EXHIBIT 1
DEBENTURE AGREEMENT
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This Debenture Agreement, dated as of September 27, 1995 is made to
set forth the provisions of the 11.5% Subordinated Debentures Due 2005 to be
issued by Cupertino National Bancorp, a California corporation (the "Company"),
which the Company is selling pursuant to a Private Placement Offering Memorandum
dated August 22, 1995 to Debentureholders.
RECITALS OF THE COMPANY
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The Company has duly authorized the creation of an issue of its
Subordinated Debentures Due 2005 (the "Debentures") of substantially the tenor
and amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution of this Debenture Agreement.
All things necessary to make the Debentures when executed and duly
issued by the Company and delivered hereunder, the valid obligations of the
Company, and to make this Debenture Agreement a valid agreement of the Company,
in accordance with their and its terms have been done.
For and in consideration of the premises and purchase of the
Debentures by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of Debentures, as follows:
ARTICLE I
Definitions and Other Provisions of General Application.
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1.1 Definitions. For all purposes of this Debenture Agreement,
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except as otherwise expressly provided or unless the context otherwise requires:
a. The term "Debenture Agreement" means this instrument as
originally adopted by the Company or as it may from time to time be supplemented
or amended by one or more debenture agreements supplemental hereto entered into
pursuant to the applicable provisions hereof.
b. All references in this instrument to designated
"Articles," "Sections" and other subdivisions are to the designated Articles,
Sections or other subdivisions of this instrument as originally adopted. The
words "herein," "hereof," and "hereunder" and other words of similar import
refer to this Debenture Agreement as a whole and not to any particular Article,
Section or other subdivision.
c. The terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular.
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d. All accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted accounting
principles.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" means Cupertino National Bank.
"Board of Directors" means either the Board of Directors of the
Company or any duly authorized committee of that Board.
"Board Resolutions" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means each day which is neither a Saturday, Sunday nor
other day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Debenture Agreement, and
thereafter "Company" shall mean such successor corporation.
"Debentureholder" or "Holder" when used with respect to any Debenture
means the Person in whose name such Debenture is registered in the Debenture
Register.
"Derivative Obligations" means any obligations of the Company to make
payment pursuant to the terms of any securities contracts and foreign currency
exchange contracts derivative instruments, such as swap agreements (including
interest rate and currency 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 other than obligations on account of indebtedness for money
borrowed ranking pari passu with or subordinate to the Debentures.
"Event of Default" has the meaning specified in Article VII.
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"Initial Interest Accrual Date" as to any Debenture means the date
from which interest shall begin to accrue in connection with the original
issuance of such Debenture, which shall be the date as of which such Debenture
originally issued by the Company to the initial purchaser thereof shall be
dated, which shall be the date upon which it was originally sold to such initial
purchaser.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Debentures.
"Legal Holiday," with respect to the Place of Payment or other
location, means a Saturday, Sunday or a day on which banking institutions or
trust companies in the Place of Payment or other location are not authorized or
obligated to be open.
"Maturity" when used with respect to any Debenture means the date on
which the principal of the Debentures or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise, and includes any
Redemption Date.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company.
"Outstanding," when used with respect to the Debentures, means, as of
the date of determination, all Debentures theretofore delivered under this
Debenture Agreement, except:
(1) any Debenture theretofore cancelled by the Debenture Registrar or
delivered to the Debenture Registration for cancellation;
(2) any Debenture, or portion thereof, which has been paid pursuant
to Section 4.8; and
(3) any Debenture in exchange for or in lieu of which other
Debentures have been delivered pursuant to this Debenture Agreement, unless
there shall have been presented to the Company proof satisfactory to it
that such Debenture is held by a bona fide purchaser in whose hands such
Debenture is a valid obligation of the Company.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Debentures on behalf of the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment" has the meaning set forth in Section 3.1.
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"Predecessor Debentures" of any particular Debenture means all
previous Debentures evidencing all or a portion of the same debt as that
evidenced by such particular Debenture, and for the purpose of this definition,
any Debenture delivered under Section 3.5 in lieu of a lost, destroyed,
mutilated or stolen Debenture shall be deemed to evidence the same debt as the
lost, destroyed or stolen Debenture.
"Redemption Date" when used with respect to any Debenture or portion
thereof to be redeemed means the date fixed for such redemption pursuant to this
Debenture Agreement.
"Redemption Price" when used with respect to any Debenture or portion
thereof to be redeemed means the price at which it is to be redeemed pursuant to
Section 2.2 of this Debenture Agreement.
"Regular Record Date" for the interest payable on any Debenture on any
Interest Payment Date therefor means the date specified in Section 2.2 as the
"Regular Record Date."
"Senior Indebtedness" means the principal of, premium, if any, and
interest on, and any other payment due pursuant to any of the following whether
outstanding on the date hereof or thereafter created, assumed or incurred: (1)
all indebtedness of the Company for money borrowed (including indebtedness of
others guaranteed by the Company and other direct credit substitutes) other than
the Debentures, (2) any indebtedness or obligation of the Company as to which it
is expressly provided that such indebtedness or obligation is senior to the
Debentures, (3) any amendments, renewals, extensions, deferrals, modifications
and refundings of any such indebtedness described in subsection (1) or (2)
above, unless in either case in the instrument creating or evidencing any such
indebtedness or pursuant to which it is outstanding it is expressly provided
that such indebtedness is not superior in right of payment to the Debentures,
and (4) Derivative Obligations. For the purposes of this definition,
"indebtedness for money borrowed" is defined as (a) any obligation of the
Company for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes, or other written instruments, (b) any deferred payment
obligation of the Company for the payment of the purchase price of property or
assets evidenced by a note or similar instrument, and (c) any obligation of the
Company for the payment of rent or other amounts under a lease of property or
assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles; provided, however, that the foregoing shall not include
any obligation that constitutes a trade payable or accrued liability arising in
the ordinary course of business.
"Special Record Date" for the payment of any Defaulted Interest on any
Debenture means a date fixed pursuant to Section 3.6.
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"Stated Maturity" when used with respect to any Debenture or any
installment of principal thereof or interest thereon means the date established
by this Debenture Agreement as the fixed date on which the principal of such
Debenture or such installment of principal or interest is due and payable.
"Vice President" when used with respect to the Company means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president."
1.2 Acts of Debentureholders.
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(1) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Debenture Agreement to be given
or taken by Debentureholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Debentureholders in
person or by an agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Debentureholders signing such instrument or instruments.
Proof of execution pursuant to 1.2(b) herein of any such instrument or a writing
appointing any such agent shall be sufficient for any purpose of this Debenture
Agreement.
(2) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by an officer of a corporation or a member of a partnership or a
trustee of a trust, on behalf of such corporation, partnership or trust, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Company deems sufficient.
(3) The ownership of Debentures shall be proved by the Debenture
Register (as defined in Section 3.4).
(4) If the Company shall solicit from the Holders of any
Debentures any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may at its option (but is not obligated to), by
Board Resolution, fix in advance a record date for the determination of the
Holders of Debentures entitled to give or take such request, demand,
authorization, direction, notice, consent, waiver or other Act. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given or taken before or after such record date, but
only the Holders of Debentures of
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record at the close of business on such record date shall be deemed to be
Holders for the purpose of determining whether Holders of the requisite
proportion of Outstanding Debentures have authorized, agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Debentures shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders of Debentures on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Debenture Agreement
not later than six months after the record date.
(5) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Debenture shall bind such
Holder and the Holder of every Debenture issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, or suffered to be done by any Debenture Registrar, any Paying
Agent or the Company in reliance thereon, whether or not notation of such action
is made upon such Debenture.
1.3 Notices, etc. to Company. Any request, demand, authorization,
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direction, notice, consent, waiver or Act of a Debentureholder or any other
document provided or permitted by this Debenture Agreement to be made upon,
given or furnished to, or filed with the Company or by any Debentureholder shall
be sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, registered or certified mail, postage
prepaid, to the Company addressed (until another address is provided by the
Company to the Holders in accordance with Section 1.4) to it at Cupertino
National Bank, 00000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Chief Financial Officer.
1.4 Notices to Debentureholders; Waiver. Where this Debenture
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Agreement provides for notice to Debentureholders of any event, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, registered or certified mail, postage prepaid, to each
Debentureholder affected by such event, at his address as it appears on the
Debenture Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Debentureholders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular
Debentureholder shall affect the sufficiency of such notice, with respect to
other Debentureholders. Where this Debenture Agreement provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notices by Debentureholders shall be
filed with the Company, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
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In case, by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause, it shall be impracticable
to mail notices as required by this Debenture Agreement, then any manner of
giving notice reasonably calculated to achieve this purpose as shall be made
with the approval of the Company shall constitute a sufficient giving of such
notice.
1.5 Effect of Headings. The Article and Section headings herein are
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for convenience only and shall not affect the construction hereof.
1.6 Successors and Assigns. All covenants and agreements in this
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Debenture Agreement by the Company shall bind its successors and assigns,
whether so expressed or not.
1.7 Separability Clause. In case any provision in this Debenture
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Agreement or in the Debentures shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
1.8 Choice of Law. This Debenture Agreement and the Debentures
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shall be construed in accordance with the laws of the State of California,
without giving effect to its choice-of-law provisions.
1.9 Legal Holidays. In any case where any Interest Payment Date,
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Redemption Date or Stated Maturity of any Debenture shall be a Legal Holiday at
the Place of Payment, then (notwithstanding any other provision of this
Debenture Agreement) payment of interest or principal (and premium, if any) of
the Debentures need not be made at such Place of Payment on such date, but may
be made on the next succeeding day that is a Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity; provided that no interest shall
accrue on the amount payable on such date or at such time for the period from
and after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
ARTICLE II
Debenture Forms
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2.1 Forms Generally. The Debentures shall be in substantially the
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forms set forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Debenture Agreement, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon, as may be
required to comply with the rules of any securities exchange, or as may,
consistently herewith, be determined by the officers executing such Debentures.
Any portion of the text of any Debenture may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Debenture.
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2.2 Form of Debenture.
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No. _____ $ _________
CUPERTINO NATIONAL BANCORP
11.5% SUBORDINATED DEBENTURE DUE 2005
THE SECURITIES REPRESENTED BY THIS DEBENTURE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT, AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD,
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, OR
UNLESS AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THIS DEBENTURE IS AN UNSECURED DEBT OBLIGATION OF THE COMPANY; IT IS
NOT A DEPOSIT OR A SAVINGS ACCOUNT OF THE CUPERTINO NATIONAL BANK OR THE COMPANY
AND WILL NOT BE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION. IT IS
SUBORDINATED TO THE CLAIMS OF THE COMPANY'S OBLIGATIONS TO CREDITORS.
Cupertino National Bancorp, a California corporation (herein referred
to as the "Company"), for value received hereby promises to pay to
_______________ (name of debentureholder), or registered assigns, the principal
sum of ______________________________________________________ Dollars on
September 15, 2005, and to pay interest thereon at the rate of 11.5% per annum
from the Initial Interest Accrual Date or from the most recent Initial Payment
Date to which interest has been paid or duly provided for, on the fifteenth day
of each March and September, commencing March 15, 1996 (each an "Interest
Payment Date"), until the principal hereof is paid or made available for
payment.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, except as provided in the Debenture Agreement
hereinafter referred to, be paid to the Person in whose name this Debenture (or
one or more Predecessor Debentures) is registered at the close of business on
the Regular Record Date for such interest, which shall be the tenth day, whether
or not a Business Day, of the month preceding the respective Interest Payment
Date. Any such interest not so punctually paid or duly provided for ("Defaulted
Interest") shall forthwith cease to be payable to the Holder on such Regular
Record Date and either may be paid to the Person in whose name this Debenture
(or one or more Predecessor Debentures) is registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Company, notice whereof shall be given to the Holders not less than ten
days prior to such Special
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Record Date, or may be paid at any time in any other lawful manner, all as more
fully provided in the Debenture Agreement. Payment of the principal of and
interest on this Debenture will be made at the Company's option (i) at the
office of the Company maintained for that purpose in Cupertino, California, or
in such other office as may be established by the Company pursuant to the
Debenture Agreement (initially the principal corporate office of the Company
(the "Place of Payment")) or (ii) by wire transfer pursuant to such wire
transfer instructions as are provided by the Debentureholders, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest on any Interest Payment Date other than at Maturity may be made at
the option of the Company by check mailed to the address of the Person entitled
thereto as such address shall appear in the Debenture Register. Payments of
principal and interest at Maturity will be made against presentation of this
Debenture at the Place of Payment (or such other office as may be established
pursuant to the Debenture Agreement) by check.
IN WITNESS WHEREOF the Company has caused this Debenture to be signed
by its Chairman of the Board, President, or one of its Vice Presidents by a
facsimile of his signature and by its Secretary, or one of its Assistant
Secretaries by a facsimile of his signature and has caused its corporate seal to
be affixed hereto or a facsimile thereof imprinted hereon.
Dated:____________, 1995 CUPERTINO NATIONAL BANCORP
By: ________________________
Title: ________________________
ATTEST:
________________________________
Title: _________________________
* * *
FORM OF DEBENTURE
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CUPERTINO NATIONAL BANCORP
11.5% SUBORDINATED DEBENTURE DUE 2005
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This Debenture is one of a duly authorized issue of Debentures of the
Company, designated as its 11.5% Subordinated Debentures Due September 15, 2005
(herein referred to as the "Debentures"), limited to the principal amount of
$2,500,000, all issued or to be issued under and pursuant to a Debenture
Agreement dated as of September ____, 1995 (herein referred to as the "Debenture
Agreement"), duly adopted by the Company, which Debenture Agreement and all
debenture agreements supplemental thereto are hereby incorporated by reference
in and made a part of this instrument and are hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the Holders (the words "Holders" or
"Holder" meaning the registered holders or designated holders) of the
Debentures.
The indebtedness of the Company evidenced by the Debentures, including
the principal thereof and interest thereon (including post-default interest),
(1) is expressly subordinated, to the extent and to the manner set forth in the
Debenture Agreement, in right of payment to the prior payment in full of all the
Company's obligations to holders of Senior Indebtedness and (2) is unsecured by
any collateral, including the assets of the Company or the Bank. Each Holder of
the Debentures, by acceptance thereof, (a) agrees to and shall be bound by the
provisions of this Debenture and all other provisions of the Debenture
Agreement; (b) authorizes and directs the Company to take such action on such
Holder's behalf as may be necessary or appropriate to effectuate the
subordination of the Debentures as provided in the Debenture Agreement; and (c)
appoints the Company as such Holder's attorney-in-fact for any and all such
purposes.
Redemption
The Debentures are not subject to any sinking fund and may not be
redeemed by the Company prior to October 1, 1998. On or after that date, the
Company, at its option, may redeem any or all of the Debentures, in whole or in
part, at any time on not less than thirty (30) nor more than sixty (60) days'
prior notice, given as provided in the Debenture Agreement. If less than all
Debentures are redeemed, the Company will select the Debentures to be redeemed
by such method as the Company may deem fair and appropriate.
This Debenture shall be fully redeemed by payment of one hundred
percent (100%) of the principal hereof, plus the appropriate premium as
calculated pursuant to the Debenture Agreement (collectively, the "Redemption
Price"), plus interest that is accrued but unpaid to the Redemption Date, and
shall be partially redeemed by payment of a pro rata portion of the Redemption
Price, plus interest accrued thereon.
If this Debenture (or a portion hereof) is duly called for redemption
and funds for payment duly provided, this Debenture (or such portion hereof)
shall cease to bear interest from and after such Redemption Date.
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Interest installments whose Stated Maturity is on the Redemption Date
will be payable to the Holders of such Debentures, or one or more Predecessor
Debentures, of record at the close of business on the relevant Regular Record
Date referred to on the face hereof, all as provided in the Debenture Agreement.
In the event of redemption of this Debenture in part only, a new Debenture or
Debentures for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the surrender hereof.
Event of Default; Waiver
Except as may be provided in the Debenture Agreement, in case an Event
of Default (as defined in the Debenture Agreement) shall have occurred and be
continuing, the Holders of not less than 33.3% in principal amount of the
Outstanding Debentures may declare the principal of all Debentures due and
payable, in the manner, with the effect, and subject to the conditions provided
in the Debenture Agreement. The Debenture Agreement provides that such
declaration and its consequences may, in certain events, be annulled by the
Holders of a majority in principal amount of the Outstanding Debentures.
The Debenture Agreement also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the Debentures
at the time Outstanding, on behalf of the Holders of all Debentures, to waive
compliance by the Company with certain provisions of the Debenture Agreement and
certain past defaults under the Debenture Agreement and their consequences. Any
such consent or waiver by the Holder of this Debenture shall be conclusive and
binding upon such Holder and upon all future Holders of this Debenture and of
any Debenture issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Debenture.
Supplemental Debenture Agreements
The Debenture Agreement contains provisions permitting the Company,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Outstanding Debentures, evidenced as in the Debenture
Agreement, to execute supplemental debenture agreements adding any provisions to
or changing in any manner or eliminating any of the provisions of the Debenture
Agreement or of any supplemental debenture agreement or modifying in any manner
the rights of the holders of the Debentures; provided, however, that no such
supplemental debenture agreement shall (i) extend the fixed maturity of any
Debenture, reduce the rate or extend the time or payment of interest thereon,
reduce the principal amount thereof or premium, if any, thereon, or change the
place for payment where, or the coin or currency in which, any Debenture or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of payment of the principal after maturity, without the consent of
the holder of each Debenture so affected; or (ii) reduce the percentage in
principal amount of Outstanding Debentures, the consent of whose Holders is
required for any such supplemental debenture agreement or the consent of whose
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Holders is required for any waiver of compliance with the Debenture Agreement;
or (iii) modify any provisions of the section requiring the consent of Holders
except to increase any such required percentage or to provide that certain other
provisions of the Debenture Agreement cannot be modified or waived without the
consent of the Holder of each Debenture affected thereby.
Payment
No reference herein to the Debenture Agreement and no provision of
this Debenture or the Debenture Agreement shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of and
interest on this Debenture at the place, at the respective times, at the rate
and in the currency herein prescribed.
Denomination
The Debentures are issuable as registered Debentures without coupons
in minimum denominations of $25,000 and increments of $1,000 above such minimum
purchase. At the office referred to on the face hereof, and in the manner and
subject to the limitations provided in the Debenture Agreement. Debentures may
be exchanged without charge for a like aggregate principal amount of Debentures
of other authorized denominations.
Transfer
On due presentment for registration of transfer of this Debenture at
the above-mentioned office of the Company, a new Debenture or Debentures, of
authorized denominations, for a like aggregate principal amount, will be issued
to the transferee as provided in the Debenture Agreement. No service charge
shall be made for any such transfer, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto.
Prior to registration of transfer of this Debenture, the Company, any
Paying Agent and any Debenture Registrar may deem and treat the holder hereof as
the absolute owner hereof (whether or not this Debenture shall be overdue, and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Debenture Registrar) for the purpose of receiving payment of the
principal of and interest on this Debenture, and for all other purposes, and
neither the Company nor any Paying Agent nor any Debenture Registrar shall be
affected by any notice to the contrary.
Each Holder of a Debenture covenants and agrees by such Holder's
acceptance thereof to comply with and be bound by the foregoing provisions.
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All terms used in this Debenture which are defined in the Debenture
Agreement shall have the meanings assigned to them in the Debenture Agreement.
ARTICLE III
The Debentures
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3.1 Title and Terms. The principal amount of Debentures which may be
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delivered under this Debenture Agreement is limited to $2,500,000, except for
Debentures delivered upon registration or transfer of, or in exchange for, or in
lieu of, other Debentures, as provided herein.
The Debentures shall be known and designated as the "11.5%
Subordinated Debentures Due 2005" of the Company. Their Stated Maturity shall
be September 15, 1995.
Every Debenture shall be dated the date of its issuance and shall
bear interest from the date and at the rate per annum specified in, and such
interest shall be payable on the dates specified in, the form of Debenture set
forth in Section 2.2, until the principal thereof is paid or made available for
payment.
The principal of and interest on the Debentures shall at the
Company's option, be payable (i) at the office of the Company in Cupertino,
California (the "Place of Payment") maintained for such purpose, or in such
other office as may be established by the Company pursuant to Section 5.2 or
(ii) by wire transfer pursuant to such wire transfer instructions as are
provided by the Debentureholders; provided, however, that at the option of the
Company, payment of interest may be made (subject to collection) by check mailed
to the address of the Person entitled thereto as such address shall appear in
the Debenture Register.
Upon maturity of the Debentures, the Holders are obligated to
surrender the Debentures to the Company for payment by check.
The Debentures shall be subordinated in right of payment to
certain other indebtedness of the Company, whether outstanding at the date of
this Debenture or thereafter created, as provided in Article IV.
3.2 Currency; Denominations. The principal of and interest on the
-----------------------
Debentures shall be payable in United States dollars or other equivalent unit of
legal tender for payment of public or private debts in the United States. The
Debentures shall be issuable as registered Debentures without coupons in a
minimum denomination of $25,000 and may be issued in increments of $1,000 above
such minimum denomination.
-13-
3.3 Execution and Delivery. The Debentures shall be executed on
----------------------
behalf of the Company by its Chairman of the Board, its Vice Chairman of the
Board, its President or one of its Vice Presidents under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. The signatures of any of these officers on the Debentures may be
manual or facsimile.
Debentures bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the delivery of such Debentures or did not hold such
offices at the date of such Debentures.
Registration, Transfer and Exchange. The Company shall cause
-----------------------------------
to be kept at the main office of the Company a register (herein sometimes
referred to as the "Debenture Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Debentures and the registration of transfers of Debentures. The Company is
hereby appointed "Debenture Registrar" for the purpose of registering debentures
and transfers of Debentures as herein provided. The Company may, without the
consent of the Debentureholders, assign the duties of the Debenture Registrar to
any commercial bank located in California who ordinarily provides services as a
transfer agent and registrar, including the Bank.
Upon surrender for registration of transfer of any Debenture at
the main office of the Company, the Company shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Debentures of
any authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Debentures may be exchanged for
other Debentures of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Debentures to be exchanged at such office.
Whenever any Debentures are so surrendered for exchange, the Company shall
execute and deliver the Debentures which the Debentureholder making the exchange
is entitled to receive.
All Debentures issued upon any registration of transfer or
exchange of Debentures shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Debenture Agreement,
as the Debentures surrendered upon such registration of transfer or exchange.
Every Debenture presented or surrendered for registration of
transfer or exchange shall (if so required by the Company) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Debenture Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
-14-
No service charge shall be made for any registration of transfer
or exchange of Debentures 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 registration of transfer or exchange of Debentures.
3.5 Mutilated, Destroyed, Lost and Stolen Debentures. If (i) any
------------------------------------------------
mutilated Debenture is surrendered to the Company or if the Company receives
evidence to its satisfaction of the destruction, loss or theft of any
Debentures; and (ii) there is delivered to the Company such security or
indemnity as may be required by it to save it harmless, then, in the absence of
notice to the Company that such Debenture has been acquired by a bona fide
purchaser, the Company shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Debenture, a new Debenture of like
tenor and principal amount, bearing a number not contemporaneously outstanding.
In the case any such mutilated, destroyed, lost or stolen
Debenture has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Debenture Registrar) connected
herewith.
Every new Debenture issued pursuant to this Section in lieu of
any destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debentures shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Debenture Agreement equally and
proportionately with any and all other Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debentures.
3.6 Payment of Interest; Rights to Interest Preserved. Any interest
-------------------------------------------------
on any Debenture which shall be payable and is punctually paid or duly provided
for on any Interest Payment Date shall be paid to the Person in whose name such
Debenture (or one or more Predecessor Debentures) is registered as of the close
of business on the Regular Record Date for such interest.
Any interest on any Debenture which shall be payable, but shall
not be punctually paid or duly provided for, on any Interest Payment Date for
such Debenture (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder thereof on the relevant Regular Record Date by virtue of
having been such Holder; and such Defaulted Interest shall be paid by the
Company to the Person
-15-
in whose name this Debenture (or one or more Predecessor Debentures) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Company, notice whereof shall be
given to the Holders not less than ten (10) days prior to such Special Record
Date, or may be paid in any other lawful manner. Such Defaulted Interest shall
accrue interest, to the extent legally enforceable, at the interest rate of
twelve and one-half percent (12.5%) per annum.
At the option of the Company, interest on the Debentures may be
paid by mailing a check to the address of the Person entitled thereto as such
address shall appear in the Debenture Register.
Subject to the foregoing provisions of this section, each
Debenture delivered under this Debenture Agreement upon registration of transfer
of or in exchange for or in lieu of any other Debenture shall carry the rights
to interest accrued and unpaid, and to accrue, which were carried by such other
Debenture.
3.7 Persons Deemed Owners. Prior to due presentment for
---------------------
registration of transfer of any Debenture, the Company and any agent of the
Company, may treat the Person in whose name any Debenture is registered as the
owner of such Debenture for the purpose of receiving payment of principal of,
and interest on, such Debenture, for all purposes whatsoever, whether or not
such Debenture may be overdue, and neither the Company nor any agent of the
Company shall be affected, by notice to the contrary.
3.8 Cancellation. All Debentures surrendered for payment,
------------
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Company, be delivered to the Company and shall be promptly
cancelled by it.
3.9 Computation of Interest. Interest on the Debentures shall be
-----------------------
computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE IV
Subordination and Redemption of Debentures
------------------------------------------
4.1 Debentures Subordinated to Senior Indebtedness.
----------------------------------------------
a. The Company covenants and agrees, and each Holder of the
Debentures, by such Holder's acceptance thereof, likewise covenants and agrees,
and for purposes of Section 7.4 consents, that the indebtedness represented by
the Debentures and the payment of the principal of and interest on each and all
of the Debentures is hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, in right of payment to the prior payment in full
of all Senior Indebtedness.
-16-
b. Upon any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company, whether
in bankruptcy, insolvency, reorganization or receivership proceedings, or upon
an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Company or otherwise, except a distribution in
connection with a merger or consolidation or a conveyance or transfer of all or
substantially all of the properties of the Company which complies with the
requirements of Article IX, or if an event of default shall have occurred and be
continuing with respect to any Senior Indebtedness, or if the principal of the
Debentures shall have been declared due and payable pursuant to Section 7.2 and
such declaration shall not have been rescinded and annulled as provided in said
Section 7.2, then:
(1) the holders of all Senior Indebtedness shall first
be entitled to receive payment of the full amount due thereon in respect of
principal and interest, or adequate provision shall be made for such payment,
before the Holders of any of the Debentures are entitled to receive any payment
on account of the principal of (and premium, if any) or interest on the
indebtedness evidenced by the Debentures;
(2) any payment by, or distribution of assets of, the
Company of any kind or character, whether in cash, property or securities (other
than securities of the Company as reorganized or readjusted or securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinated, at least to the extent
provided in this Article with respect to the Debentures, to the payment of all
Senior Indebtedness, provided that the rights of the holders of Senior
Indebtedness are not altered by such reorganization or readjustment), to which
the Holders of any of the Debentures would be entitled except for the provisions
of this Article shall be paid or delivered by the person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, 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 such Senior Indebtedness
may have been issued ratably according to the aggregate amounts remaining unpaid
on account of the Senior Indebtedness held or represented by each, 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
thereof) to the holders of such Senior Indebtedness, before any payment or
distribution is made to the Holders of the indebtedness evidenced by the
Debentures under this instrument; and
(3) in the event that, notwithstanding the foregoing,
any payment by, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than securities of the
Company as reorganized or readjusted or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in this Article with
respect to the
-17-
Debentures, to the payment of all Senior Indebtedness, provided that the rights
of the holders of Senior Indebtedness are not altered by such reorganization or
readjustments), shall be received by the Holders of any of the Debentures before
all Senior Indebtedness is paid in full, such payment or distribution shall be
paid over to the holders of such 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,
ratably as aforesaid, for application to the payment of all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or distribution (or
provision therefor) to the holders of such Senior Indebtedness.
4.2 Subrogation. Subject to the payment in full of all Senior
-----------
Indebtedness, the Holders of the Debentures shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company applicable to such Senior
Indebtedness until all amounts owing on the Debentures shall be paid in full,
and, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Debentures, no such payment or distribution
made to the holders of Senior Indebtedness by virtue of this Article which
otherwise would have been made to the Holders of the Debentures shall be deemed
to be a payment by the Company on account of the Senior Indebtedness, and no
such payments or distributions to the Holders of the Debentures of cash,
property or securities otherwise distributable to the holders of Senior
Indebtedness shall, as between the Company, its creditors other than the Holders
of Senior Indebtedness, and the Holders of the Debentures, be deemed to be a
payment by the Company on account of the Debentures, it being understood that
the provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Debentures, on the one hand,
and the holders of Senior Indebtedness, on the other hand.
4.3 Obligation of the Company Unconditional. Nothing contained in
---------------------------------------
this Article or elsewhere in this Debenture Agreement or in the Debentures is
intended to or shall impair, as between the Company, its creditors other than
the holders of Senior Indebtedness, and the Holders of the Debentures, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders of the Debentures the principal of and interest on the Debentures 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 Debentures
and creditors of the Company other than the holders of Senior Indebtedness, nor
shall anything herein or therein prevent the Holder of any Debenture from
exercising all remedies otherwise permitted by applicable law upon default under
this Debenture Agreement, subject to the rights, if any, under this Article of
the holders of Senior Indebtedness in respect of cash, property or securities of
the Company received upon the exercise of any such remedy.
-18-
Upon any payment or distribution of assets of the Company
referred to in this Article, the Holders of the Debentures shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating trustee or agent or other person making any payment or distribution,
delivered to the Holders of the Debentures, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
the Senior Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount paid or distributed thereon and all other
facts pertinent thereto or to this Article.
4.4 Payments on Debentures Permitted. Nothing contained in this
--------------------------------
Article or elsewhere in this Debenture Agreement, or in any of the Debentures,
shall affect the obligation of the Company to make, or prevent the Company from
making, payment of the principal and interest on the Debentures in accordance
with the provisions hereof and thereof, except as otherwise provided in this
Article.
4.5 Effectuation of Subordination by Company. Each Holder of
----------------------------------------
Debentures, by such Holder's acceptance thereof, authorizes and directs the
Company on such Holder's behalf to take such action as may be necessary or
appropriate to effect the subordination provided in this Article and appoints
the Company such Holder's attorney-in-fact for any and all such purposes.
4.6 Rights of Holders of Senior Indebtedness Not Impaired. No right
-----------------------------------------------------
of any present or future holder of any Senior Indebtedness to enforce the
subordination herein shall at any time or in any way be prejudiced or impaired
by any act or failure to act on the part of the Company or by any noncompliance
by the Company with the terms, provisions and covenants of this Debenture
Agreement, regardless of any knowledge thereof any such holder may have to be
otherwise charged with.
4.7 Acknowledgement of Subordination to Indebtedness of Bank. The
--------------------------------------------------------
Debentureholders acknowledge and agree that:
(1) since the operations of the Company are primarily conducted
through the Bank, a separate and distinct legal entity, the Company's ability to
service its debt, including the Debentures, is dependent upon the earnings of
the Bank and the distribution of those earnings to, or upon loans, license fees
or other payments of funds by the Bank to, the Company;
(2) the Bank has no obligation, contingent or otherwise, to pay
any amounts due pursuant to the Debentures or to make any funds available
therefore, whether by dividends, loans or other payments;
-19-
(3) the Company intends to loan substantially all of the
proceeds from the issuance of the Debentures to the Bank and the Bank's
obligation to repay such loan shall be subordinated to certain of the Bank's
indebtedness, including claims of depositors;
(4) the payment of dividends, the repayment of the loan
described in subsection (3) above and any other loans from the Company and the
making of loans and advances to the Company by the Bank may be subject to
statutory and contractual restrictions, are dependent upon the earnings of the
Bank, and are subject to various business considerations; and
(5) any right of the Company to receive assets of the Bank upon
its liquidation or reorganization (and the consequent right of the holders of
the Debentures to participate in these assets) will be effectively subordinated
to the claims of the Bank's creditors (including trade creditors), except to the
extent that the Company is itself recognized as a creditor of the Bank, in which
case the claims of the Company will be subordinate to any security interests in
the assets of the Bank and any indebtedness of the Bank senior to that held by
the Company.
4.8 Right of Redemption. The Debentures shall not be redeemable at
-------------------
the option of the Company prior to October 1, 1998. The Company may, at its
option, redeem all or any part of the Debentures at any time on or after such
date, at the Redemption Price of 100% of the principal amount thereof being
redeemed and the appropriate premium (as calculated pursuant to Section 4.9),
together with interest accrued to the Redemption Date. Redemption of Debentures
at the election of the Company, as permitted here shall be made in accordance
with this Article.
4.9 Redemption Premium. Upon the redemption of any or all of the
------------------
Debentures (or any portion thereof), the Company shall pay a premium to the
applicable Debentureholders in connection with such redemption, in an amount
equal to the percentage of the principal amount of the Debentures being redeemed
as set forth below:
If a Debenture is redeemed during the 12-month period beginning
October 1, 1998,
Year Percentage of Principal Amount
---- ------------------------------
1998 5.0%
1999 3.5%
2000 2.5%
2001 1.5%
2002 0.5%
2003 --
2004 --
2005 --
-20-
4.10 Election to Redeem. The election of the Company to redeem any
------------------
Debentures shall be evidenced by a Board Resolution. If less than all the
Debentures are to be redeemed, the particular Debentures (or portions thereof)
to be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Company from the Outstanding Debentures not previously called to
redemption, by such method as the Company shall deem fair and appropriate,
provided, however, that no such partial redemption shall reduce the portion of
the principal amount of a Debenture not redeemed to less than the minimum
denomination for a Debenture established herein.
The Company shall promptly notify the Debenture Registrar (if
other than the Company) in writing of the Debentures selected for redemption
and, in the case of any Debentures selected for partial redemption, the
principal amount thereof to be redeemed.
For all purposes of this Debenture Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Debentures
shall relate, in the case of any Debentures redeemed or to be redeemed only in
part, to the portion of the principal amount of such Debentures which has been,
or is to be, redeemed.
4.11 Notice of Redemption. Notice of redemption shall be given by
--------------------
certified or registered mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Debentures to be
redeemed, at his address appearing in the Debenture Register. Failure to give
notice by mailing in the manner herein provided to the Holder of any Debentures
designated for redemption as a whole or in part, or any defect in the notice of
any such Holder, shall not affect the validity of the proceedings for the
redemption of any other Debentures or portion thereof. Any notice that is
mailed to the Holder of any Debentures in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not such Holder
receives the notice.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of the premium,
if any;
(3) if less than all of the Outstanding Debentures are to be
redeemed, the identification (and, in the case of partial redemption of any
Debentures, the principal amounts) of the particular Debentures to be redeemed;
(4) in case any Debenture is to be redeemed in part only, the
notice which relates to such Debenture shall state that on and after the
Redemption Date, upon surrender of such Debenture, the Holder of such Debenture
will receive
-21-
without charge, a new Debenture or Debentures of authorized denominations for
the principal amount thereof remaining unredeemed;
(5) that, on the Redemption Date, the Redemption Price will
become due and payable upon each such Debenture (or portion thereof), and that
interest thereon shall cease to accrue on said date; and
(6) the place where such Debentures are to be surrendered for
payment of the Redemption Price, which shall be the office of the Company in the
Place of Payment.
4.2 Debentures Payable on Redemption Date. Notice of redemption
-------------------------------------
having been given as aforesaid, the Debentures so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price therein
specified and on such date (unless the Company shall default in the payment of
the Redemption Price and accrued interest) such Debentures shall cease to bear
interest. Upon surrender of such Debentures for redemption in accordance with
said notice, such Debentures shall be paid by the Company at the Redemption
Price, together with any accrued interest to the Redemption Date.
If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Debenture.
4.13 Debentures Redeemed in Part. Any Debenture which is to be
---------------------------
redeemed only in part shall be surrendered at the office in the Place of Payment
(with, if the Company or the Debenture Registrar so requires, due endorsement
by, or written instrument of transfer in form satisfactory to the Company or the
Debenture Registrar duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company shall execute and deliver
to the Holder of such Debenture, without service charge, a new Debenture or
Debentures, or any authorized denomination as required by such Debenture in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Debenture so surrendered.
ARTICLE V
Covenants
---------
5.1 Payment of Principal. The Company will duly and punctually pay
--------------------
the principal of and interest on the Debentures in accordance with the terms
thereof and this Debenture Agreement.
-22-
5.2 Maintenance of Office. The Company will maintain an office in
---------------------
Cupertino, California where Debentures may be presented or surrendered for
payment, where Debentures may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Debentures and this Debenture Agreement may be served. The Company will give
prompt written notice to all Holders of the location and of any change in the
location of such office.
5.3 Corporate Existence. Subject to Article IX, the Company will do
-------------------
or cause to be done all things necessary to preserve and keep in full force and
effect the corporate existence, rights (charter and statutory) and franchises of
the Company and the Bank; provided, however, that the Company or the Bank shall
not be required to preserve any right or franchise if the Company or the Bank
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company or the Bank and that the loss thereof is
not disadvantageous in any material respect to the Debentureholders.
5.4 Payment of Taxes and Other Claims. The Company will pay or
---------------------------------
discharge or cause to be paid or discharged by the Bank or Company, as
applicable, before the same shall become delinquent, (i) all taxes, assessments
and governmental charges levied or imposed upon the income, profits or property
of the Company and the Bank; and (ii) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company and the Bank; provided, however, that neither the Company nor the Bank
shall be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
5.5 Maintenance of Properties. The Company will cause all of the
-------------------------
properties of the Company and the Bank used or useful in the conduct of their
respective businesses to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company or the Bank may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all time; provided, however, that nothing in this
Section shall prevent the Company or the Bank from discontinuing the operation
and maintenance of any of its properties if such discontinuance is, in the
judgment of the Company or the Bank, desirable in the conduct of its business
and not disadvantageous in any material respect to the Debentureholders.
-23-
ARTICLE VI
Debentureholders' List and Reports by the Company
-------------------------------------------------
6.1 Preservation of Information; Communications to Debentureholders.
---------------------------------------------------------------
a. The Company shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of Debentures.
b. If one or more Holders of Debentures (hereinafter referred to
"applicants") apply in writing to the Company and furnish to the Company
reasonable proof that each such applicant has owned a Debenture for a period of
at least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders of
Debentures with respect to their rights under the Debenture Agreement or under
the Debentures and is accompanied by a copy of the form of proxy or other
communication which such applicant propose to transmit, then the Company shall,
within five Business Days after the receipt of, such application, at its
election either:
(1) afford such applicants access to the information
preserved at the time by the Company in accordance with Section 6.1(a); or
(2) inform such applicants as to the approximate number of
Holders of Debentures whose name and addresses appear in the information
preserved at the time by the Company in accordance with Section 6.1(a) and as to
the approximate cost of mailing to such Debentureholders the form of proxy or
other communication, if any, specified in such application.
If the Company shall elect not to afford such applicants
access to such information, the Company shall, upon the written request of such
applicants mail to each Debentureholder whose name and address appear in the
information preserved at the time by the Company in accordance with Section
6.1(a), a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Company of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing.
c. Every Holder of the Debentures, by receiving and holding the
same, agrees with the Company that the Company shall not be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders of Debentures in accordance with Section 6.1(b), regardless of
the source from which such information was derived, and that the Company shall
not be held accountable by reason of mailing any material pursuant to a request
made under Section 6.1(b).
-24-
6.2 Reports by Company. The Company will transmit by mail to all
------------------
Debentureholders as their names and addresses appear in the Debenture Register,
within 30 days after the Company is required to file the same with the
Securities and Exchange Commission (the "Commission"), copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file with
the Commission pursuant to Sections 13 or 15(d) of the Securities Exchange Act
of 1934; provided that notwithstanding the requirements of such rules and
regulations, so long as any Debenture is Outstanding, the Company shall mail the
Holders at a minimum (a) as soon as possible after the end of the Company's
fiscal year, a copy of the Company's financial statements, as prepared by a firm
of independent public accountants, prepared in accordance with generally
accepted accounting principles consistently applied, (b) as soon as practicable
after the end of each quarterly fiscal period, except for the last quarterly
fiscal period in each fiscal year, a balance sheet and a summary statement
(which need not be audited) of income and retained earnings of the Company for
such period, and (c) as soon as practicable after distribution to the
shareholders of the Company, a copy of any proxy statement or shareholders
report distributed to all shareholders of the Company.
ARTICLE VII
Remedies
--------
7.1 Events of Default. "Event of Default," wherever used herein,
-----------------
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be occasioned by the provisions of Article IV
hereof or be voluntary or involuntary or be effected by operation of law
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
a. default in the payment of any installment of interest on any
Debenture when such interest shall have become due and payable and such default
continues for a period of 30 days whether or not such payment is prohibited by
the provisions of Article IV; or
b. default in the payment of the principal (and premium, if
any), of any Debenture when it becomes due and payable at its Maturity or upon
redemption, whether or not such payment is prohibited by the provisions of
Article IV; or
c. default in the performance, or breach, of any covenant or
warranty of the Company in this Debenture Agreement (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for
a period of 60 days after there has been given by registered or certified mail
to the
-25-
Company, by the Holders of at least 25% in the principal amount of the
Outstanding Debentures, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
d. a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company 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 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
e. the Company 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 other similar official) of the Company or for any substantial part 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, and shall take any
corporate action in furtherance of any of the foregoing; or
f. possession of the property and business of the Bank is taken
by the Federal Deposit Insurance Corporation.
7.2 Acceleration of Maturity; Rescission and Annulment. If an Event
--------------------------------------------------
of Default occurs and is continuing, then and in every such case the Holders of
not less than 33.3% in principal amount of the Outstanding Debentures, may
declare the principal of all the Debentures, and the interest accrued thereon,
to be immediately due and payable, by a notice in writing to the Company and
upon any such declaration such amount shall become immediately due and payable.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money has been obtained by
the Holders as hereinafter in this Article provided, the Holders of a majority
in principal amount of Debentures Outstanding, by written notice to the Company,
may rescind and annul such declaration and its consequences if all Events of
Default, other than the non-payment of the principal of Debentures which have
become due solely by such acceleration, have been cured or waived as provided in
Section 7.8.
No such rescission and annulment shall affect any subsequent default
or impair any right consequent thereon.
7.3 Limitation on Suits. No Holder of any Debentures shall have any
-------------------
right to institute any proceeding, judicial or otherwise, with respect to this
Debenture Agreement, or for the appointment of a receiver or trustee, or for any
other remedy
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hereunder unless such Holder has previously given written notice to the Company
of a continuing Event of Default; it being understood and intended that no one
or more Holders of Debentures shall have any right in any manner whatever by
virtue of, or by availing themselves of, any provisions of this Debenture
Agreement to affect, disturb or prejudice the rights of any other Holders of
Debentures or to obtain or to seek to obtain priority or preference over any
other Holder or to enforce any right under this Debenture Agreement, except in
the manner herein provided and for the equal and ratable benefit of all the
Holders of the Debentures.
7.4 Unconditional Right of Debentureholders to Receive Principal and
----------------------------------------------------------------
Interest. Subject to the provisions of Article IV hereof, but notwithstanding
--------
any other provision in this Debenture Agreement, the Holder of any Debenture
shall have the right which is absolute and unconditional to receive payment of
the principal of and interest (subject to Section 3.6) on such Debenture on the
Stated Maturity expressed in such Debenture (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment and such right shall not be impaired without the consent of such Holder.
7.5 Restoration of Rights and Remedies. If any Debentureholder has
----------------------------------
instituted any proceeding to enforce, any right or remedy under this Debenture
Agreement and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to such Debentureholder, then and in every such
case the Company, and the Debentureholders shall, subject to any determination
in such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the
Debentureholders shall continue as though no such proceeding had been
instituted.
7.6 Rights and Remedies Cumulative. Except as provided in Section
------------------------------
3.5, no right or remedy herein conferred upon or reserved to Debentureholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
7.7 Delay or Omission Not Waiver. No delay or omission of any Holder
----------------------------
of any Debenture to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Debentureholders may be exercised from time to
time, and as often as may be deemed expedient by the Debentureholders.
7.8 Waiver of Past Defaults. The Holders of a majority in principal
-----------------------
amount of the Outstanding Debentures may on behalf of the Holders of all the
Debentures waive any past default hereunder and its consequences, except a
default
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a. in the payment of the principal on any Debenture; or
b. in respect of a covenant or provision hereof which under
Article VIII cannot be modified or amended without the consent of the Holder of
each Outstanding Debenture affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Debenture Agreement; but no such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.
7.9 Control by the Holders of the Debentures. The Holders of a
----------------------------------------
majority in principal amount of the Outstanding Debentures shall have the right
to direct the time, method and place of conducting any proceedings for any
remedy available to the Holders; provided that such direction shall not be in
conflict with any rule of law or with this Debenture Agreement or unduly
prejudice the rights of other Holders of the Debentures.
ARTICLE VIII
Supplemental Debenture Agreements
---------------------------------
8.1 Supplemental Debenture Agreements Without Consent of
----------------------------------------------------
Debentureholders. Without the consent of the Holders of any Debentures, the
----------------
Company, when authorized by a Board Resolution, from time to time, may adopt one
or more debenture agreements supplemental hereto, for any of the following
purposes:
a. to evidence the succession of another corporation to the
Company, and the assumption by any such successor of the covenants of the
Company contained herein and in the Debentures; or
b. to add to the covenants of the Company, for the benefit of
the Holders of the Debentures, or to surrender any right or power herein
conferred upon the Company;
c. to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Debenture Agreement which shall not adversely affect the interests of the
Holders of Debentures in any material respect; or
d. to supplement any of the provisions of this Debenture
Agreement to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any Debentures pursuant to Article X; provided that
any such action
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shall not adversely affect the interests of any Holder of a Debenture in any
material respect.
8.2 Supplemental Debenture Agreements With Consent of
-------------------------------------------------
Debentureholders. After the provision of notice to all Debentureholders as
----------------
provided in Section 1.4 hereof, but with the consent of the Holders of not less
than a majority in principal amount of the Outstanding Debentures, by Act of
said Holders delivered to the Company, the Company when authorized by a Board
Resolution, may enter into debenture agreements supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Debenture Agreement or of modifying in any manner the
rights of the Holders of the Debentures under this Debenture Agreement;
provided, however, that no such supplemental debenture agreement shall, without
the consent of the Holder of each Outstanding Debenture affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Debenture; or reduce the principal amount
payable upon the redemption thereof or otherwise, or change the rate of interest
thereon, or change the place for payment where, the coin or currency in which,
the principal of or interest on is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date); or
(2) reduce the percentage in principal amount of the Outstanding
Debentures, the consent of whose Holders is required for any such supplemental
debenture agreement or the consent of whose Holders is required for any waiver
(of compliance with certain provisions of this Debenture Agreement or certain
defaults hereunder and their consequences) provided for in this Debenture
Agreement; or
(3) modify any of the provisions of this Section or Section 7.8,
except to increase any such percentage, or to provide that certain other
provisions of this Debenture Agreement cannot be modified or waived without the
consent of the Holder of each Debenture affected thereby.
It shall not be necessary for any Act of Debentureholders under
this Section to approve the particular form of any proposed supplemental
debenture agreement, but it shall be sufficient if such Act shall approve the
substance thereof.
8.3 Effect of Supplemental Debenture Agreements. Upon the adoption
-------------------------------------------
of any supplemental debenture agreement under this Article, this Debenture
Agreement shall be modified in accordance therewith, and such supplemental
debenture agreement shall form a part of this Debenture Agreement for all
purposes; and every holder of Debentures theretofore or thereafter delivered
hereunder shall be bound thereby.
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ARTICLE IX
Consolidation, Merger, Conveyance or Transfer
---------------------------------------------
9.1 Company May Consolidate, Etc., Only on Certain Terms. The
----------------------------------------------------
Company shall not consolidate with or merge into any other corporation or convey
or transfer its 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 the
properties and assets of the Company substantially as an entirety shall be a
corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall expressly assume by,
a debenture agreement supplemental hereto, in form reasonably satisfactory to
the Company, the due and punctual payment of the principal of and any interest
on all the Debentures and the performance of every covenant of this Debenture
Agreement on the part of the Company to be performed or observed shall be
complied with by such corporation or Person, as the case may be;
(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;
(3) immediately after giving effect to such transaction, the
Bank shall be in compliance with all applicable minimum capital requirements;
and
(4) the Company has obtained an Opinion of Counsel stating that
such consolidation, merger, conveyance or transfer and such supplemental
debenture agreement comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
9.2 Successor Person Substituted. Upon any consolidation or merger,
----------------------------
or any conveyance, or transfer of the properties and assets of the Company
substantially as an entirety in accordance with Section 9.1, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Debenture Agreement with the same effect as if such successor corporation
had been named as the Company herein; and in the event of any such conveyance or
transfer, the Company (which term shall for this purpose mean the Person named
as the "Company" in the first paragraph of this instrument or any successor
corporation which shall have theretofore become such in the manner prescribed in
Section 9.1) shall be discharged from all liability under this Debenture
Agreement and the Debentures and may be dissolved and liquidated.
-30-
ARTICLE X
Satisfaction and Discharge
--------------------------
10.1 Satisfaction and Discharge of Debenture Agreement. This
-------------------------------------------------
Debenture Agreement shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Debentures herein
expressly provided for and rights to receive payments of interest thereon) when
a. all Debentures theretofore delivered (other than Debentures
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 3.5) have been delivered to the Company for cancellation;
b. the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
c. the Company has an Opinion of Counsel stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Debenture Agreement have been complied with.
IN WITNESS WHEREOF, the parties hereto have caused this Debenture
Agreement to be duly executed as of the day and year first above written.
CUPERTINO NATIONAL BANCORP
By: Xxxxxx X. Xxxxx
--------------------------------------
Name:
-------------------------------------
Title: Executive Vice President,
-----------------------------------
Chief Operating Officer and
-----------------------------------
Chief Financial Officer
-----------------------------------
See Exhibit A for a list of Debentureholders who duly executed
Subscription Agreements that were accepted by the Company and pursuant to which
they agreed to be bound by the terms hereof and are deemed to have executed and
delivered this Debenture Agreement by virtue of their execution and delivery of
such Subscription Agreements.
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EXHIBIT A
LIST OF DEBENTUREHOLDERS
------------------------
Xxxxxxxxx X. Xxxxx Living Trust
Xxxxx X. Xxxxxxx
Xxxxxxxx X.X. & Xxxxxx X. Xxxx
Xxxxx X. Xxxxxxx
Xxxxxxx Family Trust
Xxxxx 1993 Living Trust
Xxxxxxx Assoc. Money Purchase Pension Plan
Xxxxxxx Family Trust
Xxxxxx & Xxxxxxxxx Xxxx
Xxxxxxxxxx Family Trust
XxXxxxx Family Living Trust "B"
Xxx Xxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxxxx & Xxxx Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx Trust
Xxxx X. Xxxxxxx
Xxxx X. Xxxxx
Xxx & Xxxxxx Xxxxxxx Family Trust & Xxxxxx Lochler
Xxx & Xxxxxx Xxxxxxx Family Trust
Xxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxx
X. Xxxxxx & Xxxx Xxxxx
Xxxxxxx Xxxxxxxx
-32-
