 SECTION 7.03. Who Are Deemed Absolute Owners..................... 57 SECTION 7.04. Company-Owned Securities Disregarded............... 58 SECTION 7.05. Revocation of Consents; Future Holders Bound....... 58 ARTICLE EIGHT SECURITYHOLDERS' MEETINGS SECTION 8.01. Purposes of Meetings............................... 58 SECTION 8.02. Call of Meetings by Trustee........................ 59 SECTION 8.03. Call of Meetings by Company or Securityholders..... 60 SECTION 8.04. Qualifications for Voting.......................... 60 SECTION 8.05. Regulations........................................ 60 SECTION 8.06. Quorum............................................. 61 SECTION 8.07. Voting............................................. 61 SECTION 8.08. No Delay of Rights by Meeting...................... 62 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 9.01. Supplemental Indentures Without Consent of Securityholders.................................... 62 SECTION 9.02. Supplemental Indentures of Securityholders of a Series............................................. 64 SECTION 9.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures............................ 65 SECTION 9.04. Notation on Securities............................. 66
iv SECTION 9.05. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee............................ 66
ARTICLE TEN CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE SECTION 10.01. Company May Consolidate, etc., on Certain Terms.... 66 SECTION 10.02. Successor Corporation Substituted.................. 67 ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 11.01. Applicability of Article........................... 68 SECTION 11.02. Election to Redeem; Notice to Trustee.............. 68 SECTION 11.03. Selection by Trustee of Securities to Be Redeemed........................................... 68 SECTION 11.04. Notice of Redemption............................... 69 SECTION 11.05. Deposit of Redemption Price........................ 69 SECTION 11.06. Securities Payable on Redemption Date.............. 70 SECTION 11.07. Registered Securities Redeemed in Part............. 71 ARTICLE TWELVE SINKING FUNDS SECTION 12.01. Applicability of Article........................... 71 SECTION 12.02. Satisfaction of Sinking Fund Payments with Securities......................................... 71 SECTION 12.03. Redemption of Securities for Sinking Fund.......... 72 ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS SECTION 13.01. Terms Set Forth in the Securities.................. 72 ARTICLE FOURTEEN SATISFACTION AND DISCHARGE OF INDENTURE
v SECTION 14.01. Discharge of Indenture............................. 73 SECTION 14.02. Deposited Money to Be Held in Trust by Trustee..... 74 SECTION 14.03. Paying Agent to Repay Money Held................... 74 SECTION 14.04. Return of Unclaimed Money.......................... 74 SECTION 14.05. Deposits Irrevocable............................... 75 SECTION 14.06. Reinstatement...................................... 75
ARTICLE FIFTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS SECTION 15.01. Indenture and Securities Solely Corporate Obligations........................................ 75 ARTICLE SIXTEEN MISCELLANEOUS PROVISIONS SECTION 16.01. Provisions Binding on Company's Successors......... 76 SECTION 16.02. Official Acts by Successor Corporation............. 76 SECTION 16.03. Addresses for Notices, etc......................... 76 SECTION 16.04. Governing Law...................................... 76 SECTION 16.05. Evidence of Compliance with Conditions Precedent... 76 SECTION 16.06. Legal Holidays..................................... 77 SECTION 16.07. Trust Indenture Act to Control..................... 77 SECTION 16.08. No Security Interest Created....................... 77 SECTION 16.09. Benefits of Indenture.............................. 78 SECTION 16.10. Payments to Be Made in U.S. Dollars................ 78 SECTION 16.11. Table of Contents, Headings, etc................... 78 SECTION 16.12. Execution in Counterparts.......................... 78
vi THIS INDENTURE, dated as of _____________, 1996, is executed and delivered from SOUTHERN NATIONAL CORPORATION, a North Carolina corporation (such corporation or, subject to Article Ten, its successors and assigns, the "Company"), and [NAME OF TRUSTEE], a ____________ banking corporation (such corporation or, subject to Article Six, its successors and assigns as Trustee under this Indenture, the "Trustee"). RECITAL OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured subordinated debentures, notes or other evidences of indebtedness or warrants therefor to be issued in one or more series (the "Securities"), as provided herein. For and in consideration of the premises and the purchase of the Securities by the holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of the Securities, as follows: ARTICLE ONE DEFINITIONS SECTION 1.01. Definitions. The terms defined in this Section 1.01 ----------- (except to the extent the application of such definitions is expressly limited to certain instances, and except as otherwise expressly provided in this Indenture or unless the context otherwise requires) for all purposes of this Indenture will have the respective meanings specified in this Section 1.01. Except as otherwise expressly provided in this Indenture or unless the context otherwise requires, all other terms used in this Indenture that are defined in the Trust Indenture Act or that the Trust Indenture Act defines by reference to the Securities Act of 1933 or by Commission rule under the Trust Indenture Act will have the meanings assigned to such terms in the Trust Indenture Act, in such rule thereunder or in such Securities Act as in force at the date of the execution of this Indenture. "Acceleration Event", with respect to Securities of any series, means the occurrence with respect to the Company of any of the events described in Section 5.01(g) or (h) (other than the appointment of a conservator with respect to any Constituent Bank insured by the Federal Deposit Insurance Corporation or any successor agency), continued for the period of time, if any, and after the giving of notice, if any, designated in Section 5.01(g) or (h), or shall have the meaning otherwise specified in the Securities of such series. "Bank" means (i) any institution organized under the laws of the United States, any State, the District of Columbia, Puerto Rico or any territory of the United States that (a) accepts deposits that the depositor has a legal right to withdraw on demand and (b) engages in the business of making commercial loans and (ii) any trust company organized under any of the foregoing laws. Unless otherwise provided, for purposes of this Indenture a Bank also will be considered a "corporation". "BB&T-NC" shall mean Branch Banking and Trust Company, a North Carolina corporation, and any successor or successors thereto. "Bearer Security" means any Security established pursuant to Section 2.02 that is payable to bearer. "Bearer Security Tax Certificate" or "Certificate of non-U.S. Ownership", when used with respect to a Bearer Security, means a certificate satisfying the requirements of Treasury Regulation (S) 1.163-5(c)(2)(i)(D)(3), as that provision may be amended or redesignated from time to time, which certificate shall be in a form approved by the Company. "Board of Directors" means the Board of Directors of the Company or, with respect to any matter, any committee of the Board of Directors duly authorized to act for the Board of Directors with respect to such matter. "Business Day", with respect to each series of Securities, means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or obligated by law or regulation to close in either The City of New York or, with respect to Registered Notes that will bear interest based on a specified percentage of London interbank offered quotations ("LIBOR"), in London, England, or, in the case of Bearer Securities, in any Place of Payment. "CEDEL, S.A." means Centrale de Livraison de Valeurs Mobilieres S.A. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this Indenture the Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. 2 "Company" means the corporation identified as the Company in the first paragraph of this Indenture until a successor corporation shall succeed to and be substituted for the Company pursuant to the provisions of Article Ten, and thereafter shall mean such successor corporation. "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, any Vice Chairman, its Chief Executive Officer, its President, any Executive Vice President or any Senior Vice President and its Treasurer, any Assistant Treasurer, its Secretary or any Assistant Secretary, and delivered to the Trustee. "Consolidated Net Banking Assets" means all net assets owned directly or indirectly by each Subsidiary that is a Bank as such net assets would be reflected on a consolidated balance sheet of the Company prepared in accordance with generally accepted accounting principles at the time. "Constituent Bank" means any Subsidiary that is a Bank. "Controlled Subsidiary" means any Subsidiary of which more than 80% of the aggregate voting power of the outstanding shares of the Voting Stock at the time is owned directly or indirectly by the Company or by one or more Controlled Subsidiaries or by the Company and one or more Controlled Subsidiaries, after giving effect to the issuance to any Person other than the Company or any Controlled Subsidiary of Voting Stock of the Subsidiary issuable on exercise of options, warrants or rights to subscribe for such Voting Stock or on conversion of securities convertible into such Voting Stock. "coupon" means any interest coupon appertaining to a Bearer Security. "Defaulted Interest" has the meaning specified in Section 2.09. "Depositary", with respect to the Securities of any series issuable or issued in the form of one or more Global Securities, means The Depository Trust Company, New York, New York, or such other Person designated as Depositary by the Company in the manner provided in Section 2.01, until a successor Depositary shall have been appointed pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" means or includes each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the 3 Global Securities of any such series means the Depositary with respect to the Securities of that series. "Euro-clear" means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euro-clear System. "Event of Default" means any event specified in Section 5.01, continued for the period of time, if any, and after the giving of the notice, if any, designated in Section 5.01. "Global Security" means a Security issued to evidence all or part of a series of Securities in accordance with Section 2.03. "Indenture" means this instrument as originally executed or, if amended or supplemented as provided in this Indenture, as so amended or supplemented. "interest", when used with respect to an Original Issue Discount Security that by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. "Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by the declaration of acceleration, call for redemption, repayment at the option of the holder or otherwise. "Officers' Certificate", when used with respect to the Company, means a certificate signed by the Chairman of the Board, any Vice Chairman, the Chief Executive Officer, the President, any Executive Vice President or any Senior Vice President and by the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company. Except as otherwise provided in this Indenture, each such certificate shall include the statements provided for in Section 16.05. "Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, and who shall be acceptable to the Trustee. Except as otherwise provided in this Indenture, each such opinion shall include the statements provided for in Section 16.05. 4 "Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.01. The term "principal amount" or "aggregate principal amount", when used with respect to Original Issue Discount Securities, has the meaning (or meanings) specified in the manner contemplated by Section 2.01 for purposes of: determining the amount due and payable in the event of an acceleration of Maturity as provided in Section 5.01; the redemption provisions in Article Eleven; determining whether the holders of the requisite principal amount of Outstanding Securities of any series have given any request, demand, authorization, direction, notice, consent or waiver under this Indenture; and determining whether a quorum is present at a meeting of Securityholders. "Outstanding", when used with reference to Securities of any series or the related coupons, subject to the provisions of Section 7.04, means, as of any particular time, all Securities of such series or any related coupons authenticated and delivered by the Trustee pursuant to this Indenture, except: (a) such Securities and coupons theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) such Securities and coupons, or portions thereof, for the payment or redemption of which money in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent), provided that if such Securities are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been provided as specified in Article Eleven, or provision satisfactory to the Trustee shall have been made for mailing such notice; and (c) such Securities or coupons in lieu of or in substitution for which other Securities or coupons shall have been authenticated and delivered pursuant to the terms of Section 2.07, except to the extent that a bona fide holder in due course of any such Securities shall have presented proof satisfactory to the Trustee that such holder is a bona fide holder in due course of any such Securities or coupons. "Paying Agent", when used with respect to Securities of any series, means any Person authorized by the Company to 5 pay the principal of and any premium or interest on any Securities of that series on behalf of the Company. "Person" means a corporation, an association, a partnership, an organization, a trust, an individual, a government or a political subdivision thereof or a governmental agency. "Place of Payment" has the meaning stated in Section 2.01(5). "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt that was evidenced by such particular Security. For the purposes of this definition, any Security authenticated and delivered under Section 2.07 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Principal Constituent Bank" means BB&T-NC and, at any time, any other Constituent Bank the total assets of which (as set forth in the most recent statement of condition of such Constituent Bank) equal more than 30% of the total assets of all Constituent Banks as determined from the most recent statements of condition of the Constituent Banks. "principal office of the Trustee" or any other similar term means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office, at the date of this Indenture, is located at ________________________. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registered Security" means any Security in the form of registered securities established pursuant to Section 2.02, that is registered in the Security Register. "Regular Record Date", with respect to the interest payable on any Interest Payment Date on the Securities of any series, means the date specified for that purpose as contemplated by Section 2.01. "Responsible Officer", when used with respect to the Trustee, means the Chairman or Vice Chairman of its board of 6 directors, the Chairman or Vice Chairman of the executive committee of the board of directors, the President, any Vice President, the Cashier, any Assistant Cashier, any senior trust officer, any trust officer, any assistant trust officer or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be the above-named officers, or to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Security" or "Securities" has the meaning stated in the recitals of this Indenture and means any Security or Securities, as the case may be, authenticated and delivered pursuant to this Indenture. Whenever this Indenture refers to any interest on or with respect to any Security that is represented by a coupon, such reference to the Security also shall include reference to a coupon. "Security Register", when used with respect to a Registered Security, has the meaning specified in Section 2.06(b). "Securityholder", "holder of Securities", "holder" or other similar term, when used with respect to a Registered Security, means any Person in whose name at the time a particular Registered Security is registered on the Security Register and, when used with respect to a Bearer Security or coupon, the bearer thereof. "Senior Indebtedness" means: (a) the principal of, premium, if any, and interest on all indebtedness of the Company for money borrowed, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred; (b) all obligations to make payment pursuant to the terms of financial instruments, such as (i) securities contracts and foreign currency exchange contracts, (ii) derivative instruments, such as swap agreements (including interest rate and foreign exchange rate swap agreements), cap agreements, floor agreements, collar agreements, interest rate agreements, foreign exchange agreements, options, commodity futures contracts and commodity options contracts and (iii) similar financial instruments; (c) indebtedness and obligations of others of the kind described in clauses (a) and (b) for the payment of which the Company is responsible or liable as guarantor or otherwise; and (d) any deferral, renewal or extension of any Senior Indebtedness; provided, however, that, in the case of both clauses (a) and (b), such indebtedness and obligations that are expressly stated to rank junior in right of payment to, or pari passu in right of payment with, the Securities shall not be Senior Indebtedness for purposes of this Indenture. 7 "Special Record Date" has the meaning specified in Section 2.09. "Stated Maturity", when used with respect to any Security or any payment of premium or any installment of interest thereon, means the date specified in such Security or a coupon representing such installment of interest as the fixed date on which the principal of such Security or such payment of premium or such installment of interest is due and payable. "Subsidiary" means any corporation of which a majority of the aggregate voting power of the outstanding Voting Stock at the time shall be owned by the Company or by the Company and one or more Subsidiaries or by one or more Subsidiaries. "Trust Indenture Act" means the Trust Indenture Act of 1939 as it was in force at the date of execution of this Indenture, except as provided in Section 9.03. "Trustee" means the Person identified as the Trustee in the first paragraph of this Indenture until a successor shall succeed to the trusts created by this Indenture pursuant to the provisions of Article Six, and thereafter shall mean such successor. "United States" means the United States of America (including the District of Columbia) and its possessions. "Vice President", when used with respect to the Company or the Trustee, means any such officer whether or not designated by a number or a word or words added before or after such title. "Voting Stock" of a corporation or other entity means stock of the class or classes having general voting power in an election of the board of directors, managers or trustees of such corporation or other entity (irrespective of whether, at the time, stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency). ARTICLE TWO THE SECURITIES AND SECURITY FORMS SECTION 2.01. Amount Unlimited; Issuable in Series. The aggregate ------------------------------------ principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. Securities may be issued in one or more series. 8 The terms and conditions listed below, as applicable, of any series of Securities shall be established either in an indenture supplemental hereto or in or pursuant to a resolution of the Board of Directors: (1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of all other series); (2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, other Securities of the series pursuant to Section 2.05, 2.06, 2.07, 9.04 or 11.07); (3) the date or dates on which the principal of the Securities of the series is payable; (4) the rate or rates (which may be fixed or variable) at which the Securities of the series shall bear interest, if any, or the formula by which interest shall be calculated by the Company or an agent designated for such purpose, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Registered Security on any Interest Payment Date; (5) the place or places, if any, in addition to those specified herein, where the principal of and any premium or interest on Securities of the series shall be payable (the "Place of Payment"), any Registered Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange and notices and demands to or upon the Company in respect of the Securities of the series and this Indenture may be served and where notices to holders pursuant to this Indenture will be published; (6) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise; (7) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a holder thereof and the price or prices at which, the period or periods within which and the 9 other terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation, which in the case of Securities of any series that are repayable at the option of a holder thereof shall be set forth in the form of such Security; (8) whether Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Securities of the series are to be issuable with or without coupons or both and, in the case of Bearer Securities, the date as of which such Bearer Securities shall be dated if other than the date of original issuance of the first Security of such series of like tenor and term to be issued; (9) whether the Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities and, in such case, the Depositary (if other than The Depository Trust Company) for such Global Security or Securities and whether such global form shall be permanent or temporary; (10) if Securities of the series are to be issuable initially in the form of one or more temporary Global Securities, the circumstances under and the manner in which such temporary Global Securities can be exchanged for definitive Securities of the series and whether such definitive Securities will be Registered Securities, Bearer Securities or both and will be in global form; (11) the denominations in which Registered Securities of the series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof, and the denominations in which Bearer Securities of such series, if any, shall be issuable if other than the denomination of $5,000; (12) any Event of Default or Acceleration Event with respect to the Securities of such series, if not set forth herein or if different from those set forth herein; (13) the form of Securities of such series; (14) the Person or Persons who shall be Security registrar for the Securities of such series if other than as provided for in this Indenture, and the place or places where the Security Register for such series shall be maintained and the Person or Persons who will be the initial Paying Agent or Agents, if other than as provided for in this Indenture; 10 (15) if warrants for Securities of any series are to be issued, the form in which the warrants shall be issued, the circumstances under and the manner in which the warrants may be exercised, any obligation of the Company concerning any Securities underlying the warrants and any other terms or conditions regarding the warrants and any Securities underlying the warrants; and (16) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any series and the coupons appertaining to Bearer Securities of such series, if any, issued under this Indenture in all respects shall be equally and ratably entitled to the benefits hereof with respect to such series without preference, priority or distinction on account of actual time or times of authentication and delivery or Maturity of the Securities of such series. All Securities of the same series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except as to denomination and except as may otherwise be provided either in an indenture supplemental hereto or a resolution of the Board of Directors. SECTION 2.02. Form of Securities and of Trustee's Certificate of -------------------------------------------------- Authentication. The Registered Securities, if any, and the Bearer Securities - -------------- and related coupons, if any, of each series and the certificates of authentication on the Securities shall be in substantially the form as shall be established as provided in Section 2.01 with such appropriate insertions, omissions, substitutions and other variations 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 any law or with any rules made pursuant thereto or with any rules of any securities exchange or as may be determined consistently herewith by the officers executing such Securities or coupons, as evidenced by their execution of the Securities or coupons. If the form of Securities of any series or coupons (including any Global Security) is established by action taken pursuant to a resolution of the Board of Directors, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect as of the date of such certificate, and shall be delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 2.04(b) or the authentication and delivery of such Securities. 11 The definitive Securities and coupons, if any, shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange, all as determined by the officers executing such Securities or coupons, as evidenced by their execution of such Securities or coupons. The form of Trustee's certificate of authentication for all Securities shall be as follows: TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities issued under the within-mentioned Indenture. [NAME OF TRUSTEE], as Trustee By __________________________________ Authorized Signatory SECTION 2.03. Securities in Global Form. (a) If Securities of a ------------------------- series are issuable in whole or in part in global form, as specified in the manner contemplated by Section 2.01, then, notwithstanding the provisions of clause (11) of Section 2.01 or Section 2.04, such Global Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby from time to time may be reduced to reflect exchanges. Any endorsement of a Global Security to reflect the amount, or any increase or decrease in the amount, of Outstanding Securities represented thereby, shall be made in such manner and upon instructions given by such Person or Persons as shall be specified in such Global Security or in the Company Order to be delivered to the Trustee pursuant to Section 2.04(b). (b) The provisions of the last sentence of Section 2.05(b) shall apply to any Securities represented by a Global Security if such Securities were never issued and sold by the Company (whether because of failure of settlement or otherwise) and the Company delivers to the Trustee the Global Security together with written instructions with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 2.05(b), notwithstanding the 12 absence of delivery of such Securities as contemplated thereby. (c) Global Securities may be issued in either registered or bearer form and in either temporary or permanent form. SECTION 2.04. Denomination, Authentication and Dating of Securities. ----------------------------------------------------- (a) Securities of each series shall be issuable in such form and denominations as shall be specified in the form of Security for such series approved or established pursuant to Section 2.02. In the absence of any specification, as provided in Section 2.01, with respect to the Securities of any series, the Registered Securities of such series, if any, shall be issuable in denominations of $1,000 and any integral multiple thereof and the Bearer Securities of such series, if any, shall be issuable in the denomination of $5,000. Each Registered Security shall be dated as of the date of its authentication. Each Bearer Security shall be dated as of the date specified in the manner contemplated by Section 2.01. (b) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication. Except as otherwise provided in this Article Two, the Trustee thereupon shall authenticate and deliver such Securities in accordance with a Company Order; provided, however, that in connection with its original issuance a Bearer Security may be delivered only outside the United States and, except in the case of a temporary Global Security, only if the Company or its agent shall have received from the Person entitled to receive the Bearer Security a Bearer Security Tax Certificate and only if the Company and the Trustee have no reason to know that such certificate is false. (c) To the extent authorized in or pursuant to a resolution of the Board of Directors or established in an indenture supplemental hereto, such Company Order may be electronically transmitted and may provide instructions as to registration of holders, principal amounts, rates of interest, Stated Maturities and other matters contemplated by such resolution of the Board of Directors or supplemental indenture to be so instructed in respect thereof. (d) In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and, subject to Section 6.01, shall be fully protected in relying upon: 13 (i) a copy of the resolution or resolutions of the Board of Directors in or pursuant to which the terms and form of the Securities were established, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect as of the date of such certificate; (ii) an executed supplemental indenture, if any; (iii) an Officers' Certificate delivered in accordance with Section 16.05; and (iv) an Opinion of Counsel which shall state: (A) that the form of such Securities and coupons, if any, has been established by a supplemental indenture or by or pursuant to a resolution of the Board of Directors in accordance with Sections 2.01 and 2.02 and in conformity with the provisions of this Indenture; (B) that the terms of such Securities and coupons, if any, have been established in accordance with Section 2.01 and in conformity with the other provisions of this Indenture; (C) that such Securities, when authenticated and delivered by the Trustee and issued (with coupons attached, if applicable) by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization and moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (D) that all conditions precedent, if any, provided for in this Indenture have been complied with; and (E) that the execution and delivery by the Company of such Securities and coupons, if any, do not conflict with any law, administrative regulation or court decree known by legal counsel furnishing the Opinion of Counsel to be applicable to the Company. 14 (e) If the Company shall establish pursuant to Section 2.01 that the Securities of a series are to be issued in whole or in part in the form of one or more Global Securities, then the Company shall execute and the Trustee, in accordance with this Section 2.04 and the Company Order with respect to such series, shall authenticate and deliver one or more Global Securities in permanent or temporary form that (i) shall represent and shall be denominated in an aggregate amount equal to the aggregate principal amount of the Outstanding Securities of such series to be represented by one or more Global Securities, (ii) shall be registered in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary and (iii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instruction. (f) The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section 2.04 if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors or trustees or vice presidents shall determine that such action would expose the Trustee to personal liability to existing holders. (g) Notwithstanding any contrary provision herein, if all Securities of a series are not to be originally issued at one time, it shall not be necessary for the Company to deliver to the Trustee a Company Order, Officers' Certificate, resolution of the Board of Directors, supplemental indenture or Opinion of Counsel otherwise required pursuant to Section 2.04(b) or Section 2.04(d) at or prior to the time of authentication of each Security of such series if such documents are delivered to the Trustee or its agent at or prior to the authentication upon original issuance of the first Security of such series to be issued. In such event, any subsequent request by the Company to the Trustee to authenticate Securities of such series upon original issuance shall constitute a representation and warranty by the Company that, as of the date of such request, the statements made in the Officers' Certificate or other certificates delivered pursuant to Section 2.04(d) shall be true and correct as if made on such date. A Company Order, Officers' Certificate, resolution of the Board of Directors or supplemental indenture delivered by the Company to the Trustee in the circumstances set forth in this Section 2.04(g) may provide that Securities that are the subject thereof will be authenticated and delivered by the Trustee or its agent on original issue from time to time in the aggregate principal amount established for such series pursuant to such procedures acceptable to the Trustee as may be specified from time to time by Company Order 15 upon the telephonic, electronic or written order of persons designated in such Company Order, supplemental indenture or resolution of the Board of Directors (any such telephonic or electronic instructions to be promptly confirmed in writing by such persons) and that such persons are authorized to determine, consistent with such Company Order, supplemental indenture or resolution of the Board of Directors, such terms and conditions of said Securities as are specified in such Company Order, supplemental indenture or resolution of the Board of Directors. (h) Each Depositary designated pursuant to clause (9) of Section 2.01 for a Global Security in registered form, at the time of its designation and at all times while it serves as Depositary, shall be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation. SECTION 2.05. Execution of Securities. (a) The Securities and the ----------------------- related coupons shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chairman of the Board, its Chief Executive Officer or its President or, in lieu thereof, of any Senior Vice President or its Treasurer and attested by its Secretary, under its corporate seal (which may be printed, engraved or otherwise reproduced thereon, by facsimile or otherwise). For the purpose of any such signature or attestation, the Company may adopt and use the facsimile signature of any person who has been or is or shall be such officer. (b) No Security or appurtenant coupon shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose unless such security bears thereon a certificate of authentication substantially in the form set forth in Section 2.02, manually executed by an authorized signatory of the Trustee. Such certificate by the Trustee upon any Security executed by the Company shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered under this Indenture. Except as permitted by Section 2.07, the Trustee shall not authenticate and deliver any Bearer Security unless all appurtenant coupons for interest then matured have been detached and cancelled. Notwithstanding the foregoing, if any Security or portions thereof shall have been duly authenticated and delivered hereunder but never issued and sold by the Company (whether because of failure of settlement or otherwise), and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 2.10 together with a written statement stating that such Security or portion thereof has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never 16 to have been authenticated and delivered hereunder and shall not be entitled to the benefits of this Indenture. (c) In case any officer of the Company whose manual or facsimile signature appears on any of the Securities or coupons shall cease to be such officer before the Securities or coupons so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Securities or coupons nevertheless may be authenticated and delivered or disposed of as though the person whose manual or facsimile signature appears on such Securities or coupons had not ceased to be such officer of the Company; and any Security or coupon may bear the manual or facsimile signature on behalf of the Company by such persons as, at the actual date of the execution of such Security or coupon, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer. SECTION 2.06. Exchange and Registration of Transfer of Securities. --------------------------------------------------- (a) Registered Securities of any series may be exchanged for a like aggregate principal amount of Registered Securities of other authorized denominations and of like tenor and terms of the same series. Registered Securities to be exchanged shall be surrendered at the office or agency to be maintained by the Company pursuant to Section 4.02 in each Place of Payment for such series of Registered Securities, and the Company shall execute and cause to be registered, and the Trustee shall authenticate and deliver in exchange therefor, the Registered Security or Securities which the Securityholder making the exchange shall be entitled to receive. (b) For each series of Registered Securities, the Company shall cause to be kept in at least one such office or agency a Security register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for registration of Registered Securities and registration of transfer of Registered Securities as provided in this Article Two. Each such Security Register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times such Security Registers shall be open for inspection by the Trustee. Upon due presentment for registration of transfer of any Registered Security of any series at any such office or agency, the Company shall execute and register and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Securities of the same series and of like tenor and terms for an equal aggregate principal amount. Unless otherwise provided (pursuant to Section 2.01 or otherwise), the Company initially appoints the 17 Trustee, at the principal office of the Trustee, as a Security registrar for each series of Registered Securities. (c) All Registered Securities presented for registration of transfer or for exchange or payment, if so required by the Company or the Trustee, shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the holder or his attorney duly authorized in writing. (d) To the extent specified in the manner provided by Section 2.01, Registered Securities or Bearer Securities of any series may be issued in exchange for Bearer Securities (except as otherwise specified in the manner contemplated by Section 2.01 with respect to a Bearer Security in global form) of the same series, of any authorized denomination and of like tenor and terms and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any office or agency specified in the manner provided by Section 2.01, with all unmatured coupons and all unpaid matured coupons thereto appertaining. If the holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or unpaid matured coupon or coupons, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the amount represented by such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to hold harmless each of them and any Paying Agent. If thereafter the holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such payment shall have been made, such holder shall be entitled to receive the amount of such payment; provided, however, that, except as otherwise provided in Section 4.02, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the holder making the exchange is entitled to receive. (e) If at any time the Depositary for the Global Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities of such series or if at any time the Depositary for the Registered Securities of such series shall no longer be eligible under Section 2.03 because it no longer is a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to the 18 Global Securities of such series. If a successor Depositary for the Global Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 2.01(9) shall no longer be effective with respect to the Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. (f) The Company at any time and in its sole discretion may determine that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities. (g) If specified by the Company pursuant to Section 2.01 with respect to a series of Securities, the Depositary for such series of Securities may surrender a Global Security for such series of Securities in exchange in whole or in part for Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver: (i) to each Person specified by such Depositary a new Security or new Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and (ii) to such Depositary a new Global Security of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities delivered to holders thereof. (h) In any exchange provided for in Section 2.06(e), Section 2.06(f) or Section 2.06(g), the 19 Company will execute and the Trustee will authenticate and deliver Securities (i) in definitive registered form in authorized denominations, if the Securities of such series are issuable as Registered Securities, (ii) in definitive bearer form in authorized denominations, with unmatured coupons attached, if the Securities of such series are issuable as Bearer Securities or (iii) as either Registered or Bearer Securities, if the Securities of such series are issuable in either form; provided, however, that (A) no definitive Bearer Security shall be delivered in exchange for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a Bearer Security Tax Certificate, (B) delivery of a Bearer Security shall occur only outside the United States and (C) no definitive Bearer Security will be issued if the Company or the Trustee has reason to know that such certificate is false. (i) Upon the exchange of all of a Global Security for Securities in certificated form, such Global Security shall be cancelled by the Trustee. The exchange of any portion of a Global Security for Securities in certificated form shall be subject to Section 2.03(a). Registered Securities issued in exchange for all or part of a Global Security shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Registered Securities to the persons in whose names such Securities are so registered. The Trustee shall deliver Bearer Securities issued in exchange for all or part of a Global Security to the persons, and in such authorized denominations, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee; provided, however, that (A) no definitive Bearer Security shall be delivered in exchange for all or part of a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a Bearer Security Tax Certificate, (B) delivery of a Bearer Security shall occur only outside the United States and (C) no definitive Bearer Security will be issued if the Company or the Trustee has reason to know that any such certificate is false. (j) No service charge shall be made for any exchange or registration of transfer of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such exchange or registration of transfer. 20 (k) The Company shall not be required (i) to issue, register the transfer of or exchange Securities of any particular series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities of such series selected for redemption under Section 11.03 and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Registered Security so selected for redemption in whole or in part, except the unredeemed portion of any Registered Security being redeemed in part or (iii) to exchange any Bearer Security so selected for redemption except that such a Bearer Security may be exchanged for a Registered Security of that series, provided that such Registered Security shall be surrendered immediately for redemption with written instruction for payment consistent with the provisions of this Indenture. (l) Notwithstanding anything herein to the contrary: the exchange of Bearer Securities for Registered Securities shall be subject to applicable laws and regulations in effect at the time of exchange; and neither the Company nor the Trustee or any Security registrar shall exchange any Bearer Securities into Registered Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company could suffer adverse consequences under the United States Federal income tax laws and regulations then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Order to the Security registrar. SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Securities. (a) ----------------------------------------------- In case any temporary or definitive Security of any series or any related coupon shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon its request and in the absence of notice to the Company and the Trustee that such Security or coupon has been acquired by a bona fide purchaser, the Trustee shall authenticate and deliver a new Security of the same series or related coupon, of equal aggregate principal amount and of like tenor and terms bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Security or coupon, or in lieu of and in substitution for the Security or coupon so destroyed, lost or stolen. In every case the applicant for a substituted Security or coupon shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to hold each of them harmless, and, in every case of destruction, loss or theft, the applicant also shall furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, 21 loss or theft of such security or coupon and of the ownership of such Security or coupon. (b) The Trustee may authenticate any such substitute Security and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substitute Security or coupon, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security or coupon which has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company, instead of issuing a substitute Security or coupon, may pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security or coupon) if the applicant for such payment shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to hold each of them harmless and, in the case of destruction, loss or theft, evidence satisfactory to the Company and the Trustee of the destruction, loss or theft of such Security or coupon and of the ownership of such Security or coupon. (c) Every substitute Security or coupon issued pursuant to the provisions of this Section 2.07 by virtue of the fact that any Security or coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security or coupon shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities or coupons of the relevant series duly issued under this Indenture. All Securities or coupons shall be held and owned by the holders upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. (d) Notwithstanding the foregoing, the payment of principal of and any premium and interest on Bearer Securities, except as otherwise provided in Section 4.02, shall be payable only at an office or an agency located outside of the United States, and, with respect to any coupons, interest represented thereby shall be payable only upon presentation and surrender of such coupons. 22 SECTION 2.08. Temporary Securities. (a) Pending the preparation -------------------- of definitive Securities of any series, the Company may execute and the Trustee shall authenticate and deliver temporary Securities (printed or lithographed). Temporary Securities shall be issuable in any authorized denomination, and substantially in the form of the definitive Securities of such series (and of like tenor and terms) in lieu of which they are issued in registered form or, if authorized, in bearer form with one or more coupons or without coupons, but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. In the case of Securities of any series issuable as Bearer Securities, such temporary Securities may be in global form, representing all or any part of the Outstanding Securities of such series. (b) Unless otherwise provided pursuant to Section 2.01: (i) Except in the case of temporary Securities in global form, every such temporary Security shall be authenticated by the Trustee in substantially the same manner, and with the same effect, as the definitive Securities. Without unreasonable delay the Company will execute and deliver to the Trustee definitive Securities of such series and thereupon any or all temporary Securities of such series (accompanied, if applicable, by all unmatured coupons and all unpaid matured coupons appertaining thereto) may be surrendered in exchange therefor at the principal office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series of authorized denominations. Such exchange shall be made at the Company's expense and without any charge to the holder. Until so exchanged, the temporary Securities of any series in all respects shall be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered under this Indenture. Notwithstanding the foregoing, no Bearer Security shall be delivered in exchange for a Registered Security, and a Bearer Security shall be delivered in exchange for a Bearer Security only in compliance with the conditions set forth in Section 2.06. (ii) If Securities of any series are issued in temporary global form, any such temporary Global Security, unless otherwise provided pursuant to Section 2.01, shall be delivered to the Depositary for the benefit of Euro-clear and CEDEL S.A. for credit to 23 the respective accounts of the beneficial owners of such Securities or to such other accounts as they may direct. (iii) Any such temporary Global Security shall be exchangeable, on the terms and in the manner set forth therein, in whole or in part, for an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor and terms as the portions of such temporary Global Security to be exchanged. Any definitive Bearer Security shall be delivered in exchange for a portion of a temporary Global Security only upon receipt by the Trustee from the Person entitled to receive such definitive Bearer Security of a Bearer Security Tax Certificate. (iv) Until exchanged in full as hereinabove provided, the temporary Securities of any series shall be entitled in all respects to the same benefits under this Indenture as definitive Securities of the same series and of like tenor and terms authenticated and delivered hereunder, except that any interest payable with respect to a temporary Global Security will be paid as specified therein. SECTION 2.09. Payment of Interest; Interest Rights. Interest on any ------------------------------------ Registered Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Registered Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. In case a Bearer Security of any series is surrendered in exchange for a Registered Security of such series after the close of business (at an office or agency in a Place of Payment for such series) on any Regular Record Date and before the opening of business (at such office or agency) on the next succeeding Interest Payment Date, such Bearer Security shall be surrendered without the coupon relating to such Interest Payment Date and interest will not be payable on such Interest Payment Date in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the holder of such coupon when due in accordance with the provisions of this Indenture. Payment of interest on any Registered Security may be made as provided in Section 3.02. Except as otherwise provided in the terms of any particular series pursuant to Section 2.01. interest will be calculated on the basis of a year consisting of twelve 30-day months. Any interest on any Security that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") forthwith shall cease to be payable to the holder on the relevant Regular Record Date 24 by virtue of having been such holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below: (i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names such Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this clause (i). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor fewer than ten days prior to the date of the proposed payment and not fewer than ten days after the receipt by the Trustee of the notice of the proposed payment. The Trustee promptly shall notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each holder at his address as it appears in the Security Register, not fewer than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been given as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (ii). (ii) The Company may make payment of any Defaulted Interest on any such Security in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of that series may be listed, and upon such notice as may be required by any such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (ii), such manner of payment shall be deemed practicable by the Trustee. 25 Subject to the foregoing provisions of this Section 2.09, each Security of any series delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security of such series shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security. Subject to the limitations set forth in Section 4.02, the holder of any coupon appertaining to a Bearer Security shall be entitled to receive the interest payable on such coupon upon presentation and surrender of such coupon on or after the Interest Payment Date of such coupon at an office or agency maintained for such purpose pursuant to Section 4.02. SECTION 2.10. Cancellation of Securities Paid, etc. All Securities ------------------------------------ and coupons surrendered for the purpose of payment, exchange or registration of transfer, if surrendered to the Company or any Paying Agent or any Security registrar, shall be delivered to the Trustee and promptly cancelled by the Trustee, or, if surrendered to the Trustee, promptly shall be cancelled by it; and no Securities or coupons shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee may destroy cancelled Securities or coupons and will deliver a certificate of such destruction to the Company. ARTICLE THREE SUBORDINATION OF SECURITIES SECTION 3.01. Agreement of Securityholders That Securities -------------------------------------------- Subordinated to Extent Provided. The Company, for itself and its successors - ------------------------------- and assigns, covenants and agrees and each holder of Securities and any related coupons by such holders acceptance of a Security or coupon likewise covenants and agrees that, subject to the provisions of Article Fourteen, the payment of the principal of and any premium and interest on any and all Securities and coupons is expressly subordinated hereby, to the extent and in the manner set forth in this Article Three, to the prior payment in full of all Senior Indebtedness. The provisions of this Article Three shall constitute a continuing offer to all persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness, and such holders are hereby made obligees under this Article Three as if their names were written in this Article Three as such, and they and each of them may proceed to enforce the provisions of this Article Three. 26 SECTION 3.02. Company Not to Make Payments with Respect to Securities ------------------------------------------------------- in Certain Circumstances. (a) If payment of the Securities is accelerated - ------------------------ because of an Acceleration Event, the Company promptly shall notify holders of Senior Indebtedness of the acceleration. (b) The Company may not pay principal of or any premium or interest on the Securities and may not acquire any Securities for cash or property other than capital stock of the Company if: (1) a default on Senior Indebtedness occurs and is continuing that permits holders of such Senior Indebtedness to accelerate its maturity; and (2) such default is the subject of judicial proceedings or the Company receives written notice of such default from a representative of the holders of such Senior Indebtedness. If the Company receives any such notice, a similar notice received within 360 days thereafter relating to the same default on the same issue of Senior Indebtedness shall not be effective for purposes of this Section 3.02(b). The Company may resume payments on the Securities and may acquire them when: (i) such default is cured or waived or shall have ceased to exist or the Senior Indebtedness to which such default relates shall have been paid in full in cash or cash equivalent; or (ii) if such default is not the subject of judicial proceedings, 120 days pass after such written notice is received by the Company, but only if this Article Three does not otherwise prohibit such payment or acquisition at that time. (c) In the event that notwithstanding the provisions of this Section 3.02 the Company shall make any payment to the Trustee on account of the principal of or any premium or interest on the Securities prohibited by Section 3.02(b), then, unless and until such payment is thereafter permitted under Section 3.02(b), such payment shall be held by the Trustee in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, for application to the 27 payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with the terms of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. (d) The provisions of this Section 3.02 shall not apply to any payment with respect to which Section 3.03 shall apply. SECTION 3.03. Securities Subordinated to Prior Payment of All Senior ------------------------------------------------------ Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon - --------------------------------------------------------------------- any distribution of assets of the Company upon any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise): (a) The holders of all Senior Indebtedness first shall be entitled to receive payment in full of the principal of and any premium and interest due on Senior Indebtedness before the holders of the Securities are entitled to receive any payment on account of the principal of or any premium or interest on the Securities (other than payment in shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, which stock and securities are subordinated to the payment of all Senior Indebtedness and securities received in lieu thereof that at the time may be outstanding, except to the extent that such stock and securities received in lieu of Senior Indebtedness by their terms are expressly not superior in right of payment to the Securities). (b) Any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, which stock and securities are subordinated to the payment of all Senior Indebtedness and securities received in lieu thereof which may at the time be outstanding except to the extent that such stock and securities received in lieu of Senior Indebtedness by their terms are expressly not superior in right of payment to the Securities), to which the holders of the Securities and any related coupons would be entitled except for the provisions of this Section 3.03, shall be paid by the liquidating 28 trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution or provision for such Senior Indebtedness to the holders of such Senior Indebtedness. (c) In the event that notwithstanding the foregoing provisions of this Section 3.03, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, which stock and securities are subordinated to the payment of all Senior Indebtedness and securities received in lieu thereof that at the time may be outstanding, except to the extent that such stock and securities received in lieu of Senior Indebtedness by their terms are expressly not superior in right of payment of the Securities), shall be received by the Trustee or the holders of the Securities on account of principal or any premium or interest on the Securities before all Senior Indebtedness is paid in full, or effective provision made for its payment, such payment or distribution (subject to the provisions of Section 3.06 and Section 3.07) shall be received and held in trust for and shall be paid over to the holders of the Senior Indebtedness remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, for application to the payment of such Senior Indebtedness until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution or provision for such Senior Indebtedness to the holders of such Senior Indebtedness. (d) The consolidation of the Company with, or the merger of the Company into, another Person or the dissolution, winding up, liquidation or reorganization of the Company following the conveyance, transfer or lease of its properties and assets substantially as an entirety to another Person upon the terms and conditions set forth in Article Ten shall not be deemed a dissolution, winding up, liquidation or reorganization of the Company for the purposes of this Section 3.03 if the Person formed by 29 such consolidation or into which the Company is merged or the Person that acquires by conveyance, transfer or lease such properties and assets substantially as an entirety, as the case may be, as a part of such consolidation, merger, conveyance, transfer or lease, shall comply with the conditions set forth in Article Ten. SECTION 3.04. Securityholders to Be Subrogated to Rights of Holders ----------------------------------------------------- of Senior Indebtedness. Subject to the payment in full of all Senior - ---------------------- Indebtedness, the holders of the Securities and any related coupons shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until all amounts owing on the Securities shall be paid in full. For the purpose of such subrogation, no payments or distributions to the holders of the Senior Indebtedness (whether by or on behalf of the Company or by or on behalf of the holders of the Securities or any related coupons) by virtue of this Article Three that otherwise would have been made to the holders of the Securities or coupons shall be deemed, as between the Company and the holders of the Securities and coupons, to be payment by the Company to or on account of the Senior Indebtedness. SECTION 3.05. Obligation of the Company Unconditional, etc. The -------------------------------------------- provisions of this Article Three are and are intended solely for the purpose of defining the relative rights of the holders of the Securities and any related coupons on the one hand and the holders of the Senior Indebtedness on the other hand. Nothing contained in this Article Three or elsewhere in this Indenture or in the Securities is intended to or shall impair, as between the Company and the holders of the Securities, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Securities the principal of and any premium and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the holders of the Securities or the coupons and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything in this Article Three or elsewhere in this Indenture prevent the Trustee or the holder of any Security or coupon from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Three of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Nothing contained in this Article Three is intended to alter the rights between the holders of the Securities and any related coupons and the Company's creditors other than the holders of the Securities or coupons and the holders of Senior Indebtedness. Upon any payment or distribution of assets of 30 the Company referred to in this Article Three, the Trustee, subject to the provisions of Section 6.01, and the holders of the Securities and any related coupons shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to the holders of the Securities and coupons, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of, the amounts of, the amounts payable on, the amount or amounts paid or distributed on and all other facts pertinent to the Senior Indebtedness and other indebtedness of the Company and all other facts pertinent to this Article Three. SECTION 3.06. Trustee Entitled to Assume Payments Not Prohibited in ----------------------------------------------------- Absence of Notice. The Company shall give prompt written notice to a - ----------------- Responsible Officer of the Trustee located at its principal office of any fact known to the Company that would prohibit, pursuant to this Article Three, the making of any payment to or by the Trustee with respect to the Securities or any related coupons. Notwithstanding the provisions of Section 3.01 or Section 3.02 or any other provision of this Indenture, the Trustee shall not at any time be charged with knowledge of the existence of any fact that would prohibit the making of any payment of money to or by the Trustee, unless and until the Trustee shall have received at the principal office of the Trustee written notice of such facts from the Company or from one or more holders of Senior Indebtedness or from any trustee for such holders; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 6.01, shall be entitled to assume that no such facts exist. SECTION 3.07. Application by Trustee of Money Deposited with It. ------------------------------------------------- Anything in this Indenture to the contrary notwithstanding, any deposit of money by the Company with the Trustee (whether or not in trust) for the payment of the principal of or any premium or interest on any Securities or coupons shall be subject to the provisions of Sections 3.01, 3.02, 3.03 and 3.04 except that, if not fewer than three Business Days prior to the date on which by the terms of this Indenture any such money may become payable for any purpose (including without limitation the payment of principal of or any premium or interest on any Security and any amounts immediately due and payable upon the execution of any instrument acknowledging satisfaction and discharge of this Indenture as provided in Article Fourteen) the Trustee shall not have received with respect to such money the notice provided for in Section 3.06, then, anything contained in this Article Three to the contrary notwithstanding, the Trustee 31 shall have full power and authority to receive such money and to apply the same to the purpose for which it was received, and shall not be affected by any notice to the contrary that may be received by it during such three Business Day period. SECTION 3.08. 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 under this Indenture, the term "Trustee" as used in this Article Three shall be construed (unless the context otherwise requires) as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article Three in addition to or in place of the Trustee. SECTION 3.09. Subordination Rights Not Impaired by Acts or Omissions ------------------------------------------------------ of Company or Holders of Senior Indebtedness. No right of any present or - -------------------------------------------- future holder of any Senior Indebtedness to enforce subordination as provided in this Article Three shall be prejudiced or impaired at any time in any way by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge of such act, failure to act or noncompliance which any such holder may have or otherwise be charged with. SECTION 3.10. Securityholders Authorize Trustee to Effectuate ----------------------------------------------- Subordination of Securities. Each holder of the Securities by his acceptance of - --------------------------- a Security authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Three and appoints the Trustee his attorney-in-fact for such purpose, including in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise), action tending towards liquidation of the business and assets of the Company, the immediate filing of a claim for the unpaid balance of its or his Securities in the form required in such proceedings and action causing such claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to 30 days before the expiration of the time to file such claim or claims, then the holder or holders of Senior Indebtedness hereby are authorized to and have the right to file an appropriate claim for and on behalf of the holders of such Securities. SECTION 3.11. Right of Trustee to Hold Senior Indebtedness. The -------------------------------------------- Trustee shall be entitled to all the rights set forth in this Article Three in respect of any Senior 32 Indebtedness at any time held by it to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. SECTION 3.12. Article Three Not to Prevent Events of Default. The ---------------------------------------------- failure to make a payment on account of principal or any premium or interest by reason of any provision in this Article Three shall not be construed as preventing the occurrence of an Event of Default under Section 5.01. SECTION 3.13. 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 it shall in good faith mistakenly pay over or distribute to holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article Three or otherwise. ARTICLE FOUR PARTICULAR COVENANTS OF THE COMPANY SECTION 4.01. Payment of Principal and Interest. The Company duly --------------------------------- and punctually will pay or cause to be paid the principal of and any premium and interest on the Securities of each series at the places, at the respective times and in the manner provided in this Indenture and in the Securities. Any interest due on Bearer Securities on or before Maturity shall be payable only upon presentation and surrender of the several coupons for such interest installments as are evidenced thereby as they severally mature. SECTION 4.02. Offices for Notices and Payments, etc. So long as any ------------------------------------- Securities of a series remain Outstanding, the Company will maintain in each Place of Payment for such series of Securities an office or agency where the Securities of that series (but, except as otherwise provided below, unless such Place of Payment is located outside the United States, not Bearer Securities) may be presented for payment, for registration of transfer and for exchange as provided in this Indenture and where notices and demands to or upon the Company in respect of the Securities or of this Indenture may be served. If Securities of a series are issuable as Bearer Securities, the Company will maintain, subject to any laws or regulations applicable thereto, an office or agency in a Place of Payment for such series that is located outside the United States where Securities of such 33 series and the related coupons may be presented for payment. The Company will give to the Trustee prompt written notice of the location of each such office or agency and of any change of location thereof. In case the Company shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the principal office of the Trustee, and the Company hereby initially appoints the Trustee its agent to receive all such presentations and demands, except that Bearer Securities of that series and the related coupons may be presented for payment at the place specified for that purpose pursuant to Section 2.01(5). Unless otherwise provided pursuant to Section 2.01, the Company hereby initially designates as the Place of Payment for each series of Securities (other than Bearer Securities of that series and the related coupons) the Borough of Manhattan, The City of New York, New York and appoints the Trustee, at the principal office of the Trustee, as Paying Agent in such city. Notwithstanding any other provisions to the contrary, the Company at its option may make payment of principal and any premium and interest with respect to any Registered Security by check mailed to the Person entitled thereto, as such address appears on the Security Register, except that a holder of $10,000,000 or more in aggregate principal amount of Securities of such series and of like tenor and terms will be entitled to receive payments by wire transfer of immediately available funds if appropriate wire transfer instructions shall have been received in writing by the Trustee not later than ten Business Days prior to the applicable payment date. No payment of principal of or any premium or interest on Bearer Securities shall be made at any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, that payment of principal of and any premium and interest on any Bearer Security may be made at an office or agency of, and designated by, the Company located in the United States if (but only if) payment of the full amount of such principal, premium or interest at all offices outside the United States maintained for the purpose by the Company in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions and the Trustee receives an Opinion of Counsel that such payment within the United States is legal. Unless otherwise provided as contemplated by Section 2.01 with respect to any series of Securities, at the option of the holder of any Bearer Security or related coupon payment may be made by mailing a check to an address outside the United States or by transfer to an account maintained by the payee with a bank located outside the United States. 34 The Company also from time to time may designate one more offices or agencies (in or outside of such Place of Payment) where the Securities of one or more series and any appurtenant coupons (subject to the preceding paragraph) may be presented or surrendered for any and all such purposes, and from time to time may rescind such designations. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. SECTION 4.03. Provisions as to Paying Agent. (a) The Company, with ----------------------------- respect to the Securities of each series, prior to each due date of principal of or any premium or interest on such Securities, will deposit with the Paying Agent for such Securities a sum sufficient to pay the principal, premium or interest so becoming due, such sum to be held in trust for the benefit of the persons entitled to such principal, premium or interest. If the Company shall appoint a Paying Agent other than the Trustee with respect to the Securities of any series, the Company will notify the Trustee of its making, or failure to make, any such payment; and the Company also shall cause any such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.03, as follows: (1) that it will hold all sums held by it as such agent for the payment of the principal of or any premium or interest on such Securities (whether such sums have been paid to it by the Company or by any other obligor on such Securities) in trust for the benefit of the Persons entitled thereto; (2) that it will give the Trustee notice of any failure by the Company (or by any other obligor on such Securities) to make any payment of the principal of or any premium or interest on such Securities when the same shall be due and payable; and (3) that it forthwith will pay to the Trustee, at any time during the continuance of an Event of Default, upon the written request of the Trustee, all sums so held by it as such agent. (b) If the Company shall act as its own Paying Agent with respect to the Securities of any series, on or before each due date of the principal of or any premium or interest on the Securities of such series, it will set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay such principal, premium or interest so becoming due and will notify the Trustee of any failure to take such action and of any failure 35 by the Company (or by any other obligor under such Securities) to make any payment of the principal of or any premium or interest on such Securities when the same shall become due and payable. (c) Notwithstanding anything in this Section 4.03 to the contrary, the Company, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture or for any other reason, may pay or by Company Order direct any Paying Agent to pay to the Trustee all sums held in trust by the Company or any Paying Agent under this Indenture, such sums to be held by the Trustee upon the trusts contained in this Indenture. (d) Notwithstanding anything in this Section 4.03 to the contrary, the agreement to hold sums in trust as provided in this Section 4.03 is subject to Section 14.03 and Section 14.04. SECTION 4.04. Statement as to Compliance. The Company will deliver -------------------------- to the Trustee, within 120 days after the end of each calendar year commencing with the first calendar year following the issuance of Securities of any series under this Indenture, a written certificate of the principal executive officer, the principal financial officer or the principal accounting officer of the Company, covering the period from the date of issuance of such Securities to the end of the calendar year in which such Securities were issued, in the case of the first such certificate, and covering the preceding calendar year, in the case of each subsequent certificate, stating, as to each signer of such certificate, that: (1) a review of the activities of the Company during the year and of performance under this Indenture has been made under his supervision; (2) to the best of his knowledge, based on such review, the Company has fulfilled all its conditions and covenants under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such condition or covenant, specifying each such default known to him and the nature and status of such default; and (3) such certificate sets forth as of the end of such year a list of all Principal Constituent Banks. SECTION 4.05. Notice of Defaults. The Company will deliver to the ------------------ Trustee within five days after the occurrence thereof written notice of any event which with the giving of 36 notice or the lapse of time or both would be an Event of Default under Section 5.01. SECTION 4.06. Limitation on Certain Dispositions and on Merger and ---------------------------------------------------- Sale of Assets. Except as otherwise provided in Article Ten, the Company will - -------------- not: (a) sell, assign, transfer or otherwise dispose of any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of a Principal Constituent Bank, and will not permit a Principal Constituent Bank to issue any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, such Voting Stock if, in each case, after giving effect to any such transaction, the Principal Constituent Bank would cease to be a Controlled Subsidiary; or (b) permit a Principal Constituent Bank to: (i) merge or consolidate with any other corporation, unless the surviving corporation is, or upon consummation of the merger or consolidation will become, the Company or a Controlled Subsidiary; or (ii) lease, sell or transfer all or substantially all its properties and assets to any corporation or other Person, except to the Company or a Controlled Subsidiary or a Person that, upon such lease, sale or transfer, will become the Company or a Controlled Subsidiary. Notwithstanding the foregoing, any such sale, assignment, transfer or other disposition of securities, any such merger or consolidation or any such lease, sale or transfer of properties and assets shall not be prohibited if required (i) by any law or any rule, regulation or order of any governmental agency or authority or (ii) as a condition imposed by any law or any rule, regulation or order of any governmental agency or authority with respect to the acquisition by the Company or any Controlled Subsidiary, directly or indirectly, through purchase of securities or assets, or a merger, consolidation or otherwise, of any Person, provided that after giving effect to such acquisition (A) such Person will be a Controlled Subsidiary, (B) the Consolidated Net Banking Assets of the Company will be at least equal to the Consolidated Net Banking Assets of the Company prior thereto and (C) BB&T-NC will be a Controlled Subsidiary. 37 SECTION 4.07. Limitation on Creation of Liens. So long as any of ------------------------------- the Securities shall be outstanding, the Company will not create, assume, incur or suffer to be created, assumed or incurred or to exist any pledge, encumbrance or lien, as security for indebtedness for borrowed money, upon any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of a Principal Constituent Bank now or hereafter owned by the Company, directly or indirectly, if, treating such pledge, encumbrance or lien as a transfer of the shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock subject thereto to the secured party, the Principal Constituent Bank would not be a Controlled Subsidiary. SECTION 4.08. Corporate Existence. Except as otherwise provided in ------------------- Article Ten, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Securityholders. ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT OR ACCELERATION EVENT SECTION 5.01. Events of Default. "Event of Default", when used ----------------- with respect to Securities of any series, means each of the following events unless it is either inapplicable to a particular series or is specifically deleted or modified in the supplemental indenture or resolution of the Board of Directors under which such series of Securities is issued or in the form of Security for such series: (a) default in the payment of any installment of interest upon any of the Securities of that series as and when the same shall become due and payable, and continuance of such default for a period of 30 days; (b) default in the payment of the principal of or any premium on any of the Securities of that series as and when the same shall become due and payable at their Stated Maturity, upon redemption, by declaration or otherwise; 38 (c) default in the payment of any sinking fund installment or analogous obligation as and when the same shall become due and payable by the terms of the Securities of that series; (d) a default or event of default as defined or designated in any mortgage, indenture, loan agreement or instrument under which there may be issued or borrowed, or by which there is secured or evidenced, any indebtedness of the Company (other than Securities of such series or indebtedness owed by the Company to any Subsidiary) or any Subsidiary (other than indebtedness of any Subsidiary owing to the Company or to another Subsidiary), whether such indebtedness now exists or shall be created hereafter, shall happen and (i) not less than $1,000,000 of such indebtedness shall be past due under such mortgage, indenture, loan agreement or instrument or such default or event of default shall result in not less than $1,000,000 of such indebtedness becoming or being declared due and payable and (ii) such indebtedness or such declaration, as the case may be, shall not have been discharged or rescinded or annulled within 15 days after the date on which written notice thereof is given to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Securities of that series then Outstanding; (e) a final judgment or judgments or order or orders for the payment of money in excess of $1,000,000 shall be entered against the Company or one or more Principal Constituent Banks and within 90 days after entry thereof such judgment or judgments or order or orders shall not have been discharged or the execution thereof stayed pending appeal or within 90 days after the expiration of any such stay such judgment or judgments or order or orders shall not have been discharged; (f) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Securities of such series or in this Indenture (other than a covenant or agreement a default in the performance of which or the breach of which specifically is provided for elsewhere in this Section 5.01 or which expressly has been included in this Indenture solely for the benefit of one or more series of Securities other than such series), and continuance of such failure for a period of 90 days after the date on which written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee, or to the Company and the Trustee by the holders of at least 25% in 39 aggregate principal amount of the Securities of such series at the time Outstanding; (g) a court or governmental authority having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company or a Principal Constituent Bank in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or a Principal Constituent Bank or for any substantial part of its property, or ordering the winding up or liquidation of its affairs and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (h) the Company or a Principal Constituent Bank shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or similar official) of the Company or a Principal Constituent Bank or for substantially all of its property (other than the appointment of a conservator with repect to any Constituent Bank insured by the Federal Deposit Insurance Corporation or any successor agency), or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due or shall take any corporate action in furtherance of any of the foregoing. If an Acceleration Event with respect to the Securities of any series at the time Outstanding occurs and is continuing, then and in each such case, unless the principal of all the Securities of such series already shall have become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the principal amount of all the Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable. This provision, however, is subject to the condition that, at any time after such a declaration of acceleration, and before any judgment or decree for the payment of the money due shall have been obtained or entered as hereinafter provided, the holders of a majority in aggregate principal amount of the Securities of such series 40 then Outstanding, by written notice to the Company and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, if: (1) the Company shall pay or shall deposit with the Trustee a sum sufficient to pay: (A) all matured installments of interest on all the Securities of that series and the principal of and any premium on any and all Securities of that series that shall have become due otherwise than by acceleration (with interest on overdue installments of interest (to the extent that payment of such interest is enforceable under applicable law) and on such principal and premium at the rate borne by the Securities of that series, to the date of such payment or deposit); and (B) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) any and all defaults with respect to Securities of that series under this Indenture, other than the nonpayment of principal of and any premium and accrued interest on Securities that shall have become due by acceleration, shall have been cured or waived as provided in Section 5.07. No such waiver or rescission and annulment shall extend or shall affect any subsequent default or shall impair any right consequent thereon. In case the Trustee or any Securityholder shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee or any Securityholder, then and in every such case the Company, the Trustee and such Securityholders, subject to any determination in such proceeding, shall be restored respectively to their several positions and rights under this Indenture, and all rights, remedies and powers of the Company, the Trustee and such Securityholders shall continue as though no such proceeding had been taken. SECTION 5.02. Payment of Securities on Default; Suit Therefor. (a) ----------------------------------------------- Subject to the provisions of Article Three, in case default shall be made in the payment of (i) any installment of interest upon any of the Securities as and when the same shall become due and payable, and such default shall 41 have continued for a period of 30 days, or (ii) the principal of or any premium on any of the Securities as and when the same shall have become due and payable whether at Maturity of the Securities, by declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Securities, the whole amount that then shall have become due and payable on all such Securities for principal, premium or interest, or any combination thereof, as the case may be, with interest upon the overdue principal and premium and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest, at the rate borne by the Securities; and, in addition, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation, expenses, disbursements and advances of the Trustee, its agents, attorneys and counsel. (b) In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or any other obligor on the Securities and coupons and collect in the manner provided by law out of the property of the Company or any other obligor on the Securities and coupons, wherever situated, the money adjudged or decreed to be payable. (c) In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Securities and coupons under Title 11 of the United States Code or any other applicable law, or in case a receiver or trustee shall have been appointed for the property of the Company or such other obligor, or in the case of any other similar judicial proceedings relative to the Company or other obligor on the Securities and coupons, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due and payable as expressed in the Securities or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.02, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and any premium and interest owing and unpaid in respect of the Securities, and, in case of any judicial proceedings, (i) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the 42 reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Securityholders allowed in such judicial proceedings relative to the Company or any other obligor on the Securities and coupons, its or their creditors, or its or their property, and (ii) to collect and receive any money or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Securityholders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee any amount due it for reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel and any other amounts due the Trustee under Section 6.06. To the extent that such payment of reasonable compensation, expenses and counsel fees out of the trust estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other property which the holders of the Securities and coupons may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise. (d) Nothing contained in this Section 5.02 shall be deemed to authorize the Trustee to authorize or consent to or adopt on behalf of any Securityholder any plan of reorganization or arrangement affecting the Securities or related coupons or the rights of any Securityholder, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. (e) All rights of action and of asserting claims under this Indenture, or under any of the Securities or related coupons, may be enforced by the Trustee without the possession of any of the Securities or coupons, or the production thereof in any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, shall be for the ratable benefit of the holders of the Securities and related coupons. SECTION 5.03. Application of Money Collected by Trustee. Any money ----------------------------------------- collected by the Trustee with respect to any series of Securities or related coupons pursuant to Section 5.02 shall be applied, subject to the provisions of Article Three, in the order following, at the date or dates 43 fixed by the Trustee for the distribution of such money, upon presentation of the several Securities of such series or coupons, or both, as the case may be, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: FIRST: To the payment of all amounts then due the Trustee under Section 6.06; SECOND: In case the principal of the Outstanding Securities of that series shall not have become due and be unpaid, to the payment of interest on the Securities of that series in the order of the Maturity of the installments of such interest, with interest (to the extent enforceable under applicable law) upon the overdue installments of interest at the rate borne by the Securities of that series, such payments to be made ratably to the persons entitled thereto; and THIRD: In case the principal of the Outstanding Securities of that series shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Securities of that series for principal and any premium and interest, with interest on the overdue principal and any premium and (to the extent enforceable under applicable law) upon overdue installments of interest at the rate borne by the Securities of that series; and in case such money shall be insufficient to pay in full the whole amounts so due and unpaid upon the Securities of that series, then to the payment of such principal and any premium and interest without preference or priority of principal over interest, or of interest over principal or of any premium over principal or interest, or of principal or interest over any premium or of any installment of interest over any other installment of interest, or of any Security of that series over any other Security of that series, or of any coupon related to a Security of a series over any other coupon related to a Security of the same series, ratably to the aggregate of such principal and any premium and accrued and unpaid interest. SECTION 5.04. Proceedings by Securityholders. No holder of any ------------------------------ Security of any series or any related coupon shall have any right to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy under this Indenture, unless such holder previously shall have given to the Trustee written notice of default and of the continuance thereof, as provided in Section 5.01, and unless also (i) the holders of not less than 25% in aggregate principal amount of the Securities of 44 that series then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee under this Indenture and shall have offered to the Trustee such reasonable indemnity as the Trustee may require against the costs, expenses and liabilities to be incurred in compliance with such request, (ii) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding and (iii) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended, and being expressly covenanted by each Person who acquires and holds a Security or related coupon with every other such Person, that no one or more holders of Securities shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other holder of such Securities or coupons, or to obtain or seek to obtain priority over or preference to any other such holder, or to enforce any right under this Indenture, except in the manner provided in this Section 5.04 and for the equal, ratable and common benefit of all holders of Securities and coupons. Notwithstanding any other provision of this Indenture, however, the right of any holder of any Security to receive payment of the principal of and any premium and interest on such Security on or after the respective Stated Maturities, or to institute suit for the enforcement of any such payment on or after such respective dates against the Company, shall not be impaired or affected without the consent of such holder. SECTION 5.05. Proceedings by Trustee. In case of an Event of ---------------------- Default under this Indenture, the Trustee in its discretion may proceed to protect and enforce its rights and the rights of the Securityholders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Indenture or by law. SECTION 5.06. Remedies Cumulative and Continuing; Delay or Omission ----------------------------------------------------- Not Waiver. All rights, powers and remedies conferred upon or reserved to the - ---------- Trustee or to the Securityholders, to the extent permitted by law, shall be deemed cumulative and not exclusive of any thereof or of any 45 other rights, powers and remedies available to the Trustee or the holders of the Securities and related coupons, now or hereafter existing, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture; and no delay or omission of the Trustee or of any holder of any of the Securities or related coupons to exercise any such right, power or remedy shall impair any such right, power or remedy, or shall be construed to be a waiver of any default or an acquiescence in such default; and, subject to the provisions of Section 5.04, every power and remedy conferred upon or reserved to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. The assertion of any right, power or remedy shall not prevent the concurrent assertion of any other right, power or remedy. SECTION 5.07. Direction of Proceedings and Waiver of Defaults by -------------------------------------------------- Majority of Securityholders. (a) The holders of a majority in aggregate - --------------------------- principal amount of the Securities of all series affected (voting as one class) at the time Outstanding determined in accordance with Section 7.04 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, however, that (i) such direction may not be in conflict with law or this Indenture or expose the Trustee to personal liability or be unduly prejudicial to the holders of the Securities and related coupons not joining in the direction, and (ii) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with this Indenture and such direction. (b) Prior to any declaration that the principal of the Outstanding Securities of any series is due and payable, the holders of a majority in aggregate principal amount of the Securities of that series at the time Outstanding on behalf of the holders of all of the Securities of that series may waive any past default or Event of Default or Acceleration Event under this Indenture and its consequences except a default under a covenant in this Indenture that, pursuant to Section 9.02, cannot be modified without the consent of each holder of a Security of the series affected thereby. Upon any such waiver, the Company, the Trustee and the holders of the Securities of that series and the related coupons shall be restored to their former positions and rights under this Indenture, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or Acceleration Event or impair any right consequent thereon. Whenever any default or Event of Default or Acceleration Event under this Indenture shall have been waived as permitted by this Section 5.07, such default or Event of Default or 46 Acceleration Event, for all purposes of the Securities, the related coupons and this Indenture, shall be deemed to have been cured and to be not continuing. SECTION 5.08. Notices of Defaults. The Trustee, within 90 days ------------------- after the occurrence of a default with respect to Securities of any series, shall mail to all Securityholders of that series, at their addresses shown on the Security Register, notice of all such defaults known to the Trustee, unless such defaults shall have been cured or waived before the giving of such notice (the term "default" for the purpose of this Section 5.08 being hereby defined to mean any event which constitutes or after notice or lapse of time or both would constitute an Event of Default); and provided that, except in the case of default in the payment of the principal of or any premium or interest on any of the Securities of that series or in the making of any sinking fund payment or analogous obligation with respect to Securities of that series, 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 determines that the withholding of such notice is in the interest of the Securityholders of that series. SECTION 5.09. Undertaking to Pay Costs. All parties to this ------------------------ Indenture agree, and each holder of any Security or coupon by his acceptance thereof shall be deemed to have agreed, that any court in its discretion may 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 in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant; provided, however, that the provisions of this Section 5.09 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of that series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or any premium or interest on any Security on or after the respective Stated Maturities (or, in the case of redemption or repayment, on or after the redemption date or repayment date). 47 ARTICLE SIX CONCERNING THE TRUSTEE SECTION 6.01. Duties and Responsibilities of Trustee. In case an -------------------------------------- Event of Default has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, its own willful misconduct or any action or failure to act taken or omitted by it in bad faith, except that: (a) except during the continuance of an Event of Default: (1) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on the part of the Trustee, the Trustee conclusively may rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions of this Indenture specifically are required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture; (b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of 48 not less than a majority in principal amount of the Securities of any series at the time Outstanding (determined as provided in Section 7.04) relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.01. The provisions of this Section 6.01 are in furtherance of and subject to Sections 315 and 316 of the Trust Indenture Act. SECTION 6.02. Reliance on Documents, Opinions, etc. Subject to the ------------------------------------ applicable provisions of the Trust Indenture Act and in furtherance thereof and subject to the provisions of Section 6.01: (a) the Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company; (c) the Trustee may consult with counsel and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it under this Indenture in good faith and in accordance with such Opinion of Counsel; 49 (d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; (e) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, coupon or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books and records of the Company to the extent reasonably necessary to verify such facts or matters; and (g) the Trustee may execute any of the trusts or powers under this Indenture or perform any duties under this Indenture either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care under this Indenture. SECTION 6.03. No Responsibility for Recitals, etc. The recitals ----------------------------------- contained in this Indenture and in the Securities (except in the Trustee's certificate of authentication) and in any coupons shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or the coupons. The Trustee shall not be accountable for the use or application by the Company of any Securities or the proceeds of any Securities authenticated and delivered by the Trustee. SECTION 6.04. Trustee, Paying Agents or Registrar May Own Securities. ------------------------------------------------------ Subject to the applicable provisions of the Trust Indenture Act, the Trustee or any Paying Agent or Security registrar, in its individual or any other capacity, may become the owner or pledgee of Securities with the same 50 rights it would have if it were not Trustee, Paying Agent or Security registrar. SECTION 6.05. Money to Be Held in Trust. Subject to the provisions ------------------------- of Section 14.03 and Section 14.04, all money received by the Trustee, until used or applied as herein provided, shall be held in trust for the purposes for which it was received. Money held by the Trustee need not be segregated from other funds except as provided by law. The Trustee shall be under no liability for interest on any money received by it under this Indenture, except as the Company and the Trustee otherwise may agree. SECTION 6.06. Compensation and Expenses of Trustee. The Company ------------------------------------ will pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it under this Indenture (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct. The Company also covenants to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence, bad faith or willful misconduct on the part of the Trustee and arising out of or in connection with the acceptance or administration of this trust, including the reasonable costs and expenses of defending itself against any claim of liability in connection with the exercise or performance of any of its powers under this Indenture. The obligations of the Company under this Section 6.06 shall constitute additional indebtedness under this Indenture. SECTION 6.07. Officers' Certificate as Evidence. Subject to the --------------------------------- provisions of Section 6.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action under this Indenture, such matter (unless other evidence in respect thereof be herein specifically prescribed), in the absence of negligence, bad faith or willful misconduct on the part of the Trustee, may be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such Officers' Certificate, in the absence of negligence, bad faith or willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action 51 taken or omitted by it under the provisions of this Indenture upon the faith of such Officers' Certificate. SECTION 6.08. Eligibility of Trustee. The Trustee under this ---------------------- Indenture shall at all times be a corporation organized and doing business under the laws of the United States or any State thereof 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, State or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 6.08, 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. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.08, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.09. Neither the Company nor any person directly or indirectly controlling, controlled by, or under common control with the Company shall serve as Trustee under this Indenture. SECTION 6.09. Resignation or Removal of Trustee. (a) The Trustee --------------------------------- may resign at any time by giving written notice of such resignation to the Company, by mailing notice of such resignation to the holders of Registered Securities at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week. (b) In case at any time any of the following shall occur: (1) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, or (2) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.08 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or 52 (3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed or a public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee by written instrument, executed by Company Order authorized by the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor Trustee (with written notice of such removal mailed to the holders of Registered Securities at their address as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week), or, subject to the provisions of Section 5.09, any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, on behalf of himself and all others similarly situated, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (c) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company promptly shall appoint a successor Trustee by a Company Order authorized by the Board of Directors, one copy of which instrument shall be delivered to the retiring Trustee and one copy to the successor Trustee. If, within one year after such resignation, removal or incapability or the occurrence of such vacancy, a successor Trustee shall be appointed by the holders of a majority in principal amount of the Securities (voting as a single class) at the time Outstanding by instrument or instruments delivered to the Company and the retiring Trustee, the successor Trustee so appointed, forthwith upon its acceptance of such appointment, shall become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Securityholders and accepted appointment in the manner provided in Section 6.10 within 60 days after notice of the resignation or removal of the Trustee is mailed to the Securityholders, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, or any Securityholder who has been a bona fide holder of a Security or Securities for at least six months, subject to the provisions of Section 5.09, on behalf of himself and all others similarly situated, may petition any 53 court of competent jurisdiction for the appointment of a successor Trustee. (d) The holders of a majority in aggregate principal amount of the Securities (voting as a single class) at the time Outstanding at any time, upon notice to the Trustee, may remove the Trustee. (e) Any removal of the Trustee and appointment of a successor Trustee pursuant to any of the provisions of this Section 6.09 shall become effective upon acceptance of appointment by the successor Trustee as provided in Section 6.10. Any resignation of the Trustee shall become effective only upon the appointment of a successor Trustee and upon the acceptance of appointment by the successor Trustee as provided in Section 6.10. SECTION 6.10. Acceptance by Successor Trustee. Any successor ------------------------------- Trustee appointed as provided in Section 6.09 shall execute, acknowledge and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment under this Indenture, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor under this Indenture, with like effect as if originally named as Trustee in this Indenture; but, nevertheless, on the written request of the Company or of the successor Trustee, the Trustee ceasing to act, upon payment of any amounts then due it pursuant to the provisions of Section 6.06, shall execute and deliver an instrument transferring to such successor Trustee all the rights and powers of the Trustee so ceasing to act and shall transfer, assign and deliver to such successor all property and money held by such predecessor Trustee under this Indenture. Upon request of any such successor Trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers. Any Trustee ceasing to act nevertheless shall retain a lien upon all property or funds held or collected by such Trustee to secure any amounts then due it pursuant to the provisions of Section 6.06. No successor Trustee shall accept appointment as provided in this Section 6.10 unless at the time of such acceptance such successor Trustee shall be qualified under the provisions of Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 6.08. Upon acceptance of appointment by a successor Trustee as provided in this Section 6.10, the Company shall 54 mail notice of the succession of such Trustee under this Indenture to the holders of Registered Securities at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed and, if necessary, published at the expense of the Company. SECTION 6.11. Succession by Merger, etc. Any corporation into which ------------------------- the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor Trustee under this Indenture without the execution or filing of any paper or any further act on the part of any of the parties to this Indenture provided such corporation shall be qualified under the provisions of Section 310(b) of the Trust Indenture Act and eligible under the provisions of Section 6.08. In case at the time such successor Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor Trustee may authenticate such Securities either in the name of any predecessor Trustee under this Indenture or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS SECTION 7.01. Action by Securityholders. Whenever in this Indenture ------------------------- it is provided that the holders of a specified percentage in aggregate principal amount of the Securities of any or all series may take any action (including 55 the making of any demand or request, the giving of any notice, consent or waiver or the taking of any such other action), the fact that at the time of taking any such action the holders of such specified percentage have joined in such action may be evidenced (i) by any instrument or any number of instruments of similar tenor executed by Securityholders in person or by agent or proxy appointed in writing, (ii) by the record of the holders of Securities voting in favor of such action at any meeting of Securityholders duly called and held in accordance with the provisions of this Article Seven or (iii) by a combination of such instrument or instruments and any such record of such a meeting of Securityholders. The Company may set a record date for purposes of determining the identity of holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall be the later of ten days prior to the first solicitation of such consent or the date of the most recent list of holders furnished to the Trustee pursuant to the provisions of Section 312(a) of the Trust Indenture Act prior to such solicitation. If a record date is fixed, those persons who were holders of Securities at such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consents or to revoke any vote or consent previously given, whether or not such persons continue to be holders after such record date. No such vote or consent shall be valid or effective if such vote occurs or such consent is obtained more than 120 days after such record date. SECTION 7.02. Proof of Execution by Securityholders. (a) Subject ------------------------------------- to the provisions of Sections 6.01, 6.02 and 8.05, proof of the execution of any instrument by a Securityholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. (b) The ownership of Registered Securities of any series shall be proved by the Security Register or by a certificate of the Security registrar of such series. (c) The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities in the amount and with the serial numbers therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer 56 Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (i) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, (ii) such Bearer Security is produced to the Trustee by some other Person, (iii) such Bearer Security is surrendered in exchange for a Registered Security or (iv) such Bearer Security is no longer Outstanding. The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 7.02(c). (d) The record of any Securityholders' meeting shall be proved in the manner provided in Section 8.07. SECTION 7.03. Who Are Deemed Absolute Owners. Prior to due ------------------------------ presentation of a Registered Security for registration of transfer, the Company, the Trustee, any Paying Agent and any Security registrar may treat the Person in whose name such Registered Security is registered as owner of such Registered Security for the purpose of receiving payment of principal of and any premium and (subject to Section 2.09) interest on such Registered Security and for all other purposes whatsoever, whether or not such Registered Security is overdue and notwithstanding any notation of ownership or other writing on such Registered Security made by anyone other than the Company or any Security registrar, and neither the Company, the Trustee, any Paying Agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such holder as shown in the Security Register, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for money payable upon any such Registered Security. The Company, the Trustee, any Paying Agent and any Security registrar may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Bearer Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Bearer Security or coupon is overdue, and neither the Company, the Trustee, any Paying Agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such bearer shall be valid and, to the extent of the sum or sums so 57 paid, effectual to satisfy and discharge the liability for money payable upon any such Bearer Security. None of the Company, the Trustee, any Paying Agent or the Security registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. SECTION 7.04. Company-Owned Securities Disregarded. In determining ------------------------------------ whether the holders of the requisite aggregate principal amount of Securities have concurred in any direction, consent, waiver or other action under this Indenture, Securities that are owned by the Company or any other obligor on the Securities or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided, however, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or other action, only Securities that the Trustee knows are so owned shall be so disregarded. SECTION 7.05. Revocation of Consents; Future Holders Bound. At any -------------------------------------------- time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.01, of the taking of any action by the holders of the percentage in aggregate principal amount of the Securities of any or all series specified in this Indenture in connection with such action, any holder of a Security the serial number of which is shown by the evidence to be included in the Securities the holders of which have consented to such action, by filing written notice with the Trustee at the principal office of the Trustee and upon proof of holding as provided in Section 7.02, may revoke such action so far as concerns such Security. Except as provided in this Section 7.05, any such action taken by the holder of any Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Security, irrespective of whether or not any notation in regard thereto is made upon such Security or any Security issued in exchange or substitution for such Security. ARTICLE EIGHT SECURITYHOLDERS' MEETINGS SECTION 8.01. Purposes of Meetings. A meeting of Securityholders -------------------- of any or all series may be called at any time and from time to time pursuant to the provisions of this Article Eight for any of the following purposes: 58 (1) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default under this Indenture and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article Five; (2) to remove the Trustee and nominate a successor Trustee pursuant to the provisions of Article Six; (3) to consent to the execution of an indenture or indentures supplemental to this Indenture pursuant to the provisions of Section 9.02; or (4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of the Securities under any other provision of this Indenture or under applicable law. SECTION 8.02. Call of Meetings by Trustee. The Trustee at any time --------------------------- may call a meeting of Securityholders of any or all series to take any action specified in Section 8.01, to be held at such time and at such place in The City of New York for Registered Securities and the City of London, England for Bearer Securities, as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders, if any, of Registered Securities of each series affected at their addresses as they shall appear on the Security Register, and shall be provided to holders, if any, of Bearer Securities of each series affected by publication thereof in a newspaper of general circulation, in each Place of Payment for each such series, customarily published at least once a day for at least five days in each calendar week. Such notice to holders of Registered Securities shall be mailed not fewer than 20 nor more than 90 days prior to the date fixed for the meeting. Such notice to holders of Bearer Securities shall be made by the required publication on at least two dates, the first such publication to be not more than 90 days and the second such publication to be not fewer 20 days prior to the date fixed for the meeting. Any meeting of Securityholders shall be valid without notice if the holders of all Securities then Outstanding of each series affected are present in person or by proxy or if notice is waived before or after the meeting by the holders of all Outstanding Securities of each series affected, and if the Company and the Trustee are either 59 present by duly authorized representatives or, before or after the meeting, have waived notice. SECTION 8.03. Call of Meetings by Company or Securityholders. In ---------------------------------------------- case at any time the Company, pursuant to a resolution of its Board of Directors, or the holders of at least 10% in aggregate principal amount of the Securities then Outstanding of any or all series, as the case may be, that may be affected by the action proposed to be taken, shall have requested the Trustee to call a meeting of Securityholders of any or all series, as the case may be, that may be so affected, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed or published (as appropriate under Section 8.02) the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place in the city designated in Section 8.02, as the case may be, for such meeting and may call such meeting to take any action authorized in Section 8.02, by mailing or publishing notice of such meeting as provided in Section 8.02. SECTION 8.04. Qualifications for Voting. To be entitled to vote at ------------------------- any meeting of Securityholders of any series a person shall (i) be a holder of one or more Securities of such series as set forth in the Security Register for such series or (ii) be a person appointed by an instrument in writing as proxy by a holder of one or more Securities of such series, subject to the provisions of Section 7.02. The only persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 8.05. Regulations. (a) Notwithstanding any other ----------- provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. (b) The Trustee, by an instrument in writing, shall appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 8.03, in which case the Company or the Securityholders calling the meeting, as the case may be, in like manner shall appoint a temporary chairman. A permanent chairman and a permanent secretary of 60 the meeting shall be elected by vote of the holders of a majority in principal amount of the Securities represented at the meeting and entitled to vote. (c) Subject to the provisions of Section 7.04, at any meeting each Securityholder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities. (d) No vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or instruments in writing duly designating him as the person to vote on behalf of other Securityholders. Any meeting of Securityholders duly called pursuant to the provisions of Section 8.02 or Section 8.03 may be adjourned from time to time by a majority of those present and the meeting may be held as so adjourned without further notice. SECTION 8.06. Quorum. The Persons entitled to vote a majority in ------ principal amount of the Outstanding Securities affected by the action proposed to be taken shall constitute a quorum for a meeting of such Securityholders. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting, if convened at the request of holders of Securities, shall be dissolved. In the absence of a quorum in any other case the meeting may be adjourned for a period of not fewer than ten days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not fewer than ten days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.02, except that such notice need be given only once not fewer than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities affected by the action proposed to be taken which shall constitute a quorum. SECTION 8.07. Voting. The vote upon any resolution submitted to any ------ meeting of Securityholders shall be by written ballots on which shall be subscribed the signatures of the holders of Securities or of their representatives by proxy and the principal amount of the Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and 61 file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of votes on any vote by ballot taken at such meeting and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that such notice was mailed or published as provided in Section 8.02 or Section 8.03. The record shall show the principal amount of the Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee. Any record so signed and verified shall be conclusive evidence of the matters stated in such record. SECTION 8.08. No Delay of Rights by Meeting. Nothing in this Article ----------------------------- Eight shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Securityholders or any rights expressly or impliedly conferred under this Article Eight to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Securityholders under any of the provisions of this Indenture or of the Securities. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 9.01. Supplemental Indentures Without Consent of ------------------------------------------ Securityholders. The Company, when authorized by the resolutions of the Board - --------------- of Directors, and the Trustee from time to time and at any time may enter into an indenture or indentures supplemental to this Indenture for one or more of the following purposes: (a) to evidence the succession of another corporation to the Company, or successive successions, and the assumptions by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article Ten; (b) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the holders of any series of the Securities or coupons as the Board of Directors and the Trustee shall consider to be for the protection of the holders of such Securities or coupons, and to make the occurrence, 62 or the occurrence and continuance, of a default in any such additional covenants, restrictions or conditions a default or an Event of Default permitting, subject to Article Three, the enforcement of all or any of the several remedies set forth in this Indenture; provided, however, that in respect of any such additional covenant, restriction or condition such supplemental indenture may provide for notice or a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or, subject to Article Three, may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default; (c) to cure any ambiguity or to correct or supplement any provision contained in this Indenture or in any supplemental indenture that may be defective or inconsistent with any other provision contained in this Indenture or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture that shall not adversely affect the interests of the holders of Outstanding Securities of any series or any related coupons; (d) to establish the form or terms of Securities of any series as permitted by Section 2.01; (e) to add to, change or eliminate any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal or any premium on Registered Securities or of principal or any premium or interest on Bearer Securities, to permit Bearer Securities to be issued in exchange for Registered Securities or to permit or facilitate the issuance of Securities in uncertificated form, provided any such action shall not adversely affect the interests of the holders of Outstanding Securities of any series or any related coupons; (f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture; provided, however, that such action shall not adversely affect the interests of the holders of Outstanding Securities of any series; (g) to provide for the documentation necessary for the issuance of Securities outside the United States of America; 63 (h) to provide for the documentation necessary for the issuance of Securities at an issue price lower than the principal amount thereof, including to provide that upon the redemption or acceleration of the Maturity thereof an amount less than the principal amount thereof shall become due and payable and that such amount shall be used to determine the relative voting rights of the holders thereof; or (i) to conform the Indenture to the provisions of the Trust Indenture Act as then in effect. The Trustee hereby is authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be contained in such supplemental indenture and to accept the conveyance, transfer and assignment of any property under such supplemental indenture, but the Trustee shall not be obligated to, but in its discretion may, enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed by the Company and the Trustee without the consent of the holders of any of the Securities at the time Outstanding, notwithstanding the provisions of Section 9.02. SECTION 9.02. Supplemental Indentures with Consent of Securityholders ------------------------------------------------------- of a Series. With the consent (evidenced as provided in Section 7.01) of the - ----------- holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of each series affected by such supplemental indenture or indentures, the Company, when authorized by the resolutions of the Board of Directors, and the Trustee from time to time and at any time may enter into an indenture or indentures supplemental to this Indenture 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 Securities of each such series; provided, however, that without the consent of the holder of each Outstanding Security affected thereby no such supplemental indenture shall: (a) change the Stated Maturity of the principal of or any premium or any installment of interest on, any Security, or reduce the principal amount of any Security or any premium or interest on any Security, or reduce the amount of principal payable upon acceleration of the Maturity of any Original Issue Discount Security, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or interest on any Security is payable, or impair the right to 64 institute suit for the enforcement of any such payment on or after its Stated Maturity, or make any change in Article Three that adversely affects the rights of any Securityholder; (b) reduce the percentage in principal amount of Securities of any Series the consent of whose holders is required for any such supplemental indenture or the consent of whose holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults under this Indenture and their consequences provided for in this Indenture; or (c) modify the provisions of Section 5.01 providing for the rescinding and annulment of a declaration accelerating the Maturity of the Securities of any series, or any of the provisions of this Section 9.02 or Section 5.07(b), except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived. Upon request of the Company, accompanied by a copy of the resolutions of the Board of Directors certified by its Secretary or Assistant Secretary authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders of such series as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee in its discretion may, but shall not be obliged to, enter into such supplemental indenture. It shall not be necessary for the consent of the Securityholders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. SECTION 9.03. Compliance with Trust Indenture Act; Effect of ----------------------------------------------- Supplemental Indentures. Any supplemental indenture executed pursuant to the - ----------------------- provisions of this Article Nine shall comply with the Trust Indenture Act as then in effect. Upon the execution of any supplemental indenture pursuant to the provisions of this Article Nine, this Indenture shall be and be deemed to be modified and amended in accordance with such supplemental indenture and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of the series of Securities affected thereafter shall be determined, exercised and enforced under this Indenture subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. 65 SECTION 9.04. Notation on Securities. Securities authenticated and ---------------------- delivered after the execution of any supplemental indenture pursuant to the provisions of this Article Nine may bear a notation in form acceptable to the Trustee as to any matter provided for in such supplemental indenture. If the Company so shall determine, new Securities of any series and any related coupons so modified as to conform, in the opinion of the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Company, authenticated by the Trustee and delivered in exchange, as provided in Section 2.06, for the Outstanding Securities of such series and any related coupons, upon surrender of such Outstanding Securities of such series and any related coupons. SECTION 9.05. Evidence of Compliance of Supplemental Indenture to Be ------------------------------------------------------ Furnished Trustee. The Trustee, subject to the provisions of Section 6.01 and - ----------------- Section 6.02, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article Nine complies with the requirements of this Article Nine. ARTICLE TEN CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE SECTION 10.01. Company May Consolidate, etc., on Certain Terms. ----------------------------------------------- The Company shall not consolidate with or merge into another corporation or convey, transfer or lease its properties 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 or which leases the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and expressly shall assume, by a supplemental indenture executed and delivered to the Trustee in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on the Securities, according to their terms, and the performance of every covenant of this Indenture and in such series on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an 66 Event of Default, shall have happened and be continuing; and (3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and supplemental indenture comply with this Article Ten and that all conditions precedent provided for in this Indenture relating to such transaction have been complied with. SECTION 10.02. Successor Corporation Substituted. Upon any --------------------------------- consolidation by the Company with or merger by the Company into any other corporation or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 10.01, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company in this Indenture, and thereafter, except in the case of a lease, the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities of each series and any related coupons. Such successor corporation may cause to be signed, and may issue either in its own name or in the name of the Company prior to such succession, any of or all the Securities of each series issuable under this Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor corporation instead of upon the Company Order, and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee on its behalf for that purpose. All the Securities so issued shall have in all respects the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Securities had been issued at the date of the execution of this Indenture. 67 ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 11.01. Applicability of Article. Securities of any series ------------------------ that are redeemable before their Stated Maturity shall be redeemable only in accordance with their terms and (except as otherwise specified as contemplated by Section 2.01 for Securities of any series) in accordance with this Article Eleven, to the extent Article Three does not prohibit such a redemption. SECTION 11.02. Election to Redeem; Notice to Trustee. The election ------------------------------------- of the Company to redeem any Securities shall be evidenced by a Company Order. In case of any redemption at the election of the Company of less than all the Securities of any series, the Company, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), shall notify the Trustee of such Redemption Date, of the tenor and terms of the Securities of such series to be redeemed and of the principal amount of such Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. SECTION 11.03. Selection by Trustee of Securities to Be Redeemed. ------------------------------------------------- If less than all the Securities of any series of like tenor and terms specified by the Company are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and of such tenor and terms not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denominations for such Securities or any integral multiple thereof) of the principal amount of such Registered Securities or such Bearer Securities or a denomination larger than the minimum authorized denomination for such Registered Securities or such Bearer Securities. The Trustee promptly shall notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any 68 Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 11.04. Notice of Redemption. Notice of redemption shall be -------------------- given in the manner provided in Section 8.02 not fewer than 30 or more than 60 days prior to the Redemption Date. All notices of redemption shall state: (1) the Redemption Date; (2) the Redemption Price; (3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed; (4) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after such date; (5) the Place or Places of Payment where such Securities, together in the case of Bearer Securities with all coupons, if any, appertaining thereto maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price; (6) that Bearer Securities may be surrendered for payment only at such place or places that are outside the United States, except as provided in Section 4.02; and (7) that the redemption is for a sinking fund, if such is the case. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 11.05. Deposit of Redemption Price. On or prior to any --------------------------- Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 4.04(b)) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be the same date as the Stated Maturity of an installment of interest thereon) accrued interest on, all the 69 Securities that are to be redeemed on that date; provided, however, that deposits with respect to Bearer Securities shall be made with a Paying Agent or Paying Agents located outside the United States except as otherwise provided in Section 4.02, unless otherwise specified as contemplated by Section 2.01. SECTION 11.06. Securities Payable on Redemption Date. Notice of ------------------------------------- redemption having been given as aforesaid, the Securities so to be redeemed shall become due and payable, on the Redemption Date, at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that: (i) installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of coupons for such interest (at an office or agency located outside the United States except as otherwise provided in Section 4.02); and (ii) installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant record date for the payment of such interest according to the terms of such Securities. If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Bearer Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to hold each of them and any Paying Agent harmless. If thereafter the holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such holder shall be entitled to receive the amount so deducted on account of such coupon without interest thereon; provided, however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside of the United States except as otherwise provided in Section 4.02. 70 If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium, until paid, shall bear interest from the Redemption Date at the rate prescribed therefor in the Security or related coupon. SECTION 11.07. Registered Securities Redeemed in Part. Any -------------------------------------- Registered Security that is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the holder of such Security without service charge, a new Registered Security or new Registered Securities of the same series and of like tenor and terms, of any authorized denomination as requested by such holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. ARTICLE TWELVE SINKING FUNDS SECTION 12.01. Applicability of Article. Subject to Section 3.02(b), ------------------------ the provisions of this Article Twelve shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 2.01 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.02. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of the Securities of such series. SECTION 12.02. Satisfaction of Sinking Fund Payments with Securities. ----------------------------------------------------- The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and 71 (2) may apply as a credit Securities of a series that have been repurchased at the option of a holder or redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series, provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund, and the amount of such sinking fund payment shall be reduced accordingly. SECTION 12.03. Redemption of Securities for Sinking Fund. Not fewer ----------------------------------------- than 60 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment of that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 12.02 and also will deliver to the Trustee any Securities to be so delivered. Not fewer than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.03 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.04. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.06 and Section 11.07. ARTICLE THIRTEEN REPAYMENT AT THE OPTION OF HOLDERS SECTION 13.01. Terms Set Forth in the Securities. Securities of any --------------------------------- series which in accordance with their terms are repayable at the option of the holders thereof before their Stated Maturity shall be repaid in accordance with the terms set forth in such Securities, to the extent Article Three does not prohibit such a repayment. 72 ARTICLE FOURTEEN SATISFACTION AND DISCHARGE OF INDENTURE SECTION 14.01. Discharge of Indenture. When (a) the Company shall ---------------------- deliver to the Trustee for cancellation all Securities of any series and any related coupons theretofore authenticated (other than any Securities of such series and any related coupons that shall have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which other Securities or coupons shall have been authenticated and delivered) and not theretofore cancelled, or (b) all the Securities of any series and any related coupons not theretofore cancelled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit (to the extent Article Three does not prohibit such a deposit) with the Trustee, in trust, funds sufficient to pay upon Stated Maturity, redemption or repayment at the option of a holder all the Securities of such series and related coupons (other than any Securities of such series and related coupons that shall have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.07) not theretofore cancelled or delivered to the Trustee for cancellation, including principal and any premium and interest due or to become due prior to such Stated Maturity, Redemption Date or date of repayment, as the case may be, but excluding, however, the amount of any money for the payment of principal of or any premium or interest on the Securities (1) theretofore deposited with the Trustee and repaid by the Trustee to the Company in accordance with the provisions of Section 14.04 or (2) paid to any State or the District of Columbia pursuant to its unclaimed property or similar laws, and if in either case the Company also shall pay or cause to be paid all other sums payable under this Indenture by the Company, then this Indenture shall cease to be of further effect with respect to Securities of such series and any related coupons, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel as required by Section 16.05 and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to Securities of such series and any related coupons. The obligations of the 73 Company to the Trustee under Section 6.06 shall survive the termination of this Indenture. The Trustee shall notify the Securityholders of such series, at the expense of the Company, of the immediate availability of the amount referred to in clause (b) of this Section 14.01 by mailing a notice, first class postage prepaid, to the holders of Registered Securities of such series at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week. SECTION 14.02. Deposited Money to Be Held in Trust by Trustee. ---------------------------------------------- Subject to Article Three and to Section 14.04, all money deposited with the Trustee pursuant to Section 14.01 shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company if acting as its own Paying Agent, other than as to Bearer Securities, except as provided in Section 4.02), to the holders of the particular Securities and related coupons for the payment of which such money has been deposited with the Trustee, of all sums due and to become due thereon for principal and any premium and interest. SECTION 14.03. Paying Agent to Repay Money Held. Upon the -------------------------------- satisfaction and discharge of this Indenture all money then held by any Paying Agent of the Securities (other than the Trustee), upon demand of the Company, shall be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such money. SECTION 14.04. Return of Unclaimed Money. Any money deposited with ------------------------- or paid to the Trustee or any Paying Agent for payment of the principal of or any premium or interest on Securities of any series, or then held by the Company in trust for the payment of the principal of or any premium or interest on Securities of any series, and not applied but remaining unclaimed by the holders of Securities of that series for two years after the date upon which the principal or any premium or interest on such Securities, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee on demand or, if then held by the Company, shall be discharged from such trust, and all liability of the Trustee thereupon shall cease; and the holder of any of such Securities thereafter, as an unsecured general creditor, shall look only to the Company for payment of such Securities, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all 74 liability of the Company as trustee thereof, thereupon shall cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, at the expense of the Company, in the case of Registered Securities or Bearer Securities, may cause to be published once, in a newspaper of general circulation in each Place of Payment for such series customarily published on each Business Day (whether or not published on Saturdays, Sundays or holidays) or, in the case of Registered Securities, to be mailed to each such holder, or in the case of Registered Securities to be mailed and published, notice that such money remains unclaimed and that, after a date specified in such notice, which shall not be fewer than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 14.05. Deposits Irrevocable. Any deposit referred to in -------------------- Section 14.01 shall be irrevocable. If any Securities of a series with respect to which a deposit has been made pursuant to Section 14.01 and at the time Outstanding are to be redeemed prior to their Stated Maturity, whether pursuant to any optional redemption provisions or in accordance with any mandatory sinking fund requirement, the Company shall make such arrangements as are satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company. SECTION 14.06. Reinstatement. If the Trustee is unable to apply ------------- any money or U.S. Government Obligations in accordance with Section 14.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 14.01 until such time as the Trustee is permitted to apply all such money or U.S. Government Obligations in accordance with Section 14.01. ARTICLE FIFTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS SECTION 15.01. Indenture and Securities Solely Corporate Obligations. ----------------------------------------------------- No recourse for the payment of the principal of or any premium or interest on any Security, or for any claim based on any Security or coupon or otherwise in respect of any Security or coupon, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any Security, or because of the creation of any indebtedness represented by any Security or coupon, 75 shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Securities and coupons. ARTICLE SIXTEEN MISCELLANEOUS PROVISIONS SECTION 16.01. Provisions Binding on Company's Successors. All the ------------------------------------------ covenants, stipulations, promises and agreements contained in this Indenture by the Company shall bind its successors and assigns whether so expressed or not. SECTION 16.02. Official Acts by Successor Corporation. Any act or -------------------------------------- proceeding by any provisions of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation that shall at the time be the lawful sole successor of the Company. SECTION 16.03. Addresses for Notices, etc. Any notice or demand that -------------------------- by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the holders of Securities on the Company may be given or served by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company with the Trustee) to Southern National Corporation, Attention: Treasurer, 200 West Second Street, Winston-Salem, North Carolina 27101. Any notice, direction, request or demand by any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the principal office of the Trustee, Attention: Corporate Trust Administration. SECTION 16.04. GOVERNING LAW. THIS INDENTURE AND EACH SECURITY ------------- SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SECTION 16.05. Evidence of Compliance with Conditions Precedent. ------------------------------------------------ Upon any application or request by the Company to the Trustee to take any action under any of the 76 provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture (other than certificates provided pursuant to Section 4.04, which certificates shall comply with the requirements of Section 4.04) shall include: (i) a statement that the person making such certificate or opinion has read such covenant or condition; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinion contained in such certificate or opinion are based; (iii) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. The provisions of this Section 16.05 are in furtherance of and subject to Sections 314(c)(1), 314(c)(2) and 314(e) of the Trust Indenture Act. SECTION 16.06. Legal Holidays. Unless otherwise specified in the -------------- manner contemplated by Section 2.01, in any case where the Stated Maturity of principal of or any premium or interest on the Securities will not be a Business Day, payment of such principal, premium or interest need not be made on such date but may be made on the next following Business Day with the same force and effect as if made on the Stated Maturity and, if such principal, premium or interest is duly paid on such next following Business Day, no interest shall accrue for the period from and after such Stated Maturity to such next following Business Day. SECTION 16.07. Trust Indenture Act to Control. If and to the extent ------------------------------ that any provision of this Indenture limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any provision of the Trust Indenture Act, such required provision shall control. SECTION 16.08. No Security Interest Created. Nothing in this ---------------------------- Indenture or in the Securities or coupons, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar 77 legislation, as now or hereafter enacted and in effect, in any jurisdiction where property of the Company or its Subsidiaries is located. SECTION 16.09. Benefits of Indenture. Nothing in this Indenture or --------------------- in the Securities or coupons, express or implied, shall give to any Person, other than the parties to this Indenture, any Paying Agent, any Security registrar and their successors under this Indenture, the holders of Securities or coupons and, to the extent provided in this Indenture, the holders of Senior Indebtedness, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 16.10. Payments to Be Made in U.S. Dollars. Notwithstanding ----------------------------------- anything in this Indenture to the contrary, any payments on or relating to any Security or related coupon shall be made only in U.S. dollars. SECTION 16.11. Table of Contents, Headings, etc. The table of -------------------------------- contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions of this Indenture. SECTION 16.12. Execution in Counterparts. This Indenture may be ------------------------- executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. ______________ [NAME OF TRUSTEE] hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions set forth above in this Indenture. IN WITNESS WHEREOF, SOUTHERN NATIONAL CORPORATION has caused this Indenture to be signed and acknowledged by its [Vice] President, and its corporate seal to be affixed hereunto, and the same to be attested by its Secretary, and [NAME OF TRUSTEE] has caused this Indenture to be signed and acknowledged by __________________, and has caused its corporate seal to be affixed hereunto and the same to be attested by _______________, as of the day and year first written above. SOUTHERN NATIONAL CORPORATION By __________________________ [Name] [Title] [SEAL] Attest: ___________________________ Secretary [NAME OF TRUSTEE] By __________________________ [Name] [Title] [SEAL] Attest: ___________________________ Title: 79 STATE OF ) )ss.: COUNTY OF ) On the ___ day of _______________, 1996, before me personally came _______________, to me known, who, being by me duly sworn did depose and say that he resides at ______________________________; that he is the [Vice] President of Southern National Corporation, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by the authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. _______________________________ Notary Public [NOTARIAL SEAL] STATE OF ) )ss.: COUNTY OF ) On the ____ day of _______________, 1996, before me personally came ______________________________, to me known, who, being by me duly sworn did depose and say that he resides at ______________________________; that he is a ______________________________ of [Name of Trustee], one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to the said instrument is such corporate seal; that it was so affixed by the authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. _______________________________ Notary Public [NOTARIAL SEAL] EX-5 5 EXHIBIT 5 Exhibit 5 --------- [LETTER HEAD OF WOMBLE CARLYLE SANDRIDGE & RICE APPEARS HERE] [DRAFT] April 26, 1996 Southern National Corporation 200 West Second Street Winston-Salem, North Carolina 27102 Re: Registration Statement on Form S-3 with respect to $1 Billion Principal Amount of Debt Securities Dear Ladies and Gentlemen: We have acted as counsel to Southern National Corporation (the "Company") in connection with the registration by the Company of up to $1 billion principal amount of senior or subordinated Debt Securities, issuable pursuant to the Senior Indenture or the Subordinated Indenture as set forth in the registration statement on Form S-3 (the "Registration Statement") that is being filed on the date hereof by the Company with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended. This opinion letter is Exhibit 5 to the Registration Statement. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Registration Statement. The Debt Securities are to be issued, separately or together, in accordance with the terms of the Indentures in one or more series and are to be sold from time to time as set forth in the Registration Statement, the prospectuses contained therein (each, a "Prospectus") and any amendments or supplements thereto. In connection with the foregoing, we have examined such records, documents and proceedings as we have deemed relevant as a basis for the opinion expressed herein, and we have relied upon an officer's certificate as to certain factual matters. Southern National Corporation April 26, 1996 Page 2 Based on the foregoing, we are of the opinion that when (1) the Registration Statement shall have been declared effective by order of the Securities and Exchange Commission, (2) the terms of any class or series of the Debt Securities have been authorized by appropriate corporate action of the Company and (3) the Debt Securities have been issued and sold in accordance with the Senior Indenture or Subordinated Indenture, as the case may be, and upon the terms and conditions set forth in the Registration Statement, the applicable Prospectus and the applicable supplement to such Prospectus, then the Debt Securities will be validly authorized and issued and binding obligations of the Company. We hereby consent to be named in the Registration Statement and in each of the Prospectuses as attorneys who passed upon the legality of the Securities and to the filing of a copy of this opinion as Exhibit 5 to the Registration Statement. Very truly yours, WOMBLE CARLYLE SANDRIDGE & RICE, a Professional Limited Liability Company Garza Baldwin, III EX-12 6 EXHIBIT 12 Exhibit 12 ---------- COMPUTATIONS OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES (DOLLARS IN THOUSANDS)
EARNINGS TO FIXED CHARGES 1995 1994 1993 1992 1991 ----------- ---------- ---------- ---------- ---------- EARNINGS: Income before income taxes $ 264,196 $361,631 $197,279 $231,048 $167,136 Plus: Fixed charges 816,489 588,872 514,482 596,891 750,436 Less: Capitalized interest 295 293 357 139 100 ---------- -------- -------- -------- -------- Earnings, including interest on deposits 1,080,390 950,210 711,404 827,800 917,472 Less: Interest on deposits 557,149 441,876 428,194 522,893 662,382 ---------- -------- -------- -------- -------- Earnings, excluding interest on deposits $ 523,241 $508,334 $283,210 $304,907 $255,090 FIXED CHARGES: Interest expense $ 806,627 $581,279 $506,192 $589,785 $743,322 Capitalized interest 295 293 357 139 100 Interest portion of rent expense 9,567 7,300 7,933 6,967 7,014 ---------- -------- -------- -------- -------- Total fixed charges $ 816,489 $588,872 $514,482 $596,891 $750,436 ========== ======== ======== ======== ======== Less: Interest on deposits 557,149 441,876 428,194 522,893 662,382 ---------- -------- -------- -------- -------- Total fixed charges excluding interest on deposits $ 259,340 $146,996 $ 86,288 $ 73,998 $ 88,054 ========== ========= ========= ========= ========= EARNINGS TO FIXED CHARGES: Including interest on deposits 1.32x 1.61x 1.38x 1.39x 1.22x ========== ======== ======== ======== ======== Excluding interest on deposits 2.02 3.46 3.28 4.12 2.90 ========== ======== ======== ======== ========
EX-23.A 7 EXHIBIT 23(A) Exhibit 23(a) ------------- Consent of Independent Public Accountants As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports dated January 18, 1996 (except with respect to the matter discussed in Note J to the consolidated financial statements, as to which the date is February 28, 1996), included in Southern National Corporation's Form 10-K for the year ended December 31, 1995, and to all references to our firm included in this registration statement. Arthur Andersen LLP Charlotte, North Carolina, April 26, 1996. -----END PRIVACY-ENHANCED MESSAGE-----