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EXHIBIT 4.2
TELEBANC CAPITAL TRUST II, INC. CUSIP ____
__% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
No. $_________________
TELEBANC FINANCIAL CORPORATION, a corporation organized and existing
under the laws of the state of Delaware (hereinafter called the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to Wilmington Trust Company, as
Property Trustee (the "Property Trustee") for TeleBanc Capital Trust II, a
statutory business trust formed under the laws of the State of Delaware, or
registered assigns, the principal sum ____________ Dollars on ______, 2028. The
Company further promises to pay interest on said principal sum from July __,
1998 or from the most recent interest payment date (each such date, an "Interest
Payment Date") on which interest has been paid or duly provided for, (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30, and
December 31 of each year, commencing September 30, 1998, at the rate of % per
annum, until the principal hereof shall have become due and payable, plus
Additional Interest, if any, until the principal hereof is paid or duly provided
for or made available for payment and (without duplication and to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the rate of % per annum, compounded
quarterly. The amount of interest payable for any period shall be computed on
the basis of twelve 30-day months and a 360-day year. The amount of interest
payable for any partial period shall be computed on the basis of the number of
days elapsed in a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on this Security is not a Business Day, then a
payment of the interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable. A "Business Day" shall mean any
day other than (i) a Saturday or Sunday, (ii) a day on which banking
institutions in The City of New York. Wilmington, Delaware or Arlington,
Virginia are authorized or required by law or executive order to remain closed
or (iii) a day on which the Corporate Trust Office of the Trustee or the
principal office of the Property Trustee under the Trust Agreement hereinafter
referred to for TeleBanc Capital Trust II is closed for business. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities is registered
at the close of business on the Regular Record Date for such interest
installment, which shall be the any Business Day prior to the relevant Interest
Payment Date. Any such interest installment not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which the Securities of
this series may be listed or traded, and upon such notice as may be required by
such exchange or self-regulatory organization, all as more fully provided in
said Indenture.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right at any time during the term of this Security to defer
payment of interest on this Security, at any time or from time to time, for up
to twenty (20) consecutive quarterly interest payment periods with respect to
each deferral period (each an "Extension Period"), during which Extension
Periods the Company shall have the right to make partial payments of interest
on any Interest Payment Date, and at the end of which the Company shall pay all
interest then accrued and unpaid (together with Additional Interest thereon to
the extent permitted by applicable law); provided, however, that no Extension
Period shall extend beyond the Stated Maturity of the principal of this
Security; provided, further, that during any such Extension Period, the Company
shall not, (i) declare or pay any dividends or distributions on or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal of or interest or
premium,
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if any, on or repay, repurchase or redeem any debt security of the Company that
ranks pari passu with or junior in interest to this Security or (iii) make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiary of the Company if such guarantee ranks pari passu
with or junior in interest to this Security (other than (a) dividends or
distributions in the Company's capital stock, (b) any declaration of a dividend
in connection with the implementation of a Rights Plan or the redemption or
repurchase of any rights distributed pursuant to a Rights Plan, (c) payments
under the Guarantee with respect to this Security, and (d) purchases of Common
Stock related to the issuance of Common Stock or rights under any of the
Company's benefit plans for its directors, officers or employees, related to
the issuance of Common Stock or rights under a dividend reinvestment and stock
purchase plan, or related to the issuance of Common Stock (or securities
convertible or exchangeable for Common Stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of such
Extension Period and (e) guarantee payments with respect to the guarantee by
the Corporation of the Existing Capital Securities to the extent such payments
are made pari passu with payments with respect to the Series A Guarantee).
Prior to the termination of any such Extension Period, the Company may further
defer the payment of interest, provided that no Extension Period shall exceed
twenty (20) consecutive quarterly periods or extend beyond the Stated Maturity
of the principal of this Security. Upon the termination of any such Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due, the Company may elect to begin a new Extension
Period, subject to the above requirements. No interest shall be due and payable
during an Extension Period except at the end thereof. The Company shall give
the Holder of this Security and the Trustee notice of its election to begin any
Extension Period at least one Business Day prior to the next succeeding
Interest Payment Date on which interest on this Security would be payable but
for such deferral or, with respect to the Securities issued to a Trust, so long
as such Securities are held by such Trust, prior to the earlier of (i) the next
succeeding date on which Distributions on the Preferred Securities would be
payable but for such deferral or (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or other applicable
self-regulatory organization or to holders of such Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date.
Payment of principal of (and premium, if any) and interest on this Security will
be made at the office or agency of the Company maintained for that purpose in
the United States, 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 at the option of the Company payment of interest may be
made (i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Securities Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated in writing at least 15 days before the relevant Interest Payment Date
by the Person entitled thereto as specified in the Securities Register.
The indebtedness evidenced by this Security is, to the extent provided in the
Indenture, subordinate and subject in right of payments to the prior payment in
full of all Senior Debt, and this Security is issued subject to the provisions
of the Indenture with respect thereto. Each Holder of this Security, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Debt, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof by manual signature, this Security shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
under its corporate seal.
TELEBANC FINANCIAL CORPORATION.
By:
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[President or Vice President]
Attest:
[Secretary or Assistant Secretary]
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This is one of the Securities referred to in the within mentioned Indenture.
Dated:
WILMINGTON TRUST COMPANY
as Trustee
By:
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Authorized Signatory
This Security is one of a duly authorized issue of securities of the Company
(herein called the "Securities"), issued and to be issued in one or more series
under a Junior Subordinated Indenture, dated as of July ___, 1998 (herein called
the "Indenture"), between the Company and Wilmington Trust Company, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Trustee, the Company and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to
$___________.
All terms used in this Security that are defined in the Indenture or in the
Amended and Restated Trust Agreement, dated as of _____________, 1998, as
amended (the "Trust Agreement"), for TeleBanc Capital Trust II, among TeleBanc
Financial Corporation, as depositor, and the Trustees named therein, shall have
the meanings assigned to them in the Indenture or the Trust Agreement, as the
case may be.
The Company may at any time, at its option, on or after ________, 2003, and
subject to the terms and conditions of Article XI of the Indenture, redeem this
Security in whole at any time or in part from time to time, without premium or
penalty, at a redemption price equal to 100% of the principal amount thereof
plus accrued and unpaid interest, including Additional Interest, if any, to the
Redemption Date.
Upon the occurrence and during the continuation of a Tax Event or a Capital
Treatment Event in respect of a Trust, the Company may, at its option, at any
time within 90 days of the occurrence of such Tax Event or Capital Treatment
Event redeem this Security, in whole but not in part, subject to the provisions
of Section 11.7 and the other provisions of Article XI of the Indenture, at a
redemption price equal to 100% of the principal amount thereof plus accrued and
unpaid interest, including Additional Interest, if any, to the Redemption Date.
This Security shall be subject to partial redemption only in the amount of $25,
or integral multiples thereof.
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the entire
indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the Company
and the Trustee at any time to enter into a supplemental indenture or indentures
for the purpose of modifying in any manner the rights and obligations of the
Company and of the Holders
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of the Securities, with the consent of the Holders of not less than a majority
in principal amount of the Outstanding Securities of all series to be affected
by such supplemental indenture. The Indenture also contains provisions
permitting Holders of specified percentages in principal amount of the
Securities of all series at the time Outstanding, on behalf of the Holders of
all Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, if an Event of
Default with respect to the Securities of this series at the time Outstanding
occurs and is continuing, then and in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of this series may declare the principal amount of all the Securities of this
series to be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), provided that, in the case of the
Securities of this series issued to a Trust, if upon an Event of Default, the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of this series fails to declare the principal of all the
Securities of this series to be immediately due and payable, the holders of at
least 25% in aggregate Liquidation Amount of the Preferred Securities then
outstanding shall have such right by a notice in writing to the Company and the
Trustee; and upon any such declaration the principal amount of and the accrued
interest (including any Additional Interest) on all the Securities of this
series shall become immediately due and payable, provided that the payment of
principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII of the
Indenture.
No reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of (and premium, if any) and interest on
this Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or
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exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered
form without coupons in denominations of $25 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of such series of a different authorized denomination, as
requested by the Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial interest
therein, the Holder of, and any Person that acquires a beneficial interest in,
this Security agree that for United States federal, state and local tax purposes
it is intended that this Security constitute indebtedness.
No recourse shall be had for the payment of the principal of or premium, if any,
or interest on this Security, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor Person, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
