<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 4, 1998.
REGISTRATION NO. 333-50249
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C> <C>
AMERUS LIFE HOLDINGS, INC. IOWA 42-1459712
AMERUS CAPITAL II DELAWARE 42-6571888
AMERUS CAPITAL III DELAWARE 42-6571890
(Exact name of the (State or other jurisdiction (I.R.S. Employer
Registrants of incorporation or Identification No.)
as specified in their organization)
respective charters)
</TABLE>
699 WALNUT STREET
DES MOINES, IOWA 50309-3948
(515) 362-3600
(Address, including zip code, and telephone number, including
area code, of each Registrant's principal executive offices)
------------------------
JAMES A. SMALLENBERGER
SENIOR VICE PRESIDENT AND SECRETARY
699 WALNUT STREET
DES MOINES, IOWA 50309-3948
(515) 362-3600
(Name, address, including zip code, and telephone
number, including area code, of agent for service for each Registrant)
------------------------
COPY TO:
RICHARD G. CLEMENS, ESQ.
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
(312) 853-7000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective, as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
(Continued on next page)
<PAGE> 2
(Continued from previous page)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) UNIT(2) PRICE(2) FEE
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
Debt Securities of AmerUs Life
Holdings, Inc......................
- --------------------------------------------------------------------------------------------------------------------------
Preferred Stock of AmerUs Life
Holdings, Inc., no par value(3)....
- --------------------------------------------------------------------------------------------------------------------------
Class A Common Stock of AmerUs Life
Holdings, Inc., no par value(3)....
- --------------------------------------------------------------------------------------------------------------------------
Purchase Contracts of AmerUs Life
Holdings, Inc.(4)..................
- --------------------------------------------------------------------------------------------------------------------------
Warrants of AmerUs Life
Holdings, Inc......................
- --------------------------------------------------------------------------------------------------------------------------
Capital Securities of AmerUs Capital
II(5)..............................
- --------------------------------------------------------------------------------------------------------------------------
Capital Securities of AmerUs Capital
III(5).............................
- --------------------------------------------------------------------------------------------------------------------------
Unit(s)(6)...........................
- --------------------------------------------------------------------------------------------------------------------------
AmerUs Life Holdings, Inc. Guarantees
with respect to the Capital
Securities of AmerUs Capital II and
AmerUs Capital III(7)..............
- --------------------------------------------------------------------------------------------------------------------------
Total................................ $750,000,000 100% $750,000,000 $221,250
==========================================================================================================================
</TABLE>
(1) Such indeterminate number or amount of Debt Securities, Preferred Stock,
Class A Common Stock, Purchase Contracts, Units, Warrants and Guarantees of
AmerUs Life Holdings, Inc. (the "Company") and Capital Securities of AmerUs
Capital II and AmerUs Capital III (the "AmerUs Trusts") as may from time to
time be issued at indeterminate prices. Debt Securities of the Company may
be issued and sold to the AmerUs Trusts, in which event such Debt Securities
may later be distributed to the holders of Capital Securities of the AmerUs
Trusts for no further consideration upon a dissolution of any such AmerUs
Trust and the distribution of the assets thereof. The amount registered is
in United States dollars or the equivalent thereof in any other currency,
currency unit or units, or composite currency or currencies.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate offering price of the Debt Securities,
Preferred Stock, Class A Common Stock, Purchase Contracts, Stock Purchase
Units, Warrants and Capital Securities, and the exercise price of any
securities issuable upon exercise of Warrants registered hereby will not
exceed $750,000,000.
(3) Also includes such indeterminate number of shares of Preferred Stock and
Class A Common Stock as may be issued upon conversion of or exchange for any
Debt Securities or Preferred Stock registered hereunder that provide for
conversion or exchange into other securities. No separate consideration will
be received for the Preferred Stock or Class A Common Stock issuable upon
conversion of or in exchange for Debt Securities or Preferred Stock. Also
consists of such currently indeterminate number of shares of Class A Common
Stock to be issuable by the Company upon settlement of the Purchase
Contracts of the Company.
(4) Each Purchase Contract of the Company obligates the Company to sell, and the
holder thereof to purchase, a number of shares of Common Stock of the
Company.
(5) Each Capital Security of AmerUs Capital II or AmerUs Capital III represents
a preferred undivided beneficial interest in the assets of AmerUs Capital II
or AmerUs Capital III, respectively.
(6) Each Unit consists initially of a Capital Security of AmerUs Capital II or
AmerUs Capital III and a Purchase Contract.
(7) No separate consideration will be received for the Guarantees of the
Company.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 4, 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 4, 1998
UNITS
AMERUS LIFE HOLDINGS, INC.
AMERUS CAPITAL II
% ADJUSTABLE CONVERSION-RATE EQUITY SECURITY UNITS
---------------------
Each Unit will have a stated amount of $ (equal to the last reported
per share sale price of the Common Stock on the NYSE on the date of this
Prospectus). Each Unit will initially consist of (a) a Purchase Contract under
which the holder will purchase from the Company on the Stock Purchase Date
of , 2001, for cash in an amount equal to the Stated Amount, between
of a share and one share of Common Stock (depending on the
Applicable Market Value of the Common Stock on the Stock Purchase Date, as
described herein), subject to adjustment in certain circumstances, and (b) a
Quarterly Income Preferred Security ("QUIPS"(SM)*) of the Trust having a
liquidation amount equal to the Stated Amount, a distribution rate of % per
annum and a mandatory redemption date of , 2003, subject
to a Call Option granted by the holder of the Unit to the Call Option Holder
permitting the Call Option Holder to acquire the QUIPS on or before ,
2001, in exchange for a package of consideration which will include Treasury
Securities that will provide payments matching the distribution rate referred to
above through the Stock Purchase Date and payments equal to the Stated Amount on
the Stock Purchase Date. For so long as any Purchase Contract remains in effect,
such Purchase Contract and the QUIPS or other Pledged Securities securing it
(and, for so long as the Call Option relating to such Pledged Securities is
exercisable, the obligations of the holder to the Call Option Holder thereunder)
will not be separable and may be transferred only as an integrated Unit. See
"Description of the Units".
For the period from the date of issuance of the Units to the Stock Purchase
Date, each holder of a Unit (other than a Stripped Unit) will be entitled to
receive cash payments of % of the Stated Amount per annum, payable in
arrears on the Quarterly Payment Dates of , ,
and of each year (unless deferred as described
herein). Such payments will consist of payments on the QUIPS or other Pledged
Securities plus Contract Fees payable by the Company or net of Contract Fees
payable by the holders, as the case may be. If a holder of a Unit does not
provide cash to settle the underlying Purchase Contract in the manner described
herein on the Stock Purchase Date, cash proceeds from the QUIPS or other Pledged
Securities underlying such Unit will be applied on the Stock Purchase Date to
the purchase of Common Stock pursuant to such Purchase Contract. See
"Description of the Units".
Prior to the offering made hereby there has been no public market for the
Units. [Application will be made to list the Normal Units on the NYSE under the
symbol " ".] The Common Stock is listed on the NYSE under the symbol
"AMH". The last reported sale price of the Common Stock on the NYSE on
, 1998 was $ per share.
SEE "RISK FACTORS" BEGINNING ON PAGE S- OF THIS PROSPECTUS SUPPLEMENT AND
PAGE OF THE ACCOMPANYING PROSPECTUS FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE UNITS.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC OFFERING PROCEEDS FROM SALE UNDERWRITING PROCEEDS TO
PRICE OF UNITS(1) OF CALL OPTIONS DISCOUNT(2) COMPANY(1)(3)
----------------------- ------------------ ------------ -------------
<S> <C> <C> <C> <C>
Per Unit.......................... $ $ $ $
Total(4).......................... $ $ $ $
</TABLE>
- ---------------
(1) Plus accrued distributions on the QUIPS and plus or net of accrued Contract
Fees, if any, from , 1998.
(2) The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $ payable by the Company.
(4) The Company and the Trust have granted the Underwriters an option for 30
days with respect to an additional Units, solely to cover
over-allotments. If such option is exercised in full, the total initial
public offering price of Units, proceeds from sale of Call Options,
underwriting discount and proceeds to Company will be $ ,
$ , $ and $ , respectively. See "Underwriting".
---------------------
The Units are offered severally by the Underwriters, as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that the Units will be ready for
delivery in book entry form only through the facilities of The Depository Trust
Company in New York, New York, on or about , 1998, against payment
therefor in immediately available funds.
- ---------------
* QUIPS is a servicemark of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO. SALOMON SMITH BARNEY
---------------------
The date of this Prospectus Supplement is , 1998.
<PAGE> 4
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE UNITS, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES,
AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE IOWA
COMMISSIONER OF INSURANCE NOR HAS THE IOWA COMMISSIONER OF INSURANCE RULED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
---------------------
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER RULED UPON THE ACCURACY OR THE ADEQUACY OF THE ACCOMPANYING
PROSPECTUS OR THIS PROSPECTUS SUPPLEMENT.
---------------------
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A SAFE HARBOR
FOR FORWARD-LOOKING STATEMENTS. A NUMBER OF MATTERS AND SUBJECT AREAS DISCUSSED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS ARE NOT LIMITED TO HISTORICAL OR CURRENT FACTS AND DEAL WITH
POTENTIAL FUTURE CIRCUMSTANCES AND DEVELOPMENTS. FACTORS THAT MAY CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED OR PROJECTED IN SUCH
FORWARD LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES:
(I) HEIGHTENED COMPETITION, INCLUDING THE ENTRY OF NEW COMPETITORS AND THE
DEVELOPMENT OF NEW PRODUCTS BY COMPETITORS; (II) ADVERSE STATE AND FEDERAL
LEGISLATION AND REGULATION, INCLUDING INCREASES IN MINIMUM CAPITAL AND RESERVES,
AND OTHER FINANCIAL VIABILITY REQUIREMENTS AND ADDITIONAL REGULATIONS OF MUTUAL
HOLDING COMPANIES; (III) FAILURE TO DEVELOP MULTIPLE DISTRIBUTION CHANNELS IN
ORDER TO OBTAIN NEW CUSTOMERS OR FAILURE TO RETAIN EXISTING CUSTOMERS; (IV)
INABILITY TO CARRY OUT MARKETING AND SALES PLANS, INCLUDING, AMONG OTHERS,
CHANGES TO CERTAIN PRODUCTS AND ACCEPTANCE OF THE REVISED PRODUCTS IN THE
MARKET; (V) LOSS OF KEY EXECUTIVES; (VI) CHANGES IN INTEREST RATES CAUSING A
REDUCTION OF INVESTMENT INCOME; (VII) GENERAL ECONOMIC AND BUSINESS CONDITIONS
WHICH ARE LESS FAVORABLE THAN EXPECTED; (VIII) UNANTICIPATED CHANGES IN INDUSTRY
TRENDS; (IX) INACCURACIES IN ASSUMPTIONS REGARDING FUTURE MORBIDITY,
PERSISTENCY, MORTALITY AND INTEREST RATES USED IN CALCULATING RESERVE AMOUNTS;
(X) ADVERSE CHANGES IN RATINGS ASSIGNED BY RATING AGENCIES; (XI) CHANGES IN TAX
LAWS WHICH NEGATIVELY AFFECT DEMAND FOR THE COMPANY'S PRODUCTS; (XII) THE RISK
FACTORS OR UNCERTAINTIES LISTED HEREIN OR LISTED FROM TIME TO TIME IN THIS
PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS OR ANY DOCUMENT INCORPORATED
BY REFERENCE HEREIN; AND (XIII) WITH RESPECT TO COST SAVINGS THAT ARE EXPECTED
TO BE REALIZED FROM, AND COSTS ASSOCIATED WITH, THE RECENT ACQUISITIONS OF DELTA
LIFE CORPORATION ("DELTA") AND AMVESTORS FINANCIAL CORPORATION ("AMVESTORS"),
THE FOLLOWING POSSIBILITIES: (A) THE EXPECTED COST SAVINGS TO BE REALIZED
THROUGH COMBINING CERTAIN FUNCTIONS OF THE COMPANY, DELTA AND AMVESTORS TO
ELIMINATE REDUNDANCIES AND BETTER SERVE THE COMBINED COMPANY'S CUSTOMERS, AND
REDUCTIONS IN STAFF CANNOT BE FULLY REALIZED BECAUSE THE CHANGES ARE NOT MADE OR
UNANTICIPATED ADDED COSTS ARE INCURRED; AND (B) COSTS OR DIFFICULTIES RELATED TO
THE INTEGRATION OF THE BUSINESSES OF DELTA AND AMVESTORS WITH THE COMPANY'S
OTHER BUSINESSES ARE GREATER THAN EXPECTED. A VARIETY OF FACTORS COULD CAUSE THE
COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EXPECTED RESULTS
EXPRESSED IN THE COMPANY'S FORWARD-LOOKING STATEMENTS, INCLUDING THOSE SET FORTH
IN THE RISK FACTORS AND ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT, THE
ACCOMPANYING PROSPECTUS OR THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN.
S-2
<PAGE> 5
PROSPECTUS SUMMARY
OVERVIEW
AmerUs Life Holdings, Inc. (the "Company") is an insurance holding company
engaged through its subsidiaries in the business of marketing, underwriting and
distributing a broad range of individual life insurance and annuity products to
individuals and businesses in 49 states, the District of Columbia and the U.S.
Virgin Islands. The Company's primary product offerings consist of whole life,
universal life and term life insurance policies and fixed annuities. As of March
31, 1998, the Company had approximately 567,000 life insurance policies and
annuity contracts outstanding and individual life insurance in force, net of
reinsurance, of approximately $26.9 billion with life insurance reserves of $2.4
billion and annuity reserves of $5.9 billion. As of March 31, 1998, the Company
had total assets of $10.4 billion and total shareholders' equity of $944.6
million. See "The Company", "Organizational Structure" and "Business" in the
accompanying Prospectus for a more detailed description of the Company.
RECENT ACQUISITIONS
The Company made two major acquisitions in 1997. The Company acquired Delta
Life Corporation ("Delta") on October 23 for approximately $165 million in cash
and AmVestors Financial Corporation ("AmVestors") on December 19 in a stock
exchange valued at approximately $350 million. Both Delta and AmVestors
specialize in the sale of fixed annuity products, thus strengthening the
Company's presence in the rapidly growing asset accumulation and retirement
savings markets. The acquisitions, along with the growth of AmerUs Life
Insurance Company ("AmerUs Life"), increased the Company's assets from $4.4
billion at March 31, 1997 to $10.4 billion at March 31, 1998.
RECENT DEVELOPMENTS
REFINANCING PLAN
On April 16, 1998, the Company announced a refinancing plan (the
"Refinancing Plan") that includes this offering of Units (the "Units Offering")
and an offering of up to $125 million of debt securities (the "Notes Offering,"
and together with this Units Offering, the "Offerings"). Proceeds from the
Offerings will be used to repay the outstanding balance of $250 million on the
Company's revolving bank debt (the "Bank Debt"), to partially fund a buyback of
up to $75 million of the Company's Class A Common Stock (the "Stock Repurchase
Plan") and for general corporate purposes.
RECENT RATINGS ACTIONS
Certain ratings agencies have recently reviewed the ratings assigned to the
Company and its life insurance subsidiaries. On April 14, 1998, Standard &
Poor's reaffirmed its single-A insurer financial strength rating for AmerUs Life
while on May 1, 1998 Moody's Investors Service downgraded AmerUs Life's
financial strength rating to A3 from A2. At the same time, Moody's reaffirmed at
Ba1 the long-term credit ratings for the Company's junior subordinated debt and
at Baa3 for the preferred stock rating of AmerUs Capital I and upgraded the
insurance financial strength rating of AmVestor's subsidiary, American Investors
Life Insurance Company to Baa1 from Baa3. In addition, Moody's assigned an A3
insurance financial strength rating to Delta's life insurance subsidiary, Delta
Life and Annuity Company. Moody's warned that the outlook on all the debt,
preferred stock and insurance financial strength ratings remained negative,
given the Company's aggressive strategy of rapid growth through acquisition. See
"Risk Factors -- Importance of Ratings" in the prospectus to which this
Prospectus Supplement relates (the "Prospectus").
S-3
<PAGE> 6
THE TRUST
AmerUs Capital II (the "Trust") is a statutory business trust created under
the laws of the State of Delaware pursuant to (i) a declaration of trust, dated
as of April 14, 1998, executed by the Company, as sponsor (the "Sponsor"), and
certain of the trustees of the Trust (the "Issuer Trustees") and (ii) the filing
of a certificate of trust with the Secretary of State of the State of Delaware
on April 14, 1998. Such declaration of trust will be amended and restated in its
entirety (as so amended and restated, the "Declaration") substantially in the
form filed as an exhibit to the Registration Statement to which this Prospectus
Supplement relates. The Declaration will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Trust
exists for the exclusive purposes of (i) issuing the Trust Securities (as
defined herein) representing undivided beneficial interests in the assets of the
Trust, (ii) investing the proceeds of the Trust Securities in the Junior
Subordinated Debentures (as defined herein) and (iii) engaging in only those
other activities necessary or incidental thereto. Accordingly, the Junior
Subordinated Debentures will be the sole assets of the Trust and payments under
the Junior Subordinated Debentures will be the sole revenue of the Trust. All of
the Common Trust Securities (as defined herein) will be directly or indirectly
owned by the Company.
THE OFFERING
THE UNITS
Securities Offered......... Adjustable Conversion-rate Equity Security Units
(the "Units", as more fully defined below).
Issuers.................... AmerUs Life Holdings, Inc. (the "Company") and
AmerUs Capital II (the "Trust").
Stated Amount.............. $ per Unit (the "Stated Amount").
Payments on the Units...... For the period from the date of issuance of the
Units to the Stock Purchase Date (as defined
herein), each holder of a Unit (other than a
Stripped Unit (as defined herein)) will be entitled
to receive cash payments of % of the Stated
Amount per annum, payable in arrears. Such payments
will consist of payments on the QUIPS (as defined
herein) or other Pledged Securities (as defined
herein) plus Contract Fees (as defined herein)
payable by the Company or net of Contract Fees
payable by the holders, as the case may be.
Quarterly Payment Dates.... , ,
and of each year (the "Quarterly
Payment Dates"), subject to the deferral provisions
described below.
Stock Purchase Date........ , 2001 (the "Stock
Purchase Date").
Settlement................. On the Stock Purchase Date, a holder of Units
shall, in order to settle the underlying Purchase
Contracts, provide cash in the manner described
herein. The Common Stock purchased and the Pledged
Securities securing such Purchase Contracts (or, in
the case of Treasury Securities, the proceeds from
such Treasury Securities, net of any unpaid
Contract Fees payable by the holder accrued thereon
to the Stock Purchase Date) would then be delivered
to the holder.
S-4
<PAGE> 7
If a holder of Units fails to provide cash for
settlement of the underlying Purchase Contracts on
the Stock Purchase Date, then (a) if QUIPS (or
Junior Subordinated Debentures) underlie such
Units, the Collateral Agent will, on behalf of the
holder, exercise the Junior Subordinated Debenture
Put Option (as defined herein) with respect
thereto; and (b) a portion of the proceeds from the
exercise of the Junior Subordinated Debenture Put
Option (or, if Treasury Securities rather than
QUIPS or Junior Subordinated Debentures underlie
such Units, a portion of the proceeds from such
securities) will be applied to satisfy in full the
holder's obligations under such Purchase Contracts
and the remainder of such proceeds, if any, will be
paid to the holder.
Settlement Rate............ The number of shares of Common Stock issuable upon
settlement of each Purchase Contract (the
"Settlement Rate") will be between
of a share and one share of Common Stock (subject
to adjustment under certain circumstances). More
specifically, the Settlement Rate will be
calculated as follows, subject to adjustment in
certain circumstances:
(a) if the Applicable Market Value (as defined
herein) is greater than or equal to $ (the
"Threshold Appreciation Price") (i.e.,
approximately % higher than the Stated
Amount), the Settlement Rate will be
;
(b) if the Applicable Market Value is less than the
Threshold Appreciation Price but greater than the
Stated Amount, the Settlement Rate will equal the
Stated Amount divided by the Applicable Market
Value (i.e., the Settlement Rate will be calculated
so that the Applicable Market Value of the Common
Stock purchasable under each Purchase Contract
would equal the Stated Amount payable therefor);
and
(c) if the Applicable Market Value is less than or
equal to the Stated Amount, the Settlement Rate
will be one.
"Applicable Market Value" means the average of the
Closing Prices (as defined herein) per share of
Common Stock on each of the twenty consecutive
Trading Days (as defined herein) ending on the last
Trading Day immediately preceding the Stock
Purchase Date.
The following table illustrates the applicable
Settlement Rate and approximate market value of the
Common Stock receivable upon
S-5
<PAGE> 8
settlement of the Units at certain assumed
Applicable Market Values:
<TABLE>
<CAPTION>
---------------------------------------------------------------
NUMBER OF SHARES VALUE OF SHARES
IF THE APPLICABLE RECEIVED PER UNIT RECEIVED PER UNIT
MARKET VALUE IS UPON SETTLEMENT UPON SETTLEMENT(1)
---------------------------------------------------------------
<S> <C> <C>
$ per share $
(i.e., 150% of Stated (i.e., % of Stated
Amount) Amount)
---------------------------------------------------------------
$ per share $
(i.e., Threshold (i.e., Stated Amount)
Appreciation Price)
---------------------------------------------------------------
$ per share $
(i.e., 1/2 way between (i.e., Stated Amount)
Stated Amount and
Threshold
Appreciation Price)
---------------------------------------------------------------
$ per share 1.0 $
(i.e., Stated Amount) (i.e., Stated Amount)
---------------------------------------------------------------
$ per share 1.0 $
(i.e., 50% of Stated (i.e., 50% of Stated
Amount) Amount)
---------------------------------------------------------------
</TABLE>
--------------------------------------------
(1) Assumes that Applicable Market Value accurately
reflects fair market value on the Stock
Purchase Date.
Relationship of Units to
Common Stock............. Cash payments on the Units that are not Stripped
Units (consisting of payments on the QUIPS plus or
net of Contract Fees) will accrue at a rate per
annum that is greater than the current dividend
yield on the Common Stock. However, since the
number of shares of Common Stock issuable upon
settlement of each Purchase Contract may decline by
up to approximately % as the Applicable Market
Value increases, the opportunity for equity
appreciation afforded by an investment in the Units
is less than that afforded by a direct investment
in the Common Stock.
Components of the Units.... Each Unit will initially consist of:
(a) a purchase contract ("Purchase Contract") under
which (i) the holder will purchase from the Company
on the Stock Purchase Date, for cash in an amount
equal to the Stated Amount, a number of shares of
Common Stock equal to the Settlement Rate, and (ii)
contract fees ("Contract Fees") will be payable at
the rate of % of the Stated Amount per annum
(the "Contract Fee Rate") as described below, and
(b) a Quarterly Income Preferred Security
("QUIPS"(SM), which term may refer to a single
security or more than one security as the context
may require) of the Trust having a liquidation
amount equal to the Stated Amount, a distribution
rate of % of the Stated Amount per annum and
S-6
<PAGE> 9
a mandatory redemption date of , 2003 (the
"QUIPS and Debenture Maturity Date"), subject to a
Call Option ("Call Option") granted by the holder
of the Unit to Goldman, Sachs & Co. (in its
capacity as the holder of the Call Options, and
together with any transferee of the Call Options in
such capacity, the "Call Option Holder") that (when
aggregated with the Call Options underlying all
other Units) will entitle the Call Option Holder to
acquire the QUIPS underlying the Units (or the
Junior Subordinated Debentures substituted
therefor), on or before , 2001 the
last Quarterly Payment Date prior to the Stock
Purchase Date (or, if such date is not a Trading
Day, the next succeeding Trading Day) (the "Call
Option Expiration Date"), in exchange for a package
of consideration (the "Aggregate Consideration
Deliverable on Exercise of the Call Options") which
will include U.S. Treasury Strips, U.S. Treasury
Bills or other U.S. Treasury Securities (any of the
foregoing, ("Treasury Securities")) that will
provide payments matching the aggregate
distributions due on such Quips (or interest due on
such Junior Subordinated Debentures) through the
Stock Purchase Date (assuming for this purpose,
even if not true, that the distribution or interest
rate thereon remains as set forth above) through
the Stock Purchase Date and Treasury Securities
that will provide payments equal to the aggregate
Stated Amount of such Units on the Stock Purchase
Date.
The QUIPS underlying a Unit will be pledged to
, as collateral agent for the
Company and the Call Option Holder (together with
any successor thereto in such capacity, the
"Collateral Agent"), to secure the holder's
obligations to the Company and the Call Option
Holder under the Purchase Contract and Call Option
underlying such Unit. The QUIPS, or any securities
substituted therefor as securities pledged to the
Collateral Agent to secure such obligations, are
herein referred to as "Pledged Securities". If
Treasury Securities are exchanged for Pledged
Securities upon exercise of the Call Options or
Junior Subordinated Debentures are distributed in
respect of Pledged Securities upon dissolution of
the Trust, the Treasury Securities so exchanged or
the Junior Subordinated Debentures so distributed
will automatically be substituted as Pledged
Securities in place of the securities that
theretofore had been Pledged Securities.
The obligations of the holders of Units under the
Purchase Contracts, if not paid in cash by such
holders, will be funded out of payments made in
respect of the Pledged Securities. For so long as a
Purchase Contract remains in effect, such Purchase
Contract and the QUIPS or other Pledged Securities
securing it (and, for so long as a Call Option
relating to such Pledged Securities is exercisable,
the obligations of the holder to the Call Option
Holder thereunder) will not be separable and may be
transferred only as an integrated Unit.
Formation of the Units..... At the closing of the offering made hereby, the
Underwriters specified herein (the "Underwriters")
will (a) enter into Purchase Contracts with the
Company and (b) purchase QUIPS from the
S-7
<PAGE> 10
Trust for cash. The Underwriters will fund that
cash in part by the sale of the Units offered
hereby to the initial investors thereof and in part
by the sale of Call Options (on behalf of such
initial investors) to the Call Option Holder. The
Trust will use that cash to purchase Junior
Subordinated Debentures from the Company. The QUIPS
will then be pledged to the Collateral Agent as
contemplated above.
The rights to purchase Common Stock under a
Purchase Contract, together with the QUIPS or other
Pledged Securities pledged to secure the
obligations referred to in (a) and (b) below,
subject to (a) the obligations owed to the Company
under such Purchase Contract, (b) the obligations
owed to the Call Option Holder under the Call
Option relating to such QUIPS or other Pledged
Securities (which, in the case of Normal Units, can
only be Junior Subordinated Debentures) and (c) the
pledge arrangements securing the foregoing
obligations, are collectively referred to herein as
a "Normal Unit".
Each holder of Normal Units will have the right to
substitute, as Pledged Securities, Treasury
Securities that will generate payments matching
such holder's obligations under the underlying
Purchase Contracts, in return for the securities
that theretofore had been the Pledged Securities
underlying such Normal Units. For so long as the
Call Options underlying such Normal Units remain
exercisable, such right of substitution may be
exercised only if the holder obtains an instrument
from the Call Option Holder releasing its security
interest in the Pledged Securities securing such
Call Options and agreeing that such Call Options no
longer underlie such Normal Units (or the Stripped
Units they become). The holder might obtain such an
instrument by separately documenting such Call
Options with the Call Option Holder (and, if
required by the Call Option Holder, entering into
credit support arrangements satisfactory to the
Call Option Holder backing such Call Options),
paying the Call Option Holder to cancel such Call
Options or otherwise. However, the Call Option
Holder will be under no obligation to deliver such
an instrument, and there can be no assurance that a
holder will be able to induce the Call Option
Holder to do so. Therefore, investors may not be
able to capitalize on any appreciation of the QUIPS
through this means.
Goldman, Sachs & Co. have advised the Company that,
while they are the Call Option Holder, they will
evaluate requests to release their security
interests in the Pledged Securities on a case-by-
case basis, taking into account the market value of
the Pledged Securities as compared to the cost to
the Call Option Holder of exercising the Call
Options, the availability and amount of credit
support, any payments to be made in connection
therewith and other factors pertaining at the time
of any requested release. In doing so, Goldman,
Sachs & Co. would expect that they would not grant
such a request unless the value of the payments and
other new rights offered by the holder were no less
valuable to Goldman, Sachs & Co. than the rights
they had before granting such request.
S-8
<PAGE> 11
If a holder of Normal Units exercises such holder's
right to substitute Treasury Securities as Pledged
Securities in the manner described herein, the
securities that theretofore had been the Pledged
Securities underlying such Normal Units will be
released from the pledge arrangement described
herein and delivered to such holder, and such
holder's remaining rights and obligations under
such Normal Units will thereupon become "Stripped
Units" that will no longer generate cash payments
to such holder (other than Contract Fees, if any,
payable by the Company pursuant to the underlying
Purchase Contracts) and will no longer be listed on
the New York Stock Exchange ("NYSE") or be fungible
with Normal Units.
The Normal Units and any Stripped Units are
collectively referred to herein as the "Units."
Contract Fees.............. The holders of Units may be required to pay
Contract Fees to the Company, or the Company may be
required to pay Contract Fees to the holders of
Units, as specified in the final Prospectus
Supplement for the offering made hereby.
The obligation of the holders of Units to pay
Contract Fees to the Company will be funded out of
payments made in respect of the Pledged Securities.
If payments made in respect of the Pledged
Securities are insufficient to cover the obligation
of the holders of the Units to pay Contract Fees,
such obligation will be deferred until the earlier
of the date sufficient cash is available and the
Stock Purchase Date.
Any obligation of the Company to pay Contract Fees
to the holders of Units will be unsecured and
junior in right of payment to all Senior
Indebtedness (as defined herein) of the Company.
The Company will generally have the right to defer
the payment of Contract Fees at any time or from
time to time for a period not extending beyond the
Stock Purchase Date.
Any deferred Contract Fees payable by the holders
of Units or the Company will bear additional
Contract Fees at the rate of % per annum plus,
for the period after the Call Option Expiration
Date, the amount (if any) by which the interest
rate on the Junior Subordinated Debentures shall
have been increased (as described herein) (the
"Deferral Rate") (compounding on each succeeding
Quarterly Payment Date) until paid.
Termination................ The Purchase Contracts (including the right to
receive and the obligation to pay accrued or
deferred Contract Fees and the right and obligation
to purchase Common Stock) will automatically
terminate upon the occurrence of certain events of
bankruptcy, insolvency or reorganization with
respect to the Company. Upon such termination, the
Call Options will terminate and the Collateral
Agent will release the Pledged Securities held by
it to the Unit Agent for distribution to the
holders.
THE QUIPS
The Trust.................. The QUIPS will be issued by the Trust, a Delaware
statutory business trust. The Junior Subordinated
Debentures due
S-9
<PAGE> 12
, 2003 (the "Junior Subordinated Debentures") of
the Company will be the sole assets of the Trust,
and payments on those Junior Subordinated
Debentures will be the sole revenue of the Trust.
The Company will own all of the common undivided
beneficial interests in the assets of the Trust
(the "Common Trust Securities" and, collectively
with the QUIPS, the "Trust Securities").
The QUIPS.................. The QUIPS will represent preferred undivided
beneficial interests in the assets of the Trust.
Each QUIPS will have a Liquidation Amount (as
defined in the Declaration) equal to the Stated
Amount. Distributions on the QUIPS will be
cumulative, will accrue from the first date of
issuance of the QUIPS at an initial rate of % per
annum (such rate, as it may be increased in the
manner described herein, the "QUIPS and Debenture
Rate") as applied to the Liquidation Amount thereof
and will be payable quarterly in arrears on each
Quarterly Payment Date, subject to the deferral
provisions described below. The QUIPS will be
mandatorily redeemable in whole on the QUIPS and
Debenture Maturity Date of , 2003,
at a redemption price equal to the aggregate
Liquidation Amount thereof plus unpaid
distributions accrued thereon to such date, out of
the proceeds of the repayment of the Junior
Subordinated Debentures at maturity.
Junior Subordinated
Debentures............... The Junior Subordinated Debentures will be issued
by the Company under an indenture (the "Indenture")
between First Union National Bank, as trustee
(together with any successor thereto in such
capacity, the "Debenture Trustee"), and the
Company, in an aggregate principal amount equal to
the aggregate Liquidation Amount of the Trust
Securities. Interest on the Junior Subordinated
Debentures will accrue from the first date of
issuance of the Junior Subordinated Debentures at a
rate per annum equal to the QUIPS and Debenture
Rate referred to above and will be payable
quarterly in arrears on each Quarterly Payment
Date, subject to the deferral provisions described
below. The Junior Subordinated Debentures will
mature on the QUIPS and Debenture Maturity Date and
will not be redeemable at the option of the Company
prior to such date. The Junior Subordinated
Debentures will be unsecured and junior in right of
payment to all Senior Indebtedness of the Company.
On the Call Option Expiration Date, a nationally
recognized investment banking firm chosen by the
Company (the "Rate Increase Agent") will determine
whether the then current aggregate market value of
the QUIPS (or, if the QUIPS are no longer
outstanding, Junior Subordinated Debentures)
underlying the Normal Units is at least equal to
100.25% of the Cash Equivalent of the Aggregate
Call Option Exercise Consideration (as defined
herein). If the Rate Increase Agent determines that
it is (or the QUIPS and Debenture Rate is already
equal to or greater than the Maximum QUIPS and
Debenture Rate (as defined herein)), interest on
the Junior Subordinated Debentures (and, if the
QUIPS remain outstanding, distributions on the
QUIPS) will continue to accrue at the initial QUIPS
and Debenture Rate. If the Rate Increase Agent
S-10
<PAGE> 13
determines that it is not (and the QUIPS and
Debenture Rate is less than the Maximum QUIPS and
Debenture Rate), the Rate Increase Agent will
select an increased rate equal to the lower of (a)
the rate that it determines is sufficient to cause
the then current aggregate market value of such
QUIPS (or, if the QUIPS are no longer outstanding,
such Junior Subordinated Debentures) to be at least
equal to 100.25% of the Cash Equivalent of the
Aggregate Call Option Exercise Consideration and
(b) the Maximum QUIPS and Debenture Rate, and the
QUIPS and Debenture Rate will thereupon become that
increased rate. It is currently anticipated that
[Salomon Smith Barney] will be the Rate Increase
Agent. See "Description of the Junior Subordinated
Debentures -- Market Rate Increase".
Interest and QUIPS
Distribution Deferral
Provisions............... The Company will generally have the right to defer
the payments of interest on the Junior Subordinated
Debentures at any time or from time to time for a
period not extending beyond the QUIPS and Debenture
Maturity Date. Upon any such deferral, quarterly
distributions on the QUIPS by the Trust will be
deferred. However, deferred payments of interest on
the Junior Subordinated Debentures and deferred
distributions on the QUIPS will bear additional
interest or distributions at a rate per annum equal
to the Deferral Rate (compounding on each
succeeding Quarterly Payment Date) until paid.
Junior Subordinated
Debenture Put Options.... Each holder of Junior Subordinated Debentures will
have the right to require the Company to repurchase
such Junior Subordinated Debentures, in whole or in
part, on the Stock Purchase Date, for a purchase
price equal to the aggregate principal amount of
such Junior Subordinated Debentures plus unpaid
interest accrued thereon to the Stock Purchase
Date, but only if the cash received on the exercise
of such option is used to settle the Purchase
Contracts secured thereby. See "Description of the
Units -- Description of the Junior Subordinated
Debentures -- Junior Subordinated Debenture Put
Options".
Each holder of QUIPS will have the option to
require the Trust to distribute the underlying
Junior Subordinated Debentures to the Put Agent (as
defined herein), on the Stock Purchase Date, in
exchange for such QUIPS, in connection with the
concurrent exercise by the Put Agent on behalf of
such holder of the Junior Subordinated Debenture
Put Option related thereto as described above.
Exchange of QUIPS for
Junior Subordinated
Debentures............... The Company will have the right at any time to
terminate the Trust and cause the Junior
Subordinated Debentures to be distributed to the
holders of the QUIPS and Common Trust Securities in
liquidation of the Trust.
The Guarantee.............. Pursuant to a guarantee agreement (the "Guarantee")
between the Company and First Union National Bank,
as trustee (together with any successor thereto in
such capacity, the "Guarantee
S-11
<PAGE> 14
Trustee"), the Company will guarantee the payment
of distributions and other payments on the QUIPS to
the extent that the Trust has funds on hand
sufficient therefor.
GENERAL
Listing.................... Application will be made to list the Normal Units
on the NYSE.
Federal Income Tax
Consequences............. In general, holders of the Units will be subject to
federal income tax on the accrual of original issue
discount in respect of the Units and upon
disposition of the Units (including disposition
pursuant to exercise of the Call Option). For a
discussion of the United States federal income tax
consequences associated with the purchase,
ownership, and disposition of the Units, QUIPS,
Purchase Contracts and Common Stock, see "Certain
Federal Income Tax Consequences". Prospective
investors should be aware that no statutory,
judicial or administrative authority directly
addresses the tax treatment of Units or instruments
similar to Units for United States federal income
tax purposes. ACCORDINGLY, PROSPECTIVE INVESTORS
ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING
THE TAX CONSEQUENCES OF AN INVESTMENT IN THE UNITS,
INCLUDING THE APPLICATION OF STATE, LOCAL AND
FOREIGN OR OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
Use of Proceeds............ The Company intends to use the net proceeds of the
offering made hereby and of the Senior Debt
Offering (as defined herein) to repay the Bank
Debt, to partially fund the Stock Repurchase Plan
and for general corporate purposes. See "Use of
Proceeds."
Senior Debt Offering....... Concurrently with the offering made hereby, the
Company is also offering $125,000,000 % Senior
Notes due , 2008. The
Notes Offering is being made by means of a separate
prospectus. Neither the Notes Offering nor the
offering made hereby is conditioned on consummation
of the other offering. There can be no assurance
that the Notes Offering will be consummated. This
Prospectus Supplement does not constitute an offer
to buy or the solicitation of an offer to sell the
Senior Notes being offered in the Notes Offering.
S-12
<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
The following table sets forth certain consolidated financial and operating
data of the Company. The selected consolidated financial and operating data
below for the three-month periods ended March 31, 1997 and 1998 are derived from
unaudited interim financial statements of the Company incorporated by reference
in this Prospectus. In the opinion of management, such unaudited interim
financial statements include all adjustments (consisting only of normal
recurring accruals) necessary for a fair, consistent presentation, in accordance
with generally accepted accounting principles, of such information. The selected
consolidated financial and operating data for the three months ended March 31,
1998 are not necessarily indicative of the Company's results for any future
interim period or the entire year. During the fourth quarter of 1997, the
Company acquired Delta and AmVestors in transactions that were accounted for
using the purchase method of accounting. As a result, only the Consolidated
Income Statement Data and the Consolidated Balance Sheet Data as of or for the
three-month period ended March 31, 1998 include the results of Delta and
AmVestors.
<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS ENDED
MARCH 31,
(UNAUDITED)
----------------------
1998(A) 1997
--------- --------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues:
Insurance premiums........................................ $ 17.3 $ 8.2
Product charges........................................... 16.4 11.2
Net investment income..................................... 133.1 50.9
Realized gains on investments............................. 6.2 5.2
Contribution from the Closed Block........................ 9.0 9.3
--------- --------
Total revenues...................................... 182.0 84.8
--------- --------
Benefits and expenses:
Total policyowner benefits................................ 107.3 45.5
Total expenses............................................ 36.2 16.1
Dividends to policyowners................................. 0.3 0.1
--------- --------
Total benefits and expenses......................... 143.8 61.7
--------- --------
Income from operations...................................... 38.2 23.1
Interest expense............................................ 6.7 3.0
--------- --------
Income before income tax expense and equity in earnings of
unconsolidated subsidiary................................. 31.5 20.1
Income tax expense.......................................... 10.1 5.7
--------- --------
Income before equity in earnings of unconsolidated
subsidiary................................................ 21.4 14.4
Equity in earnings of unconsolidated subsidiary............. 0.4 0.2
--------- --------
Net income.................................................. $ 21.8 $ 14.6
========= ========
Earnings per common share(B)
Basic..................................................... $ 0.63 $ 0.63
Diluted................................................... $ 0.62 $ 0.63
Dividends declared per common share......................... $ 0.10 $ --
Ratios of earnings to fixed charges(C)(D)................... 1.39 2.11
CONSOLIDATED BALANCE SHEET DATA:
Total invested assets....................................... $ 7,775.7 $2,864.1
Total assets................................................ 10,354.9 4,412.0
Total liabilities........................................... 9,324.3 3,822.4
Company-obligated mandatorily redeemable preferred
securities................................................ 86.0 86.0
Total stockholders' equity(E)............................... 944.6 503.6
OTHER OPERATING DATA:
Adjusted operating income(F)................................ $ 19.5 $ 11.6
Adjusted operating income per common share (basic and
diluted)(F)............................................... $ 0.56 $ 0.50
Individual life insurance in force, net of reinsurance...... $ 26,935 $ 25,735
Life insurance reserves..................................... $ 2,369 $ 2,065
Annuity reserves............................................ $ 5,930 $ 1,323
Number of employees......................................... 710 405
STATUTORY DATA:
Premiums and deposits:
Individual life........................................... $ 84.9 $ 81.6
Annuities................................................. $ 173.7 $ 12.4
</TABLE>
- ---------------
(A) Consolidated Income Statement Data includes the results for Delta and
AmVestors for the three-month period ended March 31, 1998, and Consolidated
Balance Sheet Data includes period-end data for Delta and AmVestors as of
March 31, 1998.
S-13
<PAGE> 16
(B) Basic earnings per common share for the first quarter of 1998 is calculated
using 29.73 million weighted average shares of Class A Common Stock and 5
million shares of Class B Common Stock outstanding. Diluted earnings per
common share for the first quarter of 1998 is calculated using 29.83 million
weighted average shares of Class A Common Stock and 5 million shares of
Class B Common Stock outstanding. The basic and diluted earnings per common
share for the first quarter of 1997 are calculated using 18.16 million
shares of Class A Common Stock and 5 million shares of Class B Common Stock
outstanding.
(C) For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of income from operations before federal income taxes, fixed charges
and pre-tax earnings required to cover preferred stock dividend
requirements. "Fixed charges" consist of interest expense on debt and
capital securities, amortization of debt expense and interest credited on
deferred annuities.
(D) Since the Company currently has no preferred stock outstanding, the ratio of
earnings to fixed charges and preferred stock dividends is the same as the
ratio of earnings to fixed charges.
(E) Amounts shown include the effects of reporting fixed maturity securities at
fair value and recording the unrealized appreciation or depreciation on such
securities as a component of stockholders' equity, net of tax and other
adjustments. Such adjustments are in accordance with Statement of Financial
Accounting Standards 115, "Accounting for Certain Investments in Debt and
Equity Securities," which the Company adopted December 31, 1993.
(F) Adjusted operating income reflects net income adjusted to eliminate certain
items (net of applicable income taxes) which management believes are not
necessarily indicative of overall operating trends. For example, net
realized capital gains or losses on investments, excluding gains or losses
on convertible debt which are considered core earnings, are eliminated.
Different items are likely to occur in each period presented and others may
have different opinions as to which items may warrant adjustment. The
adjusted operating income shown does not constitute net income computed in
accordance with GAAP. See "Management's Discussion and Analysis of Results
of Operations and Financial Condition -- Adjusted Operating Income" in the
accompanying Prospectus.
S-14
<PAGE> 17
RISK FACTORS
Before purchasing any of the Units offered hereby, prospective purchasers
of Units should consider, in addition to the other information with respect to
the Company and its business contained herein or in the Prospectus or
incorporated herein by reference, the following risk factors, as well as those
in the Prospectus.
RISK OF DECLINE IN EQUITY VALUE
The market value of the Common Stock receivable upon settlement of the
Purchase Contracts may be materially different than the purchase price payable
for such Common Stock. If the Applicable Market Value of the Common Stock on the
Stock Purchase Date is less than the Stated Amount (i.e., less than the Closing
Price of the Common Stock on the date of this Prospectus Supplement), each
holder of Units will, on the Stock Purchase Date, be required to purchase shares
of Common Stock for an amount greater than the aggregate Applicable Market Value
of such shares. Accordingly, a holder of Units assumes the risk that the market
value of the Common Stock may decline, and such decline could be substantial.
See "Prospectus Summary -- Settlement Rate" for a tabular presentation of the
Settlement Rate and the approximate market value of the Common Stock receivable
upon settlement of the Units at certain assumed Applicable Market Values.
LIMITATION ON EQUITY APPRECIATION POTENTIAL
Since the number of shares of Common Stock issuable upon settlement of each
Purchase Contract may decline by up to % as the Applicable Market Value
increases, the opportunity for equity appreciation afforded by an investment in
the Units is less than that afforded by a direct investment in the Common Stock.
Assuming the Applicable Market Value accurately reflects fair market value, the
Applicable Market Value on the Stock Purchase Date must exceed the Threshold
Appreciation Price of $ per share before a holder of the Units realizes any
appreciation.
LIMITATION ON VALUE OF QUIPS (OR JUNIOR SUBORDINATED DEBENTURES) AS A RESULT OF
CALL OPTIONS
If the value of the QUIPS (or Junior Subordinated Debentures) underlying
the Normal Units is greater than the value of the Aggregate Call Option Exercise
Consideration (as expected), it is likely that the Call Option Holder will
exercise its Call Options. In that case, the Call Option Holder rather than
holders of Normal Units will realize the benefit of that greater value. The
QUIPS (or Junior Subordinated Debentures) may increase in value due to, among
other things, a decrease in interest rates, an increase in the perceived credit
quality of the Company or an increase in the QUIPS and Debenture Rate.
LIMITATIONS ON RIGHT TO CREATE STRIPPED UNITS
Each holder of Normal Units will have the right to substitute, as Pledged
Securities, Treasury Securities that will generate payments matching such
holder's obligations under the underlying Purchase Contracts, in return for the
securities that theretofore had been the Pledged Securities. For so long as the
Call Options underlying such Normal Units remain exercisable, such right may be
exercised only if the holder obtains an instrument from the Call Option Holder
releasing its security interest in the Pledged Securities securing such Call
Options and agreeing that such Call Options no longer underlie such Units. The
holder might obtain such an instrument by separately documenting such Call
Options with the Call Option Holder (and, if required by the Call Option Holder,
entering into credit support arrangements satisfactory to the Call Option Holder
backing such Call Options), paying the Call Option Holder to cancel such Call
Options or otherwise. However, the Call Option Holder will be under no
obligation to deliver such an instrument, and there can be no assurance that a
holder will be able to induce the Call Option Holder to do so. Therefore,
investors may not be able to capitalize on any appreciation of the QUIPS through
this means. Goldman, Sachs & Co. have advised the Company that, while they are
the Call Option Holder, they will evaluate requests to
S-15
<PAGE> 18
release their security interests in the Pledged Securities on a case-by-case
basis, taking into account the market value of the Pledged Securities as
compared to the cost to the Call Option Holder of exercising the Call Options,
the availability and amount of credit support, any payments to be made in
connection therewith and other factors pertaining at the time of any requested
release. In doing so, Goldman, Sachs & Co. would expect that they would not
grant such a request unless the value of the payments and other new rights
offered by the holder were no less valuable to Goldman, Sachs & Co. than the
rights they had before granting such request.
PLEDGED SECURITIES ENCUMBERED
Although holders of Units will be beneficial owners of the underlying
Pledged Securities, those Pledged Securities will be pledged with the Collateral
Agent to secure the obligations of the holders under the Purchase Contracts and
the Call Options. Thus, for so long as the Purchase Contracts remain in effect,
holders will not be entitled to withdraw their Pledged Securities from this
pledge arrangement except in the limited circumstances described herein.
SUBORDINATION OF COMPANY OBLIGATIONS
The ability of the Trust to pay amounts due on the QUIPS (including,
without limitation, the ability of the Trust to pay amounts due upon exercise of
any Junior Subordinated Debenture Put Options) is dependent upon the Company
making payments on the Junior Subordinated Debentures as and when required.
The obligations of the Company under the Junior Subordinated Debentures and
the Guarantee will be unsecured and subordinate and rank junior in right of
payment to all present and future Senior Indebtedness of the Company to the
extent and in the manner set forth in the Indenture and the Guarantee,
respectively. No payments on account of principal of, premium, if any, or
interest on the Junior Subordinated Debentures(including payments on exercise of
Junior Subordinated Debenture Put Options)may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or an event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any default. In the event of the
acceleration of the maturity of Junior Subordinated Debentures, the holders of
all Senior Indebtedness outstanding at the time of such acceleration will first
be entitled to receive payment in full of all amounts due in respect of such
Senior Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of Junior Subordinated
Debentures. Notwithstanding the foregoing, amounts that would be due and payable
by the Company to holders of Units in the absence of the foregoing subordination
provisions may be applied by such holders to offset their obligations under
their respective Purchase Contracts.
None of the Indenture, the Guarantee, the Declaration or the Master Unit
Agreement places any limitation on the amount of secured or unsecured debt,
including Senior Indebtedness, that may be incurred by the Company or any of its
subsidiaries. At March 31, 1998, the Company had $ million of Senior
Indebtedness outstanding.
See "Description of the Units -- Description of the Junior Subordinated
Debentures -- Subordination" and "Description of the Guarantee -- Status".
OPTION TO DEFER PAYMENTS
The Company will generally have the right to defer payments of interest on
the Junior Subordinated Debentures at any time or from time to time for a period
not extending beyond the QUIPS and Debenture Maturity Date. Upon any such
deferral, quarterly distributions on the QUIPS by the Trust will be deferred.
However, deferred payments of interest on the Junior Subordinated Debentures and
deferred distributions on the QUIPS will bear additional interest or
distributions at a rate per annum equal to the Deferral Rate (compounding on
each succeeding Quarterly Payment
S-16
<PAGE> 19
Date) until paid. See "Description of the Units -- Description of the
QUIPS -- Distributions" and "-- Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Date".
If Contract Fees are payable by the Company on the Purchase Contracts, the
Company will generally have the right to defer the payment of such Contract Fees
at any time or from time to time for a period not extending beyond the Stock
Purchase Date. However, deferred payments of Contract Fees will bear additional
Contract Fees at a rate per annum equal to the Deferral Rate (compounding on
each succeeding Quarterly Payment Date) until paid. If the Purchase Contracts
are terminated (upon the occurrence of certain events of bankruptcy, insolvency,
or reorganization with respect to the Company), the right to receive Contract
Fees, including deferred Contract Fees, will terminate.
Should the Company elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures or Contract Fees, the market
price of the QUIPS or Junior Subordinated Debentures or, for so long as the
Purchase Contracts remain in effect, the Units is likely to be affected. A
holder that disposes of its QUIPS, Junior Subordinated Debentures or Units
during such deferral period, therefore, might not receive the same return on its
investment as a holder that continues to hold its QUIPS, Junior Subordinated
Debentures or Units. In addition, the mere existence of the Company's right to
defer such payments may cause the market price of the QUIPS, Junior Subordinated
Debentures or Units to be more volatile than the market prices of other
securities that are not subject to such deferrals.
For information about the taxation of holders in the event that the Company
exercises its right to defer payments, see "-- Tax Matters" and "Certain Federal
Income Tax Consequences -- Interest Receivable on the QUIPS".
MASTER UNIT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED
OBLIGATIONS OF UNIT AGENT
Although the QUIPS constituting a part of the Normal Units will be issued
pursuant to a Declaration qualified as an indenture under the Trust Indenture
Act, the Master Unit Agreement relating to the Units and the appointment of the
Unit Agent (as defined herein) as the agent and attorney-in-fact for the holders
of the Units will not be qualified as an indenture under the Trust Indenture
Act, and the Unit Agent will not be required to qualify as a trustee thereunder.
Accordingly, holders of the Units will not have the benefits of the protections
of the Trust Indenture Act. Under the terms of the Master Unit Agreement, the
Unit Agent will have only limited obligations to the holders of the Units.
See"Description of the Units -- Certain Provisions of the Principal
Agreements -- Information Concerning the Unit Agent".
RIGHTS UNDER THE GUARANTEE
The Guarantee will guarantee payments due in respect of the QUIPS to the
holders of the QUIPS (including holders of Normal Units so long as the Normal
Units include QUIPS), but only to the extent that the Trust has funds on hand
legally available therefor. If the Company defaults on its obligation to pay
amounts payable in respect of the Junior Subordinated Debentures, the Trust will
not have sufficient funds to make the corresponding payments due in respect of
the QUIPS, and, in such event, holders of the QUIPS (including holders of Normal
Units so long as the Normal Units include QUIPS) will not be able to rely upon
the Guarantee for payment of such amounts.
ENFORCEMENT RIGHTS IN RESPECT OF JUNIOR SUBORDINATED DEBENTURES
In the event a Debenture Event of Default (as defined herein) shall have
occurred and be continuing and such event is attributable to the failure of the
Company to pay principal or interest on the Junior Subordinated Debentures on
the respective dates such principal or interest is payable (after giving effect
to any permitted deferral), then a holder of record of QUIPS (or, for so long as
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<PAGE> 20
QUIPS underlie Normal Units, a holder of record of Normal Units) may institute a
legal proceeding directly against the Company for enforcement of payment to such
holder of the portion of such principal or interest attributable to Junior
Subordinated Debentures having a principal amount equal to the aggregate QUIPS
Liquidation Amount of the QUIPS held by such holder (or underlying such holder's
Normal Units) (a "Direct Action"). Except as described herein, holders of QUIPS
will not be able to exercise directly any other remedy available to the holders
of the Junior Subordinated Debentures or to assert directly any other rights in
respect of the Junior Subordinated Debentures. See "Description of the
Units -- Description of the Junior Subordinated Debentures -- Enforcement of
Certain Rights by Holders of the QUIPS" and "-- Debenture Events of Default" and
"-- Description of the Guarantee". The Declaration will provide that each holder
of QUIPS (including each holder of Normal Units for so long as Normal Units
include QUIPS) by acceptance thereof agrees to the provisions of the Indenture
and the Guarantee.
LIMITED VOTING AND OTHER RIGHTS
Holders of QUIPS (including holders of Normal Units for so long as Normal
Units include QUIPS) generally will have voting rights with respect to the QUIPS
relating only to the modification of the terms of the QUIPS and the exercise of
the Trust's rights as holder of the Junior Subordinated Debentures. Holders of
QUIPS will not be entitled to vote to appoint, remove or replace, or to increase
or decrease the number of, the Issuer Trustees or Administrators, which voting
rights are vested exclusively in the holder of the Common Trust Securities,
except as described under "Description of the Units -- Description of the
QUIPS -- Removal of Issuer Trustees and Administrators". See "Description of the
Units -- Description of the QUIPS -- Voting Rights; Amendment of the
Declaration".
Holders of Units will not be entitled to any rights with respect to the
Common Stock (including, without limitation, voting rights or rights to receive
any dividends or other distributions in respect thereof) until such time as the
Company shall have delivered shares of Common Stock upon settlement of the
Purchase Contracts on the Stock Purchase Date.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
The Units are securities for which there is currently no secondary market.
It is not possible to predict how the Units will trade in the secondary market
or whether the market for the Units will be liquid or illiquid. Application will
be made to list the Normal Units on the NYSE. The Underwriters have advised the
Company and the Trust that the Underwriters intend to make a market for the
Normal Units; however, the Underwriters are not obligated to do so and any
market making may be discontinued at any time.
TAX MATTERS
For United States federal income tax purposes, the Junior Subordinated
Debentures will be classified as contingent debt instruments. Consequently, they
will be considered to be issued with original issue discount ("OID"), which each
holder of QUIPS (including each holder of Normal Units for so long as Units
include QUIPS) will be required to include in income during the holder's period
of ownership of the QUIPS, subject to certain adjustments. Additionally, holders
may be required to recognize ordinary income on all or a portion of any gain
realized on the sale of QUIPS or gain attributable to the QUIPS on a sale of
Units before maturity. See "Certain Federal Income Tax Consequences -- Interest
Received on the QUIPS."
Should the Company exercise its right to defer payments of interest on the
Junior Subordinated Debentures, each holder of QUIPS (including each holder of
Normal Units for so long as Normal Units include QUIPS) will continue to be
required to accrue OID in respect of the deferred stated interest allocable to
its QUIPS for United States federal income tax purposes. As a result, during a
deferral period, each holder of QUIPS will recognize income for United States
federal income tax
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<PAGE> 21
purposes but will not receive cash attributable to such income prior to the
conclusion of such deferral period. In addition, a holder will not receive any
cash related to the income accrued during a deferral period if the holder
disposes of the QUIPS prior to the record date for the payment of distributions.
Assuming, however, that the Company does not exercise its right to defer
payments, the Company believes that the amount of taxable income required to be
recognized each year with respect to the QUIPS will not exceed the amount of
cash distributed each year with respect to the QUIPS. See "Certain Federal
Income Tax Consequences -- Interest Received on the QUIPS".
In the event that holders of Units are required to pay Contract Fees to the
Company, it is unlikely that such holders will be entitled to a current
deduction for such payments. As a result, although the amount of cash actually
distributed to holders will be reduced by the amount of Contract Fees payable to
the Company, holders will nevertheless recognize income each quarter equal to
the full amount of OID accrued with respect to the QUIPS, subject to certain
adjustments. See "Certain Federal Income Tax Consequences -- Contract Fees".
Because income with respect to the QUIPS will not be considered dividends
for United States federal income tax purposes, corporate holders of Normal Units
or QUIPS will not be entitled to a dividends-received deduction in respect of
such income.
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<PAGE> 22
THE TRUST
AmerUs Capital II is a statutory business trust created under the laws of
the State of Delaware pursuant to (i) a declaration of trust, dated as of April
14, 1998, executed by the Company, as Sponsor, and certain of the Issuer
Trustees and (ii) the filing of a certificate of trust with the Secretary of
State of the State of Delaware on April 14, 1998. Such declaration of trust will
be amended and restated in its entirety by the Declaration. The Declaration will
be qualified as an indenture under the Trust Indenture Act. The Trust exists for
the exclusive purposes of (i) issuing the Trust Securities representing
undivided beneficial interests in the assets of the Trust, (ii) investing the
proceeds of the Trust Securities in the Junior Subordinated Debentures and (iii)
engaging in only those other activities necessary or incidental thereto.
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Trust and payments under the Junior Subordinated Debentures will be the sole
revenues of the Trust. The Trust has a term of approximately seven (7) years,
but may dissolve earlier as provided in the Declaration. All of the Common Trust
Securities will be directly or indirectly owned by the Company. The Common Trust
Securities will rank pari passu, and payments will be made thereon pro rata,
with the QUIPS, except that, if an event of default under the Declaration has
occurred and is continuing, the rights of the holders of the Common Trust
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the QUIPS. Although, upon issuance of the QUIPS, the holders of the Units will
be beneficial owners of the underlying QUIPS, the QUIPS will be pledged with the
Collateral Agent to secure the obligations of the holders under the Purchase
Contracts and Call Options. The Company will directly or indirectly acquire all
of the Common Trust Securities; such Common Trust Securities will have an
aggregate liquidation amount equal to 3% of the total capital of the Trust.
The Trust's business and affairs will be conducted by the Issuer Trustees
and Administrators appointed by the Company as the holder of the Common Trust
Securities. The Issuer Trustees will be First Union National Bank, as the
Property Trustee (the "Property Trustee"), and First Union Trust Company, as the
Delaware Trustee (the "Delaware Trustee"), and the Administrators will be three
individuals who are employees of the Company (the "Administrators"). First Union
National Bank, as the Property Trustee, will act as sole indenture trustee under
the Declaration for purposes of compliance with the provisions of the Trust
Indenture Act. First Union National Bank will also act as indenture trustee (the
"Guarantee Trustee") under the Guarantee and the Indenture, until removed or
replaced by the holder of the Common Trust Securities. See "Description of the
Units -- Description of the Guarantee" and "Description of the
Units -- Description of Junior Subordinated Debentures". The Company, as the
direct or indirect holder of the Common Trust Securities, or if an event of
default under the Declaration has occurred and is continuing, the holders of a
majority in Liquidation Amount of the Trust Securities, will be entitled to
appoint, remove or replace the Property Trustee and/or the Delaware Trustee. In
no event will the holder of the QUIPS (or Units) have the right to vote to
appoint, remove or replace the Administrators; such voting rights will be vested
exclusively in the Company, as the direct or indirect holder of the Common Trust
Securities. The duties and obligations of each Issuer Trustee and Administrator
are governed by the Declaration. The Company will pay directly all fees,
expenses, debts and obligations (other than the Trust Securities) related to the
Trust and the offering of the Units, including all ongoing costs, expenses,
taxes and other liabilities of the Trust. Under the Declaration, all parties to
the Declaration will agree, and the holders of the Units upon purchase of their
Units will be deemed to have agreed, for United States federal income tax
purposes, to treat the Trust as a grantor trust, the Junior Subordinated
Debentures as indebtedness and the Trust Securities as evidence of indirect
beneficial ownership in the Junior Subordinated Debentures. See "Description of
the Units -- Description of the Guarantee" and "-- Description of the QUIPS".
The Property Trustee will hold title to the Junior Subordinated Debentures
for the benefit of the holders of the Trust Securities and the Property Trustee
will have the power to exercise all rights, powers and privileges under the
Indenture as the holder of the Junior Subordinated Debentures. In
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<PAGE> 23
addition, the Property Trustee will maintain exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all payments
made in respect of the Junior Subordinated Debentures for the benefit of the
holders of the Trust Securities. The Property Trustee will make payments of
distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
QUIPS. See "Description of the Units -- Description of the Junior Subordinated
Debentures".
The rights of the holders of the QUIPS, including economic rights, rights
to information and voting rights, are set forth in the Declaration, the Delaware
Business Trust Act and the Trust Indenture Act. See "Description of the
Units -- Description of the QUIPS".
The principal place of business of the Trust is AmerUs Capital II, c/o
AmerUs Life Holdings, Inc., 699 Walnut, Des Moines, Iowa 50309-3948 and its
telephone number is (515) 362-3600.
USE OF PROCEEDS
The net proceeds to be received by the Trust from the sale of the QUIPS,
after deducting estimated underwriting discounts and expenses of the offering
payable by the Company, are expected to be $ million, of which
$ million will be from the sale of the Call Options to the Call Option
Holder (approximately $ million, of which $ will be from the
sale of the Call Options, if the Underwriters' over-allotment option is
exercised in full). The proceeds to be received by the Trust from the sale of
the QUIPS will be invested by the Trust in the Junior Subordinated Debentures of
the Company. The Company intends to use such proceeds to repay the remaining
outstanding Bank Debt, to partially fund a stock repurchase of up to $75 million
of the Company's Class A Common Stock and for general corporate purposes.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock of the Company has been listed for trading on the NYSE
since February 20, 1998 under the symbol AMH and was listed on the Nasdaq
National Market System from the date of the Company's initial public offering on
January 28, 1997 until February 19, 1998 under the symbol AMRS. Based upon
information reported in the Bloomberg consolidated transaction reporting system,
the high and low sales prices for each quarterly period from January 28, 1997 to
the date hereof were:
<TABLE>
<CAPTION>
PRICE RANGE
-------------------
HIGH LOW
-------- --------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Second quarter............................................
Third quarter.............................................
Fourth quarter............................................
YEAR ENDED DECEMBER 31, 1998
First quarter
</TABLE>
As of March 31, 1998, there were approximately holders of
the outstanding shares of Common Stock, including individual participants in
securities position listings. The last reported sales price of the Common Stock
on the NYSE on March 31, 1998 was $ per share.
Since the second quarter of 1997, the Company's Board of Directors has
declared a quarterly cash dividend of $0.10 per share to shareholders of its
Class A Common Stock. The declaration and payment of future dividends to holders
of its Common Stock by the Company will be at the discretion of the Board of
Directors and will depend upon the Company's earnings and financial condition,
capital requirements of its Subsidiaries, regulatory considerations and other
factors the
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<PAGE> 24
Board of Directors deems relevant. The Company's general policy is to retain
most of its earnings to finance the growth and development of its business.
Because the Company is a holding company, it is dependent upon its
Subsidiaries to provide funding for the Company's operating expenses and for the
payment by the Company of debt service and dividends. State insurance laws
applicable to the Company's Subsidiaries limit the payment of dividends and
other distributions by such Subsidiaries to the Company and may therefore limit
the ability of the Company to make dividend payments. See "Risk Factors --
Holding Company Structure -- Limitations on Dividends" and "Reorganization and
Recent Acquisitions" in the Prospectus and "Prospectus Summary -- Recent
Acquisitions".
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<PAGE> 25
CAPITALIZATION
The following table summarizes the actual capitalization of the Company and
its consolidated subsidiaries at March 31, 1998 and such capitalization adjusted
on a pro forma basis to reflect the sale by the Company of the Units
offered hereby (at an assumed initial public offering price of $ and
assuming the Underwriters' over-allotment option is not exercised) [and the sale
by the Company of $125,000,000 aggregate principal amount of its Senior Notes
due 2008], and an assumed application of the proceeds from such sale, after
underwriting commissions and estimated expenses of this offering, to repay
indebtedness. This table should be read in conjunction with the Company's
Quarterly Report on Form 10-Q for the three months ended March 31, 1998 which is
incorporated by reference in the Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------
PRO FORMA FOR
THE ISSUANCE
ACTUAL OF THE UNITS
---------- -------------
(IN THOUSANDS)
<S> <C> <C>
Commercial paper and notes payable:
Bank Debt................................................. $ 266,341 $ 16,341
Notes..................................................... -- 125,000
---------- ----------
Total Debt........................................ 266,341 141,341
Capital Securities.......................................... 86,000 236,000
---------- ----------
Shareholders' equity:
Class A Common Stock(1)................................... 29,735 29,735
Class B Common Stock...................................... 5,000 5,000
Accumulated other comprehensive income, net of deferred
income taxes.............................................. 54,099 54,099
Additional paid-in capital.................................. 383,686 383,686
Retained earnings........................................... 472,108 472,108
---------- ----------
Total shareholders' equity.................................. 944,628 944,628
---------- ----------
Total capitalization and debt..................... $1,296,969 $1,321,969
========== ==========
</TABLE>
- ---------------
(1) Does not include up to shares ( if the Underwriters'
over-allotment option is exercised in full) of Class A Common Stock issuable
on the Stock Purchase Date of , 2001 upon settlement of the
Purchase Contracts.
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<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information appearing below has been extracted from Management's
Discussion and Analysis of Results of Operations and Financial Condition
contained in the Company's Report on Form 10-Q for the three-month period ended
March 31, 1998 (which is incorporated by reference in the Prospectus) and should
be read in conjunction with the more complete information contained therein.
RESULTS OF OPERATIONS -- FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997
Revenues
Individual life and annuity premiums and product charges increased by $14.3
million, or 73.8%, to $33.6 million for the first quarter of 1998 from $19.3
million for the first quarter of 1997. Included in the 1998 increase were $6.3
million of insurance and annuity premiums and product charges from Delta and
AmVestors. Insurance premiums increased by $9.1 million to $17.3 million for the
first quarter of 1998 compared to $ 8.2 million for the first quarter of 1997.
Included in the increased insurance premiums in 1998 was $2.0 million from the
acquisitions. Traditional life insurance premiums increased by $5.6 million
primarily as a result of growth in renewal premiums on traditional life
insurance policies not included in the Closed Block (as defined below).
Immediate annuity deposits and supplementary contract premiums were $3.5 million
higher in 1998 than in 1997 with $1.8 million from the recent acquisitions of
Delta and AmVestors and $1.7 million from increased immediate annuity and
supplementary contract premium sales of AmerUs Life.
Universal life product charges increased by $0.6 million for the first
quarter of 1998 primarily due to increased cost of insurance charges as a result
of the normal aging of the block of business.
Annuity product charges for first quarter 1998 increased by $4.5 million
from 1997 amounts. The increase includes $4.3 million of annuity product charges
from Delta and AmVestors.
Net investment income increased by $82.2 million to $133.1 million for
first quarter 1998. Included in the 1998 increase in net investment income was
$82.6 million of net investment income from Delta and AmVestors. The remaining
$0.4 million decrease in net investment income was attributable to a decrease in
average invested assets (excluding market value adjustments, the Closed Block,
and Delta and AmVestors) partially offset by an increase in effective yields on
average invested assets. Average invested assets (excluding market value
adjustments, the Closed Block and Delta and AmVestors) in the first quarter of
1998 decreased by $56.8 million from the first quarter of 1997, primarily as a
result of the continued runoff of AmerUs Life's individual deferred annuity
business. Effective May, 1996 substantially all new sales of individual deferred
annuities by AmerUs Life's distribution network have been made through the joint
venture (the "Ameritas Joint Venture") with Ameritas Life Insurance Corp.
pursuant to which AmerUs Life markets fixed annuities issued by Ameritas
Variable Life Insurance Company ("AVLIC") and sells AVLIC's variable life
insurance and variable annuity products. The effective yield on average invested
assets (excluding market value adjustments, the Closed Block and Delta and
AmVestors) increased from 7.22% for the first quarter of 1997 to 7.26% for the
first quarter of 1998.
Realized gains on investments were $6.2 million for the first quarter of
1998 compared to gains of $5.2 million for the first quarter of 1997. Included
in the first quarter amounts were $1.9 million of gains from Delta and
AmVestors.
The Closed Block
The Closed Block was established on June 30, 1996. Insurance policies which
had a dividend scale in effect as of June 30, 1996 were included in the Closed
Block (as defined in the Prospectus). The Closed Block was designed to provide
reasonable assurance to owners of insurance policies included therein that,
after the Company's reorganization, assets would be
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<PAGE> 27
available to maintain the dividend scales and interest credits in effect prior
to the Company's reorganization if the experience underlying such scales and
credits continues.
The contribution to the operating income of the Company from the Closed
Block is reported as a single line item in the income statement. Accordingly,
premiums, product charges, investment income, realized gains or losses on
investments, policyowner benefits and dividends attributable to the Closed
Block, less certain minor expenses including amortization of deferred policy
acquisition costs, are shown as a net number under the caption the "Contribution
from the Closed Block." This results in material reductions in the respective
line items in the income statement while having no effect on net income. The
expenses associated with the administration of the policies included in the
Closed Block and the renewal commissions on these policies are not charged
against the Contribution from the Closed Block, but rather are grouped with
underwriting, acquisition and insurance expenses. Also, all assets allocated to
the Closed Block are grouped together and shown as a separate item entitled
"Closed Block Assets." Likewise, all liabilities attributable to the Closed
Block are combined and disclosed as the "Closed Block Liabilities."
The contribution from the Closed Block for the first quarter of 1998 was
$9.0 million compared to $9.3 million for the same period in 1997.
Closed Block insurance premiums decreased by $4.5 million to $50.4 million
for the first quarter of 1998 compared to $54.9 million for the same period in
1997. Insurance policies which had a dividend scale in effect as of June 30,
1996 were included in the Closed Block. The decrease in insurance premiums
reflects a reduction in the Closed Block's traditional life insurance business
in force as a result of the lapse of such business. Similarly, the decrease in
product charges on universal life policies included in the Closed Block is
primarily the result of the reduction of such business in force.
Net investment income for the Closed Block increased by $2.9 million to
$29.2 million for the first quarter of 1998 compared to $26.3 million for the
first quarter of 1997 due primarily to higher average invested assets (excluding
market value adjustments) partially offset by lower effective yields. Average
invested assets (excluding market value adjustments) increased by $125.6 million
and average effective yields decreased by 19 basis points for the Closed Block.
Realized gains on investments of the Closed Block were $0.9 million for the
first quarter of 1998 compared to a $0.6 million realized loss for the same
period in 1997.
Closed Block policyowner benefits were $49.0 million for the first quarter
of 1998 compared to $49.7 million a year ago. The decrease in benefits was
largely the result of lower death benefits on the Closed Block policies.
Insurance expenses for the Closed Block were $1.4 million for the first
quarter of 1998 compared to $1.5 million for the first quarter of 1997. The
decrease in expenses is the result of reduced premium taxes on such business due
to the lower insurance premiums.
The amortization of deferred policy acquisition costs for the Closed Block
increased by $1.2 million to $8.0 million for the first quarter of 1998.
Deferred policy acquisition costs are generally amortized in proportion to gross
margins, including realized capital gains. Lower death benefits and increased
realized capital gains in the first quarter of 1998, compared to the same period
in 1997, contributed to higher gross margins in 1998 on those policies included
in the Closed Block for which deferred costs are amortized, resulting in the
increased amortization in 1998.
Closed Block dividends to policyowners were $16.6 million for the first
quarter of 1998 compared to $17.1 million for the same period in 1997.
Policyowner Benefits
Total policyowner benefits were $107.3 million for the first quarter of
1998 compared to $45.5 million for the first quarter of 1997, an increase of
$61.8 million. Included in the first quarter
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<PAGE> 28
1998 amounts were $63.0 million of benefits of acquired companies primarily
consisting of interest credited to deferred annuity account balances.
Traditional life insurance benefits increased by $1.0 million in 1998 primarily
due to the growth and aging of such business in force. Universal life insurance
benefits were $1.3 million lower in 1998 primarily due to decreased death
benefits as a result of lower mortality.
Annuity benefits increased by $62.0 million for the first quarter of 1998
to $85.8 million compared to $23.8 million for the first quarter of 1997.
Included in the first quarter 1998 annuity benefits were $62.0 million
attributable to the recent acquisitions of Delta and AmVestors. AmerUs Life's
annuity benefits were $23.8 million for both the first quarters of 1998 and
1997. Interest credited to AmerUs Life's policyowner account balances decreased
by $1.8 million to $13.6 million for the first quarter of 1998 compared to $15.4
million for the same period in 1997. The weighted average crediting rate for
AmerUs Life's individual deferred annuity liabilities decreased by 19 basis
points from 5.48% for the first quarter of 1997 to 5.29% for the first quarter
of 1998, and AmerUs Life's average deferred annuity liabilities decreased by
$110.4 million from the first quarter of 1997 to the same period in 1998 also
contributing to the lower credited amounts in 1998. Other annuity benefits for
AmerUs Life increased by $1.8 million to $10.2 million for the first quarter of
1998 compared to $8.4 million for the first quarter of 1997, primarily as a
result of increased immediate annuity and supplementary contract premium sales.
Expenses
The Company's commission expense, net of deferrals, increased by $1.0
million to $3.1 million for the first quarter of 1998 compared to $2.1 million
for the first quarter of 1997. Included in the increase is $0.4 million of
commission expense, net of deferrals, from the recent acquisitions. Other
underwriting, acquisition and insurance expenses, net of deferrals, increased by
$16.0 million to $24.9 million for the first quarter of 1998. Included in the
1998 amounts is $15.7 million of expenses for the recently acquired companies,
including $1.8 million of goodwill amortization and $6.7 million of amortization
of value of business acquired. Excluding recently acquired companies, other
underwriting, acquisition and insurance expenses, net of deferrals, increased by
$0.3 million.
The amortization of deferred policy acquisition costs increased by $3.1
million to $8.2 million in the first quarter of 1998 compared to $5.1 million in
the first quarter of 1997. Deferred policy acquisition costs are generally
amortized in proportion to gross margins, including realized capital gains.
Lower death benefits and increased realized capital gains in the first quarter
of 1998, compared to the first quarter of 1997, contributed to higher gross
margins in 1998 on products for which deferred costs are amortized, resulting in
the increased amortization in 1998.
Income from Operations
Income from operations increased by $15.1 million to $38.2 million for the
first quarter of 1998 compared to $23.1 million for the same period in 1997,
with the recent acquisitions of Delta and AmVestors adding $11.7 million of
income from operations during the first quarter of 1998. Improved product
margins, in large part due to the result of better mortality, contributed to the
remaining increase in income from operations in 1998.
Interest Expense
Interest expense increased by $3.7 million in the first quarter of 1998 to
$6.7 million compared to $3.0 million for the first quarter of 1997. The
increased interest expense in the first quarter of 1998 was due to increased
interest expense on the capital securities issued by the Company on February 3,
1997 and increased interest expense on the revolving line of credit as a result
of increased debt levels.
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<PAGE> 29
Income Before Income Tax Expense
Income before income tax expense and equity in earnings of unconsolidated
subsidiary increased by $11.4 million to $31.5 million for the first quarter of
1998 compared to $20.1 million for the first quarter of 1997, with the recent
acquisitions of Delta and AmVestors adding $11.7 million to such income for the
first quarter of 1998.
Income Tax Expense
Income tax expense increased by $4.4 million to $10.1 million for the first
quarter of 1998 compared to $5.7 million for the same period of 1997. The
increase in income tax expense was primarily due to the higher pre-tax income
including income from the recent acquisitions of Delta and AmVestors. The
effective income tax rate for the first quarter of 1998 was 32.3% compared to
28.5% for the first quarter of 1997. The higher effective tax rate in 1998 was
in part attributable to the non-deductibility of the amortization of goodwill
resulting from the recent acquisitions. In addition, relatively similar amounts
of tax credits in 1998 and 1997 had a greater impact on reducing the effective
tax rate for the first quarter of 1997 due to the lower income in the first
quarter of 1997.
Net Income
Net income increased by $7.2 million to $21.8 million for the first quarter
of 1998 compared to $14.6 million for the same period in 1997, with the recent
acquisitions of Delta and AmVestors adding $6.5 million of net income for the
first quarter of 1998.
ACCOUNTING TREATMENT
The financial statements of the Trust will be reflected in the Company's
consolidated financial statements, with the QUIPS shown on the Company's balance
sheet under the caption "Company-obligated mandatorily redeemable capital
securities of subsidiary trust". The financial statement footnotes to the
Company's consolidated financial statements will reflect that the sole asset of
the Trust will be the Junior Subordinated Debentures. Distributions on the QUIPS
will be reflected as a charge to the Company's consolidated income, identified
as "Distributions on capital securities", whether paid or accrued.
The Purchase Contracts are forward transactions in the Company's Common
Stock. Under generally accepted accounting principles, the Purchase Contracts
will not be recorded on the Company's consolidated balance sheets but will be
disclosed in the notes to the Company's consolidated financial statements. Upon
settlement of a Purchase Contract, the Company will receive the Stated Amount on
such Purchase Contract and will issue the requisite number of shares of Common
Stock. The Stated Amount thus received will be credited to shareholders' equity
allocated between the common stock and paid-in capital accounts.
Prior to the issuance of shares of Common Stock upon settlement of the
Purchase Contracts, it is anticipated that the Units will be reflected in the
Company's diluted earnings per share calculations using the treasury stock
method. Under this method, the number of shares of Common Stock used in
calculating diluted earnings per share is deemed to be increased by the excess,
if any, of the number of shares issuable upon settlement of the Purchase
Contracts over the number of shares that could be purchased by the Company in
the market (at the average market price during the period) using the proceeds
receivable upon settlement. Consequently, it is anticipated there will be no
dilutive effect on the Company's diluted earnings per share except during
periods when the average market price of Common Stock is above the Threshold
Appreciation Price.
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DESCRIPTION OF THE UNITS
The summaries of certain provisions of documents described below are not
necessarily complete, and in each instance reference is hereby made to the
description of the Units contained in the Prospectus and the copies of such
documents (including the definitions therein of certain terms) which are on file
with the Commission. Wherever particular sections of, or terms defined in, such
documents are referred to herein, such sections or defined terms are
incorporated by reference herein. Capitalized terms not defined herein have the
meanings assigned to such terms in the Principal Agreements (as defined herein).
GENERAL
Each Unit will have a Stated Amount of $ (equal to the last
reported per share sale price of the Common Stock on the NYSE on the date of
this Prospectus Supplement). Each Unit will initially consist of (a) a Purchase
Contract under which (i) the holder will purchase from the Company on the Stock
Purchase Date of , 2001, for cash in an amount equal to the
Stated Amount, between of a share and one share of Common Stock
of the Company (depending on the Applicable Market Value of the Common Stock on
the Stock Purchase Date, as described below), subject to adjustment in certain
circumstances, and (ii) Contract Fees will be payable at the Contract Fee Rate
of % of the Stated Amount per annum as described below (see "-- Description
of the Purchase Contracts"), and (b) a QUIPS having a Liquidation Amount equal
to the Stated Amount, a distribution rate of % of the Stated Amount per
annum and a mandatory redemption date of , 2003 (see
"-- Description of the QUIPS"), subject to a transferrable Call Option granted
by the holder of the Unit to the Call Option Holder which (when aggregated with
the Call Options underlying all other Units) will entitle the Call Option Holder
to acquire the QUIPS underlying the Units (or the Junior Subordinated Debentures
substituted therefor), on or before, the last Quarterly Payment Date prior to
the Stock Purchase Date (or, if such date is not a Trading Day, the next
succeeding Trading Day) (i.e., the Call Option Expiration Date) in exchange for
the Aggregate Consideration Deliverable on Exercise of the Call Options (see
"-- Description of the Call Options"). For so long as a Purchase Contract
remains in effect, such Purchase Contract and the QUIPS or other Pledged
Securities securing it (and, for so long as the Call Option relating to such
Pledged Securities is exercisable, the obligations of the holder to the Call
Option Holder thereunder) will not be separable and may be transferred only as
an integrated Unit.
For the period from the date of issuance of the Units to the Stock Purchase
Date, each holder of a Unit (other than a Stripped Unit) will be entitled to
receive cash payments of % of the Stated Amount per annum, payable in
arrears on the Quarterly Payment Dates of , ,
and of each year (unless deferred as described
herein). Such payments will consist of payments on the QUIPS or other Pledged
Securities plus Contract Fees payable by the Company or net of Contract Fees
payable by the holders, as the case may be. See "-- Description of the
QUIPS -- Distributions", "-- Description of the Call Options" and
"-- Description of the Purchase Contracts -- Contract Fees". If a holder of a
Unit does not provide cash to settle the underlying Purchase Contract in the
manner described herein, cash proceeds from the QUIPS or other Pledged
Securities underlying such Unit will be applied on the Stock Purchase Date to
the purchase of Common Stock pursuant to such Purchase Contract.
The QUIPS underlying a Normal Unit will constitute Pledged Securities that
will be pledged to the Collateral Agent to secure the holder's obligations to
the Company and the Call Option Holder under the Purchase Contract and Call
Option underlying such Unit. If Treasury Securities are exchanged for Pledged
Securities upon exercise of the Call Options or Junior Subordinated Debentures
are distributed in respect of Pledged Securities upon dissolution of the Trust,
the Treasury Securities so exchanged or the Junior Subordinated Debentures so
distributed will automatically be substituted as Pledged Securities in place of
the securities that theretofore had been Pledged Securities.
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Each holder of Units, by acceptance thereof, will, under the terms of the
Principal Agreements and any of the Purchase Contracts and Call Options
underlying such Units, be deemed to have (a) irrevocably agreed to be bound by
the terms of the Principal Agreements and such Purchase Contracts and Call
Options for so long as such holder remains a holder of such Units, and (b) duly
appointed the Unit Agent as such holder's agent and attorney-in-fact to enter
into and perform such Purchase Contracts and Call Options on behalf of and in
the name of such holder.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Units by tender, in the open market or by
private agreement.
FORMATION OF THE UNITS
At the closing of the offering made hereby, the Underwriters will (a) enter
into Purchase Contracts with the Company and (b) purchase QUIPS from the Trust
for cash. The Underwriters will fund that cash in part by the sale of the Units
offered hereby to the initial investors thereof and in part by the sale of Call
Options (on behalf of such investors) to the Call Option Holder. The Trust will
use the cash received from the sale of the QUIPS to purchase Junior Subordinated
Debentures from the Company. The QUIPS will then be pledged to the Collateral
Agent to secure the obligations owed to the Company under the Purchase Contracts
and the obligations owed to the Call Option Holder under the Call Options. The
rights to purchase Common Stock under a Purchase Contract, together with the
QUIPS or other Pledged Securities pledged to secure the obligations referred to
in (a) and (b) below, subject to (a) the obligations owed to the Company under
such Purchase Contract,(b) the obligations owed to the Call Option Holder under
the Call Option relating to such QUIPS or other Pledged Securities and (c) the
pledge arrangements securing the foregoing obligations, are collectively
referred to herein as a "Normal Unit".
Each holder of Normal Units will have the right, at any time on or prior to
the second Business Day immediately preceding the Stock Purchase Date, to
substitute, as Pledged Securities, Treasury Securities that will generate
payments matching such holder's obligations under the underlying Purchase
Contracts, in return for the securities that theretofore had been the Pledged
Securities underlying such Units. For so long as the Call Options underlying
such Units remain exercisable, such right may be exercised only if the holder
obtains an instrument from the Call Option Holder releasing its security
interest in the Pledged Securities securing such Call Options and agreeing that
such Call Options no longer underlie such Units. The holder might obtain such an
instrument by separately documenting such Call Options with the Call Option
Holder (and, if required by the Call Option Holder, entering into credit support
arrangements satisfactory to the Call Option Holder backing such Call Options),
paying the Call Option Holder to cancel such Call Options or otherwise. However,
the Call Option Holder will be under no obligation to deliver such an
instrument, and there can be assurance that a holder will be able to induce the
Call Option Holder to do so. Therefore, investors may not be able to capitalize
on any appreciation of the QUIPS through this means.
Goldman, Sachs & Co. has advised the Company that, while they are the Call
Option Holder, they will evaluate requests to release their security interests
in the Pledged Securities on a case-by-case basis, taking into account the
market value of the Pledged Securities as compared to the cost to the Call
Option Holder of exercising the Call Options, the availability and amount of
credit support, any payments to be made in connection therewith and other
factors pertaining at the time of any requested release. In doing so, Goldman,
Sachs & Co. would expect that they would not grant such a request unless the
value of the payments and other new rights offered by the holder were no less
valuable to Goldman, Sachs & Co. than the rights they had before granting such
request.
If a holder of Normal Units exercises such holder's right to substitute
Treasury Securities for Pledged Securities in the manner described herein, the
securities that theretofore had been the Pledged Securities underlying such
Normal Units will be released from the pledge arrangement described herein and
delivered to such holder, and such holder's remaining rights and obligations
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<PAGE> 32
under such Normal Units will thereupon become "Stripped Units" that will no
longer generate cash payments to such holder (other than Contract Fees, if any,
payable by the Company pursuant to the underlying Purchase Contracts) and will
no longer be listed on the NYSE or be fungible with Normal Units.
A holder of Normal Units may exercise the right referred to above by
presenting and surrendering the certificate evidencing such Normal Units, at the
offices of the Unit Agent, together with the "Request to Create Stripped Units"
thereon completed and executed as indicated, and concurrently delivering to the
Collateral Agent (a) Treasury Securities that will generate, on the Stock
Purchase Date, an amount of cash equal to the aggregate Stated Amount of such
Normal Units, (b) Treasury Securities that will generate, on each Quarterly
Payment Date falling after the date of delivery and on or before the Stock
Purchase Date, an amount of cash equal to the aggregate Contract Fees that are
scheduled to be payable by the holder, if any, in respect of the Purchase
Contracts underlying such Normal Units (assuming for this purpose that no
Contract Fees will then have been deferred), (c) if such holder is, at the date
of delivery, deferring Contract Fees payable by such holder in respect of such
Normal Units, an amount of cash equal to (i) the aggregate unpaid amount of such
Contract Fees accrued to the date of delivery, if such date is a Quarterly
Payment Date, and (ii) the aggregate unpaid amount of such Contract Fees accrued
to the Quarterly Payment Date immediately preceding such date of delivery plus
interest thereon at the Deferral Rate for the period from and including such
Quarterly Payment Date to but excluding such date of delivery, if such date is
not a Quarterly Payment Date and (d) if the Call Options underlying any Normal
Units remain exercisable, the instrument from the Call Option Holder referred to
above; provided, however, that if Treasury Securities are the Pledged Securities
underlying such Normal Units, such right must be exercised with respect to a
number of Normal Units that will result in the release of Treasury Securities in
denominations of $1,000 and integral multiples thereof. A certificate
representing the Stripped Units that such Normal Units have become will then be
issued and delivered to such holder or such holder's designee and the securities
that theretofore had been the Pledged Securities underlying such Normal Units
will then be released from the pledge under the Pledge Agreement and delivered
to such holder or such holder's designee, upon payment by the holder of any
transfer or similar taxes payable in connection with the transfer of Units or
the securities that theretofore had been Pledged Securities to any person other
than such holder.
The Normal Units and any Stripped Units are collectively referred to herein
as the "Units."
The Company will enter into (x) an agreement (the "Master Unit Agreement")
with First Union National Bank, as unit agent (together with any successor
thereto in such capacity, the "Unit Agent"), governing the appointment of the
Unit Agent as the agent and attorney-in-fact for the holders of the Units, the
Purchase Contracts, the transfer, exchange or replacement of certificates
representing the Units and certain other matters relating to the Units and (y)
an agreement (the "Pledge Agreement") among the Company, the Collateral Agent
and the Call Option Holder creating a pledge and security interest for the
benefit of the Company to secure the obligations of holders of Units under the
Purchase Contracts and a pledge and security interest for the benefit of the
Call Option Holder to secure the obligations of the holders of Units under the
Call Options. In addition the Unit Agent will enter into an agreement (the "Call
Option Agreement") with the Call Option Holder governing the Call Options. The
Master Unit Agreement, the Pledge Agreement and the Call Option Agreement are
collectively referred to herein as the "Principal Agreements".
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<PAGE> 33
DESCRIPTION OF THE PURCHASE CONTRACTS
General
The Purchase Contracts will be governed by the Master Unit Agreement.
Each Purchase Contract underlying a Unit (unless earlier terminated) will
require the holder of such Unit to purchase, and the Company to sell, on the
Stock Purchase Date, for cash in an amount equal to the Stated Amount, a number
of newly issued shares of Common Stock equal to the Settlement Rate. The
Settlement Rate will be calculated as follows (subject to adjustment under the
circumstances described below under "-- Anti-Dilution Adjustments"):
(a) if the Applicable Market Value is greater than or equal to the
Threshold Appreciation Price of $ (i.e., approximately % higher
than the Stated Amount), the Settlement Rate will be ;
(b) if the Applicable Market Value is less than the Threshold Appreciation
Price but greater than the Stated Amount, the Settlement Rate will equal the
Stated Amount divided by the Applicable Market Value (i.e., the Settlement Rate
will be calculated so that the Applicable Market Value of the Common Stock
purchasable under each Purchase Contract would equal the Stated Amount payable
therefor) rounded to the nearest 1/10,000th of a share; and
(c) if the Applicable Market Value is less than or equal to the Stated
Amount, the Settlement Rate will be one.
"Applicable Market Value" means the average of the Closing Prices per share
of Common Stock on each of the twenty consecutive Trading Days ending on the
last Trading Day immediately preceding the Stock Purchase Date. "Closing Price"
of the Common Stock on any date of determination means the closing sale price
(or, if no closing price is reported, the last reported sale price) of the
Common Stock on the NYSE on such date, or if the Common Stock is not listed for
trading on the NYSE on any such date, as reported in the composite transactions
for the principal United States securities exchange on which the Common Stock is
so listed, or if the Common Stock is not so listed on a United States national
or regional securities exchange, as reported by The Nasdaq Stock Market, or if
the Common Stock is not so reported, the last quoted bid price of the Common
Stock in the over-the-counter market as reported by the National Quotation
Bureau or similar organization, or if such bid price is not available, the
market value of the Common Stock on such date as determined by a nationally
recognized investment banking firm retained for this purpose by the Company. A
"Trading Day" means a day on which the Common Stock (a) is not suspended from
trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (b) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Stock.
No fractional shares of Common Stock will be issued by the Company pursuant
to the Purchase Contracts. In lieu of a fraction of a share otherwise issuable
in respect of Purchase Contracts being settled by a holder of Units, the holder
will be entitled to receive an amount of cash equal to such fraction times the
Applicable Market Value.
Prior to the Stock Purchase Date, the Common Stock purchasable on
settlement of Purchase Contracts will not be deemed to be outstanding for any
purpose and no holder of Units will have any voting rights, rights to dividends
or other distributions or other rights or privileges of a stockholder of the
Company by virtue of holding such Units.
Settlement
In order to settle the Purchase Contracts underlying any Units, the holder
of such Units shall, by no later than 10:00 a.m., New York City time, on the
Stock Purchase Date, deliver payment (in the
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<PAGE> 34
form of a certified or cashier's check payable to the order of the Company in
immediately available funds), at the offices of the Unit Agent, of an amount
equal to the aggregate Stated Amount of such Units (plus, if there are unpaid
Contract Fees accrued on such Purchase Contracts and payable by the holder on
the Stock Purchase Date and the cash received by the Collateral Agent on such
date in respect of the Pledged Securities securing such Purchase Contracts is
less than the amount of such unpaid Contract Fees, an amount sufficient to cover
such short-fall), provided, however, that the holder's obligation to satisfy
such Purchase Contracts may be offset by any amounts due and owing by the
Company to such holder. The Common Stock purchased on settlement of such
Purchase Contracts will then be issued and delivered to such holder or such
holder's designee and the Pledged Securities securing such Purchase Contracts
(or, in the case of Treasury Securities, the proceeds from the payment of such
Treasury Securities at maturity, net of any unpaid Contract Fees payable by the
holder accrued thereon to the Stock Purchase Date) will then be released from
the pledge under the Pledge Agreement and delivered to such holder or such
holder's designee, upon presentation and surrender of the certificate evidencing
such Units and payment by the holder of any transfer or similar taxes payable in
connection with the issuance of Common Stock or the transfer of Pledged
Securities to any person other than such holder.
On the Stock Purchase Date, if a holder of Units has not delivered cash to
settle the underlying Purchase Contracts in the manner described above and no
event described under "-- Termination" below has occurred, then (a) the Unit
Agent will notify the Collateral Agent and (i) if QUIPS underlie such Units, the
Collateral Agent, on behalf of such holder, will exercise such holder's right to
require the Trust to distribute Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of such
QUIPS, in exchange for such QUIPS, and, upon receiving such Junior Subordinated
Debentures, will thereupon, as Put Agent, exercise the Junior Subordinated
Debenture Put Option with respect thereto (see "-- Description of the QUIPS --
Right to Exercise Junior Subordinated Debenture Put Options" and "-- Description
of the Junior Subordinated Debentures -- Junior Subordinated Debenture Put
Options") and (ii) if Junior Subordinated Debentures underlie such Units, the
Collateral Agent, on behalf of such holder, will, as Put Agent, exercise the
Junior Subordinated Debenture Put Option with respect thereto (see " Description
of the Junior Subordinated Debentures -- Junior Subordinated Debenture Put
Options"), (b) a portion of the proceeds from the exercise of such Junior
Subordinated Debenture Put Option (or, if Treasury Securities underlie such
Units, a portion of the proceeds from the payment of such Treasury Securities at
maturity) will be applied to satisfy in full such holder's obligation to
purchase Common Stock under such Purchase Contracts and to pay any unpaid
Contract Fees payable by such holder accrued thereon to the Stock Purchase Date
(it being understood that the holder's obligation to satisfy any unpaid Contract
Fees may be offset by any amounts due and owing by the Company to such holder)
and (c) the remainder of such proceeds, if any, will be paid to such holder.
Such Common Stock will then be issued and delivered to such holder or such
holder's designee, upon presentation and surrender of the certificate evidencing
such Units and payment by the holder of any transfer or similar taxes payable in
connection with the issuance of Common Stock to any person other than such
holder.
Contract Fees
The holders of Units may be required to pay Contract Fees to the Company,
or the Company may be required to pay Contract Fees to the holders of Units, as
specified in the final Prospectus Supplement for the offering made hereby.
Any obligation of the holders of Units to pay Contract Fees to the Company
will be funded out of payments made in respect of the Pledged Securities. If
payments made in respect of the Pledged Securities are insufficient to cover the
obligation of the holders of the Units to pay Contract Fees, such obligation
will be deferred until the earlier of the date sufficient cash is available and
the Stock Purchase Date. In the event that holders of Units are required to pay
Contract Fees to the Company, it is unlikely such holders will be entitled to a
current deduction for such payments. As a result,
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<PAGE> 35
although the amount of cash distributions made to holders will be reduced by the
amount of Contract Fees payable to the Company, holders will nevertheless
recognize income each quarter equal to the full amount of OID accrued with
respect to the QUIPS, subject to certain adjustments. See "Certain Federal
Income Tax Consequences -- Contract Fees".
Any obligation of the Company to pay Contract Fees to the holder of Units
will be subordinated and junior in right of payment to the Company's obligations
under its Senior Indebtedness, in a manner substantially similar to the manner
in which the Junior Subordinated Debentures are subordinated as described under
"-- Description of the Junior Subordinated Debentures" below. So long as no
default in the Company's obligations under the Principal Agreements has occurred
and is continuing, the Company will have the right to defer the payment of
Contract Fees at any time or from time to time for a period not extending beyond
the Stock Purchase Date; provided, however, that in order to exercise such
right, the Company must give the Unit Agent notice at least five Business Days
prior to the earlier of (a) the date such payment would otherwise have been
payable, (b) the date the Company is required to give notice to any securities
exchange or to holders of Units of the record date or the date such payment is
payable and (c) such record date. During any such deferral period, the Company
may not take any of the actions that it would be prohibited from taking during
an Extension Period as described under "-- Description of the Junior
Subordinated Debentures -- Option to Extend Interest Payment Date" below.
Contract Fees will be payable at the Contract Fee Rate set forth under
"-- General" above. Any deferred Contract Fees will bear additional Contract
Fees at the Deferral Rate (compounding on each succeeding Quarterly Payment
Date) until paid. Contract Fees payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Contract Fees will accrue from
and including the date of issuance of the Units to but excluding the Stock
Purchase Date and will be payable in arrears on the Quarterly Payment Dates
(unless deferred as described above). If the Purchase Contracts are terminated,
the right of holders of Units to receive Contract Fees or the obligation of
holders of Units to pay Contract Fees (including any deferred Contract Fees)
will also terminate.
Anti-Dilution Adjustments
The formula for determining the Settlement Rate will be subject to
adjustment upon the occurrence of certain events, including: (a) the payment of
dividends (and other distributions) of Common Stock on Common Stock; (b) the
issuance to all holders of Common Stock of rights, warrants or options entitling
them, for a period of up to 45 days, to subscribe for or purchase Common Stock
at less than the Current Market Price (as defined) thereof; (c) subdivisions and
combinations of Common Stock; (d) distributions to all holders of Common Stock
of evidences of indebtedness of the Company, securities, cash or other assets
(excluding any dividend or distribution covered by clause (a) or (b) above and
any dividend or distribution paid exclusively in cash); (e) distributions
consisting exclusively of cash to all holders of Common Stock in an aggregate
amount that, when combined with (i) other all-cash distributions made within the
preceding 12 months and (ii) the cash and the fair market value, as of the date
of expiration of the tender or exchange offer referred to below, of the
consideration paid in respect of any tender or exchange offer by the Company or
a subsidiary for the Common Stock concluded within the preceding 12 months,
exceeds % of the Company's aggregate market capitalization (such aggregate
market capitalization being the product of the Current Market Price of the
Common Stock multiplied by the number of shares of Common Stock then
outstanding) on the date fixed for the determination of stockholders entitled to
receive such distribution; and (f) the successful completion of a tender or
exchange offer made by the Company or any subsidiary for the Common Stock which
involves an aggregate consideration that, when combined with (i) any cash and
the fair market value of other consideration payable in respect of any tender or
exchange offer by the Company or a subsidiary for the Common Stock concluded
within the preceding 12 months and (ii) the aggregate amount of any all-cash
distributions to all holders of the Company's Common
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<PAGE> 36
Stock made within the preceding 12 months, exceeds % of the Company's
aggregate market capitalization on of the date of expiration of such tender or
exchange offer. The "Current Market Price" per share of Common Stock on any day
means the average of the daily Closing Prices for the five consecutive Trading
Days selected by the Company commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date", when used with
respect to any issuance or distribution, shall mean the first date on which the
Common Stock trades on such exchange or in such market without the right to
receive such issuance or distribution.
In the case of certain reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions pursuant to which the Common Stock is
converted into the right to receive other securities, cash or property, each
Purchase Contract then outstanding would, without the consent of the holders of
Units, become a contract to purchase only the kind and amount of securities,
cash and other property receivable upon consummation of the transaction by a
holder of the number of shares of Common Stock which would have been received by
the holder of the related Unit immediately prior to such transaction if such
holder had then settled such Purchase Contract.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
United States federal income tax purposes (i.e., distributions of evidences of
indebtedness or assets of the Company, but generally not stock dividends or
rights to subscribe to capital stock) and, pursuant to the Settlement Rate
adjustment provisions of the Master Unit Agreement, the Settlement Rate is
increased, such increase may be deemed to be the receipt of taxable income to
holders of Units. See "Certain Federal Income Tax Consequences -- Adjustment of
Settlement Rate".
In addition, the Company may make such increases in the Settlement Rate as
the Board of Directors of the Company deems advisable to avoid or diminish any
income tax to holders of shares of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes or for any other reasons.
Adjustments to the Settlement Rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the Settlement Rate shall be required
unless such adjustment would require an increase or decrease of at least one
percent in the Settlement Rate; provided, however, that any adjustments which by
reason of the foregoing are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
The Company will be required, within ten Business Days following the
occurrence of an event that requires or permits an adjustment in the Settlement
Rate, to provide written notice to the holders of Units of the occurrence of
such event and a statement in reasonable detail setting forth the method by
which the adjustment to the Settlement Rate was determined and setting forth the
revised Settlement Rate.
Termination
The Purchase Contracts, and the rights and obligations of the Company and
of the holders of the Units thereunder (including the right to receive and the
obligation to pay Contract Fees or deferred Contract Fees thereunder and the
right and obligation of the holders to purchase and the Company to sell Common
Stock thereunder), will automatically terminate upon the occurrence of certain
events of bankruptcy, insolvency or reorganization with respect to the Company.
Upon such termination, the Call Options will terminate and the Pledged
Securities will be distributed in the manner described under "-- Pledged
Securities and Pledge Agreement -- Termination of Purchase Contracts".
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<PAGE> 37
DESCRIPTION OF THE CALL OPTIONS
At the closing of the Offering made hereby, the Underwriters (on behalf of
the initial investors in the Units) will sell the Call Options to the Call
Option Holder at a price equal to $ per Call Option. The Call Options will
be governed by the Call Option Agreement.
Each Call Option underlying a Normal Unit (unless earlier terminated), when
aggregated with the Call Options underlying all other Normal Units, will entitle
the Call Option Holder to acquire the QUIPS underlying the Normal Units (or the
Junior Subordinated Debentures substituted therefor), on or before the Call
Option Expiration Date, in exchange for the Aggregate Call Option Exercise
Consideration. The Aggregate Call Option Exercise Consideration will be
comprised of:
(a) Treasury Securities that will generate, by each Quarterly Payment Date
falling after the Settlement Date for the Call Options (the "Call Settlement
Date") and on or before the Stock Purchase Date, an amount of cash equal to the
aggregate distributions or interest payments that are scheduled to be payable in
respect of the QUIPS or Junior Subordinated Debentures underlying the Normal
Units on such Quarterly Payment Date (assuming for this purpose, even if not
true, that (i) no distributions or interest payments will then have been
deferred and (ii) the distribution or interest rate thereon remains at the
initial QUIPS and Debenture Rate);
(b) Treasury Securities that will generate, by the Stock Purchase Date, an
amount of cash equal to the aggregate Stated Amount of the Normal Units; and
(c) if the Company is, at the Call Settlement Date, deferring distributions
on the QUIPS or interest payments on the Junior Subordinated Debentures (see
"-- Description of the QUIPS -- Distributions" and "-- Description of the Junior
Subordinated Debentures -- Option to Extend Interest Payment Date"), an amount
in cash equal to (i) the aggregate unpaid distributions on the QUIPS or interest
payments on the Junior Subordinated Debentures underlying the Normal Units
accrued to the Call Settlement Date, if the Call Settlement Date is a Quarterly
Payment Date, and (ii) the aggregate unpaid distributions on the QUIPS or
interest payments on the Junior Subordinated Debentures underlying the Normal
Units accrued to the Quarterly Payment Date immediately preceding the Call
Settlement Date plus interest thereon at the Deferral Rate for the period from
and including such Quarterly Payment Date to but excluding such Call Settlement
Date, if the Call Settlement Date is not a Quarterly Payment Date.
The Call Option Holder may exercise all of its Call Options (but not less
than all) by (a) delivering to the Unit Agent and the Collateral Agent, on or
prior to the Call Settlement Date, a notice stating that the Call Option Holder
is exercising its Call Options and specifying the Call Settlement Date therefor
(which may not be after the Call Option Expiration Date) and (b) delivering to
the Collateral Agent, by Noon, New York City time, on the Call Settlement Date,
the Aggregate Call Option Exercise Consideration. Pursuant to the Pledge
Agreement, upon receipt by the Collateral Agent of the Aggregate Call Option
Exercise Consideration, the Collateral Agent will transfer the QUIPS (or Junior
Subordinated Debentures) underlying the Normal Units to the Call Option Holder
or its designee free and clear of the pledge and security interest created by
the Pledge Agreement and the Treasury Securities included in the Aggregate Call
Option Exercise Consideration shall automatically be substituted for the QUIPS
(or Junior Subordinated Debentures) as Pledged Securities, whereupon the Call
Option Holder shall cease to have a security interest in the Pledged Securities.
If the Call Options are exercised, the Unit Agent shall, not later than
three Business Days following the Call Settlement Date, mail notice of such
exercise to the holders of the Normal Units.
The Call Options, and the rights and obligations of the Call Option Holder
and of the holders of the Units thereunder, will automatically terminate upon
the occurrence of certain events of bankruptcy, insolvency or reorganization
with respect to the Company. See "-- Description of the
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Purchase Contracts -- Termination" and "-- Pledged Securities and Pledge
Agreement -- Termination of Purchase Contracts".
PLEDGED SECURITIES AND PLEDGE AGREEMENT
General
Pursuant to the Pledge Agreement, the Pledged Securities will be pledged to
the Collateral Agent, for the benefit of the Company and the Call Option Holder,
to secure (a) the obligations of holders of Units to purchase Common Stock under
the Purchase Contracts, (b) the obligations, if any, of the holders of Units to
pay Contract Fees to the Company and (c) the obligations of holders of Normal
Units to deliver the underlying QUIPS (or Junior Subordinated Debentures) to the
Call Option Holder if the Call Options are exercised. The Pledged Securities
will initially consist of the QUIPS. If Treasury Securities are exchanged for
Pledged Securities upon exercise of the Call Options or in connection with the
creation of Stripped Units or Junior Subordinated Debentures are distributed in
respect of Pledged Securities upon dissolution of the Trust, the Treasury
Securities so exchanged or the Junior Subordinated Debentures so distributed
will automatically be substituted as Pledged Securities in place of the
securities that theretofore had been Pledged Securities and the securities that
theretofore had been Pledged Securities will automatically be released from the
pledge and security interest created by the Pledge Agreement.
The rights of the holders of the Units to the underlying Pledged Securities
will be subject to the pledge and security interest created by the Pledge
Agreement; no holder of Units will be permitted to withdraw the Pledged
Securities underlying such Units from the pledged arrangement except upon the
settlement or termination of the Purchase Contracts or as described under
"-- Formation of the Units" above. Subject to such pledge and security interest,
however, each holder of Units will have full beneficial ownership of the
underlying Pledged Securities and will be entitled (directly or through the
Collateral Agent) to all of the rights provided by such Pledged Securities, and
the Company and Call Option Holder will have no rights with respect to Pledged
Securities other than their respective security interests therein.
Quarterly Payments on Pledged Securities
The Collateral Agent will, upon receipt of any quarterly distributions or
payments of interest on the Pledged Securities, (a) pay to the Company an amount
therefrom equal to the aggregate Contract Fees, if any, then due from the
holders of the Units to the Company and (b) pay the remainder to the Unit Agent,
which will in turn distribute that amount to the holders of Units on the Record
Date. As long as the Units remain in book-entry only form, the Record Date for
any payment will be one Business Day prior to such payment date.
Substitution of Pledged Securities
For a description of the right of a holder of Units to substitute Treasury
Securities for Pledged Securities, see "-- Formation of the Units" above.
Settlement of Purchase Contracts
On the Stock Purchase Date, the Pledged Securities (or, in the case of
Treasury Securities, the proceeds from the payment of such Treasury Securities
at maturity) will be released from the pledge and security interest created by
the Pledge Agreement and distributed or delivered as specified under
"-- Description of the Purchase Contracts -- Settlement".
Termination of Purchase Contracts
Upon termination of the Purchase Contacts (see "-- Description of the
Purchase Contracts -- Termination"), the Collateral Agent will release the
Pledged Securities underlying the Units to the
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Unit Agent for distribution to the holders of such Units, upon presentation and
surrender of the certificates evidencing such Units. If upon such termination
any holder would otherwise be entitled to receive a principal amount of Treasury
Securities of any series that is not an integral multiple of $1,000, the Unit
Agent will distribute to such holder Treasury Securities of such series in a
principal amount equal to the next lower integral multiple of $1,000, will sell
the Treasury Securities of such series not otherwise distributed to such holder
(together with the Treasury Securities of such series not otherwise distributed
to other holders) and will distribute to all such holders (in accordance with
their respective interests therein) the net proceeds therefrom.
BOOK ENTRY-SYSTEM
The Depository Trust Company (the "Depositary") will act as securities
depositary for the Units. The Units will be issued only as fully-registered
securities registered in the name of Cede & Co. or another nominee of the
Depositary. Fully-registered global security certificates ("Global Security
Certificates"), representing the total aggregate number of Units, will be
issued, will be deposited with the Depositary and will bear a legend regarding
the restrictions on exchanges and registration of transfer thereof referred to
below.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the Units so long as
such Units are represented by Global Security Certificates.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Depositary holds
securities that its participants ("Participants") deposit with the Depositary.
The Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct
Participants").The Depositary is owned by a number of its Direct Participants
and by the NYSE, the American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the Depositary system is also available to
others, such as securities brokers and dealers, banks and trust companies that
clear transactions through or maintain a direct or indirect custodial
relationship with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants are
on file with the Commission.
No Units represented by Global Security Certificates may be exchanged in
whole or in part for Units registered, and no transfer of Global Security
Certificates in whole or in part may be registered, in the name of any person
other than the Depositary or a nominee of the Depositary unless the Depositary
has notified the Company that it is unwilling or unable to continue as
depositary for such Global Security Certificates or has ceased to be qualified
to act as such as required by the Master Unit Agreement or there shall have
occurred and be continuing a default by the Company in respect of its
obligations under one or more Principal Agreements. All Units represented by
Global Security Certificates or any portion thereof will be registered in such
names as the Depositary may direct.
As long as the Depositary or its nominee is the registered owner of the
Global Security Certificates, such Depositary or such nominee, as the case
maybe, will be considered the sole owner and holder of the Global Security
Certificates and all Units represented thereby for all purposes under the Units,
Purchase Contracts, Call Options and Principal Agreements. Except in the limited
circumstances referred to above, owners of beneficial interests in Global
Security
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Certificates will not be entitled to have such Global Security Certificates or
the Units represented thereby registered in their names, will not receive or be
entitled to receive physical delivery of certificates in exchange therefor and
will not be considered to be owners or holders of such Global Security
Certificates or any Units represented thereby for any purpose under the Units,
Purchase Contracts, Call Options and Principal Agreements. All payments on the
Units represented by the Global Security Certificates and all deliveries of
Pledged Securities or Common Stock to the holders thereof will be made to the
Depositary or its nominee, as the case may be, as the holder thereof.
Ownership of beneficial interests in the Global Security Certificates will
be limited to Participants or persons that may hold beneficial interests through
institutions that have accounts with the Depositary. Ownership of beneficial
interests in Global Security Certificates will be shown only on, and the
transfer of those ownership interests will be effected only through, records
maintained by the Depositary or its nominee (with respect to Participants'
interests) or any such Participant (with respect to interests of persons held by
such Participants on their behalf). Procedures for settlement of Purchase
Contracts on the Stock Purchase Date will be governed by arrangements among the
Depositary, Participants and persons that may hold beneficial interests through
Participants designed to permit such settlement without the physical movement of
certificates. Payments, transfers, deliveries, exchanges and other matters
relating to beneficial interests in Global Security Certificates may be subject
to various policies and procedures adopted by the Depositary from time to time.
The Depositary has advised the Company that it will take any action permitted to
be taken by a holder of Units only at the direction of one or more Participants
to whose account with the Depositary interests in the Global Security
Certificates are credited and only in respect of such number of Units as to
which such Participant or Participants has or have given such direction. None of
the Company, the Trust, the Unit Agent or any agent of the Company, the Trust or
the Unit Agent will have any responsibility or liability for any aspect of the
Depositary's or any Participant's records relating to, or for payments made on
account of, beneficial interests in Global Security Certificates, or for
maintaining, supervising or reviewing any of the Depositary's records or any
Participant's records relating to such beneficial ownership interests.
The information in this section concerning the Depositary and its
book-entry system has been obtained from sources that the Company and the Trust
believe to be reliable, but neither the Company nor the Trust takes
responsibility for the accuracy thereof.
CERTAIN PROVISIONS OF THE PRINCIPAL AGREEMENTS
General
Distributions on the Units will be payable, Purchase Contracts (and
documents related thereto) will be settled and transfers of the Units will be
registrable at the office of the Unit Agent in the Borough of Manhattan, The
City of New York. In addition, in the event that the Units do not remain in
book-entry form, payment of distributions on the Units may be made, at the
option of the Company, by check mailed to the address of the persons entitled
thereto as shown on the Unit Register.
In the event that any Quarterly Payment Date, the Call Settlement Date, the
Stock Purchase Date or any Put Date is not a Business Day, then payment of the
Contract Fees payable on any such Quarterly Payment Date or settlement of the
Call Options, the Purchase Contracts or the Junior Subordinated Debenture Put
Option, as the case may be, will be made on the next succeeding day which is a
Business Day (and so long as such payment is made on such next succeeding
Business Day, 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 or settlement will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
payment date. A "Business Day" shall mean any day other than Saturday, Sunday or
any other day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to be closed.
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If a holder of Units fails to present and surrender the certificate
evidencing such Units to the Unit Agent on the Stock Purchase Date, the shares
of Common Stock issuable in settlement of the related Purchase Contracts will be
registered in the name of the Unit Agent and, together with any distributions
thereon, shall be held by the Unit Agent as agent for the benefit of such
holder, until such certificate is presented and surrendered or the holder
provides satisfactory evidence that such certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Unit Agent and
the Company.
If the Purchase Contracts have terminated prior to the Stock Purchase Date,
the related Pledged Securities have been transferred to the Unit Agent for
distribution to the holders entitled thereto and a holder of Units fails to
present and surrender the certificate evidencing such Units to the Unit Agent,
the Pledged Securities otherwise deliverable to such holder and payments thereon
shall be held by the Unit Agent as agent for the benefit of such holder, until
such certificate is presented and surrendered or the holder provides the
evidence and indemnity described above.
The Unit Agent will have no obligation to invest or to pay interest on any
amounts held by the Unit Agent pending distribution.
No service charge will be made for any registration of transfer or exchange
of the Units, except for any tax or other governmental charge that maybe imposed
in connection therewith.
Modification
The Principal Agreements will contain provisions permitting the parties
thereto, with the consent of the holders of in excess of 50% of the Units at the
time outstanding (or, in the case of modifications affecting only holders of
Normal Units or Stripped Units, the consent of the holders of in excess of 50%
of the Normal Units or Stripped Units, as the case may be), to modify the terms
of the Principal Agreements, the Purchase Contracts and the Call Options, except
that no such modification may, without the consent of the holder of each
outstanding Unit affected thereby, (a) change any payment date, (b) change the
amount or type of Pledged Securities required to be pledged to secure
obligations under the Units, impair the right of the holder of any Units to
receive distributions on the Pledged Securities underlying such Units or
otherwise adversely affect the holder's rights in or to such Pledged Securities,
(c) change the place or currency of payment for any Contract Fees or other
amounts payable in respect of the Units, increase any Contract Fees or other
amounts payable by holders in respect of Units or decrease any other amounts
receivable by holders in respect of Units, (d) impair the right to institute
suit for the enforcement of any Purchase Contract, (e) reduce the amount of
Common Stock purchasable under any Purchase Contract, increase the price to
purchase Common Stock on settlement of any Purchase Contract, change the Stock
Purchase Date or otherwise adversely affect the holder's rights under any
Purchase Contract, (f) reduce the amount payable on exercise of any Call Option,
extend the Call Option Expiration Date or otherwise adversely affect the
holder's rights under any Call Option or (g) reduce the above-stated percentage
of outstanding Units the consent of whose holders is required for the
modification or amendment of the provisions of the Principal Agreements, the
Purchase Contracts or the Call Options.
Consolidation, Merger, Sale or Conveyance
The Company will covenant in the Master Unit Agreement that it will not
merge with or into or consolidate with any other entity or sell, assign,
transfer, lease or convey all or substantially all of its properties and assets
to any person, firm or corporation unless the Company is the continuing
corporation or the successor corporation is a corporation organized under the
laws of the United States of America or a state thereof and such corporation
expressly assumes the obligations of the Company under the Principal Agreements
and the Purchase Contracts, and the Company or such successor corporation is
not, immediately after such merger, consolidation, sale, assignment, transfer,
lease or conveyance, in default in the performance of any of its obligations
thereunder.
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Title
The Company, the Unit Agent, the Collateral Agent and the Call Option
Holder may treat the registered holder of any Units as the absolute owner
thereof for the purpose of making payment and settling the related Purchase
Contracts or Call Options and for all other purposes.
Replacement of Units Certificates
In the event that physical certificates have been issued, any mutilated
certificate evidencing Units will be replaced by the Company at the expense of
the holder upon surrender of such certificate to the Unit Agent. Certificates
that become destroyed, lost or stolen will be replaced by the Company at the
expense of the holder upon delivery to the Company and the Unit Agent of
evidence of the destruction, loss or theft thereof satisfactory to the Company
and the Unit Agent. In the case of a destroyed, lost or stolen certificate, an
indemnity satisfactory to the Unit Agent and the Company may be required at the
expense of the holder of the Units evidenced by such certificate before a
replacement will be issued.
Notwithstanding the foregoing, the Company will not be obligated to issue
any Units on or after the Stock Purchase Date or after the Purchase Contracts
have terminated. In lieu of the delivery of a replacement certificate following
the Stock Purchase Date, the Unit Agent, upon delivery of the evidence and
indemnity described above, will deliver the Common Stock issuable pursuant to
the Purchase Contracts included in the Units evidenced by such certificate, or,
if the Purchase Contracts have terminated prior to the Stock Purchase Date,
transfer the Pledged Securities related to the Units evidenced by such
certificate.
Governing Law
The Principal Agreements, the Purchase Contracts and the Call Options will
be governed by, and construed in accordance with, the laws of the State of New
York.
Information Concerning the Unit Agent
First Union National Bank will initially act as Unit Agent. The Unit Agent
will act as the agent for the holders of Units from time to time. The Master
Unit Agreement will not obligate the Unit Agent to exercise any discretionary
actions in connection with a default under the terms of the Principal
Agreements, the Purchase Contracts, the Call Options or the Pledged Securities.
The Master Unit Agreement will contain provisions limiting the liability of
the Unit Agent. The Master Unit Agreement will contain provisions under which
the Unit Agent may resign or be replaced. Such resignation or replacement would
be effective upon the appointment of a successor.
Information Concerning the Collateral Agent
will initially act as Collateral Agent. The Collateral Agent
will act solely as the agent of the Company or the Call Option Holder and will
not assume any obligation or relationship of agency or trust for or with any of
the holders of the Units except for the obligations owed by a pledgee of
property to the owner thereof under the Pledge Agreement and applicable law.
The Pledge Agreement will contain provisions limiting the liability of the
Collateral Agent. The Pledge Agreement will contain provisions under which the
Collateral Agent may resign or be replaced. Such resignation or replacement
would be effective upon the appointment of a successor.
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DESCRIPTION OF THE QUIPS
General
The QUIPS will be issued by the Trust, a statutory business trust created
under Delaware law pursuant to the Declaration. The Trust's affairs are
conducted by the Issuer Trustees, which are currently First Union National Bank,
as the Property Trustee, and First Union Trust Company, as the Delaware Trustee,
and the three Administrators, who are employees of the Company. The Trust exists
for the exclusive purposes of (a) issuing and selling the Trust Securities
consisting of the QUIPS and the Common Trust Securities, (b) using the proceeds
from the sale of the Trust Securities to acquire the Junior Subordinated
Debentures issued by the Company and (c) engaging in only those other activities
necessary or incidental thereto. Accordingly, the Junior Subordinated Debentures
will be the sole assets of the Trust, and payments under the Junior Subordinated
Debentures will be the sole revenue of the Trust. All of the Common Trust
Securities will be owned by the Company.
The QUIPS will represent preferred undivided beneficial interests in the
assets of the Trust and the holders thereof will be entitled to a preference
over the Common Trust Securities in certain circumstances with respect to
distributions and amounts payable on redemption of the Trust Securities or
liquidation of the Trust. See "-- Subordination of Common Trust Securities"
below. The QUIPS will be issued pursuant to, and be governed by, the
Declaration. The Declaration will be qualified under the Trust Indenture Act.
Each QUIPS will have a Liquidation Amount that is equal to the Stated
Amount. The QUIPS will rank pari passu, and payments will be made thereon pro
rata, with the Common Trust Securities except as described under
"-- Subordination of Common Trust Securities" below. Legal title to the Junior
Subordinated Debentures will be held by the Property Trustee in trust for the
benefit of the holders of the QUIPS and the Common Trust Securities.
The QUIPS will be subject to mandatory redemption on the QUIPS and
Debenture Maturity Date of , 2003, at a redemption price equal to
the aggregate Liquidation Amount thereof plus unpaid distributions accrued
thereon to but excluding such date, out of the proceeds of the repayment of the
Junior Subordinated Debentures at maturity. The Junior Subordinated Debentures
are not redeemable at the option of the Company prior to the QUIPS and Debenture
Maturity Date.
Distributions
Distributions on the QUIPS will be cumulative, will accumulate from the
first date of issuance of the QUIPS at an initial rate of % per annum (i.e.,
the initial QUIPS and Debenture Rate, which rate is subject to increase in the
manner described under "-- Description of the Junior Subordinated Debentures --
Market Rate Increase" below) as applied to the Liquidation Amount thereof and
will be payable quarterly in arrears on each Quarterly Payment Date (subject to
the deferral provisions described below), to the holders of record on the
relevant record dates. Unless the QUIPS are not Pledged Securities and are
issued in certificated form, the record date for any payment of Distributions
will be one Business Day prior to such payment date. The amount of Distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months. In the event that any date on which Distributions are payable on
the QUIPS is not a Business Day, payment of the Distributions payable on such
date will be made on the next succeeding day that 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 will be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable (each date on
which Distributions are payable in accordance with the foregoing, a
"Distribution Date").
So long as no Debenture Event of Default shall have occurred and be
continuing, the Company will have the right under the Indenture to elect to
defer the payment of interest on the Junior
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Subordinated Debentures at any time and from time to time for a period not
extending beyond the QUIPS and Debenture Maturity Date (each such period of
deferral, an "Extension Period"). See "-- Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Date" and "Certain Federal
Income Tax Consequences -- Interest Received on the QUIPS". Upon any such
election, quarterly Distributions on the QUIPS will be deferred by the Trust
during such Extension Period. Distributions to which holders of the QUIPS are
entitled during any such Extension Period will accumulate additional
Distributions thereon at the Deferral Rate, compounded on each succeeding
Distribution Date. The term "Distributions", as used in this Description of the
QUIPS, shall include any such additional Distributions and any Additional Sums
(as defined herein) paid on the Junior Subordinated Debentures.
During any Extension Period, the Company may not take any of the prohibited
actions described under "-- Description of the Junior Subordinated
Debentures -- Certain Covenants of the Company".
Although the Company may in the future exercise its option to defer
payments of interest on the Junior Subordinated Debentures, the Company has no
such current intention.
The revenue of the Trust available for distribution to holders of the QUIPS
will be limited to payments under the Junior Subordinated Debentures. If the
Company does not make interest payments on the Junior Subordinated Debentures,
the Property Trustee will not have funds available to pay Distributions on the
QUIPS. The payment of Distributions (if and to the extent the Trust has funds on
hand legally available for the payment of such Distributions) will be guaranteed
by the Company on a limited basis as set forth herein under "-- Description of
the Guarantee".
Mandatory Redemption
Upon the repayment of the Junior Subordinated Debentures, the proceeds from
such repayment shall be applied by the Property Trustee to redeem a Like Amount
(as defined herein) of the Trust Securities, at a redemption price (the "Final
Redemption Price") which shall be equal to the principal of, and accrued and
unpaid interest on, the Junior Subordinated Debentures.
"Like Amount" means (i) with respect to the redemption of the Trust
Securities, Trust Securities having an aggregate Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be paid in accordance with
their terms and (ii) with respect to a distribution of Junior Subordinated
Debentures upon the liquidation of the Trust, Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the Trust
Securities of the holder to whom such Junior Subordinated Debentures are
distributed.
Right to Exercise Junior Subordinated Debenture Put Options
Each holder of QUIPS will have the right to require the Trust to distribute
Junior Subordinated Debentures having an aggregate principal amount equal to the
aggregate Liquidation Amount of such QUIPS to the Put Agent, on the Stock
Purchase Date, in exchange for such QUIPS, in connection with the concurrent
exercise by the Put Agent on behalf of each such holder of the Junior
Subordinated Debenture Put Option related thereto, but only if the cash received
on the exercise of such option is used to settle the Purchase Contracts secured
thereby.
A holder of QUIPS may exercise the right referred to above by presenting
and surrendering the certificate evidencing such QUIPS, at the offices of the
Property Trustee, with the form of "Notice to Require Exercise of Junior
Subordinated Debenture Put Option" on the reverse side of the certificate
completed and executed as indicated, by 10:00 a.m., New York City time, on the
Stock Purchase Date. If such right is properly exercised, the applicable Junior
Subordinated Debentures will be distributed to an agent for the holder appointed
by the Company for such purpose (the "Put Agent", who shall be the Collateral
Agent), and the Put Agent will then exercise the Junior Subordinated Debenture
Put Option related thereto on behalf of the holder.
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Liquidation of the Trust and Distribution of Junior Subordinated Debentures
The Company will have the right at any time to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust.
The Trust shall automatically dissolve upon the first to occur of: (a)
certain events of bankruptcy, dissolution or liquidation of the Company or the
Trust; (b) the distribution of a Like Amount of the Junior Subordinated
Debentures to the holders of the Trust Securities, if the Company, as Sponsor,
has given written direction to the Property Trustee to dissolve the Trust (which
direction is optional and wholly within the discretion of the Company, as
Sponsor); (c) redemption of all of the Trust Securities as described under
"-- Mandatory Redemption"; (d) expiration of the term of the Trust; and (e) the
entry of an order for the dissolution of the Trust by a court of competent
jurisdiction.
If a dissolution occurs as described in clauses (a), (b), (d) or (e) of the
preceding paragraph, the Trust shall be liquidated by the Administrators as
expeditiously as practicable by distributing, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, to the holders of the
Trust Securities a Like Amount of the Junior Subordinated Debentures (such
amount being the "Liquidation Distribution"). If the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets on hand
legally available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on the QUIPS and the Common Trust
Securities shall be paid on a pro rata basis, except that if a Debenture Event
of Default has occurred and is continuing, the QUIPS shall have a priority over
the Common Trust Securities. See "-- Subordination of Common Trust Securities"
below.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities, (a) the Trust
Securities will no longer be deemed to be outstanding, (b) each registered
global certificate, if any, representing Trust Securities and held by the
Depositary or its nominee will receive a registered global certificate or
certificates representing the Junior Subordinated Debentures to be delivered
upon such distribution and (c) any certificates representing Trust Securities
not held by the Depositary or its nominee will be deemed to represent Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of such Trust Securities, and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid Distributions on such
Trust Securities until such certificates are presented to the Administrators or
their agent for cancellation, whereupon the Company will issue to such holder,
and the Debenture Trustee will authenticate, a certificate representing such
Junior Subordinated Debentures.
Redemption Procedures
The QUIPS shall be redeemed at the Final Redemption Price with the proceeds
from the contemporaneous repayment of the Junior Subordinated Debentures. The
redemption of QUIPS shall be made and the Final Redemption Price shall be
payable on the QUIPS and Debenture Maturity Date only to the extent that the
Trust has funds legally available for the payment of such Redemption Price.
If the Trust gives a notice of redemption in respect of the QUIPS, then, by
noon, New York City time, on the QUIPS and Debenture Maturity Date, to the
extent funds are legally available, with respect to the QUIPS held by the
Depositary or its nominees, the Property Trustee will give irrevocable
instructions and authority to the Depositary and will irrevocably deposit with
the Depositary for the QUIPS funds sufficient to pay the Final Redemption Price
to the holders thereof. With respect to the QUIPS held in certificated form, the
Property Trustee, to the extent funds are legally available, will give
irrevocable instructions and authority to the Paying Agent and will irrevocably
deposit with the Paying Agent funds sufficient to pay the Final Redemption Price
to the holders of the QUIPS. If a notice of redemption shall have been given and
funds deposited as
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required to pay the Final Redemption Price, then all rights of the holders of
the QUIPS will cease, except the right of the holders of QUIPS to receive the
Final Redemption Price, but without interest on the Final Redemption Price, and
the QUIPS will cease to be outstanding. In the event that the QUIPS and
Debenture Maturity Date is not a Business Day, then the Final Redemption Price
payable on such date will be paid on the next succeeding day that is a Business
Day (and so long as such payment is made on the next succeeding Business Day
without any interest or other payment in respect of any such delay). In the
event that payment of the Final Redemption Price is improperly withheld or
refused and not paid either by the Trust or by the Company pursuant to the
Guarantee as described under "-- Description of the Guarantee", Distributions on
the QUIPS will accumulate on the Final Redemption Price at the QUIPS
Distribution Rate from the QUIPS and Debenture Maturity Date to the date the
Final Redemption Price is actually paid.
Subordination of Common Trust Securities
Payment of Distributions on, and the Final Redemption Price of, the QUIPS
and the Common Trust Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of the QUIPS and Common Trust Securities; provided,
however, that if on any Distribution Date or QUIPS and Debenture Maturity Date a
Debenture Event of Default (solely as the result of an event described in
clauses (a), (b) or (c) thereto) shall have occurred and be continuing, no
payment of any Distribution on, or Final Redemption Price of, any of the Common
Trust Securities, and no other payment on account of the redemption, liquidation
or other acquisition of the Common Trust Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the outstanding QUIPS for all Distribution periods terminating on or prior
thereto or, in the case of the QUIPS and Debenture Maturity Date, the full
amount of the Final Redemption Price therefor, shall have been made or provided
for, and all funds available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions on, or Final Redemption Price
of, the QUIPS then due and payable.
In the case of any Event of Default, the Company as holder of the Common
Trust Securities will be deemed to have waived any right to act with respect to
such Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the QUIPS, and only the holders of the QUIPS will
have the right to direct the Property Trustee to act on their behalf.
Events of Default; Notice
The occurrence of a Debenture Event of Default (see "-- Description of the
Junior Subordinated Debentures -- Debenture Events of Default") constitutes an
"Event of Default" under the Declaration; provided that pursuant to the
Declaration, the holder of the Common Trust Securities will be deemed to have
waived any Event of Default with respect to such Common Trust Securities until
all Events of Default with respect to the QUIPS have been cured, waived or
otherwise eliminated. Until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the holders of the QUIPS and only the holders of such QUIPS will have
the right to direct the Property Trustee with respect to certain matters under
the Declaration, and therefore the Indenture. The holders of a majority in
Liquidation Amount of the QUIPS will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Property
Trustee or to direct the exercise of any trust or power conferred upon the
Property Trustee under the Declaration, including the right to direct the
Property Trustee to exercise the remedies available to it as holder of the
Junior Subordinated Debentures. If the Property Trustee fails to enforce its
rights under the Junior Subordinated Debentures after the holders of a majority
in Liquidation Amount of QUIPS have so directed the Property Trustee, a holder
of record of such QUIPS (or, for so long as QUIPS underlie Normal Units, a
holder of record of Normal Units) may, to the fullest extent permitted by law,
institute a legal
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proceeding against the Company to enforce the Property Trustee's rights under
the Junior Subordinated Debentures without first instituting any legal
proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing, and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debentures on the respective
dates such interest or principal is payable (after giving effect to any
Extension Period), then a holder of record of QUIPS (or, for so long as QUIPS
underlie Normal Units, a holder of record of Normal Units) may institute a
Direct Action against the Company for payment to such holder of the portion of
such principal or interest attributable to Junior Subordinated Debentures having
a principal amount equal to the aggregate Liquidation Amount of the QUIPS held
by such holder (or underlying such holder's Normal Units). In connection with
such Direct Action, the Company will be subrogated to the rights of such holder
of QUIPS (or Normal Units) under the Declaration to the extent of any payment
made by the Company to such holder of QUIPS (or Normal Units) in such Direct
Action; provided, however, that no such subrogation right may be exercised so
long as an Event of Default has occurred and is continuing. The holders of QUIPS
will not be able to exercise directly any other remedy available to the holders
of the Junior Subordinated Debentures.
Upon occurrence of an Event of Default, the Property Trustee, so long as it
is the sole holder of Junior Subordinated Debentures, will have the right under
the Indenture to declare the principal of (or premium, if any) and interest on
the Junior Subordinated Debentures to be immediately due and payable.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the QUIPS, the Administrators
and the Company, as Sponsor, unless such Event of Default shall have been cured
or waived. The Company, as Sponsor, and the Administrators are required to file
annually with the Property Trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under the
Declaration.
If a Debenture Event of Default has occurred and is continuing, the QUIPS
shall have a preference over the Common Trust Securities as described under
"-- Liquidation of the Trust and Distribution of Junior Subordinated Debentures"
and "-- Subordination of Common Trust Securities".
Removal of Issuer Trustees and Administrators
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common Trust
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in Liquidation Amount of the outstanding QUIPS. In no
event will the holders of the QUIPS have the right to vote to appoint, remove or
replace the Administrators, which voting rights are vested exclusively in the
Company as the holder of the Common Trust Securities. No resignation or removal
of an Issuer Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor Trustee in
accordance with the provisions of the Declaration.
Merger or Consolidation of Issuer Trustees
Any Person into which the Property Trustee or the Delaware Trustee that is
not a natural person may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Issuer Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Issuer Trustee, shall be the successor of such Issuer Trustee under the
Declaration, provided such Person shall be otherwise qualified and eligible.
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Mergers, Conversions, Consolidations, Amalgamations or Replacements of the
Trust
The Trust may not merge or convert with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any Person, except as described
below or as otherwise described under "-- Liquidation of the Trust and
Distribution of Junior Subordinated Debentures". The Trust may, at the request
of the Company, as Sponsor and holder of the Common Trust Securities, but
without the consent of the holders of the QUIPS, merge or convert with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to a trust
organized as such under the laws of any State; provided, that (a) such successor
entity either (i) expressly assumes all of the obligations of the Trust with
respect to the QUIPS or (ii) substitutes for the QUIPS other securities having
substantially the same terms as the QUIPS (the "Successor Securities") so long
as the Successor Securities rank the same as the QUIPS rank in priority with
respect to distributions and payments upon liquidation, redemption and
otherwise, (b) the Company expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee with respect to
the Junior Subordinated Debentures, (c) the Successor Securities are listed, or
any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the QUIPS are then
listed or quoted, if any, (d) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
QUIPS (including any Successor Securities) or Units to be downgraded by any
nationally recognized statistical rating organization, if then so rated,(e) such
merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the QUIPS (including any Successor Securities) in
any material respect, (f) such successor entity has a purpose substantially
identical to that of the Trust, (g) prior to such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Company has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (i) such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
QUIPS (including any Successor Securities) in any material respect, (ii)
following such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the Investment Company
Act of 1940, as amended (the "Investment Company Act") and (iii) following such
merger, conversion, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Trust or the successor entity will continue to be
classified as a grantor trust for United States Federal income tax purposes and
(h) the Company or any permitted successor or assignee owns all of the common
trust securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except
with the consent of holders of 100% in Liquidation Amount of the Trust
Securities, consolidate, amalgamate, merge or convert with or into, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge or convert with or into, or replace it
if such consolidation, amalgamation, merger, conversion, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity to
be classified as an association taxable as a corporation or as other than a
grantor trust for United States Federal income tax purposes.
Voting Rights; Amendment of the Declaration
Except as provided below and under "-- Mergers, Conversions,
Consolidations, Amalgamations or Replacements of the Trust" above and
"-- Description of the Guarantee -- Amendments and Assignment" and as otherwise
required by law and the Declaration, the holders of the QUIPS will have no
voting rights.
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The Declaration may be amended from time to time by the Company and the
Property Trustee, without the consent of the holders of the QUIPS, (a) to cure
any ambiguity, correct or supplement any provisions in the Declaration that may
be inconsistent with any other provision, or make any other provisions with
respect to matters or questions arising under the Declaration, which shall not
be inconsistent with the other provisions of the Declaration, or (b) to modify,
eliminate or add to any provisions of the Declaration to such extent as shall be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust or as other than an association taxable
as a corporation at all times that any Trust Securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in each case,
such action shall not adversely affect in any material respect the interests of
the holders of the Trust Securities. Any amendments of the Declaration pursuant
to the foregoing shall become effective when notice thereof is given to the
holders of the Trust Securities. The Declaration may be amended by the Issuer
Trustees and the Company (x) with the consent of holders of QUIPS (or Normal
Units) representing a majority (based upon Liquidation Amount) of the
outstanding QUIPS and (y) upon receipt by the Property Trustee of an opinion of
counsel to the effect that such amendment or the exercise of any power granted
to the Issuer Trustees in accordance with such amendment will not cause the
Trust to be classified as an association taxable as a corporation or affect the
Trust's status as a grantor trust for United States federal income tax purposes
or the Trust's exemption from status as an "investment company" under the
Investment Company Act, provided that, without the consent of each holder of
Trust Securities, the Declaration may not be amended to (i) change the amount or
timing of any Distribution or other payment on the Trust Securities (including
payment of the Put Price) or otherwise adversely affect the amount of any
Distribution or other payment (including payment of the Put Price) required to
be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not (a) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Property Trustee with respect to
the Junior Subordinated Debentures, (b) waive certain past defaults under the
Indenture, (c) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Junior Subordinated
Debentures or (d) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
QUIPS (or Normal Units) representing a majority in Liquidation Amount of all
outstanding QUIPS; provided, however, that where a consent under the Indenture
would require the consent of each holder of Junior Subordinated Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each holder of the QUIPS (or Normal Units). The Issuer
Trustees shall not revoke any action previously authorized or approved by a vote
of the holders of the QUIPS (or Normal Units) except by subsequent vote of such
holders. The Property Trustee shall notify each holder of Trust Securities (or
Normal Units) of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of such holders,
prior to taking any of the foregoing actions, the Issuer Trustees shall obtain
an opinion of counsel experienced in such matters to the effect that the Trust
will not be classified as an association taxable as a corporation or as other
than a grantor trust for United States Federal income tax purposes on account of
such action.
Any required approval of holders of QUIPS (or Normal Units) may be given at
a meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of QUIPS (or Normal Units) are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given to
each holder of record of QUIPS (or Normal Units) in the manner set forth in the
Declaration.
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No vote or consent of the holders of QUIPS (or Normal Units) will be
required for the Trust to redeem and cancel the QUIPS in accordance with the
Declaration.
Notwithstanding that holders of the QUIPS (or Normal Units) are entitled to
vote or consent under any of the circumstances described above, any of the QUIPS
(or Normal Units) that are owned by the Company or any affiliate of the Company
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
Form and Book-Entry Procedures
As long as the QUIPS constitute Pledged Securities, the QUIPS will be
represented by a single certificate and held for the benefit of the holders of
the Normal Units. If the QUIPS cease to constitute Pledged Securities, the QUIPS
may be represented by one or more QUIPS in registered, global form registered in
the name of the Depositary or its nominee. The depositary arrangements for the
QUIPS are expected to be substantially similar to those in effect for the Units.
For a description of the Depositary and the terms of the depositary
arrangements, see "-- Book-Entry System".
Payment and Paying Agency
If the QUIPS cease to constitute Pledged Securities, payments in respect of
the QUIPS held in global form shall be made to the Depositary, which shall
credit the relevant accounts at the Depositary on the applicable Distribution
Dates or in respect of the QUIPS that are not held by the Depositary, such
payments shall be made by check mailed to the address of the holder entitled
thereto as such address shall appear on the register. The paying agent (the
"Paying Agent") shall initially be the Property Trustee and any additional
paying agent chosen by the Property Trustee and acceptable to the Company. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee (if not the Paying Agent) and the Administrators.
In the event that the Property Trustee shall no longer be the Paying Agent, the
Administrators shall appoint a successor to act as Paying Agent.
Registrar and Transfer Agent
The Property Trustee will initially act as registrar and transfer agent for
the QUIPS.
Registration of transfers of the QUIPS will be effected without charge by
or on behalf of the Trust but upon payment of any tax or other governmental
charges that may be imposed in connection with any transfer or exchange. The
Trust will not be required to register or cause to be registered the transfer of
any QUIPS after they have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Declaration and, after such Event of Default, must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her affairs. Subject to this provision, the Property Trustee
is under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Trust Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. The Property Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if repayment or adequate indemnity is not reasonably
assured to the Property Trustee.
Miscellaneous
The Administrators are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be
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registered under the Investment Company Act or classified as an association
taxable as a corporation or as other than a grantor trust for United States
Federal income tax purposes and so that the Junior Subordinated Debentures will
be treated as indebtedness of the Company for United States federal income tax
purposes. In this connection, the Company and the Administrators are authorized
to take any action, not inconsistent with applicable law, the certificate of
trust of the Trust or the Declaration, that the Company and the Administrators
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
General
The Junior Subordinated Debentures are to be issued under the Indenture.
First Union National Bank will initially act as Debenture Trustee under the
Indenture. The Indenture will be qualified under the Trust Indenture Act.
The Junior Subordinated Debentures will be unsecured and subordinate and
rank junior in right of payment to the extent and in the manner set forth in the
Indenture to all Senior Indebtedness of the Company. See "Risk
Factors -- Holding Company Structure; Reliance on Dividends from Insurance
Subsidiaries" above and "-- Subordination" below.
The Junior Subordinated Debentures will mature on the QUIPS and Debenture
Maturity Date of , 2003. The Junior Subordinated Debentures will
not be redeemable at the option of the Company prior to the QUIPS and Debenture
Maturity Date.
Interest
Interest on the Junior Subordinated Debentures will accrue from the first
date of issuance of the Junior Subordinated Debentures at a rate per annum equal
to the QUIPS and Debenture Rate referred to under " --Description of the
QUIPS -- Distributions" above and will be payable quarterly in arrears on each
Quarterly Payment Date (each, an "Interest Payment Date"), subject to the
deferral provisions described below, to the holders of the Junior Subordinated
Debentures on the relevant record dates, which, unless the Junior Subordinated
Debentures are distributed upon liquidation of the Trust and are issued in
certificated form, will be one Business Day prior to the relevant Interest
Payment Date. Until the liquidation, if any, of the Trust, each Junior
Subordinated Debenture will be held in the name of the Property Trustee in trust
for the benefit of the holders of the Trust Securities. The amount of interest
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months. In the event that any date on which interest is payable on the
Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be on the next succeeding day that is a
Business Day (and to the extent such payment is made on the next succeeding
Business Day 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 such payment was
originally payable. The term "interest", as used in this Description of the
Junior Subordinated Debentures, shall include any Additional Sums (as defined
herein) payable on the Junior Subordinated Debentures.
Market Rate Increase
By 9:30 a.m., New York City time, on the Call Option Expiration Date, the
Rate Increase Agent will determine whether the then current aggregate market
value of the QUIPS (or, if the QUIPS are no longer outstanding, Junior
Subordinated Debentures) underlying the Normal Units is at least
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equal to 100.25% of the Cash Equivalent of the Aggregate Call Option Exercise
Consideration. If the Rate Increase Agent determines that it is (or the QUIPS
and Debenture Rate is already equal to or greater than the Maximum QUIPS and
Debenture Rate), interest on the Junior Subordinated Debentures (and, if the
QUIPS remain outstanding, distributions on the QUIPS) will continue to accrue at
the initial QUIPS and Debenture Rate. If the Rate Increase Agent determines that
it is not (and the QUIPS and Debenture Rate is less than the Maximum QUIPS and
Debenture Rate), the Rate Increase Agent will, by 9:30 a.m., New York City time,
on the Call Option Expiration Date, select an increased rate equal to the lower
of (a) the rate that it determines is sufficient to cause the then current
aggregate market value of such QUIPS (or, if the QUIPS are no longer
outstanding, such Junior Subordinated Debentures) to be at least equal to
100.25% of the Cash Equivalent of the Aggregate Call Option Exercise
Consideration and (b) the Maximum QUIPS and Debenture Rate (and notify the
Company and the Call Option Holder of such increased rate), and the QUIPS and
Debenture Rate will thereupon become that increased rate.
"Cash Equivalent of the Aggregate Call Option Exercise Consideration" means
the cash value on the Call Option Expiration Date of the Aggregate Call Option
Exercise Consideration, assuming for this purpose that (a) the Call Options are
exercised on the Call Option Expiration Date, (b) the Treasury Securities
included in the Aggregate Call Option Exercise Consideration are highly liquid
Treasury Securities maturing on or within 35 days prior to the Stock Purchase
Date (as designated in good faith by the Call Option Holder in a notice
delivered to the Rate Increase Agent by 8:30 a.m., New York City time, on the
Call Option Expiration Date or, if the Call Option Holder fails to so designate
such Treasury Securities, as designated in good faith by the Rate Increase
Agent, in either case in a manner intended to minimize the Cash Equivalent of
the Aggregate Call Option Exercise Consideration) and (c) such Treasury
Securities are valued based on the ask-side price thereof at 9:00 a.m., New York
City time, on the Call Option Expiration Date (as determined on a same day
settlement basis by a reasonable and customary means selected in good faith by
the Rate Increase Agent and notified to the Call Option Holder prior thereto)
plus interest accrued thereon to such date.
"Maximum QUIPS and Debenture Rate" means (a) the yield to maturity
(calculated in accordance with standard market practice) corresponding to the
bid-side price at 9:00 a.m., New York City time, on the Call Option Expiration
Date (as determined by a reasonable and customary means selected in good faith
by the Rate Increase Agent and notified to the Call Option Holder prior thereto)
of highly liquid Treasury Securities maturing on or around the QUIPS and
Debenture Maturity Date as selected in good faith by the Rate Increase Agent
plus (b) 350 basis points (3.5%).
It is currently anticipated that [Salomon Smith Barney] will be the Rate
Increase Agent. See "-- Description of the Junior Subordinated Debentures."
Option to Extend Interest Payment Date
So long as no Debenture Event of Default has occurred and is continuing,
the Company will have the right under the Indenture at any time during the term
of the Junior Subordinated Debentures to defer the payment of interest at any
time or from time to time for a period not extending beyond the QUIPS and
Debenture Maturity Date. At the end of an Extension Period, the Company must pay
all interest then accrued and unpaid (together with interest thereon accrued at
the Deferral Rate compounded on each succeeding Interest Payment Date). During
an Extension Period, interest will continue to accrue and, if the Junior
Subordinated Debentures have been distributed to holders of the Trust
Securities, holders of Junior Subordinated Debentures (or holders of the Trust
Securities while Trust Securities are outstanding) will be required to accrue
interest income for United States Federal income tax purposes prior to the
receipt of cash attributable to such income. See "Certain Federal Income Tax
Consequences -- Interest Received on the QUIPS".
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During any such Extension Period, the Company may not take any of the
prohibited actions described in the first paragraph under "-- Certain Covenants
of the Company".
Prior to the expiration of any such Extension Period, the Company may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to extend beyond the QUIPS and Debenture Maturity
Date. Upon the termination of any such Extension Period and the payment of all
amounts then due on any Interest Payment Date, 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 must give the Property Trustee, the Administrators and the Debenture
Trustee written notice of its election of any Extension Period (or an extension
thereof) at least five Business Days prior to the earlier of (a) the date the
Distributions on the Trust Securities would have been payable except for the
election to begin or extend such Extension Period, (b) the date the Trustees are
required to give notice to any securities exchange or to holders of QUIPS of the
record date or the date such Distributions are payable and (c) such record date.
The Debenture Trustee shall give notice of the Company's election to begin or
extend a new Extension Period to the holders of the QUIPS. There is no
limitation on the number of times that the Company may elect to begin an
Extension Period.
Additional Sums
If the Trust is required to pay any additional taxes, duties or other
governmental charges, the Company will pay as additional amounts on the Junior
Subordinated Debentures the Additional Sums.
"Additional Sums" means such additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Trust on the
outstanding QUIPS and Common Trust Securities shall not be reduced as a result
of any additional taxes, duties or other governmental charges to which the Trust
has become subject.
In lieu of paying Additional Sums on the Junior Subordinated Debentures the
Company may dissolve the Trust and cause the Junior Subordinated Debentures to
be distributed to the holders of the Trust Securities in liquidation of the
Trust. See "-- Description of the QUIPS -- Liquidation of the Trust and
Distribution of Junior Subordinated Debentures".
Junior Subordinated Debenture Put Options
Each holder of Junior Subordinated Debentures will have the right (a
"Junior Subordinated Debenture Put Option") to require the Company to repurchase
such Junior Subordinated Debentures, on the Stock Purchase Date, for a purchase
price (the "Put Price") for such Junior Subordinated Debentures equal to the
aggregate principal amount thereof plus unpaid interest accrued thereon to but
not including the Stock Purchase Date, but only if the cash received on the
exercise of such option is used to settle the Purchase Contracts secured
thereby. The Trust will covenant in the Declaration that it will not exercise
any Junior Subordinated Debenture Put Option (although it may distribute Junior
Subordinated Debentures to a Put Agent in connection with the exercise by a
holder of QUIPS or the Put Agent on behalf of such holder of such holder's right
to require the Trust to do so, as contemplated under "-- Description of the
QUIPS -- Right to Exercise Junior Subordinated Debenture Put Options" above).
Each holder of Junior Subordinated Debentures or the Put Agent on behalf of
such holder may exercise the Junior Subordinated Debenture Put Option related to
such securities by presenting and surrendering the certificate evidencing such
securities, at the offices of the Debenture Trustee, with the form of "Notice of
Exercise of Put Right" on the reverse side of the certificate completed and
executed as indicated, by 10:00 a.m., New York City time, on the Stock Purchase
Date.
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Certain Covenants of the Company
The Company will covenant that it will not (a) 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, (b) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in right of
payment to the Junior Subordinated Debentures or (c) make any guarantee payments
with respect to any guarantee by the Company of any securities of any subsidiary
of the Company if such guarantee ranks pari passu or junior in right of payment
to the Junior Subordinated Debentures (other than, in the case of clauses (a),
(b) and (c), (i) dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, common stock of the Company,
(ii) any declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(iii) payments under the Guarantee, (iv) as a result of a reclassification of
the Company's capital stock solely into shares of one or more classes or series
of the Company's capital stock or the exchange or conversion of one class or
series of the Company's capital stock for another class or series of the
Company's capital stock, (v) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged and (vi)
purchases of common stock in connection with the satisfaction by the Company of
its obligations under any of the Company's benefit plans for its and its
subsidiaries' directors, officers or employees or any of the Company's dividend
reinvestment plans) if at such time (x) a Debenture Event of Default shall have
occurred and be continuing, (y) the Company shall be in default with respect to
its payment of any obligations under the Guarantee or (z) the Company shall have
given notice of its election of an Extension Period, or any extension thereof,
as provided in the Indenture and shall not have rescinded such notice, and such
Extension Period, or any extension thereof, shall have commenced and not yet
terminated.
The Company will also covenant (a) to maintain 100 percent ownership of the
Common Trust Securities; provided, however, that any permitted successor of the
Company under the Indenture may succeed to the Company's ownership of the Common
Trust Securities, (b) to use its reasonable efforts to cause the Trust (i) to
remain a statutory business trust, except in connection with the distribution of
Junior Subordinated Debentures to the holders of Trust Securities in liquidation
of the Trust, the redemption of all of the Trust Securities of the Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration of the Trust and (ii) to continue not to be classified as an
association taxable as a corporation or a partnership for United States federal
income tax purposes and (c) to use its reasonable efforts to cause each holder
of Trust Securities (or, for so long as Trust Securities constitute Pledged
Securities, Units) to be treated as owning an undivided beneficial interest in
the Junior Subordinated Debentures.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures constitutes a
"Debenture Event of Default" (whatever the reason for such Debenture Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) failure for 30 days to pay any interest on the Junior Subordinated
Debentures when due (subject to the deferral of any due date in the case of an
Extension Period); or
(b) failure to pay any principal on the Junior Subordinated Debentures when
due whether at maturity, by declaration of acceleration of maturity or
otherwise; or
(c) failure to pay the Put Price when due upon exercise of a Junior
Subordinated Debenture Put Option; or
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(d) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to the
Company from the Debenture Trustee or the holders of at least 25% in aggregate
outstanding principal amount of Junior Subordinated Debentures; or
(e) certain events of bankruptcy, insolvency or reorganization of the
Company.
Prior to any declaration accelerating the maturity of the Junior
Subordinated Debentures, the holders of a majority in aggregate outstanding
principal amount of the Junior Subordinated Debentures have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Debenture Trustee. The Debenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of the Junior Subordinated
Debentures may declare the principal due and payable immediately upon a
Debenture Event of Default. The holders of a majority in aggregate outstanding
principal amount of the Junior Subordinated Debentures may annul such
declaration and waive the default if the default (other than the nonpayment of
the principal of the Junior Subordinated Debentures which has become due solely
by such acceleration) has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee.
Prior to any declaration accelerating maturity of the Junior Subordinated
Debentures, the holder or holders of a majority in aggregate outstanding
principal amount of the Junior Subordinated Debentures (which, prior to any
liquidation or dissolution of the Trust, will be the Property Trustee) affected
thereby may, on behalf of the holders of all the Junior Subordinated Debentures,
waive any past default except a default in the payment of principal, premium, if
any, interest or Put Price in respect of Junior Subordinated Debentures (unless
such default has been cured and a sum sufficient to pay all matured installments
of interest and premium, if any, and principal due otherwise than by
acceleration and any payments of the Put Price in respect of the Junior
Subordinated Debentures has been deposited with the Debenture Trustee), or a
default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture.
The Indenture requires the annual filing by the Company with the Debenture
Trustee of a certificate as to the absence of certain defaults under the
Indenture.
The Indenture provides that the Debenture Trustee may withhold notice of a
Debenture Event of Default from the holders of the Junior Subordinated
Debentures (except a Debenture Event of Default in payment of principal,
premium, if any, interest or Put Price in respect of Junior Subordinated
Debentures) if the Debenture Trustee considers it in the interest of such
holders to do so.
Enforcement of Certain Rights by Holders of QUIPS
If a Debenture Event of Default shall have occurred and be continuing and
shall be attributable to the failure of the Company to pay interest or premium,
if any, on or principal of the Junior Subordinated Debentures on the due date
(after giving effect to any Extension Period), a holder of record of QUIPS (or,
for so long as QUIPS underlie Normal Units, a holder of record of Normal Units)
may institute a Direct Action. See "-- Description of the QUIPS -- Events of
Default; Notice". The Company may not amend the Indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the QUIPS (or, for so long as QUIPS underlie Normal Units,
the holders of all the Normal Units).
The holders of the QUIPS will not be able to exercise directly any
remedies, other than those set forth in the preceding paragraph, available to
the holders of the Junior Subordinated Debentures.
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Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to any Person, and no Person shall
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to the
Company, unless: (i) in case the Company consolidates with or merges into
another Person or conveys or transfers its properties and assets substantially
as an entirety to any Person, the successor Person is organized under the laws
of the United States or any State or the District of Columbia, and such
successor Person expressly assumes the Company's obligations on the Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have occurred and be
continuing; and (iii) certain other conditions as prescribed in the Indenture
are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.
Modification of the Indenture
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interest of the holders of Junior
Subordinated Debentures). The Indenture contains provisions permitting the
Company and the Debenture Trustee, with the consent of the holders of a majority
in principal amount of the Junior Subordinated Debentures, to modify the
Indenture in a manner affecting the rights of the holders of Junior Subordinated
Debentures; provided that no such modification may, without the consent of the
holders of each outstanding Junior Subordinated Debenture so affected, (a)
change the QUIPS and Debenture Maturity Date, or reduce the principal amount of
the Junior Subordinated Debentures or reduce the rate or extend the time of
payment of interest thereon (other than a permitted deferral of interest during
an Extension Period), (b) change any of the terms or conditions of the Junior
Subordinated Debenture Put Options or the Put Price, or (c) reduce the
percentage of principal amount of Junior Subordinated Debentures the holders of
which are required to consent to any such modification of the Indenture.
Satisfaction and Discharge
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (a) have become due and payable or (b) will become due and payable
at maturity within one year and the Company deposits or causes to be deposited
with the Debenture Trustee funds, in trust, for the purpose and in an amount
sufficient to pay and discharge the entire indebtedness on the Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation, for the principal and interest to the QUIPS and Debenture Maturity
Date, then the Indenture will cease to be of further effect (except as to the
Company's obligations to pay all other sums due pursuant to the Indenture and to
provide the officers' certificates and opinions of counsel described therein),
and the Company will be deemed to have satisfied and discharged the Indenture.
Subordination
The obligations of the Company under the Junior Subordinated Debentures
will be unsecured and subordinate and rank junior in right of payment to all
present and future Senior Indebtedness to the extent provided in the Indenture.
Upon any payment or distribution of assets to creditors upon
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any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Indebtedness will
first be entitled to receive payment in full of all Senior Indebtedness before
the holders of Junior Subordinated Debentures will be entitled to receive or
retain any payment in respect thereof.
No payments on account of principal of, premium, if any, or interest on the
Junior Subordinated Debentures (including payments on exercise of Junior
Subordinated Debenture Put Options) may be made if there shall have occurred and
be continuing a default in any payment with respect to Senior Indebtedness, or
an event of default with respect to any Senior Indebtedness resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
amounts due in respect of such Senior Indebtedness before the holders of Junior
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the Junior Subordinated Debentures.
Notwithstanding the foregoing, amounts that would be due and payable by the
Company to holders of Units in the absence of the foregoing subordination
provisions may be applied by such holders to offset their obligations under
their respective Purchase Contracts.
"Senior Indebtedness" shall mean, with respect to the Company, (a) the
principal, premium, if any, and interest in respect of (i) indebtedness of the
Company for money borrowed and (ii) indebtedness evidenced by securities,
debentures, notes, bonds or other similar instruments issued by the Company,
including, without limitation, any current or future indebtedness under any
indenture (other than the Indenture) to which the Company is party, (b) all
capital lease obligations of the Company, (c) all obligations of the Company
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Company and all obligations of the Company under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (d) all obligations of the Company for the
reimbursement on any letter of credit, any banker's acceptance, any security
purchase facility, any repurchase agreement or similar arrangement, any interest
rate swap, any other hedging arrangement, any obligation under options or any
similar credit or other transaction, (e) all obligations of the type referred to
in clauses (a) through (d) above of other persons for the payment of which the
Company is responsible or liable as obligor, guarantor or otherwise and (f) all
obligations of the type referred to in clauses (a) through (e) above of other
persons secured by any lien on any property or asset of the Company (whether or
not such obligation is assumed by the Company), except for (x) any indebtedness
between or among the Company or any affiliate of the Company, (y) any other debt
securities issued pursuant to the Indenture and guarantees in respect of those
debt securities and (z) any indebtedness that is by its terms subordinated to or
pari passu with the Junior Subordinated Debentures, including any junior
subordinated debt securities issued in the future with subordination terms
substantially similar to the Junior Subordinated Debentures. Senior Indebtedness
shall continue to be Senior Indebtedness and be entitled to the benefits of the
subordination provisions irrespective of any amendment, modification or waiver
of any term of such Senior Indebtedness.
Because the Company is a holding company, the Junior Subordinated
Debentures are effectively subordinated to all existing and future liabilities
of the Company's subsidiaries, except to the extent the Company is a creditor of
the subsidiary recognized as such. See "Risk Factors -- Holding Company
Structure; Limitations on Dividends" in the Prospectus.
The Indenture places no limitation on the amount of Senior Indebtedness
that may be incurred by the Company. The Company expects from time to time to
incur indebtedness constituting Senior Indebtedness.
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Form and Book-Entry Procedures
If the Junior Subordinated Debentures are distributed to the holders of the
Trust Securities and do not constitute Pledged Securities with respect to the
Units, the Junior Subordinated Debentures may be represented by one or more
global certificates registered in the name of the Depositary or its nominee. The
depositary arrangements for such Junior Subordinated Debentures are expected to
be substantially similar to those in effect for the Units. For a description of
the Depositary and the terms of the depositary arrangements, see "-- Book-Entry
System".
Payment and Paying Agents
Payment of principal of and premium, if any, and any interest on Junior
Subordinated Debentures will be made at the office of the Debenture Trustee in
The City of New York or at the office of such paying agent or paying agents as
the Company may designate from time to time, except that at the option of the
Company payment of any interest may be made (i) by check mailed to the address
of the Person entitled thereto as such address shall appear in the register for
Junior Subordinated Debentures or (ii) by transfer to an account maintained by
the Person entitled thereto as specified in such register, provided that proper
transfer instructions have been received by the relevant Record Date. Payment of
any interest on any Junior Subordinated Debenture will be made to the Person in
whose name such Junior Subordinated Debenture is registered at the close of
business on the Record Date for such interest, except in the case of defaulted
interest. The Company may at any time designate additional paying agents or
rescind the designation of any paying agent; however the Company will at all
times be required to maintain a paying agent in each place of payment for the
Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or
then held by the Company in trust, for the payment of the principal of and
premium, if any, or interest on any Junior Subordinated Debenture (or the Put
Price therefor) and remaining unclaimed for two years after such principal and
premium, if any, or interest (or Put Price) has become due and payable shall, at
the request of the Company, be repaid to the Company and the holder of such
Junior Subordinated Debenture shall thereafter look, as a general unsecured
creditor, only to the Company for payment thereof.
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee
Subject to such provisions, the Debenture Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the request of any
holder of Junior Subordinated Debentures, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The Debenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its duties
if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
DESCRIPTION OF THE GUARANTEE
General
The Guarantee will be executed and delivered by the Company concurrently
with the issuance by the Trust of the QUIPS for the benefit of the holders from
time to time of the QUIPS. First Union National Bank will initially act as
Guarantee Trustee under the Guarantee. The Guarantee will be qualified under the
Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the QUIPS.
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The Company will irrevocably and unconditionally agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined herein) to the holders of the QUIPS, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
QUIPS, to the extent not paid by or on behalf of the Trust (the "Guarantee
Payments"), will be subject to the Guarantee: (a) any accumulated and unpaid
Distributions required to be paid on QUIPS, to the extent the Trust has funds on
hand legally available therefor and (b) the Final Redemption Price with respect
to the QUIPS, to the extent that the Trust has funds on hand legally available
therefor. The Company's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Company to the holders of the
QUIPS or by causing the Trust to pay such amounts to such holders.
The Guarantee will be unsecured and subordinate and rank junior in right of
payment to the extent and in the manner provided therein to all Senior
Indebtedness. See "Risk Factors -- Holding Company Structure; Reliance on
Dividends from Insurance Subsidiaries" above and "-- Status" below.
The Guarantee, when taken together with the Company's obligations under the
Declaration, the Junior Subordinated Debentures and the Indenture, including its
obligations to pay costs, expenses, debt, taxes and other liabilities of the
Trust (other than with respect to the Trust Securities), will provide in the
aggregate, a full, irrevocable and unconditional guarantee of all of the Trust's
obligations of payments due under the QUIPS. See "-- Relationship Among the
QUIPS, the Junior Subordinated Debentures and the Guarantee".
The Company also has agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to Common Trust Securities
issued by the Trust to the same extent as the Guarantee, except that upon an
Event of Default under the Declaration, holders of QUIPS shall have priority
over holders of Common Trust Securities with respect to Distributions and
payments on liquidation, redemption or otherwise.
Status
The Guarantee will be unsecured and subordinate and rank junior in right of
payment to all Senior Indebtedness to the extent and in the manner provided
therein, which is similar to extent and manner of subordination of the Junior
Subordinated Debentures as described under "-- Description of the Junior
Subordinated Debentures -- Subordination" above.
Because the Company is a holding company, the Guarantee is effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, except to the extent the Company is a creditor of the subsidiary
recognized as such. See "Risk Factors -- Holding Company Structure; Limitations
on Dividends" in the Prospectus.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding against any other person or entity). The Guarantee will be
held for the benefit of the holders of the QUIPS. The Guarantee will not be
discharged except by payment of the Guarantee Payments in full to the extent not
paid by the Trust or upon distribution to the holders of the QUIPS of the Junior
Subordinated Debentures. The Guarantee does not place a limitation on the amount
of Senior Indebtedness that may be incurred by the Company. The Company expects
from time to time to incur indebtedness constituting Senior Indebtedness.
Events of Default
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in Liquidation Amount
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of the QUIPS will have the right to (a) waive any past event of default under
the Guarantee and its consequences, whereby such event of default shall cease to
exist and any event of default under the Guarantee arising therefrom shall be
deemed to have been cured for every purpose of the Guarantee and (b) direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of the Guarantee or to direct the exercise of
any trust or power conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the QUIPS may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding against the Trust, the Guarantee Trustee or any other person
or entity.
The Company, as guarantor, will be required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
Certain Covenants of the Company
In the Guarantee, the Company will covenant that, so long as any QUIPS
remain outstanding, if there shall have occurred any event that is or would
constitute an event of default under the Guarantee, that is continuing, or the
Declaration, then the Company will not take any of the prohibited actions
described under "-- Description of the Junior Subordinated Debentures -- Certain
Covenants of the Company".
Amendments and Assignment
Except with respect to any changes that do not adversely affect the rights
of holders of the QUIPS in any material respect (in which case no approval will
be required), the Guarantee may not be amended without the prior approval of the
holders of a majority in Liquidation Amount of such outstanding QUIPS. The
manner of obtaining any such approval will be as set forth under "-- Description
of the QUIPS -- Voting Rights; Amendment of the Declaration". All guarantees and
agreements contained in the Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Company and shall inure
to the benefit of the holders of the QUIPS then outstanding.
Termination
The Guarantee will terminate and be of no further force and effect upon
full payment of the Final Redemption Price of the QUIPS, upon full payment of
the amounts payable upon liquidation of the Trust or upon distribution of the
Junior Subordinated Debentures to the holders of the QUIPS or at such other time
when there are no longer any QUIPS outstanding. The Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
holder of the QUIPS must restore payment of any sums paid under the QUIPS or the
Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee may be appointed or removed by the Guarantor without
cause at any time, except during an event of default under the Guarantee. The
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Guarantee at the request of any holder of QUIPS, unless offered
reasonable indemnity against the costs, expenses and liabilities which might be
incurred thereby. The Guarantee Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if it reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
The Company or its affiliates maintain certain business relationships with
the Guarantee Trustee and its affiliates in the ordinary course of business.
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Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE QUIPS, THE JUNIOR SUBORDINATION DEBENTURES AND THE
GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the QUIPS (to the extent
the Trust has funds on hand legally available for the payment of such
Distributions) will be irrevocably guaranteed by the Company as and to the
extent set forth under "Description of the Guarantee". If and to the extent that
the Company does not make the required payments on the Junior Subordinated
Debentures, the Trust will not have sufficient funds to make the related
payments, including Distributions, on the QUIPS. The Guarantee will not cover
any such payment unless and until the Trust has sufficient funds for the payment
therefor. The Guarantee, when taken together with the Company's obligations
under the Junior Subordinated Debentures, the Indenture and the Declaration,
including its obligations to pay costs, expenses, debts, taxes and other
liabilities of the Trust (other than with respect to the Trust Securities), will
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of Distributions and other amounts due on the QUIPS. The obligations of
the Company under the Guarantee will be unsecured and subordinate and rank
junior in right of payment to all Senior Indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the QUIPS, primarily because: (a) the
aggregate principal amount of the Junior Subordinated Debentures will be equal
to the aggregate Liquidation Amount of the QUIPS and Common Trust Securities;
(b) the interest rate and interest and other payment dates on the Junior
Subordinated Debentures will match the distribution rate and Distribution and
other payment dates for the Trust Securities; (c) the Company shall pay for all
and any costs, expenses, taxes and other liabilities of the Trust except the
Trust's obligations to holders of Trust Securities under such Trust Securities;
and (d) the Declaration will provide that the Trust is not authorized to engage
in any activity that is not consistent with the limited purposes thereof.
Enforcement of Rights of Holders of QUIPS
If the Company fails to make interest or other payments on the Junior
Subordinated Debentures when due (after giving effect to any Extension Period),
the Declaration provides a mechanism whereby the holders of the QUIPS (or, for
so long as QUIPS underlie Normal Units, the holders of the Normal Units) may
direct the Property Trustee to enforce its rights under the Junior Subordinated
Debentures. If the Property Trustee fails to enforce its rights under the Junior
Subordinated Debentures after a majority in Liquidation Amount of QUIPS have so
directed the Property Trustee, a holder of record of the QUIPS (or, for so long
as QUIPS underlie Normal Units, a holder of record of Normal Units) may, to the
fullest extent permitted by law, institute a legal proceeding against the
Company to enforce the Property Trustee's rights under the Junior Subordinated
Debentures without first instituting any legal proceedings against the Property
Trustee or any other person or entity. Notwithstanding the foregoing, if an
Event of Default has occurred and is continuing and such event is attributable
to the failure of the Company to pay principal or interest on the Junior
Subordinated Debentures on the respective dates such principal or interest is
payable, after giving effect to any Extension Period, then a holder of record of
QUIPS (or, for so long as QUIPS underlie Normal Units, a holder of record of
Normal Units) may institute a Direct Action for payment to such holder of the
portion of such principal or interest attributable to Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the QUIPS held by such
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holder (or underlying such holder's Normal Units). In connection with such
Direct Action, the Company will be subrogated to the rights of such holder of
QUIPS (or Normal Units) under the Declaration to the extent of any payment made
by the Company to such holder of QUIPS in such Direct Action; provided, however,
that no such subrogation right may be exercised so long as an Event of Default
has occurred and is continuing.
In addition, a holder of QUIPS may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Declaration. However, in the
event of payment defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Indenture will provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default under the Declaration.
Limited Purpose of the Trust
The QUIPS will represent preferred undivided beneficial interests in the
assets of the Trust, and the Trust exists for the sole purpose of issuing and
selling the Trust Securities, using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures and engaging in only
those other activities necessary or incidental thereto.
Rights Upon Dissolution
Upon any voluntary or involuntary liquidation or bankruptcy of the Company,
the Property Trustee, as holder of the Junior Subordinated Debentures, would be
a subordinated creditor of the Company, subordinated in right of payment to all
Senior Indebtedness as set forth in the Indenture, but entitled to receive
payment in full of principal (and premium, if any) and interest, before any
stockholders of the Company receive payments or distributions. Since the Company
will be the guarantor under the Guarantee and will agree to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to the
holders of its Trust Securities), the positions of a holder of QUIPS and a
holder of Junior Subordinated Debentures relative to other creditors and to
stockholders of the Company in the event of liquidation or bankruptcy of the
Company are expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Units, QUIPS and
Common Stock is based on the views of Sidley & Austin, counsel to the Company.
No statutory, judicial or administrative authority directly addresses the tax
treatment of Units or instruments similar to Units for United States federal
income tax purposes. As a result, no assurance can be given that the Internal
Revenue Service (the "IRS") will agree with the tax consequences described
herein or that these consequences will not be successfully challenged. This
summary deals only with Units, QUIPS and Common Stock held as capital assets by
purchasers who purchase Units in the initial offering at the issue price and who
or which are (i) citizens or residents of the United States, (ii) corporations
or partnerships created or organized in or under the laws of the United States
or any state thereof or the District of Columbia,(iii) estates the income of
which is subject to United States federal income taxation without regard to
source, or (iv) trusts that are United States persons for federal income tax
purposes. It does not address consequences to special classes of holders,
including dealers in securities or currencies, financial institutions, insurance
companies, tax-exempt entities, taxpayers subject to the alternative minimum
tax, non-United States persons or taxpayers holding the Purchase Contracts,
QUIPS or Common Stock as part of a "straddle" or a hedging or conversion
transaction or other integrated investment. Moreover, the effect of any
applicable estate and gift tax laws or state, local or foreign tax laws is not
discussed. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISORS CONCERNING
THE TAX CONSEQUENCES OF AN INVESTMENT IN THE UNITS, INCLUDING THE APPLICATION OF
STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
FEDERAL OR OTHER TAX LAWS.
This summary is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations issued thereunder, published rulings and
court decisions, each as currently in effect and all of which are subject to
change. Any such changes may be applied retroactively in a manner that could
cause the tax consequences to vary substantially from the consequences described
below, possibly adversely affecting a holder of Units, QUIPS or Common Stock.
This discussion assumes that, in connection with the formation of the
Units, the Underwriters will be acting on behalf of the holders and will (a)
sell the Call Options to the Call Option Holder and apply the proceeds from such
sale (the "Call Premium") together with the amount paid directly by the holders
to the Underwriters (the "Purchase Price") to the purchase of the Units and (b)
enter into the Purchase Contracts with the Company and that holders will assume
the rights and obligations arising from these actions undertaken on their
behalf.
CLASSIFICATION OF THE TRUST
The Trust will, for United States federal income tax purposes, be
classified as a grantor trust and not as an association taxable as a
corporation. As a result, each holder of QUIPS will be treated as owning an
undivided beneficial interest in the Junior Subordinated Debentures, and each
holder will be required to include in gross income the items of income realized
with respect to the holder's allocable share of the Junior Subordinated
Debentures.
TREATMENT OF THE CALL PREMIUM
A holder will not be subject to tax in respect of the receipt of the Call
Premium at the time the Call Premium is received. Rather, the amount of the Call
Premium will be included in the amount realized by a holder when the Call Option
is exercised (see "-- Exercise of the Call Option and Ownership of Treasury
Securities," below) or the Units are sold (see "-- Sale or Disposition of
Units," below). If the Call Option expires unexercised, the amount of the Call
Premium will be taxable to the holder as short-term capital gain.
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<PAGE> 64
INITIAL TAX BASIS OF QUIPS
The amount paid by a holder for a Unit, which, for United States federal
income tax purposes, will equal the sum of the Purchase Price plus the amount of
the Call Premium deemed to have been received by such holder and paid to the
Company in partial payment for the Units, will be allocated between the QUIPS
and the Purchase Contract included in such Unit in proportion to their
respective fair market values at the time of purchase. Such allocation will
establish each holder's initial tax basis in the QUIPS (which is to say, the
undivided beneficial interest in the Junior Subordinated Debentures which the
QUIPS represent) and the Purchase Contract. Consistent with the documentation,
and reasonably consistent with the facts and circumstances, the Company intends
to take the position that, at the time of issuance of the Unit, the fair market
value of the Purchase Contract (including the holder's obligation to pay
Contract Fees to, or right to receive Contract Fees from, the Company) equals
zero, and the entire amount paid for the Unit, including the Call Premium, is
allocable to the QUIPS. Under Treasury regulations dealing with determination of
the issue price of a debt instrument that is part of an investment unit, the
Company's position will be binding upon each holder unless the holder explicitly
discloses a contrary position on a statement attached to the holder's timely
filed United States federal income tax return for the taxable year in which
Units are acquired by such holder.
Assuming the above allocation, the holder's basis in the QUIPS will exceed
the amount payable at maturity with respect to the QUIPS by the amount of the
Call Premium. Because the Junior Subordinated Debentures will be classified as
contingent debt instruments for United States federal income tax purposes, this
excess will not be treated as "bond premium" that is amortizable at the holder's
election. Instead, this excess will be taken into account in determining the
issue price of the Junior Subordinated Debentures and in determining the yield
at which holders will be required to accrue income. See "-- Interest Received on
the QUIPS," below.
INTEREST RECEIVED ON THE QUIPS
Because of the ability of the Rate Increase Agent to increase the QUIPS and
Debenture Rate, the Junior Subordinated Debentures will be classified as
contingent debt instruments subject to the "noncontingent bond method" as set
forth in applicable Treasury regulations. As discussed below, the Company does
not believe that classification of the Junior Subordinated Debentures as
contingent debt instruments will require holders to recognize taxable income in
excess of the cash payments of interest on the QUIPS. As also discussed below,
however, as a result of classification of the Junior Subordinated Debentures as
contingent debt instruments, any gain realized on sale or exchange of the QUIPS
generally will be treated as ordinary income.
Under the noncontingent bond method, the yield on the Junior Subordinated
Debentures is projected based on the yield on a hypothetical noncontingent bond
with similar terms. Based on that yield (the "comparable yield"), a projected
schedule of payments is determined. In general, holders of QUIPS will be
required to accrue interest income from the Junior Subordinated Debentures under
the rules applicable to debt instruments with OID, on the assumption that the
projected amounts will actually be paid, and then to take into account
adjustments if the payments are fixed at amounts that differ from their
projected amounts. Under these rules, none of the stated interest on the Junior
Subordinated Debentures will be "qualified stated interest" and, accordingly,
all payments of stated interest will be treated as payments of OID or as return
of principal.
Based upon information provided by Goldman, Sachs & Co., the Company has
determined the comparable yield to be [ %]. The projected amounts of the twenty
quarterly payments on the Junior Subordinated Debentures, per $100 of Stated
Amount, are [ ] (for each of the first 12 payments), [ ] (for each of the
next seven payments) and [ ] (for the final payment). The foregoing comparable
yield and projected payment schedule will be used by the Company for purposes of
determining its own taxable income and for any required information reporting.
Based
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on this schedule, the amount of taxable income from the Junior Subordinated
Debentures for any quarter will not exceed the cash payments of interest on the
Junior Subordinated Debentures.
If a holder of QUIPS does not use this projected payment schedule to
determine interest accruals, such holder must apply the foregoing rules using
its own projected payment schedule. A holder that determines its own projected
payment schedule must explicitly disclose this fact and the reason why the
holder has used its own schedule (e.g., why the Company's projected payment
schedule is unreasonable). In general, this disclosure must be made on a
statement attached to the timely filed federal income tax return of the holder
for the taxable year that includes the date of its acquisition of the QUIPS.
The foregoing projected payment schedule is supplied by the Company solely
for computing income under the noncontingent bond method for federal income tax
purposes, and does not constitute a projection or representation as to the
amounts that holders of QUIPS will actually receive.
Holders of QUIPS will not be required to take into account any adjustments
from the projected payment schedule with respect to payments due on or before
the Call Option Expiration Date, because no such payments are contingent.
Because all contingent payments are fixed substantially contemporaneously on the
Call Option Expiration Date, Treasury regulations require that, on that date, a
determination be made of the differences between all remaining payments as
originally projected and all remaining payments as fixed. Any differences
between these amounts are positive or negative adjustments that are to be taken
into account in any reasonable manner over the period to which they relate. The
Company believes that a reasonable manner for taking into account these
differences would be to take each adjustment into account on the date that the
payment to which it relates is due. The Company intends to adopt this approach
for purposes of tax reporting.
Holders of QUIPS will be required to treat any net positive adjustment
taken into account for a taxable year as additional interest income for the
year. Net negative adjustments, if any, are expected to be negligible and
generally will be applied to reduce interest income for the taxable year.
Because income with respect to the QUIPS will constitute interest for
United States federal income tax purposes, corporate holders of Units will not
be entitled to a dividends-received deduction in respect of such income.
ADJUSTMENTS TO TAX BASIS OF QUIPS
The initial tax basis of a holder of QUIPS (see "-- Initial Tax Basis of
QUIPS," above) will be (a) increased by the amount of any interest recognized
under the noncontingent bond method, determined as though the actual amounts of
the contingent payments were equal to their projected amounts and without regard
to the adjustments made when the actual amount of a contingent payment differs
from its projected amount, and (b) reduced by the projected amounts of any
contingent payments and the actual amounts of any noncontingent payments
(including payments of interest) received with respect to the Junior
Subordinated Debentures. Based on the Company's belief (described in "--
Interest Received on the QUIPS," above) that the taxable income from the Junior
Subordinated Debentures will not exceed cash payments of interest, the Company
believes that the adjusted tax basis of a holder in the QUIPS as of the end of
each quarter ending on or before the Call Option Expiration Date will not be
greater than the initial tax basis.
CONTRACT FEES
The holders of Units may be required to pay Contract Fees to the Company,
or the Company may be required to pay Contract Fees to the holders of the Units,
as specified in the final Prospectus for the offering made hereby.
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<PAGE> 66
There is no authority for the tax treatment of the Contract Fees under
current law. In the event that the Company is required to pay Contract Fees to
holders, the Company intends to file information returns on the basis that the
Contract Fees are ordinary income to holders for the taxable year of receipt.
Because any Contract Fees received by a holder will not constitute dividends for
United States federal income tax purposes, corporate holders will not be
entitled to a dividends-received deduction as a result of receiving such fees.
Holders should consult their own tax advisors concerning the treatment of the
Contract Fees, including the possibility that the Contract Fees may not be
treated as current income to holders, but would instead reduce a holder's basis
in the Common Stock received upon exercise of the Purchase Contracts, by analogy
to the treatment of rebates. In the event the Company is required to pay
Contract Fees to holders, the Company does not intend to deduct the Contract
Fees, because it views them as a cost of issuing the Common Stock. Contract Fees
received by a regulated investment company should be treated as income derived
with respect to such company's business of investing in stock and securities.
In the event that holders are required to pay Contract Fees to the Company,
it is unlikely that holders will be entitled to a current deduction in respect
of such payments. As a result, although the amount of cash distributions made to
holders in respect of the QUIPS will be reduced by the amount of Contract Fees
payable to the Company, holders will nevertheless recognize ordinary income each
quarter equal to the full amount of OID accrued, subject to the adjustments
described in "-- Interest Received on the QUIPS," above, without a corresponding
deduction for payment of the Contract Fees. Payment of the Contract Fees by
holders will, however, effectively increase the basis of the Common Stock
received under the Purchase Contract. See "-- Purchase of Common Stock under the
Purchase Contract," below.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES UPON LIQUIDATION OF THE TRUST
If the Company were to exercise its right to liquidate the Trust and cause
the Junior Subordinated Debentures to be distributed, on a pro rata basis, to
holders of QUIPS (or to the Collateral Agent on behalf of such holders), such
distribution, under current law, would not be taxable to such holders and each
holder's aggregate tax basis in the Junior Subordinated Debentures would be
equal to such holder's aggregate tax basis in the QUIPS. A holder's holding
period for the Junior Subordinated Debentures would include the period during
which the QUIPS were held by such holder.
EXERCISE OF THE CALL OPTION AND OWNERSHIP OF TREASURY SECURITIES
Exercise of the Call Option will be a taxable event to holders of the
Units. As a result, holders will recognize gain or loss equal to the difference
between the amount realized from exercise of the Call Option and their adjusted
tax basis in the QUIPS. The amount treated as the amount realized from exercise
of the Call Option will equal the aggregate of the Call Premium and the fair
market value of the Treasury Securities received. Based on the Company's belief
that a holder's adjusted tax basis in the QUIPS on the Call Option Expiration
Date will not be greater than the initial tax basis (see "-- Adjusted Tax Basis
of QUIPS," above), it is expected that the holder will not realize loss (and may
realize some gain) on the exercise of the Call Option. The rules that govern
determination of the character of gain or loss on sale of the QUIPS (including
pursuant to the exercise of the Call Option) are summarized under "-- Sale or
Disposition of Units," below.
A holder's basis in the Treasury Securities received as a result of the
exercise of the Call Option will be equal to the fair market value of such
Treasury Securities, determined as of the Call Settlement Date. Except to the
extent the Treasury Securities are "stripped" Treasury securities ("Stripped
Treasury Securities"), the treatment of which is discussed in the immediately
succeeding paragraph, (a) interest with respect to a holder's portion of the
Treasury Securities will be taxable as ordinary income to such holder as it is
received or accrued, in accordance with such holder's normal method of
accounting for United States federal income tax purposes, and (b) any gain
realized by a holder at maturity of the Treasury Securities will generally be
treated as capital
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gain, unless the Treasury Securities are considered to have more than a "de
minimis" amount of market discount.
A holder will be required to treat a Stripped Treasury Security received by
such holder as a bond that was originally issued on the date received by such
holder. Stripped Treasury Securities (other than Stripped Treasury Securities
with a remaining term of one year or less) will be considered to have OID in an
amount equal to the difference between the amount payable on such security and
the holder's initial basis in such security (determined as described in the
immediately preceding paragraph). As a result, a holder who receives a Stripped
Treasury Security (other than a Stripped Treasury Security with a remaining term
of one year or less) will be required to include OID in income as ordinary
income over the remaining term of such security and will increase its basis in
the Stripped Treasury Security by the amount of OID included in income with
respect to such security.
Stripped Treasury Securities with a remaining term of one year or less
("Short-term Stripped Treasury Securities") generally should be considered to
have "acquisition discount" in an amount equal to the difference between the
principal amount of the Short-term Stripped Treasury Security and the taxpayer's
basis in the Short-term Stripped Treasury Security. A holder (other than a
holder on the accrual method of accounting or a holder who elects to accrue such
acquisition discount into income over the remaining term of the Short-term
Stripped Treasury Security) generally will recognize ordinary income upon
maturity of the Short-term Stripped Treasury Security equal to the amount of
such acquisition discount.
SALE OR DISPOSITION OF UNITS
A holder will generally recognize gain or loss upon the sale or other
disposition of Units. Such gain or loss will be separately calculated with
respect to the QUIPS or Treasury Securities, as the case may be, and the related
Purchase Contract composing such Units by allocating the sum of any cash and the
fair market value of any property received between the two components in
proportion to their respective fair market values. (For this purpose, and for
purposes of the remainder of this discussion of the consequences of sale or
disposition of Units, reference to the QUIPS includes reference to the undivided
beneficial interest in the Junior Subordinated Debentures represented by the
QUIPS or the Junior Subordinated Debentures received by holders in the event of
a liquidation of the Trust.) The amount considered to be received by a holder
with respect to the sale of the QUIPS will include the value of the assumption
of the holder's obligations under the Call Option, which, in the absence of any
means of independent valuation, will likely be deemed to equal the amount of the
Call Premium previously received by such holder. See "-- Treatment of the Call
Premium," above.
The amount of gain or loss with respect to each component will equal the
difference between the consideration so allocated to each component (reduced, in
the case of certain Treasury Securities, by any amount attributable to accrued
but unpaid interest, which will be taxable as ordinary income) and the holder's
adjusted tax basis in the respective components. Except in the case of gain or
loss with respect to QUIPS, such gain or loss will be capital gain or loss.
The rules for determining the character of gain or loss on a sale or
disposition of QUIPS depend on whether such sale or disposition occurs prior to
the Call Option Expiration Date. If such sale or disposition occurs prior to the
Call Option Expiration Date, any gain recognized will be ordinary interest
income. Any loss will be ordinary to the extent of prior interest inclusions
with respect to the QUIPS. If, however, such sale or disposition occurs on or
after the Call Option Expiration Date, any gain recognized will be treated as
ordinary interest income to the extent of any positive adjustments that have not
yet been accrued and included in income by the holder. Any loss, and any gain in
excess of positive adjustments that have not yet been accrued and included in
income, recognized on such a sale or disposition will be treated as capital gain
or loss.
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SALE OR RETIREMENT OF QUIPS
If the Call Option is not exercised by the Call Option Holder, a holder
will recognize gain or loss on the sale or retirement of the QUIPS (including a
sale pursuant to the exercise of a Junior Subordinated Debentures Put Option) in
an amount equal to the difference between the amount realized on the sale or
retirement of the QUIPS and the holder's adjusted tax basis in the QUIPS at such
time. Any gain recognized will be treated as ordinary interest income to the
extent of any positive adjustments that have not yet been accrued and included
in income by the holder. Any loss, and any gain in excess of positive
adjustments that have not yet been accrued and included in income, recognized on
such a disposition will be treated as capital gain or loss.
PURCHASE OF COMMON STOCK UNDER THE PURCHASE CONTRACT
Assuming that the initial basis of the Purchase Contract will be zero (see
"Initial Tax Basis of QUIPS" above), the tax basis of the Common Stock acquired
under a Purchase Contract will equal the amount of cash paid to purchase such
Common Stock (including cash applied by the Collateral Agent upon maturity of
the Treasury Securities), increased by the amount of any Contract Fees paid by
the holder (as discussed above under "-- Contract Fees") and decreased by (a)
the amount of any Contract Fees received by the holder and not previously
included in income and (b) the amount of any cash received in lieu of fractional
shares of Common Stock. A holder will recognize capital gain or loss upon
receipt of cash in lieu of fractional shares of Common Stock equal to the
difference between the amount of cash received and the holder's basis in such
fractional shares. A holder's holding period in the Common Stock purchased
pursuant to the Purchase Contract will begin on the day after the purchase of
such Common Stock.
OWNERSHIP OF COMMON STOCK ACQUIRED UNDER THE PURCHASE CONTRACT
Assuming that the Company has current or accumulated earnings and profits
at least equal to the amount of the dividends, a holder will include a dividend
on the Common Stock in income when paid, and the dividend will be eligible for
the dividends-received deduction if received by an otherwise qualifying
corporate holder which meets the holding period and other requirements for such
deduction.
Upon the sale, exchange or other disposition of Common Stock, the holder
will recognize gain or loss equal to the difference between the holder's tax
basis in the Common Stock and the amount realized on the disposition. The gain
or loss will be capital gain or loss.
ADJUSTMENT OF SETTLEMENT RATE
Holders of Units might be treated as receiving a constructive distribution
from the Company if (a) the Settlement Rate is adjusted and, as a result of such
adjustment, the proportionate interest of holders of Units in the assets or
earnings and profits of the Company is increased, and (b) the adjustment is not
made pursuant to a reasonable antidilution formula. An adjustment in the
Settlement Rate would not be considered made pursuant to such a formula if the
adjustment were made to compensate for certain taxable distributions with
respect to Common Stock. Thus, under certain circumstances, an increase in the
Settlement Rate is likely to be taxable to holders of Units as a dividend to the
extent of the current or accumulated earnings and profits of the Company.
Holders of Units would be required to include their allocable share of such
constructive dividends in gross income but would not receive any cash related
thereto.
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UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, (a) the
Company has agreed to enter into the Purchase Contracts with each of the
Underwriters named below (the "Underwriters") underlying the respective number
of Units set forth opposite its name below, (b) the Company and the Trust have
agreed to sell to each of the Underwriters the QUIPS underlying the respective
number of Units set forth opposite its name below, and (c) each of such
Underwriters, for whom Goldman, Sachs & Co. and Salomon Brothers Inc. are acting
as representatives, has severally agreed to enter into such Purchase Contracts
with the Company, purchase such QUIPS from the Company and the Trust, pledge
under the Pledge Agreement such QUIPS and sell (on behalf of the initial
investors in the Units) to the Call Option Holder the Call Options with respect
to such Units:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF UNITS
----------- ---------------
<S> <C>
Goldman, Sachs & Co. .......................................
--------
Salomon Brothers Inc .......................................
--------
Total.............................................
========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to enter into Purchase Contracts, purchase and pledge
QUIPS and sell Call Options with respect to all of the Units offered hereby, if
any Purchase Contracts are entered into, QUIPS are taken and Call Options sold.
The Underwriters propose to offer the Units in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of $ per Unit. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per Unit to certain
brokers and dealers. After the Units are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
representatives.
The Company and the Trust have granted the Underwriters an option
exercisable for 30 days after the date of this Prospectus to enter into Purchase
Contracts and purchase QUIPS underlying up to an aggregate of
additional Units solely to cover over-allotments, if any. If Purchase Contracts
underlying any such additional Units are entered into and QUIPS are purchased,
the Underwriters would pledge under the Pledge Agreement such QUIPS and would
sell to the Call Option Holder the Call Options underlying such Units. If the
Underwriters exercise their over-allotment option, each of the Underwriters has
severally agreed, subject to certain conditions, to effect the foregoing
transactions with respect to approximately the same percentage of such Units
that the respective number of Units set forth opposite its name in the foregoing
table bears to the Units offered hereby.
The Company has agreed, subject to certain exceptions, that during the
period beginning from the date of this Prospectus and continuing to and
including the date 180 days after the date of this Prospectus, it will not
offer, sell, contract to sell or otherwise dispose of any Units, QUIPS or Common
Stock (other than pursuant to employee stock option or purchase plans existing,
or on the conversion or exchange of convertible or exchangeable securities
outstanding, on the date of this Prospectus Supplement) or any securities of the
Company which are substantially similar to the Common Stock, or which are
convertible into or exchangeable for, or otherwise represent the right to
receive, Common Stock or any such other similar securities, without the prior
written consent of the representatives.
The Units will be a new issue of securities with no established trading
market. Application will be made to list the Normal Units on the NYSE. The
Underwriters have advised the Company that they intend to make a market in the
Normal Units, but they are not obligated to do so and may
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discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Units.
In connection with the Offering, the Underwriters may purchase and sell the
Units or Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created by the Underwriters in connection with the Offering.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the Units or Common
Stock, as applicable; and short positions created by the Underwriters involve
the sale by the Underwriters of a greater number of Units than they are required
to purchase from the Company and the Trust in the Offering. The Underwriters
also may impose a penalty bid, whereby selling concessions allowed to
broker-dealers in respect of the Units sold in the Offering may be reclaimed by
the Underwriters if such Units are repurchased by the Underwriters in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Units or the Common Stock, which may
be higher than the price that might otherwise prevail in the open market, and
these activities, if commenced, may be discontinued at any time. These
transactions may be effected on the NYSE, in the over-the-counter market or
otherwise.
The Company and the Trust have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933.
VALIDITY OF THE SECURITIES
The validity of the QUIPS, the Purchase Contracts, the Common Stock
issuable upon settlement thereof, the Junior Subordinated Debentures and the
Guarantee being offered hereby will be passed upon for the Company by Sidley &
Austin, Chicago, Illinois and for the Trust by Morris, James, Hitchens &
Williams of Delaware. The validity of the Purchase Contracts, the Common Stock
issuable upon settlement thereof, the Junior Subordinated Debentures and the
Guarantee being offered hereby will be passed upon for the Underwriters by
Sullivan & Cromwell, New York, New York. Certain matters relating to United
States Federal income considerations will be passed upon for the Company by
Sidley & Austin, special tax counsel to the Company, and by Sullivan & Cromwell,
special tax counsel to the Underwriters. Sidley & Austin and Sullivan & Cromwell
will rely on the opinion of Joseph K. Haggerty, Esq., Senior Vice President and
General Counsel of the Company, as to matters of Iowa law.
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<PAGE> 71
INDEX OF DEFINED TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and the pages on which the definition of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Additional Sums............................................. S-
Administrators.............................................. S-
Aggregate Call Option Exercise Consideration Deliverable on
Exercise of the Call Options.............................. S-
Aggregate Effective Call Option Exercise Price.............. S-
Applicable Market Value..................................... S-
Bank Debt................................................... S-
Business Day................................................ S-
Call Option................................................. S-
Call Option Agreement....................................... S-
Call Option Expiration Date................................. S-
Call Option Holder.......................................... S-
Call Premium................................................ S-
Call Settlement Date........................................ S-
Closed Block................................................ S-
Closing Price............................................... S-
Code........................................................ S-
Collateral Agent............................................ S-
Common Trust Securities..................................... S-
Company..................................................... S-
Comparable Yield............................................ S-
Contract Fee Rate........................................... S-
Contract Fees............................................... S-
Current Market Price........................................ S-
Debenture Event of Default.................................. S-
Debenture Trustee........................................... S-
Declaration................................................. S-
Deferral Rate............................................... S-
Delaware Trustee............................................ S-
Depositary.................................................. S-
Direct Action............................................... S-
Direct Participants......................................... S-
Distribution Date........................................... S-
Distributions............................................... S-
Exchange Act................................................ S-
Extension Period............................................ S-
Final Redemption Price...................................... S-
Global Security Certificates................................ S-
Guarantee................................................... S-
Guarantee Payments.......................................... S-
Guarantee Trustee........................................... S-
Indenture................................................... S-
Indirect Participants....................................... S-
Interest Payment Date....................................... S-
Investment Company Act...................................... S-
IRS......................................................... S-
Issuer Trustees............................................. S-
Issuers..................................................... S-
Junior Subordinated Debenture Put Option.................... S-
Junior Subordinated Debentures.............................. S-
</TABLE>
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<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Like Amount................................................. S-
Liquidation Distribution.................................... S-
Master Unit Agreement....................................... S-
Normal Unit................................................. S-
Notes Offering.............................................. S-
NYSE........................................................ S-
Offerings................................................... S-
OID......................................................... S-
Participants................................................ S-
Paying Agent................................................ S-
Payments on the Units....................................... S-
Pledge Agreement............................................ S-
Pledged Securities.......................................... S-
Principal Agreements........................................ S-
Property Account............................................ S-
Property Trustee............................................ S-
Prospectus.................................................. S-
Purchase Contract........................................... S-
Purchase Price.............................................. S-
Put Agent................................................... S-
Put Price................................................... S-
Quarterly Payment Dates..................................... S-
QUIPS....................................................... S-
QUIPS and Debenture Maturity Date........................... S-
QUIPS and Debenture Rate.................................... S-
QUIPS Distribution Date..................................... S-
QUIPS Distribution Rate..................................... S-
QUIPS Liquidation Agent..................................... S-
Rate Increase Agent......................................... S-
Refinancing Plan............................................ S-
Securities Offered.......................................... S-
Senior Indebtedness......................................... S-
Settlement.................................................. S-
Settlement Rate............................................. S-
Short-term Stripped Treasury Securities..................... S-
Sponsor..................................................... S-
Stated Amount............................................... S-
Stock Purchase Date......................................... S-
Stripped Treasury Securities................................ S-
Stripped Units.............................................. S-
Successor Securities........................................ S-
Termination................................................. S-
Threshold Appreciation Price................................ S-
Trading Day................................................. S-
Treasury Securities......................................... S-
Trust....................................................... S-
Trust Indenture Act......................................... S-
Trust Securities............................................ S-
Underwriters................................................ S-
Unit Agent.................................................. S-
Units....................................................... S-
Units Offering.............................................. S-
UST Value................................................... S-
Yield to Maturity........................................... S-
</TABLE>
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<PAGE> 73
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 4, 1998
PROSPECTUS
$750,000,000
AMERUS LIFE HOLDINGS, INC.
DEBT SECURITIES, PREFERRED STOCK, CLASS A COMMON STOCK, PURCHASE CONTRACTS,
UNITS AND WARRANTS
AMERUS CAPITAL II
AMERUS CAPITAL III
CAPITAL SECURITIES FULLY AND UNCONDITIONALLY GUARANTEED
BY AMERUS LIFE HOLDINGS, INC. AND UNITS
------------------
AmerUs Life Holdings, Inc., an Iowa corporation (the "Company"), may offer
and sell from time to time, in one or more series, (i) its debt securities,
consisting of debentures, notes and/or other evidences of indebtedness
representing unsecured obligations of the Company (the "Debt Securities"), (ii)
shares of its preferred stock, no par value per share ("Preferred Stock"), (iii)
shares of its Class A Common Stock, no par value per share ("Class A Common
Stock"), (iv) Purchase Contracts ("Purchase Contracts") to purchase shares of
Class A Common Stock, (v) Units, each representing ownership of a Purchase
Contract and Capital Securities (as defined herein) or debt obligations of third
parties, including U.S. Treasury securities, securing the holder's obligation to
purchase Class A Common Stock under the Purchase Contracts ("Units"), including
but not limited to, Adjustable Conversion-rate Equity Security Units and (vi)
warrants to purchase Debt Securities, Preferred Stock, Class A Common Stock or
other securities or rights ("Warrants").
AmerUs Capital II and AmerUs Capital III (each, an "AmerUs Trust"),
statutory business trusts formed under the laws of the State of Delaware, may
offer, from time to time, Capital Securities, representing preferred undivided
beneficial interests in the assets of the respective AmerUs Trusts ("Capital
Securities"). The payment of periodic cash distributions ("Distributions") with
respect to Capital Securities out of moneys held by each of the AmerUs Trusts,
and payments on liquidation, redemption or otherwise with respect to such
Capital Securities, will be guaranteed by the Company to the extent described
herein (each, a "Guarantee"). See "Description of Capital Securities of the
AmerUs Trusts" and "Description of Guarantees." The Company's obligations under
the Guarantees will rank junior and subordinate in right of payment to the
Senior Indebtedness (as defined herein) of the Company. See "Description of
Guarantees -- Status of the Guarantees." Junior subordinated debt ("Junior
Subordinated Debt") may be issued and sold by the Company in one or more series
to an AmerUs Trust or a trustee of such AmerUs Trust in connection with the
investment of the proceeds from the offering of Capital Securities and Common
Securities (as defined herein) of such AmerUs Trust. The Junior Subordinated
Debt purchased by an AmerUs Trust may be subsequently distributed pro rata to
holders of Capital Securities and Common Securities in connection with the
dissolution of such AmerUs Trust. The Junior Subordinated Debt will rank junior
and subordinate in right of payment to the Senior Indebtedness of the Company.
The Debt Securities, Preferred Stock, Class A Common Stock, Purchase Contracts,
Units, Warrants and Capital Securities are herein collectively referred to as
the "Securities."
Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying supplement to
this Prospectus (the "Prospectus Supplement"), which will describe, without
limitation and where applicable, the following: (i) in the case of Debt
Securities, the specific designation, aggregate principal amount, ranking as
senior or subordinated Debt Securities, denomination, maturity, premium, if any,
interest rate (which may be fixed or variable), time and method of calculating
interest, if any, place or places where principal of, premium, if any, and
interest, if any, on such Debt Securities will be payable, the currencies or
currency units in which principal of, premium, if any, and interest, if any, on
such Debt Securities will be payable, any terms of redemption or conversion, any
sinking fund provisions, the purchase price, any listing on a securities
exchange, any right of the Company to defer payment of interest on the Junior
Subordinated Debt and the maximum length of such deferral period, the method of
distribution and other special terms; (ii) in the case of Preferred Stock, the
specific designation, stated value and liquidation preference per share and
number of shares offered, the initial public offering or purchase price,
dividend rate (which may be fixed or variable), method of calculating payment of
dividends, place or places where dividends on such Preferred Stock will be
payable, any terms of redemption, dates on which dividends shall be payable and
dates from which dividends shall accrue, any listing on a securities exchange,
voting and other rights, including conversion or exchange rights, if any, the
method of distribution, and other special terms; (iii) in the case of Class A
Common Stock, the number of shares offered, the initial offering price, market
price and dividend information and the method of distribution; (iv) in the case
of Purchase Contracts, the number of shares of Class A Common Stock issuable
thereunder, the purchase price of the Class A Common Stock, the date or dates on
which the Class A Common Stock is required to be purchased by the holders of the
Purchase Contracts, any periodic payments or contract fees required to be paid
by the Company to the holders of the Purchase Contracts or vice versa, and the
terms of the offering and sale thereof; (v) in the case of Units, the specific
terms of the Purchase Contracts and any Capital Securities or debt obligations
of third parties held by a holder securing such holder's obligation to purchase
the Class A Common Stock under the Purchase Contracts, and the terms of the
offering and sale thereof; (vi) in the case of Warrants, the specific
designation, the number, purchase price, exercise price and other terms thereof,
any listing of the Warrants or the underlying Securities on a securities
exchange or any other terms in connection with the offering, sale and exercise
of the Warrants, as well as the terms on which and the Securities for which such
Warrants may be exercised; and (vii) in the case of Capital Securities, the
specific designation, number of securities, liquidation amount per security, the
purchase price, any listing on a securities exchange, distribution rate (or
method of calculation thereof), dates on which distributions shall be payable
and dates from which distributions shall accrue, any voting rights, terms for
any conversion or exchange into other securities, any redemption, exchange or
sinking fund provisions, any rights of the applicable Trust to defer payment of
interest on the Capital Securities and the maximum length of such deferral, any
other rights, preferences, privileges, limitations or restrictions relating to
the Capital Securities, the specific terms and provisions of the applicable
Guarantee and the terms upon which the proceeds of the sale of the Capital
Securities shall be used to purchase a specific series of Junior Subordinated
Debt of the Company.
The offering price to the public of the Securities will be limited to U.S.
$750,000,000 in the aggregate (or its equivalent (based on the applicable
exchange rate at the time of issue), if Securities are offered for consideration
denominated in one or more foreign currencies, currency units or composite
currencies as shall be designated by the Company and indicated in the applicable
Prospectus Supplement). The Debt Securities may be denominated in United States
dollars or, at the option of the Company if so specified in the applicable
Prospectus Supplement, in one or more foreign currencies or currency units. The
Debt Securities may be issued in registered form or bearer form, or both. If so
specified in the applicable Prospectus Supplement, Securities of one or more
classes or series may be issued in whole or in part in the form of one or more
temporary or permanent global securities.
The Class A Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "AMH."
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN ANY OF THE SECURITIES OFFERED HEREBY.
The Securities may be sold to or through underwriters, dealers or agents or
directly to purchasers, to AmerUs Group Co., the Company's parent (the "AmerUs
Group") or through a combination of such methods. See "Plan of Distribution."
The names of any underwriters, dealers or agents involved in the sale of the
Securities in respect of which this Prospectus is being delivered and any
applicable fee, commission or discount arrangements will be set forth in a
Prospectus Supplement. See "Plan of Distribution" for possible indemnification
arrangements for dealers, underwriters and agents.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE> 74
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE IOWA
COMMISSIONER OF INSURANCE NOR HAS THE IOWA COMMISSIONER OF INSURANCE RULED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
-------------------------
THE COMPANY IS AN INDIRECT SUBSIDIARY OF AMERICAN MUTUAL HOLDING COMPANY,
AN IOWA MUTUAL INSURANCE HOLDING COMPANY ("AMHC"). IOWA LAW REQUIRES THAT AMHC
AT ALL TIMES OWN DIRECTLY, OR INDIRECTLY THROUGH ONE OR MORE INTERMEDIATE
HOLDING COMPANY SUBSIDIARIES, SHARES OF CAPITAL STOCK OF AMERUS LIFE INSURANCE
COMPANY ("AMERUS LIFE") WHICH CARRY THE RIGHT TO CAST A MAJORITY OF THE VOTES
ENTITLED TO BE CAST BY ALL OF THE OUTSTANDING SHARES OF AMERUS LIFE'S CAPITAL
STOCK. ANY ATTEMPT TO EFFECT ANY TRANSACTION PURSUANT TO WHICH AMHC WOULD NO
LONGER HAVE SUCH VOTING MAJORITY WOULD BE NULL AND VOID AND INEFFECTUAL TO
TRANSFER SUCH VOTING RIGHTS.
-------------------------
THE IOWA INSURANCE HOLDING COMPANY SYSTEMS STATUTE APPLICABLE TO THE
COMPANY PROVIDES THAT NO PERSON MAY SEEK TO ACQUIRE CONTROL OF THE COMPANY, AND
THUS INDIRECT CONTROL OF AMERUS LIFE, WITHOUT THE PRIOR APPROVAL OF THE IOWA
COMMISSIONER OF INSURANCE. GENERALLY, ANY PERSON WHO DIRECTLY OR INDIRECTLY
OWNS, CONTROLS, HOLDS WITH POWER TO VOTE OR HOLDS PROXIES REPRESENTING 10% OR
MORE OF THE COMPANY'S VOTING SECURITIES (CONSISTING OF THE COMBINED OUTSTANDING
SHARES OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK) WOULD BE PRESUMED TO
HAVE ACQUIRED SUCH CONTROL, UNLESS SUCH PRESUMPTION IS REBUTTED BY A SHOWING
THAT SUCH CONTROL DOES NOT EXIST IN FACT.
-------------------------
FOR NORTH CAROLINA INVESTORS: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS SUCH
COMMISSIONER RULED UPON THE ACCURACY OR THE ADEQUACY OF THE PROSPECTUS.
-------------------------
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A SAFE HARBOR
FOR FORWARD-LOOKING STATEMENTS. A NUMBER OF MATTERS AND SUBJECT AREAS DISCUSSED
IN THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE AND IN THE SECTIONS OF THIS
PROSPECTUS ENTITLED "REORGANIZATION AND RECENT ACQUISITIONS," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION" AND
"BUSINESS" AND ELSEWHERE IN THIS PROSPECTUS AND THE APPLICABLE PROSPECTUS
SUPPLEMENT ARE NOT LIMITED TO HISTORICAL OR CURRENT FACTS AND DEAL WITH
POTENTIAL FUTURE CIRCUMSTANCES AND DEVELOPMENTS. FACTORS THAT MAY CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED OR PROJECTED IN SUCH
FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES:
(I) HEIGHTENED COMPETITION, INCLUDING THE ENTRY OF NEW COMPETITORS AND THE
DEVELOPMENT OF NEW PRODUCTS BY COMPETITORS; (II) ADVERSE STATE AND FEDERAL
LEGISLATION AND REGULATION, INCLUDING INCREASES IN MINIMUM CAPITAL AND RESERVES,
AND OTHER FINANCIAL VIABILITY REQUIREMENTS AND ADDITIONAL REGULATIONS OF MUTUAL
INSURANCE HOLDING COMPANIES; (III) FAILURE TO MAINTAIN EFFECTIVE DISTRIBUTION
CHANNELS IN ORDER TO OBTAIN NEW CUSTOMERS OR FAILURE TO RETAIN EXISTING
CUSTOMERS; (IV) INABILITY TO CARRY OUT MARKETING AND SALES PLANS, INCLUDING,
AMONG OTHERS, CHANGES TO CERTAIN PRODUCTS AND ACCEPTANCE OF THE REVISED PRODUCTS
IN THE MARKET; (V) LOSS OF
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KEY EXECUTIVES; (VI) CHANGES IN INTEREST RATES CAUSING A REDUCTION OF INVESTMENT
INCOME OR A REDUCTION IN DEMAND FOR CERTAIN OF THE COMPANY'S PRODUCTS; (VII)
GENERAL ECONOMIC AND BUSINESS CONDITIONS WHICH ARE LESS FAVORABLE THAN EXPECTED;
(VIII) UNANTICIPATED CHANGES IN INDUSTRY TRENDS; (IX) INACCURACIES IN
ASSUMPTIONS REGARDING FUTURE PERSISTENCY, MORTALITY AND INTEREST RATES USED IN
CALCULATING RESERVE AMOUNTS; (X) ADVERSE CHANGES IN RATINGS ASSIGNED BY RATING
AGENCIES; (XI) CHANGES IN TAX LAWS WHICH NEGATIVELY AFFECT DEMAND FOR THE
COMPANY'S PRODUCTS OR THE APPLICABILITY OF CERTAIN TAXES TO THE COMPANY
(INCLUDING 1998 TAX PROPOSALS OF THE CLINTON ADMINISTRATION RELATING TO
ANNUITIES); (XII) THE RISK FACTORS OR UNCERTAINTIES LISTED HEREIN OR LISTED FROM
TIME TO TIME IN ANY PROSPECTUS SUPPLEMENT OR ANY DOCUMENT INCORPORATED BY
REFERENCE HEREIN; AND (XIII) WITH RESPECT TO COST SAVINGS THAT ARE EXPECTED TO
BE REALIZED FROM, AND COSTS ASSOCIATED WITH, THE RECENT ACQUISITIONS OF DELTA
LIFE CORPORATION ("DELTA") AND AMVESTORS FINANCIAL CORPORATION ("AMVESTORS"),
THE FOLLOWING POSSIBILITIES: (A) THE ESTIMATED COST SAVINGS TO BE REALIZED
THROUGH COMBINING CERTAIN FUNCTIONS OF THE COMPANY, DELTA AND AMVESTORS TO
ELIMINATE REDUNDANCIES AND BETTER SERVE THE COMBINED BUSINESSES' CUSTOMERS, AND
REDUCTIONS IN STAFF CANNOT BE FULLY REALIZED BECAUSE THE CHANGES ARE NOT MADE OR
UNANTICIPATED ADDED COSTS ARE INCURRED; AND (B) COSTS OR DIFFICULTIES RELATED TO
THE INTEGRATION OF THE BUSINESSES OF DELTA AND AMVESTORS WITH THE COMPANY'S
OTHER BUSINESSES ARE GREATER THAN EXPECTED. A VARIETY OF FACTORS COULD CAUSE THE
COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EXPECTED RESULTS
EXPRESSED IN THE COMPANY'S FORWARD-LOOKING STATEMENTS, INCLUDING THOSE SET FORTH
IN THE RISK FACTORS AND ELSEWHERE IN THIS PROSPECTUS AND IN THE COMPANY'S OTHER
FILINGS WITH THE COMMISSION.
NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED
INCORPORATED BY REFERENCE HEREIN. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN
THE REGISTERED SECURITIES TO WHICH IT RELATES, OR AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THOSE SECURITIES TO WHICH IT RELATES, IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN
THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
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<PAGE> 76
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the regional offices of the Commission located
at: 7 World Trade Center, 13th Floor, New York, New York 10048; and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
the prescribed rates. In addition, the Commission maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants, including the Company, that file
electronically with the Commission. The Company's reports are also on file at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Company and the AmerUs Trusts have filed with the Commission a
Registration Statement on Form S-3 under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities offered hereby. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits thereto, certain parts of which are omitted in accordance with the
rules and regulations of the Commission. Statements contained herein or in any
Prospectus Supplement concerning the provisions of any document do not purport
to be complete and, in each instance, are qualified in all respects by reference
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. For further information with respect to
the Company, the AmerUs Trusts and the Securities, reference is hereby made to
such Registration Statement, including the exhibits thereto and the documents
incorporated therein by reference, which can be examined at the Commission's
principal office, 450 Fifth Street, N.W., Washington, D.C. 20549, or copies of
which can be obtained from the Commission at such office upon payment of the
fees prescribed by the Commission.
No separate financial statements of the AmerUs Trusts have been included or
incorporated by reference herein. The Company does not consider such financial
statements material to holders of the Capital Securities because the AmerUs
Trusts are newly formed special purpose entities, have no operating history or
independent operations and are not engaged in, and do not propose to engage in,
any activity other than their holding as trust assets the Junior Subordinated
Debt of the Company and their issuance of the Capital Securities and Common
Securities. See "The Company," "Description of the Capital Securities of the
AmerUs Trusts," "Description of Guarantees," "Description of Debt Securities"
and "Description of Purchase Contracts and Units." The AmerUs Trusts are
statutory business trusts formed under the laws of the State of Delaware. The
Company, as of the date hereof, beneficially owns all of the beneficial
interests in the Trust. The Company's and the AmerUs Trusts' principal executive
offices are located at 699 Walnut Street, Des Moines, Iowa 50309-3948, telephone
number (515) 362-3600.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by this reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
2. The description of the Company's Class A Common Stock contained in
the Registration Statement on Form 8-A filed by the Company with the
Commission on January 3, 1997, including any amendments or reports filed
for the purpose of updating such description;
3. The Company's report on Form 8-K filed on October 23, 1997, as
amended by Form 8-K/A filed January 6, 1998 reporting the acquisition of
Delta and certain related financial statements; and
4. The Company's report on Form 8-K filed on December 19, 1997, as
amended by Form 8-K/A filed on March 3, 1998 reporting the acquisition of
AmVestors and certain related financial statements;
5. Proxy Statement on Schedule 14A filed by the Company with the
Commission, dated April 13, 1998; and
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<PAGE> 77
6. Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this Prospectus or any Prospectus Supplement and to be part hereof
from the date of filing of such documents.
Any statement contained herein, or in a document all or a portion of which
is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement. To the extent
that any proxy statement is incorporated by reference herein, such incorporation
shall not include any information contained in such proxy statement that is not,
pursuant to the Commission's rules, deemed to be "filed" with the Commission or
subject to the liabilities of Section 18 of the Exchange Act.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents). Any such request should be directed to James A.
Smallenberger, Senior Vice President and Secretary, AmerUs Life Holdings, Inc.,
699 Walnut Street, Des Moines, Iowa 50309-3948 (telephone number (515)
362-3600).
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<PAGE> 78
THE COMPANY
GENERAL
The Company is an insurance holding company engaged through its
subsidiaries in the business of marketing, underwriting and distributing a broad
range of individual life insurance and annuity products to individuals and
businesses in 49 states, the District of Columbia and the U.S. Virgin Islands.
The Company's primary product offerings consist of whole life, universal life
and term life insurance policies and fixed annuities. In addition, through a
joint venture (the "Ameritas Joint Venture") with Ameritas Life Insurance Corp.
("Ameritas"), the Company's subsidiary, AmerUs Life Insurance Company ("AmerUs
Life"), markets fixed annuities issued by Ameritas Variable Life Insurance
Company ("AVLIC") and sells AVLIC's variable life insurance and variable annuity
products. As of December 31, 1997, the Company had approximately 573,000 life
insurance policies and annuity contracts outstanding and individual life
insurance in force, net of reinsurance, of approximately $26.7 billion with life
insurance reserves of $2.4 billion and annuity reserves of $6.1 billion. As of
December 31, 1997, the Company had total assets of $10.3 billion and total
shareholders' equity of $928.0 million.
The Company was formed in 1996 as a result of the creation of American
Mutual Holding Company ("AMHC") the first mutual insurance holding company in
the United States. AMHC owns 100% of AmerUs Group Co. ("AmerUs Group"), the
Company's controlling shareholder. The Company's principal subsidiaries are
AmerUs Life, Delta Life Corporation ("Delta") and AmVestors Financial
Corporation ("AmVestors"). AmerUs Life was originally incorporated in 1896 as a
mutual life insurance company.
AmerUs Life's target customers are individuals in the middle and upper
income brackets and small businesses. Its geographic focus is national in scope
(except for Connecticut, Maine, New Hampshire, New York and Vermont, in which
AmerUs Life is not licensed to do business), and it primarily serves suburban
and rural areas. Efforts are currently underway to expand AmerUs Life's
territory into the states of Connecticut, Maine, New Hampshire and Vermont.
AmerUs Life distributes its products primarily through a combination of career
general agency and personal producing general agency ("PPGA") distribution
systems, as well as a network of independent brokers. The career general agency
system consists of a network of 35 career general agencies, with approximately
570 career agents. The PPGA system is comprised of approximately 425 PPGA's, who
have approximately 1,100 agents. As of December 31, 1997, AmerUs Life had
approximately 408,000 life insurance policies and annuity contracts outstanding
and individual life insurance in force, net of reinsurance, of approximately
$26.6 billion. Variable life insurance products and the fixed and variable
annuities offered by the Ameritas Joint Venture are marketed through AmerUs
Life's distribution systems and the distribution systems of Ameritas and AVLIC,
which consist of approximately 160 agents and 540 independent broker-dealers
(with approximately 9,000 registered representatives), respectively.
The Company made two major acquisitions in 1997. The Company acquired Delta
on October 23 for approximately $165 million in cash (the "Delta Acquisition")
and AmVestors on December 19 in a stock exchange valued at approximately $350
million (the "AmVestors Acquisition"). These acquisitions, along with the growth
of AmerUs Life, increased the Company's assets from $4.4 billion at December 31,
1996 to $10.3 billion at December 31, 1997.
The principal asset of Delta is its wholly-owned subsidiary, Delta Life and
Annuity Company ("Delta Life"), an Iowa domiciled life insurance company. Delta
Life is licensed in the District of Columbia and in all states except New York,
and specializes in the sale of individual single and flexible premium deferred
annuities, primarily in the southeastern, western, southwestern and midwestern
regions of the United States. Sales are made primarily through a network of over
3,300 independent agents. Delta Life's strategy is to structure its fixed
annuity products to appeal to the conservative retirement saver who is seeking
principal preservation and consistency of earnings. Most of Delta Life's
products are innovative in that they incorporate a fixed contractual management
fee. Approximately 58% of Delta's 1997 direct collected premiums were derived
from retirement-oriented tax-qualified annuities. As of December 31, 1997, Delta
Life had approximately 52,000 annuity contracts outstanding.
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<PAGE> 79
AmVestors' principal operating subsidiaries are American Investors Life
Insurance Company, Inc. ("American"), a Kansas domiciled life insurance company
licensed in 48 states and the District of Columbia, and Financial Benefit Life
Insurance Company ("FBL"), a Kansas domiciled life insurance company doing
business in 40 states, the District of Columbia and the U.S. Virgin Islands.
AmVestors specializes in the sale of annuity products, further strengthening the
Company's presence in the rapidly growing asset accumulation and retirement and
savings markets. AmVestors utilizes product features intended to enhance the
potential for profit by encouraging persistency and reducing premature
withdrawal during the first five to fourteen years of an annuity contract.
AmVestors distributes its products through a national network of approximately
7,800 licensed independent agents recruited through its wholly-owned
subsidiaries as well as through almost 60 independent marketing organizations.
As of December 31, 1997, AmVestors had approximately 104,000 annuity contracts
outstanding.
The Company's principal executive offices are located at 699 Walnut Street,
Des Moines, Iowa 50309-3948; telephone (515) 362-3600.
BUSINESS STRATEGY
The business strategy of the Company is to focus on providing individual
retail consumers in the United States with superior financial services and
products that will meet their financial planning, risk protection, and asset
accumulation needs. Target markets of the Company include individuals in the
middle and upper income brackets and small businesses. Its geographic focus is
national in scope (except for New York, in which the Company is not licensed to
do business), and it primarily serves suburban and rural areas.
The Company seeks to effect this strategy by focusing on life insurance and
asset accumulation products distributed through a variety of distribution
systems. In particular, the Company has developed a very strong position in the
distribution of fixed annuities through independent agents and has a long
established reputation as a provider of whole life insurance products,
distributed through career and PPGA agency distribution systems, that are among
the most attractively priced products to consumers in the industry.
The Company's strategy emphasizes effective management of certain operating
fundamentals -- mortality, expenses, persistency and investment results -- where
the Company's results have historically compared favorably to the industry. The
Company's operating strengths have enabled it to provide attractively priced
products to consumers while also generating profitability for its shareholders.
Growth through a combination of internal growth, mergers and acquisitions
and strategic alliances is a key element of the Company's strategy. In the life
insurance market, the Company presently has less than one half of one percent of
new life insurance sales nationwide, which provides substantial opportunity for
increased growth through improved marketing and sales execution even in a
generally flat business environment.
In the fixed annuity area, the Company is presently a leader in the
distribution of fixed annuities through independent agents. Independent agents
have increased their share of fixed annuity sales in recent years and the
Company's goal is to consistently rank among the top 3 to 5 providers in this
segment.
The Company continues to seek to both deepen and diversify its distribution
channels. Primarily as a result of the acquisitions of AmVestors and Delta, the
Company's distribution channels have grown significantly in recent years. As of
December 31, 1997, the Company had over 15,000 distributors as compared to
approximately 3,700 distributors as of December 31, 1996. While continuing to
expand its existing channels, the Company is in the process of developing
additional bank and major independent marketing organization distribution
channels.
CONTROLLING SHAREHOLDER
AMHC is the indirect controlling shareholder of the Company through its
ownership of AmerUs Group. As of March 31, 1998 AmerUs Group owned all 5,000,000
of the outstanding shares of Class B Common Stock and 12,380,300 of the
outstanding shares of Class A Common Stock, representing approximately 50.04% of
the combined voting power of the Class A Common Stock and Class B Common Stock.
AMHC acquired its ownership interest in the Company as a result of the
reorganization, pursuant to which American
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<PAGE> 80
Mutual Life formed AMHC as a mutual insurance holding company and American
Mutual Life was converted into a stock life insurance company as a wholly owned
subsidiary of AMHC (the "Reorganization"). See "Reorganization and Recent
Acquisitions -- Background and Description of the Reorganization."
THE AMERUS TRUSTS
Each AmerUs Trust is a statutory business trust formed under Delaware law
pursuant to (i) a separate declaration of trust (each a "Trust Agreement")
executed by the Company, as sponsor (the "Sponsor"), and certain trustees of
such trust (the "Issuer Trustees") and (ii) the filing of a certificate of trust
with the Secretary of State of the State of Delaware. Each such declaration of
trust will be amended and restated in its entirety (as so amended and restated,
the "Declaration") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, as of the date the
Capital Securities of such AmerUs Trust are initially issued. Each Declaration
will be qualified as an indenture under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Each AmerUs Trust exists for the exclusive
purposes of (i) issuing and selling the Capital Securities and the Common
Securities representing undivided beneficial interests in the assets of such
AmerUs Trust, (ii) investing the proceeds of the sale of the Capital Securities
and the Common Securities in certain Junior Subordinated Debt (as defined
herein), and (iii) engaging in only those other activities necessary or
incidental thereto.
All of the Common Securities of each AmerUs Trust will be owned directly or
indirectly by the Company. The Common Securities will rank pari passu in right
of payment, and payments will be made thereon pro rata, with the Capital
Securities, except that upon the occurrence and continuance of an Event of
Default under the Declarations (as defined therein) resulting from an Event of
Default (as defined in the Indenture (as defined herein)), the rights of the
Company as holder of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Capital Securities. See
"Description of the Capital Securities of the AmerUs Trusts." The Company will
acquire Common Securities in an aggregate liquidation amount equal to
approximately 3% of the total capital of each AmerUs Trust.
Unless otherwise specified in the applicable Prospectus Supplement, each
AmerUs Trust has a term of approximately 55 years, but may terminate earlier as
provided in its Declaration. The Trust's business and affairs will be conducted
by the Issuer Trustees and Administrators appointed by the Company as the holder
of the Common Securities of each AmerUs Trust. The Issuer Trustees will be First
Union National Bank ("First Union Bank") and First Union Trust Company, National
Association ("First Union Trust"), First Union Bank, as the Property Trustee
(the "Property Trustee"), and First Union Trust, as the Delaware Trustee (the
"Delaware Trustee"), and the Administrators will be three individuals who are
employees of the Company (the "Administrators"). First Union Bank, as the
Property Trustee, will act as sole indenture trustee under the Declaration for
purposes of compliance with the provisions of the Trust Indenture Act. First
Union Bank will also act as indenture trustee (the "Guarantee Trustee") under
the Guarantee and the Indenture, until removed or replaced by the holder of the
Common Securities of each AmerUs Trust. See "Description of Guarantees." The
Company, as the direct or indirect holder of the Common Securities of each
AmerUs Trust, or if an event of default under the Declaration has occurred and
is continuing, the holders of a majority in liquidation amount of the Capital
Securities of each AmerUs Trust, will be entitled to appoint, remove or replace
the Property Trustee and/or the Delaware Trustee. In no event will the holders
of the Capital Securities (or Units) have the right to vote to appoint, remove
or replace the Administrators; such voting rights will be vested exclusively in
the Company, as the direct or indirect holder of the Common Securities of each
AmerUs Trust. The duties and obligations of each Issuer Trustee and
Administrator is governed by such Declaration. Under the Declaration, all
parties to the Declaration will agree, and the holders of the Units upon
purchase of their Units will be deemed to have agreed, for United States Federal
income tax purposes, to treat the Trust as a grantor trust, the Junior
Subordinated Debt as indebtedness and the Capital Securities of each AmerUs
Trust as evidence of indirect beneficial ownership in the Junior Subordinated
Debt. See "Description of the Guarantees" and "Description of the Capital
Securities of the AmerUs Trusts."
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<PAGE> 81
The Property Trustee will hold title to the Junior Subordinated Debt for
the benefit of the holders of the Capital Securities of each AmerUs Trust and
the Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture as the holder of the Junior Subordinated Debt. In
addition, the Property Trustee will maintain exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all payments
made in respect of the Junior Subordinated Debt for the benefit of the holders
of the Capital Securities of each AmerUs Trust. The Property Trustee will make
payments of distributions and payments on liquidation, redemption and otherwise
to the holders of the Capital Securities of each AmerUs Trust out of funds from
the Property Account. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Capital Securities. See "Description of the
Purchase Contracts and the Units."
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act and the Trust Indenture Act. See
"Description of the Capital Securities of the AmerUs Trusts." The Company will
pay all fees and expenses related to the AmerUs Trust and the offering of the
Capital Securities and Units and will pay, directly or indirectly, all ongoing
costs, expenses and liabilities of the AmerUs Trusts.
The principal executive office of each AmerUs Trust is located at 699
Walnut Street, Des Moines, Iowa 50309-3948; telephone (515) 362-3600.
9
<PAGE> 82
ORGANIZATIONAL STRUCTURE
The following chart illustrates as of April 15, 1998 the general
organization of AMHC and its subsidiaries, including the Company:
ORGANIZATIONAL CHART
10
<PAGE> 83
SELECTED CONSOLIDATED FINANCIAL
AND OPERATING DATA
The following table sets forth certain financial and operating data of the
Company. The selected consolidated financial data below for each of the five
years ending December 31, 1997 are derived from the Consolidated Financial
Statements of the Company, which financial statements have been audited by KPMG
Peat Marwick LLP, independent auditors. During 1997, the Company acquired Delta
and AmVestors in transactions that were accounted for using the purchase method
of accounting. As a result, the Consolidated Income Statement Data includes the
results of Delta and AmVestors from their respective acquisition dates and the
Consolidated Balance Sheet Data includes year-end data for Delta and AmVestors.
<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED
DECEMBER 31,
----------------------------------------------------------
1997(A)(B) 1996(B) 1995 1994(C) 1993(C)
---------- ------- ---- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues:
Insurance premiums................................ $ 48.1 $ 138.5 $ 244.1 $ 237.9 $ 226.4
Product charges................................... 43.4 49.3 57.3 56.3 57.4
Net investment income............................. 224.4 228.7 285.2 275.7 269.9
Realized gains (losses) on investments............ 13.8 66.0 51.4 (19.9) 15.5
Contribution from the Closed Block................ 31.1 19.9 -- -- --
--------- --------- --------- --------- ---------
Total revenues...................................... 360.8 502.4 638.0 550.0 569.2
--------- --------- --------- --------- ---------
Benefits and expenses:
Total policyowner benefits........................ 193.2 261.9 374.6 369.9 364.3
Total expenses.................................... 72.6 95.1 101.1 103.5 96.6
Dividends to policyowners......................... 1.6 26.3 49.4 45.0 45.5
--------- --------- --------- --------- ---------
Total benefits and expenses......................... 267.4 383.3 525.1 518.4 506.4
--------- --------- --------- --------- ---------
Income from operations.............................. 93.4 119.1 112.9 31.6 62.8
Interest expense.................................... 15.0 2.1 2.4 5.5 7.0
--------- --------- --------- --------- ---------
Income before income tax expense and equity in
earnings of unconsolidated subsidiary............. 78.4 117.0 110.5 26.1 55.8
Income tax expense.................................. 22.0 43.8 41.2 19.4 21.4
--------- --------- --------- --------- ---------
Income before equity in earnings of unconsolidated
subsidiary........................................ 56.4 73.2 69.3 6.7 34.4
Equity in earnings of unconsolidated subsidiary..... 1.7 1.0
Cumulative effect of a change in accounting
principle, net of tax............................. -- -- -- -- (3.2)
--------- --------- --------- --------- ---------
Net income.......................................... $ 58.1 $ 74.2 $ 69.3 $ 6.7 $ 31.2
========= ========= ========= ========= =========
Earnings per common share
Basic(D).......................................... $ 2.47 $ 3.20 $ 2.99 -- --
Diluted(E)........................................ $ 2.46 $ 3.20 $ 2.99 -- --
Dividends declared per common share................. $ 0.30 -- -- -- --
Ratios of earnings to fixed charges(F)(G):.......... 2.07 2.73 2.37 1.31 1.62
CONSOLIDATED BALANCE SHEET DATA:
Total invested assets............................... $ 7,695.5 $ 2,880.8 $ 3,965.0 $ 3,491.7 $ 3,639.3
Total assets........................................ 10,254.0 4,384.2 4,371.9 4,036.9 4,030.7
Total liabilities................................... 9,240.0 3,926.7 3,832.0 3,618.6 3,524.8
Company-obligated mandatorily redeemable preferred
securities........................................ 86.0 -- -- -- --
Total stockholders' equity(H)....................... 928.0 457.5 539.9 418.3 505.9
OTHER OPERATING DATA:
Adjusted operating income(I)........................ $ 49.1 $ 37.6 $ 38.5 $ 27.5 $ 24.2
Adjusted operating income per common share (basic
and diluted)...................................... $ 2.08 $ 1.62 $ 1.66 -- --
Individual life insurance in force, net of
reinsurance....................................... $ 26,703 $ 25,725 $ 25,157 $ 25,282 $ 24,698
Annuity account balances(J)......................... 6,134 1,363 1,467 1,473 1,410
Number of employees................................. 692 412 406 457 489
STATUTORY DATA:
Premiums and deposits:
Individual life................................... $ 319.1 $ 312.7 $ 307.1 $ 296.4 $ 286.3
Annuities(J)...................................... 75.5 81.4 197.1 187.8 90.4
</TABLE>
- -------------------------
(A) Consolidated Income Statement Data includes the results for Delta subsequent
to October 23, 1997 and the results for AmVestors subsequent to December 19,
1997, and Consolidated Balance Sheet Data includes year-end data for Delta
and AmVestors.
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<PAGE> 84
(B) The Company formed the Closed Block on June 30, 1996 as a part of the
Reorganization. Invested assets allocated to the Closed Block are classified
as Closed Block assets. Revenues and expenses associated with the Closed
Block are shown net as a single line item. Accordingly, the individual
income statement components for 1997 are not fully comparable with those of
1996 and 1995, due to the establishment of the Closed Block on June 30,
1996. See "Management's Discussion and Analysis of Results of Operations and
Financial Condition -- Combined Results of Operations."
(C) The merger of the two predecessor entities of the Company, which was
consummated in 1994, has been accounted for as a pooling of interests
transaction.
(D) Retroactively reflects the pro-forma effect of the issuance of 18.16 million
shares of the Company's Class A Common Stock and 5.0 million shares of
AmerUs Class B Common Stock at the beginning of 1995. The 1997 calculation
reflects 18.54 million weighted average shares of Class A Common Stock and 5
million shares of Class B Common Stock outstanding, respectively.
(E) Diluted earnings per common share for 1997 is calculated using 18.57 million
weighted average shares of Class A Common Stock and 5 million shares of
Class B Common Stock outstanding.
(F) For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of income from operations before federal income taxes, fixed charges
and pre-tax earnings required to cover preferred stock dividend
requirements. "Fixed charges" consist of interest expense on debt and
capital securities, amortization of debt expense and interest credited on
deferred annuities.
(G) Since the Company currently has no preferred stock outstanding, the ratio of
earnings to fixed charges and preferred stock dividends is the same as the
ratio of earnings to fixed charges.
(H) Amounts shown include the effects of reporting fixed maturity securities at
fair value and recording the unrealized appreciation or depreciation on such
securities as a component of stockholders' equity, net of tax and other
adjustments. Such adjustments are in accordance with Statement of Financial
Accounting Standards 115, "Accounting for Certain Investments in Debt and
Equity Securities," which the Company adopted December 31, 1993. Amounts
reported prior to December 31, 1996 reflect policyowners' equity. In
addition, 1996 stockholder's equity was reduced by a capital contribution
from the Company to AmerUs Group in the amount of $79 million. Amounts
reported for the year ended December 31, 1997 include the Delta and
AmVestors Acquisitions.
(I) Adjusted operating income reflects net income adjusted to eliminate certain
items (net of applicable income taxes) which management believes are not
necessarily indicative of overall operating trends, including net realized
gains or losses on investments. Different items are likely to occur in each
period presented and others may have different opinions as to which items
may warrant adjustment. The adjusted operating income shown does not
constitute net income computed in accordance with GAAP. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition --
Adjusted Operating Income."
(J) Effective May 1996, substantially all individual deferred annuity sales by
AmerUs Life distribution systems are made through the Ameritas Joint
Venture. See "Reorganization and Recent Acquisitions -- Ameritas Joint
Venture."
12
<PAGE> 85
RISK FACTORS
COMPETITIVE ENVIRONMENT
The Company competes with a large number of other insurers and
non-insurance financial service companies, such as banks, broker-dealers and
mutual funds. Many competitors have greater financial resources and offer
alternative products. Other insurers have higher claims-paying ability and
financial strength ratings than the Company. Competition exists for individual
consumers and agents and other distributors of life insurance and annuity
products. Banks, with their pre-existing customer base for financial services
products, may pose increasing competition in the future to life insurers.
Congress is considering changing the laws which regulate banks, insurance
companies and other financial institutions. These changes may permit banks to
own insurance companies and vice versa. None of these proposals has yet been
enacted. It is not possible to predict whether any of these proposals will be
enacted or, if enacted, their potential effect on the Company.
The Company must attract and retain productive agents to sell its life
insurance and annuity products. Strong competition exists among insurance
companies for agents with demonstrated ability. Competition among insurance
companies for such agents is based on the services provided to, and
relationships developed with, these agents in addition to compensation and
product structure.
IMPORTANCE OF RATINGS
Ratings with respect to claims-paying ability and financial strength have
become an increasingly important factor in establishing the competitive position
of insurance companies. Each of the rating agencies reviews its ratings
periodically and there can be no assurance that current ratings will be
maintained in the future. Claims-paying and financial strength ratings are based
upon factors relevant to policyowners and are not directed toward protection of
investors in the Company's or an AmerUs Trust's securities.
Future downgrades in the ratings of the Company's life insurance
subsidiaries could significantly affect sales of life insurance and annuity
products and could have a material adverse affect on the results of operations
of the Company. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition."
ADVERSE TAX LEGISLATION AND ADMINISTRATIVE PRONOUNCEMENTS
Congress has from time to time considered legislation that would reduce or
eliminate the benefits to policyowners of the deferral of taxation on the
appreciation in value of certain annuities and life insurance products. In 1998,
President Clinton made a budget proposal concerning the taxation of certain
exchanges between annuities, including the reallocation of assets within a
variable annuity. Other proposals affect the taxation of annuities and life
insurance products and insurance companies. A federal tax law enacted in 1997
reduced the rate of taxation on certain long-term capital gains for individuals.
This legislation, along with other possible proposals or administrative
pronouncements, including those relating to the dividends received deduction,
the applicability of the equity add-on tax, and ordinary versus capital gain
treatment for corporations, could adversely affect the taxation of the Company
or the sale of annuities and life insurance products. Similarly, there can be no
certainty as to what, if any, future laws or administrative pronouncements on
these issues might be enacted or promulgated or whether any such laws or
pronouncements would have any adverse effects on the Company.
INTEREST RATE FLUCTUATIONS; RISK OF IMPACT OF FORCED LIQUIDATION OF INVESTMENT
PORTFOLIO
Severe interest rate fluctuations could adversely affect the ability of the
Company's life insurance subsidiaries to pay policyowner benefits with operating
and investment cash flows, cash on hand and other cash sources. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition."
Interest rate fluctuations may also have an impact on policyowner behavior.
If the Company does not maintain competitive interest rates with those credited
in the marketplace, increased policy terminations may
13
<PAGE> 86
be experienced. A reduction in interest rates could depress the market for the
Company's fixed annuity products. While policyowners may pay surrender charges
to terminate policies, such terminations would reduce the Company's future
income.
The Company's actual cash flows from investments may differ from those
anticipated at the time of investment. Some of the Company's corporate bond
investments have provisions which could cause the Company to reinvest the
proceeds received at maturity of such investments at lower interest rates if
such bond investments were prepaid prior to their stated maturities. The
Company's collateralized mortgage obligations and other asset-backed securities
are purchased based on assumptions regarding rates of prepayments. If actual
prepayments are earlier or later than anticipated at the time of purchase, the
Company may not receive cash flows when expected or needed. These prepayments
are expected to be influenced by interest rates available for new mortgages as
well as general economic conditions.
Most of the Company's insurance and annuity products provide for guaranteed
minimum yields. Accordingly, a significant drop in market rates of interest
could have a material impact on the Company's future results of operations.
HOLDING COMPANY STRUCTURE; LIMITATIONS ON DIVIDENDS
The Company is an insurance holding company whose assets consist primarily
of all of the outstanding stock of AmerUs Life, Delta and AmVestors. The
Company's ongoing ability to pay dividends to its shareholders and meet its
other obligations, including its obligations in respect of the Securities on
which it is an obligor, depends primarily upon receipt of sufficient funds from
its subsidiaries in the form of dividends or interest payments.
The payment of dividends to the Company by its insurance subsidiaries is
regulated under state insurance laws. Under Iowa law, AmerUs Life and Delta Life
may pay dividends only from the earned surplus arising from their respective
businesses. Each must receive the prior approval of the Iowa Commissioner to pay
a dividend if such dividend would exceed certain statutory limitations. Based on
these limitations and 1997 results, AmerUs Life could pay approximately $58
million in dividends in 1998 and Delta Life could pay approximately $8 million
in dividends in 1998 without obtaining the Iowa Commissioner's approval. The
payment of dividends by AmVestors' insurance subsidiaries is regulated under
Kansas law. Kansas has statutory limitations similar to those of Iowa. Based
upon these limitations and 1997 results, AmVestors' insurance subsidiaries could
pay approximately $15 million in dividends in 1998 without obtaining prior
regulatory approval. In February 1998 AmerUs Life paid the Company $5 million in
dividends. Based upon the cumulative limitations and 1997 results, the Company's
insurance subsidiaries could pay an additional $75 million in dividends in 1998
without obtaining regulatory approval. If AmerUs Life, Delta or AmVestors cannot
pay dividends or interest to the Company in the future, it could have a material
adverse effect on the Company and the market value of the Securities. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition -- Liquidity and Capital Resources."
Under the terms of its existing credit agreement with its banks, the
Company is prohibited from paying cash dividends on the Company's capital stock
in excess of an amount equal to 3% of the Company's consolidated net worth as of
the last day of the preceding fiscal year. Accordingly, the Company would be
permitted by its existing credit agreement to pay a cash dividend up to
approximately $28 million in 1998. The Company has also pledged to the banks
which are party to the Credit Agreement (as defined herein) approximately 49.9%
of the outstanding common stock of AmerUs Life owned by the Company, 100% of the
outstanding common stock of Delta and a $50 million 9% note payable to the
Company by AmerUs Life.
In connection with the 8.85% Capital Securities, Series A (the "Series A
Capital Securities"), issued in February, 1997 by AmerUs Capital I, the
Company's subsidiary trust, the Company has agreed not to declare or pay any
dividends on the Company's capital stock, including the Class A Common Stock,
during any period of time in which dividends on such Capital Securities are
suspended, except for stock dividends. Other
14
<PAGE> 87
dividends in respect of the Company's capital stock cannot be paid until all
accrued dividends on the Series A Capital Securities have been paid.
CONTROL BY AMHC; ANTI-TAKEOVER EFFECTS OF IOWA LAW AND THE COMPANY'S ARTICLES OF
INCORPORATION AND BY-LAWS
Under Iowa law and the Company's Amended and Restated Articles of
Incorporation (the "Articles of Incorporation"), AMHC, as a mutual insurance
holding company, is required to own, directly or indirectly, shares of capital
stock of AmerUs Life which carry the right to cast a majority of the votes
entitled to be cast by all of the outstanding shares of AmerUs Life's capital
stock. Consequently, AMHC may, without the approval of the other shareholders of
the Company, elect all of the directors of the Company and approve matters
submitted for shareholder approval. In addition, unless AMHC is demutualized, an
action beyond the Company's control, the Company cannot be the subject of a
successful takeover bid. Certain provisions in the Company's Articles of
Incorporation and By-laws may delay, defer or prevent a takeover attempt that a
shareholder might consider in his or her best interests. These provisions
include supermajority voting rights for the Company's Class B common stock no
par value (the "Class B Common Stock"), the ability of the board of directors to
issue so-called "blank check" preferred stock and a classified board of
directors. Such provisions may adversely affect the prevailing market price of
the Class A Common Stock. See "Description of Capital Stock -- Certain
Provisions of the Articles of Incorporation and the By-laws of the Company."
RELATIONSHIP WITH AMHC; POTENTIAL CONFLICTS OF INTEREST
AMHC is a mutual insurance holding company which is operated for the
benefit of its members. The members of AMHC are policyowners of AmerUs Life.
AMHC (or certain of its wholly-owned subsidiaries) have entered into agreements
with the Company and/or AmerUs Life in which the Company and/or AmerUs Life will
provide to such subsidiaries or affiliates certain management, data processing,
legal and other services, or such subsidiaries or affiliates will provide
services to the Company and/or AmerUs Life. The Company's management believes
the terms of such agreements are fair and reasonable. However, none of these
contracts were the result of arms' length negotiations between independent
parties. These agreements may be modified in the future. Additional agreements
or transactions may be entered into between AMHC or subsidiaries of AMHC and the
Company and its subsidiaries.
As a result of these arrangements, there may be a number of potential
conflicts of interest between the Company and AMHC. In an effort to address such
potential conflicts, regulations of the Iowa Commissioner require the Company to
have three outside directors who are not directors of AMHC. Currently, the
Company has four outside directors who are not directors of AMHC or any of
AMHC's subsidiaries. These outside directors comprise the Company's Intercompany
Transactions Committee which reviews intercompany transactions involving
potential conflicting interests. However, there can be no assurance that
decisions made by AMHC will not adversely affect the Company.
The National Association of Insurance Commissioners has formed a working
group to review mutual insurance holding company legislation and regulations.
The working group's review could address, among other things, potential
restrictions on stock ownership by directors and officers, the utilization of
non-voting or low voting stock, standards for affiliate transactions, and
regulation of potential conflicts of interests. It is unclear what effect, if
any, this review would have, but it is possible that insurance regulators,
including Iowa, could propose additional laws or regulations which would affect
or inhibit transactions between affiliates, future stock issuances, the ability
of officers and directors to secure significant ownership positions in the
Company or otherwise restrict the ability of the Company to take advantage of
new business opportunities.
RESTRICTIONS ON RATIO OF THE COMPANY'S STOCK CLASSES
The Company's Articles of Incorporation provide that the number of
outstanding shares of Class A Common Stock (excluding shares of Common Stock
owned by AMHC or another Permitted Class B Holder (as defined herein)) shall
exceed the number of outstanding shares of the Company's Class B common stock
plus the shares of Class A Common Stock beneficially owned by AMHC or another
Permitted Class B Holder
15
<PAGE> 88
only as authorized by law and not by a ratio of more than three to one. As a
result, the Company's ability to issue additional shares of Class A Common Stock
for any reason, including raising additional equity capital, for stock options
or in connection with acquisitions may be restricted if such condition should
occur. As of March 1, 1998, the ratio was approximately 1:1.
UNCERTAINTIES IN INTEGRATING OPERATIONS AND ACHIEVING COST SAVINGS
As a result of the acquisitions of Delta and AmVestors, the Company has
substantially increased in size. While the Company has integrated the investment
operations of both AmVestors and Delta with those of AmerUs Life, there can be
no assurance as to the cost savings and efficiencies that will be achieved. The
success of the acquisition of Delta depends in part on the ability of the
Company to combine operations, integrate departments, systems and procedures and
obtain cost savings from these acquisitions. While the operations of Delta have
been integrated with those of AmerUs Life, and certain integration steps have
been taken with respect to AmVestors, there can be no assurance as to the cost
savings and efficiencies that will be achieved. See "Business -- Integration of
Recently Acquired Subsidiaries."
FUTURE POLICY BENEFITS EXPOSURE
The liability established by the Company for future life insurance and
annuity policy benefits is based upon assumptions concerning a number of
factors. Such factors include interest rates, mortality, duration of the
policies and expenses. Actual experience will likely differ from assumed
experience. If the Company's provision for future policy benefits proves
inadequate, future earnings will be adversely affected.
REGULATORY AND RELATED RISKS
The Company's life insurance subsidiaries are subject to regulation by
state regulators under the insurance laws of states in which they conduct
business. The Company, AmerUs Group, AMHC, AmerUs Life and Delta Life are
regulated by the Iowa Insurance Division. In addition, AmVestors and its
subsidiaries are regulated by the Kansas Department of Insurance. The purpose of
such regulation is primarily to provide safeguards for policyowners rather than
to protect the interests of shareholders. The insurance laws of the various
states establish regulatory agencies with broad administrative powers including
the authority to grant or revoke operating licenses and to regulate sales
practices, investments, deposits of securities, the form and content of
financial statements and insurance policies, accounting practices and the
maintenance of specified reserves and capital. In addition, the Iowa
Commissioner has adopted rules regulating the issuance of stock by the Company
in equity offerings.
Insurance regulators have in recent years investigated allegations of
improper sales practices by insurance agents, including churning and misleading
sales presentations. The National Association of Insurance Commissioners has
adopted a model law and regulation which would standardize the form and content
of any illustrations provided to prospective purchasers of individual life
insurance products. The model law has been enacted in a number of states. The
Company expects that similar laws will eventually be enacted in additional
states in which its subsidiaries sell individual life insurance products. There
can be no assurance as to whether any such changes will have a material adverse
impact on sales of such products by the industry as a whole or by the Company.
Certain of the Company's insurance and annuity products are innovative and
relatively new. The regulatory framework at the state and federal level
applicable to such products is evolving. The changing regulatory framework could
affect the design of such products and the Company's ability to sell certain
products. For example, in August 1997, the SEC requested information and
comments about the structure of equity index insurance products, the manner in
which they are marketed and the federal securities law issues raised by equity
index insurance products. It is possible that the SEC may propose new
regulations or policies with respect to equity index insurance products which
may affect the marketing of such products or impose requirements that some or
all such products be registered with the SEC.
16
<PAGE> 89
RISKS OF CLASS ACTION LITIGATION
In recent years, a number of life insurance companies, including AmerUs
Life, have been named defendants in class action lawsuits arising out of their
business practices. AmerUs Life recently settled one such class action lawsuit,
although the exact amount of such settlement is yet to be determined. Although
AmerUs Life has denied all allegations against it and has vigorously defended
against the remaining class action lawsuit which has been brought against AmerUs
Life, there can be no assurance that such litigation, or similar litigation
filed in the future, will not have a material adverse affect on the life
insurance industry generally or on the Company. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition."
RISKS RELATING TO THE CLOSED BLOCK
In connection with the Reorganization, AmerUs Life was required to allocate
specific assets for the benefit of insurance policies and annuities existing at
the time of the Reorganization that pay dividends or provide interest credits.
This is known as a "Closed Block." The Closed Block is designed to provide
reasonable assurance to owners of policies included therein that, after the
Reorganization, assets would be available to maintain the dividend scales and
interest credits in effect prior to the Reorganization if the experience
underlying such scales and credits continues. The investment performance of the
assets in the Closed Block and the performance of the policies covered by the
Closed Block will affect future dividends and interest credits. Any excess of
cumulative favorable experience for Closed Block policies over unfavorable
experience will be available for distribution over time to Closed Block
policyowners and will not be available to AmerUs Life or the Company. Unless the
Iowa Commissioner consents to an earlier termination, the Closed Block will
continue to be in effect until the date on which none of the policies in the
Closed Block remains in force.
The Company will continue to pay guaranteed benefits under all policies,
including the policies included in the Closed Block, in accordance with their
terms. If the assets allocated to the Closed Block, the investment cash flows
from those assets and the revenues from the policies included in the Closed
Block including investment income thereon prove to be insufficient to pay the
benefits guaranteed under the policies included in the Closed Block, the Company
will be required to make such payments from its general funds. The Company bears
the costs of operating and managing the Closed Block and, accordingly, such
costs were not funded as part of the assets allocated to the Closed Block. Any
increase in such costs in the future would be borne by the Company. See
"Reorganization and Recent Acquisitions -- The Reorganization -- Establishment
and Operation of the Closed Block."
RISKS RELATING TO YEAR 2000 COMPLIANCE
As the year 2000 approaches, an important business issue has emerged
regarding how existing application software programs and operating systems can
accommodate the date value "2000." Many existing application software products
were designed to only accommodate a two digit date position which represents the
year (e.g., the number "95" is stored on the system and represents the year
1995). As a result, the year 1999 (i.e., "99") is the maximum date value many
systems will be able to accurately process. The Company formed a year 2000
working group to address potential problems posed by this development to assure
that the Company is prepared for year 2000. Total estimated costs are in a range
of $4 to $6 million with approximately $3 million to be incurred in 1998.
However, if modifications and conversions to deal with year 2000 issues are not
completed on a timely basis or are not fully effective, such issues may have a
material adverse effect on the operations of the Company. All costs associated
with year 2000 modifications and conversions will be expensed as incurred. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition -- Year 2000 Compliance."
CLASS A COMMON STOCK ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Class A Common Stock (including shares of
the Company's Class B common stock converted into Class A Common Stock), or the
perception that such sales could occur, could
17
<PAGE> 90
have an adverse effect on the price of the Class A Common Stock. As of December
31, 1997, AMHC beneficially owned 12,380,300 shares of Class A Common Stock. All
of the shares of Class A Common Stock which are currently beneficially owned by
AMHC are eligible for sale under SEC rules, subject to certain volume and timing
limitations and restrictions imposed on AMHC, as a mutual holding company, by
Iowa law.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds received by the Company from the sale of the Securities offered
hereby are expected to be used for general corporate purposes. The proceeds from
the sale of Capital Securities by the AmerUs Trusts will be invested in the
Junior Subordinated Debt of the Company. Except as may otherwise be described in
the Prospectus Supplement relating to such Capital Securities, the Company
expects to use the net proceeds from the sale of such Junior Subordinated Debt
to the AmerUs Trusts for general corporate purposes. Any specific allocation of
the proceeds to a particular purpose that has been made at the date of any
Prospectus Supplement will be described therein.
18
<PAGE> 91
REORGANIZATION AND RECENT ACQUISITIONS
THE REORGANIZATION
BACKGROUND AND DESCRIPTION OF THE REORGANIZATION
On October 27, 1995, the Board of Directors of American Mutual Life adopted
the plan of reorganization (the "AmerUs Reorganization Plan"), pursuant to which
AMHC was formed as a mutual insurance holding company and American Mutual Life
was converted into a stock life insurance company and its name was changed to
AmerUs Life Insurance Company.
As part of the Reorganization, all of the shares of capital stock of AmerUs
Life were issued to AMHC. Subsequently, AMHC contributed all of its shares of
capital stock of AmerUs Life to AmerUs Group, which contributed such shares to
the Company, AmerUs Group's then wholly-owned subsidiary. Under this structure,
the Company is an intermediate holding company, with AmerUs Group as its direct
controlling shareholder and AmerUs Life as its wholly-owned subsidiary. Under
Iowa law, AMHC is required to retain direct or indirect ownership and control of
shares which carry the right to cast a majority of the votes entitled to be cast
by holders of the outstanding capital stock of AmerUs Life.
Iowa legislation permits AMHC to demutualize, a process which would cause
AMHC to convert from mutual to stock form and become publicly owned by
shareholders. Pursuant to the Company's Articles of Incorporation, upon a
demutualization of AMHC, all of the Company's shares of outstanding Class B
Common Stock will automatically convert into shares of Class A Common Stock. See
"Description of Capital Stock." AMHC has advised the Company that AMHC has no
present plans to demutualize.
ESTABLISHMENT AND OPERATION OF THE CLOSED BLOCK
In connection with the Reorganization, the Closed Block was established.
Insurance policies which had a dividend scale in effect as of June 30, 1996 were
included in the Closed Block. The Closed Block was designed to provide
reasonable assurance to policyowners included therein that, after the
Reorganization, assets will be available to maintain the dividend scales and
interest credits in effect prior to the Reorganization if the experience
underlying such scales and credits continues. The establishment of the Closed
Block did not alter, diminish, reduce or in any other way adversely affect these
policyowners' contractual rights.
Pursuant to the AmerUs Reorganization Plan, assets were allocated to the
Closed Block at June 30, 1996 in an amount which the Company expects to produce
cash flows which, together with anticipated revenues from the policies in the
Closed Block, are expected to be sufficient to support the Closed Block
business, including provision for payment of claims, taxes and certain other
expenses and for the continuation of dividend scales and interest credits in
effect prior to the Reorganization if the experience underlying such scales and
credits continues or for appropriate adjustments in such scales and credits if
the experience changes. The assets, including the revenue therefrom, allocated
to the Closed Block will accrue solely to the benefit of policyowners included
in the Closed Block business until such time as the Closed Block is no longer in
effect. To the extent that over time cash flows from the assets allocated to the
Closed Block and other experience relating to the Closed Block are, in the
aggregate, more or less favorable than assumed in establishing the Closed Block,
total dividends and interest credits paid to Closed Block policyowners in the
future may be greater than or less than the total dividends and interest credits
that would have been paid to these policyowners if the dividend scales and
interest credits in effect prior to the Reorganization had been continued.
Dividends and interest credits on policies included in the Closed Block, as in
the past, will be declared at the discretion of AmerUs Life's Board of Directors
and may vary from time to time (reflecting changes in investment, mortality,
persistency and other experience factors).
AmerUs Life will continue to pay guaranteed benefits under all policies,
including the policies included in the Closed Block, in accordance with their
terms. If the assets allocated to the Closed Block, the investment cash flows
from those assets and the revenues from the policies included in the Closed
Block, including investment income thereon, prove to be insufficient to pay the
benefits guaranteed under the policies included in the Closed Block, AmerUs Life
will be required to make such payments from its general funds. AmerUs Life bears
the costs of operating and managing the Closed Block and, accordingly, such
costs were not funded
19
<PAGE> 92
as part of the assets allocated to the Closed Block. Any increase in such costs
in the future would be borne by AmerUs Life.
The Closed Block will continue in effect until either (i) the last policy
in the Closed Block is no longer in force or (ii) the Closed Block is dissolved.
The AmerUs Reorganization Plan provides that the Closed Block may not be
dissolved without the approval of the Iowa Commissioner, which approval could
only be obtained if dissolution were demonstrated not to be adverse to the
interests of the policyowners whose policies make up the Closed Block. If the
Closed Block is dissolved, the assets associated with the Closed Block will
become part of AmerUs Life's general funds. If the Closed Block is not
dissolved, the expected life of the Closed Block is in excess of 75 years.
At December 31, 1997, the Closed Block had assets of $1,391.8 million and
liabilities of $1,623.4 million. The excess of Closed Block Liabilities over
Closed Block Assets represents the expected future after-tax contributions
(before certain other expense charges, which were not funded in the Closed
Block) from the Closed Block which may be recognized in income over the period
the policies in the Closed Block remain in force.
If the actual contribution from the Closed Block in any given period equals
or exceeds the expected contribution for such period as determined at the
establishment of the Closed Block, only the expected contribution would be
recognized in income from continuing operations for that period. Any excess of
the actual contribution over the expected contribution is recognized in income
from continuing operations to the extent that the aggregate expected
contribution for all prior periods exceeded the aggregate actual contribution.
Any remaining excess of actual contribution over expected contributions would be
accrued in the Closed Block as a liability for future policyowners' dividends.
This accrual for future dividends effectively limits the actual Closed Block
contribution recognized in income from continuing operations to the Closed Block
contribution expected to emerge from operation of the Closed Block as determined
as of the date of establishment of the Closed Block.
If the actual contribution from the Closed Block in any given period is
less than the expected contribution for that period, because changes in
dividends scales are inadequate to offset the negative performance in relation
to the expected performance, the contribution inuring to shareholders of AmerUs
Life will be reduced. If a liability for policyowners' dividends had been
previously established in the Closed Block because the actual contribution to
the relevant date had exceeded the expected contribution to such date, such
liability would be reduced (but not below zero) in any periods in which the
actual contribution for that period is less than the expected contribution for
such period.
ACQUISITION OF DELTA LIFE CORPORATION
On October 23, 1997, the Company acquired all of the outstanding capital
stock of Delta for approximately $165 million in cash. The principal asset of
Delta is its wholly-owned subsidiary, Delta Life, a Tennessee-domiciled life
insurance company and, following its acquisition by the Company, redomiciled to
Iowa in 1998. Delta Life is licensed in the District of Columbia and in all
states except New York, and specializes in the sale of individual single and
flexible premium deferred annuities, primarily in the southeastern, western,
southwestern and midwestern regions of the United States. Sales are made
primarily through a network of over 3,300 independent agents. Approximately 58%
of Delta Life's 1997 direct collected premiums were derived from
retirement-oriented tax-qualified annuities. As of December 31, 1997, Delta Life
had approximately 52,000 annuity contracts outstanding.
Delta Life's strategy is to structure its fixed annuity products to appeal
to the conservative retirement saver who is seeking principal preservation and
consistency of earnings. Most of Delta Life's products are innovative in that
they incorporate a fixed contractual management fee. In addition to offering a
lifetime guaranteed minimum interest crediting rate and an annual guaranteed
interest crediting rate, these annuities also require the crediting of the
interest rate earned on the assets supporting the respective policies after
deducting the contractual management fee. Over 70% of policyowners' assets are
invested in securities issued, secured or guaranteed by the U.S. Government,
government agencies or government instrumentalities.
20
<PAGE> 93
The Delta Acquisition increased the Company's presence in the rapidly
growing asset accumulation business, significantly expanded the Company's
distribution capacity, provided the Company access to Delta's extensive
marketing capabilities, expanded the Company's presence in the south and
southeast and expanded the Company's offering of competitive products that meet
the demands of consumers. By integrating the operations of Delta Life with those
of AmerUs Life, the Company substantially reduced the unit costs of both AmerUs
Life's and Delta Life's general insurance expenses and investment expenses by
spreading fixed costs over a larger revenue base. The Delta Acquisition also
increased and diversified the Company's distribution channels.
ACQUISITION OF AMVESTORS FINANCIAL CORPORATION
On December 19, 1997 the Company acquired AmVestors in a stock exchange
valued at approximately $350 million. AmVestors' principal operating
subsidiaries are American, a Kansas domiciled life insurance company licensed in
48 states and the District of Columbia and FBL, a Kansas domiciled life
insurance company doing business in 40 states, the District of Columbia and the
U.S. Virgin Islands. AmVestors distributes its products through a national
network of approximately 7,800 licensed independent agents. As of December 31,
1997, AmVestors had approximately 104,000 annuity contracts outstanding.
AmVestors specializes in the sale of annuity products, further
strengthening the Company's presence in the rapidly growing asset accumulation
and retirement savings markets. AmVestors' strategy is to focus on the dynamics
of the growing retirement market and the need for easily-administered, low-risk
annuities. AmVestors continually enhances its products based on market
conditions. The time frame for new product releases is generally less than two
months from conceptualization to rollout. Outstanding service to its
policyholders, including easy-to-read statements; quick delivery of policies and
turnaround on customer service calls; 24-hour-a-day product and customer
information availability and systematic withdrawal represent other areas of
strategic focus of AmVestors.
21
<PAGE> 94
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following analysis of the consolidated results of operations and
financial condition of the Company should be read in conjunction with the
Selected Consolidated Financial and Operating Data and the Consolidated
Financial Statements of the Company and related notes included elsewhere or
incorporated by reference in this Prospectus.
OVERVIEW
The Company is a holding company engaged through its subsidiaries in the
business of marketing, underwriting and distributing a broad range of individual
life insurance and annuity products to individuals and businesses in 49 states,
the District of Columbia and the U.S. Virgin Islands. The Company's primary
product offerings consist of whole life, universal life and term life insurance
policies and fixed annuities. Since April 1, 1996 the Company has been a party
to the Ameritas Joint Venture with Ameritas, through which it markets fixed
annuities and sells variable annuities and variable life insurance products. See
"Business -- Products."
In accordance with GAAP, universal life insurance premiums and annuity
deposits received are reflected as increases in liabilities for policyowner
account balances and not as revenues. Revenues reported for universal life and
annuity products consist of policy charges for the cost of insurance,
administration charges and surrender charges assessed against policyowner
account balances. Surrender benefits paid relating to universal life insurance
policies and annuity products are reflected as decreases in liabilities for
policyowner account balances and not as expenses. Amounts for interest credited
to universal life and annuity policyowner account balances and benefit claims in
excess of policyowner account balances are reported as expenses in the financial
statements. The Company receives investment income earned from the funds
deposited into account balances by universal life and annuity policyowners, the
majority of which is passed through to such policyowners in the form of interest
credited.
Premium revenues reported for traditional life insurance products are
recognized as revenues when due. Future policy benefits and policy acquisition
costs are recognized as expenses over the life of the policy by means of a
provision for future policy benefits and amortization of deferred policy
acquisition costs.
The costs related to acquiring new business, including certain costs of
issuing policies and certain other variable selling expenses (principally
commissions), defined as deferred policy acquisition costs, are capitalized and
amortized as an expense primarily in proportion to expected profits or margins
from such policies. This amortization is adjusted when current or estimated
future gross profits or margins on the underlying policies vary from previous
estimates. For example, the amortization of deferred policy acquisition costs is
accelerated when policy terminations are higher than originally estimated or
when investments supporting the policies are sold at a gain prior to their
anticipated maturity. Death and other policyowner benefits reflect exposure to
mortality risk and fluctuate from period to period based on the level of claims
incurred within insurance retention limits. The profitability of the Company is
primarily affected by expense levels, interest spread results (i.e., the excess
of investment earnings over the interest credited to policyowners) and
fluctuations in mortality, persistency and other policyowner benefits. The
Company has the ability to mitigate adverse experience through adjustments to
credited interest rates, policyowner dividends or cost of insurance charges.
ADJUSTED OPERATING INCOME
The following table reflects net income adjusted to eliminate certain items
(net of applicable income taxes) which management believes are not necessarily
indicative of overall operating trends, including net realized gains or losses
on investments. Different items are likely to occur in each period presented and
others
22
<PAGE> 95
may have different opinions as to which items may warrant adjustment. The
adjusted operating income shown below does not constitute net income computed in
accordance with GAAP.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net income.................................. $58,059 $ 74,173 $ 69,348 $ 6,667 $ 31,209
Net realized (gains) losses on
investments(A)............................ (9,008) (42,552) (32,244) 11,223 (10,187)
Equity add-on tax(B)........................ -- 4,480 -- 9,585 --
Reorganization costs(C)..................... -- 1,522 1,426 -- --
Adoption of SFAS 106(D)..................... -- -- -- -- 3,214
------- -------- -------- ------- --------
Adjusted operating income................... $49,051 $ 37,623 $ 38,530 $27,475 $ 24,236
======= ======== ======== ======= ========
Adjusted operating income per common
share..................................... $2.08 $1.62 $1.66 -- --
</TABLE>
- -------------------------
(A) Represents realized gains or losses on investments less that portion of the
amortization of deferred policy acquisition costs adjusted for income taxes
on such amounts. Realized gains may vary widely between periods. Such
amounts are determined by management's timing of individual transactions and
do not necessarily correspond to the underlying operating trends.
(B) Represents the mutual life insurance company equity add-on tax, which is
applicable only to mutual life insurance companies and which the Company
believes is not applicable to the Company after June 30, 1996 due to AmerUs
Life's conversion into a stock company.
(C) Represents costs directly related to the Reorganization consisting primarily
of printing, postage, legal and consulting costs adjusted for income taxes
on such amounts. These costs were not of a continuing nature and were not
expected to have any effect on future operations.
(D) As of January 1, 1993, the Company adopted SFAS 106, pursuant to which the
cost of certain post-retirement benefits must be recognized on an accrual
basis as employees perform services to earn such benefits. The Company's
transition obligation as of January 1, 1993 amounted to approximately $3.2
million, net of income tax benefits, and was recorded as a cumulative effect
adjustment to net income.
RECENT ACQUISITIONS
The Company acquired all of the outstanding stock of Delta on October 23,
1997, for approximately $165 million in cash. The transaction was accounted for
as a purchase and accordingly, the Company's results of operations include Delta
from the date of purchase. The Company acquired all of the outstanding stock of
AmVestors on December 19, 1997, in a stock exchange valued at approximately $350
million. This transaction was also accounted for as a purchase and the Company's
results of operations include AmVestors from the date of purchase. See
"Reorganization and Recent Acquisitions -- Acquisition of Delta Life Corporation
and -- Acquisition of AmVestors Financial Corporation".
THE CLOSED BLOCK
The Closed Block was established on June 30, 1996. Insurance policies which
had a dividend scale in effect as of June 30, 1996 were included in the Closed
Block. The Closed Block was designed to provide reasonable assurance to owners
of insurance policies included therein that, after the Reorganization, assets
would be available to maintain the dividend scales and interest credits in
effect prior to the Reorganization if the experience underlying such scales and
credits continues. See "Risk Factors -- Risks Relating to the Closed Block" and
"Reorganization and Recent Acquisitions -- Establishment and Operation of the
Closed Block".
The contribution to the operating income of the Company from the Closed
Block is reported as a single line item in the income statement. Accordingly,
premiums, product charges, investment income, realized gains (losses) on
investments, policyowner benefits and dividends attributable to the Closed
Block, less certain
23
<PAGE> 96
minor expenses including amortization of deferred policy acquisition costs, are
shown as a net number under the caption the "Contribution from the Closed
Block." This results in material reductions in the respective line items in the
income statement while having no effect on net income. The expenses associated
with the administration of the policies included in the Closed Block and the
renewal commissions on these policies are not charged against the Contribution
from the Closed Block, but rather are grouped with underwriting, acquisition and
insurance expenses. Also, all assets allocated to the Closed Block are grouped
together and shown as a separate item entitled "Closed Block Assets." Likewise,
all liabilities attributable to the Closed Block are combined and disclosed as
the "Closed Block Liabilities."
COMBINED RESULTS OF OPERATIONS
Since the operating results from the Closed Block are reported on one line
of the income statement, "Contribution from the Closed Block," individual income
statement components are not fully comparable with those prior to the
establishment of the Closed Block. Management believes that the presentation of
the results of operations for 1997 on a combined basis as if the Closed Block
had not been formed facilitates comparability with the results of operations for
1996 prior to the formation of the Closed Block and for 1995. Accordingly, the
combined presentation set forth below includes certain revenues and expenses
associated with policies included in the Closed Block. Such presentation does
not, however, affect the Company's reported net income.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------
AS CLOSED
REPORTED BLOCK COMBINED
-------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Insurance premiums........................................ $ 48,127 $206,145 $254,272
Product charges........................................... 43,441 17,464 60,905
Net investment income..................................... 224,431 113,759 338,190
Realized gains on investments............................. 13,791 718 14,509
Contribution from the Closed Block........................ 31,045 (31,045) --
-------- -------- --------
Total revenues....................................... 360,835 307,041 667,876
Benefits and expenses
Policyowner benefits...................................... 193,237 209,377 402,614
Underwriting, acquisition and insurance expenses.......... 51,663 6,603 58,266
Amortization of deferred policy acquisition costs......... 20,987 31,470 52,457
Dividends to policyowners................................. 1,587 59,591 61,178
-------- -------- --------
Total benefits and expenses.......................... 267,474 307,041 574,515
Income from operations...................................... 93,361 -- 93,361
Interest expense............................................ 14,980 -- 14,980
-------- -------- --------
Income before income tax expense and equity in earnings of
unconsolidated subsidiary................................. 78,381 -- 78,381
Income tax expense.......................................... 22,022 -- 22,022
-------- -------- --------
Income before equity in earnings of unconsolidated
subsidiary................................................ 56,359 -- 56,359
Equity in earnings of unconsolidated subsidiary............. 1,700 -- 1,700
-------- -------- --------
Net income........................................... $ 58,059 $ -- $ 58,059
======== ======== ========
</TABLE>
24
<PAGE> 97
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------
AS CLOSED
REPORTED BLOCK COMBINED
-------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Insurance premiums........................................ $138,476 $108,315 $246,791
Product charges........................................... 49,347 9,324 58,671
Net investment income..................................... 228,625 56,329 284,954
Realized gains on investments............................. 65,983 481 66,464
Contribution from the Closed Block........................ 19,909 (19,909) --
-------- -------- --------
Total revenues....................................... 502,340 154,540 656,880
Benefits and expenses
Policyowner benefits...................................... 261,869 103,951 365,820
Underwriting, acquisition and insurance expenses.......... 54,857 2,969 57,826
Amortization of deferred policy acquisition costs......... 40,160 18,412 58,572
Dividends to policyowners................................. 26,324 29,208 55,532
-------- -------- --------
Total benefits and expenses.......................... 383,210 154,540 537,750
Income from operations...................................... 119,130 -- 119,130
Interest expense............................................ 2,142 -- 2,142
-------- -------- --------
Income before income tax expense and equity in earnings of
unconsolidated subsidiary................................. 116,988 -- 116,988
Income tax expense.......................................... 43,859 -- 43,859
-------- -------- --------
Income before equity in earnings of unconsolidated
subsidiary................................................ 73,129 -- 73,129
Equity in earnings of unconsolidated subsidiary............. 1,044 -- 1,044
-------- -------- --------
Net income........................................... $ 74,173 $ -- $ 74,173
======== ======== ========
</TABLE>
1997 COMPARED TO 1996
A summary of the Company's combined revenues, including revenues associated
with the Closed Block, follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Insurance premiums
Traditional life insurance premiums.................... $236,878 $228,986
Immediate annuity and supplementary contract
premiums............................................ 17,238 16,082
Other premiums......................................... 156 1,723
-------- --------
Total insurance premiums.......................... 254,272 246,791
Universal life product charges........................... 59,236 57,834
Annuity product charges.................................. 1,669 837
-------- --------
Total product charges............................. 60,905 58,671
Net investment income.................................... 338,190 284,954
Realized gains on investments............................ 14,509 66,464
-------- --------
Total revenues.................................... $667,876 $656,880
======== ========
</TABLE>
In 1997, individual life and annuity premiums and product charges increased
by $11.2 million to $315.0 million, or 3.7%, from $303.8 million in 1996.
Included in this increase was $1.2 million of premium and product charges earned
in the fourth quarter resulting primarily from Delta. Insurance premiums
increased by $7.5 million to $254.3 million in 1997 compared to $246.8 million
in 1996. Traditional life
25
<PAGE> 98
insurance premiums increased by $7.9 million in 1997. The increase in
traditional life insurance premiums in 1997 was primarily the result of
continued growth in renewal premiums and also the increased sales of term life
insurance products. Changes in the level of immediate annuity deposits and
supplementary contract premiums were primarily the result of fluctuations in
immediate annuity and supplementary contract sales. Other premiums decreased in
1997 primarily due to the sale of the Company's remaining group life operation
in 1996.
Universal life product charges increased slightly in 1997 primarily due to
increased cost of insurance charges as a result of the normal aging of that
block of business. Annuity product charges for 1997 included $0.7 million earned
in the fourth quarter by recently acquired companies.
Net investment income increased by $53.3 million to $338.2 million in 1997
compared to $284.9 million in 1996. Included in the 1997 increase in net
investment income was $30.2 million of net investment income from recently
acquired companies during the fourth quarter. The remaining $23.1 million
increase in 1997 was attributable to an increase in average invested assets and
effective yields on average invested assets. Average invested assets (excluding
market value adjustments and acquisitions) in 1997 increased by $111.5 million
from 1996, and the effective yield on average invested assets (excluding market
value adjustments and acquisitions) increased to 7.89% in 1997 from 7.55% in
1996. Contributing to the higher yields in 1997 was investment income of $10.1
million from equity in earnings of certain investment partnerships.
Realized gains on investments were $14.5 million in 1997 compared to gains
of $66.4 million in 1996. Included in the amounts for 1996 were approximately
$51.1 million of gains from the sale of common stock as a result of the
liquidation of the Company's equity portfolio primarily during the first quarter
of 1996.
A summary of the Company's combined policyowner benefits, including
policyowner benefits associated with the Closed Block, follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Traditional life insurance
Death benefits............................................ $ 40,821 $ 32,251
Change in liability for future policy benefits and other
policy benefits........................................ 170,275 160,036
-------- --------
Total traditional life insurance benefits.............. 211,096 192,287
Universal life insurance
Death benefits in excess of cash value.................... 24,682 23,871
Interest credited to policyowner account balances......... 45,232 43,203
Other policy benefits..................................... 3,453 3,026
-------- --------
Total universal life insurance benefits................ 73,367 70,100
Annuities
Interest credited to deferred annuity account balances.... 80,440 66,254
Other annuity benefits.................................... 37,133 34,334
-------- --------
Total annuity benefits................................. 117,573 100,588
Miscellaneous benefits...................................... 578 2,845
-------- --------
Total policyowner benefits............................. $402,614 $365,820
======== ========
</TABLE>
Total policyowner benefits were $402.6 million in 1997 compared to $365.8
million in 1996 or an increase of $36.8 million. The 1997 amount included fourth
quarter benefits of acquired companies of $23.4 million consisting primarily of
interest credited to annuity account balances and other annuity benefits.
Traditional life insurance benefits increased by $18.8 million in 1997. The
increase in 1997 was primarily due to the growth and aging of the business in
force and increased death benefits as a result of higher mortality. Universal
life insurance benefits increased by $3.3 million in 1997. The increased
benefits in 1997 were due to increased interest credited to policyowner account
balances and increased death benefits due to
26
<PAGE> 99
higher mortality. While the weighted average crediting rate for AmerUs Life's
universal life liabilities decreased four basis points to 6.23% in 1997 from
6.27% in 1996, AmerUs Life's average liabilities increased by $33.7 million from
1996 to 1997, resulting in the increased credited amounts in 1997.
Annuity benefits, including the fourth quarter results of recent
acquisitions, were $117.6 million, an increase of $17.0 million compared to
1996. The annuity benefits of recent acquisitions amounted to $23.2 million
which were partially offset by a $6.2 million decrease in AmerUs Life's annuity
benefits in 1997 to $94.4 million compared to $100.6 million in 1996. The
decrease in AmerUs Life's annuity benefits during 1997 was due to reduced
interest credited to policyowner account balances. The weighted average
crediting rate for AmerUs Life's individual deferred annuity liabilities
decreased eleven basis points to 5.25% in 1997 compared to 5.36% in 1996 and
AmerUs Life's average deferred annuity liabilities decreased by $119.1 million
from 1996 to 1997, also contributing to the lower interest credited amounts in
1997 for AmerUs Life. Most annuity sales after May, 1996 have been recorded by
the Ameritas Joint Venture, resulting in a decrease in the average deferred
annuity liabilities at AmerUs Life.
Miscellaneous benefits decreased in 1997 primarily due to the sale of the
Company's remaining group life operation in 1996.
A summary of the Company's combined expenses, including expenses associated
with the Closed Block, follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Commission expense, net of deferrals..................... $ 8,252 $ 7,892
Other underwriting, acquisition and insurance expenses,
net of deferrals....................................... 50,014 49,934
Amortization of deferred policy acquisition costs........ 52,457 58,572
-------- --------
Total expenses...................................... $110,723 $116,398
======== ========
</TABLE>
The Company's commission expense, net of deferrals, increased by $0.4
million to $8.3 million in 1997, compared to $7.9 million in 1996. The increase
in 1997 was primarily the result of the fourth quarter commission expense, net
of deferrals, of the Company's recent acquisitions. Other underwriting,
acquisition and insurance expenses, net of deferrals, were $50.0 million in
1997, compared to $49.9 million in 1996. Included in the 1997 expenses were $4.1
million of fourth quarter expenses, net of deferrals, attributable to the
recently acquired companies.
Excluding recently acquired companies, other underwriting, acquisition and
insurance expenses, net of deferrals, decreased by $4.0 million to $45.9 million
in 1997. This decrease in expenses during 1997 was primarily due to the
establishment of a $5.0 million litigation reserve during 1996 in connection
with certain class action litigation, partially offset by a $1.3 million
write-off of expenses during 1997 related to the former bank credit facility
which was replaced by a new agreement in the fourth quarter of 1997.
The amortization of deferred policy acquisition costs decreased by $6.1
million in 1997. Deferred policy acquisition costs are generally amortized in
proportion to gross margins, including realized capital gains. Higher death
benefits and lower realized capital gains in 1997, compared to 1996, contributed
to lower gross margins in 1997 on products for which deferred costs are
amortized, resulting in the lower amortization in 1997.
Dividends to policyowners increased by $5.7 million, to $61.2 million in
1997 compared to $55.5 million in 1996. The increase in dividends was primarily
the result of the growth and aging of in force business. Traditional life
reserves grew 8.1% to the end of 1997, to $1.31 billion. The weighted average
dividend interest rate credited to these policies was 7.19% in 1997 compared to
7.17% in 1996.
Income from operations decreased by $25.7 million, to $93.4 million in 1997
compared to $119.1 million in 1996. Recent acquisitions added $3.3 million of
income from operations during the fourth quarter. However,
27
<PAGE> 100
the overall decrease in 1997 income from operations was primarily due to the
decrease in realized gains on investments in 1997.
Interest expense increased by $12.9 million in 1997 to $15.0 million
compared to $2.1 million in 1996. The increase in interest expense in 1997 was
primarily due to the interest expense on the capital securities issued by the
Company during 1997 and interest expense on the revolving line of credit. This
added interest expense was largely offset by investment of the borrowed funds
which contributed to the growth in invested assets and the higher investment
earnings of 1997.
Income before income tax expense and equity in earnings of unconsolidated
subsidiary decreased by $38.6 million to $78.4 million in 1997 compared to
$117.0 million in 1996. While acquisitions added $3.3 million of income before
income tax expense during the fourth quarter, the overall decrease in 1997
income resulted primarily from the decrease in realized gains on investments in
1997.
Income tax expense decreased by $21.8 million in 1997 to $22.0 million
compared to $43.8 million in 1996. The decrease in 1997 was primarily due to the
lower pre-tax income as a result of the lower realized gains on investments, a
$4.5 million provision for the equity add-on tax included in the first half of
1996, and increased tax credits of $3.9 million in 1997. The equity add-on tax
is applicable only to mutual life insurance companies and the Company believes
such tax is not applicable to the Company after June 30, 1996 due to the
conversion of AmerUs Life into a stock company.
Net income decreased by $16.1 million in 1997 to $58.1 million compared to
$74.2 million in 1996. Net income for 1997 included $1.8 million resulting from
acquisitions during the fourth quarter. The overall lower net income for 1997
was primarily due to lower realized gains on investments.
1996 COMPARED TO 1995
A summary of the Company's combined revenues, including revenues associated
with the Closed Block, follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Insurance premiums
Traditional life insurance premiums.................... $228,986 $219,732
Immediate annuity and supplementary contract
premiums............................................ 16,082 17,659
Other premiums......................................... 1,723 6,696
-------- --------
Total insurance premiums............................ 246,791 244,087
Universal life product charges........................... 57,834 56,763
Annuity product charges.................................. 837 607
-------- --------
Total product charges............................... 58,671 57,370
Net investment income.................................... 284,954 285,244
Realized gains on investments............................ 66,464 51,387
-------- --------
Total revenues...................................... $656,880 $638,088
======== ========
</TABLE>
In 1996, individual life and annuity premiums and product charges increased
by $9.0 million to $303.8 million, or 3.1%, from $294.8 million in 1995.
Insurance premiums increased by $2.7 million to $246.8 million in 1996 compared
to $244.1 million in 1995. Traditional life insurance premiums increased by $9.3
million in 1996. The increase in traditional life insurance premiums in 1996 was
primarily the result of continued growth in renewal premiums. Changes in the
level of immediate annuity deposits and supplementary contract premiums were
primarily the result of fluctuations in immediate annuity and supplementary
contract sales. Other premiums decreased significantly in 1996 primarily due to
the Company's exit from several group life and long-term disability reinsurance
pools in the second half of 1995 and the sale of the Company's remaining group
life operation in the third quarter of 1996.
28
<PAGE> 101
Universal life product charges increased slightly in 1996 primarily due to
increased cost of insurance charges as a result of the normal aging of that
block of business.
Net investment income decreased by $0.3 million to $284.9 million in 1996
compared to $285.2 million in 1995. The decrease in net investment income in
1996 was attributable to an increase in average invested assets more than offset
by declines in the effective yields on average invested assets. Average invested
assets (excluding market value adjustments) increased by $171.8 million largely
as a result of the investment of the $175.0 million proceeds from bank
borrowings late during the year. The effective yield on average invested assets
(excluding market value adjustments) decreased to 7.55% in 1996 from 7.88% in
1995. The decrease in effective yield in 1996 was primarily due to lower bond
yields and the timing of the investment of the proceeds from the bank borrowing.
Realized gains on investments were $66.4 million in 1996 compared to gains
of $51.4 million in 1995. Included in the amounts for 1996 were approximately
$51.1 million of gains from the sale of common stock as a result of the
liquidation of the Company's equity portfolio which commenced in 1995. The
increase in gains of $15.0 million in 1996 resulted primarily from increased
sales of common stock in the investment portfolio. The sale of common stock in
1996 and 1995 was a direct result of the Company's decision to reduce the level
of equity securities as a percentage of its investment portfolio on a long-term
basis. Proceeds from these sales were invested primarily in fixed maturity
securities.
A summary of the Company's combined policyowner benefits, including
policyowner benefits associated with the Closed Block, follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Traditional life insurance
Death benefits......................................... $ 32,251 $ 32,196
Change in liability for future policy benefits and
other policy benefits............................... 160,036 152,742
-------- --------
Total traditional life insurance benefits......... 192,287 184,938
Universal life insurance
Death benefits in excess of cash value................. 23,871 20,802
Interest credited to policyowner account balances...... 43,203 41,532
Other policy benefits.................................. 3,026 5,218
-------- --------
Total universal life insurance benefits........... 70,100 67,552
Annuities
Interest credited to deferred annuity account
balances............................................ 66,254 78,120
Other annuity benefits................................. 34,334 35,582
-------- --------
Total annuity benefits............................ 100,588 113,702
Miscellaneous benefits................................... 2,845 8,428
-------- --------
Total policyowner benefits........................ $365,820 $374,620
======== ========
</TABLE>
Total policyowner benefits were $365.8 million in 1996 compared to $374.6
million in 1995. Traditional life insurance benefits increased by $7.3 million
in 1996 primarily due to the growth and aging of the business in force.
Universal life insurance benefits increased by $2.5 million in 1996. The
increased benefits in 1996 were due to increased interest credited to
policyowner account balances and increased death benefits due to higher
mortality. While the weighted average crediting rate for AmerUs Life's universal
life liabilities decreased 19 basis points to 6.27% in 1996 from 6.46% in 1995,
the AmerUs Life's average liabilities increased by $39.8 million from 1995 to
1996, resulting in the increased interest credited amounts in 1996.
Annuity benefits decreased $13.1 million in 1996 to $100.6 million compared
to $113.7 million in 1995, primarily due to reduced interest credited to
policyowner account balances. The weighted average crediting
29
<PAGE> 102
rate for AmerUs Life's individual deferred annuity liabilities decreased 80
basis points to 5.36% in 1996 compared to 6.16% in 1995 and AmerUs Life's
average deferred annuity liabilities decreased by $71.0 million from 1995 to
1996, also contributing to the lower interest credited amounts in 1996.
Miscellaneous benefits decreased significantly in 1996 primarily due to the
Company's exit from several group life and long-term disability reinsurance
pools in the second half of 1995 and the sale of the Company's remaining group
life operation in the third quarter of 1996.
A summary of the Company's combined expenses, including expenses associated
with the Closed Block, follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1996 1995
---- ----
(IN THOUSANDS)
<S> <C> <C>
Commission expense, net of deferrals..................... $ 7,892 $ 10,448
Other underwriting, acquisition and insurance expenses,
net of deferrals....................................... 49,934 40,461
Amortization of deferred policy acquisition costs........ 58,572 50,239
-------- --------
Total expenses...................................... $116,398 $101,148
======== ========
</TABLE>
The Company's commission expense, net of deferrals, decreased by $2.5
million to $7.9 million in 1996 compared to $10.4 million in 1995. The reduction
in 1996 was primarily due to a decrease in gross commission expense as a result
of lower life insurance sales in 1996 and the transfer of new annuity sales to
the Ameritas Joint Venture in May 1996. Other underwriting, acquisition and
insurance expenses, net of deferrals, increased to $49.9 million in 1996 from
$40.5 million in 1995. The increase in expenses in 1996 was due to increased
settlements and associated legal fees of $4.7 million, primarily due to the $5.0
million class action litigation reserve; expenses related to changing the name
of the Company of $0.7 million; higher premium taxes of $1.1 million due to a
one-time adjustment to the amortization of the guaranty association asset and an
increased accrual for estimated future assessments; combined with a gain of $3.1
million recorded against 1995 expenses resulting from the curtailment of the
Company's defined benefit pension plans effective December 31, 1995.
The amortization of deferred policy acquisition costs increased by $8.3
million in 1996. The increased amortization in 1996 was primarily due to higher
gross margins, including increased realized capital gains in 1996, on products
for which deferred costs are amortized.
Dividends to policyowners increased by $6.1 million, or 12.3%, to $55.5
million in 1996 compared to $49.4 million in 1995. The increase in dividends was
primarily the result of the growth and aging of in force business. Traditional
life reserves grew 7.7% from the end of 1995 to the end of 1996. The weighted
average dividend rate credited to these policies was 7.17% in 1996 compared to
7.14% in 1995.
Income from operations increased to $119.1 million in 1996, compared to
$112.9 million in 1995. The increase in 1996 resulted primarily from the
increase in realized gains on investments.
Income before income tax expense and equity in earnings of unconsolidated
subsidiary increased by $6.5 million to $117.0 million in 1996 compared to
$110.5 million in 1995. The increase in 1996 resulted primarily from the
increase in realized gains on investments.
Income tax expense increased by $2.6 million in 1996 to $43.8 million
compared to $41.2 million in 1995. The increase in 1996 income taxes was
primarily the result of the higher pre-tax income due primarily to the increased
realized gains on investments and a $4.5 million provision for the equity add-on
tax in the first half of 1996, partially offset by $2.7 million of low-income
housing tax credits in 1996. The equity add-on tax is applicable only to mutual
life insurance companies and the Company believes such tax is not applicable to
the Company after June 30, 1996 due to the conversion of AmerUs Life into a
stock company.
30
<PAGE> 103
Net income increased by $4.9 million in 1996 to $74.2 million compared to
$69.3 million in 1995. The increased net income in 1996 was primarily due to
higher realized gains on investments.
LIQUIDITY AND CAPITAL RESOURCES
THE COMPANY
The Company's cash flows from operations consist of dividends from
subsidiaries, if declared and paid, interest income on loans and advances to its
subsidiaries (including a surplus note issued to the Company by AmerUs Life),
investment income on assets held by the Company and fees which the Company
charges its subsidiaries and certain other of its affiliates for management
services, offset by the expenses incurred for debt service, salaries and other
expenses.
The Company intends to rely primarily on dividends and interest income from
its life insurance subsidiaries in order to make dividend payments to its
shareholders. The payment of dividends by its life insurance subsidiaries is
regulated under various state laws. Under Iowa law, AmerUs Life and Delta Life
may pay dividends only from the earned surplus arising from their respective
businesses and must receive the prior approval of the Iowa Commissioner to pay
any dividend that would exceed certain statutory limitations. The current
statutory limitation is the greater of (i) 10% of the respective company's
policyowners' surplus as of the preceding year end or (ii) the net gain from
operations for the previous calendar year. Iowa law gives the Iowa Commissioner
broad discretion to disapprove requests for dividends in excess of these limits.
Based on these limitations and 1997 results, AmerUs Life and Delta Life would
have been able to pay approximately $58 million and $8 million in dividends in
1998 respectively without obtaining the Iowa Commissioner's approval. The
payment of dividends by American and FBL is regulated under Kansas law, which
has statutory limitations similar to those in place in Iowa. Based on these
limitations and 1997 results, AmVestors' subsidiaries could pay approximately
$15 million in dividends in 1998. On February 26, 1998 AmerUs Life paid the
Company $5 million in dividends. Based upon the cumulative limitations and 1997
results, the Company's subsidiaries could pay an estimated $75 million in
additional dividends in 1998 without obtaining regulatory approval.
On October 23, 1997, the Company entered into a $250 million revolving
credit facility with a syndicate of lenders (the "Bank Credit Facility") to be
used to replace its existing revolving credit facility, to finance the
acquisition of Delta, to finance permitted mergers and acquisitions and for
other general corporate purposes. The Bank Credit Facility is secured by a
pledge of approximately 49.9% of the outstanding common stock of AmerUs Life,
100% of the outstanding common stock of Delta and a $50 million 9% surplus note
payable to the Company by AmerUs Life. As of December 31, 1997, there was an
outstanding loan balance of $250 million under the facility. The Bank Credit
Facility provides for typical events of default and covenants with respect to
the conduct of the business of the Company and its subsidiaries and requires the
maintenance of various financial levels and ratios. Among other covenants, the
Company (a) cannot have a leverage ratio greater than 0.35:1.0 or an interest
coverage ratio less than 2.5:1.0, (b) is prohibited from paying cash dividends
on its common stock in excess of an amount equal to 3% of its consolidated net
worth as of the last day of the preceding fiscal year, and (c) must cause
certain of its subsidiaries, including AmerUs Life and Delta Life, to maintain
certain ratings from A.M. Best and certain levels of adjusted capital and
surplus and risk-based capital.
The Company may from time to time review other potential acquisition
opportunities. The Company anticipates that funding for any such acquisition may
be provided from available cash resources, from debt or equity financing or
stock-for-stock acquisitions. In the future, the Company anticipates that its
liquidity and capital needs will be met through interest and dividends from its
life insurance subsidiaries, accessing the public equity and debt markets
depending upon market conditions, or alternatively from bank financing.
LIFE INSURANCE SUBSIDIARIES
The cash inflows of the Company's life insurance subsidiaries consist
primarily of premium income, deposits to policyowner account balances, income
from investments, sales, maturities and calls of investments and repayments of
investment principal. Cash outflows are primarily related to withdrawals of
policyowner
31
<PAGE> 104
account balances, investment purchases, payment of policy acquisition costs,
payment of policyowner benefits, income taxes and current operating expenses.
Life insurance companies generally produce a positive cash flow from operations,
as measured by the amount by which cash inflows are adequate to meet benefit
obligations to policyowners and normal operating expenses as they are incurred.
The remaining cash flow is generally used to increase the asset base to provide
funds to meet the need for future policy benefit payments and for writing new
business.
Management anticipates that funds to meet its short-term and long-term
capital expenditures, cash dividends to shareholders and operating cash needs
will come from existing capital and internally generated funds. Management
believes that the current level of cash and available-for-sale and short-term
securities, combined with expected net cash inflows from operations, maturities
of fixed maturity investments, principal payments on mortgage-backed securities
and its insurance products, will be adequate to meet the anticipated short-term
cash obligations of the Company's life insurance subsidiaries.
The Company and its subsidiaries generated cash flows from operating
activities of $224.4 million, $147.6 million and $189.1 million for the years
ended December 31, 1997, 1996 and 1995 respectively. Excess operating cash flows
were primarily used to increase the Company's fixed maturity investment
portfolio.
Matching the investment portfolio maturities to the cash flow demands of
the type of insurance being provided is an important consideration for each type
of life insurance product and annuity. The Company continuously monitors
benefits and surrenders to provide projections of future cash requirements. As
part of this monitoring process, the Company performs cash flow testing of its
assets and liabilities under various scenarios to evaluate the adequacy of
reserves. In developing its investment strategy, the Company establishes a level
of cash and securities which, combined with expected net cash inflows from
operations, maturities of fixed maturity investments and principal payments on
mortgage-backed securities, are believed adequate to meet anticipated short-term
and long-term benefit and expense payment obligations. There can be no assurance
that future experience regarding benefits and surrenders will be similar to
historic experience since withdrawal and surrender levels are influenced by such
factors as the interest rate environment and the claims-paying and financial
strength ratings of the Company's life insurance subsidiaries.
The Company takes into account asset-liability management considerations in
the product development and design process. Contract terms for the Company's
interest-sensitive products include surrender and withdrawal provisions which
mitigate the risk of losses due to early withdrawals. These provisions generally
do one or more of the following: limit the amount of penalty-free withdrawals,
limit the circumstances under which withdrawals are permitted, or assess a
surrender charge or market value adjustment relating to the underlying assets.
The following table summarizes statutory liabilities for interest-sensitive life
products and annuities by their contractual withdrawal provisions at December
31, 1997 (dollars in millions):
<TABLE>
<S> <C>
Not subject to discretionary withdrawal..................... $ 412.9
Subject to discretionary withdrawal with adjustments:
Specified surrender charges(A)............................ 4,546.9
Market value adjustments.................................. 1,319.2
--------
Subtotal............................................... 5,866.1
--------
Subject to discretionary withdrawal without adjustments..... 711.5
--------
Total.................................................. $6,990.5
========
</TABLE>
- -------------------------
(A) Includes $1,674.3 million of statutory liabilities with a contractual
surrender charge of less than five percent of the account balance.
Through its membership in the Federal Home Loan Bank ("FHLB") of Des
Moines, AmerUs Life is eligible to borrow on a line of credit available to
provide it with additional liquidity. Interest is payable at a current rate at
the time of any advance. As of December 31, 1997, AmerUs Life had a $25.0
million open secured line of credit against which there were no borrowings. In
addition to the line of credit, AmerUs Life has long-term advances from the FHLB
outstanding of $16.4 million at December 31, 1997.
32
<PAGE> 105
The Company's life insurance subsidiaries may also obtain liquidity through
sales of investments or borrowings collateralized by their investment
portfolios. The Company's investment portfolio as of December 31, 1997 had a
carrying value of $8.9 billion, including Closed Block investments. As of
December 31, 1997, fixed maturity securities were $7.9 billion or 88.9% of
invested assets, with public and private fixed maturity securities constituting
$7.5 billion, or 95.4%, and $0.4 billion, or 4.6%, of total fixed maturity
securities, respectively.
At December 31, 1997, the statutory surplus of AmerUs Life, Delta Life,
American and FBL were approximately $325 million, $83 million, $112 million and
$41 million, respectively. The Company believes that these levels of statutory
capital are more than adequate as each life insurance subsidiary's risk-based
capital is significantly in excess of required levels.
In the future, in addition to their cash flows from operations and
borrowing capacity, the life insurance subsidiaries would anticipate obtaining
their required capital from the Company as the Company will have access to the
public debt and equity markets.
YEAR 2000 COMPLIANCE
As the year 2000 approaches, an important business issue has emerged
regarding how existing application software programs and operating systems can
accommodate the date value "2000." Many existing application software products
were designed to only accommodate a two digit date position which represents the
year (e.g., the number "95" is stored on the system and represents the year
1995). As a result, the year 1999 (i.e., "99") is the maximum date value many
systems will be able to accurately process. The Company formed a year 2000
working group to address potential problems posed by this development to assure
that the Company is prepared for the year 2000. The Company has already made
significant progress in accomplishing the necessary modifications and
conversions to deal with year 2000 issues and anticipates that the majority of
the required efforts will be completed by the end of 1998. Management does not
anticipate that the Company will incur significant operating expenses or be
required to invest heavily in computer system improvements to address year 2000
issues. Total estimated costs are in a range of $4 to $6 million with
approximately $3 million to be incurred in 1998. However, if modifications and
conversions to deal with year 2000 issues are not completed on a timely basis or
are not fully effective, such issues may have a material adverse effect on the
operations of the Company. All costs associated with year 2000 modifications and
conversions will be expensed as incurred.
33
<PAGE> 106
BUSINESS
OVERVIEW
GENERAL
The Company is an insurance holding company engaged through its
subsidiaries in the business of marketing, underwriting and distributing a broad
range of individual life insurance and annuity products to individuals and
businesses in 49 states, the District of Columbia and the U.S. Virgin Islands.
The Company's primary product offerings consist of whole life, universal life
and term life insurance policies and fixed annuities. As of December 31, 1997,
the Company had approximately 573,000 life insurance policies and annuity
contracts outstanding and individual life insurance in force, net of
reinsurance, of approximately $26.7 billion with life insurance reserves of $2.4
billion and annuity reserves of $6.1 billion. As of December 31, 1997, the
Company had total assets of $10.3 billion and total shareholders' equity of
$928.0 million. In addition, through the Ameritas Joint Venture with Ameritas,
AmerUs Life markets fixed annuities issued by AVLIC and sells AVLIC's variable
life insurance and variable annuity products.
THE COMPANY'S PRINCIPAL SUBSIDIARIES
The Company's principal subsidiaries are AmerUs Life, Delta and AmVestors.
AmerUs Life was originally incorporated in 1896 as a mutual insurance company.
AmerUs Life's target customers are individuals in the middle and upper income
brackets and small businesses. Its geographic focus is national in scope (except
for Connecticut, Maine, New Hampshire, New York and Vermont, in which AmerUs
Life is not licensed to do business), and it primarily serves suburban and rural
areas. Efforts are currently underway to expand AmerUs Life's territory into the
states of Connecticut, Maine, New Hampshire and Vermont. AmerUs Life distributes
its products primarily through a combination of career general agency and PPGA
distribution systems, as well as a network of independent brokers. The career
general agency system consists of a network of 35 career general agencies, with
approximately 570 career agents. The PPGA system is comprised of approximately
425 PPGA's, who have approximately 1,100 agents. As of December 31, 1997, AmerUs
Life had approximately 408,000 life insurance policies and annuity contracts
outstanding and individual life insurance in force, net of reinsurance, of
approximately $26.6 billion. Variable life insurance products and the fixed and
variable annuities offered by the Ameritas Joint Venture are marketed through
AmerUs Life's distribution systems and the distribution systems of Ameritas and
AVLIC, which consist of approximately 160 agents and 540 independent
broker-dealers (with approximately 9,000 registered representatives),
respectively.
The Company made two major acquisitions in 1997. The Company acquired Delta
on October 23 for approximately $165 million in cash and AmVestors on December
19 in a stock exchange valued at approximately $350 million. These acquisitions,
along with the growth of AmerUs Life, increased the Company's assets from $4.4
billion at December 31, 1996 to $10.3 billion at December 31, 1997.
The principal asset of Delta is its wholly-owned subsidiary, Delta Life, an
Iowa domiciled life insurance company. Delta Life is licensed in the District of
Columbia and in all states except New York, and specializes in the sale of
individual single and flexible premium deferred annuities, primarily in the
southeastern, western, southwestern and midwestern regions of the United States.
Sales are made primarily through a network of over 3,300 independent agents.
Delta Life's strategy is to structure its fixed annuity products to appeal to
the conservative retirement saver who is seeking principal preservation and
consistency of earnings. Most of Delta Life's products are innovative in that
they incorporate a fixed contractual management fee. Approximately 58% of
Delta's 1997 direct collected premiums were derived from retirement-oriented
tax-qualified annuities. Delta had direct collected premiums of $192.6 million
in 1997 and as of December 31, 1997 had annuity reserves of $1.8 billion. See
"Reorganization and Recent Acquisitions -- Acquisition of Delta Life
Corporation".
AmVestors' principal operating subsidiaries are American, a Kansas
domiciled life insurance company licensed in 48 states and the District of
Columbia; and FBL, a Kansas domiciled life insurance company doing business in
40 states, the District of Columbia and the U.S. Virgin Islands. AmVestors
specializes in the sale of annuity products, further strengthening the Company's
presence in the rapidly growing asset accumulation
34
<PAGE> 107
and retirement and savings markets. AmVestors utilizes product features intended
to enhance the potential for profit by encouraging persistency and reducing
premature withdrawal during the first five to fourteen years of an annuity
contract. AmVestors distributes its products through a national network of
approximately 7,800 licensed independent agents recruited through its
wholly-owned subsidiaries, as well as through almost 60 independent marketing
organizations. As of December 31, 1997, AmVestors had approximately 104,000
annuity contracts outstanding. AmVestors had direct collected premiums of $583.4
million in 1997 and as of December 31, 1997 had annuity reserves of $3.1
billion. See "Reorganization and Recent Acquisitions -- Acquisition of AmVestors
Financial Corporation."
AMERITAS JOINT VENTURE
On April 1, 1996 the Company commenced the Ameritas Joint Venture with
Ameritas. The Company participates in the Ameritas Joint Venture through AmerUs
Life's 34% ownership interest in AMAL. AMAL's operations are conducted through
AVLIC and Ameritas Investment Corp. ("AIC"), its two wholly-owned subsidiaries,
which have been in business since 1983. AVLIC is licensed to conduct business in
46 states and the District of Columbia. AIC is a registered broker-dealer which
is licensed to do business in all states except New York. As of December 31,
1997, AMAL had total consolidated assets of $1.5 billion and total consolidated
shareholder's equity of $72.0 million on a GAAP basis. AVLIC had $3.8 billion of
insurance in force and $45.3 million in surplus as of December 31, 1997, on a
statutory basis. AmerUs Life's partner in the Ameritas Joint Venture, Ameritas,
is a Nebraska life insurance company which has been in existence for more than
100 years. The distribution systems of Ameritas and AVLIC consist of
approximately 160 agents and 540 independent broker-dealers with approximately
9,000 registered representatives. On a statutory basis, Ameritas had $1.9
billion in assets, $8.2 billion of insurance in force and $311.3 million in
surplus as of December 31, 1997.
AmerUs Life's investment in the Ameritas Joint Venture affords AmerUs Life
access to a line of existing variable life insurance and annuity products.
AmerUs Life and Ameritas have equal membership on the board of directors of
AMAL, AVLIC and AIC. The Company and Ameritas each have guaranteed the
obligations of AVLIC. The guarantee of each party is joint and several, and will
remain in effect until certain financial conditions are met. Under the terms of
the Joint Venture Agreement, AmerUs Life has an option to purchase an additional
5% to 15% of AMAL if certain premium growth targets are met.
STRATEGY
The business strategy of the Company is to focus on providing individual
retail consumers in the United States with superior financial services and
products that will meet their financial planning, risk protection, and asset
accumulation needs. Target markets of the Company include individuals in the
middle and upper income brackets and small businesses. Its geographic focus is
national in scope (except for New York, in which the Company is not licensed to
do business), and it primarily serves suburban and rural areas.
The Company seeks to effect this strategy by focusing on life insurance and
asset accumulation products distributed through a variety of distribution
systems. In particular, the Company has developed a very strong position in the
distribution of fixed annuities through independent agents and has a long
established reputation as a provider of whole life insurance products,
distributed through career and PPGA agency distribution systems, that are among
the most attractively priced products to consumers in the industry.
The Company's strategy emphasizes effective management of certain operating
fundamentals -- mortality, expenses, persistency and investment results -- where
the Company's results have historically compared favorably to the industry. The
Company's operating strengths have enabled it to provide attractively priced
products to consumers while also generating profitability for its shareholders.
Growth through a combination of internal growth and mergers, acquisitions
and strategic alliances is a key element of the Company's strategy. In the life
insurance market, the Company presently has only 0.3% of new life insurance
sales nationwide, which provides substantial opportunity for increased growth
through improved marketing and sales execution even in a generally flat business
environment.
35
<PAGE> 108
In the fixed annuity area, the Company is presently a leader in the
distribution of fixed annuities through independent agents. Independent agents
have increased their share of fixed annuity sales in recent years and the
Company's goal is to consistently rank among the top 3 to 5 providers in this
segment.
The Company continues to seek to both deepen and diversify its distribution
channels. Primarily as a result of the acquisitions of AmVestors and Delta, the
Company's distribution channels have grown significantly in recent years. As of
December 31, 1997, the Company had over 15,000 distributors as compared to
approximately 3,700 distributed as of December 31, 1996. While continuing to
expand its existing channels, the Company is in the process of developing
additional bank and major independent marketing organization distribution
channels.
The Company believes it is well positioned to compete effectively based
upon a number of strengths including its strong operating performance,
customer-driven product offerings, productive and diversified distribution
systems, sophisticated asset-liability management capabilities and a customer
service orientation. In addition, the Company will continue to seek new business
opportunities through mergers, acquisitions and strategic alliances.
INTEGRATION OF RECENTLY ACQUIRED SUBSIDIARIES
The Company made two major acquisitions in 1997, acquiring Delta on October
13, 1997 for approximately $165 million in cash and AmVestors on December 19,
1997 in a stock exchange valued at approximately $350 million. These
acquisitions, along with the growth of AmerUs Life, increased the Company's
assets from $4.4 billion at December 31, 1996 to $10.3 billion at December 31,
1997.
The Company believes it has been successful in completing its integration
plans in respect of both Delta and AmVestors. The operations of Delta have been
integrated with those of AmerUs Life and the investment operations of AmVestors
have been merged with the investment management operations of the Company.
Delta's operations have been integrated with AmerUs Life's operations
except for Delta's marketing, sales management and customer services functions
and the distribution system which will remain separate. Delta's offices in
Memphis, Tennessee have been closed and all of Delta's operations have been
relocated to AmerUs Life's facilities in Des Moines, Iowa. By integrating most
of Delta's operations with those of AmerUs Life, Delta has reduced the number of
employees by over 50%, and the Company currently projects that general insurance
and investment expenses of Delta, before deferrals, will be reduced by
approximately 48% or $10 million on an annualized basis following integration of
operations with AmerUs Life at the end of March, 1998. The Company believes that
additional expense reductions will be attainable as AmerUs Life's technology
enhancements, such as imaging, are applied to Delta Life's operations.
The investment operations of AmVestors have been merged with those of the
Company. In addition, the Company intends to move towards the use of common
administrative systems and platforms for all of its annuity businesses. While
various other functions are also likely to be integrated (e.g. audit;
asset-liability management and some product development) the Company intends to
maintain AmVestors as a separate administrative as well as marketing and sales
entity. Savings from elimination of public company costs and reductions in
management personnel, when added to savings from integration of AmVestors'
investment operations with those of AmerUs, have produced initial savings
consistent with original expectations. Other staff reductions at AmVestors
completed during the first quarter of 1998 will probably produce savings in 1998
in excess of those anticipated at the time of the transactions. While AmVestors'
operations will be maintained, expense savings relating to the AmVestors
Acquisition are expected to exceed original expectations. Continued growth in
1999 and beyond should allow the estimated cost savings projected for later
years to be realized without the need for a potentially disruptive back office
integration.
PRODUCTS
GENERAL
The Company offers a diverse line of individual life insurance products
which are tailored to its markets. In addition, the Company recently acquired
Delta and AmVestors, through which it now offers additional
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annuity products. The Company also is a party to the Ameritas Joint Venture,
which offers fixed and variable annuity and variable life insurance products. As
a result of superior operating fundamentals, including mortality, persistency,
operating expenses and investment yield, the Company has had a long history of
providing high-value, low-cost products to its customers, while operating
profitably. Moreover, the Company continuously reviews and updates its product
portfolio in order to continue offering a broad range of products at competitive
performance levels.
The pricing of the Company's products is generally determined by reference
to actuarial calculations and statistical assumptions principally relating to
mortality, persistency, investment yield assumptions, estimates of expenses and
management's judgment as to market and competitive conditions. The premiums and
deposits received, together with assumed investment earnings, are designed to
cover policy benefits, expenses and policyowner dividends plus return a profit
to the Company. These profits arise from the margin between mortality charges
and insurance benefits paid, the margin between actual investment results and
the investment income credited to policies (either directly or through dividends
to policyowners) and the margin between expense charges and actual expenses. The
level of profits also depends on persistency because business acquisition costs,
particularly agent commissions, are recovered over the life of the policy.
Dividends and interest credited on policies (including policies included in the
Closed Block) may vary from time to time reflecting changes in investment,
mortality, persistency, expenses and other factors. Interest rate fluctuations
have an effect on investment income and may have an impact on policyowner
behavior. Increased lapses in policies may be experienced if the Company does
not maintain interest rates and dividend scales that are competitive with other
products in the marketplace.
AMERUS LIFE PRODUCTS
Traditional life insurance and universal life insurance have accounted for
approximately 70% and 30%, respectively, of AmerUs Life's total individual life
insurance premiums over the last three years. In addition, AmerUs Life has
historically offered a broad line of fixed annuity products.
TRADITIONAL LIFE INSURANCE PRODUCTS. AmerUs Life's traditional life
insurance products have a long history of being highly competitive within the
industry. Traditional life insurance products include participating whole life
and term life insurance products. Participating whole life insurance is designed
to provide benefits for the life of the insured. This product generally provides
for level premiums and a level death benefit and requires payments in excess of
the mortality cost in earlier years to offset increasing mortality costs in
later years. AmerUs Life also offers a second to die whole life insurance
product which insures two lives and provides benefits upon the death of the
second insured. AmerUs Life targets its second to die products primarily to
potential customers seeking to achieve estate planning goals.
AmerUs Life also offers a portfolio of term insurance policies that provide
life insurance protection for a specific time period (which generally can be
renewed at an increased premium). Such policies are mortality-based and offer no
cash accumulation feature. Term life insurance is a highly competitive and
quickly changing market. During 1997, AmerUs Life introduced new 10 and 20 year
term products. As a result, AmerUs Life's first year annualized premiums for
term insurance sales increased by 85% from 1996 to 1997.
Since 1989, AmerUs Life has offered a flexible life insurance product which
is a combination of permanent participating whole life insurance, increasing
paid-up additions and decreasing term insurance coverage. These products give
policyowners additional flexibility in designing an appropriate combination of
permanent and term life insurance coverages to meet their specific needs at
varying premium levels.
For the year ended December 31, 1997, sales of participating whole life and
term life insurance products represented 55% and 16%, respectively, of first
year annualized premiums for all individual life insurance products sold by
AmerUs Life.
UNIVERSAL LIFE INSURANCE PRODUCTS. AmerUs Life offers universal life
insurance products, pursuant to which an insurance account is maintained for
each insurance policy. Premiums, net of specified expenses, are credited to the
account, as is interest, generally at a rate determined from time to time by
AmerUs Life. Specific charges are made against the account for the cost of
insurance and for expenses. The universal life
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policy provides flexibility as to the amount and timing of premium payments and
the level of death benefits provided.
AmerUs Life's universal life insurance products provide benefits for the
life of the insured. Within limits established by AmerUs Life and state
regulations, policyowners may vary the premiums and the amount of the policy's
death benefit as long as there are sufficient policy funds available to cover
all policy charges for the coming period. Interest is credited to the policy at
a rate determined from time to time by AmerUs Life. During 1997, AmerUs Life
introduced a new second to die universal life product for the estate planning
market, enhancing universal life production for the year. The weighted average
crediting rate for AmerUs Life's universal life insurance liabilities was 6.23%
for the year 1997, 6.27% for the year 1996 and 6.46% for the year 1995. For the
year ended December 31, 1997, sales of universal life insurance products
represented 29% of first year annualized premiums for all individual life
insurance products sold by AmerUs Life.
FIXED ANNUITY PRODUCTS. Historically, AmerUs Life has offered a broad
portfolio of fixed annuity products. Annuities provide for the payment of
periodic benefits over a specified time period. Benefits may commence
immediately or may be deferred to a future date. Fixed annuities generally are
backed by a general investment account and credited with a rate of return that
is periodically reset.
Since the formation of the Ameritas Joint Venture in May 1996,
substantially all individual deferred annuity sales by AmerUs Life's
distribution systems are made through the Ameritas Joint Venture, resulting in a
significant decline in the sale of such products by AmerUs Life. However, AmerUs
Life retained the right to continue to issue replacement business to its fixed
annuity customers in existence prior to the effective date of the Joint Venture
Agreement.
DELTA PRODUCTS
Delta specializes in the sale of deferred fixed and equity index annuities
to individuals. Delta's product offerings differ from those of many of its
competitors in two ways. First, Delta offers an interest rate crediting strategy
on almost all of its single and flexible premium deferred annuities that credits
the policy with a return generally based upon the interest rates it earns on
assets supporting the respective policies less contractual management fees. In
addition, these policies offer a lifetime guaranteed minimum interest crediting
rate and an annual guaranteed interest crediting rate. Second, Delta's current
investment policy provides for no less than 70% of policyowners' assets be
invested in securities issued, secured or guaranteed by the U.S. Government,
government agencies or government instrumentalities. The balance of these funds
is invested primarily in investment grade corporate bonds and commercial
mortgages.
In 1996 and 1997 Delta introduced and commenced marketing two single
premium equity index annuity products that are based either on Standard & Poor's
500 Composite Stock Price Index(TM), or a basket of five international stock
market indices from France, Germany, Japan, Switzerland and the United Kingdom.
Earnings credited to these products are linked to increases in the anniversary
date values of the applicable index, less management fees. The policyowner is
guaranteed to receive at least 110% of the original premium at the end of the
seven year term of the policy, assuming no withdrawals.
AMVESTORS PRODUCTS
AmVestors specializes in the sale of fixed deferred annuity products to
individuals. During each of the past three years, sales of deferred annuities
have accounted for approximately 97% of AmVestors' premiums received, while
sales of single premium immediate annuities and flexible premium universal life
insurance have accounted for virtually all remaining premiums received. As of
December 31, 1997, AmVestors had total annuity reserves of $3.1 billion.
AmVestors' deferred annuities have an initial credited interest rate
guaranteed for a period of one to five years. Following the initial guarantee
period, AmVestors may adjust the credited interest rate annually, subject to the
guaranteed minimum interest rates specified in the contracts. Such minimum
guaranteed rates currently range from 3% to 6%.
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AmVestors designs its products and directs its marketing efforts towards
the savings and retirement market. Historically, the 50 and older age group has
accounted for over 86% of all annuity premiums received by AmVestors. AmVestors
continues to target this age group because management believes that as this
group ages, it will have an increasing interest in saving for retirement,
nursing home care and unanticipated medical costs. The portfolio of products is
continuously reviewed with new plans added and others discontinued in an effort
to remain competitive.
AMERITAS JOINT VENTURE PRODUCTS
The Ameritas Joint Venture offers fixed annuity products which are
substantially similar to those previously marketed by AmerUs Life. In addition,
the Ameritas Joint Venture offers, through AVLIC, flexible premium and single
premium variable universal life insurance products and variable annuities.
Variable products provide for allocation of funds to a general account or to one
or more separate accounts under which the owner bears the investment risk.
Through AVLIC's fund managers, owners of variable annuities and life insurance
policies are able to choose from a range of investment funds offered by each
manager.
Under the terms of the Joint Venture Agreement governing the Ameritas Joint
Venture, AmerUs Life and Ameritas write their new single and flexible premium
deferred fixed annuities and variable annuities and variable life insurance
through the Ameritas Joint Venture. AmerUs Life has retained the right to
continue to issue replacement business to its fixed annuity customers in
existence prior to the effective date of the Joint Venture Agreement.
The variable life insurance products and the fixed and variable annuities
offered by the Ameritas Joint Venture are distributed through AmerUs Life's
career general agency and PPGA distribution systems, as well as through the
distribution systems of Ameritas and AVLIC.
In response to customer demand, AmerUs Life developed an equity index
annuity which it began offering through the Ameritas Joint Venture in the fourth
quarter of 1996. An equity index annuity provides a minimum baseline fixed rate
of return in addition to sharing in a portion of the appreciation realized from
an investment in an indexed investment fund, such as the S&P 500 stock index.
AmerUs Life retained the right to issue this type of contract to certain of its
customers in existence prior to the effective date of the Joint Venture
Agreement and through certain other distribution systems. Sales of such products
amounted to 15% of AmerUs Life's total fixed annuity production in 1997.
DISTRIBUTION SYSTEMS
AMERUS LIFE
AmerUs Life markets its insurance products on a national basis primarily
through a career general agency system, a PPGA system, independent insurance
brokers and certain of AmerUs Life's affiliates. AmerUs Life currently employs
ten regional vice presidents who are responsible for supervising the career
general agencies and/or PPGA agents within their assigned geographic regions.
CAREER GENERAL AGENCY SYSTEM AND BROKERS. Under the career general agency
system, AmerUs Life enters into a contractual arrangement with the career
general agent for the sale of insurance products by the career agents and
brokers assigned to the career general agent's agency. The career general agents
are primarily compensated by receiving a percentage of the first year
commissions paid to career agents and brokers in the career general agent's
agency and by renewal commissions on premiums subsequently collected on that
business.
The career general agents are independent contractors and are generally
responsible for the expenses of operating their agencies, including office and
overhead expenses and the recruiting, selection, contracting, training and
development of career agents and brokers in their agency. Currently, AmerUs Life
has 35 career general agents in 23 states, through which approximately 570
career agents sell AmerUs Life's products. While career agents in the career
general agency system are non-exclusive, AmerUs Life believes most agents use
AmerUs Life's products for a majority of their new business of the type of
products offered by AmerUs
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Life. No single career general agency accounts for more than 10% of the total
first year commissions paid by AmerUs Life.
Career agents are also independent contractors and are primarily
compensated by commissions on first year and renewal premiums collected on
business written by them. In addition, career agents can earn bonus commissions,
graded by production and persistency on their business.
AmerUs Life also sells its products through a network of approximately
1,900 insurance brokers in all jurisdictions in which AmerUs Life is licensed to
sell insurance. Brokers are independent contractors who sell a variety of
insurance products issued by various companies. Brokers operate through the
career general agency system but are compensated under a commission structure
which is separate from those used for career agents and in the PPGA system.
PERSONAL PRODUCING GENERAL AGENCY SYSTEM. Under the PPGA system, AmerUs
Life contracts primarily with individuals who are experienced individual agents
or head a small group of experienced individual agents. These individuals are
independent contractors and are responsible for all of their own expenses. These
individuals often sell products for other insurance companies, and may offer
selected products of AmerUs Life rather than AmerUs Life's full line of
insurance products. The PPGA system is comprised of approximately 425 PPGA's,
with approximately 1,100 agents.
PPGA's are compensated by commissions on first year and renewal premiums
collected on business written by themselves and the agents in their units. In
addition to a base commission, PPGA's may earn bonus commissions on their
business, graded by production and persistency.
DELTA
Delta's annuity products are sold through independent agents who are
supervised by regional vice presidents and regional directors with specified
geographic supervisory responsibilities. The regional vice presidents and
regional directors are primarily responsible for recruiting agents and providing
marketing support to those agents in an effort to promote Delta's products. The
regional vice presidents' and regional directors' marketing support activities
include informational mailings, seminars, and case consultations, all of which
are designed to educate agents about annuities in general and Delta in
particular. Regional vice presidents and regional directors are paid a base
salary plus incentive compensation based on the business produced by agents
within their territory. There are currently ten regional vice presidents and
regional directors.
The regional vice presidents and regional directors are responsible for
over 3,300 licensed, independent agents, who may also sell insurance products
for other companies. Of these agents, approximately 1,400 wrote annuity business
for Delta in 1997. No single agent was responsible for more than 1.6% of Delta's
1997 annuity premiums. No significant amount of Delta's business is produced by
stock brokerage firms, banks or large national insurance brokerage agencies.
AMVESTORS
AmVestors endeavors to attract agents to sell its products by offering a
broad selection of fixed annuity products and by providing timely, comprehensive
services to agents and customers. AmVestors markets its products through
independent agents. AmVestors currently has approximately 7,800 independent
agents licensed to sell its products. AmVestors also maintains contact with
approximately 50,000 agents that are not currently licensed, but have either
sold the AmVestors' annuities in the past or have expressed an interest in doing
so. These agents continue to receive periodic mailings related to interest rate
and commission changes, and new product introductions, and are reappointed as
required in order to represent AmVestors in selling its products. However, in
order to save costs associated with reappointing agents, AmVestors does not
automatically relicense an agent that has not written business for twelve
months.
No single agent accounted for more than 1.2% of American's annuity sales in
1997, and no single agent accounted for more than 3.0% of FBL's annuity sales in
1997. AmVestors does not have exclusive agency
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agreements with its agents and management believes most of these agents sell
products for other insurance companies similar to those sold by American and
FBL.
INVESTMENT PORTFOLIO
GENERAL
The Company maintains a diversified portfolio of investments which is
supervised by an experienced in-house staff of investment professionals. The
Company employs sophisticated asset management techniques in order to achieve
competitive yields, while maintaining risk at acceptable levels. The asset
portfolio is segmented by liability type, with tailored investment strategies
for specific product lines. Investment policies and significant individual
investments are subject to approval by the Board of Directors of each of the
life insurance companies and are overseen by the Investment Committee of the
Board of Directors of the Company. Management regularly monitors individual
assets and asset groups, in addition to monitoring the overall asset mix. In
addition, the insurance company boards and the Investment Committee review
investment guidelines and monitor internal controls.
INVESTMENT STRATEGY
The Company's investment philosophy is to employ an integrated
asset-liability management approach with separate investment portfolios for
specific product lines, such as traditional life, universal life and annuities
to generate attractive risk-adjusted returns on capital. Essential to this
philosophy is coordinating investments in the investment portfolio with product
strategies, focusing on risk-adjusted returns and identifying and evaluating
associated business risks.
The Company's asset-liability management approach utilizes separate
investment portfolios for specific product lines, such as traditional life,
universal life and annuities. Investment policies and strategies have been
established based on the specific characteristics of each product line. The
portfolio investment policies and strategies establish asset duration, quality
and other guidelines. The Company utilizes analytical systems to establish an
optimal asset mix for each line of business. The Company seeks to manage the
asset-liability mismatch and the associated interest rate risk through active
management of the investment portfolio. Financial, actuarial, investment,
product development and product marketing professionals work together throughout
the product development, introduction and management phases to jointly develop
and implement product features, initial and renewal crediting strategies, and
investment strategies based on extensive modeling of a variety of factors under
a number of interest rate scenarios.
INVESTED ASSETS
The Company maintains a diversified portfolio of investments, including
public and private fixed maturity securities, commercial mortgage loans and
equity real estate. The Company's objective is to maintain a high-quality,
diversified fixed maturity securities portfolio that produces a yield and total
return that supports the various product line liabilities and the Company's
earnings goals.
FIXED MATURITY SECURITIES
The fixed maturity securities portfolio consists primarily of investment
grade corporate fixed maturity securities, high-quality MBS and United States
government and agency obligations. As of December 31, 1997 fixed maturity
securities were $7,927.5 million, or 88.9% of the carrying value of invested
assets with public and private fixed maturity securities constituting $7,561.9
million, or 95.4%, and $365.6 million, or 4.6%, of total fixed maturity
securities, respectively.
The Company's portfolio of investment grade fixed maturity securities is
diversified by number and type of issuer. As of December 31, 1997, investment
grade fixed maturity securities included the securities of over 617 issuers,
with 2,222 different issues of securities. No issuer represents more than 2.8%
of investment grade fixed maturity securities.
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Below-investment grade fixed maturity securities as of December 31, 1997
represented 4.6% of total invested assets, with the largest being a $10.6
million investment.
As of December 31, 1997, 88.7% of total invested assets were investment
grade fixed maturity securities.
Mortgage backed securities ("MBS") comprise a core position within the
Company's fixed maturity securities investments. MBS investments include
residential, commercial MBS, home equity loans (including home equity loans
purchased from one of the Company's affiliates), manufactured housing, FHA Title
I and CMBS. Residential mortgage pass-throughs and collateralized mortgage
obligations ("CMOs") total $2,794.9 million or 31.8% of total invested assets.
As of December 31, 1997, MBS were $3,450.3 million or 38.7%, of total invested
assets. MBS guaranteed by the United States government or an agency of the
United States government were $2,793.6 million, or 81.0% of MBS, and other MBS
were $656.7 million, or 19.0%, of MBS as of December 31, 1997. At December 31,
1997 the Company's MBS investment portfolio composition was approximately 54%
fixed rate pass-throughs backed by seasoned loan pools, 5% floating rate
pass-throughs and 41% CMOs with some form of explicit prepayment protection. The
Company has established specific investment guidelines for the management of
MBS. As a general policy, the Company does not invest in interest-only and
principal-only or other similar leveraged derivative mortgage instruments.
Management believes that the quality of assets in the MBS portfolio is generally
high, with 91.7% of such assets representing agency backed or "AAA" rated
securities.
The Company uses interest rate swaps and caps to reduce its exposure to
changes in interest rates and to manage duration mismatches. Although the
Company is subject to the risk that counterparties will fail to perform, credit
standings of counterparties are monitored regularly. The Company's policy is to
contract only with counterparties that are rated "AA" or higher; accordingly, it
is expected that counterparties will be able to satisfy their obligations under
such contracts. The Company is also subject to the risk associated with changes
in the value of contracts. However, such adverse changes in value generally are
offset by changes in the value of the items being hedged. The notional principal
amounts of the swaps and caps, which represent the extent of the Company's
involvement in such contracts but not the risk of loss, at December 31, 1997,
amounted to $1,100.2 million. The swaps had no carrying value at December 31,
1997 and a fair value which amounted to a net payable position of $0.1 million
at December 31, 1997. The carrying value and fair value of interest rate caps
and swaptions amounted to $2.1 million and $2.0 million, respectively, and are
reflected as "other investments" on the Company's consolidated financial
statements as of December 31, 1997. The net amount payable or receivable from
interest rate swaps and caps is accrued as an adjustment to interest income.
MORTGAGE LOANS
As of December 31, 1997, mortgage loans in the Company's investment
portfolio were $462.5 million, or 5.2% of the aggregate carrying value of
invested assets, including the Closed Block. As of December 31, 1997, commercial
mortgage loans and residential mortgage loans comprised 96.4% and 3.6%,
respectively, of the mortgage loans in the Company's investment portfolio.
Commercial mortgage loans consist primarily of fixed-rate mortgage loans.
As of December 31, 1997, the Company held 435 individual commercial mortgage
loans with an average balance of $1.1 million.
As of December 31, 1997, only five loans aggregating $2.0 million, or 0.4%,
of the Company's loan portfolio (as measured by principal balance) were
classified as delinquent or in foreclosure. As of the same date, only $4.4
million, or 0.9%, of the Company's loan portfolio (as measured by principal
balance) was classified as restructured. During 1997, the Company had no
foreclosures.
EQUITY REAL ESTATE
In recent years the Company has significantly reduced its equity real
estate portfolio. As of December 31, 1997, the carrying value of investment real
estate, including the Closed Block, was $8.7 million.
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OTHER
The Company held $286.2 million of policy loans on individual insurance and
annuity products as of December 31, 1997. Policy loans are permitted to the
extent of a policy's contractual limits and are fully collateralized by policy
cash values.
As of December 31, 1997, the Company held equity securities of $61.5
million. The largest holding of equity securities, Federal Home Loan Bank, had a
carrying value of $28.1 million as of December 31, 1997.
The Company held $172.0 million of other invested assets (including
short-term investments) on December 31, 1997. Other invested assets consist
primarily of various joint venture and limited partnership investments.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby, consisting of notes, debentures and
other evidences of indebtedness, are to be issued in one or more series
constituting either senior Debt Securities ("Senior Debt Securities") or junior
subordinated Debt Securities ("Junior Subordinated Debt"). Unless otherwise
specified in the applicable Prospectus Supplement, the Debt Securities will be
issued pursuant to indentures described below (as applicable, the "Senior
Indenture" or the "Subordinated Indenture", each, an "Indenture" and, together,
the "Indentures"), in each case between the Company and the trustee identified
therein (each an "Indenture Trustee"), the forms of which have been filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
Except as provided in the applicable Prospectus Supplement and except for the
subordination provisions of the Subordinated Indenture, for which there are no
counterparts in the Senior Indenture, the provisions of the Subordinated
Indenture are substantively identical to the provisions of the Senior Indenture
that bear the same section numbers.
The statements herein relating to the Debt Securities and the following
summaries of certain general provisions of the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indentures (as they may be amended or supplemented
from time to time), including the definitions therein of certain terms
capitalized in this Prospectus. All article and section references appearing
herein are to articles and sections of the applicable Indenture and whenever
particular Sections or defined terms of the Indentures (as they may be amended
or supplemented from time to time) are referred to herein or in a Prospectus
Supplement, such Sections or defined terms are incorporated herein or therein by
reference.
GENERAL
The Debt Securities will be unsecured obligations of the Company. The
Indentures do not limit the aggregate amount of Debt Securities which may be
issued thereunder, nor do they limit the incurrence or issuance of other secured
or unsecured debt of the Company. The Debt Securities issued under the Senior
Indenture will be unsecured and will rank pari passu in right of payment with
all other unsecured and unsubordinated debt obligations of the Company. The Debt
Securities issued under the Subordinated Indenture will be subordinate and
junior in right of payment, to the extent and in the manner set forth in the
Subordinated Indenture, to all Senior Indebtedness of the Company. See "--
Subordination under the Subordinated Indenture."
Reference is made to the applicable Prospectus Supplement which will
accompany this Prospectus for a description of the specific series of Debt
Securities being offered thereby, including, but not limited to, the following:
(1) the title of such Debt Securities, including whether the Debt Securities are
Senior Debt Securities or Junior Subordinated Debt and whether such Debt
Securities will be issued under the Senior Indenture, the Subordinated Indenture
or another indenture set forth in the Prospectus Supplement; (2) any limit upon
the aggregate principal amount of such Debt Securities; (3) the date or dates on
which the principal of and premium, if any, on such Debt Securities will mature
or the method of determining such date or dates; (4) the rate or rates (which
may be fixed or variable) at which such Debt Securities will bear interest, if
any, or the method of calculating such rate or rates; (5) the date or dates from
which interest, if any, will accrue or the method by which such date or dates
will be determined; (6) the date or dates on which
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interest, if any, will be payable and the record date or dates therefor; (7) the
place or places where principal of, premium, if any, and interest, if any, on
such Debt Securities will be payable; (8) with respect to Junior Subordinated
Debt Securities, the right, if any, of the Company to defer payment of interest
on such Debt Securities, the maximum length of any such deferral period and any
related terms, conditions or covenants; (9) the period or periods within which,
the price or prices at which, the currency or currencies (including currency
unit or units) in which, and the terms and conditions upon which, such Debt
Securities may be redeemed, in whole or in part, at the option of the Company;
(10) the obligation, if any, of the Company to redeem or purchase such Debt
Securities pursuant to any sinking fund or analogous provisions or upon the
happening of a specified event and the period or periods within which, the price
or prices at which and the other terms and conditions upon which, such Debt
Securities shall be redeemed or purchased, in whole or in part, pursuant to such
obligations; (11) the denominations in which such Debt Securities are authorized
to be issued if other than $1,000 and any integral multiple thereof, in the case
of registered Debt Securities and if other than $5,000 and any integral multiple
thereof, in the case of bearer Debt Securities; (12) if other than Dollars, the
currency or currencies (including currency units) in which Debt Securities may
be denominated and/or the currency or currencies (including currency units) in
which principal of, premium, if any, and interest, if any, on such Debt
Securities will be payable and whether the Company or the holders of any such
Debt Securities may elect to receive payments in respect of such Debt Securities
in a currency or currency unit other than that in which such Debt Securities are
stated to be payable; (13) if other than the principal amount thereof, the
portion of the principal amount of such Debt Securities which will be payable
upon declaration of the acceleration of the maturity thereof or the method by
which such portion shall be determined; (14) the person to whom any interest on
any such Debt Security shall be payable if other than the person in whose name
such Debt Security is registered on the applicable record date; (15) any
addition to, or modification or deletion of, any Event of Default or any
covenant of the Company specified in the Indenture with respect to such Debt
Securities; (16) the application, if any, of such means of defeasance or
covenant defeasance as may be specified for such Debt Securities; (17) whether
such Debt Securities are to be issued in whole or in part in the form of one or
more temporary or permanent global securities and, if so, the identity of the
depositary for such global security or securities; (18) under what
circumstances, if any, the Company will pay additional amounts on the Debt
Securities of that series held by a Person who is not a U.S. Person in respect
of taxes or similar charges withheld or deducted ("Additional Amounts") and, if
so, whether the Company will have the option to redeem such Debt Securities
rather than pay such Additional Amounts (and the terms of any such option); (18)
if the amount of payments of principal of, premium, if any, and interest, if any
shall be determined by reference to an index, formula or other method, the
index, formula, or other method by which such amounts shall be determinable;
(19) if the principal amount payable at stated maturity will not be determinable
as of any one or more dates prior to the stated maturity, the amount which shall
be deemed to be the principal amount thereof as of any date for any purpose;
(20) whether such Debt Securities shall be Registered or Bearer or both and any
restrictions as to the offering, sale, delivery or exchange of Bearer
Securities; (21) the forms of the Debt Securities and coupons, if any; and (22)
any other special terms pertaining to such Debt Securities. Unless otherwise
specified in the applicable Prospectus Supplement, the Debt Securities will not
be listed on any securities exchange. (Section 3.01.)
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities will be issued in fully-registered form without coupons. Where Debt
Securities of any series are issued in bearer form, the special restrictions and
considerations, including special offering restrictions and special Federal
income tax considerations, applicable to any such Debt Securities and to payment
on and transfer and exchange of such Debt Securities will be described in the
applicable Prospectus Supplement. Bearer Debt Securities will be transferable by
delivery. (Section 3.05.)
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain Federal income tax consequences and
special considerations applicable to any such Debt Securities, or to Debt
Securities issued at par that are treated as having been issued at a discount,
will be described in the applicable Prospectus Supplement.
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If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, or by reference to
commodity prices, equity indices or other factors, the restrictions, elections,
certain Federal income tax considerations, specific terms and other information
with respect to such issue of Debt Securities and such foreign currency or
currency units or commodity prices, equity indices or other factors will be set
forth in the applicable Prospectus Supplement. In general, holders of such
series of Debt Securities may receive a principal amount on any principal
payment date, or a payment of premium, if any, on any premium interest payment
date or a payment of interest on any interest payment date, that is greater than
or less than the amount of principal, premium, if any, or interest otherwise
payable on such dates, depending on the value on such dates of the applicable
currency, commodity, equity index or other factor.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement, payments
in respect of the Debt Securities will be made in the designated currency at the
office or agency of the Company maintained for that purpose as the Company may
designate from time to time. (Section 9.02.) Unless otherwise indicated in the
applicable Prospectus Supplement, payment of any installment of interest on Debt
Securities in registered form will be made to the person in whose name such Debt
Security is registered at the close of business on the regular record date for
such interest. (Section 3.07 (a).)
Payment in respect of Debt Securities in bearer form will be made in the
currency and in the manner designated in the applicable Prospectus Supplement,
subject to any applicable laws and regulations, at such paying agencies outside
the United States as the Company may appoint from time to time. The paying
agents outside the United States initially appointed by the Company for a series
of Debt Securities will be named in the Prospectus Supplement. The Company may
at any time designate additional paying agents or rescind the designation of any
paying agents, except that, if Debt Securities of a series are issuable as
Registered Securities, the Company will be required to maintain at least one
paying agent in each Place of Payment for such series and, if Debt Securities of
a series are issuable as Bearer Securities, the Company will be required to
maintain a paying agent in a Place of Payment outside the United States where
Debt Securities of such series and any coupons appertaining thereto may be
presented and surrendered for payment. (Section 9.02.)
Unless otherwise provided in the applicable Prospectus Supplement, Debt
Securities in registered form will be transferable or exchangeable at the agency
of the Company maintained for such purpose as designated by the Company from
time to time. (Sections 3.05 and 9.02.) Debt Securities may be transferred or
exchanged without service charge, other than any tax or other governmental
charge imposed in connection therewith. (Section 3.05.)
GLOBAL DEBT SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities of a series may be issued in whole or in part in the form of one
or more fully registered global securities (a "Registered Global Security") that
will be deposited with a depository (the "Depository") or with a nominee for the
Depository identified in the applicable Prospectus Supplement. In such a case,
one or more Registered Global Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding Debt Securities of the series to be represented by such
Registered Global Security or Securities. (Section 3.03.) Unless and until it is
exchanged in whole or in part for Debt Securities in definitive certificated
form, a Registered Global Security may not be registered for transfer or
exchange except as a whole by the Depository for such Registered Global Security
to a nominee of such Depository or by a nominee of such Depository to such
Depository or another nominee of such Depository or by such Depository or any
such nominee to a successor Depository for such series or a nominee of such
successor Depository and except in the circumstances described in the applicable
Prospectus Supplement. (Section 3.05.)
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The specific terms of the depository arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the applicable Prospectus Supplement. Unless
otherwise specified in the applicable Prospectus Supplement, the Company expects
that the following provisions will apply to such depository arrangements.
Ownership of beneficial interests in a Registered Global Security will be
limited to participants or persons that may hold interests through participants
(as such term is defined below). Upon the issuance of any Registered Global
Security, and the deposit of such Registered Global Security with or on behalf
of the Depository for such Registered Global Security, the Depository will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Registered Global
Security to the accounts of institutions ("participants") that have accounts
with the Depository or its nominee. The accounts to be credited will be
designated by the underwriters or agents engaging in the distribution of such
Debt Securities or by the Company, if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests by participants in
such Registered Global Security will be shown on, and the transfer of such
beneficial interests will be effected only through, records maintained by the
Depository for such Registered Global Security or by its nominee. Ownership of
beneficial interests in such Registered Global Security by persons that hold
through participants will be shown on, and the transfer of such beneficial
interests within such participants will be effected only through, records
maintained by such participants. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Registered Global Security.
So long as the Depository for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Registered Global Security for all
purposes under the applicable Indenture. Unless otherwise specified in the
applicable Prospectus Supplement and except as specified below, owners of
beneficial interests in such Registered Global Security will not be entitled to
have Debt Securities of the series represented by such Registered Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in certificated form and
will not be considered the holders thereof for any purposes under the relevant
Indenture. (Section 3.08.) Accordingly, each person owning a beneficial interest
in such Registered Global Security must rely on the procedures of the Depository
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a holder
under the relevant Indenture. The Depository may grant proxies and otherwise
authorize participants to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a holder is entitled to
give or take under the relevant Indenture. The Company understands that, under
existing industry practices, if the Company requests any action of holders or if
any owner of a beneficial interest in such Registered Global Security desires to
give any notice or take any action which a holder is entitled to give or take
under the relevant Indenture, the Depository would authorize the participants to
give such notice or take such action, and such participants would authorize
beneficial owners owning through such participants to give such notice or take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.
Unless otherwise specified in the applicable Prospectus Supplement,
payments with respect to principal, premium, if any, and interest, if any, on
Debt Securities represented by a Registered Global Security registered in the
name of a Depository or its nominee will be made to such Depository or its
nominee, as the case may be, as the registered owner of such Registered Global
Security.
The Company expects that the Depository for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depository. The Company also expects that payments by participants to
owners of beneficial interests in such Registered Global Security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names," and will be the responsibility of such
participants. None of the Company, the respective Trustees or any agent of the
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Company or the respective Trustees shall have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial interests of a Registered Global Security, or for maintaining,
supervising or reviewing any records relating to such beneficial interests.
(Section 3.08.)
Unless otherwise specified in the applicable Prospectus Supplement, if the
Depository for any Debt Securities represented by a Registered Global Security
is at any time unwilling or unable to continue as Depository or ceases to be a
clearing agency registered under the Exchange Act and a duly registered
successor Depository is not appointed by the Company within 90 days, the Company
will issue such Debt Securities in definitive certificated form in exchange for
such Registered Global Security. In addition, the Company may at any time and in
its sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Debt Securities of such series in definitive certificated form in exchange
for all of the Registered Global Security or Securities representing such Debt
Securities. (Section 3.05.)
The Debt Securities of a series may also be issued in whole or in part in
the form of one or more bearer global securities (a "Bearer Global Security")
that will be deposited with a depository, or with a nominee for such depository,
identified in the applicable Prospectus Supplement. Any such Bearer Global
Security may be issued in temporary or permanent form. (Section 3.04.) The
specific terms and procedures, including the specific terms of the depository
arrangement, with respect to any portion of a series of Debt Securities to be
represented by one or more Bearer Global Securities will be described in the
applicable Prospectus Supplement.
CONSOLIDATION, MERGER OR SALE BY THE COMPANY
Unless otherwise specified in the applicable Prospectus Supplement, the
Company shall not consolidate with or merge with or into any other corporation
or sell its assets substantially as an entirety, unless: (i) the corporation
formed by such consolidation or into which the Company is merged or the
corporation which acquires its assets is organized and existing under the laws
of the United States or any state thereof; (ii) the corporation formed by such
consolidation or into which the Company is merged or which acquires the
Company's assets substantially as an entirety expressly assumes by supplemental
indenture the due and punctual payment of the principal of, premium, if any, and
any Additional Amounts or interest on, the Debt Securities and the performance
or observance of every covenant of the Company under each Indenture and the Debt
Securities; (iii) immediately after giving effect to such transaction, and
treating any indebtedness which becomes an obligation of the Company or a
Subsidiary of the Company as a result of such transaction as having been
incurred by the Company or such Subsidiary at the time of such transaction, no
Default or Event of Default exists and is continuing; and (iv) if, as a result
of such transaction, properties or assets of the Company would become subject to
an encumbrance which would not be permitted by the terms of any series of Debt
Securities, the Company or the successor corporation, as the case may be, shall
take such steps as are necessary to secure such Debt Securities equally and
ratably with all indebtedness secured thereunder. Upon any such consolidation,
merger or sale, the successor corporation formed by such consolidation, or into
which the Company is merged or to which such sale is made, shall succeed to, and
be substituted for the Company under each Indenture. (Section 7.01.)
EVENTS OF DEFAULT, NOTICE AND CERTAIN RIGHTS ON DEFAULT
Each Indenture provides that, if an Event of Default specified therein
occurs with respect to the Debt Securities of any series and is continuing, the
Trustee for such series or the holders of 25% in aggregate principal amount of
all of the outstanding Debt Securities of that series, by written notice to the
Company (and to the Trustee for such series, if notice is given by such holders
of Debt Securities), may declare the principal of (or, if the Debt Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the principal amount specified in the Prospectus Supplement) and
accrued interest on all the Debt Securities of that series to be due and payable
(provided, with respect to any Debt Securities issued under the Subordinated
Indenture, that the payment of principal and interest on such Debt Securities
shall remain subordinated to the extent provided in the Subordinated Indenture).
(Section 5.02.)
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Unless otherwise specified in the applicable Prospectus Supplement, Events
of Default with respect to Debt Securities of any series are defined in each
Indenture as being: (a) default in payment of any interest on any Debt Security
of that series or any coupon appertaining thereto or any Additional Amount
payable with respect to Debt Securities of such series as specified in the
applicable Prospectus Supplement when the same becomes due and payable and the
same continues for 30 days; (b) default in payment of principal, or premium, if
any, at maturity or on redemption or otherwise, or in the making of a mandatory
sinking fund payment of any Debt Securities of that series when due; (c) default
continuing for 60 days after notice to the Company by the Indenture Trustee for
such series, or by the holders of 25% in aggregate principal amount of the Debt
Securities of such series then outstanding to the Company and the Indenture
Trustee, in the performance of any other agreement or covenant (other than an
agreement or covenant for which non-compliance is elsewhere specifically dealt
with in this paragraph) in the Debt Securities of that series, in the Indenture
or in any supplemental indenture or board resolution referred to therein under
which the Debt Securities of that series may have been issued; (d) a default
under any mortgage, agreement, indenture or instrument under which there may be
issued, or by which there may be evidenced any Debt of the Company, whether
existing now or in the future, in an aggregate principal amount then outstanding
of $25 million or more, which default (i) shall constitute a failure to pay any
portion of the principal of such Debt when due and payable after the expiration
of an applicable grace period with respect thereto or (ii) shall result in such
Debt becoming or being declared due and payable, and such acceleration shall not
be rescinded or annulled, or such Debt shall not be paid in full within a period
of 30 days after there has been given, to the Company by the Indenture Trustee
or to the Company and the Indenture Trustee by the holders of at least 25% in
aggregate principal amount of the Outstanding Debt Securities of such series
provided that such Event of Default will be remedied, cured or waived if the
default that resulted in the acceleration of such other indebtedness is
remedied, cured or waived; and (e) certain events of bankruptcy, insolvency or
reorganization of the Company. (Section 5.01.) The definition of "Event of
Default" in each Indenture specifically excludes a default under a secured debt
under which the obligee has recourse (exclusive of recourse for ancillary
matters such as environmental indemnities, misapplication of funds, costs of
enforcement, etc.) only to the collateral pledged for repayment, and where the
fair market value of such collateral does not exceed two percent of Total Assets
(as defined in the Indenture) at the time of the default. Events of Default with
respect to a specified series of Debt Securities may be added to the Indenture
and, if so added, will be described in the applicable Prospectus Supplement.
(Sections 3.01 and 5.01(7).)
At any time after a declaration of acceleration has been made with respect
to Debt Securities of any series but before a judgment or decree for payment has
been obtained by the applicable Indenture Trustee, the Holders of a majority in
principal amount of Outstanding Debt Securities of that series may rescind any
declaration of acceleration and its consequences, provided that all payments due
(other than those due as a result of acceleration) have been made and all Events
of Default have been cured or waived. (Section 5.02)
Each Indenture provides that the Indenture Trustee will, within 90 days
after the occurrence of a Default with respect to the Debt Securities of any
series, give to the holders of the Debt Securities of that series notice of all
Defaults known to it unless such Default shall have been cured or waived;
provided that except in the case of a Default in payment on the Debt Securities
of that series, the Indenture Trustee may withhold the notice if and so long as
a committee of its Responsible Officers in good faith determines that
withholding such notice is in the interests of the holders of the Debt
Securities of that series. (Section 6.06.) "Default" means any event which is,
or after notice or passage of time or both, would be, an Event of Default.
(Section 1.01.)
Each Indenture provides that the holders of a majority in aggregate
principal amount of the Debt Securities of each series affected (with each such
series voting as a class) may, subject to certain limited conditions, direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee for such series, or exercising any trust or power
conferred on such Indenture Trustee. (Section 5.08.)
Each Indenture includes a covenant that the Company will file annually with
the Indenture Trustee a certificate as to the Company's compliance with all
conditions and covenants of such Indenture. (Section 9.05.)
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The holders of a majority in aggregate principal amount of any series of
Debt Securities by notice to the Indenture Trustee for such series may waive, on
behalf of the holders of all Debt Securities of such series, any past Default or
Event of Default with respect to that series and its consequences except a
Default or Event of Default in the payment of the principal of, premium, if any,
or interest, if any, or any Additional Amounts on any Debt Security, and except
in respect of an Event of Default resulting from the breach of a covenant or
provision of either Indenture which, pursuant to the applicable Indenture,
cannot be amended or modified without the consent of the holders of each
outstanding Debt Security of such series affected. (Section 5.07.)
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Company shall have
the right at any time and from time to time during the term of any series of
Junior Subordinated Debt to defer the payment of interest on such series for
such number of consecutive interest payment periods as may be specified in the
applicable Prospectus Supplement (each, an "Extension Period"), subject to the
terms, conditions and covenants, if any, specified in such Prospectus
Supplement, provided that such Extension Period may not extend beyond the stated
maturity of such Junior Subordinated Debt. Certain material United States
Federal income tax consequences and special considerations applicable to any
such Junior Subordinated Debt will be described in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, at the
end of such Extension Period, the Company shall pay all interest then accrued
and unpaid together with interest thereon compounded semiannually at the rate
specified for the Junior Subordinated Debt of such series to the extent
permitted by applicable law ("Compound Interest"); provided, that during any
such Extension Period, (a) the Company shall not declare or pay dividends on,
make distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of Common Stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee or agent
benefit plans or the satisfaction by the Company of its obligations pursuant to
any contract or security outstanding on the date of such event requiring the
Company to purchase Common Stock of the Company, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock, (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(iv) dividends or distributions in Common Stock of the Company (or rights to
acquire capital stock) or repurchases or redemptions of capital stock solely
from the issuance or exchange of capital stock or (v) redemptions or repurchases
of any rights outstanding under a shareholder rights plan), (b) the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Company that rank
pari passu in right of payment with or junior to the Junior Subordinated Debt of
such series, and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than payments pursuant to the Guarantee or the
Common Guarantee. Prior to the termination of any such Extension Period, the
Company may further defer payments of interest by extending the interest payment
period; provided, however, that, such Extension Period may not extend beyond the
maturity of the Junior Subordinated Debt of such series. Upon the termination of
any Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the terms set forth in this section.
No interest during an Extension Period, except at the end thereof, shall be due
and payable, but the Company may prepay at any time all or any portion of the
interest accrued during an Extension Period. If the applicable Property Trustee
shall be the sole holder of the Junior Subordinated Debt of such series subject
to an Extension Period, the Company shall give the applicable Administrative
Trustee, the applicable Indenture Trustee and the applicable Property Trustee
notice of its selection of such Extension Period one Business Day prior to the
earlier of (i) the date distributions on the Capital Securities are payable or
(ii) the date the applicable Administrative Trustee is required to give notice
to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Capital Securities of record or payment date
of such distribution. The applicable Administrative Trustee shall give notice of
the Company's selection of such Extension Period to the holders of the Capital
Securities. If the applicable Property Trustee shall not be the sole holder of
the Junior Subordinated Debt of such series subject to the Extension Period, the
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Company shall give the holders of the Junior Subordinated Debt of such series
subject to the Extension Period notice of its selection of such Extension Period
ten Business Days prior to the earlier of (i) the Interest Payment Date for the
series of Junior Subordinated Debt subject to the Extension Period or (ii) the
date upon which the Company is required to give notice to the New York Stock
Exchange (or other applicable self-regulatory organization) or to holders of the
Junior Subordinated Debt of such series subject to the Extension Period of the
record or payment date of such related interest payment.
MODIFICATION OF THE INDENTURES
Unless otherwise specified in the applicable Prospectus Supplement, each
Indenture contains provisions permitting the Company and the Indenture Trustee
to enter into one or more supplemental indentures without the consent of the
holders of any of the Debt Securities in order (i) to evidence the succession of
another corporation to the Company and the assumption of the covenants and
obligations of the Company under the Indenture and the Debt Securities by a
successor to the Company; (ii) to add to the covenants of the Company or
surrender any right or power of the Company; (iii) to add additional Events of
Default with respect to any series of Debt Securities; (iv) to add or change any
provisions to such extent as necessary to permit or facilitate the issuance of
Debt Securities in bearer form; (v) to change or eliminate any provision
affecting only Debt Securities not yet issued; (vi) to secure the Debt
Securities; (vii) to establish the form or terms of Debt Securities; (viii) to
evidence and provide for successor Indenture Trustees; (ix) if allowed without
penalty under applicable laws and regulations, to permit payment in respect of
Debt Securities in bearer form in the United States; (x) to correct any defect
or supplement any inconsistent provisions or to make any other provisions with
respect to matters or questions arising under such Indenture, provided that such
action does not adversely affect the interests of any holder of Debt Securities
of any series; or (xi) to cure any ambiguity or correct any mistake. The
Subordinated Indenture also permits the Company and the Indenture Trustee
thereunder to enter into such supplemental indentures to modify the
subordination provisions contained in the Subordinated Debenture except in a
manner adverse to any outstanding Debt Securities. (Section 8.01.)
Unless otherwise specified in the applicable Prospectus Supplement, each
Indenture also contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the outstanding Debt Securities of each series affected by such
supplemental indenture (with the Debt Securities of each series voting as a
class), to execute supplemental indentures adding any provisions to or changing
or eliminating any of the provisions of such Indenture or any supplemental
indenture or modifying the rights of the holders of Debt Securities of such
series, except that, without the consent of the holder of each Debt Security so
affected, no such supplemental indenture may: (i) change the time for payment of
principal or premium, if any, or interest or any Additional Amounts on any Debt
Security; (ii) reduce the principal of, or any installment of principal of, or
premium, if any, or interest or any Additional Amounts on any Debt Security, or
change the manner in which the amount of any of the foregoing is determined;
(iii) reduce the amount of premium, if any, payable upon the redemption of any
Debt Security; (iv) reduce the amount of principal payable upon acceleration of
the maturity of any Original Issue Discount or Index Security; (v) change the
currency or currency unit in which any Debt Security or any premium or interest
or any Additional Amounts thereon is payable; (vi) impair the right to institute
suit for the enforcement of any payment on or with respect to any Debt Security;
(vii) reduce the percentage in principal amount of the outstanding Debt
Securities affected thereby the consent of whose holders is required for
modification or amendment of such Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults; (viii)
change the obligation of the Company to maintain an office or agency in the
places and for the purposes specified in such Indenture; (ix) modify the
provisions relating to the subordination of outstanding Debt Securities of any
series in a manner adverse to the holders thereof; or (x) modify the provisions
relating to waiver of certain defaults or any of the foregoing provisions.
(Section 8.02.)
SUBORDINATION UNDER THE SUBORDINATED INDENTURE
The Subordinated Indenture provides that any Junior Subordinated Debt
issued thereunder are subordinate and junior in right of payment to all Senior
Indebtedness to the extent provided in the
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Subordinated Indenture. (Section 12.01 of the Subordinated Indenture.) The
Subordinated Indenture defines the term "Senior Indebtedness" as: (i) all
indebtedness of the Company, whether outstanding on the date of the Subordinated
Indenture or thereafter created, incurred or assumed, which is for money
borrowed, or which is evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or assets, including
securities; (ii) any indebtedness of others of the kinds described in the
preceding clause (i) the payment of which the Company is responsible or liable
as guarantor or otherwise; and (iii) amendments, renewals, extensions and
refundings of any such indebtedness, unless in any instrument or instruments
evidencing or securing such indebtedness or pursuant to which the same is
outstanding, it is provided that such indebtedness is not senior in right of
payment to, or that such indebtedness is pari passu in right of payment with or
junior to, the Junior Subordinated Debt. The Senior Indebtedness shall continue
to be Senior Indebtedness and entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term of
the Senior Indebtedness or extension or renewal of the Senior Indebtedness.
Senior Indebtedness does not include (A) any indebtedness of the Company to any
of its subsidiaries, (B) liabilities of the Company incurred in the ordinary
course of its business or (C) any indebtedness which by its terms is expressly
made pari passu in right of payment with or subordinated to the 8.85% Capital
Securities [,any other Junior Subordinated Debt] and the Guarantees. (Section
1.01 of the Subordinated Indenture.)
In the event and during the continuation of (i) a Company default in the
payment of any principal, interest, if any or premium, if any, or any Additional
Amounts on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or declaration or
otherwise or (ii) an event of default with respect to any Senior Indebtedness
permitting the holders thereof to accelerate the maturity thereof and written
notice of such event of default (requesting that payments on Junior Subordinated
Debt cease) is given to the Company by the holders of Senior Indebtedness, then
unless and until such default in payment or event of default shall have been
cured or waived or shall have ceased to exist, no direct or indirect payment (in
cash, property or securities, by set-off or otherwise) shall be made or agreed
to be made on account of the Junior Subordinated Debt or interest thereon or in
respect of any repayment, redemption, retirement, purchase or other acquisition
of Junior Subordinated Debt. (Section 12.03 of the Subordinated Indenture.)
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company or its property, (ii) any proceeding for the liquidation,
dissolution or other winding-up of the Company, voluntary or involuntary,
whether or not involving insolvency or bankruptcy proceedings, (iii) any
assignment by the Company for the benefit of creditors or (iv) any other
marshaling of the assets and liabilities of the Company, all Senior Indebtedness
(including, without limitations interest accruing after the commencement of any
such proceeding, assignment or marshaling of assets) shall first be paid in full
or provision must be made for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Indebtedness before
any payment or distribution, whether in cash, securities or other property,
shall be made by the Company on account of Junior Subordinated Debt. In any such
event, any payment or distribution, whether in cash, securities or other
property (other than 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 the subordination provisions of
the Subordinated Indenture with respect to the indebtedness evidenced by Junior
Subordinated Debt, to the payment of all Senior Indebtedness at the time
outstanding and to any securities issued in respect thereof under any such plan
of reorganization or readjustment), which would otherwise (but for the
subordination provisions) be payable or deliverable in respect of Junior
Subordinated Debt (including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of Junior Subordinated Debt) shall be
paid or delivered directly to the holders of Senior Indebtedness, or to their
representative or trustee, in accordance with the priorities then existing among
such holders until all Senior Indebtedness shall have been paid in full.
(Section 12.02 of the Subordinated Indenture.) No present or future holder of
any Senior Indebtedness shall be prejudiced in the right to enforce
subordination of the indebtedness evidenced by Junior Subordinated Debt by any
act or failure to act on the part of the Company. (Section 12.11 of the
Subordinated Indenture.)
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Senior Indebtedness shall not be deemed to have been paid in full unless
the holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding (Section 12.01 of the
Subordinated Indenture). Upon the payment in full of all Senior Indebtedness,
the holders of Junior Subordinated Debt shall be subrogated to all the rights of
any holders of Senior Indebtedness to receive any further payments or
distributions applicable to the Senior Indebtedness until all Junior
Subordinated Debt shall have been paid in full, and such payments or
distributions received by any holder of Junior Subordinated Debt, by reason of
such subrogation, of cash, securities or other property which otherwise would be
paid or distributed to the holders of Senior Indebtedness, shall, as between the
Company and its creditors other than the holders of Senior Indebtedness, on the
one hand, and the holders of Junior Subordinated Debt, on the other, be deemed
to be a payment by the Company on account of Senior Indebtedness, and not on
account of Junior Subordinated Debt. (Section 12.06 of the Subordinated
Indenture.)
The Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Junior
Subordinated Debt, may be changed prior to such issuance. Any such change would
be described in the applicable Prospectus Supplement relating to such Junior
Subordinated Debt.
DEFEASANCE AND COVENANT DEFEASANCE
If indicated in the applicable Prospectus Supplement, the Company may elect
either (i) to defease and be discharged from any and all obligations with
respect to the Debt Securities of or within any series (except as otherwise
provided in the relevant Indenture) ("defeasance") or (ii) to be released from
its obligations with respect to certain covenants applicable to the Debt
Securities of or within any series ("covenant defeasance"), upon the deposit
with the relevant Indenture Trustee (or other qualifying trustee), in trust for
such purpose, of money and/or Government Obligations which through the payment
of principal, interest, premium, if any, and any Additional Amounts in
accordance with their terms will provide money in an amount sufficient, without
reinvestment, to pay the principal of, any premium or interest on and any
Additional Amounts on such Debt Securities and any coupons appertaining thereto
on the Maturity or redemption, as the case may be, and any mandatory sinking
fund or analogous payments thereon. As a condition to defeasance or covenant
defeasance, the Company must deliver to the Indenture Trustee an Opinion of
Counsel to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance or covenant defeasance and will be subject to Federal income tax
on the same amounts and in the same manner and at the same times as would have
been the case if such defeasance or covenant defeasance had not occurred. Such
Opinion of Counsel, in the case of defeasance under clause (i) above, must refer
to and be based upon a ruling of the Internal Revenue Service or a change in
applicable Federal income tax law occurring after the date of the relevant
Indenture. (Article IV.) If indicated in the applicable Prospectus Supplement,
in addition to obligations of the United States or an agency or instrumentality
thereof, Government Obligations may include obligations of the government or an
agency or instrumentality of the government issuing the currency or currency
unit in which Debt Securities of such series are payable. (Section 3.01.)
In addition, with respect to the Subordinated Indenture, in order to be
discharged no event or condition shall exist that, pursuant to certain
provisions described under "-- Subordination under the Subordinated Indenture"
above, would prevent the Company from making payments of principal of (and
premium, if any) and interest, if any, and any Additional Amounts on Junior
Subordinated Debt at the date of the irrevocable deposit referred to above.
(Section 4.06 of the Subordinated Indenture.)
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its defeasance option, payment of such Debt Securities
may not be accelerated because of a Default or an Event of Default. (Section
4.04.) If the Company exercises its covenant defeasance option, payment of such
Debt Securities may not be accelerated by reason of a Default or an Event of
Default with respect to the covenants to which such covenant defeasance is
applicable. However, if such acceleration were to occur by reason of another
Event of Default, the realizable value at the acceleration date of the money and
Government Obligations in the defeasance trust could be less than the principal
and interest then due on such Debt Securities, in that the
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required deposit in the defeasance trust is based upon scheduled cash flow
rather than market value, which will vary depending upon interest rates and
other factors.
THE TRUSTEES
Unless otherwise specified in the applicable Prospectus Supplement, First
Union Bank will be the Indenture Trustee under the Senior Indenture, and First
Union Bank will be the Indenture Trustee under the Subordinated Indenture. The
Company may also maintain banking and other commercial relationships with each
of the Trustees and their affiliates in the ordinary course of business.
DESCRIPTION OF CAPITAL STOCK
The following description does not purport to be complete and is qualified
in its entirety by reference to the Company's Articles of Incorporation and the
Company's By-laws.
GENERAL
The Company is authorized to issue 75,000,000 shares of Class A Common
Stock, no par value, and 50,000,000 shares of Class B Common Stock, no par
value. As of December 31, 1997 there were 29,734,918 shares of Class A Common
Stock outstanding and 5,000,000 shares of Class B Common Stock outstanding, of
which 12,380,300 of the Class A Common Stock and 5,000,000 of the Class B Common
Stock were held by AmerUs Group. In addition, 1,400,000 and 150,000 shares of
Class A Common Stock are reserved for issuance under options granted or
available for grant under the Stock Plan and Director Plan, respectively, and 5
million shares of Class A Common Stock are reserved for issuance upon conversion
of Class B Common Stock. At its meeting on February 19, 1998 the Board of
Directors approved a resolution recommending that the Company solicit
shareholder approval to increase the authorized issuance of Class A Common
Stock, no par value, from 75,000,000 to 180,000,000 shares. The Company intends
to seek such approval at its annual meeting of stockholders scheduled for May 8,
1998. The Company is also authorized to issue 20 million shares of preferred
stock on such terms as determined by its Board of Directors (the "Preferred
Stock"). See "-- Preferred Stock."
The Class B Common Stock (or any interest therein) may only be owned by
AMHC or a mutual insurance holding company or intermediate holding company which
is expressly authorized by applicable law to own or have a beneficial interest
in the Class B Common Stock (a "Permitted Class B Holder"). Under current Iowa
law, a Permitted Class B Holder must at all times possess the right to cast at
least a majority of the votes of the outstanding shares of the capital stock of
the Company.
The Company's Articles of Incorporation provide that the number of
outstanding shares of Class A Common Stock (excluding shares of Class A Common
Stock owned by AMHC or another Permitted Class B Holder) shall exceed the number
of outstanding shares of Class B Common Stock plus the shares of Class A Common
Stock owned by AMHC or another Permitted Class B Holder only as authorized by
law and never by a ratio of more than three to one.
COMMON STOCK
Each share of Class A Common Stock will entitle its holder to one vote per
share on all matters upon which shareholders are entitled to vote (including
election of directors, mergers, sales of assets, dissolution and amendments to
the Articles of Incorporation). Each share of Class B Common Stock will entitle
its holder to one vote per share on all such matters except that, if on the
record date for determining shares eligible to vote, the number of outstanding
shares of Class A Common Stock (excluding shares of Class A Common Stock owned
by a Permitted Class B Holder) and any outstanding shares of Preferred Stock
having voting rights, if any (excluding shares of Preferred Stock owned by a
Permitted Class B Holder), equals or exceeds the number of outstanding shares of
Class B Common Stock plus the number of outstanding shares of Class A Common
Stock owned by a Permitted Class B Holder, the voting rights for each share of
Class B Common Stock shall be equal to the aggregate number of shares of Class A
Common Stock (excluding shares of
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Class A Common Stock owned by a Permitted Class B Holder) and Preferred Stock
having voting rights, if any, then outstanding (excluding shares of Preferred
Stock owned by a Permitted Class B Holder) plus one divided by the number of
outstanding shares of Class B Common Stock. Accordingly, even if the number of
outstanding shares of Class A Common Stock (excluding shares of Class A Common
Stock owned by a Permitted Class B Holder) exceeds the number of outstanding
shares of Class B Stock, the Permitted Class B Holder will always have a
majority of the votes.
Both classes of Common Stock will generally vote together as a single class
on all matters; however, the holders of Class A Common Stock and the holders of
Class B Common Stock will vote separately as a class with respect to certain
matters for which class voting is required under Iowa law, including (i)
approval of proposed amendments to the Company's Articles of Incorporation that,
among other things, would alter the designation, rights, preferences or
limitations of all or part of the shares of their respective class, increase or
decrease the aggregate number of authorized shares of such class, effect an
exchange or reclassification or create a right of exchange of all or part of the
shares of one class into shares of another class, create a new class of shares
or increase the rights, preferences, or number of authorized shares of any
existing class so that it would have rights or preferences with respect to
distribution or to dissolution that are prior, superior, or substantially equal
to, the shares of such class, provided that the Class A Common Stock and Class B
Common Stock are not affected by such amendment in the same or a substantially
similar way; (ii) approval of a proposed plan of merger or consolidation if such
plan contains any provisions which, if contained in a proposed amendment to the
Articles of Incorporation, would entitle such class of shares to vote as a class
(with certain limited exceptions for shareholders of the surviving corporation);
and (iii) approval of a plan of share exchange (to be voted upon by each class
included in the exchange).
There is no provision in the Company's Articles of Incorporation permitting
cumulative voting in the election of directors.
No cash dividends may be declared in any fiscal year on the Class B Common
Stock until and unless a cash dividend has been declared on the Class A Common
Stock. Any cash dividends will be declared and paid equally on both classes of
Common Stock.
The classes of Common Stock will rank equally and have equal rights with
respect to distributions and all other rights, including distributions upon
liquidation of the Company. However, in the case of dividends or other
distributions payable on the Common Stock in shares of such stock, including
distributions pursuant to stock splits or stock dividends, only Class A Common
Stock will be distributed with respect to Class A Common Stock and only Class B
Common Stock will be distributed with respect to Class B Common Stock. In no
event will either class of Common Stock be split, divided or combined unless the
other is split, divided or combined equally.
So long as the number of outstanding shares of Class A Common Stock
(excluding shares of Class A Common Stock owned by a Permitted Class B Holder)
shall exceed the number of outstanding shares of Class B Common Stock plus the
outstanding shares of Class A Common Stock owned by AMHC or another Permitted
Class B Holder only as authorized by law and never by a ratio of more than three
to one, the Class B Common Stock will be convertible at all times into Class A
Common Stock on a share-for-share basis by surrender of certificates to the
transfer agent for the Company. Such conversion will be without cost to the
shareholder, except for any transfer taxes which may be payable if certificates
for Class A Common Stock are issued in a name other than the one in which the
surrendered certificate is registered. Therefore, shareholders who subsequently
desire to sell some or all of their shares of Class B Common Stock may convert
those shares into an equal number of shares of Class A Common Stock and sell the
shares of Class A Common Stock in the public market. The Company will be
required to reserve shares of Class A Common Stock sufficient for issuance upon
conversion of Class B Common Stock. All shares of Class B Common Stock
surrendered upon conversion will have the status of authorized but unissued
shares of Class B Common Stock.
The Articles of Incorporation provide that a Permitted Class B Holder has
the preemptive right to purchase Common Stock to the extent necessary to
maintain the ratio of Class A Common Stock to Class B Common Stock set forth in
the preceding paragraph. The Amended and Restated Intercompany Agreement
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dated as of December 1, 1996 among AMHC, AmerUs Group and the Company also
affords the AmerUs Affiliated Group certain equity purchase rights.
In the event that AMHC (or any successor mutual insurance holding company)
is demutualized and is converted into a stock company pursuant to Iowa law, then
immediately upon such conversion each share of the Class B Common Stock shall
automatically be converted into one share of Class A Common Stock. AMHC has no
present plans to demutualize.
A Permitted Class B Holder may pledge, subject to a security interest or
lien, encumber, or otherwise hypothecate shares of Class B Common Stock in
excess of the number of shares of Class B Common Stock which carry the right to
cast at least a majority of the votes of the outstanding shares of capital stock
of the Company having voting rights. However, except for a transfer to a
Permitted Class B Holder, a conversion of Class B Common Stock into Class A
Common Stock and except as described in the preceding sentence, no shares of
Class B Common Stock may be conveyed, pledged or otherwise transferred. Any
conveyance, transfer, assignment, pledge, security interest, lien, encumbrance
or hypothecation or alienation by AMHC or any intermediate holding company, in
or on the majority of the voting shares of AmerUs Life shall be deemed void in
inverse chronological order from the date of such transaction to the extent
necessary to give AMHC unencumbered direct or indirect ownership of a majority
of such voting shares.
All shares of Common Stock offered hereby, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and
non-assessable. The Class A Common Stock is listed on the New York Stock
Exchange under the symbol "AMH."
The Prospectus Supplement relating to an offering of Common Stock will
describe terms relevant thereto, including the number of shares offered, the
initial offering price, market price and dividend information.
PREFERRED STOCK
The Board of Directors of the Company is authorized, subject to any
limitations prescribed by law, from time to time to issue up to an aggregate of
20 million shares of Preferred Stock in one or more series, each of such series
to have such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights, and such qualifications, limitations or restrictions thereof, as shall
be determined by the Board of Directors in a resolution or resolutions providing
for the issue of such Preferred Stock and as shall be described in the
Prospectus Supplement relating to a particular series of Preferred Stock offered
thereby; provided, however, that no Preferred Stock may have more than one vote
per share. Thus, any series may, if so determined by the Board of Directors,
have full voting rights with the Class A Common Stock or superior or limited
voting rights, be convertible into Class A Common Stock or another security of
the Company, and have such other relative rights, preferences and limitations as
the Company's Board of Directors shall determine; provided, however, that no
Preferred Stock may have more than one vote per share.
The applicable Prospectus Supplement will describe the following terms of
any series of Preferred Stock in respect of which this Prospectus is being
delivered (to the extent applicable to such Preferred Stock): (i) the specific
designation, number of shares, seniority and initial public offering or purchase
price; (ii) any liquidation preference per share; (iii) any date of maturity;
(iv) any redemption, repayment or sinking fund provisions; (v) any dividend rate
or rates and the dates on which any such dividends will be payable (or the
method by which such rates or dates will be determined) and whether such
dividends will be cumulative or non-cumulative; (vi) any voting rights (which
may not exceed one vote per share); (vii) if other than the currency of the
United States of America, the currency or currencies, including currency units
and composite currencies, in which such Preferred Stock is denominated and/or in
which payments will or may be payable; (viii) the method by which amounts in
respect of such Preferred Stock may be calculated and any commodities,
currencies or indices, or value, rate or price, relevant to such calculation;
(ix) whether the Preferred Stock is convertible or exchangeable and, if so, the
securities or rights into which such Preferred Stock is convertible or
exchangeable (which may include other Preferred Stock, Debt Securities, Common
Stock or other securities or rights of the Company (including rights to receive
payment in cash or securities
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based on the value, rate or price of one or more specified commodities,
currencies or indices) or a combination of the foregoing), and the terms and
conditions upon which such conversions or exchanges will be effected, including
the initial conversion or exchange prices or rates, the conversion or exchange
period and any other related provisions; (x) the place or places where dividends
and other payments on the Preferred Stock will be payable; and (xi) any
additional voting, dividend, liquidation, redemption and other rights,
preferences, privileges, limitations and restrictions.
As described under "Description of Depositary Shares", the Company may, at
its option, elect to offer Depositary Shares evidenced by depositary receipts
("Depositary Receipts"), each representing an interest (to be specified in the
applicable Prospectus Supplement relating to the particular series of the
Preferred Stock) in a share of the particular series of the Preferred Stock
issued and deposited with a Preferred Stock Depositary (as defined herein) in
lieu of offering full shares of such series of Preferred Stock.
All shares of Preferred Stock offered hereby, or issuable upon conversion,
exchange or exercise of Securities, will, when issued, be fully paid and
non-assessable.
CAPITAL SECURITIES OF AMERUS CAPITAL I
AmerUs Capital I, a Delaware business trust and a wholly-owned subsidiary
of the Company, issued $86 million of 8.85% Capital Securities (the "8.85%
Capital Securities") in 1997 as part of the Company's financing plan. The assets
of such trust are invested in Subordinated Debt Securities of the Company, which
debt securities have a stated maturity of thirty years from their date of
issuance. If the Company redeems all or a portion of the Subordinated Debt
Securities, AmerUs Capital I must redeem a corresponding amount of the 8.85%
Capital Securities.
CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BY-LAWS OF THE COMPANY
The following discussion is a summary of certain provisions of the Articles
of Incorporation and By-laws of the Company relating to shareholder voting
rights, advance notice requirements and other provisions which may be deemed to
have an "anti-takeover" effect. In addition to these provisions, regulatory
restrictions on dispositions of Common Stock by the Company's parent corporation
as well as the inability of the holders of the Class A Common Stock to elect a
majority of the Company's Board of Directors may also deter attempts to effect,
or prevent the consummation of, a change in control of the Company. See
"Description of Capital Stock -- Common Stock." These and other provisions
affect shareholder rights and should be given careful attention. The following
description of certain of these provisions is necessarily general and is
qualified in its entirety by reference to the Company's Articles of
Incorporation and By-laws, copies of which are included as exhibits to the
Registration Statement of which this Prospectus is a part.
ISSUANCE OF CLASS A COMMON STOCK, PREFERRED STOCK AND OTHER RIGHTS
The Company believes that its ability to issue, by action of a majority of
the Company's entire Board of Directors, and without shareholder consent, the
authorized but unissued shares of Class A Common Stock, shares of Preferred
Stock and other rights will provide the Company with the flexibility necessary
to meet its future needs without experiencing the time delay of having to seek
shareholder approval. Unissued shares of Class A Common Stock and Preferred
Stock will be issuable from time to time for any corporate purpose, including,
without limitation, stock splits, stock dividends, employee benefit and
compensation plans, acquisition and public or private sales for cash as a means
of raising capital. It is possible that the Company's Board of Directors might
use its authority (subject to the restrictions referred to above) to issue Class
A Common Stock, Preferred Stock or other rights in a way that could deter or
impede the completion of a tender offer or other attempt to gain control of the
Company of which the Company's Board of Directors does not approve. The Company
does not have any predetermined plans or commitments to use its authority to
effect any such issuance, but reserves the right to take any action in the
future which the Company's Board of Directors deems to be in the best interests
of the shareholders and the Company under the circumstances.
It is not possible to state the actual effect of any issuance of Preferred
Stock upon the rights of holders of Class A Common Stock because the Company's
Board of Directors has not determined any issuance price or
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prices, terms or rights relating to Preferred Stock. However, such effects might
include (i) restrictions on Class A Common Stock dividends if Preferred Stock
dividends have not been paid; (ii) dilution of the voting power and equity
interest of existing holders of Class A Common Stock to the extent that any
Preferred Stock series has voting rights or would acquire voting rights upon the
occurrence of certain events (such as the failure to pay dividends for a
specified period) or that any Preferred Stock series is convertible into Class A
Common Stock; and (iii) current holders of Class A Common Stock not being
entitled to share in the Company's assets upon liquidation, dissolution or
winding-up until satisfaction of any liquidation preferences granted to any
series of Preferred Stock.
BOARD OF DIRECTORS
The Articles of Incorporation provide that the number of Company directors
will be determined pursuant to the By-laws, but will not be less than seven or
more than 21 directors (subject to the rights of the holders of any series of
Preferred Stock). The By-laws provide that the exact number of directors will be
determined from time to time by the affirmative vote of a majority of the
Company's entire Board of Directors. At any meeting of the Company's Board of
Directors, a majority of the Company's entire Board of Directors will constitute
a quorum for the transaction of business, and subject to certain exceptions, at
any meeting at which a quorum is present the affirmative vote of a majority of
the directors present will constitute the act of the Company's Board of
Directors. The Company's Board of Directors is divided into three classes,
designated Classes I, II and III, which must be as nearly equal in number as
possible. Directors of Class I hold office for a term expiring at the annual
meeting of shareholders to be held in 2000, directors of Class II hold office
for a term expiring at the annual meeting of shareholders to be held in 1998 and
directors of Class III hold office for a term expiring at the annual meeting of
shareholders to be held in 1999. At each annual meeting of shareholders
following such initial classification and election, the respective successors of
each class shall be elected for three-year terms, and each director will hold
office until such annual meeting and until his or her successor is elected and
qualified, unless the director dies, resigns, is disqualified or is removed from
office. Thus, approximately two-thirds of the members of the Board of Directors
at any time will have had prior board experience. With such a staggered Board of
Directors, at least two annual meetings will normally be required to effect a
change in the composition of a majority of the Board of Directors.
Under the Iowa Business Corporation Act (the "IBCA") and the Company's
Articles of Incorporation, and subject to the rights of the holders of any
series of Preferred Stock, a majority of the Board of Directors though less than
a quorum, or the sole remaining director, may fill vacancies on the Board of
Directors or newly created directorships resulting from any increase in the
authorized number of directors. The Articles of Incorporation provide that the
election of directors need not be by written ballot unless the By-laws so
provide. The By-laws do not require the use of such a written ballot. The
By-laws provide that the holders of a majority of shares then entitled to vote
if an election of directors were held may remove any director or the entire
Board of Directors, with or without cause.
LIMITATIONS ON CALLING SPECIAL MEETINGS OF SHAREHOLDERS
Under Iowa law, special meetings of shareholders may be called by the Board
of Directors or by such other persons as may be authorized by the articles of
incorporation or the by-laws. In the case of the Company, the By-laws provide
that special meetings may be called by the Chairman, the President, the
Company's Board of Directors pursuant to a resolution adopted by not less than a
majority of the total number of directors or at the request of the holders of
not less than 10% of the combined voting power of the then outstanding stock of
the Company entitled to vote generally in the election of directors. The notice
for a special meeting must set forth the purpose or purposes of the meeting and,
except as otherwise required by law or the Articles of Incorporation, no
business will be transacted at any special meeting of shareholders other than
the items of business stated in the notice.
ADVANCE NOTICE REQUIREMENTS
The By-laws establish advance notice procedures with regard to (i) the
nomination, other than by or at the direction of the Company's Board of
Directors, of candidates for election to the Company's Board of
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Directors (the "Nomination Provision") and (ii) certain business to be brought
before an annual meeting of shareholders of the Company (the "Business
Provision").
The Nomination Provision, by requiring advance notice of nominations by
shareholders, affords the Company's Board of Directors a meaningful opportunity
to consider the qualifications of the proposed nominees and, to the extent
deemed necessary or desirable by the Company's Board of Directors, to inform
shareholders about such qualifications.
The Business Provision, by requiring advance notice of business proposed to
be brought before an annual meeting, provides a more orderly procedure for
conducting annual meetings of shareholders and provides the Company's Board of
Directors with a meaningful opportunity prior to the meeting to inform
shareholders, to the extent deemed necessary or desirable by the Company's Board
of Directors, of any business proposed to be conducted at such meeting, together
with any recommendation of the Company's Board of Directors. The Business
Provision does not affect the right of shareholders to make shareholder
proposals for inclusion in proxy statements for the Company's annual meetings of
shareholders pursuant to the rules of the Commission. In addition, neither the
Nomination Provision nor the Business Provision will prevent any shareholder or
shareholders holding at least 10% of the shares entitled to vote on a particular
matter from requesting a special meeting with respect to such matter as
described above in "-- Limitations on Calling Special Meetings of Shareholders."
Although these By-law provisions do not give the Company's Board of
Directors any power to approve or disapprove of shareholder nominations for the
election of directors or of any other business desired by shareholders to be
conducted at an annual meeting, they may make it difficult for a third party to
conduct a solicitation of proxies to elect its own slate of directors or
otherwise attempt to obtain control of the Company, even if such a solicitation
or attempt might be beneficial to the Company and its shareholders.
AMENDMENT OF ARTICLES OF INCORPORATION AND BY-LAWS
Except to the extent the Articles of Incorporation or By-laws otherwise
provide, the Company's Board of Directors may, upon the affirmative vote of a
majority of the entire Board, amend or repeal any By-law. The Articles of
Incorporation may be amended with the affirmative vote of the holders of a
majority of the outstanding voting securities of the Company having the right to
vote generally in the election of directors; provided, that any proposed
amendment to the Articles of Incorporation which would alter the provision
relating to the ratio of outstanding shares of Class A Common Stock to
outstanding shares of Class B Common Stock would require the approval of a
majority of the outstanding shares of Class A Common Stock and Class B Common
Stock and a majority of the outstanding shares of Class A Common Stock
(excluding shares owned by the Permitted Class B Holders). Under Iowa law,
certain proposed amendments to the Articles of Incorporation which adversely
affect the rights of a particular class of stock must be approved by a majority
of such class.
STATE STATUTORY PROVISIONS
Any merger or acquisition of the Company by another entity or the
acquisition or attempted acquisition of more than 10% of the stock of the
Company is subject to regulatory approval by the Iowa Commissioner.
Section 490.1108 of the IBCA provides that in considering acquisition
proposals, directors may consider, in addition to the consideration of the
effects of any action on shareholders, the effects on the Company's employees,
suppliers, creditors, customers and the communities in which it operates, as
well as the long-term and short-term interests of the Company. Consideration of
any or all community interest factors is not a violation of the business
judgment rule, even if the directors reasonably determine that effects on a
community or other factors outweigh the financial or other benefits to the
Company or a shareholder or group of shareholders. Section 490.624A of the IBCA
also includes authorization of "poison pills" which include, without limitation,
terms and conditions of stock rights or options issued by a corporation that
preclude or limit the exercise, transfer or receipt of stock rights by persons
owning or offering to acquire a specified number or percentage of a
corporation's outstanding shares. Unlike most states, Iowa does not presently
have
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a "business combination" law prohibiting business combinations with a
shareholder who holds over a specified percentage of stock for less than a
specified period after crossing the threshold.
The foregoing provisions of state law could have the effect of delaying,
deferring or preventing a change in control of the Company if the Board of
Directors determines that a change of control is not in the best interests of
the Company, its shareholders and other constituencies. In addition, the
regulatory restrictions on the acquisition of securities of the Company may also
deter attempts to effect, or prevent the consummation of, a change in control of
the Company.
Certain provisions of the Articles of Incorporation and the By-laws may
make it more difficult to effect a change in control of the Company if the Board
of Directors determines that such action would not be in the best interests of
the shareholders. It could be argued, contrary to the belief of the Board of
Directors, that such provisions are not in the best interests of the
shareholders to the extent that they will have the effect of tending to
discourage possible takeover bids, which might be at prices involving a premium
over then recent market quotations for the Common Stock. The most important of
those provisions are described below.
The Articles of Incorporation authorize the establishment of a classified
Board of Directors pursuant to the By-laws. The By-laws, in turn, provide that
the Directors serve staggered three-year terms, with the members of only one
class being elected in any year. A classified Board of Directors may increase
the difficulty of removing incumbent directors, providing such directors with
enhanced ability to retain their positions. A classified Board of Directors may
also make the acquisition of control of the Company by a third party by means of
a proxy contest more difficult. In addition, the classification may make it more
difficult to replace a majority of directors for business reasons unrelated to a
change in control.
As discussed above, Preferred Stock may be issued from time to time in one
or more series with such rights, preferences, limitations and restrictions as
may be determined by the Board of Directors. The issuance of Preferred Stock
could be used, under certain circumstances, as a method of delaying or
preventing a change of control of the Company and could have a detrimental
effect on the rights of holders of Common Stock, including loss of voting
control.
The provisions of the Articles of Incorporation regarding the classified
Board of Directors and certain business combination transactions may not be
amended without the affirmative approval of holders of not less than 80% of the
outstanding voting stock of the Company.
The By-laws may be amended by majority vote of the Board of Directors.
DESCRIPTION OF WARRANTS
The Company may issue Warrants to purchase Debt Securities, Preferred
Stock, Common Stock or any combination thereof, and such Warrants may be issued
independently or together with any such Securities and may be attached to or
separate from such Securities. Each series of Warrants will be issued under a
separate warrant agreement (each a "Warrant Agreement") to be entered into
between the Company and a warrant agent ("Warrant Agent"). The Warrant Agent
will act solely as an agent of the Company in connection with the Warrants of
each such series and will not assume any obligation or relationship of agency
for or with holders or beneficial owners of Warrants. The following sets forth
certain general terms and provisions of the Warrants offered hereby. Further
terms of the Warrants and the applicable Warrant Agreement will be set forth in
the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of any series
of Warrants in respect of which this Prospectus is being delivered, including
the following: (i) the title of such Warrants; (ii) the aggregate number of such
Warrants; (iii) the price or prices at which such Warrants will be issued; (iv)
the currency or currencies, including currency units or composite currencies, in
which the price of such Warrants may be payable; (v) the designation and terms
of the Securities (other than Capital Securities and Common Securities)
purchasable upon exercise of such Warrants; (vi) the price at which and the
currency or currencies, including currency units or composite currencies, in
which the Securities (other than Capital Securities and Common Securities)
purchasable upon exercise of such Warrants may be purchased; (vii) the
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date on which the right to exercise such Warrants shall commence and the date on
which such right shall expire; (viii) whether such Warrants will be issued in
registered form or bearer form; (ix) if applicable, the minimum or maximum
amount of such Warrants which may be exercised at any one time; (x) if
applicable, the designation and terms of the Securities (other than Capital
Securities and Common Securities) with which such Warrants are issued and the
number of such Warrants issued with each such Security; (xi) if applicable, the
date on and after which such Warrants and the related Securities (other than
Capital Securities and Common Securities) will be separately transferable; (xii)
information with respect to book-entry procedures, if any; (xiii) if applicable,
a discussion of certain United States Federal income tax considerations; and
(xiv) any other terms of such Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Warrants.
DESCRIPTION OF CAPITAL SECURITIES OF THE AMERUS TRUSTS
Each AmerUs Trust may issue, from time to time, only one series of Capital
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each AmerUs Trust will authorize the Administrative Trustees
of such AmerUs Trust to issue on behalf of such AmerUs Trust one series of
Capital Securities. Each Declaration will be qualified as an indenture under the
Trust Indenture Act. The Property Trustee, an independent trustee, will act as
indenture trustee for the Capital Securities for purposes of compliance with the
provisions of the Trust Indenture Act. The Capital Securities will have such
terms, including distributions, redemption, voting, liquidation rights and such
other preferred, deferred or other special rights or such restrictions as shall
be established by the Administrative Trustees in accordance with the applicable
Declaration or as shall be set forth in the Declaration or made part of the
Declaration by the Trust Indenture Act. Reference is made to any Prospectus
Supplement relating to the Capital Securities of an AmerUs Trust for specific
terms of the Capital Securities, including, to the extent applicable, (i) the
distinctive designation of such Capital Securities, (ii) the number of Capital
Securities issued by such AmerUs Trust, (iii) the annual distribution rate (or
method of determining such rate) for Capital Securities issued by such AmerUs
Trust and the date or dates upon which such distributions shall be payable
(provided, however, that distributions on such Capital Securities shall, subject
to any deferral provisions, and any provisions for payment of defaulted
distributions, be payable on a quarterly basis to holders of such Capital
Securities as of a record date in each quarter during which such Capital
Securities are outstanding), (iv) any right of such AmerUs Trust to defer
quarterly distributions on the Capital Securities as a result of an interest
deferral right exercised by the Company on any Junior Subordinated Debt held by
such AmerUs Trust, (v) whether distributions on Capital Securities shall be
cumulative, and, in the case of Capital Securities having such cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions on Capital Securities shall be cumulative, (vi)
the amount or amounts which shall be paid out of the assets of such AmerUs Trust
to the holders of Capital Securities upon voluntary or involuntary dissolution,
winding-up or termination of such AmerUs Trust, (vii) the obligation or option,
if any, of such AmerUs Trust to purchase or redeem Capital Securities and the
price or prices at which, the period or periods within which and the terms and
conditions upon which Capital Securities shall be purchased or redeemed, in
whole or in part, pursuant to such obligation or option with such redemption
price to be specified in the applicable Prospectus Supplement, (viii) the voting
rights, if any, of Capital Securities in addition to those required by law,
including the number of votes per Capital Security and any requirement for the
approval by the holders of Capital Securities as a condition to specified action
or amendments to the Declaration, (ix) the terms and conditions, if any, upon
which Junior Subordinated Debt held by such AmerUs Trust may be distributed to
holders of Capital Securities, and (x) any other relevant rights, preferences,
privileges, limitations or restrictions applicable to Capital Securities
consistent with the Declaration or with applicable law. All Capital Securities
offered hereby will be guaranteed by the Company to the extent set forth below
under "Description of Guarantees." The Guarantee issued for the benefit of the
holders of the Capital Securities, when taken together with the Company's
back-up undertakings, consisting of its obligations under each Declaration
(including the obligation to pay expenses of each AmerUs Trust), the
Subordinated Indenture and any applicable supplemental indentures thereto and
the Junior Subordinated Debt issued to any AmerUs Trust will provide in the
aggregate a full and unconditional guarantee by the Company of amounts
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due on the Capital Securities issued by each AmerUs Trust. The payment terms of
the Capital Securities will be the same as the Junior Subordinated Debt issued
to the applicable AmerUs Trust by the Company.
Each Declaration will authorize the Administrative Trustees to issue on
behalf of the applicable AmerUs Trust one series of Common Securities having
such terms including distributions, redemption, voting, liquidation rights or
such restrictions as shall be established by the Administrative Trustees in
accordance with such Declaration or as shall otherwise be set forth therein. The
terms of the Common Securities issued by each AmerUs Trust will be substantially
identical to the terms of the Capital Securities issued by such AmerUs Trust,
and the Common Securities will rank pari passu in right of payment, and payments
will be made thereon pro rata, with the Capital Securities except that, if an
event of default under such Declaration has occurred and is continuing, the
rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Capital Securities. The Common
Securities will also carry the right to vote and to appoint, remove or replace
any of the Administrative Trustees of such AmerUs Trust. All of the Common
Securities of each AmerUs Trust will be directly or indirectly owned by the
Company.
The financial statements of any AmerUs Trust that issues Capital Securities
will be reflected in the Company's consolidated financial statements with the
Capital Securities shown as Company-obligated mandatorily-redeemable Capital
Securities of a subsidiary trust under minority interest in consolidated
subsidiaries. In a footnote to the Company's audited financial statements there
will be included statements that the applicable AmerUs Trust is wholly-owned by
the Company and that the sole asset of such AmerUs Trust is the Junior
Subordinated Debt (indicating the principal amount, interest rate and maturity
date thereof).
DESCRIPTION OF GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders,
from time to time, of Capital Securities. Each Guarantee will be qualified as an
indenture under the Trust Indenture Act. Unless otherwise specified in the
applicable Prospectus Supplement, First Union Bank will act as indenture trustee
for Trust Indenture Act purposes under each Guarantee (the "Guarantee Trustee").
The terms of each Guarantee will be those set forth in such Guarantee and those
made part of such Guarantee by the Trust Indenture Act. The following summary
does not purport to be complete and is subject to and qualified in its entirety
by reference to the provisions of the form of Guarantee, a copy of which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part, and the Trust Indenture Act. Each Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Capital Securities of
the applicable AmerUs Trust.
GENERAL
Unless otherwise specified in the applicable Prospectus Supplement,
pursuant to each Guarantee, the Company will agree, to the extent set forth
therein, to pay in full to the holders of the Capital Securities, the Guarantee
Payments (as defined below) (except to the extent paid by such AmerUs Trust), as
and when due, regardless of any defense, right of set-off or counterclaim which
such AmerUs Trust may have or assert. The following payments or distributions
with respect to the Capital Securities (the "Guarantee Payments"), to the extent
not paid by such AmerUs Trust, will be subject to the Guarantee (without
duplication): (i) any accrued and unpaid distributions that are required to be
paid on such Capital Securities, to the extent such AmerUs Trust shall have
funds available therefor, and (ii) the redemption price, including all accrued
and unpaid distributions to the date of redemption (the "Redemption Price"), to
the extent such AmerUs Trust has funds available therefor, with respect to any
Capital Securities called for redemption by such AmerUs Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of Capital Securities or by
causing the applicable AmerUs Trust to pay such amounts to such holders.
Each Guarantee will not apply to any payment of distributions except to the
extent the applicable AmerUs Trust shall have funds available therefor. If the
Company does not make interest or principal
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payments on the Junior Subordinated Debt purchased by such AmerUs Trust, such
AmerUs Trust will not pay distributions on the Capital Securities issued by such
AmerUs Trust and will not have funds available therefor.
The Company has also agreed to guarantee the obligations of each AmerUs
Trust with respect to the Common Securities (the "Common Guarantee") issued by
such AmerUs Trust to the same extent as the Guarantee, except that, if an Event
of Default under the Subordinated Indenture has occurred and is continuing,
holders of Capital Securities under the Guarantee shall have priority over
holders of the Common Securities under the Common Guarantee with respect to
distributions and payments on liquidation, redemption or otherwise.
STATUS OF THE GUARANTEES
The Guarantees will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to the Senior
Indebtedness of the Company, except those liabilities of the Company made pari
passu or subordinate by their terms, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company and with
any guarantee now or hereafter entered into by the Company in respect of any
preferred or preference stock of any affiliate of the Company and (iii) senior
to the Common Stock. The terms of the Capital Securities provide that each
holder of Capital Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee relating thereto.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the Company to enforce its rights under such Guarantee without instituting a
legal proceeding against any other person or entity).
CERTAIN COVENANTS OF THE COMPANY
Unless otherwise specified in the applicable Prospectus Supplement, in each
Guarantee the Company will covenant that, so long as any Capital Securities
issued by the applicable AmerUs Trust remain outstanding, if there shall have
occurred any event of default under such Guarantee or under the Declaration of
such AmerUs Trust, then (a) the Company will not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee or agent
benefit plans or the satisfaction by the Company of its obligations pursuant to
any contract or security outstanding on the date of such event requiring the
Company to purchase capital stock of the Company, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock, (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(iv) dividends or distributions in capital stock of the Company (or rights to
acquire capital stock) or repurchases or redemptions of capital stock solely
from the issuance or exchange of capital stock or (v) redemptions or repurchases
of any rights outstanding under a shareholder rights plan); (b) the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Company which rank
junior to the Junior Subordinated Debt issued to the applicable AmerUs Trust and
(c) the Company shall not make any guarantee payments with respect to the
foregoing (other than pursuant to a Guarantee).
MODIFICATION OF THE GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Capital Securities (in which case no consent of such holders will
be required), each Guarantee may be amended only with the prior approval of the
holders of not less than a majority in liquidation amount of the outstanding
Capital Securities of such AmerUs Trust. The manner of obtaining any such
approval of holders of such Capital Securities will be set forth in the
accompanying Prospectus Supplement. All guarantees and agreements
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contained in a Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Company and shall inure to the benefit of the holders
of the Capital Securities of the applicable AmerUs Trust then outstanding.
EVENTS OF DEFAULT
An event of default under a Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in liquidation amount of the Capital Securities to which
such Guarantee relates have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee.
If the Guarantee Trustee fails to enforce such Guarantee, any record holder
of Capital Securities to which such Guarantee relates may institute a legal
proceeding directly against the Company to enforce the Guarantee Trustee's
rights under such Guarantee without first instituting a legal proceeding against
the applicable AmerUs Trust, the Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
Guarantee Payment under a Guarantee, a record holder of Capital Securities to
which such Guarantee relates may directly institute a proceeding against the
Company for enforcement of such Guarantee for such payment to the record holder
of the Capital Securities to which such Guarantee relates of the principal of or
interest on the applicable Junior Subordinated Debt on or after the respective
due dates specified in the Junior Subordinated Debt, and the amount of the
payment will be based on the holder's pro rata share of the amount due and owing
on all of the Capital Securities to which such Guarantee relates. The Company
has waived any right or remedy to require that any action be brought first
against the applicable AmerUs Trust or any other person or entity before
proceeding directly against the Company. The record holder in the case of the
issuance of one or more global Capital Securities certificates will be The
Depository Trust Company acting at the direction of the beneficial owners of the
Capital Securities.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under each outstanding Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default to a Guarantee,
undertakes to perform only such duties as are specifically set forth in such
Guarantee and, after default with respect to such Guarantee, shall exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to such provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by a Guarantee at the
request of any holder of Capital Securities to which such Guarantee relates
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
TERMINATION
Each Guarantee will terminate as to the Capital Securities issued by the
applicable AmerUs Trust upon full payment of the Redemption Price of all Capital
Securities of such AmerUs Trust, upon distribution of the Junior Subordinated
Debt held by such AmerUs Trust to the holders of all of the Capital Securities
of such AmerUs Trust or upon full payment of the amounts payable in accordance
with the Declaration of such AmerUs Trust upon liquidation of such AmerUs Trust.
Each Guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of Capital Securities issued by the applicable
AmerUs Trust must restore payment of any sums paid under such Capital Securities
or such Guarantee.
GOVERNING LAW
The Guarantees will be governed by and construed in accordance with the law
of the State of New York.
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DESCRIPTION OF THE PURCHASE CONTRACTS AND THE UNITS
The Company may issue Purchase Contracts, including contracts obligating
holders to purchase from the Company, and the Company to sell to the holders, a
specified number of shares of Common Stock or Preferred Stock at a future date
or dates. The consideration per share of Common Stock or Preferred Stock may be
fixed at the time the Purchase Contracts are issued or may be determined by
reference to a specific formula set forth in the Purchase Contracts. The
Purchase Contracts may be issued separately or as a part of units ("Units"),
including, but not limited to, adjustable conversion-rate equity security units.
Each Unit consists of a Purchase Contract and Debt Securities, Capital
Securities or debt obligations of third parties, including U.S. Treasury
securities, securing the holders' obligations to purchase the Common Stock or
Preferred Stock under the Purchase Contracts. The Purchase Contracts may require
the Company to make periodic payments to the holders of the Units or vice versa,
and such payments may be unsecured or refunded on some basis. The Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner.
The applicable Prospectus Supplement will describe the terms of any
Purchase Contracts or Units. The description in the Prospectus Supplement will
not necessarily be complete, and reference will be made to the Purchase
Contracts, and, if applicable, collateral arrangements and depositary
arrangements, relating to such Purchase Contracts or Units.
PLAN OF DISTRIBUTION
The Company and/or any AmerUs Trust may sell any of the Securities being
offered hereby in any one or more of the following ways from time to time: (i)
through agents; (ii) to or through underwriters; (iii) through dealers; or (iv)
directly to purchasers.
The Prospectus Supplement with respect to the Securities will set forth the
terms of the offering of the Securities, including the name or names of any
underwriters, dealers or agents; the purchase price of the Securities and the
proceeds to the Company and/or an AmerUs Trust from such sale; any underwriting
discounts and commissions or agency fees and other items constituting
underwriters' or agents' compensation; any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchange on which such Securities may be listed. Any initial public
offering price, discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
Offers to purchase Securities may be solicited by agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company and/or the applicable AmerUs Trust to
such agent will be set forth, in the applicable Prospectus Supplement. Unless
otherwise indicated in such Prospectus Supplement, any such agent will be acting
on a reasonable best efforts basis for the period of its appointment. Any such
agent may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the Securities so offered and sold.
If Securities are sold by means of an underwritten offering, the Company
and/or the applicable AmerUs Trust will execute an underwriting agreement with
an underwriter or underwriters at the time an agreement for such sale is
reached, and the names of the specific managing underwriter or underwriters, as
well as any other underwriters, and the terms of the transaction, including
commissions, discounts and any other compensation of the underwriters and
dealers, if any, will be set forth in the applicable Prospectus Supplement which
will be used by the underwriters to make resales of the Securities in respect of
which this Prospectus is delivered to the public. If underwriters are utilized
in the sale of the Securities in respect of which this Prospectus is delivered,
the Securities will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at fixed public offering prices or at varying prices
determined by the underwriter at the time of sale. Securities may be offered to
the
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public either through underwriting syndicates represented by managing
underwriters or directly by the managing underwriters. If any underwriter or
underwriters are utilized in the sale of the Securities, unless otherwise
indicated in the Prospectus Supplement, the underwriting agreement will provide
that the obligations of the underwriters are subject to certain conditions
precedent and that the underwriters with respect to a sale of Securities will be
obligated to purchase all such Securities of a series if any are purchased.
If a dealer is utilized in the sales of the Securities in respect of which
this Prospectus is delivered, the Company and/or the applicable AmerUs Trust
will sell such Securities to the dealer as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such dealer
at the time of resale. Any such dealer may be deemed to be an underwriter, as
such term is defined in the Securities Act, of the Securities so offered and
sold. The name of the dealer and the terms of the transaction will be set forth
in the Prospectus Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the Company
and/or the applicable AmerUs Trust and the sale thereof may be made by the
Company and/or the applicable AmerUs Trust directly to institutional investors
or others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the Prospectus Supplement relating thereto.
Agents, underwriters and dealers may be entitled under relevant agreements
to indemnification or contribution by the Company and/or the applicable AmerUs
Trust against certain liabilities, including liabilities under the Securities
Act.
Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for, the Company and its subsidiaries in
the ordinary course of business.
Securities may also be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company and/or the applicable AmerUs Trust. Any
remarketing firm will be identified and the terms of its agreement, if any, with
its compensation will be described in the applicable Prospectus Supplement.
Remarketing firms may be deemed to be underwriters, as such term is defined in
the Securities Act, in connection with the Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company and/or the applicable AmerUs Trust to indemnification or
contribution by the Company and/or the applicable AmerUs Trust against certain
civil liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for AmerUs and its
subsidiaries in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Company and/or
the applicable AmerUs Trust may authorize agents, underwriters or dealers to
solicit offers by certain types of institutions to purchase Securities from the
Company and/or the applicable AmerUs Trust at the public offering prices set
forth in the applicable Prospectus Supplement pursuant to delayed delivery
contracts ("Contracts") providing for payment and delivery on a specified date
or dates in the future. A commission indicated in the applicable Prospectus
Supplement will be paid to underwriters, dealers and agents soliciting purchases
of Securities pursuant to Contracts accepted by the Company and/or the
applicable AmerUs Trust.
If so indicated in the applicable Prospectus Supplement, in connection with
the offering of Class A Common Stock or any Securities issued by the Company or
any AmerUs Trust, convertible or exchangeable into Class A Common Stock, the
Company's parent and majority shareholder, AmerUs Group, may be offered the
opportunity to purchase such Securities concurrently with a public offering at
the public offering price less any applicable underwriting discounts and
commissions.
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of Securities (other than the Capital Securities) will be passed upon
for the Company by Joseph K. Haggerty, Esq., Senior Vice
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President and General Counsel of the Company and Sidley & Austin, Chicago,
Illinois. Sidley & Austin will rely as to matters governed by the laws of the
State of Iowa upon the opinion of Joseph K. Haggerty, Esq.
Certain matters of Delaware law relating to the validity of the Capital
Securities will be passed upon for the AmerUs Trusts by Morris, James, Hitchens
& Williams, special Delaware counsel to the AmerUs Trusts.
EXPERTS
The consolidated financial statements of the Company, as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997, have been incorporated by reference herein in reliance upon the
reports of KPMG Peat Marwick LLP, independent accountants, which reports are
also incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements and schedules of Delta as of December
31, 1996 and 1995, and for each of the years in the three-year period ended
December 31, 1996, have been incorporated by reference herein in reliance upon
the reports of Coopers & Lybrand L.L.P., independent accountants, which reports
are also incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing.
The consolidated financial statements and schedules of AmVestors as of
December 31, 1996 and 1995, and for each of the years in the three-year period
ended December 31, 1996, have been incorporated by reference herein in reliance
upon the reports of Deloitte & Touche LLP, independent accountants, which
reports are also incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary...................... S-3
Selected Consolidated Financial and
Operating Data........................ S-13
Risk Factors............................ S-15
The Trust............................... S-20
Use of Proceeds......................... S-21
Price Range of Common Stock and Dividend
Policy................................ S-21
Capitalization.......................... S-23
Management's Discussion and Analysis of
Results of Operations and Financial
Condition............................. S-24
Description of the Units................ S-28
Accounting Treatment.................... S-27
Certain Federal Income Tax
Consequences.......................... S-61
Underwriting............................ S-67
Validity of the Securities.............. S-68
PROSPECTUS
Available Information................... 4
Incorporation of Certain Documents by
Reference............................. 4
The Company............................. 6
The AmerUs Trusts....................... 8
Selected Consolidated Financial and
Operating Data........................ 11
Risk Factors............................ 13
Use of Proceeds......................... 18
Reorganization and Recent Acquisitions..
Management's Discussion and Analysis of
Results of Operations and Financial
Condition............................. 19
Business................................ 34
Description of Debt Securities.......... 43
Description of Capital Stock............ 53
Description of Warrants................. 59
Description of Capital Securities of the
AmerUs Trusts........................... 60
Description of Guarantees............... 61
Description of the Purchased Contracts
and the Units......................... 64
Plan of Distribution.................... 64
Validity of Securities.................. 65
Experts................................. 66
</TABLE>
======================================================
======================================================
UNITS
AMERUS LIFE HOLDINGS, INC.
AMERUS CAPITAL TRUST II
% ADJUSTABLE
CONVERSION-RATE
EQUITY SECURITY UNITS
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
======================================================
<PAGE> 140
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee........................................ $ 221,250
New York Stock Exchange listing fee......................... 29,500
Legal fees and expenses..................................... 250,000
Accounting fees and expenses................................ 150,000
Printing and engraving expenses............................. 200,000
Trustee's fees and expenses................................. 100,000
Rating agencies' fees....................................... 300,000
Blue Sky fees............................................... 20,000
Miscellaneous............................................... 129,250
----------
Total..................................................... $1,400,000
==========
</TABLE>
Except for the SEC registration fee, all of the foregoing fees and expenses
are estimates and will vary depending upon the Securities issued pursuant to
this Registration Statement.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Sections 851 and 856 of the Iowa Business Corporation Act ("IBCA") provide
that a corporation has the power to indemnify its directors and officers against
liabilities and expenses incurred by reason of such person serving in the
capacity of director or officer, if such person has acted in good faith and in a
manner reasonably believed by the individual to be in or not opposed to the best
interests of the corporation, and in any criminal proceeding if such person had
no reasonable cause to believe the individual's conduct was unlawful. The
foregoing indemnity provisions notwithstanding, in the case of actions brought
by or in the right of the corporation, no indemnification shall be made to such
director or officer with respect to any matter as to which such individual has
been adjudged to be liable to the corporation unless, and only to the extent
that, a court determines that indemnification is proper under the circumstances.
The Company's Articles of Incorporation provide that the Company shall
indemnify its directors to the fullest extent possible under the IBCA. The
Company's By-laws extend the same indemnity to its officers. The Articles of
Incorporation provide that no director shall be liable to the Company or its
shareholders for monetary damages for breach of the individual's fiduciary duty
as a director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its shareholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for any transaction in which the director derived an improper
personal benefit, or (iv) under the IBCA provisions relating to improper
distributions.
The Company maintains a directors' and officers' liability insurance policy
to insure against losses arising from claims made against its directors and
officers, subject to the limitations and conditions as set forth in the
policies. In addition, the Company has entered into indemnification agreements
with its directors and certain of its executive officers providing for the
indemnification of such persons as permitted by the Company's Articles of
Incorporation and Iowa law.
The Declaration for each of AmerUs Capital II and AmerUs Capital III (the
"Trusts") provides that no Property Trustee or any of its Affiliates, Delaware
Trustee or any of its Affiliates, or any officer, director, shareholder, member,
partner, employee, representative, custodian, nominee or agent of the Property
Trustee or the Delaware Trustee (each a "Fiduciary Indemnified Person"), and no
Administrative Trustee, Affiliate of any Administrative Trustee, or any officer,
director, shareholder, member, partner, employee, representative or agent of any
Administrative Trustee or any Affiliate thereof, or any employee or agent of any
of the Trusts or any of their Affiliates (each a "Company Indemnified Person")
shall be liable, responsible or accountable in damages or otherwise to any of
such Trusts or any officer, director, shareholder, partner, member,
representative, employee or agent of any such Trust or its Affiliates or to any
holder of Capital Securities for
II-1
<PAGE> 141
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Fiduciary Indemnified Person or Company Indemnified Person in
good faith on behalf of any of such Trusts and in a manner such Fiduciary
Indemnified Person or Company Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Fiduciary Indemnified Person
or Company Indemnified Person by such Declaration or by law, except that a
Fiduciary Indemnified Person or Company Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Fiduciary Indemnified
Person's or Company Indemnified Person's gross negligence or willful misconduct
with respect to such acts or omissions.
The Declaration for each of such Trusts also provides that to the full
extent permitted by law, the Company shall indemnify any Company Indemnified
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of any such Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of any such Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. Each of the Declarations also provides that to the full
extent permitted by law, the Company shall indemnify any Company Indemnified
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of any such
trust to procure a judgment in its favor by reason of the fact that such person
is or was a Company Indemnified Person against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interests of any such trust and except that no such indemnification shall
be made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to any such trust
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem proper. The
Declaration for each such AmerUs Trust further provides that expenses (including
attorneys' fees) incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or proceeding referred to
in the immediately preceding two sentences shall be paid by the Company in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such Company Indemnified Person to repay
such amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Company as authorized in any such Declaration.
The Declaration for each Trust also provides that the Company shall
indemnify each Fiduciary Indemnified Person against any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts under
any such Trust, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or
duties thereunder.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
1.1*** Form of Underwriting Agreement -- Debt Securities.
1.2*** Form of Underwriting Agreement -- Equity Securities.
1.3*** Form of Concurrent Offering Purchase Agreement between the
Company and AmerUs Group Co.
3.1 Amended and Restated Articles of Incorporation of the
Company are incorporated herein by reference to Exhibit 3.5
to the Company's Registration Statement on Form S-1 (No.
333-12239).
</TABLE>
II-2
<PAGE> 142
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
3.2 By-laws of the Company are incorporated herein by reference
to Exhibit 3.2 to the Company's Registration Statement on
Form S-1 (No. 333-12239).
4.1 Form of Certificate for shares of Class A Common Stock of
the Company is incorporated herein by reference to Exhibit
4.1 to the Registration Statement on Form S-1 of the Company
(No. 333-12239).
4.2*** Senior Indenture, dated as of by and between
the Company and First Union National Bank, as Indenture
Trustee, pursuant to which the Senior Debt Securities are to
be issued.
4.3** Form of Subordinated Indenture by and between the Company
and First Union National Bank, as Indenture Trustee,
pursuant to which the Junior Subordinated Debt is to be
issued.
4.4* Certificate of Trust of AmerUs Capital II.
4.5* Trust Agreement of AmerUs Capital II.
4.6** Form of Amended and Restated Declaration of Trust of AmerUs
Capital II.
4.7* Certificate of Trust of AmerUs Capital III.
4.8* Trust Agreement of AmerUs Capital III.
4.9** Form of Amended and Restated Declaration of Trust of AmerUs
Capital III.
4.10** Form of Common Trust Securities Guarantee Agreement by the
Company.
4.11** Form of QUIPS Guarantee Agreement by the Company.
4.12** Form of Master Unit Agreement between the Company and First
Union National Bank.
4.13** Form of Call Option Agreement between Goldman, Sachs & Co.
and First Union National Bank.
4.14** Form of Pledge Agreement among the Company, Goldman, Sachs &
Co. and First Union National Bank.
4.15*** Form of Debt Security. The form or forms of such Debt
Securities with respect to each particular offering will be
filed as an exhibit subsequently included or incorporated by
reference herein.
4.16*** Form of Preferred Stock. Any amendment to the Company's
Amended and Restated Articles of Incorporation authorizing
the creation of any series of Preferred Stock or Depositary
Shares representing such shares of Preferred Stock and
setting forth the rights, preferences and designations
thereof will be filed as an exhibit subsequently included or
incorporated by reference herein.
4.17*** Form of Warrant Agreement.
4.18*** Form of Preferred Security.
4.19 Amended and Restated Intercompany Agreement dated as of
December 1, 1996 among American Mutual Holding Company,
AmerUs Group Co. and the Company is incorporated herein by
reference to Exhibit 10.81 to the Company's Registration
Statement on Form S-1 (No. 333-12239).
5.1*** Opinion of Joseph K. Haggerty, Esq.
5.2*** Opinion of Morris, James, Hitchens & Williams.
12.1 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends is incorporated herein by
reference to Exhibit 12.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997.
23.1*** Consent of Joseph K. Haggerty, Esq. (included in Exhibit 5.1
hereto).
23.2*** Consent of Morris, James, Hitchens & Williams (included in
Exhibit 5.2 hereto).
23.3** Consent of KPMG Peat Marwick LLP with respect to the
financial statements of AmerUs Life Holdings, Inc.
23.4*** Consent of Coopers & Lybrand, L.L.P. with respect of the
financial statements of Delta Life Corporation.
</TABLE>
II-3
<PAGE> 143
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<C> <S>
23.5*** Consent of Deloitte & Touche LLP with respect of the
financial statements of AmVestors Financial Corporation.
24.1** Powers of Attorney (included in the signature page hereto).
25.1* Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Indenture Trustee under the Senior Indenture.
25.2** Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Indenture Trustee under the Subordinated Indenture.
25.3*** Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Trustee of the Guarantees for the benefit of the
holders of Capital Securities of AmerUs Capital II and
AmerUs Capital III.
25.4** Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Trustee under the Amended and Restated Trust
Agreement.
25.5** Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Trustee under the Amended and Restated Trust
Agreement.
</TABLE>
- -------------------------
* Previously filed.
** Filed herewith.
*** To be filed either by amendment or as an exhibit to an Exchange Act Report
and incorporated herein by reference.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) under the Securities Act of 1933 if, in the aggregate,
the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-4
<PAGE> 144
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of a
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrants hereby undertake to supplement the
prospectus, after the expiration of the subscription period with regard to the
warrants, if any, to set forth the results of the subscription offer, the
transactions by the underwriters during the subscription period, the amount of
unsubscribed securities to be purchased by the underwriters, and the terms of
any subsequent reoffering thereof. If any public offering by the underwriters is
to be made on terms differing from those set forth on the cover page of the
prospectus, a post effective amendment will be filed to set forth the terms of
such offering.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, each of the
Registrants has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(e) The undersigned Registrants hereby undertake that (1) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time it was
declared effective; and (2) for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(f) The undersigned Registrants hereby undertake to file, if necessary, an
application for the purpose of determining the eligibility of the Trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act of 1939 in
accordance with the rules and regulations prescribed by the Securities and
Exchange Commission under Section 305(b)(2) of such Act.
II-5
<PAGE> 145
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AmerUs Life
Holdings, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Des Moines,
State of Iowa, on June 4, 1998.
AMERUS LIFE HOLDINGS, INC.
BY: /s/ ROGER K. BROOKS
-----------------------------------
Roger K. Brooks,
Chairman of the Board, President
and Chief Executive Officer
We, the undersigned officers and directors of AmerUs Life Holdings, Inc.,
hereby severally and individually constitute and appoint Michael E. Sproule,
Michael G. Fraizer and James A. Smallenberger, and each of them, the true and
lawful attorneys and agents of each of us to execute in the name, place and
stead of each of us (individually and in any capacity stated below) any and all
amendments to this Form S-3 and all instruments necessary or advisable in
connection therewith including, without limitation, a registration statement
under Rule 462, and to file the same with the Securities and Exchange
Commission, each of said attorneys and agents to have the power to act with or
without the others and to have full power and authority to do and perform in the
name and on behalf of each of the undersigned every act whatsoever necessary or
advisable to be done on the premises as fully and to all intents and purposes as
any of the undersigned might or could do in person, and we hereby ratify and
confirm our signatures as they may be signed by or said attorneys and agents or
each of them to any and all such amendments and instruments.
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director, Chairman of the Board, June 4, 1998
- ------------------------------------------------ President and Chief Executive
Roger K. Brooks Officer
(Principal Executive Officer of
AmerUs Life Holdings, Inc.)
* Executive Vice President and Chief June 4, 1998
- ------------------------------------------------ Financial Officer
Michael E. Sproule (Principal Financial Officer of
AmerUs Life Holdings, Inc.)
* Senior Vice President Accounting June 4, 1998
- ------------------------------------------------ Officer and Controller/Treasurer
Michael G. Fraizer (Principal Accounting Officer of
AmerUs Life Holdings, Inc.)
* Director June 4, 1998
- ------------------------------------------------
John R. Albers
* Director June 4, 1998
- ------------------------------------------------
Malcolm Candlish
</TABLE>
II-6
<PAGE> 146
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director June 4, 1998
- ------------------------------------------------
Maureen M. Culhane
* Director June 4, 1998
- ------------------------------------------------
Thomas F. Gaffney
* Director June 4, 1998
- ------------------------------------------------
Ilene B. Jacobs
* Director June 4, 1998
- ------------------------------------------------
Sam C. Kalainov
* Director June 4, 1998
- ------------------------------------------------
Ralph W. Laster, Jr.
* Director June 4, 1998
- ------------------------------------------------
John W. Norris, Jr.
* Director June 4, 1998
- ------------------------------------------------
Jack C. Pester
* Director June 4, 1998
- ------------------------------------------------
John A. Wing
</TABLE>
- -------------------------
* James A. Smallenberger, attorney-in-fact
II-7
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AmerUs Capital
II certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Des Moines, State of
Iowa, on June 4, 1998.
AMERUS CAPITAL II
By: AMERUS LIFE HOLDINGS, INC.,
as Depositor
By: /s/ MICHAEL E. SPROULE
------------------------------------
Michael E. Sproule
Executive Vice President and
Chief Financial Officer
II-8
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AmerUs Capital
III certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Des Moines, State of
Iowa, on June 4, 1998.
AMERUS CAPITAL III
By: AMERUS LIFE HOLDINGS, INC.,
as Depositor
By: /s/ MICHAEL E. SPROULE
------------------------------------
Michael E. Sproule
Executive Vice President and
Chief Financial Officer
II-9
<PAGE> 149
EXHIBIT INDEX
TO REGISTRATION STATEMENT
ON FORM S-3
AMERUS LIFE HOLDINGS, INC.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1*** Form of Underwriting Agreement -- Debt Securities.
1.2*** Form of Underwriting Agreement -- Equity Securities.
1.3*** Form of Concurrent Offering Purchase Agreement between the
Company and AmerUs Group Co.
3.1 Amended and Restated Articles of Incorporation of the
Company are incorporated herein by reference to Exhibit 3.5
to the Company's Registration Statement on Form S-1 (No.
333-12239).
3.2 By-laws of the Company are incorporated herein by reference
to Exhibit 3.2 to the Company's Registration Statement on
Form S-1 (No. 333-12239).
4.1 Form of Certificate for shares of Class A Common Stock of
the Company is incorporated herein by reference to Exhibit
4.1 to the Registration Statement on Form S-1 of the Company
(No. 333-12239).
4.2*** Senior Indenture, dated as of by and between
the Company and First Union National Bank, as Indenture
Trustee, pursuant to which the Senior Debt Securities are to
be issued.
4.3** Form of Subordinated Indenture by and between the Company
and First Union National Bank, as Indenture Trustee,
pursuant to which the Junior Subordinated Debt is to be
issued.
4.4* Certificate of Trust of AmerUs Capital II.
4.5* Trust Agreement of AmerUs Capital II.
4.6** Form of Amended and Restated Declaration of Trust of AmerUs
Capital II.
4.7* Certificate of Trust of AmerUs Capital III.
4.8* Trust Agreement of AmerUs Capital III.
4.9** Form of Amended and Restated Declaration of Trust of AmerUs
Capital III.
4.10** Form of Common Trust Securities Guarantee Agreement by the
Company.
4.11** Form of QUIPS Guarantee Agreement by the Company.
4.12** Form of Master Unit Agreement between the Company and First
Union National Bank.
4.13** Form of Call Option Agreement between Goldman, Sachs & Co.
and First Union National Bank.
4.14** Form of Pledge Agreement among the Company, Goldman, Sachs &
Co. and First Union National Bank.
4.15*** Form of Debt Security. The form or forms of such Debt
Securities with respect to each particular offering will be
filed as an exhibit subsequently included or incorporated by
reference herein.
4.16*** Form of Preferred Stock. Any amendment to the Company's
Amended and Restated Articles of Incorporation authorizing
the creation of any series of Preferred Stock or Depositary
Shares representing such shares of Preferred Stock and
setting forth the rights, preferences and designations
thereof will be filed as an exhibit subsequently included or
incorporated by reference herein.
</TABLE>
<PAGE> 150
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4.17*** Form of Warrant Agreement.
4.18*** Form of Preferred Security.
4.19 Amended and Restated Intercompany Agreement dated as of
December 1, 1996 among American Mutual Holding Company,
AmerUs Group Co. and the Company is incorporated herein by
reference to Exhibit 10.81 to the Company's Registration
Statement on Form S-1 (No. 333-12239).
5.1*** Opinion of Joseph K. Haggerty, Esq.
5.2*** Opinion of Morris, James, Hitchens & Williams.
12.1 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends is incorporated herein by
reference to Exhibit 12.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997.
23.1*** Consent of Joseph K. Haggerty, Esq. (included in Exhibit 5.1
hereto).
23.2*** Consent of Morris, James, Hitchens & Williams (included in
Exhibit 5.2 hereto).
23.3** Consent of KPMG Peat Marwick LLP with respect to the
financial statements of AmerUs Life Holdings, Inc.
23.4*** Consent of Coopers & Lybrand, L.L.P. with respect of the
financial statements of Delta Life Corporation.
23.5*** Consent of Deloitte & Touche LLP with respect of the
financial statements of AmVestors Financial Corporation.
24.1** Powers of Attorney (included in the signature page hereto).
25.1* Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Indenture Trustee under the Senior Indenture.
25.2** Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Indenture Trustee under the Subordinated Indenture.
25.3*** Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Trustee of the Guarantees for the benefit of the
holders of Capital Securities of AmerUs Capital II and
AmerUs Capital III.
25.4** Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Trustee under the Amended and Restated Trust
Agreement.
25.5** Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of First Union National
Bank, as Trustee under the Amended and Restated Trust
Agreement.
</TABLE>
- -------------------------
* Previously filed.
** Filed herewith.
*** To be filed either by amendment or as an exhibit to an Exchange Act Report
and incorporated herein by reference.
<PAGE> 1
EXHIBIT 4.3
================================================================================
INDENTURE
between
AMERUS LIFE HOLDINGS, INC.
and
FIRST UNION NATIONAL BANK
as Trustee
Dated as of ___________ __ , 1998
Providing for the Issuance of
Subordinated Debt Securities in Series
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TABLE OF CONTENTS
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ARTICLE I
Definitions and Other Provisions of General Application
Section 1.01. Definitions................................................. 1
Section 1.02. Compliance Certificate and Opinions......................... 13
Section 1.03. Forms of Documents Delivered to Trustee..................... 14
Section 1.04. Acts of Holders............................................. 15
Section 1.05. Notices, Etc., to Trustee and Company....................... 18
Section 1.06. Notice to Holders; Waiver................................... 18
Section 1.07. Headings and Table of Contents.............................. 20
Section 1.08. Successors and Assigns...................................... 20
Section 1.09. Separability................................................ 20
Section 1.10. Benefits of Indenture....................................... 20
Section 1.11. Governing Law............................................... 20
Section 1.12. Legal Holidays.............................................. 21
ARTICLE II
Security Forms
Section 2.01. Forms Generally............................................. 21
Section 2.02. Form of Trustee's Certificate of Authentication............. 22
Section 2.03. Securities in Global Form................................... 22
Section 2.04. Form of Legend for Securities in Global Form................ 23
ARTICLE III
The Securities
Section 3.01. Amount Unlimited; Issuable in Series........................ 24
Section 3.02. Denominations............................................... 29
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Section 3.03. Execution, Authentication, Delivery and Dating............ 29
Section 3.04. Temporary Securities...................................... 33
Section 3.05. Registration, Transfer and Exchange....................... 34
Section 3.06. Replacement Securities.................................... 39
Section 3.07. Payment of Interest; Interest Rights Preserved............ 41
Section 3.08. Persons Deemed Owners..................................... 43
Section 3.09. Cancellation.............................................. 44
Section 3.10. Computation of Interest................................... 44
Section 3.11. CUSIP Numbers............................................. 44
Section 3.12. Currency and Manner of Payment in Respect of Securities... 45
Section 3.13. Appointment and Resignation of Exchange Rate Agent........ 50
ARTICLE IV
Satisfaction, Discharge and Defeasance
Section 4.01. Termination of Company's Obligations
Under the Indenture...................................... 51
Section 4.02. Application of Trust Funds................................ 53
Section 4.03. Applicability of Defeasance Provisions;
Company's Option to Effect Defeasance
or Covenant Defeasance................................... 53
Section 4.04. Defeasance and Discharge.................................. 54
Section 4.05. Covenant Defeasance....................................... 54
Section 4.06. Conditions to Defeasance or Covenant
Defeasamce............................................... 55
Section 4.07. Deposited Money and Government
Obligations to Be Held in Trust.......................... 58
Section 4.08. Repayment to Company...................................... 59
Section 4.09. Indemnity for Government Obligations...................... 59
Section 4.10. Reinstatement............................................. 59
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ARTICLE V
Defaults and Remedies
Section 5.01. Events of Default............................... 60
Section 5.02. Acceleration; Rescission and Annulment.......... 62
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee..................... 64
Section 5.04. Trustee May File Proofs of Claim................ 65
Section 5.05. Trustee May Enforce Claims Without
Possession of Securities....................... 65
Section 5.06. Delay or Omission Not Waiver.................... 66
Section 5.07. Waiver of Past Defaults......................... 66
Section 5.08. Control by Majority............................. 66
Section 5.09. Limitation on Suits by Holders.................. 67
Section 5.10. Rights of Holders to Receive Payment............ 68
Section 5.11. Application of Money Collected.................. 68
Section 5.12. Restoration of Rights and Remedies.............. 69
Section 5.13. Rights and Remedies Cumulative.................. 69
Section 5.14. Waiver of Usury, Stay or Extension Laws......... 69
Section 5.15. Undertaking for Costs........................... 69
Section 5.16. Judgment Currency............................... 70
ARTICLE VI
The Trustee
Section 6.01. Certain Duties and Responsibilities
of the Trustee................................. 71
Section 6.02. Rights of Trustee............................... 71
Section 6.03. Trustee May Hold Securities..................... 72
Section 6.04. Money Held in Trust............................. 73
Section 6.05. Trustee's Disclaimer............................ 73
Section 6.06. Notice of Defaults.............................. 73
Section 6.07. Reports by Trustee to Holders................... 73
Section 6.08. Securityholder Lists............................ 74
Section 6.09. Compensation and Indemnity...................... 74
Section 6.10. Replacement of Trustee.......................... 75
Section 6.11. Acceptance of Appointment by Successor.......... 77
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Section 6.12. Eligibility; Disqualification........................ 79
Section 6.13. Merger, Conversion, Consolidation or
Succession to Business.............................. 79
Section 6.14. Appointment of Authenticating Agent.................. 79
ARTICLE VII
Consolidation, Merger or Sale by the Company
Section 7.01. Consolidation, Merger or Sale of Assets Permitted.... 82
ARTICLE VIII
Supplemental Indentures
Section 8.01. Supplemental Indentures Without Consent of Holders... 83
Section 8.02. Supplemental Indentures with Consent of Holders...... 85
Section 8.03. Compliance with Trust Indenture Act.................. 86
Section 8.04. Execution of Supplemental Indentures................. 86
Section 8.05. Effect of Supplemental Indentures.................... 86
Section 8.06. Reference in Securities to Supplemental.............. 86
Indentures.......................................... 87
Section 8.07. Effect on Senior Indebtedness........................ 87
ARTICLE IX
Covenants
Section 9.01. Payment of Principal, Premium, if any,
and Interest........................................ 87
Section 9.02. Maintenance of Office or Agency...................... 87
Section 9.03. Money for Securities Payments to be
Held in Trust; Unclaimed Money...................... 89
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Section 9.04. Corporate Existence...................................... 91
Section 9.05. Reports by the Company................................... 91
Section 9.06. Annual Review Certificate; Notice of
Defaults or Events of Default........................... 92
Section 9.07. Books of Record and Account.............................. 92
ARTICLE X
Redemption
Section 10.01. Applicability of Article................................ 93
Section 10.02. Election to Redeem Notice to Trustee.................... 93
Section 10.03. Selection of Securities to be Redeemed.................. 93
Section 10.04. Notice of Redemption.................................... 94
Section 10.05. Deposit of Redemption Price............................. 95
Section 10.06. Securities Payable on Redemption Date................... 96
Section 10.07. Securities Redeemed in Part............................. 97
ARTICLE XI
Sinking Funds
Section 11.01. Applicability of Article............................... 98
Section 11.02. Satisfaction of Sinking Fund Payments
with Securities....................................... 98
Section 11.03. Redemption of Securities for Sinking Fund.............. 98
ARTICLE XII
Subordination of Securities
Section 12.01. Agreement to Subordinate................................. 99
Section 12.02. Distribution on Dissolution, Liquidation and
Reorganization.......................................... 99
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Section 12.03. Prior Payment to Senior Indebtedness
Upon Acceleration of Securities................... 102
Section 12.04. No Payment on Securities in Event of
Default on Senior Indebtedness.................... 102
Section 12.05. Payments on Securities Permitted.................... 103
Section 12.06. Subrogation to Rights of Holders
of Senior Indebtedness............................. 103
Section 12.07. Provisions Solely to Define Relative
Rights............................................. 104
Section 12.08. Authorization of Holders of Securities to Trustee to
Effect Subordination............................... 105
Section 12.09. Notices to Trustee.................................. 105
Section 12.10. Trustee as Holder of Senior Indebtedness............ 106
Section 12.11. No Waiver of Subordination Provisions............... 106
Section 12.12. Reliance on Judicial Order or
Certificate of Liquidating Agent................... 107
Section 12.13. Trustee Not Fiduciary for Holders
of Senior Indebtedness............................ 107
Section 12.14. Article Applicable to Paying Agents................ 107
Section 12.15. Certain Conversions or Exchanges
Deemed Payment.................................... 107
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INDENTURE, dated as of , 1998 from AMERUS LIFE HOLDINGS, INC.,
an Iowa corporation (the "Company"), to FIRST UNION NATIONAL BANK (the
"Trustee").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured and
subordinated debentures, notes or other evidences of subordinated indebtedness
("Securities") to be issued in one or more series as herein provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
Definitions and Other Provisions
of General Application
Section 1.01. Definitions. (a) For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise
requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP (as hereinafter
defined); and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a
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whole and not to any particular Article, Section or other subdivision.
"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 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.
"Agent" means any Paying Agent or Registrar.
"Authenticating Agent" means any authenticating agent appointed by the
Trustee pursuant to Section 6.14.
"Authorized Newspaper" means a newspaper of general circulation, in the
official language of the country of publication or in the English language,
customarily published on each Business Day whether or not published on
Saturdays, Sundays or holidays. Whenever successive publications in an
Authorized Newspaper are required hereunder they may be made (unless otherwise
expressly provided herein) on the same or different days of the week and in the
same or different Authorized Newspapers.
"Bearer Security" means any Security issued hereunder which is payable to
bearer.
"Board" or "Board of Directors" means the Board of Directors of the
Company or any duly authorized committee of the Board of Directors of the
Company.
"Board Resolution" means a copy of a resolution of the Board of Directors,
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 the certificate, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment or any
other particular location referred to in this Indenture or in the Securities,
means, unless otherwise specified with respect to any Securities pursuant to
Section 3.01, each
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Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment or particular location are
authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act,
then the body performing such duties at such time.
"Company" means the party named as the Company in the first paragraph of
this Indenture until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter means such
successor.
"Company Order" and "Company Request" mean, respectively, a written order
or request signed in the name of the Company by two Officers, one of whom must
be the Chairman of the Board, the President, the Chief Financial Officer, the
Treasurer, the Assistant Treasurer, the Controller or a Vice President of the
Company.
"Conversion Event" means the cessation of use of (i) a Foreign Currency
both by the issuer of such currency and for the settlement of transactions by a
central bank or other public institutions of or within the international banking
community, (ii) the ECU both within the European Monetary System and for the
settlement of transactions by public institutions of or within the European
Communities or (iii) any currency unit other than the ECU for the purposes for
which it was established.
"Corporate Trust Office" means the office of the Trustee in which at any
particular time its corporate trust business shall be principally administered,
which office at the date hereof is located at 230 South Tryon Street, 9th Floor,
Charlotte, North Carolina 28288-1179, Attention: Corporate Trust Dept.
"Currency Unit" or "currency unit" for all purposes of this Indenture
shall mean any composite currency.
"Debt" means indebtedness for money borrowed.
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"Default" means any event which is, or after notice or passage of time, or
both, would be, an Event of Default.
"Depository" when used with respect to the Securities of or within any
series issuable or issued in whole or in part in global form, means the Person
designated as Depository by the Company pursuant to Section 3.01 until a
successor Depository shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter shall mean or include each Person
which is then a Depository hereunder, and if at any time there is more than one
such Person, shall be a collective reference to such Persons.
"Dollar" means the currency of the United States as at the time of payment
is legal tender for the payment of public and private debts.
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"European Monetary System" means the European Monetary System established
by the Resolution of December 5, 1978 of the Council of the European
Communities.
"Exchange Rate Agent", when used with respect to Securities of or within
any series, means, unless otherwise specified with respect to any Securities
pursuant to Section 3.01, a bank designated pursuant to Section 3.01 or Section
3.13 (which may include any such bank acting as Trustee hereunder).
"Exchange Rate Officer's Certificate" means a certificate setting forth (i)
the applicable Market Exchange Rate or the applicable bid quotation and (ii) the
Dollar or Foreign Currency amounts of principal (and premium, if any) and
interest, if any (on an aggregate basis and on the basis of a Security having
the lowest denomination principal amount in the relevant currency or currency
unit), payable with respect to a Security of any series on the basis of such
Market Exchange Rate or the applicable bid quotation, signed by the Chief
Financial Officer,
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the Treasurer, the Controller, any Vice President or the Assistant Treasurer of
the Company.
"Foreign Currency" means any currency issued by the government of one or
more countries other than the United States or by any recognized confederation
or association of such governments.
"GAAP" means United States generally accepted accounting principles, in
effect as of the date of this Indenture, as set forth in the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as is approved by a significant segment of the
accounting profession.
"Government Obligations" means securities which are (i) direct obligations
of the United States or, if specified as contemplated by Section 3.01, the
government which issued the currency in which the Securities of a particular
series are payable, for the payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States or, if specified as
contemplated by Section 3.01, such government which issued the foreign currency
in which the Securities of such series are payable, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States or such other government, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such custodian for the
account of the holder of a depository receipt; provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation evidenced by such depository
receipt.
"Holder" means, with respect to a Bearer Security, a bearer thereof or of a
coupon appertaining thereto and, with respect to a Registered Security, a person
in whose name a Security is registered on the Register.
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"Indenture" means this Indenture as originally executed or as amended or
supplemented from time to time and shall include the forms and terms of
particular series of Securities established as contemplated hereunder.
"Indexed Security" means a Security the terms of which provide that the
principal amount thereof payable at Stated Maturity may be more or less than the
principal face amount thereof at original issuance.
"Interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Market Exchange Rate" means, unless otherwise specified with respect to
any Securities pursuant to Section 3.01, (i) for any conversion involving a
currency unit on the one hand and Dollars or any Foreign Currency on the other,
the exchange rate between the relevant currency unit and Dollars or such Foreign
Currency calculated by the method specified pursuant to Section 3.01 for the
Securities of the relevant series, (ii) for any conversion of Dollars into any
Foreign Currency, the noon buying rate for such Foreign Currency for cable
transfers quoted in New York City as certified for customs purposes by the
Federal Reserve Bank of New York and (iii) for any conversion of one Foreign
Currency into Dollars or another Foreign Currency, the spot rate at noon local
time in the relevant market at which, in accordance with normal banking
procedures, the Dollars or Foreign Currency into which conversion is being made
could be purchased with the Foreign Currency from which conversion is being made
from major banks located in New York City, London or any other principal market
for Dollars or such purchased Foreign Currency, in each case determined by the
Exchange Rate Agent. Unless otherwise specified with respect to any Securities
pursuant to Section 3.01, in the event of the unavailability of any of the
exchange rates provided for in the foregoing clauses (i), (ii) and (iii), the
Exchange Rate Agent shall use, in its sole discretion and without liability on
its part, such quotation of the Federal Reserve Bank of New York as of the most
recent available date, or quotations from one or more major banks in New York
City, London or other principal market for such currency or
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currency unit in question (which may include any such bank acting as Trustee
under this Indenture), or such other quotations as the Exchange Rate Agent shall
deem appropriate. If there is more than one market for dealing in any currency
or currency unit by reason of foreign exchange regulations or otherwise, the
market to be used in respect of such currency or currency unit shall be that
upon which a nonresident issuer of securities designated in such currency or
currency unit would purchase such currency or currency unit in order to make
payments in respect of such securities.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security 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.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the Assistant Treasurer,
the Controller, the Secretary or any Assistant Secretary of the Company.
"Officers' Certificate", when used with respect to the Company, means a
certificate signed by two Officers, one of whom must be the Chairman of the
Board, the President, the Chief Financial Officer, the Treasurer, the Assistant
Treasurer, the Controller or a Vice President of the Company.
"Opinion of Counsel" means a written opinion from the general counsel of
the Company or other legal counsel who is reasonably acceptable to the Trustee.
Such counsel may be an employee of or counsel to the Company.
"Original Issue Discount Security" means any Security which provides for an
amount less than the stated principal amount thereof to be due and payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 5.02.
"Outstanding", when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
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(ii) Securities, or portions thereof, for whose payment or redemption
money in the necessary amount and in the required currency or Currency
Unit has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust (if
the Company shall act as its own Paying Agent) for the Holders of such
Securities and any coupons appertaining thereto, provided that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provisions therefor satisfactory to
the Trustee have been made;
(iii) Securities, except to the extent provided in Sections 4.04,
with respect to which the Company has effected defeasance as provided in
Article IV; and
(iv) Securities which have been paid pursuant to Section 3.06 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, or whether
sufficient funds are available for redemption or for any other purpose and for
the purpose of making the calculations required by Section 313 of the Trust
Indenture Act, (W) the principal amount of any Original Issue Discount
Securities that may be counted in making such determination or calculation and
that shall be deemed to be outstanding for such purpose shall be equal to the
amount of principal thereof that would be (or shall have been declared to be)
due and payable, at the time of such Determination, upon a declaration of
acceleration of the maturity thereof pursuant to Section 5.02, (X) the principal
amount of any Security denominated in a Foreign Currency that may be counted in
making such determination or calculation and that shall be deemed Outstanding
for such purpose shall be equal to the Dollar equivalent, determined as of the
date such Security is originally issued by the Company as set forth in an
Exchange Rate Officer's
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Certificate delivered to the Trustee, of the principal amount (or, in the case
of an Original Issue Discount Security, the Dollar equivalent as of such date
of original issuance of the amount determined as provided in clause (W) above)
of such Security, (Y) the principal amount of any Indexed Security that may be
counted in making such determination or calculation and that shall be deemed
Outstanding for such purpose shall be equal to the principal face amount of
such Indexed Security at original issuance, unless otherwise provided with
respect to such security pursuant to Section 3.01, and (Z) Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee actually knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of, premium, if any, or interest and any other payments on any
Securities on behalf of the Company.
"Periodic Offering" means an offering of Securities of a series from time
to time the specific terms of which Securities, including, without limitation,
the rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Maturity thereof and the redemption provisions, if
any, with respect thereto, are to the determined by the Company upon the
issuance of such Securities.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of or within
any series, means the place or places where the principal of, premium, if any,
and interest and any
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other payments on such Securities are payable as specified as contemplated by
Sections 3.01.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Amount", when used with respect to any Security, means the
amount of principal, if any, payable in respect thereof at Maturity; provided,
however, that when used with respect to an Indexed Security in any context other
than the making of payments at Maturity, "principal amount" means the principal
face amount of such Indexed Security at original issuance.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
in whole or in part, means the price at which it is to be redeemed pursuant to
this Indenture.
"Registered Security" means any Security issued hereunder and registered as
to principal and interest in the Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of or within any series means the date specified for that
purpose as contemplated by Section 3.01.
"Responsible Officer", when used with respect to the Trustee, shall mean
the chairman or any vice chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any senior vice president, any vice
president, any assistant vice president, the secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any senior trust
officer, any trust officer,
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the controller, any assistant controller, or any officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate trust
matter is referred because of his knowledge of and familiarity with a particular
subject.
"Security" or "Securities" has the meaning stated in the first recital of
this Indenture and more particularly means a Security or Securities of the
Company issued, authenticated and delivered under this Indenture.
"Senior Indebtedness" means the principal of, premium, if any, and unpaid
interest on (i) all indebtedness of the Company, whether outstanding on the date
of this Indenture or thereafter created, incurred or assumed, which is for money
borrowed, or which is evidenced by a note or similar instrument given in
connection with the acquisition of any business, properties or assets, including
securities; (ii) any indebtedness of others of the kinds described in the
preceding clause (i) the payment of which the Company is responsible for or
liable as guarantor or otherwise; and (iii) amendments, renewals, extensions and
refundings of any such indebtedness, unless in any instrument or instruments
evidencing or securing such indebtedness or pursuant to which the same is
outstanding, it is provided that such indebtedness is not senior in right of
payment to, or that such indebtedness is pari passu in right of payment with or
junior to, the Securities.
Senior Indebtedness does not include (a) any indebtedness of the Company to
any of its Subsidiaries, (b) liabilities of the Company incurred in the ordinary
course of its business, or (c) any indebtedness which by its terms is expressly
made pari passu in right of payment with or subordinated to the 8.85% Junior
Subordinated Debentures, Series A of AmerUs Capital I, a trust formed under the
laws of the State of Delaware, or the Company's guarantee thereof.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
on such Security or on a coupon
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representing such installment of interest as the fixed date on which the
principal of such Security or such installment of principal or interest is due
and payable.
"Subsidiary" means, with respect to any Person, (i) a corporation more than
50% of the combined voting power of the outstanding Voting Stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof, (ii) any other Person (other than a corporation) in which such Person,
or one or more other Subsidiaries of such Person or such Person and one or more
other Subsidiaries thereof, directly or indirectly, has at least a majority
ownership and power to direct the policies, management and affairs thereof, or
(iii) any other Person which is otherwise controlled by such Person or by one or
more other Subsidiaries of such Person or by such Person and one or more other
Subsidiaries of such Person.
"Total Assets" means, at any date, the total assets appearing on the most
recently prepared consolidated balance sheet of the Company and its
consolidated Subsidiaries as of the end of a fiscal quarter of the Company,
prepared in accordance with GAAP.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in effect
on the date of this Indenture, except as provided in Section 8.03.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor Trustee replaces it pursuant to the applicable
provisions of this Indenture, and thereafter means such successor Trustee and
if, at any time, there is more than one Trustee, "Trustee" as used with respect
to the Securities of any series shall mean the Trustee with respect to the
Securities of that series.
"United States" means, unless otherwise specified with respect to the
Securities of any series as contemplated by Section 3.01, the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction.
"U.S. Person" means, unless otherwise specified with respect to the
Securities of any series as contemplated by Section 3.01, a citizen, national or
resident of the United
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<PAGE> 20
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust, the income of which is subject to United States federal income
taxation regardless of its source.
"Voting Stock" of any Person means capital stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
(b) The following terms shall have the meanings specified in the Sections
referred to opposite such term below:
<TABLE>
<CAPTION>
TERM Section
<S> <C>
"Act" 1.04(a)
"Additional Amount" 3.01(17)
"Bankruptcy Law" 5.01
"Component Currency" 3.12(h)
"Conversion Date" 3.12(d)
"Custodian" 5.01
"Defaulted Interest" 3.07(b)
"Election Date" 3.12(h)
"Event of Default" 5.01
"Judgment Date" 5.16
"Notice of Default" 5.01(3)
"Register" 3.05
"Registrar" 3.05
"Substitute Date" 5.16
"Valuation Date" 3.12(c)
</TABLE>
Section 1.02. Compliance Certificate and Opinions. Upon any application
or request by the Company to the Trustee to take an action under any provision
of this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
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<PAGE> 21
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Sections 2.03 and 9.06) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such condition or covenant and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such condition or
covenant has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Forms of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a
14
<PAGE> 22
certificate or opinion of, or representations by, an Officer or Officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
as to such matters are erroneous.
Any certificate, statement or opinion of an Officer of the Company or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Company, unless such Officer or counsel, as the
case may be, knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate, statement or opinion is based are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.04. Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by 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 Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such Agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such
15
<PAGE> 23
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Bearer Securities may be proved by the production of
such Bearer Securities or by a certificate executed by any trust company, bank,
banker or other depository, wherever situated if such certificate shall be
deemed by the Trustee to be satisfactory, showing that at the date therein
mentioned such Person had on deposit with such depository, or exhibited to it,
the Bearer Securities therein described; or such facts may be proved by the
certificate or affidavit of the Person holding such Bearer Securities, if such
certificate or affidavit is deemed by the Trustee to be satisfactory. The
Trustee and the Company may assume that such ownership of any Bearer Security
continues until (i) another such certificate or affidavit bearing a later date
issued in respect of the same Bearer Security is produced, (ii) such Bearer
Security is produced to the Trustee by some other Person, (iii) such Bearer
Security is surrendered in exchange for a Registered Security or (iv) such
Bearer Security is no longer Outstanding. The ownership of Bearer Securities
may also be proved in any other manner which the Trustee deems sufficient; and
the Trustee may in any instance require further proof with respect to any of the
matters referred to in this Section.
(d) The ownership of Registered Securities shall be proved by the
Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
(f) If the Company shall solicit from the Holders of any series any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date
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<PAGE> 24
for the determination of Holders of such series entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so, provided that the Company may not set
a record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six months
after the record date.
(g) The Trustee may set any day as a record date for the purpose of
determining the Holders of any series entitled to join in the giving or making
of (i) any Notice of Default, (ii) any declaration of acceleration referred to
in Section 5.02, (iii) any direction referred to in Section 5.08 or (iv) any
request to institute proceedings referred to in Section 5.09(2), and (v) any
waiver of past defaults pursuant to Section 5.07, in each case with respect to
Securities of such series. If such a record date is fixed pursuant to this
paragraph, the relevant action may be taken or given before or after such record
date, but only the Holders of record at the close of business on such record
date shall be deemed to be holders of a series for the purpose of determining
whether Holders of the requisite proportion of Outstanding Securities of such
series have authorized or agreed or consented to such action, and for that
purpose the Outstanding Securities of such series shall be computed as of such
record date; provided that no such action by Holders on such record date shall
be deemed effective unless it shall become effective pursuant to the provisions
of this Indenture not later than six months after the record date. Nothing in
this paragraph shall be construed to prevent the Trustee from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and
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<PAGE> 25
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date and the proposed action by Holders to be given to the
Company in writing and to each Holder of Securities of the relevant series in
the manner set forth in Section 1.06.
Section 1.05. Notices, Etc., to Trustee and Company. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given
or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
in writing and mailed, first-class postage prepaid, to the Trustee at its
Corporate Trust Office at 230 South Tryon Street, 9th Floor, Charlotte,
North Carolina 28288-1179, Attention: Corporate Trust Department, or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at AmerUs Life Holdings, Inc., 699 Walnut Street, Des
Moines, Iowa 50309, Attention: General Counsel or at any other address
previously furnished in writing to the Trustee by the Company.
Section 1.06. Notice to Holders; Waiver. Where this Indenture provides
for notice to Holders of an event (i) if any of the Securities affected by such
event are Registered Securities, such notice to the Holders thereof shall be
sufficiently given unless otherwise herein expressly provided) if in writing
and mailed first-class postage prepaid to each such Holder affected by such
event, at his address as it appears in the Register within the time prescribed
for the giving of such notice and, (ii) if any of the Securities affected by
such event are Bearer Securities, notice to the Holders thereof shall be
sufficiently given (unless otherwise herein or in the terms of
18
<PAGE> 26
such Bearer Securities expressly provided) if published once in an Authorized
Newspaper in New York, New York, and in such other city or cities, if any, as
may be specified as contemplated by Section 3.01.
In any case where notice to Holders of Registered Securities is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of Registered
Securities or the sufficiency of any notice to Holders of Bearer Securities
given as provided herein. In any case where notice is given to Holders of
Bearer Securities by publication, neither the failure to publish such notice,
nor any defect in any notice so published, shall affect the sufficiency of such
notice with respect to any Holders of Registered Securities given as provided
herein. Any notice mailed to a Holder in the manner herein prescribed shall be
conclusively deemed to have been received by such Holder, whether or not such
Holder actually receives such notice.
If by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give such notice as provided above,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder with respect
to a Holder of Registered Securities. If it is impossible or, in the opinion
of the Trustee, impracticable to give any notice by publication in the manner
herein required, then such publication in lieu thereof as shall be made with
the approval of the Trustee shall constitute a sufficient publication of such
notice with respect to a Holder of Bearer Securities.
Any request, demand, authorization, direction, notice, consent or waiver
required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event and such waiver shall be equivalent of such notice. Waivers
of notice by Holders shall be filed with the Trustee, but such filing shall
19
<PAGE> 27
not be a condition precedent to the validity of any action taken in reliance
upon such waiver.
Section 1.07. Headings and Table of Contents. The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
Section 1.08. Successors and Assigns. All covenants and agreements in
this Indenture by the Company shall bind its successors and assigns, whether so
expressed or not.
Section 1.09. Separability. In case any provision of this Indenture or
the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 1.10. Benefits of Indenture. Nothing in this Indenture or in the
Securities, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section 1.11. Governing Law. This Indenture, the Securities and any
coupons appertaining thereto shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles of
conflicts of laws. This Indenture is subject to the Trust Indenture Act and if
any provision hereof limits, qualifies or conflicts with any provision of the
Trust Indenture Act, which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Whether or not this Indenture is required to be qualified under the Trust
Indenture Act, the provisions of the Trust Indenture Act required to be
included in an indenture in order for such indenture to be so qualified shall
be deemed to be included in this Indenture with the same effect as if such
provisions were set forth herein and any provisions hereof which may not be
included in an indenture which is so qualified shall be deemed to be deleted or
modified to the extent
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<PAGE> 28
such provisions would be required to be deleted or modified in an indenture so
qualified.
Section 1.12. Legal Holidays. In any case where any Interest Payment
Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity
of any Security shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of any Security or
coupon other than a provision in the Securities of an series which specifically
states that such provision shall apply in lieu of this Section) payment of
principal, premium, if any, or interest need not be made at such Place of
Payment on such date, but may be made on the next succeeding Business Day at
such Place of Payment with the same force and effect as if made on such date;
provided that to the extent such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount so payable for the period
from and after such Interest Payment Date, Redemption Date, sinking fund
payment date, Stated Maturity or Maturity, as the case may be.
ARTICLE II
Security Forms
Section 2.01. Forms Generally. The Securities of each series and the
coupons, if any, to be attached thereto shall be in substantially such form as
shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or Depository
therefor or as may, consistently herewith, be determined by the officers
executing such Securities and coupons, if any, as evidenced by their execution
of the Securities and coupons, if any. If temporary Securities of any series
are issued as permitted by Section 3.04, the form thereof also shall be
established as provided in the preceding sentence. If the forms of Securities
and coupons, if any, of any series are established by, or by action taken
pursuant to, a Board Resolution, a copy of the Board Resolution together with
an appropriate record of any such action taken pursuant thereto, including a
copy of the approved form of
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<PAGE> 29
Securities or coupons, if any, shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.03 for the
authentication and delivery of such Securities.
Unless otherwise specified as contemplated by Section 3.01, Bearer
Securities shall have interest coupons attached.
The definitive Securities and coupons, if any, shall be printed,
lithographed or engraved on steel engraved boarders or may be produced in any
other manner, all as determined by the officers executing such Securities and
coupons, if any, as evidenced by their execution of such Securities and
coupons, if any.
Section 2.02. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication shall be in substantially the following
form:
This is one of the Securities of the series described in
the within-mentioned Indenture.
--------------------------------,
as Trustee
By:
----------------------------
Authorized Signatory
Section 2.03. Securities in Global Form. If Securities of or within a
series are issuable in whole or in part in global form, any such Security of
such series may provide that it shall represent the aggregate or specified
amount of Outstanding Securities of such series from time to time endorsed
thereon and may also provide that the aggregate amount of Outstanding
Securities of such series represented thereby may from time to time be reduced
or increased to reflect exchanges. Any endorsement of a Security in global
form to reflect the amount, or any increase or decrease in the amount, or
changes in the rights of Holders, of Outstanding Securities represented
thereby, shall be made in such manner and by such Person or Persons as shall be
specified therein or in the Company Order to be delivered to the Trustee
pursuant to Section 3.03 or 3.04.
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<PAGE> 30
Subject to the provisions of Section 3.03 and, if applicable, Section 3.04, the
Trustee shall deliver and redeliver any Security in permanent global form in the
manner and upon instructions given by the Person or Persons specified therein or
in the applicable Company Order. Any instructions by the Company with respect
to endorsement or delivery or redelivery of a Security in global form shall be
in writing but need not comply with Section 1.02 hereof and need not be
accompanied by an Opinion of Counsel.
The provisions of the last paragraph of Section 3.03 shall apply to any
Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 1.02 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby, together with the
written statement contemplated by the last paragraph of Section 3.03.
Notwithstanding the provisions of Section 2.01 and 3.07, unless otherwise
specified as contemplated by Section 3.01, payment of principal of, premium, if
any, and interest on any Security in permanent global form shall be made to the
Person or Persons specified therein.
Section 2.04. Form of Legend for Securities in Global Form. Any
Registered Security in global form authenticated and delivered hereunder shall
bear a legend in substantially the following form with such changes as may be
required by the Depository:
THIS SECURITY IS IN GLOBAL FORM WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED
IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE
OR IN PART FOR SECURITIES IN CERTIFICATED FORM IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, THIS
SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY
SUCH
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<PAGE> 31
NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.
ARTICLE III
The Securities
Section 3.01. Amount Unlimited; Issuable in Series. (a) The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited. The Securities may be issued from time to time in
one or more series.
(b) The following matters shall be established with respect to each series
of Securities issued hereunder (i) by a Board Resolution, (ii) by action taken
pursuant to a Board Resolution and (subject to Section 3.03) set forth, or
determined in the manner provided, in an Officers' Certificate or (iii) in one
or more indentures supplemental hereto:
(1) the title of the Securities of the series (which title shall
distinguish the Securities of the series from all other series of
Securities);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this
Indenture (which limit shall not pertain to Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu
of, other securities of the series pursuant to Section 3.04, 3.05, 3.06,
8.06, or 10.07);
(3) the date or dates on which the principal of and premium, if any,
on the Securities of the series is payable or the method of determination
thereof;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method of calculating such rate or rates of
interest, the date or dates from which such interest shall accrue or the
method by which such date or dates shall be determined, the Interest
Payment Dates on which any such interest shall be payable and, with
respect to Registered Securities, the Regular
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<PAGE> 32
Record Date, if any, for the interest payable on any Registered Security
on any Interest Payment Date;
(5) the place or places where the principal of, premium, if any, and
interest, if any, on Securities of the series shall be payable;
(6) the right, if any, of the Company to defer payment of interest on
the Securities, as the maximum length of any such deferral period and any
related terms, conditions or covenants;
(7) the period or periods within which, the price or prices at which,
the currency or currencies (including currency unit or units) in which,
and the other terms and conditions upon which, Securities of the series
may be redeemed, in whole or in part, at the option of the Company and, if
other than as provided in Section 10.03, the manner in which the
particular Securities of such series (if less than all Securities of such
series are to be redeemed) are to be selected for redemption;
(8) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or upon the happening of a specified event or at the option of
a Holder thereof and the period or periods within which, the price or
prices at which, and the other terms and conditions upon which, Securities
of the series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, if Registered Securities, and if other than the denomination of
$5,000 and any integral multiple thereof, if Bearer Securities, the
denominations in which Securities of the series shall be issuable;
(10) if other than Dollars, the currency or currencies (including
currency unit or units) in which the principal of, premium, if any, and
interest, if any, on the Securities of the series shall be payable, or in
which the Securities of the series shall be denominated, and the
particular provisions applicable thereto in accordance with, in addition
to, or in lieu of the provisions of Section 3.12;
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<PAGE> 33
(11) if the payments of principal of, premium, if any, or interest,
if any, on the Securities of the series are to be made, at the election of
the Company or a Holder, in a currency or currencies (including currency
unit or units) other than that in which such Securities are denominated or
designated to be payable, the currency or currencies (including currency
unit or units) in which such payments are to be made, the terms and
conditions of such payments and the manner in which the exchange rate with
respect to such payments shall be determined, and the particular
provisions applicable thereto in accordance with, in addition to, or in
lieu of the provisions of Section 3.12;
(12) if the amount of payments of principal of, premium, if any, and
interest, if any, on the Securities of the series shall be determined with
reference to an index, formula or other method (which index, formula or
method may be based, without limitation, on a currency or currencies
(including currency unit or units) other than that in which the Securities
of the series are denominated or designated to be payable), the index,
formula or other method by which such amounts shall be determined;
(13) if other than the principal amount thereof, the portion of the
principal amount of such Securities of the series which shall be payable
upon declaration of acceleration thereof pursuant to Section 5.02 or the
method by which such portion shall be determined;
(14) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which shall be deemed to be
the principal amount of such Securities as of any such date for any
purpose thereunder or hereunder, including the principal amount thereof
which shall be due and payable upon any Maturity other than the Stated
Maturity or which shall be deemed to be Outstanding as of any date prior
to the Stated Maturity (or, in any such case, the manner in which such
amount deemed to be the principal amount shall be determined);
(15) if other than as provided in Section 3.07, the Person to whom
any interest on any Registered Security of the series shall be payable and
the manner in which, or the
26
<PAGE> 34
Person to whom, any interest on any Bearer Securities of the series shall
be payable;
(16) provisions, if any, granting special rights to the Holders of
Securities of the series upon the occurrence of such events as may be
specified;
(17) any deletions from, modifications of or additions to the Events
of Default set forth in Section 5.01 or covenants of the Company set forth
in Article IX pertaining to the Securities of the series;
(18) under what circumstances, if any, the Company will pay
additional amounts on the Securities of that series held by a Person who
is not a U.S. Person in respect of taxes or similar charges withheld or
deducted ("Additional Amounts") and, if so, whether the Company will have
the option to redeem such Securities rather than pay such additional
amounts (and the terms of any such option);
(19) whether Securities of the series shall be issuable as Registered
Securities or Bearer Securities (with or without interest coupons), or
both, and any restrictions applicable to the offering, sale or delivery of
Bearer Securities and, if other than as provided in Section 3.05, the
terms upon which Bearer Securities of a series may be exchanged for
Registered Securities of the same series and vice versa;
(20) the date as of which any Bearer Securities of the series and any
temporary global Security representing Outstanding Securities of the
series shall be dated if other than the date of original issuance of the
first Security of the series to be issued;
(21) the forms of the Securities and coupons, if any, of the series;
(22) the applicability, if any, to the Securities of or within the
series of Sections 4.04 and 4.05, or such other means of defeasance or
covenant defeasance as may be specified for the Securities and coupons, if
any, of such series, and, if the Securities are payable in a currency
other than Dollars, whether, for the purpose of such defeasance or
covenant defeasance the term "Government
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Obligations" shall include obligations referred to in the definition of
such term which are not obligations of the United States or an agency or
instrumentality of the United States;
(23) if other than the Trustee, the identity of the Registrar and any
Paying Agent;
(24) the designation of the initial Exchange Rate Agent, if any;
(25) if the Securities of the series shall be issued in whole or in
part in global form (i) the Depository for such global Securities, (ii)
the form of any legend in addition to or in lieu of that in Section 2.04
which shall be borne by such global Security, (iii) whether beneficial
owners of interests in any Securities of the series in global form may
exchange such interests for certificated Securities of such series and of
like tenor of any authorized form and nomination, and (iv) if other than
as provided in Section 3.05, the circumstances under which any such
exchange may occur;
(26) any addition to, deletion from or change in Article XII with
respect to Securities of the Series; and
(27) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture) including any terms
which may be required by or advisable under United States laws or
regulations or advisable (as determined by the Company) in connection with
the marketing of Securities of the series.
(c) All Securities of any one series and coupons, if any, appertaining to
any Bearer Securities of such series shall be substantially identical except,
in the case of Registered Securities, as to denomination and except as may
otherwise be provided (i) by a Board Resolution, (ii) by action taken pursuant
to a Board Resolution and (subject to Section 3.03) set forth or determined in
the manner provided, in the related Officers' Certificate or (iii) in an
indenture supplemental hereto. All Securities of any one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders, for issuances of additional
Securities of such series.
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(d) If any of the terms of the Securities of any series are established by
action taken pursuant to a Board Resolution, a copy of such Board Resolution
shall be certified by the Corporate Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth, or providing the manner for determining,
the terms of the Securities of such series, and an appropriate record of any
action taken pursuant thereto in connection with the issuance of any Securities
of such series shall be delivered to the Trustee prior to the authentication
and delivery thereof.
(e) The Securities shall be subordinated and subject in right of payment
to Senior Indebtedness as provided in Article XII.
Section 3.02. Denominations. Unless otherwise provided as contemplated
by Section 3.01, any Registered Securities of a series shall be issuable in
denominations of $1,000 and any integral multiple thereof and any Bearer
Securities of a series shall be issuable in the denomination of $5,000 and any
integral multiples thereof.
Section 3.03. Execution, Authentication, Delivery and Dating. Securities
shall be executed on behalf of the Company by two Officers. The Company's seal
shall be reproduced on the Securities. The signatures of any of these officers
on the Securities may be manual or facsimile. The coupons, if any, of Bearer
Securities shall bear the facsimile signature of two Officers.
Securities and coupons bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time, the Company may deliver Securities,
together with any coupons appertaining thereto, of any series executed by the
Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and
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deliver such Securities; provided, however, that in the case of Securities
offered in a Periodic Offering, the Trustee shall authenticate and deliver such
Securities from time to time in accordance with such other procedures
(including without limitation, the receipt by the Trustee of oral or electronic
instructions from the Company or its duly authorized agents, promptly confirmed
in writing) acceptable to the Trustee as may be specified by or pursuant to a
Company Order delivered to the Trustee prior to the time of the first
authentication of Securities of such series.
If the form or terms of the Securities of a series have been established
by or pursuant to one or more Board Resolutions as permitted by Sections 2.01
and 3.0l, in authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 315(a) through
(d) of the Trust Indenture Act) shall be fully protected in relying upon, an
Opinion of Counsel stating,
(1) if the forms of such Securities and any coupons have been
established by or pursuant to a Board Resolution as permitted by Section
2.01, that such forms have been established in conformity with the
provisions of this Indenture;
(2) if the terms of such Securities and any coupons have been
established by or pursuant to a Board Resolution as permitted by Section
3.01, that such terms have been, or in the case of Securities of a series
offered in a Periodic Offering, will be, established in conformity with
the provisions of this Indenture, subject in the case of Securities
offered in a Periodic Offering, to any conditions specified in such
Opinion of Counsel; and
(3) that such Securities together with any coupons appertaining
thereto, when authenticated and delivered by the trustee and issued by the
Company in the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute valid and legally binding obligations
of the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and other similar laws of general applicability relating to or affecting
the enforcement of creditors' rights and to general equity
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principles and except further as enforcement thereof may be limited by (A)
requirements that a claim with respect to any Securities denominated other
than in Dollars (or a Foreign Currency or currency unit judgment in
respect of such claim) be converted into Dollars at a rate of exchange
prevailing on a date determined pursuant to applicable law or (B)
governmental authority to limit, delay or prohibit the making of payments
in Foreign Currencies or currency units or payments outside the United
States.
Notwithstanding that such form or terms have been so established, the
Trustee shall have the right to decline to authenticate such Securities if, in
the written opinion of counsel to the Trustee (which counsel may be an employee
of the Trustee) reasonably acceptable to the Company, the issue of such
Securities pursuant to this Indenture will adversely affect the Trustee's own
rights, duties or immunities under this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee. Notwithstanding the
generality of the foregoing, the Trustee will not be required to authenticate
Securities denominated in a Foreign Currency if the Trustee reasonably believes
that it would be unable to perform its duties with respect to such Securities.
Notwithstanding the provisions of Section 3.01 and of the two preceding
paragraphs, if all of the Securities of any series are not to be issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.01 or the Company Order and Opinion of Counsel
otherwise required pursuant to the two preceding paragraphs in connection with
the authentication of each Security of such series if such documents, with
appropriate modifications to cover such future issuances, are delivered at or
prior to the authentication upon original issuance of the first Security of
such series to be issued.
With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Company of any of such
securities, the form and terms thereof and the legality, validity, binding
effect and enforceability thereof, upon the Opinion of Counsel and the other
documents delivered pursuant to Sections 2.01 and 3.01 and this Section, as
applicable, in connection with the first authentication of Securities of such
series.
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If the Company shall establish pursuant to Section 3.01 that the
Securities of a series are to be issued in whole or in part in global form,
then the Company shall execute and the Trustee shall, in accordance with this
Section and the Company Order with respect to such series, authenticate and
deliver one or more Securities of such series in global form that (i) shall
represent and shall be denominated in an amount equal to the aggregate
principal amount of the Outstanding Securities of such series to be represented
by such Security or Securities in global form, (ii) shall be registered, if a
Registered Security, in the name of the Depository for such Security or
Securities in global form or the nominee of such Depository, (iii) shall be
delivered by the Trustee to such Depository or pursuant to such Depository's
instruction and (iv) shall bear the legends set forth in Section 2.04 and the
terms of the Board Resolution or supplemental indenture relating to such
series.
Each Depository designated pursuant to Section 3.01 for a Registered
Security in global form must, at the time of its designation and at all times
while it serves as Depository, be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and any other applicable statute
or regulation. The Trustee shall have no responsibility to determine if the
Depository is so registered. Each Depository shall enter into an agreement
with the Trustee and the Company governing the respective duties and rights of
such Depository, the Company and the Trustee with regard to Securities issued
in global form.
Each Registered Security shall be dated the date of its authentication and
each Bearer Security shall be dated as of the date specified as contemplated by
Section 3.01.
No Security or coupon appertaining thereto shall be entitled to any
benefits under this Indenture or be valid or obligatory for any purpose until
the certificate of authentication substantially in the form provided herein is
executed by the manual signature of one of the authorized signatories of the
Trustee or an Authenticating Agent and no coupon shall be valid until the
Security to which it appertains has been so authenticated. Such signature upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered under this Indenture and is
entitled to the benefits of this Indenture. Except as permitted by Section
3.06 or 3.07, the Trustee shall not authenticate and deliver any Bearer
Security unless all
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appurtenant coupons for interest then matured have been detached and canceled.
Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 3.09 together with a written statement (which need not
comply with Section 1.02 and need not be accompanied by an Opinion of Counsel)
stating that such Security has never been issued and sold by the Company, for
all purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall not be entitled to the benefits
of this Indenture.
Section 3.04. Temporary Securities. Pending the preparation of
definitive Securities of any series, the Company may execute and, upon Company
Order, the Trustee shall authenticate and deliver temporary Securities of such
series which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor and form,
with or without coupons, of the definitive Securities in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities and coupons, if
any. In the case of Securities of any series, such temporary Securities may be
in global form, representing all or a portion of the Outstanding Securities of
such series.
Except in the case of temporary Securities in global form, each of which
shall be exchanged in accordance with the provisions thereof, if temporary
Securities of any series are issued, the Company will cause definitive
Securities of such series to be prepared without unreasonable delay. After
preparation of definitive Securities of such series, the temporary Securities
of such series shall be exchangeable for definitive Securities of such series
upon surrender of the temporary Securities of such series at the office or
agency of the Company pursuant to Section 9.02 in a Place of Payment for such
series, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities of any series (accompanied by any unmatured
coupons appertaining thereto), the Company shall execute and the Trustee shall
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authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations and of
like tenor; provided, however, that no definitive Bearer Security, except as
may be provided pursuant to Section 3.01, shall be delivered in exchange for a
temporary Registered Security; and provided further that no definitive Bearer
Security shall be delivered in exchange for a temporary Bearer Security unless
the Trustee shall have received from the person entitled to receive the
definitive Bearer Security a certificate substantially in the form approved in
or pursuant to the Board Resolutions relating thereto and such delivery shall
occur only outside the United States. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series except as
otherwise specified as contemplated by Section 3.01.
Section 3.05. Registration, Transfer and Exchange. The Company shall
cause to be kept at the Corporate Trust Office of the Trustee or in any office
or agency to be maintained by the Company in accordance with Section 9.02 in a
Place of Payment a register (the "Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Registered Securities and the registration of transfers of
Registered Securities. The Register shall be in written form or any other form
capable of being converted into written form within a reasonable time. The
Trustee is hereby appointed "Registrar" for the purpose of registering
Registered Securities and transfers of Registered Securities as herein
provided.
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency maintained pursuant to Section 9.02 in a
Place of Payment for that series, the Company shall execute and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series, of any
authorized denominations and of a like aggregate principal amount containing
identical terms and provisions.
Bearer Securities or any coupons appertaining thereto shall be
transferable by delivery.
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At the option of the Holder, Registered Securities of any series (except a
Registered Security in global form) may be exchanged for other Registered
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount containing identical terms and provisions, upon
surrender of the Registered Securities to be exchanged at such office or
agency. Whenever any Registered Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Registered Securities which the Holder making the exchange is entitled to
receive. Unless otherwise specified as contemplated by Section 3.01, Bearer
Securities may not be issued in exchange for Registered Securities.
Unless otherwise specified as contemplated by Section 3.01, at the option
of the Holder, Bearer Securities of such series may be exchanged for Registered
Securities (if the Securities of such series are issuable in registered form) or
Bearer Securities (if Bearer Securities of such series are issuable in more than
one denomination and such exchanges are permitted by such series) of the same
series, of any authorized denominations and of like tenor and aggregate
principal amount, upon surrender of the Bearer Securities to be exchanged at any
such office or agency, with all unmatured coupons and all matured coupons in
default thereto appertaining. If the Holder of a Bearer Security is unable to
produce any such unmatured coupon or coupons or matured coupon or coupons in
default, such exchange may be effected if the Bearer Securities are accompanied
by payment in funds acceptable to the Company and the Trustee in an amount equal
to the face amount of such missing coupon or coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to any Paying Agent any such missing coupon in respect
of which such a payment shall have been made, such Holder shall be entitled to
receive the amount of such payment; provided, however, that, except as otherwise
provided in Section 9.02, interest represented by coupons shall be payable only
upon presentation and surrender of those coupons at an office or agency located
outside the United States.
Notwithstanding the foregoing, in case any Bearer Security of any series
is surrendered at any such office or agency in exchange for a Registered
Security of the same series
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after the close of business at such office or agency on (i) any Regular Record
Date and before the opening of business at such office or agency on the
relevant Interest Payment Date, or (ii) any Special Record Date and before the
opening of business at such office or agency on the related date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date or proposed date of payment, as
the case may be (or, if such coupon is so surrendered with such Bearer
Security, such coupon shall be returned to the person so surrendering the
Bearer Security), and interest or Defaulted Interest, as the case may be, will
not be payable on such Interest Payment Date or proposed date for payment, as
the case may be, in respect of the Registered Security issued in exchange for
such Bearer Security, but will be payable only to the Holder of such coupon,
when due in accordance with the provisions of this Indenture.
Each Security issued in global form authenticated under this Indenture
shall be registered in the name of the Depository designated for such series or
a nominee thereof and delivered to such Depository or a nominee thereof or
custodian therefor, and each such Security issued in global form shall
constitute a single Security for all purposes of this Indenture.
Notwithstanding any other provision of this Section, unless and until it
is exchanged in whole or in part for Securities in certificated form in the
circumstances described below, a Security in global form representing all or a
portion of the Securities of a series may not be transferred except as a whole
by the Depository for such series to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository or by such Depository or any such nominee to a successor Depository
for such series or a nominee of such successor Depository.
If at any time the Depository for the Securities of a series notifies the
Company that it is unwilling or unable to continue as Depository for the
Securities of such series or defaults in the performance of its duties as
Depository or if at any time the Depository for the Securities of such series
shall no longer be eligible under Section 3.03, the Company shall appoint a
successor Depository with respect to the Securities of such series. If a
successor Depository for the Securities of such series is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such
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ineligibility, the Company selection pursuant to Section 3.01(b)(24) shall no
longer be effective with respect to the Securities of such series and the
Company shall execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of certificated Securities of such series of like
tenor, shall authenticate and deliver Securities of such series of like tenor in
certificated form, in authorized denominations and in an aggregate principal
amount equal to the principal amount of the Security or Securities of such
series of like tenor in global form in exchange for such Security or Securities
in global form.
The Company may at any time in its sole discretion determine that
Securities issued in global form shall no longer be represented by such a
Security or Securities in global form. In such event the Company shall execute,
and the Trustee, upon receipt of a Company Order for the authentication and
delivery of certificated Securities of such series of like tenor, shall
authenticate and deliver, Securities of such series of like tenor in
certificated form, in authorized denominations and in an aggregate principal
amount equal to the principal amount of the Security or Securities of such
series of like tenor in global form in exchange for such Security or Securities
in global form.
If specified by the Company pursuant to Section 3.01 with respect to a
series of Securities, the Depository for such series may surrender a Security
in global form of such series in exchange in whole or in part for Securities of
such series in certificated form on such terms as are acceptable to the Company
and such Depository. Thereupon, the Company shall execute, and the Trustee
shall authenticate and deliver, without service charge,
(i) to each Person specified by such Depository a new certificated
Security or Securities of the same series of like tenor, of any authorized
denomination as requested by such Person in aggregate principal amount
equal to and in exchange for such Person's beneficial interest in the
Security in global form; and
(ii) to such Depository a new Security in global form of like tenor
in a denomination equal to the difference, if any, between the principal
amount of the surrendered Security in global form and the aggregate
principal amount of certificated Securities delivered to Holders thereof.
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Upon the exchange of a Security in global form for Securities in
certificated form, such Security in global form shall be canceled by the
Trustee. Unless expressly provided with respect to the Securities of any series
that such Security may be exchanged for Bearer Securities, Securities in
certificated form issued in exchange for a Security in global form pursuant to
this Section shall be registered in such names and in such authorized
denominations as the Depository for such Security in global form, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Securities to the Persons
in whose names such Securities are so registered.
Whenever any Securities are surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or upon any
exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the Registrar or
the Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company, the Registrar and the Trustee
duly executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or for
any exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration or transfer or exchange of Securities, other
than exchanges pursuant to Section 3.04, 8.06 or 10.07 not involving any
transfer.
If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company shall not be required (i) to issue,
register the transfer of, or exchange any Securities of that series for a
period beginning at the opening of business 15 days before the day of the
mailing of
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a notice of redemption of any such Securities selected for redemption under
Section 10.03 and ending at the close of business on the day of such mailing;
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption, in whole or in part, except the unredeemed portion of any
Security being redeemed in part; or (iii) to exchange any Bearer Security so
selected for redemption, except that such a Bearer Security may be exchanged for
a Registered Security of that series and like tenor; provided that such
Registered Security shall be simultaneously surrendered for redemption.
The foregoing provisions relating to registration, transfer and exchange
may be modified, supplemented or superseded with respect to any series of
Securities by a Board Resolution or in one or more indentures supplemental
hereto.
Section 3.06. Replacement Securities. If a mutilated Security or a
Security with a mutilated coupon appertaining to it is surrendered to the
Trustee, together with, in proper cases, such security or indemnity as may be
required by the Company or the Trustee to save each of them harmless, the
Company shall execute and the Trustee shall authenticate and deliver a
replacement Registered Security, if such surrendered Security was a Registered
Security, or a replacement Bearer Security with coupons corresponding to the
coupons appertaining to the surrendered Security, if such surrendered Security
was a Bearer Security, of the same series and date of maturity, if the
Trustee's requirements are met, containing identical terms and of like tenor
and of like principal amount.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security or coupon
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security or coupon has been acquired by
a bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver in lieu of any such destroyed, lost or stolen Security
or in exchange for the Security to which a destroyed, lost or stolen coupon
appertains (with all appurtenant coupons not destroyed, lost or stolen), a
replacement Registered Security, if such Holder's Claim appertains to a
Registered Security, or a replacement Bearer Security with coupons
corresponding to the coupons appertaining to the destroyed, lost or stolen
Bearer Security or the Bearer
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Security to which such lost, destroyed or stolen coupon appertains, if such
Holder's claim appertains to a Bearer Security, of the same series and
principal amount, containing identical terms and provisions and bearing a
number not contemporaneously outstanding with coupons corresponding to the
coupons, if any, appertaining to the destroyed, lost or stolen Security.
In case any such mutilated, destroyed, lost or stolen Security or coupon
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security or coupon, pay such Security or coupon;
provided, however, that payment of principal of and any premium or interest on
Bearer Securities shall, except as otherwise provided in Section 9.02, be
payable only at an office or agency located outside the United States and,
unless otherwise specified as contemplated by Section 3.01, any interest on
Bearer Securities shall be payable only upon presentation and surrender of the
coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Company may
require that payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee, its agents and counsel)
connected therewith.
Every new Security of any series with its coupons, if any, issued pursuant
to this Section in lieu of any destroyed, lost or stolen Security, or in
exchange for a Security to which a destroyed, lost or stolen coupon appertains,
shall constitute an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Security and its coupon, if any,
or the destroyed, lost or stolen coupon, shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series and their
coupons, if any, 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 Securities or coupons.
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Section 3.07. Payment of Interest; Interest Rights Preserved. (a) Unless
otherwise provided as contemplated by Section 3.01 with respect to any series
of Securities, interest, if any, on any Registered Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date.
Unless otherwise provided as contemplated by Section 3.01 with respect to
any series of Securities, (i) interest, if any, on Bearer Securities shall be
paid only against presentation and surrender of the coupons for such interest
installments as are evidenced thereby as they mature and (ii) original issue
discount, if any, on Bearer Securities shall be paid only against presentation
and surrender of such Securities; in either case at the office of a Paying
Agent located outside the United States, unless the Company shall have
otherwise instructed the Trustee in writing, provided that any such instruction
for payment in the United States does not cause any Bearer Security to be
treated as a "registration-required obligation" under United States laws and
regulations. The interest, if any, on any temporary Bearer Security shall be
paid, as to any installment of interest evidenced by a coupon attached thereto
only upon presentation and surrender of such coupon and, as to other
installments of interest, only upon presentation of such Security for notation
thereon of the payment of such interest. If at the time a payment of principal
of or interest, if any, on a Bearer Security or coupon shall become due, the
payment of the full amount so payable at the office or offices of all the
Paying Agents outside the United States is illegal or effectively precluded
because of the imposition of exchange controls or other similar restrictions on
the payment of such amount in Dollars, then the Company may instruct the
Trustee in writing to make such payments at a Paying Agent located in the
United States, provided that provision for such payment in the United States
would not cause such Bearer Security to be treated as a "registration-required
obligation" under United States laws and regulations.
(b) Unless otherwise provided as contemplated by Section 3.01 with respect
to any series of Securities, any interest on Registered Securities of any
series which is payable, but is not punctually paid or duly provided for, on
any Interest Payment Date for such Registered Securities (herein called
"Defaulted Interest") shall forthwith cease to be payable to the
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Holders on the relevant Regular Record Date by virtue of their having been such
Holders, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of such Defaulted
Interest to the Persons in whose names such Registered Securities
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner.
The Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause (1)
provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name and
at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder
of such Registered Securities at his address as it appears in the
Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names such Registered
Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2). In
case a Bearer Security of any series is surrendered at the office or
agency in a Place of Payment for such series in exchange for a
Registered Security of such series after the close of business at
such office or agency on the related proposed date for payment of
Defaulted
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Interest, such Bearer Security shall be surrendered without the
coupon relating to such proposed date of payment in respect of the
Registered Security issued in exchange for such Bearer Security, but
will be payable only to the Holder of such coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of such Defaulted Interest to
the Persons in whose names such Registered Securities (or their
respective Predecessor Securities) are registered at the close of
business on a specified date in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Registered Securities may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this
clause (2), such manner of payment shall be deemed practicable by
the Trustee.
(c) Subject to the foregoing provisions of this Section and Section
3.05, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 3.08. Persons Deemed Owners. Prior to due presentment of any
Registered 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 such
Registered Security is registered as the owner of such Registered Security for
the purpose of receiving payment of principal of, premium, if any, and (subject
to Sections 3.05 and 3.07) interest on and Additional Amounts with respect to
such Registered Security and for all other purposes whatsoever, whether or not
such Registered Security be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Bearer Security or coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
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whether or not such Bearer Security or coupon be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
None of the Company, the Trustee or any agent of the Company or the Trustee
shall have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Security in global form, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests. Notwithstanding the
foregoing, with respect to any Security in global form, nothing herein shall
prevent the Company or the Trustee, or any agent of the Company or the Trustee,
from giving effect to any written certification, proxy or other authorization
furnished by any Depository (or its nominee) as a Holder, with respect to such
Security in global form or impair, as between such Depository and owners of
beneficial interests in such Security in global form, the operation of customary
practices governing the exercise of the rights of such Depository (or its
nominee) as Holder of such Security in global form.
Section 3.09. Cancellation. The Company at any time may deliver
Securities and coupons to the Trustee for cancellation. The Registrar and any
Paying Agent shall forward to the Trustee any Securities and coupons surrendered
to them for replacement, for registration of transfer, or for exchange or
payment. The Trustee shall cancel all Securities and coupons surrendered for
replacement, for registration of transfer, or for exchange, payment, redemption
or cancellation and may, but shall not be required to, dispose of canceled
Securities and coupons and issue a certificate of destruction to the Company.
The Company may not issue new Securities to replace Securities that it has paid
or delivered to the Trustee for cancellation.
Section 3.10. Computation of Interest. Except as otherwise specified as
contemplated by Section 3.01, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
Section 3.11. CUSIP Numbers. The Company in issuing the Securities may
use "CUSIP" numbers (if then generally in use), and, in such case, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the
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Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Securities,
and any such redemption shall not be affected by any defect in or omission of
such numbers.
Section 3.12. Currency and Manner of Payment in Respect of Securities.
(a) Unless otherwise specified with respect to any Securities pursuant to
Section 3.01, with respect to Registered Securities of any series not
permitting the election provided for in paragraph (b) below or the Holders of
which have not made the election provided for in paragraph (b) below, and with
respect to Bearer Securities of any series, except as provided in paragraph (d)
below, payment of the principal of, premium, if any, and interest, if any, on
any Registered or Bearer Security of such series will be made in the currency
or currencies or currency unit or units in which such Registered Security or
Bearer Security, as the case may be, is payable. The provisions of this
Section 3.12 may be modified or superseded pursuant to Section 3.01 with
respect to any Securities.
(b) It may be provided pursuant to Section 3.01, with respect to Registered
Securities of any series, that Holders shall have the option, subject to
paragraphs (d) and (e) below, to receive payments of principal of, premium, if
any, or interest, if any, on such Registered Securities in any of the currencies
or currency units which may be designated for such election by delivering to the
Trustee (or the applicable Paying Agent) a written election with signature
guarantees and in the applicable form established pursuant to Section 3.01, not
later than the close of business on the Election Date immediately preceding the
applicable payment date. If a Holder so elects to receive such payments in any
such currency or currency unit, such election will remain in effect for such
Holder or any transferee of such Holder until changed by such Holder or such
transferee by written notice to the Trustee (or any applicable Paying Agent) for
such series of Registered Securities (but any such change must be made not later
than the close of business on the Election Date immediately preceding the next
payment date to be effective for the payment to be made on such payment date,
and no such change of election may be made with respect to payments to be made
on any Registered Security of such series with respect to which an Event of
Default has occurred or with respect to which the Company has deposited funds
pursuant to Article IV or with respect to which a notice of redemption has been
given by or on
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behalf of the Company pursuant to Article X). Any Holder of any such Registered
Security who shall not have delivered any such Election to the Trustee (or any
applicable Paying Agent) not later than the close of business on the applicable
Election Date will be paid the amount due on the applicable payment date in the
relevant currency or currency unit as provided in Section 3.12(a). The Trustee
(or the applicable Paying Agent) shall notify the Exchange Rate Agent as soon as
practicable after the Election Date of the aggregate principal amount of
Registered Securities for which Holders have made such written election.
(c) If the election referred to in paragraph (b) above has been provided
for with respect to any Registered Securities of a series pursuant to Section
3.01, then, unless otherwise specified pursuant to Section 3.01 with respect to
any such Registered Securities, not later than the fourth Business Day after the
Election Date for each payment date for such Registered Securities, the Exchange
Rate Agent will deliver to the Company a written notice specifying, in the
currency or currencies or currency unit or units in which Registered Securities
of such series are payable, the respective aggregate amounts of principal of,
premium, if any, and interest, if any, on such Registered Securities to be paid
on such payment date, and specifying the amounts in such currency or currencies
or currency unit or units so payable in respect of such Registered Securities as
to which the Holders of Registered Securities denominated in any currency or
currencies or currency unit or units shall have elected to be paid in another
currency or currency unit as provided in paragraph (b) above. If the election
referred to in paragraph (b) above has been provided for with respect to any
Registered Securities of a series pursuant to Section 3.01, and if at least one
Holder has made such election, then, unless otherwise specified pursuant to
Section 3.01, on the second Business Day immediately preceding such payment date
the Company will deliver to the Trustee (or the applicable Paying Agent) an
Exchange Rate Officers' Certificate in respect of the Dollar, Foreign Currency
or Currencies, ECU or other currency unit payments to be made on such payment
date. Unless otherwise specified pursuant to Section 3.01, the Dollar, Foreign
Currency or Currencies, ECU or other currency unit amount receivable by Holders
of Registered Securities who have elected payment in a currency or currency unit
as provided in paragraph (b) above shall be determined by the Company on the
basis of the applicable Market Exchange Rate in effect on the second Business
Day (the "Valuation Date") immediately preceding each payment date, and such
determination
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shall be conclusive and binding for all purposes, absent manifest error.
(d) If a Conversion Event occurs with respect to a Foreign Currency, ECU or
any other currency unit in which any of the Securities are denominated or
payable otherwise than pursuant to an election provided for pursuant to
paragraph (b) above, then, with respect to each date for the payment of
principal of, premium, if any, and interest, if any, on the applicable
Securities denominated or payable in such Foreign Currency, ECU or such other
currency unit occurring after the last date on which such Foreign Currency, ECU
or such other currency unit was used (the "Conversion Date"), the Dollar shall
be the currency of payment for use on each such payment date (but such Foreign
Currency, ECU or such other currency unit that was previously the currency of
payment shall, at the Company's election, resume being the currency of payment
on the first such payment date preceded by 15 Business Days during which the
circumstances which gave rise to the Dollar becoming such currency no longer
prevail). Unless otherwise specified pursuant to Section 3.01, the Dollar
amount to be paid by the Company to the Trustee or any applicable Paying Agent
and by the Trustee or any applicable Paying Agent to the Holders of such
Securities with respect to such payment date shall be, in the case of a Foreign
Currency other than a currency unit, the Dollar Equivalent of the Foreign
Currency or in the case of a Foreign Currency that is a currency unit, the
Dollar Equivalent of the Currency limit, in each case as determined by the
Exchange Rate Agent in the manner provided in paragraph (f) or (g) below.
(e) Unless otherwise specified pursuant to Section 3.01, if the Holder of a
Registered Security denominated in any currency or currency unit shall have
elected to be paid in another currency or currency unit or in other currencies
as provided in paragraph (b) above, and (i) a Conversion Event occurs with
respect to any such elected currency or currency unit, such Holder shall receive
payment in the currency or currency unit in which payment would have been made
in the absence of such election and (ii) if a Conversion Event occurs with
respect to the currency or currency unit in which payment would have been made
in the absence of such election, such Holder shall receive payment in Dollars as
provided in paragraph (d) of this Section 3.12 (but, subject to any contravening
valid election pursuant to paragraph (b) above, the elected payment currency or
currency unit, in the case of the circumstances
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described in clause (i) above, or the payment currency or currency unit in the
absence of such election, in the case of the circumstances described in clause
(ii) above, shall, at the Company's election, resume being the currency or
currency unit of payment with respect to Holders who have so elected, but only
with respect to payments on payment dates preceded by 15 Business Days during
which the circumstances which gave rise to such currency or currency unit, in
the case of the circumstances described in clause (i) above, or the Dollar, in
the case of the circumstances described in clause (ii) above, as applicable,
becoming the currency or currency unit of payment, no longer prevail).
(f) The "Dollar Equivalent of the Foreign Currency" shall be determined by
the Exchange Rate Agent and shall be obtained for each subsequent payment date
by the Exchange Rate Agent by converting the specified Foreign Currency into
Dollars at the Market Exchange Rate on the Conversion Date.
(g) The "Dollar Equivalent of the Currency Unit" shall be determined by the
Exchange Rate Agent and, subject to the provisions of paragraph (h) below, shall
be the sum of each amount obtained by converting the specified amount of each
Component Currency (as each such term is defined in paragraph (h) below) into
Dollars at the Market Exchange Rate for such Component Currency on the Valuation
Date with respect to each payment.
(h) For purposes of this Section 3.12 the following terms shall have the
following meanings:
A "Component Currency" shall mean any currency which, on the
Conversion Date, was a component currency of the relevant currency
unit, including, but not limited to, ECU.
"Election Date" shall mean the Regular Record Date for the
applicable series of Registered Securities as specified pursuant to
Section 3.01 by which the written election referred to in Section
3.12(b) may be made.
A "Specified Amount" of a Component Currency shall mean the
number of units of such Component Currency or fractions thereof
which such Component Currency represented in the relevant currency
unit, including,
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but not limited to, ECU, on the Conversion Date. If after the
Conversion Date the official unit of any Component Currency is
altered by way of combination or subdivision, the Specified Amount
of such Component Currency shall be divided or multiplied in the
same proportion. If after the Conversion Date two or more Component
Currencies are consolidated into a single currency, the respective
Specified Amounts of such Component Currencies shall be replaced by
an amount in such single currency equal to the sum of the respective
specified Amounts of such consolidated Component Currencies
expressed in such single currency, and such amount shall thereafter
be a Specified Amount and such single currency shall thereafter be a
Component Currency. If after the Conversion Date any Component
Currency shall be divided into two or more currencies, the Specified
Amount of such Component Currency shall be replaced by specified
amounts of such two or more currencies, the sum of which, at the
Market Exchange Rate of such two or more currencies on the date of
such replacement, shall be equal to the Specified Amount of such
former Component Currency and such amounts shall thereafter be
Specified Amounts and such currencies shall thereafter be Component
Currencies. If, after the Conversion Date of the relevant currency
unit, including, but not limited to, ECU, a Conversion Event (other
than any event referred to above in this definition of "Specified
Amount") occurs with respect to any Component Currency of such
currency unit and is continuing on the applicable Valuation Date,
the Specified Amount of such Component Currency shall, for purposes
of calculating the Dollar Equivalent of the Currency Unit, be
converted into Dollars at the Market Exchange Rate in effect on the
Conversion Date of such Component Currency.
All decisions and determinations of the Exchange Rate Agent regarding
the Dollar Equivalent of the Foreign Currency, the Dollar Equivalent of the
Currency Unit, the Market Exchange Rate and changes in the Specified Amounts as
specified above shall be in its sole discretion and shall, in the absence of
manifest error, be conclusive for all purposes and irrevocably binding upon the
Company, the Trustee (and any applicable Paying Agent) and all Holders of
Securities denominated or payable in the relevant currency, currencies or
currency units. The
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Exchange Rate Agent shall promptly give written notice to the Company and the
Trustee of any such decision or determination.
In the event that the Company determines in good faith that a Conversion
Event has occurred with respect to a Foreign Currency, the Company will
promptly give written notice thereof to the Trustee of the appropriate series
of Securities (or any applicable Paying Agent) and to the Exchange Rate Agent
(and the Trustee (or such Paying Agent) will promptly thereafter give notice in
the manner provided in Section 1.06 to the affected Holders) specifying the
Conversion Date. In the event the Company so determines that a Conversion
Event has occurred with respect to ECU or any other currency unit in which
Securities are denominated or payable, the Company will promptly give written
notice thereof to the Trustee (or any applicable Paying Agent) and to the
Exchange Rate Agent (and the Trustee (or such Paying Agent) will promptly
thereafter give notice in the manner provided in Section 1.06 to the affected
Holders) specifying the Conversion Date and the Specified Amount of each
Component Currency on the Conversion Date. In the event the Company determines
in good faith that any subsequent change in any Component Currency as set forth
in the definition of Specified Amount above has occurred, the Company will
similarly give written notice to the Trustee (or any applicable Paying Agent)
and to the Exchange Rate Agent.
The Trustee of the appropriate series of Securities shall be fully
justified and protected in relying and acting upon information received by it
from the Company and the Exchange Rate Agent and shall not otherwise have any
duty or obligation to determine the accuracy or validity of such information
independent of the Company or the Exchange Rate Agent.
Section 3.13. Appointment and Resignation of Exchange Rate Agent. (a)
Unless otherwise specified pursuant to Section 3.01, if and so long as the
Securities of any series (i) are denominated in a currency other than Dollars
or (ii) may be payable in a currency other than Dollars, or so long as it is
required under any other provision of this Indenture, then the Company will
maintain with respect to each such series of Securities, or as so required, at
least one Exchange Rate Agent. The Company will cause the Exchange Rate Agent
to make the necessary foreign exchange determinations at the time and in the
manner specified pursuant to Section 3.12 for the purpose of determining the
applicable rate of exchange and, if applicable,
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for the purpose of converting the issued currency or currencies or currency
unit or units into the applicable payment currency or currency unit for the
payment of principal, premium, if any, and interest, if any, pursuant to
Section 3.12.
(b) No resignation of the Exchange Rate Agent and no appointment of a
successor Exchange Rate Agent pursuant to this Section shall become effective
until the acceptance of appointment by the successor Exchange Rate Agent as
evidenced by a written instrument delivered to the Company and the Trustee of
the appropriate series of Securities accepting such appointment executed by the
successor Exchange Rate Agent.
(c) If the Exchange Rate Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Exchange
Rate Agency for any cause, with respect to the Securities of one or more
series, the Company, by or pursuant to a Board Resolution, shall promptly
appoint a successor Exchange Rate Agent or Exchange Rate Agents with respect to
the Securities of that or those series (it being understood that any such
successor Exchange Rate Agent may be appointed with respect to the Securities
of one or more or all of such series and that, unless otherwise specified
pursuant to Section 3.01 at any time there shall only be one Exchange Rate
Agent with respect to the Securities of any particular series that are
originally issued by the Company on the same date and that are initially
denominated and/or payable in the same currency or currencies or currency unit
or units).
ARTICLE IV
Satisfaction, Discharge and Defeasance
Section 4.01. Termination of Company's Obligations Under the Indenture.
This Indenture shall upon a Company Request cease to be of further effect with
respect to Securities of or within any series and any coupons appertaining
thereto (except as to any surviving rights of registration of transfer or
exchange of such Securities and replacement of such Securities which may have
been lost, stolen or mutilated as herein expressly provided for) and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture (including but not
limited to
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Article XII) with respect to such Securities and any coupons appertaining
thereto when (1) either
(A) all such Securities previously authenticated and delivered and
all coupons appertaining thereto (other than (i) such coupons appertaining
to Bearer Securities surrendered in exchange for Registered Securities and
maturing after such exchange, surrender of which is not required or has
been waived as provided in Section 3.05, (ii) such Securities and coupons
which have been destroyed, lost or stolen and which have been replaced or
paid, as provided in Section 3.06, (iii) such coupons appertaining to
Bearer Securities called for redemption and maturing after the relevant
Redemption Date, surrender of which has been waived as provided in Section
10.06 and (iv) such Securities and coupons for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust
as provided in Section 9.03) have been delivered to the Trustee for
cancellation; or
(B) all Securities of such series and, in the case of (i) or (ii)
below, any coupons appertaining thereto not theretofore delivered to the
Trustee for cancellation (i) have become due and payable, or (ii) will
become due and payable at their Stated Maturity within one year, or (iii)
if redeemable at the option of the Company, are to be called for
redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption by the Trustee in the name, and at
the expense, of the Company, and the Company, in the case of (i), (ii) or
(iii) above, has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount in the currency
or currencies or currency unit or units in which the Securities of such
series are payable, sufficient to pay and discharge the entire
indebtedness on such Securities and such coupons not theretofore delivered
to the Trustee for cancellation, for principal, premium, if any, and
interest, and any Additional Amounts payable as specified pursuant to
Section 3.01(b)(17) with respect thereto, to the date of such deposit (in
the case of Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
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(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture as to such
series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligation of the Company to the Trustee and any predecessor Trustee under
Section 6.09, the obligations of the Company to any Authenticating Agent under
Section 6.14 and, if money shall have been deposited with the Trustee pursuant
to subclause (B) of clause (1) of this Section, the obligations of the Trustee
under Section 4.02 and the last paragraph of Section 9.03 shall survive.
Section 4.02. Application of Trust Funds. Subject to the provisions of
the last paragraph of Section 9.03, all money deposited with the Trustee
pursuant to Section 4.01 shall be held in trust and applied by it, in
accordance with the provisions of the Securities, the coupons and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the persons entitled thereto, of the principal, premium, if any,
and any interest for whose payment such money has been deposited with or
received by the Trustee, but such money need not be segregated from other funds
except to the extent required by law.
Section 4.03. Applicability of Defeasance Provisions; Company's Option to
Effect Defeasance or Covenant Defeasance. If pursuant to Section 3.01
provision is made for either or both of (i) defeasance of the Securities of or
within a series under Section 4.04 or (ii) covenant defeasance of the
Securities of or within a series under Section 4.05, then the provisions of
such Section or Sections, as the case may be, together with the provisions of
Sections 4.06 through 4.09 inclusive, with such modifications thereto as may be
specified pursuant to Section 3.01 with respect to any Securities, shall be
applicable to such Securities and any coupons appertaining thereto, and the
Company may at its option by or pursuant to Board Resolution, at any time, with
respect to such Securities and any coupons appertaining thereto, elect to have
Section 4.04 (if applicable)
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or Section 4.05 (if applicable) be applied to such Outstanding Securities and
any coupons appertaining thereto upon compliance with the conditions set forth
below in this Article.
Section 4.04. Defeasance and Discharge. Upon the Company's exercise of
the option specified in Section 4.03 applicable to this Section with respect to
the Securities of or within a series, the Company shall be deemed to have been
discharged from its obligations with respect to such Securities and any coupons
appertaining thereto on and after the date the conditions set forth in Section
4.06 are satisfied (hereinafter "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by such Securities and any coupons
appertaining thereto which shall thereafter be deemed to be "Outstanding" only
for the purposes of Section 4.07 and the other Sections of this Indenture
referred to in clause (ii) of this Section, and to have satisfied all its other
obligations under such Securities and any coupons appertaining thereto and this
Indenture insofar as such Securities and any coupons appertaining thereto are
concerned (and the Trustee, at the expense of the Company, shall on a Company
Order execute proper instruments acknowledging the same), except the following
which shall survive until otherwise terminated or discharged hereunder: (i) the
rights of Holders of such Securities and any coupons appertaining thereto to
receive solely from the trust funds described in Section 4.06(a) and as more
fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest, if any, on such Securities or any coupons
appertaining thereto when such payments are due; (ii) the Company's obligations
with respect to such Securities under Sections 3.04, 3.05, 3.06, 9.02 and 9.03
and with respect to the payment of additional amounts, if any, payable with
respect to such Securities as specified pursuant to Section 3.01(b)(17); (iii)
the rights, powers trusts, duties and immunities of the Trustee hereunder and
(iv) this Article IV. Subject to compliance with this Article IV, the Company
may exercise its option under this Section notwithstanding the prior exercise
of its option under Section 4.05 with respect to such Securities and any
coupons appertaining thereto. Following a defeasance, payment of such
Securities may not be accelerated because of an Event of Default.
Section 4.05. Covenant Defeasance. Upon the Company's exercise of the
option specified in Section 4.03 applicable to this Section with respect to any
Securities of or within a
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series, the Company shall be released from its obligations under Sections
7.01(4) and 9.07 and, if specified pursuant to Section 3.01, its obligations
under any other covenant, with respect to such Securities and any coupons
appertaining thereto on and after the date the conditions set forth in Section
4.06 are satisfied (hereinafter, "covenant defeasance"), and such Securities
and any coupons appertaining thereto shall thereafter be deemed to be not
"Outstanding" for the purposes of any direction, waiver, consent or declaration
or Act of Holders (and the consequences of any thereof) in connection with
Sections 7.01(4)and 9.07 or such other covenant but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to such Securities and any coupons
appertaining thereto, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or such other covenant, whether directly or indirectly, by reason of
any reference elsewhere herein to any such Section or such other covenant or by
reason of reference in any such Section or such other covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 5.01(3) or 5.01(7),
or otherwise, as the case may be, but, except as specified above, the remainder
of this Indenture and such Securities and any coupons appertaining thereto
shall be unaffected thereby.
Section 4.06. Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of Section 4.04 or Section
4.05 to any Securities of or within a series and any coupons appertaining
thereto:
(a) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee (or another trustee satisfying the
requirements of Section 6.12 who shall agree to comply with and shall be
entitled to the benefits of, the provisions of Sections 4.03 through 4.09
inclusive and the last paragraph of Section 9.03 applicable to the
Trustee, for purposes of such Sections also a "Trustee") as trust funds in
trust for the purpose of making the payments referred to in clauses (x)
and (y) of this Section 4.06(a), specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities and any
coupons appertaining thereto, with instructions to the Trustee as to the
application thereof, (A) money in an amount (in such currency, currencies
or currency unit or
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units in which such Securities and any coupons appertaining thereto are
then specified as payable at Maturity), or (B) if Securities of such
series are not subject to repayment at the option of Holders, Government
Obligations which through the payment of interest, principal, premium, if
any, and any Additional Amounts in respect thereof in accordance with
their terms will provide not later than one day before the due date of any
payment referred to in clause (x) or (y) of this Section 4.06(a), money in
an amount or (C) a combination thereof in an amount, sufficient, without
reinvestment, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee to pay and discharge (x) the
principal of, premium, if any, and interest, if any, and any Additional
Amounts on such Securities and any coupons appertaining thereto on the
Maturity of such principal or installment of principal or interest and (y)
any mandatory sinking fund payments applicable to such Securities on the
day on which such payments are due and payable in accordance with the
terms of this Indenture and such Securities and any coupons appertaining
thereto. Before such a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future
date or dates in accordance with Article X which shall be given effect in
applying the foregoing.
(b) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default or Event of Default under,
this Indenture or result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company is a
party or by which it is bound.
(c) In the case of an election under Section 4.04, the Company shall
have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel to the effect that (i) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (ii) since
the date of execution of this Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of such
Securities and any coupons appertaining thereto will not recognize income,
gain or loss
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for Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amount and in the same manner
and at the same times, as would have been the case if such deposit,
defeasance and discharge had not occurred.
(d) In the case of an election under Section 4.05, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such Securities and any coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as a result
of such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
(e) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance under Section 4.04 or the covenant defeasance
under Section 4.05 (as the case may be) including those contained in this
Section 4.06 other than the 90 day period specified in Section 4.06(g),
have been complied with.
(f) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that neither such Securities nor any other
Securities of the same series, if then listed on any securities exchange,
will be delisted as a result of such deposit.
(g) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Securities or any other
Securities shall have occurred and be continuing at the time of such
deposit or, with regard to any such event specified in Sections 5.01(5)
and (6), at any time on or prior to the 90th day after the date of such
deposit (it being understood that this condition shall not be deemed
satisfied until after such 90th day).
(h) Such defeasance or covenant defeasance shall not result in the
trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940 unless such trust shall
be registered under such Act or exempt from registration thereunder.
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(i) Such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or
limitations which may be imposed on the Company in connection therewith as
contemplated by Section 3.01.
(j) No event or condition shall exist that, pursuant to Article XII,
would prevent the Company from making payments of principal of, premium,
if any, interest, if any and any Additional Amounts on the Securities.
Section 4.07. Deposited Money and Government Obligations to Be Held in
Trust. Subject to the provisions of the last paragraph of Section 9.03, all
money and Government Obligations (or other property as may be provided pursuant
to Section 3.01) (including the proceeds thereof) deposited with the Trustee
pursuant to Section 4.06 in respect of any Securities of any series and any
coupons appertaining thereto shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and any coupons
appertaining thereto and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Securities and any coupons
appertaining thereto of all sums due and to become due thereon in respect of
principal, premium, if any, and interest, if any, and any Additional Amounts,
but such money need not be segregated from other funds except to the extent
required by law.
Unless otherwise specified with respect to any Security pursuant to
Section 3.01, if, after a deposit referred to in Section 4.06(a) has been made,
(i) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 3.12(b) or the terms of such
Security to receive payment in a currency or currency unit other than that in
which the deposit pursuant to Section 4.06(a) has been made in respect of such
Security, or (ii) a Conversion Event occurs as contemplated in Section 3.12(d)
or 3.12(e) or by the terms of any Security in respect of indebtedness which the
deposit pursuant to Section 4.06(a) has been made, the indebtedness represented
by such Security and any coupons appertaining thereto shall be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of, premium, if any, and interest, if any, on such Security as the
same becomes due out of the proceeds yielded by converting (from time to time
as
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specified below in the case of any such election) the amount or other property
deposited in respect of such Security into the currency or currency unit in
which such Security becomes payable as a result of such election or Conversion
Event based on the applicable Market Exchange Rate for such currency or
currency unit in effect on the second Business Day prior to each payment date,
except, with respect to a Conversion Event, for such currency or currency unit
in effect (as nearly as feasible) at the time of the Conversion Event.
Section 4.08. Repayment to Company. Subject to the last paragraph of
Section 9.03, the Trustee (and any Paying Agent) shall promptly pay to the
Company upon Company Request any excess money or securities held by them at any
time.
Section 4.09. Indemnity for Government Obligations. The Company shall
pay, and shall indemnify the Trustee against, any tax, fee or other charge
imposed on or assessed against Government Obligations deposited pursuant to
this Article or the principal and interest and any other amount received on
such Government Obligations.
Section 4.10. Reinstatement. If the Trustee or the Paying Agent is
unable to apply any money or Government Obligations, as the case may be, in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture, such Securities and any coupons appertaining thereto from which the
Company has been discharged or released pursuant to Section 4.04 or 4.05 shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article with respect to such Securities, until such time as the Trustee or
Paying Agent is permitted to apply all money or Government Obligations, as the
case may be, held in trust pursuant to Section 4.07 with respect to such
Securities and any coupons appertaining thereto in accordance with this
Article; provided, however, that if the Company makes any payment of principal
of or any premium or interest on any such Security following such reinstatement
of its obligations, the Company shall be subrogated to the rights (if any) of
the Holders of such Securities or coupons to receive such payment from the
money or Government Obligations, as the case may be, so held in trust.
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ARTICLE V
Defaults and Remedies
Section 5.01. Events of Default. An "Event of Default" occurs with
respect to the Securities of any series if (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any payment, decree or order of any court or any
order, rule or regulation of any administrative or governmental body):
(1) the Company defaults in the payment of interest on any
Security of that series or any coupon appertaining thereto or any
additional amount payable with respect to any Security of that
series as specified pursuant to Section 3.01(b)(17) when the same
becomes due and payable and such default continues for a period of
30 days;
(2) the Company defaults in the payment of the principal of or
any premium on any Security of that series when the same becomes due
and payable at its Maturity or on redemption or otherwise, or in the
payment of a mandatory sinking fund payment when and as due by the
terms of the Securities of that series;
(3) the Company fails to comply with any of its agreements or
covenants in, or any of the provisions of, this Indenture with
respect to any Security of that series (other than an agreement,
covenant or provision for which non-compliance is elsewhere in this
Section specifically dealt with), and such non-compliance continues
for a period of 60 days after there has been given by registered or
certified mail, to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% in principal amount of
the Outstanding Securities of the series, 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;
(4) a default under any mortgage, agreement, indenture or
instrument under which there may be issued, or by which there may be
secured, guaranteed or
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evidenced any Debt of the Company (including this Indenture) whether
such Debt now exists or shall hereafter be created, in an aggregate
principal amount then outstanding of $25,000,000 or more, which
default (a) shall constitute a failure to pay any portion of the
principal of such Debt when due and payable after the expiration of
an applicable grace period with respect thereto or (b) shall result
in such Debt becoming or being declared due and payable prior to the
date on which it would otherwise become due and payable, and such
acceleration shall not be rescinded or annulled, or such Debt shall
not be paid in full within a period of 30 days after there has been
given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the Outstanding Securities of
that series a written notice specifying such event of default and
requiring the Company to cause such acceleration to be rescinded or
annulled or to pay in full such Debt and stating that such notice is
a "Notice of Default" hereunder; (it being understood however, that
the Trustee shall not be deemed to have knowledge of such default
under such agreement or instrument unless either (A) a Responsible
Officer of the Trustee shall have actual knowledge of such default
or (B) a Responsible Officer of the Trustee shall have received
written notice thereof from the Company, from any Holder, from the
holder of any such indebtedness or from the trustee under any such
agreement or other instrument); provided, however, that if such
default under such agreement or instrument is remedied or cured by
the Company or waived by the holders of such indebtedness, then the
Event of Default hereunder by reason thereof shall be deemed
likewise to have been thereupon remedied, cured or waived without
further action upon the part of either the Trustee or any of such
Holders; provided, further, that the foregoing shall not apply to
any secured Debt under which the obligee has recourse (exclusive of
recourse for ancillary matters such as environmental indemnities,
misapplication of funds, costs of enforcement and the like) only to
the collateral pledged for repayment so long as the fair market
value of such collateral does not exceed 2% of Total Assets at the
time of the default;
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(5) the Company, pursuant to or within the meaning of any
Bankruptcy Law, (A) commences a voluntary case or proceeding, (B)
consents to the entry of an order for relief against it in an
involuntary case or proceeding, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D)
makes a general assignment for the benefit of its creditors, (E)
makes an admission in writing of its inability to pay its debts
generally as they become due or (F) takes corporate action in
furtherance of any such action;
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (A) is for relief against the Company,
in an involuntary case, (B) adjudges the Company a bankrupt or
insolvent, or approves as properly filed a petition seeking
reorganization, arrangement, and adjustment or composition of or in
respect of the Company, or appoints a Custodian of the Company, or
for all or substantially all of its property, or (C) orders the
liquidation of the Company and the decree remains unstayed and in
effect for 60 days; or
(7) any other Event of Default provided as contemplated by
Section 3.01 with respect to Securities of that series.
The Company shall deliver to the Trustee, within 90 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which is or with the giving of notice or the lapse of time would
become an event which is or with the giving of notice or the lapse of time would
become an Event of Default, its status and what action the Company is taking or
proposes to take with respect thereto.
As used in the Indenture, the term "Bankruptcy Law" means Title 11,
U.S. Code, or any similar federal or state bankruptcy, insolvency,
reorganization or other law for the relief of debtors. As used in the
Indenture, the term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
Section 5.02. Acceleration; Rescission and Annulment. If an Event
of Default with respect to the Securities of any
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series at the time Outstanding occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of all of the Outstanding
Securities of that series by written notice to the Company (and if given by the
Holders, to the Trustee), may declare the principal (or, if the Securities of
that series are Original Issue Discount Securities or Indexed Securities, such
portion of the Original principal amount as may be specified in the terms of
that series) of and accrued interest, if any, on all the Securities of that
series to be due and payable and upon any such declaration such principal (or,
in the case of Original Issue Discount Securities or Indexed Securities, such
specified amount) and interest, if any, shall be immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgement or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in aggregate principal amount
of the Outstanding Securities of that series, by written notice to the Trustee,
may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) in the currency or currency unit in which that series of
Securities is payable, all overdue interest on all Securities of
that series and any related coupons and any Additional Amounts,
(B) in the currency or currency unit in which that series of
Securities is payable, the principal of (and premium, if any, on)
any Securities of that series which have become due otherwise than
by such declaration of acceleration and any interest thereon at the
rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities and any Additional Amounts payable, and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all existing Defaults and Events of Default with respect to
Securities of that series, other than the non-payment of the principal of
Securities of that series which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 5.07.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if
(1) default is made in the payment of any interest on any
Security or coupon, if any, when such interest or any Additional
Amounts becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities and coupons, if any, the whole amount then due and
payable on such Securities and coupons for principal, premium, if any, and
interest and any Additional Amounts, and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal,
premium, if any, and on any overdue interest and any Additional Amounts, at the
rate or rates prescribed therefor in such Securities or coupons, if any, and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
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appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to secure any other proper remedy.
Section 5.04. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents and take such actions
authorized under the Trust Indenture Act as may be necessary or advisable in
order to have the claims of the Trustee and the Holders of Securities allowed
in any judicial proceedings relating to the Company, its creditors or its
property. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.09.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a
Security or coupon any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder of a
Security or coupon in any such proceeding; provided, however, that the Trustee
may, on behalf of the Holders, vote for the election of a trustee in bankruptcy
or similar official and be a member of a creditors' or other similar committee.
Section 5.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee, in its own name as an
express trust, without the possession of any of the Securities or coupons or
the production thereof in any proceeding relating thereto and any recovery of
judgment shall, after provision for the reasonable fees and expenses of the
Trustee and its counsel, be for the ratable
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benefit of the Holders of the Securities and coupons in respect to which
judgment was recovered.
Section 5.06. Delay or Omission Not Waiver. No delay or omission by the
Trustee or any Holder of any Securities to exercise any right or remedy
accruing upon an Event of Default shall impair any such right or remedy or
constitute a waiver of or acquiescence in any such Event of Default. Every
right and remedy given by this Article or by law to the Trustee or to the
Holders of Securities or coupons may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders of
Securities or coupons, as the case may be.
Section 5.07. Waiver of Past Defaults. The Holders of a majority in
aggregate principal amount of Outstanding Securities of any series by written
notice to the Trustee may waive on behalf of the Holders of all Securities of
such series and any related coupons a past Default or Event of Default with
respect to that series and its consequences except (i) a Default or Event of
Default in the payment of the principal of, premium, if any, or interest or any
Additional Amounts on any Security of such series or any coupon appertaining
thereto or (ii) in respect of a covenant or provision hereof which pursuant to
Section 8.02 cannot be amended or modified without the consent of the Holder of
each Outstanding Security of such series affected. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Indenture.
Section 5.08. Control by Majority. The Holders of a majority in
aggregate principal amount of the Outstanding Securities of each series
affected (with each such series voting as a class) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on it with
respect to Securities of that series; provided, however, that (i) the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
(ii) the Trustee may refuse to follow any direction that is unduly prejudicial
to the rights of the Holders of Securities of such series not consenting or of
any other series for which the Trustee is trustee, or that would in the good
faith judgment of the Trustee have a substantial likelihood of involving the
Trustee in personal liability and (iii) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
Prior to
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the taking of any action hereunder, the Trustee shall be entitled to reasonable
indemnification satisfactory to the Trustee against all losses and expenses
caused by taking or not taking such action. This paragraph shall be in lieu of
Section 316(a)(1)(A) of the Trust Indenture Act and such Section 316(a)(1)(A)
is hereby expressly excluded from this Indenture, as permitted By the Trust
Indenture Act.
Section 5.09. Limitation on Suits by Holders. No Holder of any Security
of any series or any coupons appertaining thereto shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(1) the Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Securities of that series;
(2) the Holders of at least 25% in aggregate principal amount
of the Outstanding Securities of that series have made a written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or
expense to be, or which may be, incurred by the Trustee in pursuing
the remedy;
(4) the Trustee for 60 days after its receipt of such notice,
request and the offer of indemnity has failed to institute any such
proceedings; and
(5) during such 60 day period, the Holders of a majority in
aggregate principal amount of the Outstanding Securities of that
series have not given to the Trustee a direction inconsistent with
such written request.
No one or more Holders shall have any right in any manner whatever by
virtue of, or by availing of any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek
to obtain priority or preference over any other of such Holders or to enforce
any
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right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all of such Holders.
Section 5.10. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder of a Security or
coupon to receive payment of principal of, premium, if any, and, subject to
Sections 3.05 and 3.07, interest on the Security and any Additional Amounts, on
or after the respective due dates expressed in the Security (or, in case of
redemption, on the redemption dates), and the right of any Holder of a coupon
to receive payment of interest due as provided in such coupon, or, subject to
Section 5.09, to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
Section 5.11. Application of Money Collected. If the Trustee collects
any money pursuant to this Article, it shall pay out the money in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, premium, if any, or
interest, and any Additional Amounts upon presentation of the Securities or
coupon or both and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: to the Trustee for amounts due under Section 6.09;
SECOND: Subject to the provisions of Article XII, to Holders of
Securities and coupons in respect of which or for the benefit of which
such money has been collected for amounts due and unpaid on such
Securities for principal of, premium, if any, and interest or any
Additional Amounts, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal,
premium, if any, and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 5.11. At least 15 days before such record
date, the Trustee shall mail to each Holder and the Company a notice that
states the record date, the payment date and the amount to be paid.
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Section 5.12. Restoration of Rights and Remedies. If the Trustee or any
Holder of a Security or coupon has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders of Securities and
coupons shall continue as though no such proceeding had been instituted.
Section 5.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities or coupons in the last paragraph of Section 3.06, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any existing
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.14. Waiver of Usury, Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
Section 5.15. Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorney's fees, against
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any party litigant in the suit having due regard to the merits and good faith
of the claims or defenses made by the party litigant provided that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit
instituted by the Company or by the Trustee.
Section 5.16. Judgment Currency. If, for the purpose of obtaining a
judgment in any court with respect to any obligation of the Company hereunder
or under any Security or any related coupon, it shall become necessary to
convert into any other currency or currency unit any amount in the currency or
currency unit due hereunder or under such Security or coupon, then such
conversion shall be made by the Exchange Rate Agent at the Market Exchange Rate
as in effect on the date of entry of the judgment (the "Judgment Date"). If
pursuant to any such judgment, conversion shall be made on a date (the
"Substitute Date") other than the Judgment Date and there shall occur a change
between the Market Exchange Rate as in effect on the Judgment Date and the
Market Exchange Rate as in effect on the Substitute Date, the Company agrees to
pay such additional amounts (if any) as may be necessary to ensure that the
amount paid is equal to the amount in such other currency or currency unit
which, when converted at the Market Exchange Rate as in effect on the Judgment
Date, is the amount due hereunder or under such Security or coupon. Any amount
due from the Company, under this Section 5.16 shall be due as a separate debt
and is not to be affected by or merged into any judgment being obtained for any
other sums due hereunder or in respect of any Security or coupon. In no event,
however, shall the Company be required to pay more in the currency or currency
unit due hereunder under such Security or coupon at the Market Exchange Rate as
in effect on the Judgment Date than the amount of currency or currency unit
stated to be due hereunder or under such Security or coupon so that in any
event the Company's obligations hereunder or under such Security or coupon will
be effectively maintained as obligations in such currency or currency unit, and
the Company shall be entitled to withhold (or be reimbursed for, as the case
may be) any excess of the amount actually realized upon any such conversion on
the Substitute Date over the amount due and payable on the Judgment Date.
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ARTICLE VI
The Trustee
Section 6.01. Certain Duties and Responsibilities of the Trustee. (a)
The Trustee's duties and responsibilities under this Indenture shall be
governed by the Trust Indenture Act.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
shall use the same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
Section 6.02. Rights of Trustee. Subject to the provisions of the Trust
Indenture Act:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any document believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Trustee need not
investigate any fact or matter stated in the document.
(b) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order (other than
delivery of any Security, together with any coupons appertaining thereto, to
the Trustee for authentication and delivery pursuant to Section 3.03 which
shall be sufficiently evidenced as provided therein) and any resolution of the
Board of Directors may be sufficiently evidenced by a Board Resolution.
(c) Before the Trustee acts or refrains from acting, it may consult with
counsel of its selection and/or require an Officers' Certificate. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on a Board Resolution, the written or oral advice of counsel
reasonably acceptable to the Company and the Trustee (which advice, if oral,
counsel shall promptly confirm in writing to the Trustee), a certificate of an
Officer or Officers delivered pursuant to Section 1.02, an Officers'
Certificate or an Opinion of Counsel.
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(d) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney appointed
with due care.
(e) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(f) The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may seem fit, and, if the Trustee shall determine
to make such further inquiry or investigation it shall be entitled to examine
the books, records and premises of the Company, personally or by agent or
attorney.
(h) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
(i) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
6.02.
Section 6.03. Trustee May Hold Securities. The Trustee, any Paying
Agent, any Registrar or any other agent of the Company, in its in individual or
any other capacity, may become the owner or pledgee of Securities and coupons
and, subject to Sections 310(b) and 311 of the Trust Indenture Act, may
otherwise deal with the Company, an Affiliate or Subsidiary
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with the same rights it would have if it were not Trustee, Paying Agent,
Registrar or such other agent.
Section 6.04. Money Held in Trust. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed upon in writing with the
Company.
Section 6.05. Trustee's Disclaimer. The recitals contained herein and in
the Securities, except the Trustee's certificate of authentication, shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representation as
to the validity or accuracy of this Indenture or the Securities or any coupon.
The Trustee shall not be accountable for the Company's use of the proceeds from
the Securities or for monies paid over to the Company pursuant to the
Indenture.
Section 6.06. Notice of Defaults. If a Default occurs and is continuing
with respect to the Securities of any series and if it is known to a
Responsible Officer of the Trustee, the Trustee shall, within 90 days after it
occurs, transmit by mail to the Holders of Securities of such series, in the
manner and to the extent provided in Section 313(c) of the Trust Indenture Act,
notice of all Defaults known to it unless such Default shall have been cured or
waived; provided, however, that except in the case of a Default in payment on
the Securities of any series, the Trustee may withhold the notice if and so
long as the board of directors, the executive committee or a committee of its
Responsible Officers in good faith determines that withholding such notice is
in the interests of Holders of Securities of that series; and provided,
further, that in the case of any Default of the character specified in Section
5.01(3) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof.
Section 6.07. Reports by Trustee to Holders. Within 60 days after each
May 15 of each year commencing with the first May 15 after the first issuance
of Securities pursuant to this Indenture, the Trustee shall transmit by mail to
all Holders of Securities as provided in Section 313(c) of the Trust Indenture
Act a brief report dated as of such May 15 if required by and in compliance
with Section 313(a) of the Trust Indenture Act. A
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copy of each such report shall, at the time of such transmission to Holders, be
filed by the Trustee with each stock exchange, if any, upon which the
Securities are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when the Securities are listed on any stock
exchange.
Section 6.08. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders of Securities of each series. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee
semiannually on or before the last day of June and December in each year, and
at such other times as the Trustee may request in writing, a list, in such form
and as of such date as the Trustee may reasonably require containing all the
information in the possession or control of the Registrar, the Company or any
of its Paying Agents other than the Trustee as to the names and addresses of
Holders of Securities of each such series. If there are Bearer Securities of
any series Outstanding, even if the Trustee is the Registrar, the Company shall
furnish to the Trustee such a list containing such information with respect to
Holders of such Bearer Securities only.
Section 6.09. Compensation and Indemnity. (a) The Company shall pay to
the Trustee from time to time such reasonable compensation for its services as
the Company and the Trustee shall agree in writing from time to time. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred by it in connection
with the performance of its duties under this Indenture, except any such
expense as may be attributable to its negligence or bad faith. Such expenses
shall include the reasonable compensation and expenses of the Trustee's agents
and counsel.
(b) The Company shall indemnify the Trustee and any Predecessor Trustee,
for and hold it harmless against, any loss or liability damage, claim or
reasonable expense including taxes (other than taxes based upon or determined
or measured by the income of the Trustee) incurred by it arising out of or in
connection with its acceptance or administration of the trust or trusts
hereunder, including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties
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hereunder. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
(c) The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
(d) To secure the payment obligations of the Company pursuant to this
Section, the Trustee shall have a lien prior to the Securities of any series on
all money or property held or collected by the Trustee, except that held in
trust to pay principal, premium, if any, any interest and any Additional
Amounts, on particular Securities.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.01(5) or Section 5.01(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture or the resignation or removal of the Trustee.
Section 6.10. Replacement of Trustee. (a) The resignation or removal of
the Trustee and the appointment of a successor Trustee shall become effective
only upon the successor Trustee's acceptance of appointment as provided in
Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
any series by giving written notice thereof to the Company.
(c) The Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series may remove the Trustee with respect to
that series by so notifying the Trustee and the Company and may appoint a
successor Trustee for such series with the Company's consent.
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(d) If at any time:
(1) the Trustee fails to comply with Section 310(b) of the Trust
Indenture Act after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for any least six
months, or
(2) the Trustee shall cease to be eligible under Section 6.12 of this
Indenture or Section 310(a) of the Trust Indenture Act and shall fail to
resign after written request therefor by the Company or by any Holder of a
Security who has been a bona fide Holder of a Security for at least six
months; or
(3) the Trustee becomes incapable of acting, is adjudged a bankrupt
or an insolvent or a receiver or public officer takes charge of the
Trustee or its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (i) the Company by or
pursuant to a Board Resolution may remove the Trustee with respect to all
Securities, or (ii) subject to Section 315(e) of the Trust Indenture Act,
any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the instrument of acceptance by a successor Trustee required by
Section 6.11 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation or removal, the Trustee resigning or
being removed may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to Securities of one or more
series, the Company, by or pursuant to Board Resolution, shall promptly appoint
a successor Trustee with respect to the Securities to that or those series (it
being understood that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of any particular
series) and
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shall comply with the applicable requirements of Section 6.11. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
6.11, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 6.11, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
Section 6.11. Acceptance of Appointment by Successor. (a) In case of the
appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment.
Thereupon, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee, without further act, deed or conveyance,
shall become vested with all the rights, powers and duties of the retiring
Trustee; but, on the request of the Company or the successor Trustee, such
retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and such successor Trustee shall execute and deliver an
indenture supplemental hereto wherein such successor Trustee shall accept such
appointment and which (i) shall contain such provisions as shall be necessary
or desirable to transfer and confirm to, and to vest in, such successor Trustee
all the rights, powers, trusts and
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duties of the retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates, (ii) if the
retiring Trustee is not retiring with respect to all Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties or the retiring Trustee with respect to
the Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (iii) shall
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
another such Trustee and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to the successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
the Trust Indenture Act.
(e) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series in the
manner provided for notices to the Holders of Securities in Section 1.06. Each
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notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
Section 6.12. Eligibility; Disqualification. There shall at all times be
a Trustee hereunder which shall be eligible to act as Trustee under Section
310(a)(1) of the Trust Indenture Act and shall have a combined capital and
surplus of at least $100,000,000. If such Trustee publishes reports of
condition at least annually, pursuant to law or the requirements of Federal,
State, Territorial or District of Columbia supervising or examining authority,
then, for the purposes of this Section, the combined capital and surplus of
such Trustee shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
heretofore specified in this Article.
Section 6.13. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor to the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 6.14. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon original issue, exchange,
registration of transfer or partial redemption thereof, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Any such
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appointment shall be evidenced by an instrument in writing signed by a
Responsible Officer of the Trustee, a copy of which Instrument shall be
promptly furnished to the Company. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or
the Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and, except as may otherwise be provided pursuant to
Section 3.01, shall at all times be a bank or trust company or corporation
organized and doing business and in good standing under the laws of the United
States of America or of any State or the District of Columbia, authorized under
such laws to act as Authenticating Agent, having a combined capital and surplus
of not less than $50,000,000 and subject to supervision or examination by
Federal or State authorities. If such Authenticating Agent publishes reports
of condition at least annually, pursuant to law or the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or further act
on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent for any series of Securities may at any time
resign by giving written notice of resignation to the Trustee for such series
and to the Company. The Trustee for any series of Securities may at any time
terminate the agency of an Authenticating Agent by giving written notice of
termination
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to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee for such series may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve in the manner set forth
in Section 1.06. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation including reimbursement of its reasonable expenses for
its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to or in lieu of the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
This is one of the Securities of the series described in the
within-mentioned Indenture.
_______________________________
As Trustee
By:____________________________
as Authenticating Agent
By:____________________________
Authorized Signatory
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ARTICLE VII
Consolidation, Merger or Sale by the Company
Section 7.01. Consolidation, Merger or Sale of Assets Permitted. The
Company shall not consolidate with or merge with or into, or transfer or lease
all or substantially all of its assets to, any Person unless:
(1) the Person formed by or surviving any such consolidation or any
merger (if other than the Company), or to which such transfer or lease
shall have been made, is a corporation organized and existing under the
laws of the United States, any State thereof or the District of Columbia;
(2) the Person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such transfer or lease
shall have been made, expressly assumes by supplemental indenture hereto
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal, premium, if any,
interest, if any and any Additional Amounts, with respect to all of the
Securities and the performance or observance of every covenant under this
Indenture and the Securities on the part of the Company to be performed
under the Securities, the coupons and this Indenture;
(3) immediately after giving effect to the transaction and treating
any indebtedness which becomes an obligation of the Company or a
Subsidiary of the Company as a result of such transaction as having been
incurred by the Company or such Subsidiary at the time of such
transaction, no Default or Event of Default exists and is continuing; and
(4) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by the Securities of any series,
the Company or such successor Person, as the case may be, shall take such
steps as shall be necessary effectively to secure such Securities equally
and ratably with all indebtedness secured thereby.
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The Company shall deliver to the Trustee prior to the proposed transaction
an Officers' Certificate to the foregoing effect and an Opinion of Counsel
stating that the proposed transaction and such supplemental indenture comply
with this Indenture and that all conditions precedent to the consummation of
the transaction under this Indenture have been met.
In the event of the assumption by a successor corporation as provided in
clause (2) above, such successor corporation shall succeed to and be
substituted for the Company hereunder and under the Securities with the same
effect as if it had been named hereunder and thereunder and any coupons
appertaining thereto and, except in the case of a lease, all such obligations
of the Company shall terminate.
ARTICLE VIII
Supplemental Indentures
Section 8.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee at any time and from time to time, may enter into
indentures supplemental hereto, in form reasonably satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants and obligations
of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default with respect to all or
any series of Securities (and if such Events of Default are to be for the
benefit of less than all series of Securities, stating that such Events of
Default
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are expressly included solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to facilitate the issuance of Bearer
Securities (including, without limitation to provide that Bearer
Securities may be registrable as to principal only) or to facilitate the
issuance of Securities in global form; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 3.01; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 6.11; or
(9) if allowed without penalty under applicable laws and
regulations, to permit payment in the United states (including any of the
States and District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction of principal, premium, if any, or
interest, if any, on Bearer Securities or coupons, if any; or
(10) to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other
provisions with respect to matters or questions arising under this
Indenture, provided such action shall not adversely affect the interests
of the Holders of Securities of any series; or
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(11) to cure an ambiguity or correct any mistake, provided such
action shall not adversely affect the interests of the Holders of
Securities of any series.
Section 8.02. Supplemental Indentures with Consent of Holders. With the
written consent of the Holders of a majority of the aggregate principal amount
of the Outstanding Securities of each series adversely affected by such
supplemental indenture (with the Securities of each series voting as a class),
the Company, when authorized by a Board Resolution, and the Trustee may enter
into an indenture or indentures supplemental hereto to add any provisions to or
to change or eliminate any provisions of this Indenture or of any other
indenture supplemental hereto or to modify the rights of the Holders of such
Securities; provided, however, that without the consent of the Holder of each
Outstanding Security affected thereby, a supplemental indenture under this
Section may not:
(1) change the Stated Maturity of the principal of, or premium, if
any, on, or any installment of principal of or premium, if any, or
interest on, or any Additional Amounts on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption, repurchase or repayment thereof, or change
the manner in which the amount of any principal thereof or premium, if
any, or interest or Additional Amounts thereon is determined or reduce the
amount of the principal of any Original Issue Discount Security or Indexed
Security that would be due and payable upon a declaration of acceleration
of the Maturity thereof pursuant to Section 5.02, or change the Place of
Payment where or the currency in which any Securities or any premium or
the interest or Additional Amounts thereon 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);
(2) reduce the percentage in principal amount of the Outstanding
Securities affected thereby, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture;
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(3) change any obligation of the Company to maintain an office or
agency in the places and for the purposes specified in Section 9.02; or
(4) make any change in Section 5.07 or this 8.02 except to increase
any percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived with the consent of the Holders of
each Outstanding Security affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provision shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It is not necessary under this Section 8.02 for the Holders to consent to
the particular form of any proposed supplemental indenture, but it is
sufficient if they consent to the substance thereof.
Section 8.03. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities of one or more series shall be set forth in a
supplemental indenture that complies with the Trust Indenture Act as then in
effect.
Section 8.04. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modification thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Section 8.05. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture under this Article, this Indenture shall be modified
in accordance therewith and such supplemental indenture shall form a part of
this Indenture for
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all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder and of any coupon appertaining thereto
shall be bound thereby.
Section 8.06. Reference in Securities to Supplemental Indentures.
Securities, including any coupons, of any series authenticated and delivered
after the execution of any supplemental indenture pursuant to this Article may,
and shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities including any coupons of any series
so modified as to conform, in the opinion of the Trustee and the Company, to
any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities including any coupons of such series.
Section 8.07. Effect on Senior Indebtedness. No supplemental indenture
shall adversely affect the rights of any holder of Senior Indebtedness under
Article XII without the consent of such holder.
ARTICLE IX
Covenants
Section 9.01. Payment of Principal, Premium, if any, and Interest. The
Company covenants and agrees for the benefit of the Holders of each series of
Securities that it will duly and punctually pay the principal of, premium, if
any, and interest together with Additional Amounts, if any, on the Securities
of that series in accordance with the terms of the Securities of such series,
any coupons appertaining thereto and this Indenture.
Section 9.02. Maintenance of Office or Agency. If Securities of a series
are issued as Registered Securities, the Company will maintain in each Place of
Payment for any series of Securities an office or agency where Securities of
that series may be presented or surrendered for payment, where securities of
that series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
of that series and this Indenture may be served. If Securities of a series are
issuable as Bearer
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Securities, the Company will maintain, (i) subject to any laws or regulations
applicable thereto, an office or agency in a Place of Payment for that series
which is located outside the United States where Securities of that series and
related coupons may be presented and surrendered for payment; provided,
however, that if the Securities of that series are listed on The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited, the
Luxembourg Stock Exchange or any other stock exchange located outside the
United States and such stock exchange shall so require, the Company will
maintain a Paying Agent for the Securities of that series in London, Luxembourg
or any other required city located outside the United States, as the case may
be, so long as the Securities of that series are listed on such exchange, and
(ii) subject to any laws or regulations applicable thereto, an office or agency
in a Place by Payment for that series which is located outside the United
States, where Securities of that series may be surrendered for exchange and
where notices and demands to or upon the Company in respect of the Securities
of that series and this Indenture maybe served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
Unless otherwise specified as contemplated by Section 3.01, no payment of
principal, premium or interest on Bearer Securities shall be made at any office
or agency of the Company in the United States, by check mailed to any address
in United States, by transfer to an account located in the United States or
upon presentation or surrender in the United States of a Bearer Security or
coupon for payment, even if the payment would be credited to an account located
outside the United States; provided, however, that, if the Securities of a
series are denominated and payable in Dollars, payment of principal of and any
premium or interest on any such Bearer Security shall be made at the office of
the Company's Paying Agent located within the United States, if (but only if)
payment in Dollars of the full amount of such principal, premium or interest,
as the case may be, at all offices or agencies outside the United States
maintained for the purpose by the Company in accordance with this
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Indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
The Company may also from time to time designate one or more other offices
or agencies where the Securities (including any coupons, if any) of one or more
series may be presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or an agency in each Place of Payment for
Securities (including any coupons, if any) of any series for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency. Unless otherwise specified as contemplated by Section 3.01,
the Trustee shall initially serve as Paying Agent.
If and so long as the Securities of any series (i) are denominated in a
currency other than Dollars or (ii) may be payable in currency other than
Dollars, or so long as it is required under any other provision of this
Indenture, then the Company will maintain with respect to each such series of
Securities or as so required, an Exchange Rate Agent.
Section 9.03. Money for Securities Payments to be Held in Trust;
Unclaimed Money. If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it will, on or before each due date
of the principal of, premium, if any, or interest or any Additional Amount, on
any of the Securities of that series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal,
premium, if any, or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee in writing of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest or Additional Amounts on Securities of that
series in trust for the
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benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making to any
payment of principal, premium, if any, or interest or Additional Amounts
on the Securities; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge or defeasance of this Indenture or for any other
purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee
all sums held in trust by the Company or such Paying Agent, such sums to be held
by the Trustee upon the same terms as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of any principal, premium or interest
on any Security of any series and remaining unclaimed for two years after such
principal, premium, if any, or interest or Additional Amount has become due and
payable shall be paid to the Company on Company Request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
and coupon, if any, shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in The City of New York, or cause to be mailed to
such Holder, notice that such money remains unclaimed and that, after a date
specified therein, which
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shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
Section 9.04. Corporate Existence. Subject to Article VII, the Company
will at all times do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its rights and
franchises; provided that nothing in this Section 9.04 shall prevent the
abandonment or termination of any right or franchise of the Company if, in the
opinion of the Company, such abandonment or termination is in the best
interests of the Company and not prejudicial in any material respect to the
Holders of the Securities.
Section 9.05. Reports by the Company. The Company covenants:
(a) to file with the Trustee, within 30 days after the Company is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended; or, if the Company is not required to file
information, documents or reports pursuant to either of such Sections, then to
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(b) to file with the Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company with the conditions and covenants provided for in this Indenture as may
be required from time to time by such rules and regulations; and
(c) to transmit to all Holders of Securities, within 30 days after the
filing thereof with the Trustee, in the manner
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and to the extent provided in Section 313(c) of the Trust Indenture Act, such
summaries of any information, documents and reports required to be filed by the
Company pursuant to subsections (a) and (b) of this Section 9.05, as may be
required by rules and regulations prescribed from time to time by the
Commission.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including information
concerning the Company's compliance with any of its covenants hereunder,
provided that the foregoing shall not relieve the Trustee of any of its
responsibilities hereunder.
Section 9.06. Annual Review Certificate; Notice of Defaults or Events of
Default. The Company covenants and agrees to deliver to the Trustee, within
120 days after the end of each fiscal year of the Company ending after the date
hereof, a certificate from the principal executive officer, principal financial
officer or principal accounting officer of the Company, covering the preceding
calendar year, stating whether or not to the best knowledge of the signer(s)
thereof the Company is in default in the performance, observance or fulfillment
of or compliance with any of the terms, provisions, covenants and conditions of
this Indenture, and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
For the purposes of this Section 9.06, compliance shall be determined without
regard to any grace period or requirement of notice provided pursuant to the
terms of this Indenture.
Section 9.07. Books of Record and Account. The Company will keep proper
books of record and account, either on a consolidated or individual basis. The
Company shall cause its books of record and account to be examined either on a
consolidated or individual basis, by one or more firms of independent public
accountants not less frequently than annually. The Company shall prepare its
financial statements in accordance with GAAP.
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ARTICLE X
Redemption
Section 10.01. Applicability of Article. Securities (including coupons,
if any) of any series which are redeemable before their Stated Maturity shall
be redeemable in accordance with their terms and (except as otherwise specified
as contemplated by Section 3.01 for Securities of any series) in accordance
with this Article.
Section 10.02. Election to Redeem Notice to Trustee. The election of the
Company to redeem any Securities, including coupons, if any, shall be evidenced
by or pursuant to a Board Resolution. In case of any redemption at the
election of the Company of less than all the Securities or coupons, if any, of
any series, the Company shall, at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date and Redemption Price, of
the principal amount of Securities of such series to be redeemed and, if
applicable, of the tenor of the Securities to be redeemed. In the case of any
redemption of Securities (i) prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture or (ii) pursuant to an election of the Company which is subject to a
condition specified in the terms of such Securities, the Company shall furnish
the Trustee with an Officers' Certificate evidencing compliance with such
restriction or condition.
Section 10.03. Selection of Securities to be Redeemed. Unless otherwise
specified as contemplated by Section 3.01, if less than all the Securities
(including coupons, if any) of a series with the same terms are to be redeemed,
the Trustee, not more than 45 days prior to the redemption date, shall select
the Securities of the series to be redeemed in such manner as the Trustee shall
deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the
minimum authorized denomination) for such Security. The Trustee shall make the
selection from Securities of the series that are Outstanding and that have not
previously been called for redemption and may provide for the selection for
redemption of
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portions (equal to the minimum authorized denomination for Securities,
including coupons, if any, of that series or any integral multiple thereof) of
the principal amount of Securities, including coupons, if any, of such series
of a denomination larger than the minimum authorized denomination for
Securities of that series. The Trustee shall promptly notify the Company in
writing of the Securities selected by the Trustee for redemption and, in the
case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed. If the Company shall so direct, Securities registered
in the name of the Company, any Affiliate or any Subsidiary thereof shall not
be included in the Securities selected for redemption. If less than all the
Securities of any series with differing issue dates, interest rates and stated
maturities are to be redeemed, the Company in its sole discretion shall select
the particular Securities to be redeemed and shall notify the Trustee in
writing thereof at least 45 days prior to the relevant redemption date.
For purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities (including coupons, if any)
shall relate, in the case of any Securities (including coupons, if any)
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Securities (including coupons, if any) which has been or is to be
redeemed.
Section 10.04. Notice of Redemption. Unless otherwise specified as
contemplated by Section 3.01, notice of redemption shall be given in the manner
provided in Section 1.06 not less than 30 days nor more than 60 days prior to
the Redemption Date to the Holders of the Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of a series are to
be redeemed, the identification (and in the case of partial redemption,
the principal amounts) of the particular Security or Securities to be
redeemed;
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall
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state that on and after the Redemption Date, upon surrender of such
Security, the Holder will receive, without a charge, a new Security or
Securities of authorized denominations for the principal amount thereof
remaining unredeemed;
(5) the Place or Places of Payment where such Securities, together
in the case of Bearer Securities with all coupons appertaining thereto, if
any, maturing after the Redemption Date, are to surrendered for payment
for the Redemption Price;
(6) that Securities of the series called for redemption and all
unmatured coupons, if any, appertaining thereto must be surrendered to the
Paying Agent to collect the Redemption Price;
(7) that, on the Redemption Date, the Redemption Price will become
due and payable upon each such Security, or the portion thereof, to be
redeemed and, if applicable, that interest thereon will cease to accrue on
and after said date;
(8) that the redemption is for a sinking fund, if such is the case;
(9) that unless otherwise specified in such notice, Bearer
Securities of any series, if any, surrendered for redemption must be
accompanied by all coupons maturing subsequent to the Redemption Date or
the amount of any such missing coupon or coupons will be deducted from the
Redemption Price, unless security or indemnity satisfactory to the
Company, the Trustee and any Paying Agent is furnished; and
(10) the CUSIP number, if any, of the Securities.
Notice of redemption of Securities to be redeemed shall be given by the
Company or, at the Company's request, by the Trustee in the name and at the
expense of the Company.
Section 10.05. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, which it may not do
in the case of a sinking fund payment under Article XI, segregate and hold in
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trust as provided in Section 9.03) an amount of money in the currency or
currencies (including currency unit or units) in which the Securities of such
series are payable (except as otherwise specified pursuant to Section 3.01 for
the Securities of such series) sufficient to pay on the Redemption Date the
Redemption Price of, and (unless the Redemption Date shall be an Interest
Payment Date) interest accrued to the Redemption Date on, all Securities or
portions thereof which are to be redeemed on that date.
Unless any Security by its terms prohibits any sinking fund payment
obligation from being satisfied by delivering and crediting Securities
(including Securities redeemed otherwise than through a sinking fund), the
Company may deliver such Securities to the Trustee for crediting against such
payment obligation in accordance with the terms of such Securities and this
Indenture.
Section 10.06. Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest and the coupons for any such interest
appertaining to any Bearer Security so to be redeemed, except to the extent
provided below, shall be void. Except as provided in the next succeeding
paragraph, upon surrender of any such Security, including coupons, if any, for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest (and any
Additional Amounts) to the Redemption Date; provided, however, that
installments of interest on Bearer Securities whose Stated Maturity is on or
prior to the Redemption Date shall be payable only at an office or agency
located outside the United States and its possessions (except as otherwise
provided in Section 9.02) and, unless otherwise specified as contemplated by
Section 3.01, only upon presentation and surrender to coupons for such
interest; and provided, further that, unless otherwise specified as
contemplated by Section 3.01, installments of interest on Registered Securities
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the
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relevant Record Dates according to their terms and the provisions of Section
3.07.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Bearer
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such
missing coupon or coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of such
Bearer Security shall surrender to the Trustee or any Paying Agent any such
missing coupon in respect of which a deduction shall have been made from the
Redemption Price, such Holder shall be entitled to receive the amount so
deducted; provided, however, that interest (and any Additional Amounts)
represented by coupons shall be payable only at an office or agency located
outside of the United States (except as otherwise specified pursuant to Section
9.02) and, unless otherwise provided as contemplated by Section 3.01, only upon
presentation and surrender of those coupons.
If any Security 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 prescribed therefor in the
Security.
Section 10.07. Securities Redeemed in Part. Upon surrender of a
Registered Security that is redeemed in part at any Place of Payment therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of that Security, without service charge a new Registered
Security or Securities of the same series, having the same form, terms and
Stated Maturity, in any authorized denomination equal in aggregate principal
amount to the unredeemed portion of the principal amount of the Security
surrendered.
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ARTICLE XI
Sinking Funds
Section 11.01. Applicability of Article. The provisions of this Article
shall be applicable to any sinking fund for the retirement of Securities of a
series except as otherwise specified as contemplated by Section 3.01 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 11.02. Each sinking fund payment shall be applied to the redemption
of Securities of any series as provided for by the terms of Securities of such
series.
Section 11.02. Satisfaction of Sinking Fund Payments with Securities.
The Company (i) may deliver Outstanding Securities of a series (other than any
previously called for redemption) together, in the case of Bearer Securities of
such series, with all unmatured coupons appertaining thereto and (ii) may apply
as a credit Securities of a series which have been redeemed either at the
election of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities, in each case in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of such series required to
be made pursuant to the terms of such Securities as provided for by the terms
of such series; provided that such Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
Section 11.03. Redemption of Securities for Sinking Fund. Not less than
60 days prior to each sinking fund payment date for any series of Securities,
the Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the
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next ensuing sinking fund payment for that series pursuant to the terms of that
series, the portion thereof, if any, which is to be satisfied by payment of
cash and the portion thereof, if any, which is to be satisfied be delivering
and crediting Securities of that series pursuant to Section 11.02 and will also
deliver to the Trustee any Securities to be so delivered to the extent it has
not previously done so. Not less than 30 days before each such sinking fund
payment date the Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 10.03 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 10.04. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 10.06 and 10.07.
ARTICLE XII
Subordination of Securities
Section 12.01. Agreement to Subordinate. The Company, for itself, its
successors and assigns, covenants and agrees, and each Holder of Securities, by
his acceptance thereof, likewise covenants and agrees, that the payment of the
principal of (and premium, if any), interest on and any Additional Amounts
payable in respect of each and all of the Securities is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth in this
Article XII (subject to the provisions of Article IV), in right of payment to
the prior payment in full of all Senior Indebtedness.
Section 12.02. Distribution on Dissolution, Liquidation and
Reorganization. In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company or its property, (ii) any proceeding for the
liquidation, dissolution or other winding-up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshaling of the assets and liabilities of the Company then, and in any
such event specified in (i), (ii), (iii) or (iv) (each such event, if any,
herein sometimes referred to as a "Proceeding") (subject to the power of a
court of competent
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jurisdiction to make other equitable provision reflecting the rights conferred
in this Indenture upon the Senior Indebtedness and the holders thereof with
respect to the Securities and the Holders thereof by a lawful plan or
reorganization under applicable Bankruptcy Law),
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of the principal thereof, premium, if any, any interest
or any additional amounts required in respect of certain taxes, and any
interest thereon, due thereon or provision must first be made for such payment
in cash or cash equivalents or any other manner acceptable to the holders of
such Senior Indebtedness before any payment or distribution, whether in cash,
securities or property (including any payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of
the Company subordinated to the payment of the Securities, such payment or
distribution being referred to as a "Junior Subordinated Payment", but
excluding any payment or distribution of securities of the Company provided for
by a plan of reorganization or readjustment authorized by an order or decree of
a court of competent jurisdiction in a reorganization proceeding under any
applicable Bankruptcy Law or of any other corporation provided for by such plan
of reorganization or readjustment which securities are subordinated in right of
payment to all then outstanding Senior Indebtedness to substantially the same
extent as the Securities are so subordinated as provided in this Article),
shall be made by the Company on account of principal, premium, interest or
Additional Amounts of or on the Securities or interest on overdue amounts
thereof; and
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, including any Junior
Subordinated Payment, to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article (and excluding any
payment or distribution of securities of the Company provided for by a plan of
reorganization or readjustment authorized by an order or decree of a court of
competent jurisdiction in a reorganization proceeding under any applicable
Bankruptcy Law or of any other corporation provided for by such plan of
reorganization or readjustment which securities are subordinated in right of
payment to all then outstanding Senior Indebtedness to substantially the same
extent as the Securities are so subordinated as provided in this Article) shall
be paid by the
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liquidating trustee or agent or other 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 of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, premium, if any, interest or
additional amounts required in respect of certain taxes, and any interest
thereon, on 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 to the holders of
such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, shall be received by the Trustee or the Holders
of the Securities before all Senior Indebtedness is paid in full, then, and in
such event 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 to the holders of such Senior
Indebtedness. As used in this Article, the phrase "payment in full" (or any
similar phrase), when used to refer to the payment of Senior Indebtedness,
shall mean payment in full of the aggregate amount of such Senior Indebtedness
then outstanding in cash, securities or other property.
The consolidation of the Company with, or the merger of the Company with
or into, another Person or the liquidation or dissolution of the Company
following the conveyance or transfer of all or substantially all of its
properties and assets as an entirety to another Person upon the terms and
conditions set forth in Article VII shall not be deemed a Proceeding for the
purposes of this Section if the Person formed by such consolidation with or
into which the Company is merged or the Person which acquires by conveyance or
transfer such properties and assets as an entirety, as the case may be, shall,
as a part
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of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article VII.
Section 12.03. Prior Payment to Senior Indebtedness Upon Acceleration of
Securities.
In the event that any Securities of a series are declared due and payable
before their Stated Maturity, then and in such event the holders of the Senior
Indebtedness outstanding at the time such Securities so become due and payable
shall be entitled to receive payment in full of all amounts due on or in
respect of such Senior Indebtedness (including any amounts due upon
acceleration), or provision shall be made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, before the Holders of the Securities are entitled to receive any
payment or distribution of any kind or character, whether in cash, properties
or securities (including any Junior Subordinated Payment) by the Company on
account of the principal of, or premium, if any, or any interest or Additional
Amounts on such Securities or on account of the purchase or other acquisition
of such Securities by the Company or any Subsidiary of the Company.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, then and in such event such payment shall
be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.02 would be applicable.
Section 12.04. No Payment on Securities in Event of Default on Senior
Indebtedness. In the event and during the continuation of (i) a Company
default in the payment of any principal, interest, if any or premium, if any,
or any Additional Amounts on any Senior Indebtedness when the same becomes due
and payable, whether at maturity or at a date fixed for prepayment or
declaration or otherwise or (ii) an event of default with respect to any Senior
Indebtedness permitting the holders thereof to accelerate the maturity thereof
and written notice of such event of default (requesting that payments on the
Securities cease) is given to the Company by the holders of Senior
Indebtedness, then unless and until such default in payment or event of default
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<PAGE> 110
shall have been cured or waived or shall have ceased to exist, no direct or
indirect payment (in cash, property or securities, by set-off or otherwise)
shall be made or agreed to be made on account of the Junior Subordinated Debt
or interest thereon or in respect of any repayment, redemption, retirement,
purchase or other acquisition of Junior Subordinated Debt.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.02 would be applicable.
Section 12.05. Payments on Securities Permitted. Nothing contained in
this Indenture or in any of the Securities shall (a) affect the obligation of
the Company to make, or prevent the Company from making, at any time except
during the pendency of any Proceeding referred to in Section 12.02 or under the
conditions described in Sections 12.03 and 12.04, payments of principal,
premium, interest or Additional Amounts, and any interest thereon, of or on the
Securities or (b) prevent the application by the Trustee of any moneys
deposited with it hereunder to the payment of or on account of the principal,
premium, interest or Additional Amounts, and any interest thereon, of or on the
Securities unless the Trustee shall have received at its Corporate Trust Office
written notice of any event prohibiting the making of such payment more than
two Business Days prior to the date fixed for such payment or prior to the
execution of an instrument to satisfy and discharge this Indenture based upon
the deposit of funds under Section 4.01(l)(B).
Section 12.06. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on all
Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent
of the payments or distributions made to the holders of such Senior
Indebtedness pursuant to the provisions of
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<PAGE> 111
this Article (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to Senior Indebtedness of
the Company to substantially the same extent as the Securities are subordinated
to the Senior Indebtedness and is entitled to like rights of subrogation by
reason of any payments or distributions made to holders of such Senior
Indebtedness) to all of the rights of the holders of such Senior Indebtedness
to receive payments and distributions of cash, property and securities
applicable to the Senior Indebtedness until the principal of (and premium, if
any) and any interest and Additional Amounts on the Securities shall be paid in
full. For purposes of such subrogation or assignment, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property
or securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
Section 12.07. Provisions Solely to Define Relative Rights. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities any series on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in any Securities
of any series is intended to or shall (a) impair, as between the Company and
the Holders of the Securities of a series, the obligations of the Company,
which are absolute and unconditional, to pay to the Holders of the Securities
the principal of , premium, if any, and any interest and Additional Amounts on
the Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than their rights
in relation to the holders of Senior Indebtedness; or (c) prevent the Trustee
or the Holder of any Security from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture including, without
limitation, filing and voting claims in any Proceeding, subject to the rights,
if any, under this Article of the holders of Senior Indebtedness to receive
104
<PAGE> 112
cash, property and securities otherwise payable or deliverable to the Trustee
or such Holder.
Section 12.08. Authorization of Holders of Securities to Trustee to
Effect Subordination. Each Holder of Securities by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article and appoints the Trustee his attorney-in-fact for any and all such
purposes.
Section 12.09. Notices to Trustee. The Company shall give prompt written
notice to a Responsible Officer of the Trustee located at the Corporate Trust
Office of the Trustee of any fact known to the Company which would prevent the
making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article or any other provisions of this
Indenture, neither the Trustee nor any Paying Agent (other than the Company)
shall be charged with knowledge of the existence of any Senior Indebtedness or
of any event which would prohibit the making of any payment of moneys to or by
the Trustee or such Paying Agent, unless and until the Trustee or such Paying
Agent shall have received (in the case of the Trustee, at its Corporate Trust
Office) written notice thereof from the Company or from the holder of any
Senior Indebtedness or from the trustee for any such holder, together with
proof satisfactory to the Trustee of such holding of Senior Indebtedness or of
the authority of such trustee; provided, however, that if at least two Business
Days prior to the date upon which by the terms hereof any such moneys may
become payable for any purpose (including, without limitation, the payment of
the principal, premium, interest or Additional Amounts, of or on any Security,
or any interest thereon) or the date on which the Trustee shall execute an
instrument acknowledging satisfaction and discharge of this Indenture, the
Trustee shall not have received with respect to such moneys or the moneys
deposited with it as a condition to such satisfaction and discharge the notice
provided for in this Section 12.09, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such moneys and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary, which may be
received by it on or after such two Business Days prior to such date. The
Trustee shall be entitled to rely on the delivery to it of a written notice by
a person representing himself to be a holder of
105
<PAGE> 113
Senior Indebtedness (or a trustee on behalf of such holder) to establish that
such a notice has been given by a holder of Senior Indebtedness or a trustee on
behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any Person
as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such person under this Article and, if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 12.10. Trustee as Holder of Senior Indebtedness. The Trustee
shall be entitled to all the rights set forth in this Article in respect of any
Senior Indebtedness at any time held by it to the same extent as any other
holder of Senior Indebtedness and nothing in this Indenture shall be construed
to deprive the Trustee of any of its rights as such holder.
Section 12.11. No Waiver of Subordination Provisions. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to such Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of such Holders of the Securities to the holders
of Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or
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<PAGE> 114
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
Section 12.12. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Article VI, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other
Person making such payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article.
Section 12.13. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be liable to any such holders if it shall in good faith mistakenly
pay over or distribute to Holders of Securities or to the Company or to any
other Person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article or otherwise.
Section 12.14. Article Applicable to Paying Agents. In case at any time
any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term "Trustee" as used in this
Article shall in such case (unless the context otherwise requires) be construed
as extending to and including such Paying Agent within its meaning as fully for
all intents and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee.
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<PAGE> 115
Section 12.15. Certain Conversions or Exchanges Deemed Payment. For the
purposes of this Article only, (a) the issuance and delivery of junior
securities upon exchange of Securities shall not be deemed to constitute a
payment or distribution on account of the principal of , premium, if any, or
any interest or Additional Amounts, on Securities or on account of the purchase
or other acquisition of Securities, and (b) the payment, issuance or delivery
of cash, property or securities (other than junior securities) upon exchange of
a Security shall be deemed to constitute payment on account of the principal of
such security. For the purposes of this Section, the term "junior securities"
means (i) shares of any stock of any class of the Company and (ii) securities
of the Company which are subordinated in right of payment to all Senior
Indebtedness which may be outstanding at the time of issuance or delivery of
such securities to substantially the same extent as, or to a greater extent
than, Securities are so subordinated as provided in this Article.
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<PAGE> 116
This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
AMERUS LIFE HOLDINGS, INC.
By: ______________________
Name:
Title:
{Seal}
Attest:
By: ______________________
Name:
Title:
FIRST UNION NATIONAL BANK
By: ______________________
Name:
Title:
{Seal}
Attest:
By: ______________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.6
================================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
among
AMERUS LIFE HOLDINGS, INC., as Sponsor,
FIRST UNION NATIONAL BANK,
as Property Trustee,
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Delaware Trustee,
and
THE ADMINISTRATORS NAMED HEREIN
Dated as of ________ __, 1998
AMERUS CAPITAL II
================================================================================
<PAGE> 2
AMENDED AND RESTATED DECLARATION
OF TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS............................................1
Section 1.1. Definitions....................................................................1
ARTICLE II
TRUST INDENTURE ACT..............................................9
Section 2.1. Trust Indenture Act; Application...............................................9
Section 2.2. Lists of Holders of Securities.................................................9
Section 2.3. Reports by the Property Trustee...............................................10
Section 2.4. Periodic Reports to Property Trustee..........................................10
Section 2.5. Evidence of Compliance with Conditions Precedent..............................10
Section 2.6. Events of Default; Waiver.....................................................10
Section 2.7. Event of Default; Notice......................................................12
ARTICLE III
ORGANIZATION.................................................13
Section 3.1. Name..........................................................................13
Section 3.2. Office........................................................................13
Section 3.3. Purpose.......................................................................13
Section 3.4. Authority.....................................................................14
Section 3.5. Title to Property of the Trust................................................14
Section 3.6. Powers and Duties of the Administrators.......................................14
Section 3.7. Prohibition of Actions by the Trust, the Administrators and the
Trustees..................................................................17
Section 3.8. Powers and Duties of the Property Trustee.....................................18
Section 3.9. Certain Duties and Responsibilities of the Property Trustee...................20
Section 3.10. Certain Rights of the Property Trustee.......................................22
Section 3.11. Delaware Trustee.............................................................24
Section 3.12. Execution of Documents.......................................................24
Section 3.13. Not Responsible for Recitals or Issuance of Securities.......................24
Section 3.14. Duration of Trust............................................................25
Section 3.15. Mergers......................................................................25
</TABLE>
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<TABLE>
<S> <C>
ARTICLE IV
SPONSOR.....................................................26
Section 4.1. Sponsor's Purchase of Common Trust Securities.................................26
Section 4.2. Responsibilities of the Sponsor...............................................27
Section 4.3. Right to Proceed..............................................................28
ARTICLE V
TRUSTEES AND ADMINISTRATORS............................................28
Section 5.1. Number of Trustees: Appointment of Co-Trustee.................................28
Section 5.2. Delaware Trustee..............................................................28
Section 5.3. Property Trustee; Eligibility.................................................29
Section 5.4. Certain Qualifications of Administrators and Delaware Trustee
Generally.................................................................29
Section 5.5. Administrators................................................................30
Section 5.6. Delaware Trustee..............................................................31
Section 5.7. Appointment, Removal and Resignation of Trustees..............................31
Section 5.8. Vacancies among Trustees......................................................32
Section 5.9. Effect of Vacancies...........................................................32
Section 5.10. Meetings.....................................................................33
Section 5.11. Delegation of Power..........................................................33
Section 5.12. Merger, Conversion, Consolidation or Succession to Business..................33
ARTICLE VI
DISTRIBUTIONS..................................................34
Section 6.1. Distributions.................................................................34
ARTICLE VII
ISSUANCE OF SECURITIES............................................34
Section 7.1. General Provisions Regarding Securities.......................................34
Section 7.2. Execution and Authentication..................................................35
Section 7.3. Form and Dating...............................................................35
Section 7.4. Registrar, Paying Agent and Exchange Agent....................................37
Section 7.5. Paying Agent to Hold Money in Trust...........................................37
Section 7.6. Replacement Securities........................................................37
Section 7.7. Outstanding QUIPS.............................................................38
Section 7.8. QUIPS in Treasury.............................................................38
Section 7.9. Temporary Securities..........................................................38
Section 7.10. Cancellation.................................................................39
Section 7.11. CUSIP Numbers................................................................39
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VIII
DISSOLUTION OF TRUST.............................................39
Section 8.1. Dissolution of Trust..........................................................40
ARTICLE IX
TRANSFER OF INTERESTS............................................41
Section 9.1. Transfer of Securities........................................................41
Section 9.2. Transfer Procedures and Restrictions..........................................41
Section 9.3. Deemed Security Holders.......................................................44
Section 9.4. Book Entry Interests..........................................................45
Section 9.5. Notices to Clearing Agency....................................................45
Section 9.6. Appointment of Successor Clearing Agency......................................45
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES,
ADMINISTRATORS OR OTHERS..........................................46
Section 10.1. Liability....................................................................46
Section 10.2. Exculpation..................................................................46
Section 10.3. Fiduciary Duty...............................................................46
Section 10.4. Indemnification..............................................................47
Section 10.5. Outside Businesses...........................................................50
ARTICLE XI
ACCOUNTING....................................................51
Section 11.1. Fiscal Year..................................................................51
Section 11.2. Certain Accounting Matters...................................................51
Section 11.3. Banking......................................................................51
Section 11.4. Withholding..................................................................52
ARTICLE XII
AMENDMENTS AND MEETINGS.................................................52
Section 12.1. Amendments...................................................................52
Section 12.2. Meetings of the Holders; Action by Written Consent...........................54
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE.....................................56
Section 13.1. Representations and Warranties of Property Trustee...........................56
Section 13.2. Representations and Warranties of Delaware Trustee...........................56
</TABLE>
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<TABLE>
<S> <C>
ARTICLE XIV
MISCELLANEOUS..................................................57
Section 14.1. Notices......................................................................57
Section 14.2. Governing Law................................................................58
Section 14.3. Intention of the Parties.....................................................58
Section 14.4. Headings.....................................................................58
Section 14.5. Successors and Assigns.......................................................59
Section 14.6. Partial Enforceability.......................................................59
Section 14.7. Counterparts.................................................................59
</TABLE>
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<PAGE> 6
Annex I - Terms of Securities
Exhibit A-1 - Form of Quarterly Income Preferred Security
Exhibit A-2 - Form of Common Trust Security
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<PAGE> 7
AMENDED AND RESTATED DECLARATION OF TRUST
OF
AMERUS CAPITAL II
________ __, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of ________ __, 1998, by the Trustees (as defined herein), the
Sponsor (as defined herein), the Administrators (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the assets of
the Trust to be issued pursuant to this Declaration;
WHEREAS, AmerUs Capital II (the "Trust") has been established as a
trust created under the Business Trust Act (as defined herein) pursuant to a
Trust Agreement dated as of April 14, 1998 (the "Original Declaration") and a
Certificate of Trust executed and filed with the Secretary of State of the State
of Delaware on April 14, 1998, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain Debentures of the
Debenture Issuer (each as hereinafter defined);
WHEREAS, the parties hereto, by this Declaration, amend and restate
each and every term and provision of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
<PAGE> 8
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires;
(f) a term defined in the Indenture (as defined herein) and the
Master Unit Agreement (as defined herein) has the same meaning when used in this
Declaration unless otherwise defined in this Declaration or the context
otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
"Administrators" means each of Michael E. Sproule, Michael G. Fraizer
and James A. Smallenberger solely in such Person's capacity as Administrator of
the Trust created and continued hereunder and not in such Person's individual
capacity, or such Administrator's successor in interest in such capacity, or any
successor appointed as herein provided.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that is
authorized to legally bind such former Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of such Person 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 such Person or for all or
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 90 consecutive days; or
(b) such Person shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
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 of
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of such Person of all or any
substantial
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<PAGE> 9
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.
"Book Entry Interest" means a beneficial interest in a Global Security
registered in the name of a Clearing Agency or its nominee, ownership and
transfers of which shall be maintained and made through book entries by a
Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or a day
on which banking institutions in The City of New York or Charlotte, North
Carolina are authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. Section 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the QUIPS and in whose name or in the name of a nominee of that organization
shall be registered a Global Security and which shall undertake to effect
book-entry transfers and pledges of the QUIPS.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Time" means the "First Time of Delivery" under the
Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the United States Securities and Exchange Commission
as from time to time constituted, or if any time after the execution of this
Declaration such Commission is not existing and performing the duties now
assigned to it under applicable federal securities laws, then the body
performing such duties at such time.
"Common Trust Securities" has the meaning specified in Section 7.1(a).
"Common Trust Securities Guarantee" means the guarantee agreement dated
as of May __, 1998 of the Sponsor in respect of the Common Trust Securities.
"Common Trust Securities Subscription Agreement" means the Common Trust
Securities Subscription Agreement, dated May __, 1998, by and between the
Debenture Issuer and the Trust.
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<PAGE> 10
"Company Indemnified Person" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at First Union National Bank Corporate
Trust Group, 230 South Tyson St., Charlotte, North Carolina 28288-1179.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means AmerUs Life Holdings, Inc., an Iowa
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Subscription Agreement" means the Debenture Subscription
Agreement, dated ________ __, 1998, by and between the Debenture Issuer and the
Trust.
"Debenture Trustee" means First Union National Bank, a __________
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means the __% Junior Subordinated Deferrable Interest
Debentures due ________ __, 2003 of the Debenture Issuer issued pursuant to the
Indenture.
"Default" means an event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"Definitive QUIPS" shall have the meaning set forth in Section 7.3(d).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance
with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
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<PAGE> 11
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Final Redemption Price" has the meaning set forth in Section 4 of
Annex I hereto.
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Security" has the meaning set forth in Section 7.3(b).
"Holder" means a Person in whose name a Security is registered, such
Person being a beneficial owner within the meaning of the Business Trust Act,
provided, however, that with respect to any QUIPS that underlie Normal Units,
the Holder (as defined in the Master Unit Agreement and as notified to the
Property Trustee by or on behalf of the Unit Agent) of such Normal Units shall
be deemed to be the Holder of such QUIPS for all purposes under the Declaration
and the Indenture other than for receipt of Distributions on, or other payments
to be made in respect of, such QUIPS (including the distribution of Debentures
in connection with a Dissolution Event or the exercise of a Put Option). The
Property Trustee shall from time to time request from the Unit Agent a copy of
the Unit Register for the Normal Units as shall be necessary to give effect to
the foregoing.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of ________ __, 1998, between
the Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(f).
"Like Amount" has the meaning set forth in Section 3 of Annex I hereto.
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"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the QUIPS or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding QUIPS or
Holders of outstanding Common Trust Securities voting separately as a class, who
are the record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"Master Unit Agreement" shall mean the Master Unit Agreement between
AmerUs Life Holdings, Inc. and First Union National Bank, as Unit Agent, dated
as of ________ __, 1998.
"Officers' Certificate" means, (i) with respect to any Person other
than the Trust, a certificate signed by two of the following: the Chairman, a
Vice Chairman, the Chief Executive Officer, the President, the Chief Financial
Officer, a Vice President (whether or not designated by a number or a word or
words added before or after such title), the Comptroller, or the Secretary or an
Assistant Secretary of such Person and (ii) with respect to the Trust, a
certificate signed by not less than two administrators. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(i) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(iii) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be an employee of the Sponsor, and who shall be acceptable to the Property
Trustee.
"Participants" shall have the meaning set forth in Section 7.3(c).
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning set forth in Section 6.1.
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"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Quorum" means a majority of the Administrators or, if there are only
two Administrators, both of them.
"QUIPS(SM)*" has the meaning specified in Section 7.1(a).
"QUIPS Guarantee" means the guarantee agreement of the Sponsor dated as
of ________ __, 1998 in respect of the QUIPS.
"QUIPS Beneficial Owner" means, with respect to a Book Entry Interest,
a Person who is the beneficial owner of such Book Entry Interest, as reflected
on the books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant or
as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Registrar" has the meaning set forth in Section 7.4.
"Registration Statements" has the meaning set forth in Section 3.6(b).
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee with direct
responsibility for the administration of this Declaration and also means, with
respect to a particular corporate trust matter, any other officer of the
Property Trustee to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Securities" or "Trust Securities" means the Common Trust Securities
and the QUIPS.
_________________
*QUIPS is a servicemark of Goldman, Sachs & Co.
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"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Securities Guarantees" means the Common Trust Securities Guarantee and
the QUIPS Guarantee.
"Sponsor" means AmerUs Life Holdings, Inc., an Iowa corporation, or any
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"Subscription Agreements" means the Common Trust Securities
Subscription Agreement and the Debenture Subscription Agreement.
"Successor Delaware Trustee" has the meaning set forth in Section
5.7(b)(ii).
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning set forth in Section
3.8(f).
"Successor Securities" has the meaning set forth in Section
3.15(b)(i)(B).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the QUIPS or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding QUIPS or
Holders of outstanding Common Trust Securities voting separately as a class, who
are the record owners of 10% or more of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees
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in accordance with the provisions hereof, and references herein to a Trustee or
the Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Underwriting Agreement" means the Underwriting Agreement among AmerUs
Life Holdings, Inc., the Trust and the underwriters named therein, dated as of
________ __, 1998, for the initial offering and sale of the Units.
"Units" has the meaning set forth in the Master Unit Agreement.
"1933 Act Registration Statement" has the meaning set forth in Section
3.6(b).
"1934 Act Registration Statement" has the meaning set forth in Section
3.6(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION. (a) This Declaration is
subject to the provisions of the Trust Indenture Act that are required to be
part of this Declaration and shall, to the extent applicable, be governed by
such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES. (a) Each of the Sponsor
and the Administrators on behalf of the Trust shall provide the Property
Trustee, unless the Property Trustee is Registrar for the Securities (i) on a
quarterly basis on each record date for payment of Distributions, a list, in
such form as the Property Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such record date, and (ii) at
such other times as the Property Trustee may request in writing, within 30 days
of receipt by the Trust, of such written request, a List of Holders as of a date
not more than 15 days prior to the time such List of Holders is furnished to the
Property Trustee. The Property Trustee shall preserve, in as current a form as
is reasonably practicable, all information contained in Lists of Holders given
to it or which it receives in the capacity as Paying Agent (if acting in such
capacity), provided that
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the Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE. If required by Section
313(a) of the Trust Indenture Act, the Property Trustee shall, within sixty days
after each December 31, following the date of this Indenture, commencing
________ __, 1999, deliver to the Holders of QUIPS a brief report, dated as of
such ________ __, 1999, which complies with the provisions of such Section
313(a) of the Trust Indenture Act. The Property Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO PROPERTY TRUSTEE. Each of the Sponsor
and the Administrators on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as are required by Section 314
of the Trust Indenture Act (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act. Delivery of such
documents, reports and information to the Trustee is for informational purposes
only and the Property Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Trust's compliance with any of its
covenants hereunder (as to which the Property Trustee is entitled to rely
exclusively on Officers' Certificates).
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each of
the Sponsor and the Administrators on behalf of the Trust shall provide to the
Property Trustee such evidence of compliance with any conditions precedent
provided for in this Declaration that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c) (1) of the Trust Indenture
Act may be given in the form of an Officers' Certificate.
SECTION 2.6. EVENTS OF DEFAULT; WAIVER. (a) The Holders of a Majority
in liquidation amount of QUIPS may, by vote or written consent, on behalf of the
Holders of all of the QUIPS, waive any past Event of Default in respect of the
QUIPS and its consequences, provided, that if the underlying Event of Default
under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least the
proportion in aggregate liquidation amount of the
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QUIPS that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the QUIPS
arising therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or an Event of Default with respect to the QUIPS or impair any right consequent
thereon. Any waiver by the Holders of the QUIPS of an Event of Default with
respect to the QUIPS shall also be deemed to constitute a waiver by the Holders
of the Common Trust Securities of any such Event of Default with respect to the
Common Trust Securities for all purposes of this Declaration without any further
act, vote, or consent of the Holders of the Common Trust Securities.
The Holders of a Majority in liquidation amount of the QUIPS will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee or to direct the exercise of any
trust or power conferred upon the Property Trustee, including the right to
direct the Property Trustee to exercise the remedies available to it as holder
of the Debentures; provided, however, that (subject to the provisions of Section
3.9) the Property Trustee shall have the right to decline to follow any such
direction if the Property Trustee shall determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such direction
or if the Property Trustee, being advised by counsel, determines that the action
or proceeding so directed may not lawfully be taken or if the Property Trustee,
in good faith, by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or Responsible Officers, shall
determine that the action or proceedings so directed would involve the Property
Trustee in personal liability. If the Property Trustee fails to enforce its
rights under the Debentures after the Holders of a Majority in liquidation
amount of the QUIPS have so directed the Property Trustee, a Holder of record of
such QUIPS may, to the fullest extent permitted by law, institute a legal
proceeding against the Debenture Issuer to enforce the Property Trustee's rights
under the Debentures without first instituting any legal proceeding against the
Property Trustee or any other Person.
(b) The Holders of a Majority in liquidation amount of the Common
Trust Securities may, by vote or written consent, on behalf of the Holders of
all of the Common Trust Securities, waive any past Event of Default with respect
to the Common Trust Securities and its consequences, provided, that if the
underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Trust Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section 2.6(b), the Event
of Default under the Declaration shall also not be waivable; or
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(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Trust Securities are deemed to have
waived such Event of Default under the Declaration as provided below in
this Section 2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion in aggregate
liquidation amount of the Common Trust Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding;
provided further, each Holder of Common Trust Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Trust Securities and its consequences until all Events of Default with
respect to the QUIPS have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the QUIPS and only the Holders of the QUIPS will have the right to direct the
Property Trustee in accordance with the terms of the Securities. The foregoing
provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act. Subject
to the foregoing provisions of this Section 2.6(b), upon such waiver, any such
default shall cease to exist and any Event of Default with respect to the Common
Trust Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common Trust Securities
or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the QUIPS, constitutes a
waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 2.6(c) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7. EVENT OF DEFAULT; NOTICE. (a) The Property Trustee shall,
within 90 days after the occurrence of an Event of Default actually known to a
Responsible Officer of the Property Trustee, transmit by mail, first class
postage prepaid, to the Holders, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Event of Default as defined in the Indenture, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Debentures, the Property Trustee
shall be protected in withholding such notice if and so long as a Responsible
Officer of the Property Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders.
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(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 5.01(1) and 5.01(2) of the Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or of which a Responsible Officer of the Property Trustee
charged with the administration of the Declaration shall have actual
knowledge.
(c) Within ten Business Days after the occurrence of an Event of
Default actually known to a Responsible Officer of the Property Trustee, the
Property Trustee shall transmit notice of such Event of Default to the holders
of the QUIPS, the Administrators and the Sponsor, unless such Event of Default
shall have been cured or waived. The Sponsor and the Administrators shall file
annually with the Property Trustee a certification as to whether or not they are
in compliance with all the conditions and covenants applicable to them under
this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1. NAME. The Trust is named "AmerUs Capital II" as such name
may be modified from time to time by the Administrators following written notice
to the Trustees and the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Administrators.
SECTION 3.2. OFFICE. The address of the principal office of the Trust
is c/o AmerUs Life Holdings, Inc., 699 Walnut Street, Des Moines, Iowa 50309. On
ten Business Days written notice to the Property Trustee, the Delaware Trustee
and the Holders of Securities, the Administrators may designate another
principal office.
SECTION 3.3. PURPOSE. The exclusive purposes and functions of the Trust
are (a) to issue and sell the Securities, (b) use the proceeds from the sale of
the Securities to acquire the Debentures, and (c) except as otherwise limited
herein, to engage in only those other activities necessary or incidental
thereto, including, without limitation, those activities specified in Sections
3.6, 3.8, 3.9, 3.10, 3.11 and/or 3.12. The Trust shall not borrow money, issue
debt or reinvest proceeds derived from investments, mortgage or pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust either not to be classified for United States Federal
income tax purposes as a grantor trust or to be classified as an association
taxable as a corporation or as other than a grantor trust for United States
Federal income tax purposes.
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SECTION 3.4. AUTHORITY. Subject to the limitations provided in this
Declaration and to the specific duties of the Property Trustee, the
Administrators shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Administrators or any of them in
accordance with their powers shall constitute the act of and serve to bind the
Trust and an action taken by the Property Trustee on behalf of the Trust in
accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein with
respect to accomplishing the purposes of the Trust and are not intended to be
trustees or fiduciaries with respect to the Trust or the Holders. The Property
Trustee shall have the right, but shall not be obligated except as provided in
Section 3.6, to perform those duties assigned to the Administrators.
SECTION 3.5. TITLE TO PROPERTY OF THE TRUST. Except as provided in
Section 3.8 with respect to the Debentures and the Property Trustee Account or
as otherwise provided in this Declaration, legal title to all assets of the
Trust shall be vested in the Trust. The Holders shall not have legal title to
any part of the assets of the Trust, but shall have an undivided beneficial
interest in the assets of the Trust.
SECTION 3.6. POWERS AND DUTIES OF THE ADMINISTRATORS. The
Administrators shall have the exclusive power, duty and authority to cause the
Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that (i) except as contemplated in Section
7.1(a), (A) the Trust may issue no more than one series of QUIPS and no more
than one series of Common Trust Securities and (B) there shall be no interests
in the Trust other than the Securities, and (ii) the issuance of Securities
shall be limited to a simultaneous issuance of both QUIPS and Common Trust
Securities at the Closing Time;
(b) in connection with the registration, issue and sale of the QUIPS,
to:
(i) execute and file on behalf of the Trust, (a) a registration
statement, including pre-effective or post-effective amendments to such
registration statement and any and all amendments to registration
statements filed pursuant to Rule 462(b) promulgated under the Securities
Act, relating to the registration under the Securities Act, of the
Securities (the "1933 Act Registration Statement"), and (b) a registration
statement on Form 8-A or other appropriate form (the "1934 Act Registration
Statement" and together with the 1933 Act Registration Statement, the
"Registration Statements") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Securities of the
Trust under the Exchange Act;
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(ii) execute and file on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as the Sponsor, on behalf
of the Trust, may deem necessary or desirable to register the Securities
under the securities or "Blue Sky" laws of any applicable jurisdiction;
(iii) execute and file a listing application and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to permit the QUIPS [(or Units)] to trade
or be quoted or listed in or on the New York Stock Exchange or any other
securities exchange, quotation system or the Nasdaq National Market;
(iv) execute, deliver and perform on behalf of the Trust such
underwriting or purchase agreements with one or more underwriters,
purchasers or agents relating to the offering of the Securities as the
Sponsor, on behalf of the Trust, may deem necessary or desirable; and
(v) execute and deliver letters, documents or instruments with DTC
and other Clearing Agencies relating to the QUIPS.
(c) to acquire the Debentures with the proceeds of the sale of the
QUIPS and the Common Trust Securities; provided, however, that the
Administrators shall cause legal title to the Debentures to be held of record in
the name of the Property Trustee for the benefit of the Holders;
(d) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of QUIPS and Holders of Common Trust Securities as to
such actions and applicable record dates;
(e) to take all actions and perform such duties as may be required of
the Administrators pursuant to the terms of the Securities;
(f) to the fullest extent permitted by law, to bring or defend, pay,
collect, compromise, arbitrate, resort to legal action, or otherwise adjust
claims or demands of or against the Trust (each a "Legal Action"), unless
pursuant to Section 3.8(e), the Property Trustee has the exclusive power to
bring such Legal Action;
(g) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
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(h) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(i) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Administrator;
(j) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(k) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(l) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(m) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the QUIPS or to
enable the Trust to effect the purposes for which the Trust was created;
(n) to take any action, not inconsistent with this Declaration, the
certificate of trust of the Trust or with applicable law, that the
Administrators determine in their discretion to be necessary or desirable in
carrying out the activities of the Trust as set out in this Section 3.6 (as long
as such action does not materially adversely affect the interests of the Holders
of the Securities), including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust not to be classified for United States Federal
income tax purposes as an association taxable as a corporation or as other
than a grantor trust;
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States Federal income tax purposes;
(o) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Administrators, on behalf of the
Trust; and
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(p) to execute and deliver all documents, instruments and
certificates, exercise all rights and powers, perform all duties, and do all
things for and on behalf of the Trust in all matters necessary or incidental to
the foregoing.
The Administrators must exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3 and with the intentions of the parties set forth in
Section 14.3, and the Administrators shall not take any action that is
inconsistent with the purposes and functions of the Trust and intentions of the
parties set forth in Section 3.3 and Section 14.3, respectively.
Subject to this Section 3.6, the Administrators shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.
Any indebtedness, expenses, taxes or other liabilities incurred by the
Administrators pursuant to this Section 3.6 or otherwise incurred by or on
behalf of the Trust, other than obligations of the Trust to pay to holders of
the QUIPS the amounts due such holders pursuant to the terms of the QUIPS, shall
be paid for in full or reimbursed, as the case may be, by the Debenture Issuer.
SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST, THE ADMINISTRATORS
AND THE TRUSTEES. (a) The Trust shall not, and neither the Administrators nor
the Trustees (including the Property Trustee) shall cause the Trust to, engage
in any activity other than as required or authorized by this Declaration. The
Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant to
the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures, execute mortgages or pledge any of its
assets;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A) direct
the time, method and place of conducting any proceeding with respect to any
remedy available to
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the Debenture Trustee, or exercising any trust or power conferred upon the
Debenture Trustee with respect to the Debentures, (B) waive any past
default that is waivable under the Indenture, (C) exercise any right to
rescind or annul any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required, unless the Trust shall have received an opinion of counsel
experienced in such matters to the effect that such action will not cause
more than an insubstantial risk that for United States Federal income tax
purposes the Trust will not be classified as a grantor trust.
SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE. (a) The legal
title to the Debentures shall be owned by and held of record in the name of the
Property Trustee in trust for the benefit of the Trust and the Holders. The
right, title and interest of the Property Trustee to the Debentures shall vest
automatically in each Person who may hereafter be appointed as Property Trustee
in accordance with Section 5.7. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Debentures
have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrators or to the Delaware Trustee (if
the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders and,
upon the receipt of payments of funds made in respect of the Debentures
held by the Property Trustee, deposit such funds into the Property Trustee
Account and make payments, and/or request the Paying Agent (whether or not
the Property Trustee also acts as Paying Agent) to make payments, to the
Holders of the QUIPS and Holders of the Common Trust Securities from the
Property Trustee Account in accordance with Section 6.1. Funds in the
Property Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Property Trustee Account shall be
maintained by the Property Trustee with First Union National Bank (in its
separate corporate capacity and not in its capacity as Property Trustee) in
its trust department;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the repurchase or redemption of the Securities to the
extent the Debentures are redeemed, repurchased or mature; and
(iii) upon written notice of distribution issued by the Administrators
in accordance with the terms of the Securities, engage in such ministerial
activities as shall
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be necessary or appropriate to effect the distribution of the Debentures to
Holders of Securities upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities.
(e) Subject to Section 3.9(a), the Property Trustee may take any
Legal Action which arises out of or is in connection with an Event of Default of
which a Responsible Officer of the Property Trustee has actual knowledge or the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act. If such Property Trustee shall have failed to take such Legal
Action, the Holders of the QUIPS, to the fullest extent permitted by applicable
law, may take such Legal Action, to the same extent as if such Holders of QUIPS
held an aggregate principal amount of Debentures equal to the aggregate
liquidation amount of such QUIPS, without first proceeding against the Property
Trustee or the Trust; provided, however, that if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay the principal of or premium, if any, or interest on the
Debentures on the date such principal, premium, if any, or interest is otherwise
payable (after giving effect to any permitted deferral of payment of such
interest), then a Holder of QUIPS may directly institute a proceeding against
the Debenture Issuer for enforcement of payment to such Holder of the principal
of or premium, if any, or interest on the Debentures having a principal amount
equal to the aggregate liquidation amount of the QUIPS of such Holder (a "Direct
Action") on or after the respective due date specified in the Debentures. In
connection with such Direct Action, the rights of the Holders of the Common
Trust Securities will be subrogated to the rights of such Holder of QUIPS (or
Units) to the extent of any payment made by the Debenture Issuer to such Holder
of QUIPS (or Units) in such Direct Action; provided, however, that no such
subrogation right may be exercised so long as an Event of Default has occurred
and is continuing. The Holders of QUIPS will not be able to exercise directly
any other remedy available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders pursuant to the terms of the
Securities; or
(ii) a successor Property Trustee has been appointed and has accepted
that appointment in accordance with Section 5.7 (a "Successor Property
Trustee").
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Property Trustee occurs and is continuing, the Property Trustee shall, for
the benefit of Holders, enforce its rights as holder of the
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Debentures subject to the rights of the Holders pursuant to this Declaration
(including Annex I) and the terms of the Securities.
(h) The Property Trustee shall be authorized to undertake any actions
set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all securities and any such Paying Agent
shall comply or shall be caused to comply with Section 317(b) of the Trust
Indenture Act. Any such additional Paying Agent may be removed by the Property
Trustee at any time the Property Trustee remains as Paying Agent and a successor
Paying Agent or additional Paying Agents may be (but are not required to be)
appointed at any time by the Property Trustee.
(j) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Administrators set
forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Property Trustee shall not take, nor shall the
Sponsor or any Administrator direct the Property Trustee to take, any action
that is inconsistent with the purposes and functions of the Trust and intentions
of the parties set out in Section 3.3 and Section 14.3, respectively.
SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY
TRUSTEE. (a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and in the Securities and no implied covenants shall be read into
this Declaration against the Property Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
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(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration and in
the Securities and the Property Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Declaration and in the Securities, and no implied
covenants or obligations shall be read into this Declaration against
the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Property Trustee and
conforming to the requirements of this Declaration; provided, however,
that in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Property Trustee, the Property Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in liquidation
amount of the QUIPS or the Common Trust Securities, as applicable, relating
to the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Property Trustee against such risk or
liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner
as the Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Property Trustee under this Declaration and the Trust Indenture Act;
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(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with
the Sponsor, and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Property Trustee
Account maintained by the Property Trustee pursuant to Section 3.8(c)(i)
and except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrators or the Sponsor with their respective
duties under this Declaration, nor shall the Property Trustee be
liable for any default or misconduct of the Administrators or the Sponsor.
SECTION 3.10. CERTAIN RIGHTS OF THE PROPERTY TRUSTEE. (a) Subject to
the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, opinion
of counsel, written representation of Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration may be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Administrators;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or re-registration thereof;
(v) the Property Trustee may consult with counsel or other experts
of its selection and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area
of expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted
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by it hereunder in good faith and in accordance with such advice or opinion,
such counsel may be counsel to the Sponsor or any of its Affiliates, and may
include any of its employees. The Property Trustee shall have the right at
any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request
or direction of any Holder, unless such Holder shall have provided to the
Property Trustee security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs, expenses (including reasonable
attorneys' fees and expenses and the expenses of the Property Trustee's
agents, nominees or custodians) and liabilities that might be incurred by
it in complying with such request or direction, including such reasonable
advances as may be requested by the Property Trustee provided, that,
nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the
Property Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be
required to inquire as to the authority of the Property Trustee to so act
or as to its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the Property
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders which
instructions may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct the
Property Trustee under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action
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until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration;
(xii) the Property Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without negligence,
and reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Declaration; and
(xiii) the Property Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Property
Trustee has actual knowledge thereof or unless written notice of any event
which is in fact such a default is received by the Property Trustee at the
Corporate Trust Office of the Property Trustee, and such notice references
the QUIPS and this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11. DELAWARE TRUSTEE. Notwithstanding any other provision of
this Declaration other than Section 5.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities of the Administrators or the Property Trustee
described in this Declaration. Except as set forth in Section 5.2, the Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act and shall take such
actions as are expressly required to be taken by the Delaware Trustee under the
Business Trust Act. In the event the Delaware Trustee shall at any time be
required to take any action or perform any duty hereunder, the Delaware Trustee
shall be entitled to the benefits of Section 3.9(b)(ii) to (viii) inclusive, and
Section 3.10. No implied covenants or obligations shall be read into this
Declaration against the Delaware Trustee.
SECTION 3.12. EXECUTION OF DOCUMENTS. Except as otherwise required by
the Business Trust Act or applicable law, any Administrator is authorized to
execute on behalf of the Trust any documents that the Administrators have the
power and authority to execute pursuant to Section 3.6.
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SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration or the
Securities.
SECTION 3.14. DURATION OF TRUST. The Trust, unless dissolved pursuant
to the provisions of Article VIII hereof, shall have existence for seven years
from April 14, 1998.
SECTION 3.15. MERGERS. (a) The Trust may not merge or convert with or
into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to any
Person, except as described in Section 3.15(b) and (c) or Section 3 of Annex I.
(b) The Trust may, at the request of the Holders of a Majority in
liquidation amount of the Common Trust Securities and without the consent of the
other Holders, the Delaware Trustee or the Property Trustee, merge or convert
with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to, a trust organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
with respect to the QUIPS; or
(B) substitutes for the QUIPS other securities having
substantially the same terms as the QUIPS (the "Successor Securities")
so long as the Successor Securities rank the same as the QUIPS rank
with respect to Distributions and payments upon liquidation, redemption
and otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee as
the Holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the QUIPS are then
listed or quoted, if any;
(iv) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the QUIPS
(including any Successor
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Securities) or Units to be downgraded by any nationally recognized
statistical rating organization, if then so rated;
(v) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders of QUIPS (including
any Successor Securities) in any material respect (other than with respect
to any dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vii) prior to such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
opinion of an independent counsel to the Trust experienced in such matters
to the effect that:
(A) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders of QUIPS
(including any Successor Securities) in any material respect (other
than with respect to any dilution of the Holders' interest in the new
entity);
(B) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the
Trust nor the Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Trust or
the Successor Entity will continue to or will be classified as a
grantor trust for United States Federal income tax purposes.
(viii) the Sponsor or any permitted successor or assignee owns all of
the common securities of such Successor Entity and guarantees the
obligations of such Successor Entity under the Successor Securities at least
to the extent provided by the QUIPS Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge or convert with or into, or be replaced by, or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, any other entity or permit any other entity to
consolidate, amalgamate, merge or convert with or into, or replace it if such
consolidation, amalgamation, merger, conversion, replacement, conveyance,
transfer or lease would cause the
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Trust or the Successor Entity to be classified as an association taxable as a
corporation or as other than a grantor trust for United States Federal income
tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1. SPONSOR'S PURCHASE OF COMMON TRUST SECURITIES. At the
Closing Time, the Sponsor will purchase all of the Common Trust Securities then
issued by the Trust, in an amount at least equal to 3% of the total capital of
the Trust, at the same time as (and giving effect to) the QUIPS are issued and
sold.
SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR. In connection with the
issue and sale of the QUIPS, the Sponsor shall have the exclusive right and
responsibility to engage in the following activities (and any actions taken by
the Sponsor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):
(a) to prepare and file with the Commission and to execute, in
the case of the Registration Statements, on behalf of the Trust, (a) the
1933 Act Registration Statement, including pre-effective or post-effective
amendments to such registration statement and any and all amendments to
such registration statement filed pursuant to Rule 462(b) promulgated under
the Securities Act, relating to the registration under the Securities Act
of the Securities, (b) any preliminary prospectus or prospectus or
supplement thereto relating to the Securities required to be filed pursuant
to the Securities Act, and (c) the 1934 Act Registration Statement
(including all pre-effective and post-effective amendments thereto)
relating to the registration of the Securities of the Trust under the
Exchange Act;
(b) to determine the jurisdictions in which to take appropriate
action to qualify or register for sale all or part of the QUIPS and to do
any and all such acts, other than actions which must be taken by the Trust,
and advise the Trust of actions it must take, and prepare for execution and
filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable to register the Securities and in order to
comply with the securities or "Blue Sky" laws of any applicable
jurisdiction;
(c) to prepare, execute and file a listing application and all
other applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to permit the QUIPS and/or
the Units to trade or be quoted or listed in or on the New York
Stock Exchange or any other securities exchange, quotation system or the
Nasdaq National Market;
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(d) to negotiate the terms of, and execute, the Underwriting
Agreement and the Subscription Agreements, and to enter into and execute
and deliver and perform the same on behalf of the Trust; and
(e) notwithstanding anything to the contrary contained herein, the
Trust shall be authorized to issue and sell the QUIPS at an offering price
per QUIPS to be determined by the Sponsor in its sole and absolute
discretion, including, without limitation, at an offering price that is less
than the liquidation amount of $____ per QUIPS (the "Liquidation Amount"),
which offering price shall be specified in the Prospectus relating to the
Securities, and the Common Trust Securities shall be issued and sold at an
offering price per Common Trust Security that is equal to the offering price
per QUIPS.
SECTION 4.3. RIGHT TO PROCEED. The Sponsor acknowledges the rights of
the Holders of QUIPS, in the event that a failure of the Trust to pay
Distributions on the QUIPS is attributable to the failure of the Debenture
Issuer to pay interest or principal on the Debentures, to institute a proceeding
directly against the Debenture Issuer for enforcement of its payment obligations
on the Debentures.
ARTICLE V
TRUSTEES AND ADMINISTRATORS
SECTION 5.1. NUMBER OF TRUSTEES: APPOINTMENT OF CO-TRUSTEE. The number
of Trustees initially shall be two (2), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees and
Administrators; and
(b) after the issuance of any Securities, the number of Trustees
and Administrators may be increased or decreased by vote of the Holders of
a Majority in liquidation amount of the Common Trust Securities voting as
a class at a meeting of the Holders of the Common Trust Securities;
provided, however, that, there shall be a Delaware Trustee if required by
Section 5.2; and there shall be one Trustee who shall be the Property
Trustee, and such Trustee may also serve as Delaware Trustee if it meets
the applicable requirements. Notwithstanding the above, unless an Event of
Default shall have occurred and be continuing, at any time or times, for
the purpose of meeting the legal requirements of any jurisdiction in which
any part of the Trust's property may at the time be located, the Holders of
a Majority in liquidation amount of the Common Trust Securities acting as a
class at a meeting of the Holders of the Common Trust Securities, and the
Administrators shall have power to appoint one or more persons either to
act as a co-trustee, jointly with the Property Trustee, of all or any part
of the Trust's property, or to act as separate trustee of any such
property, in either case with such powers as may be
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provided in the instrument of appointment, and to vest in such person or
persons in such capacity any property, title, right or power deemed
necessary or desirable, subject to the provisions of this Declaration. In
case an Event of Default has occurred and is continuing, the Property
Trustee alone shall have power to make any such appointment of a co-trustee.
SECTION 5.2. DELAWARE TRUSTEE. If required by the Business Trust Act,
one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law; provided that, if the Property Trustee
has its principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law, then the Property Trustee shall
also be the Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3. PROPERTY TRUSTEE; ELIGIBILITY. (a) There shall at all
times be one Trustee (the "Property Trustee") which shall act as Property
Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a Person organized and doing business under the laws of the
United States of America or any State or Territory thereof or of the
District of Columbia, or a Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this Section
5.3(a)(ii), the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Trust Securities (as if it were
the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
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(d) The QUIPS Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
First Union National Bank
SECTION 5.4. CERTAIN QUALIFICATIONS OF ADMINISTRATORS AND DELAWARE
TRUSTEE GENERALLY. Each Administrator and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
SECTION 5.5. ADMINISTRATORS. The initial Administrators shall be:
Michael E. Sproule
c/o AmerUs Life Holdings, Inc.
699 Walnut Street
Des Moines, IA 50309
Michael G. Fraizer
c/o AmerUs Life Holdings, Inc.
699 Walnut Street
Des Moines, IA 50309
James A. Smallenberger
c/o AmerUs Life Holdings, Inc.
699 Walnut Street
Des Moines, IA 50309
(a) Except as expressly set forth in this Declaration and except
if a meeting of the Administrators is called with respect to any matter over
which the Administrators have power to act, any power of the Administrators
may be exercised by, or with the consent of, any one such Administrator.
(b) An Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Administrators
have power and authority to cause the Trust to execute pursuant to Section 3.6.
(c) The Holders of a Majority in liquidation amount of the Common
Trust Securities may appoint or remove any Administrator without cause at any
time.
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(d) An Administrator appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Administrator may resign from office (without need for prior
or subsequent accounting) by an instrument in writing signed by the
Administrator and delivered to the Sponsor and the Property Trustee, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein.
SECTION 5.6. DELAWARE TRUSTEE. The initial Delaware Trustee shall be:
First Union Trust Company, National Association
One Rodney Square
920 King Street
1st Floor
Wilmington, DE 19801
Attention: Corporate Trust Administration
SECTION 5.7. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES. (a)
Subject to Section 5.7(b) and to Section 6(b) of Annex I hereto, Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Trust Securities voting as
a class at a meeting of the Holders of the Common Trust Securities; and
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee
or the Delaware Trustee only, by vote of Holders of a Majority in
liquidation amount of the QUIPS voting as a class at a meeting of Holders of
the QUIPS.
(b)(i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.7(a) until a Successor Property Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Property Trustee and delivered to the Administrators and the
Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with Section 5.7(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Administrators and the Sponsor.
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(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective until the first to occur of the following:
(A) a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Trust Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.7 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition, at the expense of the Sponsor, any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 5.8. VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1,
a vacancy shall occur. A resolution certifying the
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existence of such vacancy by the Trustees or, if there are more than two, a
majority of the Trustees shall be conclusive evidence of the existence of such
vacancy. The vacancy shall be filled with a Trustee appointed in accordance with
Section 5.7.
SECTION 5.9. EFFECT OF VACANCIES. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee shall not operate to dissolve, terminate or
annul the Trust. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled by the appointment of a Trustee in accordance with
Section 5.7, the Property Trustee shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration.
SECTION 5.10. MEETINGS. If there is more than one Administrator,
meetings of the Administrators shall be held from time to time upon the call of
any Administrator. Regular meetings of the Administrators may be held at a time
and place fixed by resolution of the Administrators. Notice of any in-person
meetings of the Administrators shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier) not less
than 24 hours before such meeting. Notice of any telephonic meetings of the
Administrators or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The
presence (whether in person or by telephone) of an Administrator at a meeting
shall constitute a waiver of notice of such meeting except where an
Administrator attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been lawfully
called or convened. Unless provided otherwise in this Declaration, any action of
the Administrators may be taken at a meeting by vote of a majority of the
Administrators present (whether in person or by telephone) and eligible to vote
with respect to such matter, provided that a Quorum is present, or without a
meeting by the unanimous written consent of the Administrators. In the event
there is only one Administrator, any and all action of such Administrator shall
be evidenced by a written consent of such Administrator.
SECTION 5.11. DELEGATION OF POWER. (a) Any Trustee or Administrator
may, by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any documents contemplated in Section 3.6; and
(b) the Trustees shall have power to delegate from time to time to
such of their number or to other Persons the doing of such things and the
execution of such instruments either in the name of the Trust or the
names of the Trustees or otherwise as the Trustees may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 5.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any Person into which the Property Trustee or the Delaware Trustee, as
the case may be, that is
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not a natural person, may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of the Property Trustee or the Delaware Trustee, as
the case may be, shall be the successor of the Property Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing
(except to the extent required under the Business Trust Act) of any paper or any
further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. DISTRIBUTIONS. Each Holder shall receive Distributions pro
rata in accordance with the applicable terms of such Holder's Securities. If and
to the extent that the Debenture Issuer makes a payment of interest (including
Compounded Interest (as defined in the Indenture) and Additional Sums (as
defined in the Indenture)), premium and/or principal on the Debentures held by
the Property Trustee (the amount of any such payment being a "Payment Amount"),
the Property Trustee shall and is directed, to the extent funds are available
for that purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders in accordance with the respective terms of the Securities held
by them. In the event there is any money or other property held by or for the
Trust that is not accounted for hereunder, such property shall be distributed
pro rata among the Holders of Securities on the next Distribution Date.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES. (a) The
Administrators shall on behalf of the Trust issue one class of preferred
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "QUIPS") and one class
of common securities representing undivided beneficial interests in the assets
of the Trust having such terms as are set forth in Annex I (the "Common Trust
Securities"). The Trust shall issue no securities or other interests in the
assets of the Trust other than the QUIPS and the Common Trust Securities and the
aggregate liquidation amount of all Securities issued by the Trust and
outstanding at any time shall not exceed [$150 million].
(b) The QUIPS rank pari passu, and payment thereon shall be made
pro rata, with the Common Trust Securities except that, where an Event of
Default specified in clause (1), (2) or (3) of the definition of Event of
Default in the Indenture has occurred and is continuing, the rights of Holders
of the Common Trust Securities to payment in respect of Distributions and
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payments upon liquidation, redemption, repurchase and otherwise are subordinated
to the rights to payment of the Holders of the QUIPS.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the QUIPS as provided in this Declaration, the
QUIPS so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person that becomes a Holder or a QUIPS Beneficial Owner
in accordance with the terms of this Declaration, shall be deemed to have
expressly assented and agreed to the terms of, and shall be bound by,
this Declaration and the QUIPS Guarantee.
SECTION 7.2. EXECUTION AND AUTHENTICATION. (a) The Securities shall be
signed on behalf of the Trust by one or more Administrators. Such signature may
be the manual or facsimile signature of any Administrator. In case any
Administrator of the Trust who shall have signed any of the Securities shall
cease to be such Administrator before the Securities so signed shall be
delivered by the Trust, such Securities nevertheless may be delivered as though
the person who signed such Securities had not ceased to be such Administrator;
and any Securities may be signed on behalf of the Trust by such persons who, at
the actual date of execution of such Security, shall be the Administrators of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such an Administrator.
(b) A Common Trust Security shall be deemed validly issued upon
execution by an Administrator without any act of the Property Trustee. A QUIPS
shall not be valid until authenticated by the manual signature of an authorized
signatory of the Property Trustee. Such signature shall be conclusive evidence
that the QUIPS have been authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrator, the
Property Trustee shall authenticate the QUIPS for original issue. The Property
Trustee may appoint an authenticating agent acceptable to the Trust to
authenticate QUIPS. An authenticating agent may authenticate QUIPS whenever the
Property Trustee may do so. Each reference in this Declaration to authentication
by the Property Trustee includes authentication by such agent. An authenticating
agent has the same rights as the Property Trustee hereunder with respect to the
Sponsor or an Affiliate. The aggregate number of QUIPS outstanding at any time
shall not exceed the number set forth in the Terms in Annex I hereto except as
provided in Section 7.6.
SECTION 7.3. FORM AND DATING. (a) The QUIPS and the Property Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-1
and the Common Trust Securities shall be substantially in the form of Exhibit
A-2, each of which is hereby incorporated in and expressly made a part of this
Declaration. Certificates representing the
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Securities may be printed, lithographed or engraved or may be produced in any
other manner as is reasonably acceptable to the Administrators, as evidenced by
their execution thereof. The Securities may have letters, CUSIP or other
numbers, notations or other marks of identification or designation and such
legends or endorsements required by law, stock exchange rule, agreements to
which the Trust is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Trust). The Trust at the
direction of the Sponsor shall furnish any such legend not contained in Exhibit
A-1 to the Property Trustee in writing. Each QUIPS shall be dated the date of
its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part
of the terms of this Declaration and to the extent applicable, the Property
Trustee and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
(b) Global Securities. If no QUIPS constitute Pledged Securities
(as defined in the Master Unit Agreement), the QUIPS will be represented in the
form of one or more permanent global securities in definitive, fully
registered form with the global legend set forth in Exhibit A-1 hereto (a
"Global Security"), which shall be deposited on behalf of the holders of the
Units with the Property Trustee, at its Charlotte office, as custodian for the
Clearing Agency, and registered in the name of the Clearing Agency or a nominee
of the Clearing Agency, duly executed by the Trust and authenticated by the
Property Trustee as hereinafter provided. The number of QUIPS represented by
the Global Security may from time to time be increased or decreased by
adjustments made on the records of the Property Trustee and the Clearing Agency
or its nominee as hereinafter provided.
(c) Book-Entry Provisions. This Section 7.3(c) shall apply only
to the Global Security and such other QUIPS in global form as may be authorized
by the Trust to be deposited with or on behalf of the Clearing Agency.
The Trust shall execute and the Property Trustee shall, in accordance
with this Section 7.3, authenticate and make available for delivery initially
one or more Global Securities that (i) shall be registered in the name of Cede &
Co. or other nominee of such Clearing Agency and (ii) shall be delivered by the
Property Trustee to such Clearing Agency or pursuant to such Clearing Agency's
written instructions or, if no such written instructions are received by the
Property Trustee, held by the Property Trustee as custodian for the Clearing
Agency.
Members of, or participants in, the Clearing Agency ("Participants")
shall have no rights under this Declaration with respect to any Global Security
held on their behalf by the Clearing Agency or by the Property Trustee as the
custodian of the Clearing Agency or under such Global Security, and the Clearing
Agency may be treated by the Trust, the Property Trustee and any agent of the
Trust or the Property Trustee as the absolute owner of such Global Security for
all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Trust, the Property Trustee or any agent of the Trust or the
Property Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Clearing Agency or
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impair, as between the Clearing Agency and its Participants, the operation of
customary practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in any Global Security.
(d) Definitive QUIPS. Except as provided in Section 7.9, owners of
beneficial interests in a Global Security will not be entitled to receive
physical delivery of certificated QUIPS ("Definitive QUIPS").
SECTION 7.4. REGISTRAR, PAYING AGENT AND EXCHANGE AGENT. The Trust
shall maintain in Charlotte, North Carolina or at the principal offices of the
Property Trustee, (i) an office or agency where QUIPS may be presented for
registration of transfer ("Registrar") and (ii) an office or agency where QUIPS
may be presented for payment ("Paying Agent"). The Registrar shall keep a
register of the QUIPS and of their transfer. The Property Trustee may appoint
the Registrar and the Paying Agent and may appoint one or more co-registrars and
one or more additional paying agents in such other locations as it shall
determine. The term "Registrar" includes any additional registrar and the term
"Paying Agent" includes any additional paying agent. The Property Trustee may
change any Paying Agent or Registrar without prior notice to any Holder. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee (if not the Paying Agent) and the Administrators.
The Trust shall notify the Property Trustee of the name and address of any Agent
not a party to this Declaration. In the event that the Property Trustee shall no
longer be the Paying Agent or the Registrar, the Administrators shall appoint
another entity as Registrar or Paying Agent. The Trust or any of its Affiliates
may act as Paying Agent or Registrar. The Trust shall act as Paying Agent and
Registrar for the Common Trust Securities.
The Property Trustee will initially act as Registrar and Paying Agent
for the QUIPS.
SECTION 7.5. PAYING AGENT TO HOLD MONEY IN TRUST. The Trust shall
require each Paying Agent other than the Property Trustee to agree in writing
that the Paying Agent will hold in trust for the benefit of Holders or the
Property Trustee all money held by the Paying Agent for the payment of
liquidation amounts or Distributions on the Securities, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent to
pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee and
to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
SECTION 7.6. REPLACEMENT SECURITIES. If a Holder claims that a
certificate evidencing the Securities owned by it has been lost, destroyed or
wrongfully taken or if such
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certificate is mutilated and is surrendered to the Trust, or in the case of a
certificate evidencing QUIPS, to the Property Trustee, and the Property Trustee
shall receive evidence to its satisfaction of the destruction, loss or theft of
such certificate and there shall be delivered to the Property Trustee and the
Administrators such security or indemnity as may be required by them to keep
each of them harmless, then, in the absence of notice that such certificate
shall have been acquired by a protected purchaser, an Administrator on behalf of
the Trust shall execute (and in the case of a certificate evidencing QUIPS, the
Property Trustee shall authenticate) and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen certificate, a new certificate of
like denomination. In connection with the issuance of any new certificate under
this Section 7.6, the Registrar or the Administrators may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate certificate issued pursuant to
this Section 7.6 shall constitute conclusive evidence of or ownership interest
in the relevant Securities, as if originally issued, whether or not the lost,
stolen or destroyed certificate shall be found at any time.
SECTION 7.7. OUTSTANDING QUIPS. The QUIPS outstanding at any time are
all the QUIPS authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding. If a QUIPS is replaced paid or purchased, pursuant to
Section 7.6 or Section 7.10, it ceases to be outstanding unless the Property
Trustee receives proof satisfactory to it that the replaced QUIPS is held by a
protected purchaser. If QUIPS are considered paid in accordance with the terms
of this Declaration, they cease to be outstanding and Distributions on them
shall cease to accumulate.
A QUIPS does not cease to be outstanding because one of the Trust, the
Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8. QUIPS IN TREASURY. In determining whether the Holders of
the required amount of Securities have concurred in any direction, waiver or
consent, QUIPS owned by the Trust, the Sponsor or an Affiliate of the Sponsor,
as the case may be, shall be disregarded and deemed not to be outstanding,
except that for the purposes of determining whether the Property Trustee shall
be fully protected in relying on any such direction, waiver or consent, only
Securities which a Responsible Officer of the Property Trustee actually knows
are so owned shall be so disregarded.
SECTION 7.9. TEMPORARY SECURITIES. (a) Until definitive securities are
ready for delivery, the Trust may prepare and, in the case of the QUIPS, the
Property Trustee shall authenticate temporary securities. Temporary Securities
shall be substantially in the form of definitive securities but may have
variations that the Trust considers appropriate for temporary securities.
Without unreasonable delay, the Trust shall prepare and, in the case of the
QUIPS, the Property Trustee shall authenticate definitive securities in exchange
for temporary securities.
(b) A Global Security deposited with the Clearing Agency or with
the Property Trustee as custodian for the Clearing Agency pursuant to Section
7.3 shall be
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transferred to the beneficial owners thereof in the form of Definitive QUIPS
only if such transfer complies with Section 9.2 and (i) the Clearing Agency
notifies the Sponsor that it is unwilling or unable to continue as Clearing
Agency for such Global Security or if at any time such Clearing Agency ceases to
be a "clearing agency" registered under the Exchange Act and a clearing agency
is not appointed by the Sponsor within 90 days of such notice, (ii) a Default or
an Event of Default has occurred and is continuing, or (iii) the Trust at its
sole discretion elects to cause the issuance of Definitive QUIPS.
(c) Any Global Security that is transferable to the beneficial
owners thereof in the form of Definitive QUIPS pursuant to this Section 7.9
shall be surrendered by the Clearing Agency to the Property Trustee to
be so transferred, in whole or from time to time in part, without charge, and
the Property Trustee shall authenticate and make available for delivery, upon
such transfer of each portion of such Global Security, an equal aggregate
liquidation amount of Securities of authorized denominations in the form of
Definitive QUIPS. Any portion of a Global Security transferred pursuant to this
Section shall be registered in such names as the Clearing Agency shall direct.
(d) Subject to the provisions of Section 7.9(c), the Holder of a
Global Security may grant proxies and otherwise authorize any Person, including
Participants and Persons that may hold interests through Participants, to take
any action which such Holder is entitled to take under this Declaration or the
Securities.
(e) In the event of the occurrence of any of the events specified
in Section 7.9(b), the Trust will promptly make available to the Property
Trustee a reasonable supply of Definitive QUIPS in fully registered form
without distribution coupons.
SECTION 7.10. CANCELLATION. The Trust at any time may deliver QUIPS to
the Property Trustee for cancellation. The Registrar and Paying Agent shall
forward to the Property Trustee any QUIPS surrendered to them for registration
of transfer, redemption, repurchase, exchange or payment. The Property Trustee
shall promptly cancel all QUIPS surrendered for registration of transfer,
redemption, repurchase, exchange, payment, replacement or cancellation and shall
dispose of canceled QUIPS as the Trust directs, provided that the Property
Trustee shall not be obligated to destroy QUIPS. The Trust may not issue new
QUIPS to replace QUIPS that it has paid or that have been delivered to the
Property Trustee for cancellation or that any holder has exchanged.
SECTION 7.11. CUSIP NUMBERS. The Trust in issuing the QUIPS may use
"CUSIP" numbers (if then generally in use), and, if so, the Property Trustee
shall use "CUSIP" numbers in notices as a convenience to Holders of QUIPS;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the QUIPS or as contained in
any such notice and that reliance may be placed only on the other identification
numbers printed on the QUIPS, and any such notice shall not be affected by any
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defect in or omission of such numbers. The Sponsor will promptly notify the
Property Trustee of any change in the "CUSIP" numbers.
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1. DISSOLUTION OF TRUST. (a) The Trust shall automatically
dissolve:
(i) upon a Bankruptcy Event of the Sponsor;
(ii) upon the filing of a certificate of dissolution or liquidation
or its equivalent with respect to the Sponsor; or the revocation of the
Sponsor's charter and the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iii) after satisfaction of liabilities to creditors of the Trust as
required by applicable law, following the distribution of a Like Amount of
the Debentures to the Holders, provided that the Property Trustee has
received written notice from the Sponsor, as holder of all of the issued and
outstanding Common Trust Securities directing the Property Trustee, to
dissolve the Trust (which direction is optional, and except as otherwise
expressly provided below, within the discretion of the Sponsor);
(iv) upon the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the Securities;
(vi) upon the repayment of the Debentures or at such time as no
Debentures are outstanding; or
(vii) the expiration of the term of the Trust provided in Section
3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) or Section 8.1(c), and after the completion of
the winding up of the Trust's affairs, the Administrators shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) Subject to the conditions set forth in the Declaration and the
Indenture, the Sponsor may at any time direct the Property Trustee to dissolve
the Trust and, after satisfaction of liabilities to creditors of the Trust as
required by applicable law, cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust.
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(d) The provisions of Section 3.9, Article X and Section 11.2 shall
survive the termination of the Trust and the registration or removal of any
Trustee.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. TRANSFER OF SECURITIES. (a) Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration and the terms of the Securities. Any transfer or
purported transfer of any Security not made in accordance with this Declaration
shall be null and void.
(b) Subject to this Article IX, QUIPS may only be transferred, in
whole or in part, in accordance with the terms and conditions set forth in
this Declaration. To the fullest extent permitted by law, any transfer or
purported transfer of any security not made in accordance with this Declaration
shall be null and void.
(c) The Sponsor may not transfer the Common Trust Securities;
provided, however, that any permitted successor of the Sponsor under the
Indenture may succeed to the Sponsor's ownership of the Common Trust Securities.
(d) The Registrar shall provide for the registration of Securities
and of the transfer of Securities, which will be effected without charge but
only upon payment (with such indemnity as the Registrar may require) in respect
of any tax or other governmental charges that may be imposed in relation to it.
Upon surrender for registration of transfer of any Securities, the Registrar
shall cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered
for registration of transfer shall be canceled by the Property Trustee. A
transferee of a Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Security. By acceptance of a Security, each transferee shall be deemed to have
agreed to be bound by this Declaration.
SECTION 9.2. TRANSFER PROCEDURES AND RESTRICTIONS. (a) Transfer and
Exchange of Definitive QUIPS. When Definitive QUIPS are presented to the
Registrar or co-Registrar:
(i) to register the transfer of such Definitive QUIPS; or
(ii) to exchange such Definitive QUIPS which became mutilated,
destroyed, defaced, stolen or lost, for an equal number of Definitive QUIPS,
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the Registrar or co-registrar shall register the transfer or make the exchange
as requested; provided, however, that the Definitive QUIPS surrendered for
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and the
Registrar or co-registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing.
(b) Transfer of a Definitive QUIPS for a Beneficial Interest in a
Global Security. A Definitive QUIPS may not be exchanged for a beneficial
interest in a Global Security except upon satisfaction of the requirements set
forth below. Upon receipt by the Property Trustee of a Definitive QUIPS, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Property Trustee, together with written instructions
directing the Property Trustee to make, or to direct the Clearing Agency to
make, an adjustment on its books and records with respect to the appropriate
Global Security to reflect an increase in the number of the QUIPS represented by
such Global Security, then the Property Trustee shall cancel such Definitive
QUIPS and cause, or direct the Clearing Agency to cause, the aggregate number of
QUIPS represented by the appropriate Global Security to be increased
accordingly. If no Global Securities are then outstanding, the Trust shall issue
and the Property Trustee shall authenticate, upon written order of any
Administrator, an appropriate number of QUIPS in global form.
(c) Transfer and Exchange of Global Securities. Subject to Section
9.2(d), the transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Clearing Agency, in accordance with this
Declaration (including applicable restrictions on transfer set forth herein, if
any) and the procedures of the Clearing Agency therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive QUIPS.
(i) If none of the QUIPS constitute Pledged Securities, and are
thereafter represented by one or more permanent Global Securities in
definitive, fully registered form, any Person having a beneficial interest
in a Global Security may upon request, but only upon 20 days prior notice to
the Property Trustee, and if accompanied by the information specified below,
exchange such beneficial interest for a Definitive QUIPS representing the
same number of QUIPS. Upon receipt by the Property Trustee from the Clearing
Agency or its nominee on behalf of any Person having a beneficial interest
in a Global Security of written instructions or such other form of
instructions as is customary for the Clearing Agency or the Person
designated by the Clearing Agency as having such a beneficial interest in a
QUIPS and a certification from the transferor (in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1),
which may be submitted by facsimile, then the Property Trustee will cause
the aggregate number of QUIPS represented by Global Securities to be reduced
on its books and records and, following such reduction, the Trust will
execute and the Property Trustee will authenticate and make available for
delivery to the transferee a Definitive QUIPS.
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(ii) Definitive QUIPS issued in exchange for a beneficial interest
in a Global Security pursuant to this Section 9.2(d) shall be registered in
such names and in such authorized denominations as the Clearing Agency,
pursuant to instructions from its Participants or indirect
participants or otherwise, shall instruct the Property Trustee in writing.
The Property Trustee shall deliver such QUIPS to the Persons in whose names
such QUIPS are so registered in accordance with such instructions of the
Clearing Agency.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Declaration (other than the
provisions set forth in subsection (f) of this Section 9.2), a Global Security
may not be transferred as a whole except by the Clearing Agency to a nominee of
the Clearing Agency or another nominee of the Clearing Agency or by the Clearing
Agency or any such nominee to a successor Clearing Agency or a nominee of such
successor Clearing Agency.
(f) Authentication of Definitive QUIPS. If at any time:
(i) there occurs a Default or an Event of Default which is
continuing, or
(ii) the Trust, at the direction of the Sponsor, as Holder of all of
the issued and outstanding QUIPS, notifies the Property Trustee in writing
that it elects to cause the issuance of Definitive QUIPS under this
Declaration, then the Trust will execute, and the Property Trustee, upon
receipt of a written order of the Trust signed by one Administrator
requesting the authentication and delivery of Definitive QUIPS to the
Persons designated by the Trust, will authenticate and make available for
delivery Definitive QUIPS, equal in number to the number of QUIPS
represented by the Global Securities, in exchange for such Global
Securities.
(g) Cancellation or Adjustment of Global Security. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive QUIPS to the extent permitted by this Declaration or redeemed,
repurchased or canceled in accordance with the terms of this Declaration, such
Global Security shall be returned to the Clearing Agency for cancellation or
retained and canceled by the Property Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Security is exchanged for
Definitive QUIPS, QUIPS represented by such Global Security shall be reduced
and an adjustment shall be made on the books and records of the Property
Trustee (if it is then the custodian for such Global Security) with respect to
such Global Security, by the Property Trustee or the Securities custodian, to
reflect such reduction.
(h) Obligations with Respect to Transfers and Exchanges of QUIPS.
(i) To permit registrations of transfers and exchanges, an
Administrator on behalf of the Trust shall execute and the Property Trustee
shall authenticate Definitive
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QUIPS and Global Securities at the Registrar's or co-Registrar's request in
accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust or
the Sponsor may require) in respect of any tax or other governmental charge
that may be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of QUIPS during a period beginning at the
opening of business 15 days before the day of mailing of a notice of
redemption of QUIPS and ending at the close of business on the day of such
mailing.
(iv) Prior to the due presentation for registrations of transfer of
any QUIPS, the Trust, the Property Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the person in whose name a QUIPS is
registered as the absolute owner of such QUIPS for the purpose of receiving
Distributions on such QUIPS and for all other purposes whatsoever, and none
of the Trust, the Property Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(v) All QUIPS issued upon any transfer or exchange pursuant to the
terms of this Declaration shall evidence the same security and shall be
entitled to the same benefits under this Declaration as the QUIPS
surrendered upon such transfer or exchange.
(i) No Obligation of the Property Trustee.
The Property Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a Participant in the Clearing Agency
or other Person with respect to the accuracy of the records of the Clearing
Agency or its nominee or of any Participant thereof, with respect to any
ownership interest in the QUIPS or with respect to the delivery to any
Participant, beneficial owner or other Person (other than the Clearing
Agency) of any notice (including any notice of redemption) or the payment of
any amount, under or with respect to such QUIPS. All notices and
communications to be given to the Holders and all payments to be made to
Holders under the QUIPS shall be given or made only to or upon the order of
the registered Holders (which shall be the Clearing Agency or its nominee in
the case of a Global Security). The rights of beneficial owners in any
Global Security shall be exercised only through the Clearing Agency subject
to the applicable rules and procedures of the Clearing Agency. The Property
Trustee may conclusively rely and shall be fully protected in relying upon
information furnished by the Clearing Agency or any agent thereof with
respect to its Participants and any beneficial owners.
SECTION 9.3. DEEMED SECURITY HOLDERS. Except when QUIPS constitute
Pledged Securities held for the benefit of the holders of Units, the Trustees
may treat the Person in whose
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name any Security shall be registered on the books and records of the Trust as
the sole owner of such Security for purposes of receiving Distributions and for
all other purposes whatsoever and, accordingly, shall not be bound to recognize
any equitable or other claim to or interest in such Security on the part of any
Person, whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4. BOOK ENTRY INTERESTS. Global Securities shall initially be
registered on the books and records of the Trust in the name of Cede & Co., the
nominee of the Clearing Agency, and no QUIPS Beneficial Owner will receive a
definitive certificate representing such QUIPS Beneficial Owner's interests in
such Global Securities, except as provided in Section 9.2. Unless and until
definitive, fully registered certificates representing QUIPS have been issued to
the QUIPS Beneficial Owners pursuant to Section 9.2 and Section 7.9:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Securities and receiving approvals, votes or
consents hereunder) as the sole holder of the Global Securities and shall have
no obligation to the QUIPS Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this Section
9.4 shall control; and
(d) the rights of the QUIPS Beneficial Owners shall be exercised
only through the Clearing Agency and shall be limited to those established by
law and agreements between such QUIPS Beneficial Owners and the Clearing Agency
and/or the Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Securities to such Clearing Agency Participants.
DTC will make book entry transfers among the Clearing Agency Participants.
SECTION 9.5. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Holders of QUIPS is required to be given by a Trustee under
this Declaration and such QUIPS are in the form of Global Securities, such
Trustee shall give all such notices and communications specified herein to be
given to the Holders of Global Securities to the Clearing Agency, and shall have
no notice obligations to the QUIPS Beneficial Owners.
SECTION 9.6. APPOINTMENT OF SUCCESSOR CLEARING AGENCY. If any Clearing
Agency elects to discontinue its services as securities depositary with respect
to the QUIPS, the Administrators may, in their sole discretion, appoint a
successor Clearing Agency with respect to such QUIPS.
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ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES,
ADMINISTRATORS OR OTHERS
SECTION 10.1. LIABILITY. (a) Except as expressly set forth in this
Declaration, the Securities Guarantees and the terms of the Securities, the
Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities which
shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the QUIPS shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2. EXCULPATION. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Property Trustee, by reason of such Trustee's
negligence) or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3. FIDUCIARY DUTY. (a) To the extent that, at law or in
equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the
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Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons and any Indemnified Person; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner
that is, or provide terms that are, fair and reasonable to the Trust or any
Holder of Securities.
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or by
applicable law.
SECTION 10.4. INDEMNIFICATION. (a)(i) The Sponsor shall indemnify, to
the full extent permitted by law, any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason
of the fact that he is or was a Company Indemnified Person against expenses
(including attorneys' fees and expenses), judgments, fines and amounts paid in
settlement
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actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Trust to procure a judgment in its favor by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Trust and except that no such indemnification shall
be made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust unless
and only to the extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a), or in defense of any claim, issue or matter therein, he
shall be indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Sponsor only
as authorized in the specific case upon a determination that indemnification
of the Company Indemnified Person is proper in the circumstances because he has
met the applicable standard of conduct set forth in paragraphs (i) and (ii).
Such determination shall be made by the Holder of the Common Trust Securities.
(v) To the fullest extent permitted by law, expenses (including
attorneys' fees and expenses) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall
be paid by the Sponsor in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such Company
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Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Sponsor as authorized in this
Section 10.4(a). Notwithstanding the foregoing, no advance shall be made by the
Sponsor if a determination is reasonably and promptly made by the Holder of the
Common Trust Securities, that, based upon the facts known to the Holder of the
Common Trust Securities at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person did not
believe to be in or not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company Indemnified Person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Holder of the Common
Trust Securities reasonably determines that such person deliberately breached
his duty to the Trust or its Common Trust Securities or QUIPS Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Holders of the QUIPS
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. All rights to indemnification under
this Section 10.4(a) shall be deemed to be provided by a contract between the
Sponsor and each Company Indemnified Person who serves in such capacity at any
time while this Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain insurance on
behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
10.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
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(b) The Sponsor agrees, to the fullest extent permitted by law,
to (A) indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any
Affiliate of the Property Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents of the Property Trustee and the
Delaware Trustee (each of the Persons in (i) through (iv), including the
Property Trustee and the Delaware Trustee in their respective individual
capacities, being referred to as a "Fiduciary Indemnified Person") for, and to
hold each Fiduciary Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense including taxes (other than taxes based on
the income of such Fiduciary Indemnified Person) incurred without gross
negligence (or, in the case of the Property Trustee, incurred without ordinary
negligence) or bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder and (B) to
advance, from time to time, prior to the final disposition of any claim,
demand, action, suit or proceeding for which indemnification is authorized
pursuant to subsection (b)(A) above, any expenses (including reasonable legal
fees) incurred by a Fiduciary Indemnified Person in defending such claim,
demand, action, suit or proceeding upon receipt by the Sponsor of an
undertaking by or on behalf of the Fiduciary Indemnified Person to repay such
amount if it shall be determined that the Fiduciary Indemnified Person is not
entitled to be indemnified as authorized in subsection (b)(A) above. The
obligation to indemnify and advance expenses as set forth in this Section
10.4(b) shall survive the satisfaction and discharge of this Declaration and
the Trust and shall survive the resignation or removal of such Fiduciary
Indemnified Person.
(c) The Sponsor agrees to pay the Property Trustee and the Delaware
Trustee, from time to time, such compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by the Property Trustee and the Delaware Trustee
hereunder as may be mutually agreed upon in writing by the Sponsor and the
Property Trustee or the Delaware Trustee, as the case may be, and, except as
otherwise expressly provided herein, to reimburse the Property Trustee and the
Delaware Trustee upon its or their request for all reasonable expenses
(including counsel fees and expenses), disbursements and advances incurred or
made by the Property Trustee or the Delaware Trustee, as the case may be, in
accordance with the provisions of this Declaration.
SECTION 10.5. OUTSIDE BUSINESSES. Any Covered Person, the Sponsor, the
Delaware Trustee and the Property Trustee (subject to Section 5.3(c)) may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders shall have no rights by virtue of
this Declaration in and to such independent ventures or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive with
the business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee, or the Property Trustee shall be
obligated to present any particular investment or other opportunity to the Trust
even if such opportunity is of a character that, if presented to the
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Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the
Delaware Trustee and the Property Trustee shall have the right to take for its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Covered Person,
the Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
or may act as depositary, trustee or agent for, or act on any committee or body
of holders of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1. FISCAL YEAR. The fiscal year ("Fiscal Year") of the Trust
shall be the calendar year, or such other year as is required by the Code.
SECTION 11.2. CERTAIN ACCOUNTING MATTERS. (a) At all times during the
existence of the Trust, the Administrators shall keep, or cause to be kept, full
books of account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of account shall be
maintained on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied. The Trust shall use the
accrual method of accounting for United States Federal income tax purposes. The
books of account and the records of the Trust shall be examined by and reported
upon as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Administrators.
(b) The Administrators shall cause to be duly prepared and
delivered to each of the Holders, any annual United States Federal income tax
information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code
and the Treasury Regulations. Notwithstanding any right under the Code to
deliver any such statement at a later date, the Administrators shall endeavor
to deliver all such information statements within 90 days after the end of each
Fiscal Year of the Trust.
(c) The Administrators shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States Federal income
tax return, on a Form 1041 or such other form required by United States
Federal income tax law, and any other annual income tax returns required to be
filed by the Administrators on behalf of the Trust with any state or local
taxing authority.
SECTION 11.3. BANKING. The Trust shall maintain one or more bank
accounts in the name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by the Property
Trustee shall be made directly to the Property Trustee Account and no other
funds of the Trust shall be deposited in the Property Trustee Account. The sole
signatories for such accounts shall be designated by the Administrators;
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provided, however, that the Property Trustee shall designate the signatories for
the Property Trustee Account.
SECTION 11.4. WITHHOLDING. The Trust and the Administrators shall
comply with all withholding requirements under United States Federal, state and
local law. The Trust shall request, and the Holders shall provide to the Trust,
such forms or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations and forms as
shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Administrators
shall file required forms with applicable jurisdictions and, unless an exemption
from withholding is properly established by a Holder, shall remit amounts
withheld with respect to the Holder to applicable jurisdictions. To the extent
that the Trust is required to withhold and pay over any amounts to any authority
with respect to Distributions or allocations to any Holder, the amount withheld
shall be deemed to be a Distribution in the amount of the withholding to the
Holder. In the event of any claimed over withholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. AMENDMENTS. (a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities, this Declaration may
only be amended by a written instrument approved and executed by:
(i) if the amendment affects the rights, powers, duties,
obligations or immunities of the Administrators, the Administrators
(or if there are more than two Administrators, a majority of the
Administrators);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from the Sponsor
that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
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(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee or
the Delaware Trustee, the Property Trustee and the Delaware Trustee shall
have first received:
(A) an Officers' Certificate from the Sponsor that such
amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); and
(B) an Opinion of Counsel that such amendment is permitted
by, and conforms to, the terms of this Declaration (including the
terms of the Securities); provided, however, that the Property
Trustee shall not be required to sign any such amendment; and
(C) a consent in writing by the Property Trustee or the
Delaware Trustee, as the case may be (which consent may be withheld in
such Trustee's sole discretion); and
(iii) unless the Property Trustee shall have first received an
Opinion of Counsel that such amendment or the exercise of any power granted
to the Property Trustee or Delaware Trustee in accordance with such
amendment will not:
(A) cause the Trust to be classified for purposes of United
States Federal income taxation as an association taxable as a
corporation or as other than a grantor trust; or
(B) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(c) Except as provided in Section 12.1(d), (e) or (h), no
amendment shall be made, and any such purported amendment shall be void and
ineffective unless the Holders of a Majority in liquidation amount of the QUIPS
(or Units) shall have consented to such amendment.
(d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the amount or timing of any Distribution or
other payment on the Securities (including payment of the Put Price (as defined
in the Indenture) or otherwise adversely affect the amount of any distribution
required to be made in respect of the Securities as of a specified date or (ii)
restrict the right of a Holder of Securities to institute suit for the
enforcement of any such payment on or after such date.
(e) Section 9.1(b) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities.
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(f) Article Four shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Trust Securities.
(g) The rights of the holders of the Common Trust Securities under
Article Five to increase or decrease the number of, and appoint and remove
Trustees or Administrators shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Trust Securities.
(h) Notwithstanding Section 12.1(c), this Declaration may be
amended from time to time by the Sponsor and the Property Trustee without the
consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any provision in this
Declaration that may be inconsistent with any other provision of this
Declaration or to make any other provisions with respect to matters or
questions arising under this Declaration which shall not be inconsistent
with the other provisions of the Declaration; or
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust
will be classified for United States Federal income tax purposes as a
grantor trust or as other than an association taxable as a corporation at
all times that any Securities are outstanding or to ensure that the Trust
will not be required to register as an Investment Company under the
Investment Company Act;
provided, however, that in the case of clauses (i) and (ii), such action shall
not adversely affect in any material respect the interests of the Holders, and
any amendments of this Declaration pursuant to Section 12.1(h) shall become
effective when notice thereof is given to the Holders of the Securities.
(i) If so directed by all of the Holders of a class of Securities
at a meeting of the Holders of such class, the Trustees, the Sponsor and
the Trust shall take such actions as are necessary to amend this
Declaration and to permit Holders of such class to reconstitute all of the
Securities of such class with a liquidation amount of $1,000 per each
Security of such class.
SECTION 12.2. MEETINGS OF THE HOLDERS; ACTION BY WRITTEN CONSENT. (a)
Meetings of the Holders of any class of Securities may be called at any time by
the Administrators (or as otherwise provided in the terms of the Securities) to
consider and act on any matter on which Holders of such class of Securities are
entitled to act under the terms of this Declaration, the terms of the Securities
or the rules of any stock exchange on which the QUIPS listed or admitted for
trading. The Administrators shall call a meeting of the Holders of such class if
directed to do so by the Holders of at least 10% in liquidation amount of such
class of Securities. Such direction shall be given by delivering to the
Administrators one or more notices
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in a writing stating that the signing Holders of Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Holders calling a meeting shall specify in writing the
Securities held by the Holders exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given by the Property
Trustee to all the Holders of Securities having a right to vote thereat at
least seven days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the Holders is permitted
or required under this Declaration or the rules of any stock exchange on
which the QUIPS are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders. Any action that may be
taken at a meeting of the Holders of Securities may be taken without a
meeting if a consent in writing setting forth the action so taken is signed
by the Holders of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders having a right to vote
thereon were present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders entitled to vote who have
not consented in writing. The Administrators may specify that any written
ballot submitted to the Security Holder for the purpose of taking any
action without a meeting shall be returned to the Trust within the time
specified by the Administrators;
(ii) each Holder may authorize any Person to act for it by proxy
on all matters in which a Holder is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting.
No proxy shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the discretion of the Holder of Securities executing it.
Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation
Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware corporation and
the Holders were stockholders of a Delaware corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrators or by such other Person that the Administrators may
designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the QUIPS or Units are then listed or trading, otherwise
provides, the Administrators, in their sole discretion, shall establish all
other provisions relating to meetings of Holders, including notice of the
time, place or purpose of any meeting at which any matter is to be voted on
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by any Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE. The
Trustee that acts as initial Property Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Property Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(a) The Property Trustee is a national banking association with
trust powers and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee and under Delaware law
(excluding securities laws) constitutes a legal, valid and binding obligation
of the Property Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at
law);
(c) The execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with
or notice to, any Federal banking authority is required for the execution,
delivery or performance by the Property Trustee of this Declaration.
SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE. The
Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
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(a) The Delaware Trustee is a national banking association with
trust powers and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Delaware
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. This Declaration has been duly
executed and delivered by the Delaware Trustee under Delaware law (excluding
securities laws) and constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement
of such remedies is considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with
or notice to, any federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration; and
(d) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. NOTICES. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrators at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders):
AmerUs Capital II
c/o AmerUs Life Holdings
699 Walnut Street
Des Moines, IA 50309
Attention: James A. Smallenberger, Administrator
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to the
Holders):
First Union Trust Company, National Association
One Rodney Square
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920 King Street
1st Floor
Wilmington, DE 19801
Attention: Corporate Trust Administration
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property Trustee
may give notice of to the Holders):
First Union National Bank
230 South Street
Charlotte, NC 28288-1179
Attention: Corporate Trust Group
(d) if given to the Holder of the Common Trust Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Trust Securities may give notice to the Trust):
AmerUs Life Holdings
699 Walnut Street
Des Moines, IA 50309
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2. GOVERNING LAW. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
SECTION 14.3. INTENTION OF THE PARTIES. It is the intention of the
parties hereto that for United States Federal income tax purposes the Trust be
classified as a grantor trust and the Debentures as indebtedness. The provisions
of this Declaration shall be interpreted to further this intention of the
parties. The parties hereto agree and any Holder by the acquisition of a
Security shall be deemed to have agreed to treat the Trust as a grantor trust
and the Debentures as indebtedness in all tax and accounting filings and
reports.
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SECTION 14.4. HEADINGS. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 14.5. SUCCESSORS AND ASSIGNS. Whenever in this Declaration any
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed.
SECTION 14.6. PARTIAL ENFORCEABILITY. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 14.7. COUNTERPARTS. This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
----------------------------
Michael E. Sproule
as Administrator
----------------------------
Michael G. Fraizer
as Administrator
----------------------------
James A. Smallenberger
as Administrator
FIRST UNION TRUST COMPANY,
National Association,
as Delaware Trustee
By:
-------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Property Trustee
By:
-------------------------
Name:
Title:
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AMERUS LIFE HOLDINGS, INC.,
as Sponsor
By:
-------------------------
Name:
Title:
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<PAGE> 68
ANNEX I
TERMS OF
__% QUARTERLY INCOME PREFERRED SECURITIES
__% COMMON TRUST SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of June __, 1998 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Quarterly Income Preferred Securities. _______ Quarterly Income
Preferred Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of ___________________ ($__________), and
each with a liquidation amount with respect to the assets of the Trust of $_____
per security, are hereby designated for the purposes of identification only as
"___% Quarterly Income Preferred Securities" (the "QUIPS"). The certificates
evidencing the QUIPS shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any exchange or quotation system on which the QUIPS are listed, traded or
quoted, if any.
(b) Common Trust Securities. _______ Common Trust Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the
Trust of _______________ ($________) and a liquidation amount with respect to
the assets of the Trust of $_______ per security, are hereby designated for the
purposes of identification only as "___% Common Trust Securities" (the "Common
Trust Securities"). The certificates evidencing the Common Trust Securities
shall be substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will initially be fixed at
a rate per annum of ___% (the "Initial Coupon Rate") of the stated liquidation
amount of $_______ per Security (the "Liquidation Amount") and, on and after the
Call Option Expiration Date (as defined in the Indenture) if the Rate Increase
Agent (as defined in the Indenture), makes a Rate Increase Determination (as
defined in the Indenture), at a rate per annum that is equal to the Increased
Distribution Rate (as defined in the Indenture) of the Liquidation Amount. The
Initial Coupon Rate and the Increased Distribution Rate as in effect at any
applicable time are
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hereinafter referred to as the "Coupon Rate". Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than one
quarterly period will bear additional distributions thereon compounded quarterly
at the rate of ___% per annum plus, for the period after the Call Option
Exercise Date, the amount (if any), by which the Initial Coupon Rate shall have
been increased (together, the "Deferral Rate") (to the extent permitted by
applicable law). The term "Distributions," as used herein, includes
distributions of any such interest unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property Trustee has funds on
hand legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from _________ __, 1998, and will be payable
quarterly in arrears on __________ __, __________ __, __________ __, 1998 and
_________ __, 1998 of each year, commencing on __________ __, 1998 (each, a
"Distribution Date"), except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months. As
long as no Event of Default has occurred and is continuing under the Indenture,
the Debenture Issuer has the right under the Indenture to elect to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures (each an "Extension Period"), during which
Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall end on a date other than an Interest
Payment Date for the Debentures or extend beyond the Maturity Date of the
Debentures. During any such Extension Period, the Debenture Issuer may 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 Debenture Issuer's
capital stock (which includes common and preferred stock), (ii) make any payment
of principal of or premium, if any, or interest on or repay, repurchase or
redeem any debt securities of the Debenture Issuer that rank pari passu with or
junior in right of payment to the Debentures or (iii) make any guarantee
payments with respect to any guarantee by the Debenture Issuer of any securities
of any subsidiary of the Debenture Issuer if such guarantee ranks pari passu
with or junior in right of payment to the Debentures (other than, in the case of
clauses (i), (ii) and (iii), (A) dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares of, common stock
of the Debenture Issuer, (B) any declaration of a dividend in connection with
the implementation of a stockholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (C) payments under the QUIPS Guarantee, (D) as a result
of a reclassification of the Debenture Issuer's capital stock solely into shares
of one or more classes or series of the Debenture Issuer's capital stock or the
exchange or conversion of one class or series of the Debenture Issuer's capital
stock for another class or series of the Debenture Issuer's capital stock, (E)
the purchase of fractional interests in shares of the Debenture Issuer's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, and (F) purchases of common stock of
the Debenture Issuer in connection with the satisfaction by the Debenture Issuer
of its obligations (including purchases related to the issuance of such common
stock or rights) under any of the Debenture Issuer's
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benefit plans for its and its subsidiaries' directors, officers or employees or
any of the Debenture Issuer's dividend reinvestment plans). As a consequence of
such deferral, Distributions will also be deferred. Despite such deferral,
Distributions will continue to accumulate with additional Distributions thereon
(to the extent permitted by applicable law but not at a rate greater than the
rate at which interest is then accruing on the Debentures) at the Deferral Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period may not extend beyond the Maturity Date of the Debentures. Upon
the termination of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates which shall be one Business Day prior to the relevant Distribution
Date, unless the QUIPS are issued in certificated form, in which case the
regular record date for such Distributions shall be the first day of the month
in which the relevant Distribution Date falls, which Distribution Dates
correspond to the interest payment dates on the Debentures. The relevant record
dates for the Common Trust Securities shall be the same as the record dates for
the QUIPS. Distributions payable on any Securities that are not punctually paid
on any Distribution Date, as a result of the Debenture Issuer having failed to
make a payment under the Debentures, will cease to be payable to the Holder on
the relevant record date, and such defaulted Distribution will instead be
payable to the Person in whose name such Securities are registered on the
special record date or other specified date determined in accordance with the
Indenture. If any date on which Distributions are payable on the Securities is
not a Business Day, then payment of the Distribution payable on such date will
be made on the next succeeding day that is a Business Day (and so long as such
payment is made on such next succeeding day, without any interest or other
payment in respect of any such delay), except 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 such payment was originally payable.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any dissolution of the Trust or the Sponsor otherwise
gives notice of its election to dissolve the Trust pursuant to Section
8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrators as expeditiously as the Administrators determine to be possible
by distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to the Holders of the Securities a Like Amount (as
defined below) of the Debentures (the "Liquidation Distribution").
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<PAGE> 71
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having an aggregate Liquidation Amount equal to the principal amount
of Debentures to be paid in accordance with their terms and (ii) with respect to
a distribution of Debentures upon the liquidation of the Trust, Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Securities of the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets on hand legally available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis,
except that if a Event of Default has occurred and is continuing, the QUIPS
shall have priority over the Common Trust Securities.
4. Redemption and Distribution.
(a) The QUIPS will be subject to mandatory redemption on the Maturity
Date of the Debentures out of the proceeds of the repayment of the Debentures at
Maturity. Upon the repayment of the Debentures at maturity, the proceeds from
such repayment shall be simultaneously applied by the Property Trustee to redeem
a Like Amount of the Securities at a redemption price equal to the principal of
and accrued and unpaid interest on the Debentures as of the Maturity Date
thereof (the "Final Redemption Price").
(b) On and from the date fixed by the Administrators for any
distribution of Debentures and liquidation of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) the Clearing Agency or its nominee
(or any successor Clearing Agency or its nominee), as the Holder of the
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures and bearing
accrued and unpaid interest in an amount equal to the accumulated and unpaid
Distributions on such Securities until such certificates are presented to the
registrar for the Debentures for transfer or reissue, whereupon the Debenture
Issuer will issue to such Holder, and the Debenture Trustee will authenticate, a
certificate representing such Debentures.
(c) The procedure with respect to redemptions or distributions of
Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be redeemed or
exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be
the Maturity Date of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are
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<PAGE> 72
given pursuant to this Section 4(c)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders. Each Redemption/Distribution
Notice shall be addressed to the Holders of Securities at the address of
each such Holder appearing in the books and records of the Trust. No defect
in the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, then to the extent funds are legally
available, (A) with respect to QUIPS issued in book-entry form, by 12:00
noon, New York City time, on the Maturity Date, provided that the Debenture
Issuer has paid the Property Trustee a sufficient amount of cash in
connection with the maturity of the Debentures by 10:00 a.m., New York City
time, on the Maturity Date, the Property Trustee will deposit, or cause the
Paying Agent to Deposit, irrevocably with the Clearing Agency or its nominee
(or successor Clearing Agency or its nominee) funds sufficient to pay the
Final Redemption Price and will give the Clearing Agency irrevocable
instructions and authority to pay the Final Redemption Price to the Clearing
Agency Participants, and (B) with respect to QUIPS issued in certificated
form and Common Trust Securities, provided that the Debenture Issuer has
paid the Property Trustee a sufficient amount of cash in connection with the
maturity of the Debentures, the Property Trustee will give irrevocable
instructions and authority to the Paying Agent and will irrevocably deposit
with the Paying Agent funds sufficient to pay the Final Redemption Price to
the Holders thereof. If a Redemption/Distribution Notice shall have been
given and funds deposited as required, if applicable, then immediately prior
to the close of business on the date of such deposit distributions will
cease to accumulate on the Securities and all rights of Holders will cease,
except the right of the Holders of such Securities to receive the Final
Redemption Price, but without interest on such Final Redemption Price, and
such Securities shall cease to be outstanding.
(iii) Payment of accumulated and unpaid Distributions on the Maturity
Date of the Debentures will be subject to the rights of Holders of
Securities on the close of business on a regular record date in respect of a
Distribution Date occurring on or prior to such Maturity Date.
If the Maturity Date of the Debentures is not a Business Day, then
payment of the Final Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and so long as such payment
is made on the next succeeding Business Day, without any interest or other
payment in respect of any such delay), with the same force and effect as if
made on such date fixed for redemption. If payment of the Final Redemption
Price is improperly withheld or refused and not paid either by the Trust or
by the Sponsor as guarantor pursuant to the relevant Securities Guarantee,
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Distributions on such Securities will continue to accumulate at the Coupon
Rate on the Final Redemption Price from the Maturity Date to the actual date
of payment.
(iv) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the QUIPS, the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee) if
the Global Certificates have been issued or, if Definitive QUIPS have been
issued, to the Holder thereof, and (B) in respect of the Common Trust
Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States Federal securities laws and banking laws),
provided the acquiror is not the Holder of the Common Trust Securities or
the obligor under the Indenture, the Sponsor or any of its subsidiaries may
at any time and from time to time purchase outstanding QUIPS by tender, in
the open market or by private agreement.
5. Voting Rights - QUIPS.
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the QUIPS will have no
voting rights. The Administrators are required to call a meeting of the Holders
of the QUIPS if directed to do so by the Holders of at least 10% in liquidation
amount of the QUIPS.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding QUIPS; provided, however, that where a consent under the
Indenture would require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Trustees without the prior
approval of each Holder of the QUIPS. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the QUIPS
except by subsequent vote of such Holders. The Property Trustee shall notify
each Holder of Securities of any notice of default with respect to the
Debentures. In addition to obtaining the foregoing approvals of such Holders
prior to taking any of the foregoing actions, the Property Trustee shall obtain
an Opinion of Counsel experienced in such matters to the effect that the Trust
will not be classified as an association taxable as a corporation for United
States Federal income tax purposes or as other than a grantor trust on account
of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if
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<PAGE> 74
any, or interest on the Debentures on the due date therefor (after giving effect
to any Extension Period), then a Holder of QUIPS may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest on a Like Amount of Debentures (a "Direct Action")
on or after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Common Trust Securities Holder will
be subrogated to the rights of such Holder of QUIPS to the extent of any payment
made by the Debenture Issuer to such Holder of QUIPS in such Direct Action,
provided, however, that no such subrogation right may be exercised so long as an
Event of Default has occurred and is continuing. The Holders of QUIPS will not
be able to exercise directly any other remedy available to the holders of the
Debentures.
Any approval or direction of Holders of QUIPS may be given at a
separate meeting of such Holders of QUIPS convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
Holders of QUIPS are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed to each Holder of
record of QUIPS. Each such notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the QUIPS will be required for the
Trust to redeem and cancel QUIPS or to distribute the Debentures in accordance
with the Declaration and the terms of the Securities.
Notwithstanding that Holders of QUIPS are entitled to vote or consent
under any of the circumstances described above, any of the QUIPS that are owned
by the Sponsor or any Affiliate of the Sponsor shall not be entitled to vote or
consent and shall, for purposes of such vote or consent, be treated as if they
were not outstanding.
6. Voting Rights - Common Trust Securities.
(a) Except as provided under Sections 6(b), and 7, in the Business
Trust Act, and as otherwise required by law and the Declaration, the Holders of
the Common Trust Securities will have no voting rights.
(b) Unless an Event of Default under the Declaration shall have
occurred and be continuing, any Trustee may be removed at any time by the holder
of the Common Trust Securities. If an Event of Default under the Declaration has
occurred and is continuing, the Property Trustee and the Delaware Trustee may be
removed at such time by the Holders of a Majority in liquidation amount of the
outstanding QUIPS. In no event will the Holders of the QUIPS have the right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the holder of the Common Trust Securities.
No
A-7
<PAGE> 75
resignation or removal of a Trustee and no appointment of a successor trustee
shall be effective until the acceptance of appointment by the successor trustee
in accordance with the provisions of the Declaration.
No vote or consent of the Holders of the Common Trust Securities will
be required for the Trust to redeem and cancel Common Trust Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration.
(a) The provisions set forth under Section 12.1 of the Declaration and
this Section 7 shall govern any amendments to the Declaration.
(b) Notwithstanding any provisions of the Declaration and the
provisions of Section 3.16(b) of the Trust Indenture Act, the right of any
Holder of QUIPS to receive payment of distributions and other payments upon
redemption, repurchase or otherwise, on or after their respective due dates, or
to institute a suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder. For the protection and enforcement of the foregoing provision, each and
every Holder of QUIPS shall be entitled to such relief as can be given either at
law or equity.
8. Right to Exercise Put Options.
Each holder of QUIPS will have the right to require the Trust to
distribute Debentures having an aggregate principal amount equal to the
aggregate Liquidation Amount of such QUIPS to the Put Agent (as defined in the
Indenture), on the Stock Purchase Date (as defined in the Indenture), in
exchange for such QUIPS, in connection with the concurrent exercise by the Put
Agent on behalf of each such holder of the Debenture Put Option (as defined in
the Indenture) related thereto.
A holder of QUIPS may exercise the right referred to above by
presenting and surrendering the certificate evidencing such QUIPS, at the
offices of the Property Trustee, with the form of "Notice to Require Exercise of
Junior Subordinated Debenture Put Option" on the reverse side of the certificate
completed and executed as indicated, by 10:00 a.m., New York City time, on the
Stock Purchase Date. If such right is properly exercised, the applicable
Debentures will be distributed to the Put Agent, who shall be the Collateral
Agent, and the Put Agent will then exercise the Put Option related thereto on
behalf of the holder. Any cash received on the exercise of such option must be
used to settle any purchase contracts secured by the Debentures.
9. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate
A-8
<PAGE> 76
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default under the Declaration has occurred
and is continuing, in which case any funds available to make such payment shall
be paid first to each Holder of the QUIPS pro rata according to the aggregate
liquidation amount of QUIPS held by the relevant Holder relative to the
aggregate liquidation amount of all QUIPS outstanding, and only after
satisfaction of all amounts owed to the Holders of the QUIPS (as described in
Section 10), to each Holder of Common Trust Securities pro rata according to the
aggregate liquidation amount of Common Trust Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Common Trust
Securities outstanding.
10. Ranking; Subordination of Common Trust Securities.
(a) The QUIPS rank pari passu with the Common Trust Securities and
payment of Distributions on, and the Final Redemption Price of, the QUIPS and
the Common Trust Securities, as applicable, shall be made pro rata based on the
liquidation amount of the QUIPS and Common Trust Securities; provided, however,
that if on any Distribution Date or Maturity Date an Event of Default under the
Declaration (solely as the result of an event described in clauses (1), (2) or
(3) of the definition of Event of Default in the Indenture) shall have occurred
and be continuing, no payment of any Distribution, or Final Redemption Price of,
any of the Common Trust Securities, and no other payment on account of the
redemption, liquidation or other acquisition of the Common Trust Securities,
shall be made unless payment in full in cash of all accumulated and unpaid
Distributions on all of the outstanding QUIPS for all distribution periods
terminating on or prior thereto or, in the case of the Maturity Date, the full
amount of the Final Redemption Price therefor, shall have been made or provided
for, and all funds available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions on, or Final Redemption Price
of, the QUIPS then due and payable.
In the case of any Event of Default, the holder of the Common Trust
Securities will be deemed to have waived any right to act with respect to such
Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the Holders of the QUIPS, and only the Holders of the QUIPS will
have the right to direct the Property Trustee to act on their behalf.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of QUIPS and Common Trust Securities, by the acceptance
thereof, agrees to the provisions of the QUIPS Guarantee and the Common Trust
Securities Guarantee, respectively, including the subordination provisions
therein and to the provisions of the Indenture and the Declaration.
12. No Preemptive Rights.
A-9
<PAGE> 77
The Holders of the Securities shall have no preemptive or similar
rights to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Indenture, the
QUIPS Guarantee or the Common Trust Securities Guarantee (as may be appropriate)
and the Indenture (including any supplemental indenture) to a Holder without
charge on written request to the Sponsor at its principal place of business.
A-10
<PAGE> 78
EXHIBIT A-1
FORM OF QUARTERLY INCOME PREFERRED SECURITIES
FORM OF FACE OF SECURITY
[IF THIS QUARTERLY INCOME PREFERRED SECURITY ("QUIPS") IS A GLOBAL
SECURITY, INSERT: THIS QUARTERLY INCOME PREFERRED SECURITY IS A GLOBAL SECURITY
WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED
IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE
OF THE CLEARING AGENCY. THIS QUIPS IS EXCHANGEABLE FOR QUIPS REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS QUIPS
(OTHER THAN A TRANSFER OF THIS QUIPS AS A WHOLE BY THE CLEARING AGENCY TO A
NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE
CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED
EXCEPT IN LIMITED CIRCUMSTANCES.]
[UNLESS THIS QUIPS IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK), A NEW YORK
CORPORATION, TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY QUIPS ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
Certificate Number Number of Quarterly Income Preferred Securities
CUSIP NO.
Certificate Evidencing Quarterly Income Preferred Securities
of
AmerUs Capital II
__% Quarterly Income Preferred Securities (liquidation amount $_______ per
Quarterly Income Preferred Security)
AmerUs Capital II, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that __________ (the "Holder")
is the registered owner of _____
<PAGE> 79
securities of the Trust representing preferred undivided beneficial interests in
the assets of the Trust designated the ___% Quarterly Income Preferred
Securities (liquidation amount $_______ per Quarterly Income Preferred Security)
(the "QUIPS"). Subject to the terms of the Declaration (as defined below), the
QUIPS are transferable on the books and records of the Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the QUIPS represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of May __, 1998, as the same
may be amended from time to time (the "Declaration"), including the designation
of the terms of the QUIPS as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given them
in the Declaration. The Sponsor will provide a copy of the Declaration, the
QUIPS Guarantee and the Indenture to a Holder without charge upon written
request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the QUIPS Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States Federal
income tax purposes, the Trust as a grantor trust, the Debentures as
indebtedness and the QUIPS as evidence of indirect beneficial ownership in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this day of
June, 1998.
AMERUS CAPITAL II
By:_________________________
Name:
Title: Administrator
A-2
<PAGE> 80
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Quarterly Income Preferred Securities referred to in
the within-mentioned Declaration.
Dated: _______________
FIRST UNION NATIONAL BANK, not in its
individual capacity, but solely as Property Trustee
By:_________________________
Authorized Signatory
A-3
<PAGE> 81
FORM OF REVERSE OF SECURITY
Distributions payable on each QUIPS will initially be fixed at
a rate per annum of ___% (the "Initial Coupon Rate") of the liquidation amount
of $_______ per QUIPS (the "Liquidation Amount") and, on and after the Call
Option Expiration Date (as defined in the Indenture) if the Rate Increase Agent
(as defined in the Indenture), makes a Rate Increase Determination (as defined
in the Indenture), at a rate per annum that is equal to the Increased
Distribution Rate (as defined in the Indenture) of the Liquidation Amount. The
Initial Coupon Rate and the Increased Distribution Rate as in effect at any
applicable time are hereinafter referred to as the "Coupon Rate". Distributions
in arrears for more than one quarterly period will bear interest thereon
compounded quarterly at the rate of ___% per annum plus, for the period after
the Call Option Exercise Date, the amount (if any), by which the Initial Coupon
Rate shall have been increased (together, the "Deferral Rate") (to the extent
permitted by applicable law). The term "Distributions", as used herein, includes
such cash distributions and any such interest unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
Distributions on the QUIPS will be cumulative, will accumulate
from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from __________ __, 1998 and will be payable
quarterly in arrears, on __________ __, _________ __, __________ __, and
__________ __ of each year, commencing on __________ __, 1998, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months. As long as no Event of Default
has occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to elect to defer payments of interest by extending
the interest payment period at any time and from time to time on the Debentures
(each an "Extension Period"), provided that no Extension Period shall end on a
date other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate of interest
then accruing on the Debentures) at the Deferred Rate compounded quarterly
during any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension Period may not
extend beyond the Maturity Date of the Debentures. Payments of accumulated
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
A-4
<PAGE> 82
Subject to the conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and, after satisfaction of liabilities to creditors of
the Trust as required by applicable law, cause the Debentures to be distributed
to the holders of the Securities in liquidation of the Trust.
The QUIPS will be subject to mandatory redemption on the Maturity Date
of the Debentures as provided in the Declaration.
The QUIPS and the rights of the Holders shall be governed by and
interpreted in accordance with the laws of the State of Delaware and all rights
and remedies shall be governed by such laws without regard to principles of
conflict of laws.
A-5
<PAGE> 83
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Security to:
- ----------------------------------
- ----------------------------------
- ----------------------------------
(Insert assignee's social security or tax identification number)
- ----------------------------------
- ----------------------------------
- ----------------------------------
(Insert address and zip code of assignee)
- ----------------------------------
- ----------------------------------
- ----------------------------------
and irrevocably appoints agent to transfer this Security on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
-------------------
Signature:
------------------------
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee(1):
---------------------
- ------------------
(1)Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities and Exchange Act of 1934, as amended.
A-6
<PAGE> 84
NOTICE TO REQUIRE EXERCISE OF JUNIOR SUBORDINATED
DEBENTURE PUT OPTION
The undersigned holder of this Security hereby irrevocably exercises the right
to require the Trust to distribute to the Put Agent Debentures having an
aggregate principal amount equal to the Liquidation Amount of the number of
QUIPS listed below (which number does not exceed the number evidenced hereby) in
exchange for such number of QUIPS, on the Stock Purchase Date in connection with
the concurrent exercise by the Put Agent on behalf of the holder of this
Security of the Debenture Put Option related hereto on such date. Pursuant to
the aforementioned exercise of the right to require the Trust to distribute to
the Put Agent Debentures in exchange for such number of QUIPS, the undersigned
hereby directs the Property Trustee to take any actions necessary to effect the
exchange of such number of QUIPS for such principal amount of Debentures. Any
cash received on the exercise of such option must be used to settle any purchase
contracts secured by the Debentures.
Date:
----------------
Number of QUIPS (not to exceed number of QUIPS evidenced hereby)
Signature:
-------------------
(Sign exactly as your name appears on the other side of this Security)
Please Print or Type Name and Address,
Including Zip Code, and Social Security
or Other Identifying Number
- --------------------------
- --------------------------
- --------------------------
Signature Guarantee(1):
--------------------------
- -------------------
(1)Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities and Exchange Act of 1934, as amended.
A-7
<PAGE> 85
EXHIBIT A-2
FORM OF COMMON TRUST SECURITY CERTIFICATE
THIS COMMON TRUST SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN
EFFECTIVE REGISTRATION STATEMENT.
THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.
Certificate Number Number of Common Trust Securities
Certificate Evidencing Common Trust Securities
of
AmerUs Capital II
__% Common Trust Securities (liquidation amount $_______ per Common Trust
Security)
AmerUs Capital II, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that AmerUs Life Holdings,
Inc. (the "Holder") is the registered owner of common trust securities of the
Trust representing undivided beneficial interests in the assets of the Trust
designated the ___% Common Trust Securities (liquidation amount $_______ per
Common Trust Security) (the "Common Trust Securities"). The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Trust Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of June __, 1998 as the same may be amended from time to time
(the "Declaration"), including the designation of the terms of the Common Trust
Securities as set forth in Annex I to the Declaration. Capitalized terms used
but not defined herein shall have the meaning given them in the Declaration.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Trust Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States Federal
income tax purposes, the Debentures as indebtedness and the Common Trust
Securities as evidence of indirect beneficial ownership in the Debentures.
<PAGE> 86
IN WITNESS WHEREOF, the Trust has executed this certificate this
_____day of June 1998.
AMERUS CAPITAL II
----------------------------
Name:
Title: Administrator
A-2
<PAGE> 87
FORM OF REVERSE OF SECURITY
Distributions payable on each Common Trust Security will initially be
fixed at a rate per annum of __% (the "Initial Coupon Rate") of the liquidation
amount of $_______ per Common Trust Security (the "Liquidation Amount") and, on
and after the Call Option Expiration Date (as defined in the Indenture) if the
Rate Increase Agent (as defined in the Indenture), makes a Rate Increase
Determination (as defined in the Indenture), at a rate per annum that is equal
to the Increased Distribution Rate (as defined in the Indenture) of the
Liquidation Amount. The Initial Coupon Rate and the Increased Distribution Rate
as in effect at any applicable time are hereinafter referred to as the "Coupon
Rate". Distributions in arrears for more than one quarterly period will bear
interest thereon compounded quarterly at the rate of ___% per annum plus, for
the period after the Call Option Exercise Date, the amount (if any), by which
the Initial Coupon Rate shall have been increased (together, the "Deferral
Rate") (to the extent permitted by applicable law). The term "Distributions", as
used herein, includes such cash distributions and any such interest unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Property Trustee and to the extent
the Property Trustee has funds available therefor.
Distributions on the Common Trust Securities will be cumulative, will
accrue from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from __________ __, 1998 and will be payable
quarterly in arrears, on __________ __, ________ __, and ________ __ of each
year, commencing on __________ __, 1998, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to elect to defer payments of interest by extending the interest
payment period at any time and from time to time on the Debentures (each an
"Extension Period"), provided that no Extension Period shall end on a date other
than an Interest Payment Date for Debentures or extend beyond the Maturity Date
of the Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, Distributions will continue to accumulate with
interest thereon (to the extent permitted by applicable law, but not at a rate
exceeding the rate of interest then accruing on the Debentures) at the Deferral
Rate compounded quarterly during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
such Extension Period may not extend beyond the Maturity Date of the Debentures.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of the
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
Subject to the conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and, after
A-3
<PAGE> 88
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, cause the Debentures to be distributed to the holders of the Securities in
liquidation of the Trust.
The Common Trust Securities will be subject to mandatory redemption on
the Maturity Date of the Debentures, as provided in the Declaration.
The Common Trust Securities and the rights of the holders thereof
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware and all rights and remedies shall be governed by such laws
without regard to principles of conflict of laws.
_____________________
A-4
<PAGE> 1
EXHIBIT ____
================================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
among
AMERUS LIFE HOLDINGS, INC., as Sponsor,
FIRST UNION NATIONAL BANK,
as Property Trustee,
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Delaware Trustee,
and
THE ADMINISTRATORS NAMED HEREIN
Dated as of ________ __, 1998
AMERUS CAPITAL III
================================================================================
<PAGE> 2
AMENDED AND RESTATED DECLARATION
OF TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.1. Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.2. Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3. Reports by the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.4. Periodic Reports to Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5. Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.6. Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.7. Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.1. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.3. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.4. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5. Title to Property of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.6. Powers and Duties of the Administrators . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.7. Prohibition of Actions by the Trust, the Administrators and the Trustees . . . . . . . . . . . 17
Section 3.8. Powers and Duties of the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.9. Certain Duties and Responsibilities of the Property Trustee . . . . . . . . . . . . . . . . . 20
Section 3.10. Certain Rights of the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.11. Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.12. Execution of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.13. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . 24
Section 3.14. Duration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.15. Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE IV
SPONSOR . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.1. Sponsor's Purchase of Common Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.2. Responsibilities of the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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Section 4.3. Right to Proceed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
TRUSTEES AND ADMINISTRATORS. . . . . . . . . . . . . . . . . . . . 28
Section 5.1. Number of Trustees: Appointment of Co-Trustee . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.2. Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.3. Property Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.4. Certain Qualifications of Administrators and Delaware Trustee Generally . . . . . . . . . . . 29
Section 5.5. Administrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.6. Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.7. Appointment, Removal and Resignation of Trustees . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.8. Vacancies among Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.9. Effect of Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.10. Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.11. Delegation of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . 33
ARTICLE VI
DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
ISSUANCE OF SECURITIES. . . . . . . . . . . . . . . . . . . . . 34
Section 7.1. General Provisions Regarding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.3. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.4. Registrar, Paying Agent and Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.5. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.6. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.7. Outstanding QUIPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.8. QUIPS in Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.9. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.11. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VIII
DISSOLUTION OF TRUST . . . . . . . . . . . . . . . . . . . . . 39
Section 8.1. Dissolution of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . . . 41
Section 9.1. Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.2. Transfer Procedures and Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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Section 9.3. Deemed Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.4. Book Entry Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.5. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.6. Appointment of Successor Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES,
ADMINISTRATORS OR OTHERS . . . . . . . . . . . . . . . . . . . . 46
Section 10.1. Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.2. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.3. Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.5. Outside Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XI
ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . 51
Section 11.1. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 11.2. Certain Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 11.3. Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 11.4. Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XII
AMENDMENTS AND MEETINGS. . . . . . . . . . . . . . . . . . . . . 52
Section 12.1. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 12.2. Meetings of the Holders; Action by Written Consent . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE . . . . . . . . . . . 56
Section 13.1. Representations and Warranties of Property Trustee . . . . . . . . . . . . . . . . . . . . . 56
Section 13.2. Representations and Warranties of Delaware Trustee . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XIV
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 57
Section 14.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 14.2. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 14.3. Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 14.4. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 14.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 14.6. Partial Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 14.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
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Annex I - Terms of Securities
Exhibit A-1 - Form of Quarterly Income Preferred Security
Exhibit A-2 - Form of Common Trust Security
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<PAGE> 6
AMENDED AND RESTATED DECLARATION OF TRUST
OF
AMERUS CAPITAL III
________ __, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of ________ __, 1998, by the Trustees (as defined
herein), the Sponsor (as defined herein), the Administrators (as defined
herein) and by the holders, from time to time, of undivided beneficial
interests in the assets of the Trust to be issued pursuant to this Declaration;
WHEREAS, AMERUS CAPITAL III (the "Trust") has been established
as a trust created under the Business Trust Act (as defined herein) pursuant to
a Trust Agreement dated as of April 14, 1998 (the "Original Declaration") and a
Certificate of Trust executed and filed with the Secretary of State of the
State of Delaware on April 14, 1998, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer (each as hereinafter defined);
WHEREAS, the parties hereto, by this Declaration, amend and
restate each and every term and provision of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless the context otherwise
requires:
(a) Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Declaration has the
same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or amended from
time to time;
<PAGE> 7
(d) all references in this Declaration to Articles and
Sections and Annexes and Exhibits are to Articles and Sections of and Annexes
and Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires;
(f) a term defined in the Indenture (as defined herein)
and the Master Unit Agreement (as defined herein) has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or the
context otherwise requires; and
(g) a reference to the singular includes the plural and
vice versa.
"Administrators" means each of Michael E. Sproule, Michael G.
Fraizer and James A. Smallenberger solely in such Person's capacity as
Administrator of the Trust created and continued hereunder and not in such
Person's individual capacity, or such Administrator's successor in interest in
such capacity, or any successor appointed as herein provided.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that
is authorized to legally bind such former Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of such Person 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 such Person or for all or 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 90 consecutive days; or
(b) such Person shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, 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 of possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of such Person of all or any substantial
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<PAGE> 8
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.
"Book Entry Interest" means a beneficial interest in a Global
Security registered in the name of a Clearing Agency or its nominee, ownership
and transfers of which shall be maintained and made through book entries by a
Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday
or a day on which banking institutions in The City of New York or Charlotte,
North Carolina are authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801 et seq., as it may be amended from time
to time, or any successor legislation.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the QUIPS and in whose name or in the name of a nominee of that
organization shall be registered a Global Security and which shall undertake to
effect book-entry transfers and pledges of the QUIPS.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Time" means the "First Time of Delivery" under the
Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if any time after the execution
of this Declaration such Commission is not existing and performing the duties
now assigned to it under applicable federal securities laws, then the body
performing such duties at such time.
"Common Trust Securities" has the meaning specified in Section
7.1(a).
"Common Trust Securities Guarantee" means the guarantee
agreement dated as of May __, 1998 of the Sponsor in respect of the Common
Trust Securities.
"Common Trust Securities Subscription Agreement" means the
Common Trust Securities Subscription Agreement, dated May __, 1998, by and
between the Debenture Issuer and the Trust.
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<PAGE> 9
"Company Indemnified Person" means (a) any Administrator; (b)
any Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Property
Trustee at which the corporate trust business of the Property Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Agreement is located at First Union National Bank Corporate
Trust Group, 230 South Tyson St., Charlotte, North Carolina 28288-1179.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means AmerUs Life Holdings, Inc., an Iowa
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer
of the Debentures under the Indenture.
"Debenture Subscription Agreement" means the Debenture
Subscription Agreement, dated ________ __, 1998, by and between the Debenture
Issuer and the Trust.
"Debenture Trustee" means First Union National Bank, a
__________ corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the __% Junior Subordinated Deferrable
Interest Debentures due ________ __, 2003 of the Debenture Issuer issued
pursuant to the Indenture.
"Default" means an event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Definitive QUIPS" shall have the meaning set forth in Section
7.3(d).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section
3.8(e).
"Distribution" means a distribution payable to Holders in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
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<PAGE> 10
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Final Redemption Price" has the meaning set forth in Section
4 of Annex I hereto.
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Security" has the meaning set forth in Section 7.3(b).
"Holder" means a Person in whose name a Security is
registered, such Person being a beneficial owner within the meaning of the
Business Trust Act, provided, however, that with respect to any QUIPS that
underlie Normal Units, the Holder (as defined in the Master Unit Agreement and
as notified to the Property Trustee by or on behalf of the Unit Agent) of such
Normal Units shall be deemed to be the Holder of such QUIPS for all purposes
under the Declaration and the Indenture other than for receipt of Distributions
on, or other payments to be made in respect of, such QUIPS (including the
distribution of Debentures in connection with a Dissolution Event or the
exercise of a Put Option). The Property Trustee shall from time to time
request from the Unit Agent a copy of the Unit Register for the Normal Units as
shall be necessary to give effect to the foregoing.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of ________ __, 1998,
between the Debenture Issuer and the Debenture Trustee, as amended from time to
time.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(f).
"Like Amount" has the meaning set forth in Section 3 of Annex
I hereto.
"Majority in liquidation amount" means, with respect to the
Trust Securities, except as provided in the terms of the QUIPS or by the Trust
Indenture Act, Holder(s) of
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<PAGE> 11
outstanding Trust Securities voting together as a single class or, as the
context may require, Holders of outstanding QUIPS or Holders of outstanding
Common Trust Securities voting separately as a class, who are the record owners
of more than 50% of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Master Unit Agreement" shall mean the Master Unit Agreement
between AmerUs Life Holdings, Inc. and First Union National Bank, as Unit
Agent, dated as of ________ __, 1998.
"Officers' Certificate" means, (i) with respect to any Person,
a certificate signed by two of the following: the Chairman, a Vice Chairman,
the Chief Executive Officer, the President, the Chief Financial Officer, a Vice
President (whether or not designated by a number or a word or words added
before or after such title), the Comptroller, or the Secretary or an Assistant
Secretary of such Person and (ii) with respect to the Trust, a certificate
signed by not less than two administrators. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
(i) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(iii) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Sponsor, and who shall be acceptable to the
Property Trustee.
"Participants" shall have the meaning set forth in Section
7.3(c).
"Paying Agent" has the meaning specified in Section 7.4.
"Paying Amount" has the meaning set forth in Section 6.1
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<PAGE> 12
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in
Section 3.8(c).
"Quorum" means a majority of the Administrators or, if there
are only two Administrators, both of them.
"QUIPSSM*" has the meaning specified in Section 7.1(a).
"QUIPS Guarantee" means the guarantee agreement of the Sponsor
dated as of ________ __, 1998 in respect of the QUIPS.
"QUIPS Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Registrar" has the meaning set forth in Section 7.4.
"Registration Statements" has the meaning set forth in Section
3.6(b).
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any officer within the Corporate Trust Office of the Property Trustee
with direct responsibility for the administration of this Declaration and also
means, with respect to a particular corporate trust matter, any other officer
of the Property Trustee to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Securities" or "Trust Securities" means the Common Trust
Securities and the QUIPS.
- -------------------------
*QUIPS is a servicemark of Goldman, Sachs & Co.
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<PAGE> 13
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Securities Guarantees" means the Common Trust Securities
Guarantee and the QUIPS Guarantee.
"Sponsor" means AmerUs Life Holdings, Inc., an Iowa
corporation, or any successor entity resulting from any merger, consolidation,
amalgamation or other business combination, in its capacity as sponsor of the
Trust.
"Subscription Agreements" means the Common Trust Securities
Subscription Agreement and the Debenture Subscription Agreement.
"Successor Delaware Trustee" has the meaning set forth in
Section 5.7(b)(ii).
"Successor Entity" has the meaning set forth in Section
3.15(b)(i).
"Successor Property Trustee" has the meaning set forth in
Section 3.8(f).
"Successor Securities" has the meaning set forth in Section
3.15(b)(i)(B).
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the QUIPS or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding QUIPS or
Holders of outstanding Common Trust Securities voting separately as a class,
who are the record owners of 10% or more of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the
relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in
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accordance with the provisions hereof, and references herein to a Trustee or
the Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"Underwriting Agreement" means the Underwriting Agreement
among AmerUs Life Holdings, Inc., the Trust and the underwriters named therein,
dated as of ________ __, 1998, for the initial offering and sale of the Units.
"Units" has the meaning set forth in the Master Unit Agreement.
"1933 Act Registration Statement" has the meaning set forth in
Section 3.6(b).
"1934 Act Registration Statement" has the meaning set forth in
Section 3.6(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. TRUST INDENTURE ACT; APPLICATION. (a) This
Declaration is subject to the provisions of the Trust Indenture Act that are
required to be part of this Declaration and shall, to the extent applicable, be
governed by such provisions.
(b) The Property Trustee shall be the only Trustee which
is a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2. LISTS OF HOLDERS OF SECURITIES. (a) Each of the
Sponsor and the Administrators on behalf of the Trust shall provide the
Property Trustee, unless the Property Trustee is Registrar for the Securities
(i) on a quarterly basis on each record date for payment of Distributions, a
list, in such form as the Property Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of such record date, and
(ii) at such other times as the Property Trustee may request in writing, within
30 days of receipt by the Trust, of such written request, a List of Holders as
of a date not more than 15 days prior to the time such List of Holders is
furnished to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity), provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
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(b) The Property Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture
Act.
SECTION 2.3. REPORTS BY THE PROPERTY TRUSTEE. If required by
Section 313(a) of the Trust Indenture Act, the Property Trustee shall, within
sixty days after each December 31, following the date of this Indenture,
commencing ________ __, 1999, deliver to the Holders of QUIPS a brief report,
dated as of such ________ __, 1999, which complies with the provisions of such
Section 313(a) of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. PERIODIC REPORTS TO PROPERTY TRUSTEE. Each of
the Sponsor and the Administrators on behalf of the Trust shall provide to the
Property Trustee such documents, reports and information as are required by
Section 314 of the Trust Indenture Act (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act. Delivery
of such documents, reports and information to the Trustee is for informational
purposes only and the Property Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Trust's compliance with any of its
covenants hereunder (as to which the Property Trustee is entitled to rely
exclusively on Officers' Certificates).
SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT. Each of the Sponsor and the Administrators on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent provided for in this Declaration that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c) (1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
SECTION 2.6. EVENTS OF DEFAULT; WAIVER. (a) The Holders of a
Majority in liquidation amount of QUIPS may, by vote or written consent, on
behalf of the Holders of all of the QUIPS, waive any past Event of Default in
respect of the QUIPS and its consequences, provided, that if the underlying
Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in aggregate principal amount of the holders of the
Debentures (a "Super Majority") to be waived under the Indenture, the
Event of Default under the Declaration may only be waived by the vote
of the Holders of at least the proportion in aggregate liquidation
amount of the
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QUIPS that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
QUIPS arising therefrom shall be deemed to have been cured, for every purpose
of this Declaration, but no such waiver shall extend to any subsequent or other
default or an Event of Default with respect to the QUIPS or impair any right
consequent thereon. Any waiver by the Holders of the QUIPS of an Event of
Default with respect to the QUIPS shall also be deemed to constitute a waiver
by the Holders of the Common Trust Securities of any such Event of Default with
respect to the Common Trust Securities for all purposes of this Declaration
without any further act, vote, or consent of the Holders of the Common Trust
Securities.
The Holders of a Majority in liquidation amount of the QUIPS
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee or to direct the
exercise of any trust or power conferred upon the Property Trustee, including
the right to direct the Property Trustee to exercise the remedies available to
it as holder of the Debentures; provided, however, that (subject to the
provisions of Section 3.9) the Property Trustee shall have the right to decline
to follow any such direction if the Property Trustee shall determine that the
action so directed would be unjustly prejudicial to the Holders not taking part
in such direction or if the Property Trustee, being advised by counsel,
determines that the action or proceeding so directed may not lawfully be taken
or if the Property Trustee, in good faith, by its board of directors or
trustees, executive committee, or a trust committee of directors or trustees
and/or Responsible Officers, shall determine that the action or proceedings so
directed would involve the Property Trustee in personal liability. If the
Property Trustee fails to enforce its rights under the Debentures after the
Holders of a Majority in liquidation amount of the QUIPS have so directed the
Property Trustee, a Holder of record of such QUIPS may, to the fullest extent
permitted by law, institute a legal proceeding against the Debenture Issuer to
enforce the Property Trustee's rights under the Debentures without first
instituting any legal proceeding against the Property Trustee or any other
Person.
(b) The Holders of a Majority in liquidation amount of
the Common Trust Securities may, by vote or written consent, on behalf of the
Holders of all of the Common Trust Securities, waive any past Event of Default
with respect to the Common Trust Securities and its consequences, provided,
that if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Trust Securities are deemed to have waived such
Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration shall also
not be waivable; or
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(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Trust Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the Common Trust
Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;
provided further, each Holder of Common Trust Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Trust Securities and its consequences until all Events of Default with
respect to the QUIPS have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the QUIPS and only the Holders of the QUIPS will have the right to direct the
Property Trustee in accordance with the terms of the Securities. The foregoing
provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such waiver,
any such default shall cease to exist and any Event of Default with respect to
the Common Trust Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect to the Common
Trust Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture
by the Property Trustee, at the direction of the Holders of the QUIPS,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7. EVENT OF DEFAULT; NOTICE. (a) The Property
Trustee shall, within 90 days after the occurrence of an Event of Default
actually known to a Responsible Officer of the Property Trustee, transmit by
mail, first class postage prepaid, to the Holders, notices of all defaults with
respect to the Securities actually known to a Responsible Officer of the
Property Trustee, unless such defaults have been cured before the giving of
such notice (the term "defaults" for the purposes of this Section 2.7(a) being
hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided that, except for a default in
the payment of principal of (or premium, if any) or interest on any of the
Debentures, the Property Trustee shall be protected in withholding such notice
if and so long as a Responsible Officer of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
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(b) The Property Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 5.01(1) and 5.01(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall
have received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of the Declaration
shall have actual knowledge.
(c) Within ten Business Days after the occurrence of an
Event of Default actually known to a Responsible Officer of the Property
Trustee, the Property Trustee shall transmit notice of such Event of Default to
the holders of the QUIPS, the Administrators and the Sponsor, unless such Event
of Default shall have been cured or waived. The Sponsor and the Administrators
shall file annually with the Property Trustee a certification as to whether or
not they are in compliance with all the conditions and covenants applicable to
them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1. NAME. The Trust is named "AMERUS CAPITAL III" as
such name may be modified from time to time by the Administrators following
written notice to the Trustees and the Holders of Securities. The Trust's
activities may be conducted under the name of the Trust or any other name
deemed advisable by the Administrators.
SECTION 3.2. OFFICE. The address of the principal office of
the Trust is c/o AmerUs Life Holdings, Inc., 699 Walnut Street, Des Moines,
Iowa 50309. On ten Business Days written notice to the Property Trustee, the
Delaware Trustee and the Holders of Securities, the Administrators may
designate another principal office.
SECTION 3.3. PURPOSE. The exclusive purposes and functions
of the Trust are (a) to issue and sell the Securities, (b) use the proceeds
from the sale of the Securities to acquire the Debentures, and (c) except as
otherwise limited herein, to engage in only those other activities necessary or
incidental thereto, including, without limitation, those activities specified
in Sections 3.6, 3.8, 3.9, 3.10, 3.11 and/or 3.12. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, mortgage or
pledge any of its assets, or otherwise undertake (or permit to be undertaken)
any activity that would cause the Trust either not to be classified for United
States Federal income tax purposes as a grantor trust or to be classified as an
association taxable as a corporation or as other than a grantor trust for
United States Federal income tax purposes.
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SECTION 3.4. AUTHORITY. Subject to the limitations provided
in this Declaration and to the specific duties of the Property Trustee, the
Administrators shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Administrators or any of them in
accordance with their powers shall constitute the act of and serve to bind the
Trust and an action taken by the Property Trustee on behalf of the Trust in
accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein with
respect to accomplishing the purposes of the Trust and are not intended to be
trustees or fiduciaries with respect to the Trust or the Holders. The Property
Trustee shall have the right, but shall not be obligated except as provided in
Section 3.6, to perform those duties assigned to the Administrators.
SECTION 3.5. TITLE TO PROPERTY OF THE TRUST. Except as
provided in Section 3.8 with respect to the Debentures and the Property Trustee
Account or as otherwise provided in this Declaration, legal title to all assets
of the Trust shall be vested in the Trust. The Holders shall not have legal
title to any part of the assets of the Trust, but shall have an undivided
beneficial interest in the assets of the Trust.
SECTION 3.6. POWERS AND DUTIES OF THE ADMINISTRATORS. The
Administrators shall have the exclusive power, duty and authority to cause the
Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with
this Declaration; provided, however, that (i) except as contemplated in Section
7.1(a), (A) the Trust may issue no more than one series of QUIPS and no more
than one series of Common Trust Securities and (B) there shall be no interests
in the Trust other than the Securities, and (ii) the issuance of Securities
shall be limited to a simultaneous issuance of both QUIPS and Common Trust
Securities at the Closing Time;
(b) in connection with the registration, issue and sale
of the QUIPS, to:
(i) execute and file on behalf of the Trust, (a) a
registration statement, including pre-effective or post-effective
amendments to such registration statement and any and all amendments
to registration statements filed pursuant to Rule 462(b) promulgated
under the Securities Act, relating to the registration under the
Securities Act, of the Securities (the "1933 Act Registration
Statement"), and (b) a registration statement on Form 8-A or other
appropriate form (the "1934 Act Registration Statement" and together
with the 1933 Act Registration Statement, the "Registration
Statements") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Securities of
the Trust under the Exchange Act;
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(ii) execute and file on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents,
appointments of attorney for service of process and other papers and
documents as the Sponsor, on behalf of the Trust, may deem necessary
or desirable to register the Securities under the securities or "Blue
Sky" laws of any applicable jurisdiction;
(iii) execute and file a listing application and all other
applications, statements, certificates, agreements and other
instruments as shall be necessary or desirable to permit the QUIPS
[(or Units)] to trade or be quoted or listed in or on the New York
Stock Exchange or any other securities exchange, quotation system or
the Nasdaq National Market;
(iv) execute, deliver and perform on behalf of the Trust
such underwriting or purchase agreements with one or more
underwriters, purchasers or agents relating to the offering of the
Securities as the Sponsor, on behalf of the Trust, may deem necessary
or desirable; and
(v) execute and deliver letters, documents or instruments
with DTC and other Clearing Agencies relating to the QUIPS.
(c) to acquire the Debentures with the proceeds of the
sale of the QUIPS and the Common Trust Securities; provided, however, that the
Administrators shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders;
(d) to establish a record date with respect to all
actions to be taken hereunder that require a record date be established,
including and with respect to, for the purposes of Section 316(c) of the Trust
Indenture Act, Distributions, voting rights, redemptions and exchanges, and to
issue relevant notices to the Holders of QUIPS and Holders of Common Trust
Securities as to such actions and applicable record dates;
(e) to take all actions and perform such duties as may be
required of the Administrators pursuant to the terms of the Securities;
(f) to the fullest extent permitted by law, to bring or
defend, pay, collect, compromise, arbitrate, resort to legal action, or
otherwise adjust claims or demands of or against the Trust (each a "Legal
Action"), unless pursuant to Section 3.8(e), the Property Trustee has the
exclusive power to bring such Legal Action;
(g) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such services;
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(h) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(i) to give the certificate required by Section 314(a)(4)
of the Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrator;
(j) to incur expenses that are necessary or incidental to
carry out any of the purposes of the Trust;
(k) to act as, or appoint another Person to act as,
Registrar and Exchange Agent for the Securities or to appoint a Paying Agent
for the Securities as provided in Section 7.4 except for such time as such
power to appoint a Paying Agent is vested in the Property Trustee;
(l) to give prompt written notice to the Property Trustee
and to Holders of any notice received from the Debenture Issuer of its election
to defer payments of interest on the Debentures by extending the interest
payment period under the Indenture;
(m) to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business trust
under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of
the QUIPS or to enable the Trust to effect the purposes for which the Trust was
created;
(n) to take any action, not inconsistent with this
Declaration, the certificate of trust of the Trust or with applicable law, that
the Administrators determine in their discretion to be necessary or desirable
in carrying out the activities of the Trust as set out in this Section 3.6 (as
long as such action does not materially adversely affect the interests of the
Holders of the Securities), including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment
Company Act;
(ii) causing the Trust not to be classified for United
States Federal income tax purposes as an association taxable as a
corporation or as other than a grantor trust;
(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the Debenture Issuer
for United States Federal income tax purposes;
(o) to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Administrators, on
behalf of the Trust; and
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(p) to execute and deliver all documents, instruments and
certificates, exercise all rights and powers, perform all duties, and
do all things for and on behalf of the Trust in all matters necessary
or incidental to the foregoing.
The Administrators must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3 and with the intentions of the parties set
forth in Section 14.3, and the Administrators shall not take any action that is
inconsistent with the purposes and functions of the Trust and intentions of the
parties set forth in Section 3.3 and Section 14.3, respectively.
Subject to this Section 3.6, the Administrators shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrators pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST, THE
ADMINISTRATORS AND THE TRUSTEES. (a) The Trust shall not, and neither the
Administrators nor the Trustees (including the Property Trustee) shall cause
the Trust to, engage in any activity other than as required or authorized by
this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust
purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures, execute mortgages or pledge any
of its assets;
(v) possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex
I, (A) direct the time, method and place of conducting any proceeding
with respect to any remedy available to the Debenture Trustee, or
exercising any trust or power conferred upon the Debenture Trustee
with respect to the Debentures, (B) waive any past default that is
waivable under the Indenture, (C) exercise any right to rescind or
annul any declaration that the principal
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of all the Debentures shall be due and payable, or (D) consent to any
amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required, unless the Trust
shall have received an opinion of counsel experienced in such matters
to the effect that such action will not cause more than an
insubstantial risk that for United States Federal income tax purposes
the Trust will not be classified as a grantor trust.
SECTION 3.8. POWERS AND DUTIES OF THE PROPERTY TRUSTEE. (a)
The legal title to the Debentures shall be owned by and held of record in the
name of the Property Trustee in trust for the benefit of the Trust and the
Holders. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.7. Such vesting and
cessation of title shall be effective whether or not conveyancing documents
with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right,
title and interest in the Debentures to the Administrators or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Trustee Account") in the name of
and under the exclusive control of the Property Trustee on behalf of
the Holders and, upon the receipt of payments of funds made in respect
of the Debentures held by the Property Trustee, deposit such funds
into the Property Trustee Account and make payments, and/or request
the Paying Agent (whether or not the Property Trustee also acts as
Paying Agent) to make payments, to the Holders of the QUIPS and
Holders of the Common Trust Securities from the Property Trustee
Account in accordance with Section 6.1. Funds in the Property Trustee
Account shall be held uninvested until disbursed in accordance with
this Declaration. The Property Trustee Account shall be maintained by
the Property Trustee with First Union National Bank (in its separate
corporate capacity and not in its capacity as Property Trustee) in its
trust department;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the repurchase or redemption of the
Securities to the extent the Debentures are redeemed, repurchased or
mature; and
(iii) upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities
upon the occurrence of certain events.
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(d) The Property Trustee shall take all actions and
perform such duties as may be specifically required of the Property Trustee
pursuant to the terms of this Declaration and the Securities.
(e) Subject to Section 3.9(a), the Property Trustee may
take any Legal Action which arises out of or is in connection with an Event of
Default of which a Responsible Officer of the Property Trustee has actual
knowledge or the Property Trustee's duties and obligations under this
Declaration or the Trust Indenture Act. If such Property Trustee shall have
failed to take such Legal Action, the Holders of the QUIPS, to the fullest
extent permitted by applicable law, may take such Legal Action, to the same
extent as if such Holders of QUIPS held an aggregate principal amount of
Debentures equal to the aggregate liquidation amount of such QUIPS, without
first proceeding against the Property Trustee or the Trust; provided, however,
that if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay the principal of or
premium, if any, or interest on the Debentures on the date such principal,
premium, if any, or interest is otherwise payable (after giving effect to any
permitted deferral of payment of such interest), then a Holder of QUIPS may
directly institute a proceeding against the Debenture Issuer for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on
the Debentures having a principal amount equal to the aggregate liquidation
amount of the QUIPS of such Holder (a "Direct Action") on or after the
respective due date specified in the Debentures. In connection with such Direct
Action, the rights of the Holders of the Common Trust Securities will be
subrogated to the rights of such Holder of QUIPS (or Units) to the extent of
any payment made by the Debenture Issuer to such Holder of QUIPS (or Units) in
such Direct Action; provided, however, that no such subrogation right may be
exercised so long as an Event of Default has occurred and is continuing. The
Holders of QUIPS will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a
Trustee until either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders pursuant to the
terms of the Securities; or
(ii) a successor Property Trustee has been appointed and
has accepted that appointment in accordance with Section 5.7 (a
"Successor Property Trustee").
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property Trustee
shall, for the benefit of Holders, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to this Declaration
(including Annex I) and the terms of the Securities.
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(h) The Property Trustee shall be authorized to undertake
any actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying
Agent, the Property Trustee may authorize one or more Persons to act as
additional Paying Agents and to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all securities and
any such Paying Agent shall comply or shall be caused to comply with Section
317(b) of the Trust Indenture Act. Any such additional Paying Agent may be
removed by the Property Trustee at any time the Property Trustee remains as
Paying Agent and a successor Paying Agent or additional Paying Agents may be
(but are not required to be) appointed at any time by the Property Trustee.
(j) Subject to this Section 3.8, the Property Trustee
shall have none of the duties, liabilities, powers or the authority of the
Administrators set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Property Trustee shall not take,
nor shall the Sponsor or any Administrator direct the Property Trustee to take,
any action that is inconsistent with the purposes and functions of the Trust
and intentions of the parties set out in Section 3.3 and Section 14.3,
respectively.
SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE
PROPERTY TRUSTEE. (a) The Property Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and in the Securities and no implied covenants shall
be read into this Declaration against the Property Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed
to relieve the Property Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and in the Securities and the Property
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration and in
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the Securities, and no implied covenants or obligations shall
be read into this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of
the Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming to
the requirements of this Declaration; provided, however, that
in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not they
conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the QUIPS or the Common Trust
Securities, as applicable, relating to the time, method and place of
conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property
Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
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(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor, and money held by the Property Trustee
need not be segregated from other funds held by it except in relation
to the Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Sponsor with
their respective duties under this Declaration, nor shall the Property
Trustee be liable for any default or misconduct of the Administrators
or the Sponsor.
SECTION 3.10. CERTAIN RIGHTS OF THE PROPERTY TRUSTEE. (a)
Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall
be fully protected in acting or refraining from acting upon any
resolution, opinion of counsel, written representation of Holder or
transferee, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the
Administrators contemplated by this Declaration may be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the
Sponsor or the Administrators;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or re-registration
thereof;
(v) the Property Trustee may consult with counsel or
other experts of its selection and the advice or opinion of such
counsel and experts with respect to legal matters or advice within the
scope of such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion, such counsel may be counsel to the Sponsor or any
of its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
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(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder shall
have provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including reasonable attorneys' fees and expenses and the
expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Property Trustee provided, that, nothing contained in
this Section 3.10(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its
agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its agents
alone shall be sufficient and effective to perform any such action and
no third party shall be required to inquire as to the authority of the
Property Trustee to so act or as to its compliance with any of the
terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking
such action;
(x) whenever in the administration of this Declaration
the Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request instructions
from the Holders which instructions may only be given by the Holders
of the same proportion in liquidation amount of the Securities as
would be entitled to direct the Property Trustee under the terms of
the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration;
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(xii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith,
without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Declaration; and
(xiii) the Property Trustee shall not be deemed to have
notice of any Default or Event of Default unless a Responsible Officer
of the Property Trustee has actual knowledge thereof or unless written
notice of any event which is in fact such a default is received by the
Property Trustee at the Corporate Trust Office of the Property
Trustee, and such notice references the QUIPS and this Declaration.
(b) No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11. DELAWARE TRUSTEE. Notwithstanding any other
provision of this Declaration other than Section 5.2, the Delaware Trustee
shall not be entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities of the Administrators or the
Property Trustee described in this Declaration. Except as set forth in Section
5.2, the Delaware Trustee shall be a Trustee for the sole and limited purpose
of fulfilling the requirements of Section 3807 of the Business Trust Act and
shall take such actions as are expressly required to be taken by the Delaware
Trustee under the Business Trust Act. In the event the Delaware Trustee shall
at any time be required to take any action or perform any duty hereunder, the
Delaware Trustee shall be entitled to the benefits of Section 3.9(b)(ii) to
(viii) inclusive, and Section 3.10. No implied covenants or obligations shall
be read into this Declaration against the Delaware Trustee.
SECTION 3.12. EXECUTION OF DOCUMENTS. Except as otherwise
required by the Business Trust Act or applicable law, any Administrator is
authorized to execute on behalf of the Trust any documents that the
Administrators have the power and authority to execute pursuant to Section 3.6.
SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
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SECTION 3.14. DURATION OF TRUST. The Trust, unless dissolved
pursuant to the provisions of Article VIII hereof, shall have existence for
seven years from April 14, 1998.
SECTION 3.15. MERGERS. (a) The Trust may not merge or
convert with or into, consolidate, amalgamate, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to any Person, except as described in Section 3.15(b) and (c) or
Section 3 of Annex I.
(b) The Trust may, at the request of the Holders of a
Majority in liquidation amount of the Common Trust Securities and without the
consent of the other Holders, the Delaware Trustee or the Property Trustee,
merge or convert with or into, consolidate, amalgamate, or be replaced by, or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, a trust organized as such under the laws of
any State; provided that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust with respect to the QUIPS; or
(B) substitutes for the QUIPS other securities
having substantially the same terms as the QUIPS (the
"Successor Securities") so long as the Successor Securities
rank the same as the QUIPS rank with respect to Distributions
and payments upon liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Property Trustee as the Holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the QUIPS
are then listed or quoted, if any;
(iv) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the QUIPS
(including any Successor Securities) or Units to be downgraded by any
nationally recognized statistical rating organization, if then so
rated;
(v) such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders of QUIPS
(including any Successor Securities) in any material respect (other
than with respect to any dilution of such Holders' interests in the
new entity);
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(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Sponsor
has received an opinion of an independent counsel to the Trust
experienced in such matters to the effect that:
(A) such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of
the Holders of QUIPS (including any Successor Securities) in
any material respect (other than with respect to any dilution
of the Holders' interest in the new entity);
(B) following such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer
or lease, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(C) following such merger, conversion,
consolidation, amalgamation, replacement, conveyance, transfer
or lease, the Trust or the Successor Entity will continue to
or will be classified as a grantor trust for United States
Federal income tax purposes.
(viii) the Sponsor or any permitted successor or assignee
owns all of the common securities of such Successor Entity and
guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the QUIPS
Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge or convert with or into, or be
replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, any other entity or permit any
other entity to consolidate, amalgamate, merge or convert with or into, or
replace it if such consolidation, amalgamation, merger, conversion,
replacement, conveyance, transfer or lease would cause the Trust or the
Successor Entity to be classified as an association taxable as a corporation or
as other than a grantor trust for United States Federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1. SPONSOR'S PURCHASE OF COMMON TRUST SECURITIES.
At the Closing Time, the Sponsor will purchase all of the Common Trust
Securities then issued by the Trust, in
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an amount at least equal to 3% of the total capital of the Trust, at the same
time as (and giving effect to) the QUIPS are issued and sold.
SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR. In connection
with the issue and sale of the QUIPS, the Sponsor shall have the exclusive
right and responsibility to engage in the following activities (and any actions
taken by the Sponsor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):
(a) to prepare and file with the Commission and to
execute, in the case of the Registration Statements, on behalf of the
Trust, (a) the 1933 Act Registration Statement, including
pre-effective or post-effective amendments to such registration
statement and any and all amendments to such registration statement
filed pursuant to Rule 462(b) promulgated under the Securities Act,
relating to the registration under the Securities Act of the
Securities, (b) any preliminary prospectus or prospectus or supplement
thereto relating to the Securities required to be filed pursuant to
the Securities Act, and (c) the 1934 Act Registration Statement
(including all pre-effective and post-effective amendments thereto)
relating to the registration of the Securities of the Trust under the
Exchange Act;
(b) to determine the jurisdictions in which to take
appropriate action to qualify or register for sale all or part of the
QUIPS and to do any and all such acts, other than actions which must
be taken by the Trust, and advise the Trust of actions it must take,
and prepare for execution and filing any documents to be executed and
filed by the Trust, as the Sponsor deems necessary or advisable to
register the Securities and in order to comply with the securities or
"Blue Sky" laws of any applicable jurisdiction;
(c) to prepare, execute and file a listing application
and all other applications, statements, certificates, agreements and
other instruments as shall be necessary or desirable to permit the
QUIPS and/or the Units to trade or be quoted or listed in or on the
New York Stock Exchange or any other securities exchange, quotation
system or the Nasdaq National Market;
(d) to negotiate the terms of, and execute, the
Underwriting Agreement and the Subscription Agreements, and to enter
into and execute and deliver and perform the same on behalf of the
Trust; and
(e) notwithstanding anything to the contrary contained
herein, the Trust shall be authorized to issue and sell the QUIPS at
an offering price per QUIPS to be determined by the Sponsor in its
sole and absolute discretion, including, without limitation, at an
offering price that is less than the liquidation amount of $____ per
QUIPS (the "Liquidation Amount"), which offering price shall be
specified in the Prospectus relating to the Securities, and the Common
Trust Securities shall be issued and sold at an offering price per
Common Trust Security that is equal to the offering price per QUIPS.
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SECTION 4.3. RIGHT TO PROCEED. The Sponsor acknowledges the
rights of the Holders of QUIPS, in the event that a failure of the Trust to pay
Distributions on the QUIPS is attributable to the failure of the Debenture
Issuer to pay interest or principal on the Debentures, to institute a
proceeding directly against the Debenture Issuer for enforcement of its payment
obligations on the Debentures.
ARTICLE V
TRUSTEES AND ADMINISTRATORS
SECTION 5.1. NUMBER OF TRUSTEES: APPOINTMENT OF CO-TRUSTEE.
The number of Trustees initially shall be two (2), and:
(a) at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the
number of Trustees and Administrators; and
(b) after the issuance of any Securities, the number of
Trustees and Administrators may be increased or decreased by vote of
the Holders of a Majority in liquidation amount of the Common Trust
Securities voting as a class at a meeting of the Holders of the Common
Trust Securities; provided, however, that, there shall be a Delaware
Trustee if required by Section 5.2; and there shall be one Trustee who
shall be the Property Trustee, and such Trustee may also serve as
Delaware Trustee if it meets the applicable requirements.
Notwithstanding the above, unless an Event of Default shall have
occurred and be continuing, at any time or times, for the purpose of
meeting the legal requirements of any jurisdiction in which any part
of the Trust's property may at the time be located, the Holders of a
Majority in liquidation amount of the Common Trust Securities acting
as a class at a meeting of the Holders of the Common Trust Securities,
and the Administrators shall have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of
all or any part of the Trust's property, or to act as separate trustee
of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such person
or persons in such capacity any property, title, right or power deemed
necessary or desirable, subject to the provisions of this Declaration.
In case an Event of Default has occurred and is continuing, the
Property Trustee alone shall have power to make any such appointment
of a co-trustee.
SECTION 5.2. DELAWARE TRUSTEE. If required by the Business
Trust Act, one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise
meets the requirements of applicable law; provided
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that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of
applicable law, then the Property Trustee shall also be the Delaware
Trustee and Section 3.11 shall have no application.
SECTION 5.3. PROPERTY TRUSTEE; ELIGIBILITY. (a) There shall
at all times be one Trustee (the "Property Trustee") which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a Person organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a Person permitted by the
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination
by Federal, State, Territorial or District of Columbia authority. If
such Person publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section
5.3(a)(ii), the combined capital and surplus of such Person shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Trust
Securities (as if it were the obligor referred to in Section 310(b) of the
Trust Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
(d) The QUIPS Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
First Union National Bank
SECTION 5.4. CERTAIN QUALIFICATIONS OF ADMINISTRATORS AND
DELAWARE TRUSTEE GENERALLY. Each Administrator and the Delaware
Trustee (unless the Property Trustee also acts as Delaware Trustee)
shall be either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more Authorized Officers.
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SECTION 5.5. ADMINISTRATORS. The initial Administrators
shall be:
Michael E. Sproule
c/o AmerUs Life Holdings, Inc.
699 Walnut Street
Des Moines, IA 50309
Michael G. Fraizer
c/o AmerUs Life Holdings, Inc.
699 Walnut Street
Des Moines, IA 50309
James A. Smallenberger
c/o AmerUs Life Holdings, Inc.
699 Walnut Street
Des Moines, IA 50309
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Administrators is called with respect to any matter
over which the Administrators have power to act, any power of the
Administrators may be exercised by, or with the consent of, any one such
Administrator.
(b) An Administrator may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purposes of signing any documents which the
Administrators have power and authority to cause the Trust to execute pursuant
to Section 3.6.
(c) The Holders of a Majority in liquidation amount of
the Common Trust Securities may appoint or remove any Administrator without
cause at any time.
(d) An Administrator appointed to office shall hold
office until his successor shall have been appointed or until his death,
removal or resignation. Any Administrator may resign from office (without need
for prior or subsequent accounting) by an instrument in writing signed by the
Administrator and delivered to the Sponsor and the Property Trustee, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein.
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SECTION 5.6. DELAWARE TRUSTEE. The initial Delaware Trustee
shall be:
First Union Trust Company, National Association
One Rodney Square
920 King Street
1st Floor
Wilmington, DE 19801
Attention: Corporate Trust Administration
SECTION 5.7. APPOINTMENT, REMOVAL AND RESIGNATION OF
TRUSTEES. (a) Subject to Section 5.7(b) and to Section 6(b) of Annex I hereto,
Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Trust
Securities voting as a class at a meeting of the Holders of the Common
Trust Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the
Property Trustee or the Delaware Trustee only, by vote of Holders of a
Majority in liquidation amount of the QUIPS voting as a class at a
meeting of Holders of the QUIPS.
(b)(i) The Trustee that acts as Property Trustee shall not
be removed in accordance with Section 5.7(a) until a Successor Property Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the Administrators
and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not
be removed in accordance with Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 5.2 and
5.4 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Administrators and the Sponsor.
(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
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(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective until the first to occur of the
following:
(A) a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or
(B) the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders
of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Trust Securities shall use
their best efforts to promptly appoint a Successor Delaware Trustee or
Successor Property Trustee, as the case may be, if the Property Trustee or the
Delaware Trustee delivers an instrument of resignation in accordance with this
Section 5.7.
(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.7 within 60 days after delivery of an instrument of
resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition, at the expense of the Sponsor, any
court of competent jurisdiction for appointment of a Successor Property Trustee
or Successor Delaware Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper and prescribe, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
SECTION 5.8. VACANCIES AMONG TRUSTEES. If a Trustee ceases
to hold office for any reason and the number of Trustees is not reduced
pursuant to Section 5.1, or if the number of Trustees is increased pursuant to
Section 5.1, a vacancy shall occur. A resolution certifying the existence of
such vacancy by the Trustees or, if there are more than two, a majority of the
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section
5.7.
SECTION 5.9. EFFECT OF VACANCIES. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the number of
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Trustees shall occur, until such vacancy is filled by the appointment of a
Trustee in accordance with Section 5.7, the Property Trustee shall have all the
powers granted to the Trustees and shall discharge all the duties imposed upon
the Trustees by this Declaration.
SECTION 5.10. MEETINGS. If there is more than one
Administrator, meetings of the Administrators shall be held from time to time
upon the call of any Administrator. Regular meetings of the Administrators may
be held at a time and place fixed by resolution of the Administrators. Notice
of any in-person meetings of the Administrators shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before such meeting. Notice of any
telephonic meetings of the Administrators or any committee thereof shall be
hand delivered or otherwise delivered in writing (including by facsimile, with
a hard copy by overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place and anticipated
purposes of the meeting. The presence (whether in person or by telephone) of an
Administrator at a meeting shall constitute a waiver of notice of such meeting
except where an Administrator attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Administrators may be taken at a meeting by vote
of a majority of the Administrators present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the
Administrators. In the event there is only one Administrator, any and all
action of such Administrator shall be evidenced by a written consent of such
Administrator.
SECTION 5.11. DELEGATION OF POWER. (a) Any Trustee or
Administrator may, by power of attorney consistent with applicable law,
delegate to any other natural person over the age of 21 his or her power for
the purpose of executing any documents contemplated in Section 3.6; and
(b) the Trustees shall have power to delegate from time
to time to such of their number or to other Persons the doing of such things
and the execution of such instruments either in the name of the Trust or the
names of the Trustees or otherwise as the Trustees may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 5.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any Person into which the Property Trustee or the Delaware
Trustee, as the case may be, that is not a natural person, may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Property Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Property Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case may be,
hereunder, provided such Person shall be otherwise qualified and eligible under
this
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Article, without the execution or filing (except to the extent required under
the Business Trust Act) of any paper or any further act on the part of any of
the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. DISTRIBUTIONS. Each Holder shall receive
Distributions pro rata in accordance with the applicable terms of such Holder's
Securities. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest (as defined in the Indenture) and
Additional Sums (as defined in the Indenture)), premium and/or principal on the
Debentures held by the Property Trustee (the amount of any such payment being a
"Payment Amount"), the Property Trustee shall and is directed, to the extent
funds are available for that purpose, to make a distribution (a "Distribution")
of the Payment Amount to Holders in accordance with the respective terms of the
Securities held by them. In the event there is any money or other property held
by or for the Trust that is not accounted for hereunder, such property shall be
distributed pro rata among the Holders of Securities on the next Distribution
Date.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES. (a)
The Administrators shall on behalf of the Trust issue one class of preferred
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "QUIPS") and one class
of common securities representing undivided beneficial interests in the assets
of the Trust having such terms as are set forth in Annex I (the "Common Trust
Securities"). The Trust shall issue no securities or other interests in the
assets of the Trust other than the QUIPS and the Common Trust Securities and
the aggregate liquidation amount of all Securities issued by the Trust and
outstanding at any time shall not exceed [$150 million].
(b) The QUIPS rank pari passu, and payment thereon shall
be made pro rata, with the Common Trust Securities except that, where an Event
of Default specified in clause (1), (2) or (3) of the definition of Event of
Default in the Indenture has occurred and is continuing, the rights of Holders
of the Common Trust Securities to payment in respect of Distributions and
payments upon liquidation, redemption, repurchase and otherwise are
subordinated to the rights to payment of the Holders of the QUIPS.
(c) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.
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(d) Upon issuance of the QUIPS as provided in this
Declaration, the QUIPS so issued shall be deemed to be validly issued, fully
paid and non-assessable.
(e) Every Person that becomes a Holder or a QUIPS
Beneficial Owner in accordance with the terms of this Declaration, shall be
deemed to have expressly assented and agreed to the terms of, and shall be
bound by, this Declaration and the QUIPS Guarantee.
SECTION 7.2. EXECUTION AND AUTHENTICATION. (a) The
Securities shall be signed on behalf of the Trust by one or more
Administrators. Such signature may be the manual or facsimile signature of any
Administrator. In case any Administrator of the Trust who shall have signed any
of the Securities shall cease to be such Administrator before the Securities so
signed shall be delivered by the Trust, such Securities nevertheless may be
delivered as though the person who signed such Securities had not ceased to be
such Administrator; and any Securities may be signed on behalf of the Trust by
such persons who, at the actual date of execution of such Security, shall be
the Administrators of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such an Administrator.
(b) A Common Trust Security shall be deemed validly
issued upon execution by an Administrator without any act of the Property
Trustee. A QUIPS shall not be valid until authenticated by the manual
signature of an authorized signatory of the Property Trustee. Such signature
shall be conclusive evidence that the QUIPS have been authenticated under this
Declaration.
Upon a written order of the Trust signed by one Administrator,
the Property Trustee shall authenticate the QUIPS for original issue. The
Property Trustee may appoint an authenticating agent acceptable to the Trust to
authenticate QUIPS. An authenticating agent may authenticate QUIPS whenever the
Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by such agent.
An authenticating agent has the same rights as the Property Trustee hereunder
with respect to the Sponsor or an Affiliate. The aggregate number of QUIPS
outstanding at any time shall not exceed the number set forth in the Terms in
Annex I hereto except as provided in Section 7.6.
SECTION 7.3. FORM AND DATING. (a) The QUIPS and the Property
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A-1 and the Common Trust Securities shall be substantially in the form
of Exhibit A-2, each of which is hereby incorporated in and expressly made a
part of this Declaration. Certificates representing the Securities may be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators, as evidenced by their execution
thereof. The Securities may have letters, CUSIP or other numbers, notations or
other marks of identification or designation and such legends or endorsements
required by law, stock exchange rule, agreements to which the Trust is subject,
if any, or usage (provided that any such notation, legend or endorsement is in
a form acceptable to the Trust). The Trust at the direction of the Sponsor
shall furnish any such legend not contained in Exhibit A-1 to the Property
Trustee in writing. Each
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QUIPS shall be dated the date of its authentication. The terms and provisions
of the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the
extent applicable, the Property Trustee and the Sponsor, by their execution and
delivery of this Declaration, expressly agree to such terms and provisions and
to be bound thereby.
(b) Global Securities. If no QUIPS constitute Pledged
Securities (as defined in the Master Unit Agreement), the QUIPS will be
represented in the form of one or more permanent global securities in
definitive, fully registered form with the global legend set forth in Exhibit
A-1 hereto (a "Global Security"), which shall be deposited on behalf of the
holders of the Units with the Property Trustee, at its Charlotte office, as
custodian for the Clearing Agency, and registered in the name of the Clearing
Agency or a nominee of the Clearing Agency, duly executed by the Trust and
authenticated by the Property Trustee as hereinafter provided. The number of
QUIPS represented by the Global Security may from time to time be increased or
decreased by adjustments made on the records of the Property Trustee and the
Clearing Agency or its nominee as hereinafter provided.
(c) Book-Entry Provisions. This Section 7.3(c) shall
apply only to the Global Security and such other QUIPS in global form as may be
authorized by the Trust to be deposited with or on behalf of the Clearing
Agency.
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for delivery
initially one or more Global Securities that (i) shall be registered in the
name of Cede & Co. or other nominee of such Clearing Agency and (ii) shall be
delivered by the Property Trustee to such Clearing Agency or pursuant to such
Clearing Agency's written instructions or, if no such written instructions are
received by the Property Trustee, held by the Property Trustee as custodian for
the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with respect to
any Global Security held on their behalf by the Clearing Agency or by the
Property Trustee as the custodian of the Clearing Agency or under such Global
Security, and the Clearing Agency may be treated by the Trust, the Property
Trustee and any agent of the Trust or the Property Trustee as the absolute
owner of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Trust, the Property Trustee or any
agent of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Clearing Agency or
impair, as between the Clearing Agency and its Participants, the operation of
customary practices of such Clearing Agency governing the exercise of the
rights of a holder of a beneficial interest in any Global Security.
(d) Definitive QUIPS. Except as provided in Section 7.9,
owners of beneficial interests in a Global Security will not be entitled to
receive physical delivery of certificated QUIPS ("Definitive QUIPS").
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SECTION 7.4. REGISTRAR, PAYING AGENT AND EXCHANGE AGENT. The
Trust shall maintain in Charlotte, North Carolina or at the principal offices
of the Property Trustee, (i) an office or agency where QUIPS may be presented
for registration of transfer ("Registrar") and (ii) an office or agency where
QUIPS may be presented for payment ("Paying Agent"). The Registrar shall keep
a register of the QUIPS and of their transfer. The Property Trustee may appoint
the Registrar and the Paying Agent and may appoint one or more co-registrars
and one or more additional paying agents in such other locations as it shall
determine. The term "Registrar" includes any additional registrar and the term
"Paying Agent" includes any additional paying agent. The Property Trustee may
change any Paying Agent or Registrar without prior notice to any Holder. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee (if not the Paying Agent) and the
Administrators. The Trust shall notify the Property Trustee of the name and
address of any Agent not a party to this Declaration. In the event that the
Property Trustee shall no longer be the Paying Agent or the Registrar, the
Administrators shall appoint another entity as Registrar or Paying Agent. The
Trust or any of its Affiliates may act as Paying Agent or Registrar. The Trust
shall act as Paying Agent and Registrar for the Common Trust Securities.
The Property Trustee will initially act as Registrar and
Paying Agent for the QUIPS.
SECTION 7.5. PAYING AGENT TO HOLD MONEY IN TRUST. The Trust
shall require each Paying Agent other than the Property Trustee to agree in
writing that the Paying Agent will hold in trust for the benefit of Holders or
the Property Trustee all money held by the Paying Agent for the payment of
liquidation amounts or Distributions on the Securities, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent
to pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee and
to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the
Trust) shall have no further liability for the money. If the Trust or the
Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the
Holders all money held by it as Paying Agent.
SECTION 7.6. REPLACEMENT SECURITIES. If a Holder claims that
a certificate evidencing the Securities owned by it has been lost, destroyed or
wrongfully taken or if such certificate is mutilated and is surrendered to the
Trust, or in the case of a certificate evidencing QUIPS, to the Property
Trustee, and the Property Trustee shall receive evidence to its satisfaction of
the destruction, loss or theft of such certificate and there shall be delivered
to the Property Trustee and the Administrators such security or indemnity as
may be required by them to keep each of them harmless, then, in the absence of
notice that such certificate shall have been acquired by a protected purchaser,
an Administrator on behalf of the Trust shall execute (and in the case of a
certificate evidencing QUIPS, the Property Trustee shall authenticate) and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen certificate, a new certificate of like
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denomination. In connection with the issuance of any new certificate under
this Section 7.6, the Registrar or the Administrators may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate certificate issued pursuant to
this Section 7.6 shall constitute conclusive evidence of or ownership interest
in the relevant Securities, as if originally issued, whether or not the lost,
stolen or destroyed certificate shall be found at any time.
SECTION 7.7. OUTSTANDING QUIPS. The QUIPS outstanding at any
time are all the QUIPS authenticated by the Property Trustee except for those
canceled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding. If a QUIPS is replaced paid or purchased,
pursuant to Section 7.6 or Section 7.10, it ceases to be outstanding unless the
Property Trustee receives proof satisfactory to it that the replaced QUIPS is
held by a protected purchaser. If QUIPS are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and Distributions
on them shall cease to accumulate.
A QUIPS does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8. QUIPS IN TREASURY. In determining whether the
Holders of the required amount of Securities have concurred in any direction,
waiver or consent, QUIPS owned by the Trust, the Sponsor or an Affiliate of the
Sponsor, as the case may be, shall be disregarded and deemed not to be
outstanding, except that for the purposes of determining whether the Property
Trustee shall be fully protected in relying on any such direction, waiver or
consent, only Securities which a Responsible Officer of the Property Trustee
actually knows are so owned shall be so disregarded.
SECTION 7.9. TEMPORARY SECURITIES. (a) Until definitive
securities are ready for delivery, the Trust may prepare and, in the case of
the QUIPS, the Property Trustee shall authenticate temporary securities.
Temporary Securities shall be substantially in the form of definitive
securities but may have variations that the Trust considers appropriate for
temporary securities. Without unreasonable delay, the Trust shall prepare and,
in the case of the QUIPS, the Property Trustee shall authenticate definitive
securities in exchange for temporary securities.
(b) A Global Security deposited with the Clearing Agency
or with the Property Trustee as custodian for the Clearing Agency pursuant to
Section 7.3 shall be transferred to the beneficial owners thereof in the form
of Definitive QUIPS only if such transfer complies with Section 9.2 and (i) the
Clearing Agency notifies the Sponsor that it is unwilling or unable to continue
as Clearing Agency for such Global Security or if at any time such Clearing
Agency ceases to be a "clearing agency" registered under the Exchange Act and a
clearing agency is not appointed by the Sponsor within 90 days of such notice,
(ii) a Default or an Event of Default has occurred and is continuing, or (iii)
the Trust at its sole discretion elects to cause the issuance of Definitive
QUIPS.
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(c) Any Global Security that is transferable to the
beneficial owners thereof in the form of Definitive QUIPS pursuant to this
Section 7.9 shall be surrendered by the Clearing Agency to the Property Trustee
to be so transferred, in whole or from time to time in part, without charge,
and the Property Trustee shall authenticate and make available for delivery,
upon such transfer of each portion of such Global Security, an equal aggregate
liquidation amount of Securities of authorized denominations in the form of
Definitive QUIPS. Any portion of a Global Security transferred pursuant to this
Section shall be registered in such names as the Clearing Agency shall direct.
(d) Subject to the provisions of Section 7.9(c), the
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Participants and Persons that may hold interests through
Participants, to take any action which such Holder is entitled to take under
this Declaration or the Securities.
(e) In the event of the occurrence of any of the events
specified in Section 7.9(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of Definitive QUIPS in fully registered
form without distribution coupons.
SECTION 7.10. CANCELLATION. The Trust at any time may
deliver QUIPS to the Property Trustee for cancellation. The Registrar and
Paying Agent shall forward to the Property Trustee any QUIPS surrendered to
them for registration of transfer, redemption, repurchase, exchange or payment.
The Property Trustee shall promptly cancel all QUIPS surrendered for
registration of transfer, redemption, repurchase, exchange, payment,
replacement or cancellation and shall dispose of canceled QUIPS as the Trust
directs, provided that the Property Trustee shall not be obligated to destroy
QUIPS. The Trust may not issue new QUIPS to replace QUIPS that it has paid or
that have been delivered to the Property Trustee for cancellation or that any
holder has exchanged.
SECTION 7.11. CUSIP NUMBERS. The Trust in issuing the QUIPS
may use "CUSIP" numbers (if then generally in use), and, if so, the Property
Trustee shall use "CUSIP" numbers in notices as a convenience to Holders of
QUIPS; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the QUIPS or as
contained in any such notice and that reliance may be placed only on the other
identification numbers printed on the QUIPS, and any such notice shall not be
affected by any defect in or omission of such numbers. The Sponsor will
promptly notify the Property Trustee of any change in the "CUSIP" numbers.
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1. DISSOLUTION OF TRUST. (a) The Trust shall
automatically dissolve:
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(i) upon a Bankruptcy Event of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) after satisfaction of liabilities to creditors of the
Trust as required by applicable law, following the distribution of a
Like Amount of the Debentures to the Holders, provided that the
Property Trustee has received written notice from the Sponsor, as
holder of all of the issued and outstanding Common Trust Securities
directing the Property Trustee, to dissolve the Trust (which direction
is optional, and except as otherwise expressly provided below, within
the discretion of the Sponsor);
(iv) upon the entry of a decree of judicial dissolution of
the Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities;
(vi) upon the repayment of the Debentures or at such time
as no Debentures are outstanding; or
(vii) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 8.1(a) or Section 8.1(c), and after the completion
of the winding up of the Trust's affairs, the Administrators shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) Subject to the conditions set forth in the
Declaration and the Indenture, the Sponsor may at any time direct the Property
Trustee to dissolve the Trust and, after satisfaction of liabilities to
creditors of the Trust as required by applicable law, cause the Debentures to
be distributed to the holders of the Securities in liquidation of the Trust.
(d) The provisions of Section 3.9, Article X and Section
11.2 shall survive the termination of the Trust and the registration or removal
of any Trustee.
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ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. TRANSFER OF SECURITIES. (a) Securities may only
be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration and the terms of the Securities. Any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article IX, QUIPS may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. To the fullest extent permitted by law, any
transfer or purported transfer of any security not made in accordance with this
Declaration shall be null and void.
(c) The Sponsor may not transfer the Common Trust
Securities; provided, however, that any permitted successor of the Sponsor
under the Indenture may succeed to the Sponsor's ownership of the Common Trust
Securities.
(d) The Registrar shall provide for the registration of
Securities and of the transfer of Securities, which will be effected without
charge but only upon payment (with such indemnity as the Registrar may require)
in respect of any tax or other governmental charges that may be imposed in
relation to it. Upon surrender for registration of transfer of any Securities,
the Registrar shall cause one or more new Securities to be issued in the name
of the designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered
for registration of transfer shall be canceled by the Property Trustee. A
transferee of a Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Security. By acceptance of a Security, each transferee shall be deemed to have
agreed to be bound by this Declaration.
SECTION 9.2. TRANSFER PROCEDURES AND RESTRICTIONS. (a)
Transfer and Exchange of Definitive QUIPS. When Definitive QUIPS are presented
to the Registrar or co-Registrar:
(i) to register the transfer of such Definitive QUIPS; or
(ii) to exchange such Definitive QUIPS which became
mutilated, destroyed, defaced, stolen or lost, for an equal number of
Definitive QUIPS,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested; provided, however, that the Definitive QUIPS surrendered for
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and the
Registrar or co-registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing.
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(b) Transfer of a Definitive QUIPS for a Beneficial
Interest in a Global Security. A Definitive QUIPS may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Property Trustee of a
Definitive QUIPS, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Property Trustee, together with written
instructions directing the Property Trustee to make, or to direct the Clearing
Agency to make, an adjustment on its books and records with respect to the
appropriate Global Security to reflect an increase in the number of the QUIPS
represented by such Global Security, then the Property Trustee shall cancel
such Definitive QUIPS and cause, or direct the Clearing Agency to cause, the
aggregate number of QUIPS represented by the appropriate Global Security to be
increased accordingly. If no Global Securities are then outstanding, the Trust
shall issue and the Property Trustee shall authenticate, upon written order of
any Administrator, an appropriate number of QUIPS in global form.
(c) Transfer and Exchange of Global Securities. Subject
to Section 9.2(d), the transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Clearing Agency, in accordance
with this Declaration (including applicable restrictions on transfer set forth
herein, if any) and the procedures of the Clearing Agency therefor.
(d) Transfer of a Beneficial Interest in a Global
Security for a Definitive QUIPS.
(i) If none of the QUIPS constitute Pledged Securities,
and are thereafter represented by one or more permanent Global
Securities in definitive, fully registered form, any Person having a
beneficial interest in a Global Security may upon request, but only
upon 20 days prior notice to the Property Trustee, and if accompanied
by the information specified below, exchange such beneficial interest
for a Definitive QUIPS representing the same number of QUIPS. Upon
receipt by the Property Trustee from the Clearing Agency or its
nominee on behalf of any Person having a beneficial interest in a
Global Security of written instructions or such other form of
instructions as is customary for the Clearing Agency or the Person
designated by the Clearing Agency as having such a beneficial interest
in a QUIPS and a certification from the transferor (in a form
substantially similar to that attached hereto as the "Form of
Assignment" in Exhibit A-1), which may be submitted by facsimile, then
the Property Trustee will cause the aggregate number of QUIPS
represented by Global Securities to be reduced on its books and
records and, following such reduction, the Trust will execute and the
Property Trustee will authenticate and make available for delivery to
the transferee a Definitive QUIPS.
(ii) Definitive QUIPS issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 9.2(d) shall be
registered in such names and in such authorized denominations as the
Clearing Agency, pursuant to instructions from its Participants or
indirect participants or otherwise, shall instruct the Property
Trustee in writing. The Property Trustee shall deliver such QUIPS to
the Persons in whose names
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such QUIPS are so registered in accordance with such instructions of
the Clearing Agency.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Declaration (other
than the provisions set forth in subsection (f) of this Section 9.2), a Global
Security may not be transferred as a whole except by the Clearing Agency to a
nominee of the Clearing Agency or another nominee of the Clearing Agency or by
the Clearing Agency or any such nominee to a successor Clearing Agency or a
nominee of such successor Clearing Agency.
(f) Authentication of Definitive QUIPS. If at any time:
(i) there occurs a Default or an Event of Default which is
continuing, or
(ii) the Trust, at the direction of the Sponsor, as Holder
of all of the issued and outstanding QUIPS, notifies the Property
Trustee in writing that it elects to cause the issuance of Definitive
QUIPS under this Declaration, then the Trust will execute, and the
Property Trustee, upon receipt of a written order of the Trust signed
by one Administrator requesting the authentication and delivery of
Definitive QUIPS to the Persons designated by the Trust, will
authenticate and make available for delivery Definitive QUIPS, equal
in number to the number of QUIPS represented by the Global Securities,
in exchange for such Global Securities.
(g) Cancellation or Adjustment of Global Security. At
such time as all beneficial interests in a Global Security have either been
exchanged for Definitive QUIPS to the extent permitted by this Declaration or
redeemed, repurchased or canceled in accordance with the terms of this
Declaration, such Global Security shall be returned to the Clearing Agency for
cancellation or retained and canceled by the Property Trustee. At any time
prior to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive QUIPS, QUIPS represented by such Global Security shall
be reduced and an adjustment shall be made on the books and records of the
Property Trustee (if it is then the custodian for such Global Security) with
respect to such Global Security, by the Property Trustee or the Securities
custodian, to reflect such reduction.
(h) Obligations with Respect to Transfers and Exchanges
of QUIPS.
(i) To permit registrations of transfers and exchanges,
an Administrator on behalf of the Trust shall execute and the Property
Trustee shall authenticate Definitive QUIPS and Global Securities at
the Registrar's or co-Registrar's request in accordance with the terms
of this Declaration.
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(ii) Registrations of transfers or exchanges will be
effected without charge, but only upon payment (with such indemnity as
the Trust or the Sponsor may require) in respect of any tax or other
governmental charge that may be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required
to register the transfer of or exchange of QUIPS during a period
beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of QUIPS and ending at the close of business
on the day of such mailing.
(iv) Prior to the due presentation for registrations of
transfer of any QUIPS, the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar may deem and treat the person
in whose name a QUIPS is registered as the absolute owner of such
QUIPS for the purpose of receiving Distributions on such QUIPS and for
all other purposes whatsoever, and none of the Trust, the Property
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All QUIPS issued upon any transfer or exchange
pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this
Declaration as the QUIPS surrendered upon such transfer or exchange.
(i) No Obligation of the Property Trustee.
The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Security, a Participant
in the Clearing Agency or other Person with respect to the accuracy of
the records of the Clearing Agency or its nominee or of any
Participant thereof, with respect to any ownership interest in the
QUIPS or with respect to the delivery to any Participant, beneficial
owner or other Person (other than the Clearing Agency) of any notice
(including any notice of redemption) or the payment of any amount,
under or with respect to such QUIPS. All notices and communications to
be given to the Holders and all payments to be made to Holders under
the QUIPS shall be given or made only to or upon the order of the
registered Holders (which shall be the Clearing Agency or its nominee
in the case of a Global Security). The rights of beneficial owners in
any Global Security shall be exercised only through the Clearing
Agency subject to the applicable rules and procedures of the Clearing
Agency. The Property Trustee may conclusively rely and shall be fully
protected in relying upon information furnished by the Clearing Agency
or any agent thereof with respect to its Participants and any
beneficial owners.
SECTION 9.3. DEEMED SECURITY HOLDERS. Except when QUIPS
constitute Pledged Securities held for the benefit of the holders of Units, the
Trustees may treat the Person in whose name any Security shall be registered on
the books and records of the Trust as the sole owner of such Security for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such
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Security on the part of any Person, whether or not the Trust shall have actual
or other notice thereof.
SECTION 9.4. BOOK ENTRY INTERESTS. Global Securities shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of the Clearing Agency, and no QUIPS Beneficial Owner
will receive a definitive certificate representing such QUIPS Beneficial
Owner's interests in such Global Securities, except as provided in Section 9.2.
Unless and until definitive, fully registered certificates representing QUIPS
have been issued to the QUIPS Beneficial Owners pursuant to Section 9.2 and
Section 7.9:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Securities and receiving approvals,
votes or consents hereunder) as the sole holder of the Global Securities and
shall have no obligation to the QUIPS Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the QUIPS Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such QUIPS Beneficial Owners and the
Clearing Agency and/or the Clearing Agency Participants and receive and
transmit payments of Distributions on the Global Securities to such Clearing
Agency Participants. DTC will make book entry transfers among the Clearing
Agency Participants.
SECTION 9.5. NOTICES TO CLEARING AGENCY. Whenever a notice
or other communication to the Holders of QUIPS is required to be given by a
Trustee under this Declaration and such QUIPS are in the form of Global
Securities, such Trustee shall give all such notices and communications
specified herein to be given to the Holders of Global Securities to the
Clearing Agency, and shall have no notice obligations to the QUIPS Beneficial
Owners.
SECTION 9.6. APPOINTMENT OF SUCCESSOR CLEARING AGENCY. If
any Clearing Agency elects to discontinue its services as securities depositary
with respect to the QUIPS, the Administrators may, in their sole discretion,
appoint a successor Clearing Agency with respect to such QUIPS.
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ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES,
ADMINISTRATORS OR OTHERS
SECTION 10.1. LIABILITY. (a) Except as expressly set forth
in this Declaration, the Securities Guarantees and the terms of the Securities,
the Sponsor shall not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust;
and
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the QUIPS shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2. EXCULPATION. (a) No Indemnified Person shall
be liable, responsible or accountable in damages or otherwise to the Trust or
any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Declaration or by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence (or, in the case of the Property Trustee, by reason
of such Trustee's negligence) or willful misconduct with respect to such acts
or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.
SECTION 10.3. FIDUCIARY DUTY. (a) To the extent that, at law
or in equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall
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not be liable to the Trust or to any other Covered Person for its good faith
reliance on the provisions of this Declaration. The provisions of this
Declaration, to the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons and any Indemnified Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provide terms that are, fair and
reasonable to the Trust or any Holder of Securities.
the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4. INDEMNIFICATION. (a)(i) The Sponsor shall
indemnify, to the full extent permitted by law, any Company Indemnified Person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Trust) by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
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faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Company Indemnified Person did not act in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Trust to procure a judgment in its favor by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees and expenses) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Company Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of Chancery of Delaware
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim,
issue or matter therein, he shall be indemnified, to the full extent permitted
by law, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by the Sponsor
only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set forth
in paragraphs (i) and (ii). Such determination shall be made by the Holder of
the Common Trust Securities.
(v) To the fullest extent permitted by law, expenses
(including attorneys' fees and expenses) incurred by a Company Indemnified
Person in defending a civil, criminal, administrative or investigative action,
suit or proceeding referred to in paragraphs (i) and (ii) of this Section
10.4(a) shall be paid by the Sponsor in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such Company Indemnified Person to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Sponsor as
authorized in this Section 10.4(a). Notwithstanding the foregoing,
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no advance shall be made by the Sponsor if a determination is reasonably and
promptly made by the Holder of the Common Trust Securities, that, based upon
the facts known to the Holder of the Common Trust Securities at the time such
determination is made, such Company Indemnified Person acted in bad faith or in
a manner that such person did not believe to be in or not opposed to the best
interests of the Trust, or, with respect to any criminal proceeding, that such
Company Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Holder of the Common Trust Securities reasonably determines that such
person deliberately breached his duty to the Trust or its Common Trust
Securities or QUIPS Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this Section
10.4(a) shall not be deemed exclusive of any other rights to which those
seeking indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Sponsor or
Holders of the QUIPS or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a
contract between the Sponsor and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect. Any repeal
or modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified Person
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Sponsor
would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was serving
at the request of such constituent entity as a director, trustee, officer,
employee or agent of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to the resulting or surviving
entity as he would have with respect to such constituent entity if its separate
existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(b) The Sponsor agrees, to the fullest extent permitted
by law, to (A) indemnify the (i) Property Trustee, (ii) the Delaware Trustee,
(iii) any Affiliate of the Property Trustee and the Delaware Trustee, and (iv)
any officers, directors, shareholders, members,
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partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv), including the Property Trustee and the Delaware Trustee in their
respective individual capacities, being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense including taxes (other
than taxes based on the income of such Fiduciary Indemnified Person) incurred
without gross negligence (or, in the case of the Property Trustee, incurred
without ordinary negligence) or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder and (B) to advance, from time to time, prior to the final
disposition of any claim, demand, action, suit or proceeding for which
indemnification is authorized pursuant to subsection (b)(A) above, any expenses
(including reasonable legal fees) incurred by a Fiduciary Indemnified Person in
defending such claim, demand, action, suit or proceeding upon receipt by the
Sponsor of an undertaking by or on behalf of the Fiduciary Indemnified Person
to repay such amount if it shall be determined that the Fiduciary Indemnified
Person is not entitled to be indemnified as authorized in subsection (b)(A)
above. The obligation to indemnify and advance expenses as set forth in this
Section 10.4(b) shall survive the satisfaction and discharge of this
Declaration and the Trust and shall survive the resignation or removal of such
Fiduciary Indemnified Person.
(c) The Sponsor agrees to pay the Property Trustee and
the Delaware Trustee, from time to time, such compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by the Property Trustee and the
Delaware Trustee hereunder as may be mutually agreed upon in writing by the
Sponsor and the Property Trustee or the Delaware Trustee, as the case may be,
and, except as otherwise expressly provided herein, to reimburse the Property
Trustee and the Delaware Trustee upon its or their request for all reasonable
expenses (including counsel fees and expenses), disbursements and advances
incurred or made by the Property Trustee or the Delaware Trustee, as the case
may be, in accordance with the provisions of this Declaration.
SECTION 10.5. OUTSIDE BUSINESSES. Any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee (subject to Section
5.3(c)) may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other
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opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary, trustee or
agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1. FISCAL YEAR. The fiscal year ("Fiscal Year")
of the Trust shall be the calendar year, or such other year as is required by
the Code.
SECTION 11.2. CERTAIN ACCOUNTING MATTERS. (a) At all times
during the existence of the Trust, the Administrators shall keep, or cause to
be kept, full books of account, records and supporting documents, which shall
reflect in reasonable detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting, in accordance
with generally accepted accounting principles, consistently applied. The Trust
shall use the accrual method of accounting for United States Federal income tax
purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm
of independent certified public accountants selected by the Administrators.
(b) The Administrators shall cause to be duly prepared
and delivered to each of the Holders, any annual United States Federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code
and the Treasury Regulations. Notwithstanding any right under the Code to
deliver any such statement at a later date, the Administrators shall endeavor
to deliver all such information statements within 90 days after the end of each
Fiscal Year of the Trust.
(c) The Administrators shall cause to be duly prepared
and filed with the appropriate taxing authority, an annual United States
Federal income tax return, on a Form 1041 or such other form required by United
States Federal income tax law, and any other annual income tax returns required
to be filed by the Administrators on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3. BANKING. The Trust shall maintain one or more
bank accounts in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Debentures held by the
Property Trustee shall be made directly to the Property Trustee Account and no
other funds of the Trust shall be deposited in the Property Trustee Account.
The sole signatories for such accounts shall be designated by the
Administrators; provided, however, that the Property Trustee shall designate
the signatories for the Property Trustee Account.
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SECTION 11.4. WITHHOLDING. The Trust and the Administrators
shall comply with all withholding requirements under United States Federal,
state and local law. The Trust shall request, and the Holders shall provide to
the Trust, such forms or certificates as are necessary to establish an
exemption from withholding with respect to each Holder, and any representations
and forms as shall reasonably be requested by the Trust to assist it in
determining the extent of, and in fulfilling, its withholding obligations. The
Administrators shall file required forms with applicable jurisdictions and,
unless an exemption from withholding is properly established by a Holder, shall
remit amounts withheld with respect to the Holder to applicable jurisdictions.
To the extent that the Trust is required to withhold and pay over any amounts
to any authority with respect to Distributions or allocations to any Holder,
the amount withheld shall be deemed to be a Distribution in the amount of the
withholding to the Holder. In the event of any claimed over withholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Trust may reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. AMENDMENTS. (a) Except as otherwise provided
in this Declaration or by any applicable terms of the Securities, this
Declaration may only be amended by a written instrument approved and executed
by:
(i) if the amendment affects the rights, powers, duties,
obligations or immunities of the Administrators, the Administrators
(or if there are more than two Administrators, a majority of the
Administrators);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate
from the Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities);
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(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee or the Delaware Trustee, the Property Trustee and the
Delaware Trustee shall have first received:
(A) an Officers' Certificate from the Sponsor
that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the
Securities); and
(B) an Opinion of Counsel that such amendment is
permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); provided, however,
that the Property Trustee shall not be required to sign any
such amendment; and
(C) a consent in writing by the Property Trustee
or the Delaware Trustee, as the case may be (which consent may
be withheld in such Trustee's sole discretion); and
(iii) unless the Property Trustee shall have first received
an Opinion of Counsel that such amendment or the exercise of any power
granted to the Property Trustee or Delaware Trustee in accordance with
such amendment will not:
(A) cause the Trust to be classified for purposes
of United States Federal income taxation as an association
taxable as a corporation or as other than a grantor trust; or
(B) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(c) Except as provided in Section 12.1(d), (e) or (h), no
amendment shall be made, and any such purported amendment shall be void and
ineffective unless the Holders of a Majority in liquidation amount of the QUIPS
(or Units) shall have consented to such amendment.
(d) In addition to and notwithstanding any other
provision in this Declaration, without the consent of each affected Holder,
this Declaration may not be amended to (i) change the amount or timing of any
Distribution or other payment on the Securities (including payment of the
Applicable Put Price (as defined in the Indenture) or otherwise adversely
affect the amount of any distribution required to be made in respect of the
Securities as of a specified date or (ii) restrict the right of a Holder of
Securities to institute suit for the enforcement of any such payment on or
after such date.
(e) Section 9.1(b) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities.
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(f) Article Four shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common Trust
Securities.
(g) The rights of the holders of the Common Trust
Securities under Article Five to increase or decrease the number of, and
appoint and remove Trustees or Administrators shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the Common Trust
Securities.
(h) Notwithstanding Section 12.1(c), this Declaration may
be amended from time to time by the Sponsor and the Property Trustee without
the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any
provision in this Declaration that may be inconsistent with any other
provision of this Declaration or to make any other provisions with
respect to matters or questions arising under this Declaration which
shall not be inconsistent with the other provisions of the
Declaration; or
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the
Trust will be classified for United States Federal income tax purposes
as a grantor trust or as other than an association taxable as a
corporation at all times that any Securities are outstanding or to
ensure that the Trust will not be required to register as an
Investment Company under the Investment Company Act;
provided, however, that in the case of clauses (i) and (ii), such action shall
not adversely affect in any material respect the interests of the Holders, and
any amendments of this Declaration pursuant to Section 12.1(h) shall become
effective when notice thereof is given to the Holders of the Securities.
SECTION 12.2. MEETINGS OF THE HOLDERS; ACTION BY WRITTEN
CONSENT. (a) Meetings of the Holders of any class of Securities may be called
at any time by the Administrators (or as otherwise provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms
of the Securities or the rules of any stock exchange on which the QUIPS listed
or admitted for trading. The Administrators shall call a meeting of the Holders
of such class if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Securities. Such direction shall be given
by delivering to the Administrators one or more notices in a writing stating
that the signing Holders of Securities wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Securities held by the
Holders exercising the right to call a meeting and only those Securities
specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
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(b) Except to the extent otherwise provided in the terms
of the Securities, the following provisions shall apply to meetings of Holders
of Securities:
(i) notice of any such meeting shall be given by the
Property Trustee to all the Holders of Securities having a right to
vote thereat at least seven days and not more than 60 days before the
date of such meeting. Whenever a vote, consent or approval of the
Holders is permitted or required under this Declaration or the rules
of any stock exchange on which the QUIPS are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders. Any action that may be taken at a meeting of the Holders
of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders having a right to vote
thereon were present and voting. Prompt notice of the taking of action
without a meeting shall be given to the Holders entitled to vote who
have not consented in writing. The Administrators may specify that any
written ballot submitted to the Security Holder for the purpose of
taking any action without a meeting shall be returned to the Trust
within the time specified by the Administrators;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder is entitled to participate,
including waiving notice of any meeting, or voting or participating at
a meeting. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the discretion of the Holder of Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if
the Trust were a Delaware corporation and the Holders were
stockholders of a Delaware corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrators or by such other Person that the Administrators may
designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing rules
of any stock exchange on which the QUIPS or Units are then listed or
trading, otherwise provides, the Administrators, in their sole
discretion, shall establish all other provisions relating to meetings
of Holders, including notice of the time, place or purpose of any
meeting at which any matter is to be voted on by any Holders of
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
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ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF PROPERTY
TRUSTEE. The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a national banking
association with trust powers and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the
Property Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration has been
duly executed and delivered by the Property Trustee and under Delaware law
(excluding securities laws) constitutes a legal, valid and binding obligation
of the Property Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at
law);
(c) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or
registration with or notice to, any Federal banking authority is required for
the execution, delivery or performance by the Property Trustee of this
Declaration.
SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF DELAWARE
TRUSTEE. The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a national banking
association with trust powers and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the
Delaware Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This Declaration has been
duly executed and delivered by the Delaware
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Trustee under Delaware law (excluding securities laws) and constitutes a legal,
valid and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) No consent, approval or authorization of, or
registration with or notice to, any federal banking authority is required for
the execution, delivery or performance by the Delaware Trustee of this
Declaration; and
(d) The Delaware Trustee is an entity which has its
principal place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. NOTICES. All notices provided for in this
Declaration shall be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrators
at the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders):
AMERUS CAPITAL III
c/o AmerUs Life Holdings
699 Walnut Street
Des Moines, IA 50309
Attention: James A. Smallenberger, Administrator
(b) if given to the Delaware Trustee, at the mailing
address set forth below (or such other address as Delaware Trustee may give
notice of to the Holders):
First Union Trust Company, National Association
One Rodney Square
920 King Street
1st Floor
Wilmington, DE 19801
Attention: Corporate Trust Administration
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(c) if given to the Property Trustee, at the Property
Trustee's mailing address set forth below (or such other address as the
Property Trustee may give notice of to the Holders):
First Union National Bank
230 South Street
Charlotte, NC 28288-1179
Attention: Corporate Trust Group
(d) if given to the Holder of the Common Trust
Securities, at the mailing address of the Sponsor set forth below (or such
other address as the Holder of the Common Trust Securities may give notice to
the Trust):
AmerUs Life Holdings
699 Walnut Street
Des Moines, IA 50309
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set
forth on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 14.2. GOVERNING LAW. This Declaration and the rights
of the parties hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware and all rights and remedies shall be
governed by such laws without regard to principles of conflict of laws.
SECTION 14.3. INTENTION OF THE PARTIES. It is the intention
of the parties hereto that for United States Federal income tax purposes the
Trust be classified as a grantor trust and the Debentures as indebtedness. The
provisions of this Declaration shall be interpreted to further this intention
of the parties. The parties hereto agree and any Holder by the acquisition of a
Security shall be deemed to have agreed to treat the Trust as a grantor trust
and the Debentures as indebtedness in all tax and accounting filings and
reports.
SECTION 14.4. HEADINGS. Headings contained in this
Declaration are inserted for convenience of reference only and do not affect
the interpretation of this Declaration or any provision hereof.
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SECTION 14.5. SUCCESSORS AND ASSIGNS. Whenever in this
Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and
agreements in this Declaration by the Sponsor and the Trustees shall bind and
inure to the benefit of their respective successors and assigns, whether so
expressed.
SECTION 14.6. PARTIAL ENFORCEABILITY. If any provision of
this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the
application of such provision to persons or circumstances other than those to
which it is held invalid, shall not be affected thereby.
SECTION 14.7. COUNTERPARTS. This Declaration may contain
more than one counterpart of the signature page and this Declaration may be
executed by the affixing of the signature of each of the Trustees to one of
such counterpart signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as though
all of the signers had signed a single signature page.
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<PAGE> 65
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
-------------------------------------
Michael E. Sproule
as Administrator
-------------------------------------
Michael G. Fraizer
as Administrator
-------------------------------------
James A. Smallenberger
as Administrator
FIRST UNION TRUST COMPANY,
National Association,
as Delaware Trustee
By:
----------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Property Trustee
By:
----------------------------------
Name:
Title:
AMERUS LIFE HOLDINGS, INC.,
as Sponsor
By:
----------------------------------
Name:
Title:
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<PAGE> 66
ANNEX I
TERMS OF
__% QUARTERLY INCOME PREFERRED SECURITIES
__% COMMON TRUST SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of May __, 1998 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Securities are set out below
(each capitalized term used but not defined herein has the meaning set forth in
the Declaration or, if not defined in such Declaration, as defined in the
Prospectus referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Quarterly Income Preferred Securities. 125,000
Quarterly Income Preferred Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of One Hundred
Twenty-Five Million Dollars ($125,000,000), and each with a liquidation amount
with respect to the assets of the Trust of $1,000 per security, are hereby
designated for the purposes of identification only as "___% Quarterly Income
Preferred Securities" (the "QUIPS"). The certificates evidencing the QUIPS
shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any exchange
or quotation system on which the QUIPS are listed, traded or quoted, if any.
(b) Common Trust Securities. 3,750,000 Common Trust
Securities of the Trust with an aggregate liquidation amount with respect to
the assets of the Trust of Three Million, Seven Hundred Fifty Thousand Dollars
($3,750,000) and a liquidation amount with respect to the assets of the Trust
of $1,000 per security, are hereby designated for the purposes of
identification only as "___% Common Trust Securities" (the "Common Trust
Securities"). The certificates evidencing the Common Trust Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed
at a rate per annum of ___% (the "Coupon Rate") of the stated liquidation
amount of $1,000 per Security (the "Liquidation Amount"), such rate being the
rate of interest payable on the Debentures to be held by the Property Trustee.
Except as set forth below in respect of an Extension Period, Distributions in
arrears for more than one quarterly period will bear additional distributions
thereon compounded quarterly at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions," as used herein, includes
distributions of any such interest unless
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otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Debentures held by the Property Trustee and to the
extent the Property Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from May __, 1998, and will be payable
quarterly in arrears on August __, November __, February __, 1998 and May __,
1998 of each year, commencing on August __, 1998 (each, a "Distribution Date"),
except as otherwise described below. Distributions will be computed on the
basis of a 360-day year consisting of twelve 30-day months. As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to elect to defer payments
of interest by extending the interest payment period at any time and from time
to time on the Debentures (each an "Extension Period"), during which Extension
Period no interest shall be due and payable on the Debentures, provided that no
Extension Period shall end on a date other than an Interest Payment Date for
the Debentures or extend beyond the Maturity Date of the Debentures. During any
such Extension Period, the Debenture Issuer may 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 Debenture Issuer's capital
stock (which includes common and preferred stock), (ii) make any payment of
principal of or premium, if any, or interest on or repay, repurchase or redeem
any debt securities of the Debenture Issuer that rank pari passu with or junior
in right of payment to the Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Debenture Issuer of any securities of any
subsidiary of the Debenture Issuer if such guarantee ranks pari passu with or
junior in right of payment to the Debentures (other than, in the case of
clauses (i), (ii) and (iii), (A) dividends or distributions in shares of, or
options, warrants or rights to subscribe for or purchase shares of, common
stock of the Debenture Issuer, (B) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of
stock under any such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto, (C) payments under the QUIPS Guarantee, (D) as a
result of a reclassification of the Debenture Issuer's capital stock solely
into shares of one or more classes or series of the Debenture Issuer's capital
stock or the exchange or conversion of one class or series of the Debenture
Issuer's capital stock for another class or series of the Debenture Issuer's
capital stock, (E) the purchase of fractional interests in shares of the
Debenture Issuer's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
and (F) purchases of common stock of the Debenture Issuer in connection with
the satisfaction by the Debenture Issuer of its obligations (including
purchases related to the issuance of such common stock or rights) under any of
the Debenture Issuer's benefit plans for its and its subsidiaries' directors,
officers or employees or any of the Debenture Issuer's dividend reinvestment
plans). As a consequence of such deferral, Distributions will also be deferred.
Despite such deferral, Distributions will continue to accumulate with
additional Distributions thereon (to the extent permitted by applicable law but
not at a rate greater than the rate at which interest is then accruing on the
Debentures) at the rate of ___% per annum (the "Deferral Rate") compounded
quarterly during any such Extension Period. Prior to the termination of any
such Extension
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Period, the Debenture Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension Period may not
extend beyond the Maturity Date of the Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
relevant record dates which shall be one Business Day prior to the relevant
Distribution Date, unless the QUIPS are issued in certificated form, in which
case the regular record date for such Distributions shall be the first day of
the month in which the relevant Distribution Date falls, which Distribution
Dates correspond to the interest payment dates on the Debentures. The relevant
record dates for the Common Trust Securities shall be the same as the record
dates for the QUIPS. Distributions payable on any Securities that are not
punctually paid on any Distribution Date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures, will cease to be payable
to the Holder on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered
on the special record date or other specified date determined in accordance
with the Indenture. If any date on which Distributions are payable on the
Securities is not a Business Day, then payment of the Distribution payable on
such date will be made on the next succeeding day that is a Business Day (and
so long as such payment is made on such next succeeding day, without any
interest or other payment in respect of any such delay), except 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 such payment was originally payable.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any dissolution of the Trust or the Sponsor
otherwise gives notice of its election to dissolve the Trust pursuant to
Section 8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrators as expeditiously as the Administrators determine to be possible
by distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to the Holders of the Securities a Like Amount (as
defined below) of the Debentures (the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having an aggregate Liquidation Amount equal to the
principal amount of Debentures to be paid in accordance with their terms and
(ii) with respect to a distribution of Debentures upon the liquidation of the
Trust, Debentures having a principal amount equal to the aggregate Liquidation
Amount of the Securities of the Holder to whom such Debentures are distributed.
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If, upon any such liquidation, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets on hand
legally available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis, except that if a Event of Default has occurred and is
continuing, the QUIPS shall have priority over the Common Trust Securities.
4. Redemption and Distribution.
(a) The QUIPS will be subject to mandatory redemption on
the Maturity Date of the Debentures out of the proceeds of the repayment of the
Debentures at Maturity. Upon the repayment of the Debentures at maturity, the
proceeds from such repayment shall be simultaneously applied by the Property
Trustee to redeem a Like Amount of the Securities at a redemption price equal
to the principal of and accrued and unpaid interest on the Debentures as of the
Maturity Date thereof (the "Final Redemption Price").
(b) On and from the date fixed by the Administrators for
any distribution of Debentures and liquidation of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of the
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii)
any certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures and bearing
accrued and unpaid interest in an amount equal to the accumulated and unpaid
Distributions on such Securities until such certificates are presented to the
registrar for the Debentures for transfer or reissue, whereupon the Debenture
Issuer will issue to such Holder, and the Debenture Trustee will authenticate,
a certificate representing such Debentures.
(c) The procedure with respect to redemptions or
distributions of Debentures shall be as follows:
(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for, the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail
to each Holder to be redeemed or exchanged not fewer than 30 nor more
than 60 days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the Maturity Date of the
Debentures. For purposes of the calculation of the date of redemption
or exchange and the dates on which notices are given pursuant to this
Section 4(c)(i), a Redemption/Distribution Notice shall be deemed to
be given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders. Each Redemption/Distribution Notice shall
be addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in
the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
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(ii) If Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice, then to the extent funds are legally
available, (A) with respect to QUIPS issued in book-entry form, by
12:00 noon, New York City time, on the Maturity Date, provided that
the Debenture Issuer has paid the Property Trustee a sufficient amount
of cash in connection with the maturity of the Debentures by 10:00
a.m., New York City time, on the Maturity Date, the Property Trustee
will deposit, or cause the Paying Agent to Deposit, irrevocably with
the Clearing Agency or its nominee (or successor Clearing Agency or
its nominee) funds sufficient to pay the Final Redemption Price and
will give the Clearing Agency irrevocable instructions and authority
to pay the Final Redemption Price to the Clearing Agency Participants,
and (B) with respect to QUIPS issued in certificated form and Common
Trust Securities, provided that the Debenture Issuer has paid the
Property Trustee a sufficient amount of cash in connection with the
maturity of the Debentures, the Property Trustee will give irrevocable
instructions and authority to the Paying Agent and will irrevocably
deposit with the Paying Agent funds sufficient to pay the Final
Redemption Price to the Holders thereof. If a Redemption/Distribution
Notice shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on the
date of such deposit distributions will cease to accumulate on the
Securities and all rights of Holders will cease, except the right of
the Holders of such Securities to receive the Final Redemption Price,
but without interest on such Final Redemption Price, and such
Securities shall cease to be outstanding.
(iii) Payment of accumulated and unpaid Distributions on
the Maturity Date of the Debentures will be subject to the rights of
Holders of Securities on the close of business on a regular record
date in respect of a Distribution Date occurring on or prior to such
Maturity Date.
If the Maturity Date of the Debentures is not a Business Day,
then payment of the Final Redemption Price payable on such date will
be made on the next succeeding day that is a Business Day (and so long
as such payment is made on the next succeeding Business Day, without
any interest or other payment in respect of any such delay), with the
same force and effect as if made on such date fixed for redemption. If
payment of the Final Redemption Price is improperly withheld or
refused and not paid either by the Trust or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions
on such Securities will continue to accumulate at the Coupon Rate on
the Final Redemption Price from the Maturity Date to the actual date
of payment.
(iv) Redemption/Distribution Notices shall be sent by the
Property Trustee on behalf of the Trust to (A) in respect of the
QUIPS, the Clearing Agency or its nominee (or any successor Clearing
Agency or its nominee) if the Global Certificates have been issued or,
if Definitive QUIPS have been issued, to the Holder thereof, and (B)
in respect of the Common Trust Securities to the Holder thereof.
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(v) Subject to the foregoing and applicable law
(including, without limitation, United States Federal securities laws
and banking laws), provided the acquiror is not the Holder of the
Common Trust Securities or the obligor under the Indenture, the
Sponsor or any of its subsidiaries may at any time and from time to
time purchase outstanding QUIPS by tender, in the open market or by
private agreement.
5. Voting Rights - QUIPS.
(a) Except as provided under Sections 5(b) and 7, in the
Business Trust Act and as otherwise required by law and the Declaration, the
Holders of the QUIPS will have no voting rights. The Administrators are
required to call a meeting of the Holders of the QUIPS if directed to do so by
the Holders of at least 10% in liquidation amount of the QUIPS.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
exercising any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
5.07 of the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Debentures
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding QUIPS; provided, however, that where a consent under the
Indenture would require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Trustees without the prior
approval of each Holder of the QUIPS. The Property Trustee shall not revoke
any action previously authorized or approved by a vote of the Holders of the
QUIPS except by subsequent vote of such Holders. The Property Trustee shall
notify each Holder of Securities of any notice of default with respect to the
Debentures. In addition to obtaining the foregoing approvals of such Holders
prior to taking any of the foregoing actions, the Property Trustee shall obtain
an Opinion of Counsel experienced in such matters to the effect that the Trust
will not be classified as an association taxable as a corporation for United
States Federal income tax purposes or as other than a grantor trust on account
of such action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures on
the due date therefor (after giving effect to any Extension Period), then a
Holder of QUIPS or, for so long as QUIPS underlie Units, a holder of record of
Units may directly institute a proceeding for enforcement of payment to such
Holder of the principal of or premium, if any, or interest on a Like Amount of
Debentures (a "Direct Action") on or after the respective due date specified in
the Debentures. In connection with such Direct Action, the rights of the Common
Trust Securities Holder will be subrogated to the rights of such Holder of
QUIPS to the extent of any payment made by the Debenture Issuer to such Holder
of QUIPS in such Direct Action, provided, however, that no such subrogation
right may be exercised so long as an Event of Default has occurred and is
continuing. The Holders of QUIPS will not be able to exercise directly any
other remedy available to the holders of the Debentures.
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Any approval or direction of Holders of QUIPS may be given at
a separate meeting of such Holders of QUIPS convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
Holders of QUIPS are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed to each Holder of
record of QUIPS. Each such notice will include a statement setting forth (i)
the date of such meeting or the date by which such action is to be taken, (ii)
a description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the QUIPS will be
required for the Trust to redeem and cancel QUIPS or to distribute the
Debentures in accordance with the Declaration and the terms of the Securities.
Notwithstanding that Holders of QUIPS are entitled to vote or
consent under any of the circumstances described above, any of the QUIPS that
are owned by the Sponsor or any Affiliate of the Sponsor shall not be entitled
to vote or consent and shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
6. Voting Rights - Common Trust Securities.
(a) Except as provided under Sections 6(b), and 7, in the
Business Trust Act, and as otherwise required by law and the Declaration, the
Holders of the Common Trust Securities will have no voting rights.
(b) Unless an Event of Default under the Declaration
shall have occurred and be continuing, any Trustee may be removed at any time
by the holder of the Common Trust Securities. If an Event of Default under the
Declaration has occurred and is continuing, the Property Trustee and the
Delaware Trustee may be removed at such time by the Holders of a Majority in
liquidation amount of the outstanding QUIPS. In no event will the Holders of
the QUIPS have the right to vote to appoint, remove or replace the
Administrators, which voting rights are vested exclusively in the Sponsor as
the holder of the Common Trust Securities. No resignation or removal of a
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
No vote or consent of the Holders of the Common Trust
Securities will be required for the Trust to redeem and cancel Common Trust
Securities or to distribute the Debentures in accordance with the Declaration
and the terms of the Securities.
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7. Amendments to Declaration.
(a) The provisions set forth under Section 12.1 of the
Declaration and this Section 7 shall govern any amendments to the Declaration.
(b) Notwithstanding any provisions of the Declaration and
the provisions of Section 3.16(b) of the Trust Indenture Act, the right of any
Holder of QUIPS to receive payment of distributions and other payments upon
redemption, repurchase or otherwise, on or after their respective due dates, or
to institute a suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder. For the protection and enforcement of the foregoing provision, each and
every Holder of QUIPS shall be entitled to such relief as can be given either
at law or equity.
8. Right to Exercise Put Options.
Each holder of QUIPS will have the right to require the Trust
to distribute Debentures having an aggregate principal amount equal to the
aggregate Liquidation Amount of such QUIPS to the Put Agent (as defined in the
Indenture), on the Stock Purchase Date (as defined in the Indenture) or on the
date which is three months after the Stock Purchase Date (the "Final Put Date"
and, together with the Stock Purchase Date, the "Put Dates"), in exchange for
such QUIPS, in connection with the concurrent exercise by the Put Agent on
behalf of each such holder of the Debenture Put Option related thereto.
A holder of QUIPS may exercise the right referred to above by
presenting and surrendering the certificate evidencing such QUIPS, at the
offices of the Property Trustee, with the form of "Notice to Require Exercise
of Junior Subordinated Debenture Put Option" on the reverse side of the
certificate completed and executed as indicated, by 10:00 a.m., New York City
time, on the applicable Put Date. If such right is properly exercised, the
applicable Debentures will be distributed to an agent for the holder appointed
by Debenture Issuer for such purpose (the "Put Agent", who shall, if the right
is exercised on the Stock Purchase Date, be the Collateral Agent), and the Put
agent will then exercise the Put Option related thereto on behalf of the
holder.
9. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder according to the aggregate liquidation amount of the Securities held by
the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the QUIPS
pro rata according to the aggregate liquidation amount of QUIPS held by the
relevant Holder relative to the aggregate liquidation amount of all QUIPS
outstanding, and only after satisfaction of all amounts owed to the Holders of
the QUIPS (as described in Section 10), to each Holder of Common Trust
A-8
<PAGE> 74
Securities pro rata according to the aggregate liquidation amount of Common
Trust Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Common Trust Securities outstanding.
10. Ranking; Subordination of Common Trust Securities.
(a) The QUIPS rank pari passu with the Common Trust
Securities and payment of Distributions on, and the Final Redemption Price of,
the QUIPS and the Common Trust Securities, as applicable, shall be made pro
rata based on the liquidation amount of the QUIPS and Common Trust Securities;
provided, however, that if on any Distribution Date or Maturity Date an Event
of Default under the Declaration (solely as the result of an event described in
clauses (1), (2) or (3) of the definition of Event of Default in the Indenture)
shall have occurred and be continuing, no payment of any Distribution, or Final
Redemption Price of, any of the Common Trust Securities, and no other payment
on account of the redemption, liquidation or other acquisition of the Common
Trust Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding QUIPS for all
distribution periods terminating on or prior thereto or, in the case of the
Maturity Date, the full amount of the Final Redemption Price therefor, shall
have been made or provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all Distributions on,
or Final Redemption Price of, the QUIPS then due and payable.
In the case of any Event of Default, the holder of the Common
Trust Securities will be deemed to have waived any right to act with respect to
such Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the Holders of the QUIPS, and only the Holders of the QUIPS will
have the right to direct the Property Trustee to act on their behalf.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of QUIPS and Common Trust Securities, by the
acceptance thereof, agrees to the provisions of the QUIPS Guarantee and the
Common Trust Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture and the Declaration.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive or
similar rights to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
A-9
<PAGE> 75
The Sponsor will provide a copy of the Declaration, the
Indenture, the QUIPS Guarantee or the Common Trust Securities Guarantee (as may
be appropriate) and the Indenture (including any supplemental indenture) to a
Holder without charge on written request to the Sponsor at its principal place
of business.
A-10
<PAGE> 76
EXHIBIT A-1
FORM OF QUARTERLY INCOME PREFERRED SECURITIES
FORM OF FACE OF SECURITY
[IF THIS QUARTERLY INCOME PREFERRED SECURITY ("QUIPS") IS A
GLOBAL SECURITY, INSERT: THIS QUARTERLY INCOME PREFERRED SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY")
OR A NOMINEE OF THE CLEARING AGENCY. THIS QUIPS IS EXCHANGEABLE FOR QUIPS
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS QUIPS (OTHER THAN A TRANSFER OF THIS QUIPS AS A WHOLE BY THE
CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
[UNLESS THIS QUIPS IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK), A NEW YORK CORPORATION, TO THE TRUST OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY QUIPS ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
Certificate Number Number of Quarterly Income Preferred Securities
CUSIP NO.
Certificate Evidencing Quarterly Income Preferred Securities
of
AMERUS CAPITAL III
__% Quarterly Income Preferred Securities (liquidation amount $1,000 per
Quarterly Income Preferred Security)
AMERUS CAPITAL III, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that __________ (the
"Holder") is the registered owner of _____
<PAGE> 77
securities of the Trust representing preferred undivided beneficial interests
in the assets of the Trust designated the ___% Quarterly Income Preferred
Securities (liquidation amount $1,000 per Quarterly Income Preferred Security)
(the "QUIPS"). Subject to the terms of the Declaration (as defined below), the
QUIPS are transferable on the books and records of the Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the QUIPS represented hereby are
issued and shall in all respects be subject to the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of May __, 1998, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the QUIPS as set forth in Annex I to the
Declaration. Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declaration, the QUIPS Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the QUIPS Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States
Federal income tax purposes, the Trust as a grantor trust, the Debentures as
indebtedness and the QUIPS as evidence of indirect beneficial ownership in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this _____ day of May, 1998.
AMERUS CAPITAL III
By:
-------------------------
Name:
Title: Administrator
A-2
<PAGE> 78
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Quarterly Income Preferred Securities
referred to in the within-mentioned Declaration.
Dated:
------------------
FIRST UNION NATIONAL BANK, not in its
individual capacity, but solely as
Property Trustee
By:
----------------------------
Authorized Signatory
A-3
<PAGE> 79
FORM OF REVERSE OF SECURITY
Distributions payable on each QUIPS will be fixed at a rate
per annum of ___% (the "Coupon Rate") of the liquidation amount of $1,000 per
QUIPS, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one
quarterly period will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions", as
used herein, includes such cash distributions and any such interest unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Debentures held by the Property Trustee and to the
extent the Property Trustee has funds on hand legally available therefor.
Distributions on the QUIPS will be cumulative, will accumulate
from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from May __, 1998 and will be payable quarterly
in arrears, on August __, November __, February __, and May __of each year,
commencing on August __, 1998, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to elect to defer payments of interest by extending the interest
payment period at any time and from time to time on the Debentures (each an
"Extension Period"), provided that no Extension Period shall end on a date
other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate of interest
then accruing on the Debentures) at the Coupon Rate compounded quarterly during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension Period may not
extend beyond the Maturity Date of the Debentures. Payments of accumulated
Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to the conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and, after satisfaction of liabilities to creditors of
the Trust as required by applicable law, cause the Debentures to be distributed
to the holders of the Securities in liquidation of the Trust.
The QUIPS will be subject to mandatory redemption on the
Maturity Date of the Debentures as provided in the Declaration.
A-4
<PAGE> 80
The QUIPS and the rights of the Holders shall be governed by
and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.
A-5
<PAGE> 81
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Security to:
- --------------------
- --------------------
- --------------------
(Insert assignee's social security or tax identification number)
- --------------------
- --------------------
- --------------------
(Insert address and zip code of assignee)
- --------------------
- --------------------
- --------------------
and irrevocably appoints agent to transfer this Security on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
--------------------------------
Signature:
---------------------------
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee(1):
-----------------------
- --------------------
(1)Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A-6
<PAGE> 82
NOTICE TO REQUIRE EXERCISE OF JUNIOR SUBORDINATED
DEBENTURE PUT OPTION
The undersigned holder of this Security hereby irrevocably exercises the right
to require the Trust to distribute to the Put Agent Debentures having an
aggregate principal amount equal to the Liquidation Amount of the number of
QUIPS listed below (which number does not exceed the number evidenced hereby)
in exchange for such number of QUIPS, on the Put Date indicated below in
connection with the concurrent exercise by the Put Agent on behalf of the
holder of this Security of the Debenture Put Option related hereto on such
date. Pursuant to the aforementioned exercise of the right to require the
Trust to distribute to the Put Agent Debentures in exchange for such number of
QUIPS, the undersigned hereby directs the Property Trustee to take any actions
necessary to effect the exchange of such number of QUIPS for such principal
amount of Debentures.
Date:
--------------------
Put Date (check one)
Stock Purchase Date
- -----
Final Put Date
- -----
Number of QUIPS (not to exceed number of QUIPS evidenced hereby)
Signature:
---------------------------
(Sign exactly as your name appears on the other side of this Security)
Please Print or Type Name and Address,
Including Zip Code, and Social Security
or Other Identifying Number
- --------------------
- --------------------
- --------------------
Signature Guarantee(1):
--------------------------
- --------------------
(1)Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities and Exchange Act of 1934, as amended.
A-7
<PAGE> 83
EXHIBIT A-2
FORM OF COMMON TRUST SECURITY CERTIFICATE
THIS COMMON TRUST SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN
EFFECTIVE REGISTRATION STATEMENT.
THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED.
Certificate Number Number of Common Trust Securities
Certificate Evidencing Common Trust Securities
of
AMERUS CAPITAL III
__% Common Trust Securities (liquidation amount $1,000
per Common Trust Security)
AMERUS CAPITAL III, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that AmerUs Life Holdings,
Inc. (the "Holder") is the registered owner of common trust securities of the
Trust representing undivided beneficial interests in the assets of the Trust
designated the ___% Common Trust Securities (liquidation amount $1,000 per
Common Trust Security) (the "Common Trust Securities"). The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Trust Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of May __, 1998 as the same may be amended from
time to time (the "Declaration"), including the designation of the terms of the
Common Trust Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given them
in the Declaration.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Trust Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States
Federal income tax purposes, the Debentures as indebtedness and the Common
Trust Securities as evidence of indirect beneficial ownership in the
Debentures.
<PAGE> 84
IN WITNESS WHEREOF, the Trust has executed this certificate
this _____day of May 1998.
AMERUS CAPITAL III
-------------------------------
Name:
Title: Administrator
A-2
<PAGE> 85
FORM OF REVERSE OF SECURITY
Distributions payable on each Common Trust Security will be
fixed at a rate per annum of __% (the "Coupon Rate") of the liquidation amount
of $1,000 per Common Trust Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one quarterly period will bear interest thereon
compounded quarterly at the Coupon Rate (to the extent permitted by applicable
law). The term "Distributions", as used herein, includes such cash
distributions and any such interest unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property Trustee has funds
available therefor.
Distributions on the Common Trust Securities will be
cumulative, will accrue from the most recent date to which Distributions have
been paid or, if no Distributions have been paid, from May __, 1998 and will be
payable quarterly in arrears, on August __, November __, and February __ of
each year, commencing on May __, 1998, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to elect to defer payments of interest by extending the interest
payment period at any time and from time to time on the Debentures (each an
"Extension Period"), provided that no Extension Period shall end on a date
other than an Interest Payment Date for Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with interest thereon (to the extent permitted by
applicable law, but not at a rate exceeding the rate of interest then accruing
on the Debentures) at the Deferral Rate compounded quarterly during any such
Extension Period. Prior to the termination of any such Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
such Extension Period; provided that such Extension Period may not extend
beyond the Maturity Date of the Debentures. Payments of accrued Distributions
will be payable to Holders as they appear on the books and records of the Trust
on the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
Subject to the conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, cause the Debentures to be distributed
to the holders of the Securities in liquidation of the Trust.
The Common Trust Securities will be subject to mandatory
redemption on the Maturity Date of the Debentures, as provided in the
Declaration.
A-3
<PAGE> 86
The Common Trust Securities and the rights of the holders
thereof hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
-----------------------
A-4
<PAGE> 1
EXHIBIT 4.10
Common Trust Securities Guarantee Agreement
By
AmerUs Life Holdings, Inc.
(as Guarantor)
In Favor of
The Holders of the Common Trust Securities of AmerUs Capital II
dated as of
________ __, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS................................2
SECTION 1.01. Definitions....................................................2
ARTICLE II
GUARANTEE.................................4
SECTION 2.01. Guarantee......................................................4
SECTION 2.02. Waiver of Notice and Demand....................................4
SECTION 2.03. Obligations Not Affected.......................................4
SECTION 2.04. Rights of Holders..............................................5
SECTION 2.05. Guarantee of Payment...........................................5
SECTION 2.06. Subrogation....................................................5
SECTION 2.07. Independent Obligations........................................5
ARTICLE III
COVENANTS AND SUBORDINATION.......................6
SECTION 3.01. Limitation of Transactions.....................................6
SECTION 3.02. Subordination..................................................6
ARTICLE IV
TERMINATION................................7
SECTION 4.01. Termination....................................................7
ARTICLE V
MISCELLANEOUS...............................7
SECTION 5.01. Successors and Assigns.........................................7
SECTION 5.02. Amendments.....................................................7
SECTION 5.03. Notices........................................................7
SECTION 5.04. Benefit........................................................8
SECTION 5.05. Interpretation.................................................8
SECTION 5.06. GOVERNING LAW..................................................9
SECTION 5.07. Counterparts...................................................9
-i-
<PAGE> 3
COMMON TRUST SECURITIES GUARANTEE AGREEMENT
This Common Trust Securities Guarantee Agreement, dated as of ________
__, 1998, is executed and delivered by AmerUs Life Holdings, Inc., an Iowa
corporation (the "Guarantor") for the benefit of the Holders (as defined herein)
from time to time of the Common Trust Securities (as defined herein) of AmerUs
Capital II, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of ________ _, 1998, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders, from time to time, of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing up to $_________ aggregate liquidation amount of its ______% Common
Trust Securities (the "Common Trust Securities") and up to $_________ aggregate
liquidation amount of its ___% Capital Securities, (liquidation amount $___ per
Capital Security) (the "Capital Securities" and together with the Common Trust
Securities, the "Trust Securities"), each representing ownership interests in
the assets of the Issuer and having the terms set forth in the Declaration;
WHEREAS, the Trust Securities will be issued by the Issuer and the
proceeds thereof will be used to purchase the Debentures (as defined herein) of
the Guarantor which will be deposited with First Union National Bank, as
Property Trustee under the Declaration, as trust assets;
WHEREAS, as an incentive for the Holders to purchase Common Trust
Securities the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein; and
WHEREAS, the Guarantor is executing and delivering a Guarantee
Agreement (the "QUIPS Guarantee Agreement") with substantially identical terms
to this Common Trust Securities Guarantee, for the benefit of the holders of the
Capital Securities, except that if a Guarantee Event of Default (as defined in
the QUIPS Guarantee Agreement) has occurred and is continuing, the rights of the
holders of the Common Trust Securities to receive the Guarantee Payments under
this Common Trust Securities Guarantee are subordinated, to the extent and in
the manner set forth in this Common Trust Securities Guarantee, to the rights of
Holders to receive Guarantee Payments under the QUIPS Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Common Trust Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Common Trust
Securities Guarantee Agreement for the benefit of the Holders from time to time
of the Common Trust Securities.
<PAGE> 4
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Common Trust Securities
Guarantee Agreement, the terms set forth below shall, unless the context
otherwise requires, have the following meanings. Capitalized or otherwise
defined terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Declaration as in effect on the date hereof unless
otherwise indicated.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, provided, however that an Affiliate of the
Guarantor shall not be deemed to include the Issuer. 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.
"Capital Securities" has the meaning specified in the recitals to this
Common Trust Securities Guarantee Agreement.
"Common Trust Securities" has the meaning specified in the recitals to
this Common Trust Securities Guarantee Agreement.
"Common Trust Securities Guarantee Agreement" means this Common Trust
Securities Guarantee Agreement, dated as of ________ __, 1998 by AmerUs Life
Holdings, Inc. in favor of the Holders.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the ____% [Junior Subordinated Deferrable Interest
Debentures] due ________ __, 2003 held by the Property Trustee (as defined in
the Declaration) of the Issuer.
"Declaration" has the meaning specified in the recitals to this Common
Trust Securities Guarantee Agreement.
"Distributions" shall have the same meaning as indicated in the
Declaration.
"Final Redemption Price" means the final redemption price of the
Common Trust Securities, including all accumulated and unpaid Distributions to
the date of redemption.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Common Trust Securities,
to the extent not paid or made by or on behalf of the Issuer: (i) any
accumulated and unpaid Distributions (as defined in the Declaration) required to
be paid on the Common Trust Securities, to the extent the Issuer shall have
funds on hand legally available therefor at such time, and (ii) the Final
Redemption Price with respect to the
-2-
<PAGE> 5
Common Trust Securities outstanding on the Maturity Date of the Debentures (as
defined in the Indenture) to the extent the Issuer shall have funds on hand
legally available therefor at such time. If a Guarantee Event of Default has
occurred and is continuing, no Guarantee Payments under the Common Trust
Securities Guarantee with respect to the Common Trust Securities or any
guarantee payment under any Other Common Trust Securities Guarantees shall be
made until the Holders shall be paid in full the Guarantee Payments to which
they are entitled under the QUIPS Guarantee Agreement.
"Guarantor" has the meaning specified in the recitals to this Common
Trust Securities Guarantee Agreement.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Common Trust Securities that is deemed to be a holder of
any Common Trust Securities.
"Indenture" means the Junior Subordinated Indenture dated as of
________ __, 1998, among the Guarantor and First Union National Bank, as
trustee, as the same may be amended or supplemented from time to time in
accordance with the terms hereof, pursuant to which the Debentures are to be
issued to the Property Trustee.
"Majority in liquidation amount of the Capital Securities" means
Common Trust Securities representing more than 50% of the liquidation amount of
all then outstanding Common Trust Securities.
"Other Debentures" means all junior subordinated debentures issued by
the Guarantor from time to time and sold to trusts established or to be
established by the Guarantor, in each case similar to the issuer.
"Other Guarantees" means all guarantees issued by the Guarantor with
respect to Common Trust Securities similar to the Common Trust Securities issued
by other trusts to be established by the Guarantor, in each case similar to the
Issuer.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"QUIPS Guarantee Agreement" has the meaning specified in the recitals
to this Common Trust Securities Guarantee Agreement.
"Trust" or "Issuer" means AmerUs Capital II, a Delaware statutory
business trust.
"Trust Securities" has the meaning specified in the recitals to this
Common Trust Securities Guarantee Agreement.
-3-
<PAGE> 6
ARTICLE II
GUARANTEE
SECTION 2.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due,
regardless of any defense (other than the defense of payment), right of set-off
or counterclaim which the Issuer may have or assert. The Guarantor's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 2.02. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of the Common Trust Securities Guarantee Agreement and of
any liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 2.03. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Common Trust Securities
Guarantee Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Common Trust
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Final Redemption Price or any other sums
payable under the terms of the Common Trust Securities or the extension of
time for the performance of any other obligation under, arising out of, or
in connection with, the Common Trust Securities (other than an extension of
time for the payment of Distributions that results from the extension of
any interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Common Trust
Securities or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorgani zation, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
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(e) any invalidity of, or defect or deficiency in, the Common Trust
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying obligation) it being the intent of this Section
2.03 that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.04. Rights of Holders. The Guarantor expressly acknowledges
that any Holder of Common Trust Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Common Trust
Securities Guarantee, without first instituting a legal proceeding against the
Issuer or any other Person.
SECTION 2.05. Guarantee of Payment. This Common Trust Securities
Guarantee Agreement creates a guarantee of payment and not a guarantee of
collection. This Common Trust Securities Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon distribution of
Debentures to holders thereof as provided in the Declaration.
SECTION 2.06. Subrogation. The Guarantor shall be subrogated to all
(if any) rights of the Holders against the Issuer in respect of any amounts paid
to the Holders by the Guarantor under this Common Trust Securities Guarantee
Agreement and shall have the right to waive payment by the Issuer pursuant to
Section 2.01; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Common Trust Securities Guarantee Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Common Trust Securities
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 2.07. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Common Trust Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Common Trust Securities Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 2.03 hereof.
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ARTICLE III
COVENANTS AND SUBORDINATION
SECTION 3.01. Limitation of Transactions. So long as any Common Trust
Securities remain outstanding, the Guarantor 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 Guarantor's capital stock (which
includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities of the Guarantor (including any Other Debentures) that rank pari
passu with or junior in right of payment to the Debentures or (iii) make any
guarantee payments with respect to any guarantee by the Guarantor of any
securities of any subsidiary of the Guarantor (including Other Guarantees) if
such guarantee ranks pari passu or junior in right of payment to the Debentures
(other than in the case of clauses (i), (ii) and (iii), (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, common stock of the Guarantor, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the QUIPS
Guarantee, (d) as a result of a reclassification of the Guarantor's capital
stock solely into shares of one or more classes or series of the Guarantor's
capital stock or the exchange or the conversion of one class or series of the
Guarantor's capital stock for another class or series of the Guarantor's capital
stock, (e) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged and (f) purchases of the
Guarantor's common stock in connection with the satisfaction by the Guarantor of
its obligations (including purchases related to the issuance of such common
stock or rights), under any of the Guarantor's benefit plans for its and its
subsidiaries' directors, officers or employees or any of the Guarantor's
dividend reinvestment plans) if at such time (x) a Guarantee Event of Default or
an Event of Default (as defined in the Indenture) shall have occurred and be
continuing, (y) if such Debentures are held by the Property Trustee, the
Guarantor shall be in default with respect to its payment of any obligations
under the QUIPS Guarantee or (z) the Guarantor shall have given notice of its
election of the exercise of its right to extend the interest payment period
pursuant to Section 3.01(b)(6) of the Indenture and any such extension shall
have commenced and not yet terminated.
SECTION 3.02. Subordination. (a) This Common Trust Securities
Guarantee will constitute an unsecured obligation of the Guarantor and will rank
subordinate and junior in right of payment to all present and future Senior
Indebtedness (as defined in the Indenture), to the same extent and in the same
manner that the Debentures are subordinated to all present and future Senior
Indebtedness pursuant to the Indenture, it being understood that the terms of
Article XII of the Indenture shall apply to the obligations of the Guarantor
under this Common Trust Securities Guarantee as if (x) such Article XII were set
forth herein in full and (y) such obligations were substituted for the term
"Securities" appearing in such Article XII, and pari passu with the Debentures
and Other Debentures.
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<PAGE> 9
(b) If an Event of Default has occurred and is continuing, the rights
of Holders of the Common Trust Securities of the Issuer to receive payments
under this Common Trust Securities Guarantee are subordinated to the rights of
holders of QUIPS to receive Guarantee Payments.
ARTICLE IV
TERMINATION
SECTION 4.01. Termination. This Common Trust Securities Guarantee
shall terminate and be of no further force and effect (i) upon full payment of
the Final Redemption Price of all Common Trust Securities, (ii) at such other
time when there are no longer any QUIPS outstanding (iii) at any such other time
when there are no longer any Common Trust Securities outstanding.
Notwithstanding the foregoing, this Common Trust Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder of the Common Trust Securities must restore payment of any sums
paid under the Common Trust Securities or under this Common Trust Securities
Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Successors and Assigns. All guarantees and agreements
contained in this Common Trust Securities Guarantee Agreement shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Common Trust Securities
then outstanding. Except in connection with a consolidation, merger or sale
involving the Guarantor or a conveyance, transfer or lease of the Guarantor's
properties that is permitted under Article __ of the Indenture and pursuant to
which the successor or assignee agrees in writing to perform the Guarantor's
obligations hereunder, the Guarantor shall not assign its obligations hereunder,
and any purported assignment other than in accordance with this provision shall
be void.
SECTION 5.02. Amendments. Except with respect to any changes that do
not adversely affect the rights of Holders in any material respect (in which
case no consent of Holders will be required), this Common Trust Securities
Guarantee Agreement may be amended only with the prior approval of the Holders
of not less than a Majority in liquidation amount of the outstanding Common
Trust Securities. The provisions of the Declaration concerning meetings of
Holders shall apply to the giving of such approval.
SECTION 5.03. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
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(a) if given to the Guarantor, to the address or telecopy number set
forth below or such other address as the Guarantor may give notice of to
the Holders:
AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa 50309-2407
Facsimile No: (515) 283-3402
Attention: Secretary
(b) if given to the Issuer, at the address or telecopy number set
forth below or such other address as the Issuer may give notice of to the
Holders:
AmerUs Capital II
c/o AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa 50309-2407
Facsimile No: (515) 283-3402
Attention: Administrative Trustee
with copy to:
First Union National Bank
------------------------------------
------------------------------------
Facsimile No:
----------------------
Attention: Corporate Trust Administration
(c) if given to any Holder of Capital Securities, at the address set
forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 5.04. Benefit. This Common Trust Securities Guarantee
Agreement is solely for the benefit of the Holders, and is not separately
transferable from the Common Trust Securities.
SECTION 5.05. Interpretation. In this Common Trust Securities
Guarantee Agreement, unless the context otherwise requires:
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<PAGE> 11
(a) Capitalized terms used in this Common Trust Securities Guarantee
Agreement but not defined in the preamble hereto have the respective
meanings assigned to them in Section 1.01 unless otherwise indicated;
(b) a term defined anywhere in this Common Trust Securities Guarantee
Agreement has the same meaning throughout;
(c) all references to "the Common Trust Securities Guarantee
Agreement" or "this Common Trust Securities Guarantee Agreement" are to
this Common Trust Securities Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Common Trust Securities Guarantee Agreement
to Articles and Sections are to Articles and Sections of this Common Trust
Securities Guarantee Agreement unless otherwise specified;
(e) a reference to the singular includes the plural and vice versa;
and
(f) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 5.06. GOVERNING LAW. THIS COMMON TRUST SECURITIES GUARANTEE
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICTS OF LAWS
PROVISIONS.
SECTION 5.07. Counterparts. This Common Trust Securities Guarantee
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
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THIS Common Trust Securities Guarantee Agreement is executed as of the
day and year first above written.
AMERUS LIFE HOLDINGS, INC.
By:
----------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 4.11
QUIPS Guarantee Agreement
Between
AmerUs Life Holdings, Inc.
(as Guarantor)
and
First Union National Bank
(as Trustee)
dated as of
________ __, 1998
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C>
SECTION 1.01. Definitions.......................................................................2
ARTICLE II
TRUST INDENTURE ACT...............................................5
SECTION 2.01. Trust Indenture Act; Application..................................................5
SECTION 2.02. Lists of Holders..................................................................5
SECTION 2.03. Reports by the QUIPS Guarantee Agreement Trustee..................................5
SECTION 2.04. Periodic Reports to QUIPS Guarantee Agreement Trustee.............................6
SECTION 2.05. Evidence of Compliance with Conditions Precedent..................................6
SECTION 2.06. Guarantee Events of Default; Waiver...............................................6
SECTION 2.07. Guarantee Event of Default; Notice................................................6
SECTION 2.08. Conflicting Interests.............................................................7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
QUIPS GUARANTEE AGREEMENT TRUSTEE........................................7
SECTION 3.01. Powers and Duties of the QUIPS Guarantee Agreement Trustee........................7
SECTION 3.02. Certain Rights of QUIPS Guarantee Agreement Trustee...............................9
SECTION 3.03. Not Responsible for Recitals or Issuance of QUIPS
Guarantee Agreement.......................................................11
ARTICLE IV
QUIPS GUARANTEE AGREEMENT TRUSTEE.......................................12
SECTION 4.01. QUIPS Guarantee Agreement Trustee; Eligibility...................................12
SECTION 4.02. Appointment, Removal and Resignation of QUIPS Guarantee Agreement
Trustees..................................................................12
ARTICLE V
GUARANTEE...................................................13
SECTION 5.01. Guarantee........................................................................13
SECTION 5.02. Waiver of Notice and Demand......................................................13
SECTION 5.03. Obligations Not Affected.........................................................13
SECTION 5.04. Rights of Holders................................................................14
SECTION 5.05. Guarantee of Payment.............................................................15
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
SECTION 5.06. Subrogation.............................................................15
SECTION 5.07. Independent Obligations.................................................15
ARTICLE VI
COVENANTS AND SUBORDINATION ...............................16
SECTION 6.01. Limitation of Transactions..............................................16
SECTION 6.02. Subordination...........................................................16
ARTICLE VII
TERMINATION.........................................17
SECTION 7.01. Termination.............................................................17
ARTICLE VIII
COMPENSATION AND EXPENSES OF
QUIPS GUARANTEE AGREEMENT TRUSTEE..............................17
SECTION 8.01. Compensation and Expenses of QUIPS Guarantee Agreement Trustee..........17
ARTICLE IX
INDEMNIFICATION.......................................18
SECTION 9.01. Exculpation.............................................................18
SECTION 9.02. Indemnification.........................................................18
ARTICLE X
MISCELLANEOUS........................................19
SECTION 10.01. Successors and Assigns.................................................19
SECTION 10.02. Amendments.............................................................19
SECTION 10.03. Notices................................................................19
SECTION 10.04. Benefit................................................................20
SECTION 10.05. Interpretation.........................................................20
SECTION 10.06. GOVERNING LAW..........................................................21
SECTION 10.07. Counterparts...........................................................21
</TABLE>
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<PAGE> 4
QUIPS GUARANTEE AGREEMENT
This QUIPS Guarantee Agreement, dated as of ________ __, 1998, is
executed and delivered by AmerUs Life Holdings, Inc., an Iowa corporation (the
"Guarantor"), and First Union National Bank, a national banking corporation, as
trustee, for the benefit of the Holders (as defined herein) from time to time of
the Capital Securities (as defined herein) of AmerUs Capital II, a Delaware
statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of ________ _, 1998 among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders, from time to time, of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing up to $_________ aggregate liquidation amount of its ____% Capital
Securities, (liquidation amount $____ per Capital Security) (the "Capital
Securities") and up to $_________ aggregate liquidation amount of its ___%
Common Securities (the "Common Securities" and together with the Capital
Securities, the "Trust Securities"), each representing ownership interests in
the assets of the Issuer and having the terms set forth in the Declaration;
WHEREAS, the Trust Securities will be issued by the Issuer and the
proceeds thereof will be used to purchase the Debentures (as defined herein) of
the Guarantor which will be deposited with First Union National Bank, as
Property Trustee under the Declaration, as trust assets;
WHEREAS, as an incentive for the Holders to purchase Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein; and
WHEREAS, the Guarantor is executing and delivering a Guarantee
Agreement (the "Common Trust Securities Guarantee") with substantially identical
terms to this QUIPS Guarantee Agreement, for the benefit of the holders of the
Common Securities, except that if a Guarantee Event of Default (as defined
herein) has occurred and is continuing, the rights of the holders of the Common
Securities to receive the Guarantee Payments under the Common Trust Securities
Guarantee are subordinated, to the extent and in the manner set forth in the
Common Trust Securities Guarantee, to the rights of Holders to receive Guarantee
Payments under this QUIPS Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this QUIPS Guarantee Agreement
for the benefit of the Holders from time to time of the Capital Securities.
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this QUIPS Guarantee Agreement,
the terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Declaration as in effect on the date hereof unless otherwise indicated.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, provided, however that an Affiliate of the
Guarantor shall not be deemed to include the Issuer. 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.
"Capital Securities" has the meaning specified in the recitals to this
QUIPS Guarantee Agreement.
"Common Securities" has the meaning specified in the recitals to this
QUIPS Guarantee Agreement.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the ____% Junior Subordinated Deferrable Interest
Debentures due ________ __, 2003 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"Declaration" has the meaning set forth in the preamble to this QUIPS
Guarantee Agreement.
"Distribution" shall have the same meaning as indicated in the
Declaration.
"Final Redemption Price" means the final redemption price of the
QUIPS, including all accumulated and unpaid Distributions to the date of
redemption.
"Guarantee Event of Default" has the meaning specified in Section
2.06.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by or on behalf of the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Declaration) required to be paid on
the Capital Securities, to the extent the Issuer shall have funds on hand
legally available therefor at such time, and (ii) the Final Redemption Price
with respect to the QUIPS outstanding on the Maturity Date of the Debentures (as
defined in the Indenture) to the extent the Issuer shall have funds on hand
legally available therefor at such time. If a Guarantee
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Event of Default has occurred and is continuing, no Guarantee Payments under the
Common Trust Securities Guarantee with respect to the Common Trust Securities or
any guarantee payment under any Other Common Trust Securities Guarantees shall
be made until the Holders shall be paid in full the Guarantee Payments to which
they are entitled under this QUIPS Guarantee Agreement.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Capital Securities or Normal Units that is deemed, under
the Declaration, to be a holder of any Capital Securities; provided, however,
that in determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the QUIPS Guarantee Agreement Trustee or any
Affiliate of the Guarantor or the QUIPS Guarantee Agreement Trustee.
"Indemnified Person" means the QUIPS Guarantee Agreement Trustee, any
Affiliate of the QUIPS Guarantee Agreement Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the QUIPS Guarantee Agreement Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
________ __, 1998, among the Guarantor and First Union National Bank, as
trustee, as the same may be amended or supplemented from time to time in
accordance with the terms hereof, pursuant to which the Debentures are to be
issued to the Property Trustee.
"Majority in liquidation amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, Capital Securities representing
more than 50% of the liquidation amount of all then outstanding Capital
Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two of the following: the Chairman of the Board, Vice
Chairman of the Board, Chief Executive Officer, the President or a Vice
President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this QUIPS Guarantee
Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
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<PAGE> 7
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Other Common Trust Securities Guarantees" shall have the same meaning
as "Other Guarantees" in the Common Trust Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued by
the Guarantor from time to time and sold to trusts established or to be
established by the Guarantor, in each case similar to the issuer.
"Other Guarantees" means all guarantees issued by the Guarantor with
respect to securities similar to the QUIPS issued by other trusts to be
established by the Guarantor, in each case similar to the Issuer.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"QUIPS Guarantee Agreement" means this QUIPS Guarantee Agreement,
dated as of ________ __, 1998, between AmerUs Life Holdings, Inc. and the QUIPS
Guarantee Agreement Trustee.
"QUIPS Guarantee Agreement Trustee" means First Union National Bank
until a Successor QUIPS Guarantee Agreement Trustee has been appointed and has
accepted such appointment pursuant to the terms of this QUIPS Guarantee
Agreement and thereafter means each such Successor QUIPS Guarantee Agreement
Trustee.
"Responsible Officer" means, with respect to the QUIPS Guarantee
Agreement Trustee, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
financial services officer or any other officer of the Corporate Trust Office of
the QUIPS Guarantee Agreement Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Senior Indebtedness" shall have the same meaning as indicated in the
Indenture.
"Successor QUIPS Guarantee Agreement Trustee" means a successor QUIPS
Guarantee Agreement Trustee possessing the qualifications to act as QUIPS
Guarantee Agreement Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
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<PAGE> 8
"Trust Securities" has the meaning specified in the recitals to this
QUIPS Guarantee Agreement.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This QUIPS Guarantee Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this QUIPS Guarantee
Agreement and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this QUIPS Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section
310 to 317, inclusive, of the Trust Indenture Act, through operation of
Section 318(c) thereof, such imposed duties shall control. If any provision
of this QUIPS Guarantee Agreement modifies or excludes any provision of the
Trust Indenture Act which may be so modified or excluded, the latter
provision shall be deemed to apply to this QUIPS Guarantee Agreement as so
modified or excluded, as the case may be.
SECTION 2.02. Lists of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the QUIPS
Guarantee Agreement Trustee (a) on a quarterly basis on each regular record
date for the Debentures, a list, in such form as the QUIPS Guarantee
Agreement Trustee may reasonably require, of the names and addresses of the
Holders of the Capital Securities ("List of Holders") as of a date not more
than 15 days prior to the delivery thereof, and (b) at such other times as
the QUIPS Guarantee Agreement Trustee may request in writing, within 30
days after the receipt by the Guarantor of any such request, a List of
Holders as of a date not more than 15 days prior to the time such list is
furnished, in each case to the extent such information is in the possession
or control of the Guarantor and has not otherwise been received by the
QUIPS Guarantee Agreement Trustee in its capacity as such; provided,
however, that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the QUIPS Guarantee Agreement Trustee by
the Guarantor. The QUIPS Guarantee Agreement Trustee may destroy any List
of Holders previously given to it on receipt of a new List of Holders.
(b) The QUIPS Guarantee Agreement Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.03. Reports by the QUIPS Guarantee Agreement Trustee. Not
later than ________ __ of each year, commencing ________ __, 1999, the QUIPS
Guarantee
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<PAGE> 9
Agreement Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313(a) of the Trust Indenture Act. The QUIPS Guarantee
Agreement Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
SECTION 2.04. Periodic Reports to QUIPS Guarantee Agreement Trustee.
The Guarantor shall provide to the QUIPS Guarantee Agreement Trustee, the
Securities and Exchange Commission and the Holders such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act; provided,
however, that such compliance certificate shall be delivered on or before 120
days after the end of each fiscal year of the Guarantor. Delivery of such
reports, information and documents to the QUIPS Guarantee Agreement Trustee is
for informational purposes only and the QUIPS Guarantee Agreement Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Guarantor's compliance with any of its covenants hereunder (as to which the
QUIPS Guarantee Agreement Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the QUIPS Guarantee Agreement Trustee such evidence
of compliance with conditions precedent, if any, provided for in this QUIPS
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.06. Guarantee Events of Default; Waiver. (a) An event of
default under this QUIPS Guarantee Agreement will occur upon the failure of the
Guarantor to perform any of its payment or other obligations hereunder (a
"Guarantee Event of Default"); provided, however, that, other than with respect
to a default on any payment under this QUIPS Guarantee Agreement, the Guarantor
shall have received notice of default and shall not have cured such default
within 90 days after receipt of such notice.
(b) The Holders of a Majority in liquidation amount of the Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Guarantee Event of Default and its consequences. Upon
such waiver, any such Guarantee Event of Default shall cease to exist, and any
Guarantee Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this QUIPS Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Guarantee Event of Default or
impair any right consequent thereon.
SECTION 2.07. Guarantee Event of Default; Notice.
(a) The QUIPS Guarantee Agreement Trustee shall, within 90 days after
the occurrence of a Guarantee Event of Default, transmit by mail, first
class postage prepaid, to the Holders of the Capital Securities, notices of
all Guarantee Events of Default known
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to the QUIPS Guarantee Agreement Trustee, unless such Guarantee Event
of Default has been cured before the giving of such notice, provided that,
except in the case of a default in the payment of a Guarantee Payment, the
QUIPS Guarantee Agreement Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers of the QUIPS
Guarantee Agreement Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Capital
Securities.
(b) The QUIPS Guarantee Agreement Trustee shall not be deemed to have
knowledge of any Guarantee Event of Default unless the QUIPS Guarantee
Agreement Trustee shall have received written notice, or a Responsible
Officer charged with the administration of this QUIPS Guarantee Agreement
shall have obtained actual knowledge, of such Guarantee Event of Default.
SECTION 2.08. Conflicting Interests. The Declaration and the Indenture
shall be deemed to be specifically described in this QUIPS Guarantee Agreement
for the purposes of clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
QUIPS GUARANTEE AGREEMENT TRUSTEE
SECTION 3.01. Powers and Duties of the QUIPS Guarantee Agreement
Trustee.
(a) This QUIPS Guarantee Agreement shall be held by the QUIPS
Guarantee Agreement Trustee for the benefit of the Holders of the Capital
Securities, and the QUIPS Guarantee Agreement Trustee shall not transfer
this QUIPS Guarantee Agreement to any Person except a Holder of Capital
Securities exercising his or her rights pursuant to Section 5.04(iv) or to
a Successor QUIPS Guarantee Agreement Trustee on acceptance by such
Successor QUIPS Guarantee Agreement Trustee of its appointment to act as
Successor QUIPS Guarantee Agreement Trustee. The right, title and interest
of the QUIPS Guarantee Agreement Trustee shall automatically vest in any
Successor QUIPS Guarantee Agreement Trustee, upon acceptance by such
Successor QUIPS Guarantee Agreement Trustee of its appointment hereunder,
and such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor QUIPS Guarantee Agreement Trustee.
(b) If a Guarantee Event of Default actually known to a Responsible
Officer has occurred and is continuing, the QUIPS Guarantee Agreement
Trustee shall enforce this QUIPS Guarantee Agreement for the benefit of the
Holders of the Capital Securities.
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(c) The QUIPS Guarantee Agreement Trustee, before the occurrence of
any Guarantee Event of Default and after the curing of all Guarantee Events
of Default that may have occurred, shall undertake to perform only such
duties as are specifically set forth in this QUIPS Guarantee Agreement, and
no implied covenants shall be read into this QUIPS Guarantee Agreement
against the QUIPS Guarantee Agreement Trustee. In case a Guarantee Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.06), and is actually known to a Responsible Officer, the QUIPS Guarantee
Agreement Trustee shall exercise such of the rights and powers vested in it
by this QUIPS Guarantee Agreement, and use the same degree of care and
skill in its exercise thereof, as a prudent individual would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this QUIPS Guarantee Agreement shall be construed
to relieve the QUIPS Guarantee Agreement Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Guarantee Event of Default and
after the curing or waiving of all such Guarantee Events of Default
that may have occurred:
(A) the duties and obligations of the QUIPS Guarantee
Agreement Trustee shall be determined solely by the express
provisions of this QUIPS Guarantee Agreement, (including pursuant
to Section 2.01) and the QUIPS Guarantee Agreement Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this QUIPS Guarantee
Agreement and no implied covenants or obligations shall be read
into this QUIPS Guarantee Agreement against the QUIPS Guarantee
Agreement Trustee; and
(B) in the absence of bad faith on the part of the QUIPS
Guarantee Agreement Trustee, the QUIPS Guarantee Agreement
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the QUIPS Guarantee
Agreement Trustee and conforming to the requirements of this
QUIPS Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof or of the
Trust Indenture Act are specifically required to be furnished to
the QUIPS Guarantee Agreement Trustee, the QUIPS Guarantee
Agreement Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
QUIPS Guarantee Agreement;
(ii) the QUIPS Guarantee Agreement Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
of the QUIPS Guarantee Agreement Trustee, unless it shall be proved
that the QUIPS Guarantee Agreement Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
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(iii) the QUIPS Guarantee Agreement Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less than
a Majority in liquidation amount of the Capital Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the QUIPS Guarantee Agreement Trustee, or exercising any
trust or power conferred upon the QUIPS Guarantee Agreement Trustee
under this QUIPS Guarantee Agreement; and
(iv) no provision of this QUIPS Guarantee Agreement shall require
the QUIPS Guarantee Agreement Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers,
if the QUIPS Guarantee Agreement Trustee shall have reasonable grounds
for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this QUIPS Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.02. Certain Rights of QUIPS Guarantee Agreement Trustee.
(a) Subject to the provisions of Section 3.01:
(i) The QUIPS Guarantee Agreement Trustee may conclusively rely
and shall be fully protected in acting, or refraining from acting upon
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document reasonably
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
QUIPS Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this QUIPS Guarantee
Agreement, the QUIPS Guarantee Agreement Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the QUIPS Guarantee
Agreement Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt of such request
from the QUIPS Guarantee Agreement Trustee, shall be promptly
delivered by the Guarantor.
(iv) The QUIPS Guarantee Agreement Trustee may (at the expense of
the Guarantor) consult with legal counsel, and the written advice or
opinion of such legal counsel with respect to legal matters shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by
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it hereunder in good faith and in accordance with such advice or
opinion. Such legal counsel may be legal counsel to the Guarantor or
any of its Affiliates and may be one of its employees. The QUIPS
Guarantee Agreement Trustee shall have the right at any time to seek
instructions concerning the administration of this QUIPS Guarantee
Agreement from any court of competent jurisdiction.
(v) The QUIPS Guarantee Agreement Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this QUIPS Guarantee Agreement at the request or direction of any
Holder, unless such Holder shall have provided to the QUIPS Guarantee
Agreement Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the QUIPS Guarantee
Agreement Trustee, against the costs, expenses (including attorneys'
fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the QUIPS Guarantee Agreement Trustee;
provided that nothing contained in this Section 3.02(a)(v) shall be
taken to relieve the QUIPS Guarantee Agreement Trustee, upon the
occurrence of a Guarantee Event of Default, of its obligation to
exercise the rights and powers vested in it by this QUIPS Guarantee
Agreement.
(vi) The QUIPS Guarantee Agreement Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
QUIPS Guarantee Agreement Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(vii) The QUIPS Guarantee Agreement Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys, and the QUIPS Guarantee
Agreement Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed with
due care by it hereunder.
(viii) Whenever in the administration of this QUIPS Guarantee
Agreement the QUIPS Guarantee Agreement Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the QUIPS Guarantee
Agreement Trustee (A) may request instructions from the Holders of the
Capital Securities, (B) may refrain from enforcing such remedy or
right or taking such other action until such instructions are
received, and (C) shall be protected in acting in accordance with such
instructions.
(ix) The QUIPS Guarantee Agreement Trustee shall have no duty to
see any recording, filing or registration of any instrument (or any
re-recording, refiling or re-registration thereof).
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(x) Any action taken by the QUIPS Guarantee Agreement Trustee or
its agents hereunder shall bind the Holders, and the signature of the
QUIPS Guarantee Agreement Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the QUIPS
Guarantee Agreement Trustee to so act or as to its compliance with any
of the terms and provisions of this QUIPS Guarantee Agreement, both of
which shall be conclusively evidenced by the QUIPS Guarantee Agreement
Trustee's or its agent's taking such action.
(xii) The QUIPS Guarantee Agreement Trustee shall not be liable
for any action taken, suffered or omitted to be taken by it in good
faith, without negligence, and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this QUIPS Guarantee Agreement.
(b) No provision of this QUIPS Guarantee Agreement shall be deemed to
impose any duty or obligation on the QUIPS Guarantee Agreement Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the QUIPS Guarantee Agreement Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform
any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the QUIPS
Guarantee Agreement Trustee shall be construed to be a duty to act in
accordance with such power and authority.
SECTION 3.03. Not Responsible for Recitals or Issuance of QUIPS
Guarantee Agreement. The recitals contained in this QUIPS Guarantee Agreement
shall be taken as the statements of the Guarantor, and the QUIPS Guarantee
Agreement Trustee does not assume any responsibility for their correctness. The
QUIPS Guarantee Agreement Trustee makes no representation as to the validity or
sufficiency of this QUIPS Guarantee Agreement.
ARTICLE IV
QUIPS GUARANTEE AGREEMENT TRUSTEE
SECTION 4.01. QUIPS Guarantee Agreement Trustee; Eligibility.
(a) There shall at all times be a QUIPS Guarantee Agreement Trustee
which shall
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and shall be a corporation
meeting the requirements of Section 310(a) of the Trust Indenture Act.
If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of a supervising
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or examining authority, then, for the purposes of this Section
4.01(a)(ii) and to the extent permitted by the Trust Indenture Act,
the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the QUIPS Guarantee Agreement Trustee shall cease
to be eligible to so act under Section 4.01(a), the QUIPS Guarantee
Agreement Trustee shall immediately resign in the manner and with the
effect set out in Section 4.02(c).
(c) If the QUIPS Guarantee Agreement Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the QUIPS Guarantee Agreement Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 4.02. Appointment, Removal and Resignation of QUIPS Guarantee
Agreement Trustees.
(a) Subject to Section 4.02(b), the QUIPS Guarantee Agreement Trustee
may be appointed or removed without cause at any time by the Guarantor
except during a Guarantee Event of Default.
(b) The QUIPS Guarantee Agreement Trustee shall not be removed until a
Successor QUIPS Guarantee Agreement Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
QUIPS Guarantee Agreement Trustee and delivered to the Guarantor.
(c) The QUIPS Guarantee Agreement Trustee appointed hereunder shall
hold office until a Successor QUIPS Guarantee Agreement Trustee shall have
been appointed or until its removal or resignation. The QUIPS Guarantee
Agreement Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the QUIPS
Guarantee Agreement Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor QUIPS Guarantee
Agreement Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor QUIPS Guarantee Agreement
Trustee and delivered to the Guarantor and the resigning QUIPS Guarantee
Agreement Trustee.
(d) If no Successor QUIPS Guarantee Agreement Trustee shall have been
appointed and accepted appointment as provided in this Section 4.02 within
30 days after delivery to the Guarantor of an instrument of resignation,
the resigning QUIPS Guarantee Agreement Trustee may petition, at the
expense of the Guarantor, any court of competent jurisdiction for
appointment of a Successor QUIPS Guarantee Agreement Trustee. Such court
may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor QUIPS Guarantee Agreement Trustee.
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(e) No QUIPS Guarantee Agreement Trustee shall be liable for the acts
or omissions to act of any Successor QUIPS Guarantee Agreement Trustee.
(f) Upon termination of this QUIPS Guarantee Agreement or removal or
resignation of the QUIPS Guarantee Agreement Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the QUIPS Guarantee Agreement
Trustee all amounts due to the QUIPS Guarantee Agreement Trustee accrued to
the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due,
regardless of any defense (other than the defense of payment) right of set-off
or counterclaim which the Issuer may have or assert. The Guarantor's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of the QUIPS Guarantee Agreement and of any liability to
which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the QUIPS Guarantee Agreement Trustee, the
Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.03. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this QUIPS Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Capital Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Debentures as so provided in the Indenture), Final Redemption
Price, liquidation Distribution or any other sums payable under the terms
of the Capital Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Capital Securities;
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(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Capital
Securities or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorgani zation, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying obligation) it being the intent of this Section
5.03 that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.04. Rights of Holders. The Guarantor expressly acknowledges
that: (i) this QUIPS Guarantee Agreement will be deposited with the QUIPS
Guarantee Agreement Trustee to be held for the benefit of the Holders; (ii) the
QUIPS Guarantee Agreement Trustee has the right to enforce this QUIPS Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
liquidation amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
QUIPS Guarantee Agreement Trustee in respect of this QUIPS Guarantee Agreement
or exercising any trust or power conferred upon the QUIPS Guarantee Agreement
Trustee under this QUIPS Guarantee Agreement; provided, however, that (subject
to Section 3.01) the QUIPS Guarantee Agreement Trustee shall have the right to
decline to follow any such direction if the QUIPS Guarantee Agreement Trustee
shall determine that the actions so directed would be unjustly prejudicial to
the Holders not taking part in such direction or if the QUIPS Guarantee
Agreement Trustee, being advised by counsel, determines that the action or
proceeding so directed may not lawfully be taken or if the QUIPS Guarantee
Agreement Trustee in good faith by its board of directors or trustees, executive
committee or a trust committee or directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the QUIPS Guarantee Agreement Trustee in personal liability; and (iv)
any Holder of Capital Securities may institute, to the extent permissible under
applicable law, a legal proceeding directly against the Guarantor to enforce its
rights under this QUIPS Guarantee Agreement without first instituting a legal
proceeding against the QUIPS Guarantee Agreement Trustee, the Issuer or any
other Person. The Guarantor waives any right or remedy to require that any
action be brought
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first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.
SECTION 5.05. Guarantee of Payment. This QUIPS Guarantee Agreement
creates a guarantee of payment and not a guarantee of collection. This QUIPS
Guarantee Agreement will not be discharged except by payment of the Guarantee
Payments in full (without duplication of amounts theretofore paid by the Issuer)
or upon distribution of Debentures to Holders as provided in the Declaration.
SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all
(if any) rights of the Holders against the Issuer in respect of any amounts paid
to the Holders by the Guarantor under this QUIPS Guarantee Agreement and shall
have the right to waive payment by the Issuer pursuant to Section 5.01;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this QUIPS Guarantee
Agreement, if, at the time of any such payment, any amounts are due and unpaid
under this QUIPS Guarantee Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this QUIPS Guarantee Agreement notwithstanding the occurrence of any
event referred to in subsections (a) through (g), inclusive, of Section 5.03
hereof.
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ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.01. Limitation of Transactions. So long as any QUIPS remain
outstanding, the Guarantor 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 Guarantor's capital stock (which includes common and
preferred stock), (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Guarantor
(including any Other Debentures) that rank pari passu with or junior in right of
payment to the Debentures or (iii) make any guarantee payments with respect to
any guarantee by the Guarantor of any securities of any subsidiary of the
Guarantor (including Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Debentures (other than in the case of clauses
(i), (ii) and (iii), (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, common stock of the
Guarantor, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the QUIPS Guarantee Agreement, (d) as a
result of a reclassification of the Guarantor's capital stock solely into shares
of one or more classes or series of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged and (f) purchases of the Guarantor's
common stock in connection with the satisfaction by the Guarantor of its
obligations (including purchases related to the issuance of such common stock or
rights) under any of the Guarantor's benefit plans for its and its subsidiaries'
directors, officers or employees or any of the Guarantor's dividend reinvestment
plans), if at such time (x) a Guarantee Event of Default or an Event of Default
(as defined in the Indenture) shall have occurred and be continuing, (y) if such
Debentures are held by the Property Trustee, the Guarantor shall be in default
with respect to its payment of any obligations under this QUIPS Guarantee
Agreement or (z) the Guarantor shall have given notice of its election of the
exercise of its right to extend the interest payment period pursuant to Section
3.01(b)(6) of the Indenture and any such extension shall have commenced and not
yet terminated.
SECTION 6.02. Subordination. (a) The obligations of the Guarantor
under this QUIPS Guarantee Agreement will constitute unsecured obligations of
the Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness of the Guarantor to the extent and in the
manner that the Debentures are subordinated to all present and future Senior
Indebtedness pursuant to the Indenture, it being understood that the terms of
Article XII of the Indenture shall apply to the obligations of the Guarantor
under this QUIPS Guarantee Agreement as if (x) such Article XII were set forth
herein in full and (y) such obligations were substituted for the term
"Securities" appearing in such Article XII and pari passu with the Debentures
and Other Debentures. The obligations of the Guarantor hereunder do not
constitute Senior Indebtedness (as defined in the Indenture) of the Guarantor.
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(b) The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
QUIPS Guarantee Agreement will be effectively subordinated to all existing and
future liabilities of the Guarantor's subsidiaries, and claimants should look
only to the assets of the Guarantor for payments thereunder. This QUIPS
Guarantee Agreement does not limit the incurrence or issuance of other secured
or unsecured debt of the Guarantor, including Senior Indebtedness of the
Guarantor, under any indenture that the Guarantor may enter into in the future
or otherwise.
(c) If an Event of Default has occurred and is continuing, the rights
of holders of the Common Trust Securities of the Issuer to receive payments
under the Common Trust Securities Guarantee are subordinated to the rights of
Holders of QUIPS to receive Guarantee Payments.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This QUIPS Guarantee Agreement shall
terminate and be of no further force and effect upon (i) full payment of the
Final Redemption Price of all Capital Securities, (ii) upon liquidation of the
Issuer and the distribution of the Debentures to Holders of Capital Securities
or (iii) at such other time when there are no longer any Capital Securities
outstanding. Notwithstanding the foregoing, this QUIPS Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Capital
Securities or this QUIPS Guarantee Agreement. Guarantor will indemnify each
Holder and hold it harmless from and against any loss it may suffer in such
circumstance.
ARTICLE VIII
COMPENSATION AND EXPENSES OF
QUIPS GUARANTEE AGREEMENT TRUSTEE
SECTION 8.01. Compensation and Expenses of QUIPS Guarantee Agreement
Trustee. The Guarantor covenants and agrees to pay to the QUIPS Guarantee
Agreement Trustee from time to time, and the QUIPS Guarantee Agreement Trustee
shall be entitled to, such compensation as shall be agreed to in writing between
the Guarantor and the QUIPS Guarantee Agreement Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Guarantor will pay or reimburse the QUIPS Guarantee
Agreement Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the QUIPS Guarantee Agreement Trustee in
accordance with any of the provisions of this QUIPS Guarantee Agreement
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly
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in its employ) except any such expenses, disbursements or advances as may arise
form its negligence or bad faith. The Guarantor also covenants to indemnify the
QUIPS Guarantee Agreement Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense including taxes (other than taxes based on the
income of the QUIPS Guarantee Agreement Trustee) incurred without negligence or
bad faith on the part of the QUIPS Guarantee Agreement Trustee and arising out
of or in connection with the acceptance or administration of this guarantee,
including the costs and expenses of defending itself against any claim of
liability in the premises. The obligations of the Guarantor under this Article
VIII to compensate and indemnify the QUIPS Guarantee Agreement Trustee and to
pay or reimburse the QUIPS Guarantee Agreement Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the QUIPS
upon all property and funds held or collected by the QUIPS Guarantee Agreement
Trustee as such, except funds held in trust for the benefit of the holders of
particular QUIPS.
The provisions of this Article VIII shall survive the termination of
this QUIPS Guarantee Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Guarantor or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this QUIPS Guarantee Agreement and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this QUIPS Guarantee Agreement or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
SECTION 9.02. Indemnification. The Guarantor agrees to indemnify each
Indemnified Person for, and to hold each Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against, or investigating, any claim or liability in connection with the
exercise or performance of
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any of its powers or duties hereunder. The obligation to indemnify as set forth
in this Section 9.02 shall survive the termination of this QUIPS Guarantee
Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Successors and Assigns. All guarantees and agreements
contained in this QUIPS Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Capital Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor or a
conveyance, transfer or lease of the Guarantor's properties that is permitted
under Article Eight of the Indenture and pursuant to which the successor or
assignee agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder, and any purported
assignment other than in accordance with this provision shall be void.
SECTION 10.02. Amendments. Except with respect to any changes that do
not adversely affect the rights of Holders in any material respect (in which
case no consent of Holders will be required), this QUIPS Guarantee Agreement may
be amended only with the prior approval of the Holders of not less than a
Majority in liquidation amount of the outstanding Capital Securities (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined). The provisions of the Declaration concerning
meetings of Holders shall apply to the giving of such approval.
SECTION 10.03. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address or telecopy number set
forth below or such other address as the Guarantor may give notice of to
the QUIPS Guarantee Agreement Trustee:
AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa 50309-2407
Facsimile No: (515) 283-3402
Attention: Secretary
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(b) if given to the Issuer, at the address or telecopy number set
forth below or such other address as the Issuer may give notice of to the
QUIPS Guarantee Agreement Trustee:
AmerUs Capital II
c/o AmerUs Life Holdings, Inc.
418 Sixth Avenue
Des Moines, Iowa 50309-2407
Facsimile No: (515) 283-3402
Attention: Administrative Trustee
with copy to:
First Union National Bank
-------------------------
-------------------------
Facsimile No:
--------------
Attention: Corporate Trust Administration
(c) if given to the QUIPS Guarantee Agreement Trustee, at the QUIPS
Guarantee Agreement Trustee's address or telecopy number set forth below:
First Union National Bank
-------------------------
-------------------------
Facsimile No:
---------------
Attention: Corporate Trust Administration
(d) if given to any Holder of Capital Securities, at the address set
forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 10.04. Benefit. This QUIPS Guarantee Agreement is solely for
the benefit of the Holders, and is not separately transferable from the Capital
Securities.
SECTION 10.05. Interpretation. In this QUIPS Guarantee Agreement,
unless the context otherwise requires:
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(a) Capitalized terms used in this QUIPS Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 1.01 unless otherwise indicated;
(b) a term defined anywhere in this QUIPS Guarantee Agreement has the
same meaning throughout;
(c) all references to "the QUIPS Guarantee Agreement" or "this QUIPS
Guarantee Agreement" are to this QUIPS Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this QUIPS Guarantee Agreement to Articles and
Sections are to Articles and Sections of this QUIPS Guarantee Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this QUIPS Guarantee Agreement unless otherwise defined in
this QUIPS Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 10.06. GOVERNING LAW. THIS QUIPS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICTS OF LAWS PROVISIONS.
SECTION 10.07. Counterparts. This QUIPS Guarantee Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
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THIS QUIPS Guarantee Agreement is executed as of the day and year
first above written.
AMERUS LIFE HOLDINGS, INC.
By:
---------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as QUIPS Guarantee Agreement Trustee
By:
---------------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 4.12
================================================================================
AMERUS LIFE HOLDINGS, INC.
AND
FIRST UNION NATIONAL BANK,
as Unit Agent
---------------------------
MASTER UNIT AGREEMENT
---------------------------
Dated as of [ ]
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
RECITALS............................................................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions...........................................................................1
SECTION 102. Compliance Certificates and Opinions..................................................9
SECTION 103. Form of Documents Delivered to Unit Agent............................................10
SECTION 104. Acts of Holders; Record Dates........................................................10
SECTION 105. Notices, etc. to Unit Agent and the Company..........................................12
SECTION 106. Notice to Holders; Waiver............................................................12
SECTION 107. Effect of Headings and Table of Contents.............................................13
SECTION 108. Successors and Assigns...............................................................13
SECTION 109. Separability Clause..................................................................13
SECTION 110. Benefits of Agreement................................................................13
SECTION 111. Governing Law........................................................................13
SECTION 112. Legal Holidays.......................................................................13
SECTION 113. Counterparts.........................................................................14
SECTION 114. Inspection of Agreement..............................................................14
ARTICLE TWO
UNIT CERTIFICATE FORMS
SECTION 201. Forms of Unit Certificates Generally.................................................14
SECTION 202. Form of Unit Agent's Certificate of Authentication...................................15
ARTICLE THREE
THE UNITS
SECTION 301. Title and Terms; Denominations.......................................................15
SECTION 302. Rights and Obligations Evidenced by the Unit Certificates............................16
SECTION 303. Execution, Authentication, Delivery and Dating.......................................16
SECTION 304. Temporary Unit Certificates..........................................................17
SECTION 305. Registration; Registration of Transfer and Exchange..................................17
SECTION 306. Mutilated, Destroyed, Lost and Stolen Unit Certificates..............................20
</TABLE>
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<TABLE>
<S> <C>
SECTION 307. Persons Deemed Owners................................................................21
SECTION 308. Cancellation.........................................................................21
SECTION 309. Substitution of Pledged Securities and Creation of Stripped Units;
Units Not Otherwise Separable....................................................22
SECTION 310. Payments on the Units................................................................24
ARTICLE FOUR
THE PLEDGED SECURITIES
SECTION 401. Payments on the Pledged Securities...................................................24
SECTION 402. Transfer of Pledged Securities Upon Occurrence of
Termination Event................................................................25
ARTICLE FIVE
THE PURCHASE CONTRACTS
SECTION 501. Purchase of Shares of Common Stock...................................................26
SECTION 502. Contract Fees........................................................................28
SECTION 503. Deferral of Payment Dates For Contract Fee...........................................28
SECTION 504. Payment of Purchase Price............................................................29
SECTION 505. Issuance of Shares of Common Stock...................................................31
SECTION 506. Adjustment of Settlement Rate........................................................32
SECTION 507. Notice of Adjustments and Certain Other Events.......................................37
SECTION 508. No Fractional Shares.................................................................38
SECTION 509. Charges and Taxes....................................................................38
SECTION 510. Termination Event; Notice............................................................39
ARTICLE SIX
REMEDIES
SECTION 601. Unconditional Rights of Holders......................................................39
SECTION 602. Restoration of Rights and Remedies...................................................39
SECTION 603. Rights and Remedies Cumulative.......................................................40
SECTION 604. Delay or Omission Not Waiver.........................................................40
SECTION 605. Undertaking for Costs................................................................40
SECTION 606. Waiver of Stay or Extension Laws.....................................................41
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE SEVEN
THE UNIT AGENT
<S> <C>
SECTION 701. Certain Duties and Responsibilities..................................................41
SECTION 702. Notice of Default....................................................................42
SECTION 703. Certain Rights of Unit Agent.........................................................42
SECTION 704. Not Responsible for Recitals or Issuance of Units....................................43
SECTION 705. May Hold Units.......................................................................43
SECTION 706. Money Held in Trust..................................................................43
SECTION 707. Compensation and Reimbursement.......................................................44
SECTION 708. Corporate Unit Agent Required; Eligibility...........................................44
SECTION 709. Resignation and Removal; Appointment of Successor....................................45
SECTION 710. Acceptance of Appointment by Successor...............................................46
SECTION 711. Merger, Conversion, Consolidation or Succession to Business..........................47
SECTION 712. Preservation of Information; Communications to Holders...............................47
SECTION 713. No Obligations of Unit Agent.........................................................47
SECTION 714. Tax Compliance.......................................................................48
ARTICLE EIGHT
SUPPLEMENTAL AGREEMENTS
SECTION 801. Supplemental Agreements Without Consent of Holders...................................48
SECTION 802. Supplemental Agreements with Consent of Holders......................................49
SECTION 803. Execution of Supplemental Agreements.................................................50
SECTION 804. Effect of Supplemental Agreements....................................................51
SECTION 805. Reference to Supplemental Agreements.................................................51
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 901. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions..................................................51
SECTION 902. Rights and Duties of Successor Corporation...........................................52
SECTION 903. Opinion of Counsel to Unit Agent.....................................................52
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE TEN
COVENANTS
<S> <C>
SECTION 1001. Performance Under Purchase Contracts................................................52
SECTION 1002. Maintenance of Office or Agency.....................................................53
SECTION 1003. Company to Reserve Common Stock.....................................................53
SECTION 1004. Covenants as to Common Stock........................................................53
SECTION 1005. Statements of Officers of the Company as to Default.................................54
TESTIMONIUM........................................................................................55
SIGNATURES.........................................................................................55
EXHIBIT A Form of Normal Unit Certificate
EXHIBIT B Form of Stripped Unit Certificate
EXHIBIT C Form of Call Option Agreement
EXHIBIT D Form of Pledge Agreement
</TABLE>
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<PAGE> 6
MASTER UNIT AGREEMENT, dated as of _____________, between AMERUS LIFE
HOLDINGS, INC, an Iowa corporation (the "Company"), and First Union National
Bank, a _____________ banking corporation, acting as unit agent for the Holders
of Units from time to time (the "Unit Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Unit Certificates evidencing the Units.
All things necessary to make the Company's obligations under the Units,
when the Unit Certificates are executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Unit Agent, as in this
Agreement provided, the valid obligations of the Company, and to constitute
these presents a valid agreement of the Company, in accordance with its terms,
have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the Units by
the Holders thereof, it is mutually agreed as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; and
(b) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Act" has the meaning specified in Section 104.
"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
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<PAGE> 7
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.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Aggregate Consideration Deliverable on Exercise of the Call Options" has
the meaning set forth in the Call Option Agreement.
"Applicable Market Value" has the meaning specified in Section 501.
"Board of Directors" means the board of directors of the Company or a duly
authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of Directors,
a copy of which has been certified by the Secretary or an Assistant Secretary of
the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Unit Agent.
"Business Day" means any day that is not a Saturday, Sunday or a day on
which banking institutions in The City of New York are authorized or obligated
by law or executive order to be closed.
"Call Option" means an option entitling the Call Option Holder to acquire
the QUIPS or Junior Subordinated Debentures underlying the related Normal Unit
on the terms and subject to the conditions set forth in the Call Option
Agreement.
"Call Option Agreement" means the Call Option Agreement, dated as of the
date hereof, between the Call Option Holder named therein and the Unit Agent, in
its capacity as Unit Agent and as attorney-in-fact for the Holders from time to
time of the Normal Units, the form of which is attached hereto as Exhibit C, as
the same may be amended from time to time in accordance with the terms hereof
and thereof.
"Call Option Expiration Date" means _______ (or, if such date is not a
Business Day, the next succeeding Business Day).
"Call Option Holder" means the Person named as the Call Option Holder in
the Call Option Agreement.
"Call Settlement Date" means the date on which the Call Options are settled
pursuant to the Call Option Agreement.
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<PAGE> 8
"Closing Price" has the meaning specified in Section 501.
"Collateral Agent" means __________________, as Collateral Agent under the
Pledge Agreement, until a successor Collateral Agent shall have become such
pursuant to the applicable provisions of the Pledge Agreement, and thereafter
"Collateral Agent" shall mean the Person who is then the Collateral Agent
thereunder.
"Common Stock" means the Class A Common Stock, no par value per share, of
the Company.
"Company" means the Person designated as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Contract Fee" means, with respect to each Purchase Contract, a fee payable
[to] [by] the Company [by] [to] the Holder of the related Unit, accruing on the
Stated Amount of such Unit from and including the date of first issuance of any
Units to but excluding the Stock Purchase Date and payable quarterly in arrears
on each Quarterly Payment Date to and including the Stock Purchase Date at a
rate per annum equal to the Contract Fee Rate (and computed on the basis of a
360-day year of twelve 30-day months), plus any additional fees accrued thereon
pursuant to Section 503.
"Contract Fee Rate" means ______%.
"Corporate Trust Office" means the principal office of the Unit Agent in
the Borough of Manhattan, The City of New York, at which at any particular time
its corporate trust business shall be administered, which office at the date
hereof is located at _________ ____________, New York, New York ______.
"Current Market Price" has the meaning specified in Section 506(a)(8).
"Declaration" means the Declaration of Trust, dated as of ___________ and
amended and restated as of the date hereof, executed by the Administrators, the
Sponsor and the Trustees of the Trust, as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"Deferral Rate" means ____% per annum plus, for the period after the Call
Option Expiration Date, the amount (if any) by which the interest rate on the
Junior Subordinated Debentures shall have been increased on the Call Option
Expiration Date in accordance with the terms of the Junior Subordinated
Debentures.
"Depositary" means a clearing agency registered under the Exchange Act that
is designated to act as Depositary for Global Units as contemplated by Section
305.
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<PAGE> 9
"Exchange Act" means the Securities Exchange Act of 1934 or any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Unit Certificate" means a Unit Certificate that evidences all or
part of the Normal Units or a Unit Certificate that evidences all or a part of
the Stripped Units and is registered in the name of the Depositary or a nominee
thereof.
"Holder" means a Person in whose name a Unit Certificate is registered in
the Unit Register; "Holder", when used with respect to any particular Unit
Certificate (or Unit), means a Person in whose name such Unit Certificate (or
the Unit Certificate evidencing such Unit) is registered in the relevant Unit
Register.
"Indenture" means the Indenture, dated as of the date hereof, between the
Company and First Union National Bank, as Trustee, as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"Issuer Order" or "Issuer Request" means a written order or request signed
in the name of the Company by its Chairman of the Board, any Vice Chairman, its
President or a Vice President and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Unit Agent.
"Junior Subordinated Debenture Put Option" has the meaning specified for
the term "Put Option" in the Indenture.
"Junior Subordinated Debentures" means the _____% Junior Subordinated
Deferrable Interest Debentures due ___________ of the Company issued under the
Indenture.
"Normal Unit" means the rights to purchase Common Stock under a Purchase
Contract, together with ownership of the QUIPS or other Pledged Securities
pledged to secure the obligations referred to in (a) and (b) below, subject to
(a) the obligations owed to the Company under such Purchase Contract, (b) for so
long as any Call Options remain exercisable, the obligations owed to the Call
Option Holder under a Call Option and (c) the pledge arrangements securing the
foregoing obligations; provided, however, that the term "Normal Unit" will not
include any Stripped Unit.
"NYSE" has the meaning specified in Section 501.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, any Vice Chairman, the President or any Vice President and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company and delivered to the Unit Agent.
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<PAGE> 10
"Opinion of Counsel" means an opinion in writing signed by legal counsel,
who may be an employee of or counsel to the Company.
"Outstanding Unit Certificates" means, as of the date of determination, all
Unit Certificates theretofore authenticated, executed and delivered pursuant to
this Agreement, except:
(a) Unit Certificates theretofore canceled by the Unit Agent or
delivered to the Unit Agent for cancellation; and
(b) Unit Certificates in exchange for or in lieu of which other Unit
Certificates have been authenticated, executed on behalf of the Holder and
delivered pursuant to this Agreement, other than any such Unit Certificate
in respect of which there shall have been presented to the Unit Agent proof
satisfactory to it that such Unit Certificate is held by a bona fide
purchaser in whose hands the Units evidenced by such Unit Certificate are
valid obligations of the Company.
"Outstanding Units" means, as of the date of determination, all Units
evidenced by then Outstanding Unit Certificates, except, on or after the
Termination Date or Stock Purchase Date, Units for which the underlying Pledged
Securities or the Common Stock purchasable upon settlement of the underlying
Purchase Contracts, as the case may be, have been theretofore deposited with the
Unit Agent in trust for the Holders of such Units; provided, however, that in
determining whether the Holders of the requisite number of Units have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Units owned by the Company or any Affiliate of the Company shall be disregarded
and deemed not to be outstanding, except that, in determining whether the Unit
Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Units which the Unit
Agent actually knows to be so owned shall be so disregarded. Units so owned
which have been pledged in good faith may be regarded as Outstanding Units if
the pledgee establishes to the satisfaction of the Unit Agent the pledgee's
right so to act with respect to such Units and that the pledgee is not the
Company or any Affiliate of the Company.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge" means the pledge of the Pledged Securities under the Pledge
Agreement.
"Pledge Agreement" means the Pledge Agreement, dated as of the date hereof,
among the Company, the Call Option Holder, the Collateral Agent and the Unit
Agent, in its capacity as Unit Agent and as attorney-in-fact for the Holders
from time to time of the Units,
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<PAGE> 11
the form of which is attached hereto as Exhibit D, as the same may be amended
from time to time in accordance with the terms hereof and thereof.
"Pledged Securities" means the securities pledged to the Collateral Agent
pursuant to the Pledge and constituting a part of the Units.
"Predecessor Unit Certificate" of any particular Unit Certificate means
every previous Unit Certificate evidencing all or a portion of the rights and
obligations of the Holder under the Units evidenced thereby; and, for the
purposes of this definition, any Unit Certificate authenticated and delivered
under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Unit Certificate shall be deemed to evidence the same rights and
obligations of the Holder as the mutilated, destroyed, lost or stolen Unit
Certificate.
"Principal Agreements" means this Agreement, the Pledge Agreement and the
Call Option Agreement.
"Purchase Contract" means a contract obligating the Company to sell and the
Holder of the related Unit to purchase Common Stock on the terms and subject to
the conditions set forth in Article Five hereof.
"Purchase Contract Settlement Fund" has the meaning specified in Section
505.
"Purchased Shares" has the meaning specified in Section 506(a)(6).
"Quarterly Payment Date" means each _________, _________, ________ and
__________, commencing _________.
"QUIPS"(sm)* means _____% Quarterly Income Preferred Securities of the
Trust issued under the Declaration, which term may refer to a single security or
more than one security as the context may require.
"Record Date", when used with respect to any payment date, means the
Business Day next preceding such payment date; provided, however, that if any
Units are no longer evidenced by a Global Unit Certificate, "Record Date", when
used with respect to any payment date for such Units, means the [first day of]
[fifteenth day of] [fifteenth day of the month preceding] the month in which
such payment date falls; and provided further, that if payments are in respect
of QUIPS or Junior Subordinated Debentures underlying Normal Units, "Record
Date", when used with respect to such payments, means the record date for such
payments determined as provided under the Declaration or the Indenture, as the
case may be.
_________________
* QUIPS is a servicemark of Goldman, Sachs & Co.
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"Reorganization Event" has the meaning specified in Section 506(b).
"Responsible Officer", when used with respect to the Unit Agent, means any
vice president, any assistant vice president, any assistant secretary, any
assistant treasurer, any trust officer or assistant trust officer, or any other
officer or assistant officer of the Unit Agent customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Settlement Rate" has the meaning specified in Section 501.
"Stated Amount" means $_____ per Unit.
"Stock Purchase Date" means ___________.
"Stripped Unit" means the rights to purchase Common Stock under a Purchase
Contract, together with ownership of the Treasury Securities pledged to secure
the obligations referred to in (a) below, subject to (a) the obligations owed to
the Company under such Purchase Contract and (b) the pledge arrangements
securing the foregoing obligations; provided, however, that the term "Stripped
Unit" will only include Units issued as a result of a Stripped Unit Creation as
contemplated by Section 309.
"Stripped Unit Creation" has the meaning specified in Section 309(a).
"Termination Date" means the date, if any, on which a Termination Event
occurs.
"Termination Event" means the occurrence of any of the following events at
any time on or prior to the Stock Purchase Date: (a) a decree or order of a
court having jurisdiction in the premises shall have been entered adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization of the Company under the United States Bankruptcy Code or
any other similar applicable Federal or State law, and, unless such decree or
order shall have been entered within 60 days prior to the Stock Purchase Date,
such decree or order shall have continued undischarged and unstayed for a period
of 60 days, or (b) a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver or liquidator or trustee or assignee
in bankruptcy or insolvency of the Company or of its property, or for the
winding up or liquidation of its affairs, shall have been entered, and, unless
such decree or order shall have been entered within 60 days prior to the Stock
Purchase Date, such decree or order shall have continued undischarged and
unstayed for a period of 60 days, or (c) the Company shall institute proceedings
to be adjudicated a bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent seeking
reorganization under the United States Bankruptcy Code or any other similar
applicable Federal or State law, or shall consent to the
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filing of any such petition, or shall consent to the appointment of a receiver
or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in Section 501.
"TIA" means the Trust Indenture Act of 1939 or any statute successor
thereto, in each case as amended from time to time.
"Trading Day" has the meaning specified in Section 501.
"Treasury Securities" means United States Treasury Securities.
"Trust" means AmerUs Capital II, a statutory business trust created under
the laws of the State of Delaware.
"Underwriting Agreement" means the Underwriting Agreement dated __________
among the Company, the Trust and Goldman, Sachs & Co. [and [list other
Underwriters]], as the Underwriters named therein.
"Unit Agent" means the Person named as the "Unit Agent" in the first
paragraph of this Agreement until a successor Unit Agent shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter "Unit
Agent" shall mean the Person who is then the Unit Agent hereunder.
"Unit Certificate" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Normal Units or Stripped
Units, as the case may be, specified on such certificate.
"Unit Register" and "Unit Registrar" have the respective meanings specified
in Section 305.
"Units" means the Normal Units and, if any are issued, the Stripped Units.
The Purchase Contracts, Call Options and/or Pledged Securities constituting a
part of any Units are sometimes referred to herein as "underlying" such Units
and are sometimes herein said to "underlie" such Units.
"Vice President" means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president".
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SECTION 102. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Unit Agent to take any action under
any provision of this Agreement, the Company shall furnish to the Unit Agent at
the Unit Agent's request (i) an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and/or (ii) an Opinion of Counsel
stating that, in the opinion of such counsel, all such conditions precedent, if
any, have been complied with, except that in the case of any such application or
request as to which the furnishing of such documents is specifically required by
any provision of this Agreement relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Agreement shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Unit Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or
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opinion or representations with respect to the matters upon which his
certificate or opinion is based are erro neous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by 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 Unit Agent
and, where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and (subject to Section 701) conclusive in favor of the Unit Agent and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
exe cution is by a signer acting in a capacity other than his individual
capacity, 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 Unit Agent deems sufficient.
(c) The ownership of Units shall be proved by the Unit Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Unit shall bind every future Holder of the
same Unit and the Holder of every Unit Certificate evidencing such Unit issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to
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<PAGE> 16
be done by the Unit Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Unit Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Units entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Units. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Units on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite number of Outstanding Units on such record date. Nothing in
this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite number of Outstanding Units on the date
such action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Unit Agent in writing and to each Holder of Units in the manner set
forth in Section 106.
With respect to any record date set pursuant to this Section, the Company
may designate any date as the "Expiration Date" and from time to time may change
the Expiration Date to any earlier or later day; provided that no such change
shall be effective unless notice of the proposed new Expiration Date is given to
the Unit Agent in writing, and to each Holder of Units in the manner set forth
in Section 106, on or prior to the existing Expiration Date. If an Expiration
Date is not designated with respect to any record date set pursuant to this
Section, the Company shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject to
its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
SECTION 105. Notices, etc. to Unit Agent and the Company.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of Holders or other document provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with,
(a) the Unit Agent by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing and personally
delivered or mailed, first-class postage prepaid, to the Unit Agent at
____________________________________
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______________, Attention: __________________ or at any other address
previously furnished in writing by the Unit Agent to the Holders and the
Company, or
(b) the Company by the Unit Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing and personally
delivered or mailed, first-class postage prepaid, to the Company at 699
Walnut Street, Des Moines, Iowa 50309-3948, Attention: General Counsel, or
at any other address previously furnished in writing by the Company to the
Unit Agent and the Holders.
SECTION 106. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Unit Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this 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 notice by Holders shall be filed with the
Unit Agent, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Unit Agent shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall bind
its successors and assigns, whether so expressed or not.
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SECTION 109. Separability Clause.
In case any provision in this Agreement or in the Units shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
SECTION 110. Benefits of Agreement.
Nothing in this Agreement or in the Unit Certificates, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefits or any legal or equitable right, remedy
or claim under this Agreement. The Holders from time to time shall be
beneficiaries of this Agreement and shall be bound by all of the terms and
conditions hereof and of the Units evidenced by their Unit Certificates by their
acceptance of delivery thereof.
SECTION 111. Governing Law.
THIS AGREEMENT AND THE UNITS 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.
SECTION 112. Legal Holidays.
In any case where any Quarterly Payment Date or the Stock Purchase Date
shall not be a Business Day, then (notwithstanding any other provision of this
Agreement or of the Units) payment in respect of distributions or interest on or
principal of Pledged Securities or Contract Fees shall not be made, Purchase
Contracts shall not be performed and other actions described herein shall not
occur, but such payments shall be made, the Purchase Contracts shall be
performed and such other actions shall occur, as applicable, on the next
succeeding Business Day with the same force and effect as if made on such
Quarterly Payment Date or Stock Purchase Date, as the case may be; provided,
that to the extent such payment is made on the next succeeding Business Day, no
distributions or interest shall accrue or be payable by the Company or any
Holder for the period from and after any such Quarterly Payment Date or Stock
Purchase Date, as the case may be, to the date of payment or performance; except
that if such next succeeding Business Day is in the next succeeding calendar
year, such payment shall be made, the Purchase Contracts shall be performed
or such other action shall occur on the immediately preceding Business Day with
the same force and effect as if made on such Quarterly Payment Date or the Stock
Purchase Date.
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<PAGE> 19
SECTION 113. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which, when so executed, shall be deemed an original, but all such counterparts
shall together constitute one and the same instrument.
SECTION 114. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times at the
Corporate Trust Office for inspection by any Holder.
ARTICLE TWO
UNIT CERTIFICATE FORMS
SECTION 201. Forms of Unit Certificates Generally.
Unit Certificates evidencing Normal Units shall be in substantially the
form set forth in Exhibit A hereto and Unit Certificates evidencing the Stripped
Units shall be in substantially the form of Exhibit B hereto, in each case with
such letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Units are listed
or Depositary therefor, or as may, consistently herewith, be determined by the
officers of the Company executing such Unit Certificates, as evidenced by their
execution of the Unit Certificates.
The definitive Unit Certificates shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers of the Company executing the Unit Certificates,
consistent with the provisions of this Agreement, as evidenced by their
execution thereof.
Every Global Unit Certificate authenticated, executed and delivered
hereunder shall bear a legend in substantially the following form:
THIS UNIT CERTIFICATE IS A GLOBAL UNIT CERTIFICATE WITHIN THE MEANING OF
THE MASTER UNIT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS UNIT CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A UNIT CERTIFICATE REGISTERED, AND NO
TRANSFER OF THIS UNIT CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN
THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF,
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<PAGE> 20
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE MASTER UNIT AGREEMENT.
SECTION 202. Form of Unit Agent's Certificate of Authentication.
The form of the Unit Agent's certificate of authentication of the Units
shall be in substantially the form set forth on the form of the Unit
Certificates.
ARTICLE THREE
THE UNITS
SECTION 301. Title and Terms; Denominations.
The aggregate number of Units evidenced by Unit Certificates authenticated,
executed on behalf of the Holders and delivered hereunder is limited to
__________ [(subject to increase up to a maximum of ___________ to the extent
the over-allotment option of the underwriters under the Underwriting Agreement
is exercised)], except for Unit Certificates authenticated, executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Unit Certificates pursuant to Section 304, 305, 306 or 805.
All of the Unit Certificates authenticated, executed and delivered
hereunder shall be Normal Units except for any Unit Certificates evidencing
Stripped Units issued in connection with a Stripped Unit Creation pursuant to
Section 309 and Unit Certificates authenticated, executed and delivered upon
registration of transfer of, in exchange for, or in lieu of, other Unit
Certificates evidencing Stripped Units pursuant to Section 304, 305, 306 or 805.
Unit Certificates shall be issuable only in registered form and only in
denominations of a single Unit and any integral multiple thereof.
SECTION 302. Rights and Obligations Evidenced by the Unit Certificates.
Each Unit Certificate shall evidence the number of Units specified therein.
Prior to the purchase, if any, of shares of Common Stock under the Purchase
Contracts, the Units shall not entitle the Holders to any of the rights or
privileges of a holder of shares of Common Stock by virtue of holding such
Units, including, without limitation, the right to vote or receive any dividends
or other distributions or to consent or to receive notice as stockholders in
respect of the meetings of stockholders or for the election of directors of the
Company or for any other matter.
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<PAGE> 21
SECTION 303. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Section 309 hereof, upon the execution and
delivery of this Agreement, and at any time and from time to time thereafter,
the Company may deliver Unit Certificates executed by the Company to the Unit
Agent for authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such Unit Certificates, and
the Unit Agent in accordance with such Issuer Order shall authenticate, execute
on behalf of the Holders and make such Unit Certificates available for delivery.
The Unit Certificates 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 attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Unit Certificates may be manual or facsimile.
Unit Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Unit
Certificates or did not hold such offices at the date of such Unit Certificates.
Each Unit Certificate shall be dated the date of its authentication.
No Purchase Contract or Call Option underlying a Unit evidenced by a
Unit Certificate shall be valid until such Unit Certificate has been executed on
behalf of the Holder by the manual signature of an authorized signatory of the
Unit Agent, as such Holder's attorney-in-fact. Such signature by an authorized
signatory of the Unit Agent shall be conclusive evidence that the Holder of such
Unit Certificate has entered into the Purchase Contracts and Call Options
underlying the Units evidenced by such Unit Certificate.
No Unit Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on such
Unit Certificate a certificate of authentication substantially in the form
provided for herein executed by an authorized signatory of the Unit Agent by
manual signature, and such certificate upon any Unit Certificate shall be
conclusive evidence, and the only evidence, that such Unit Certificate has been
duly authenticated and delivered hereunder.
SECTION 304. Temporary Unit Certificates.
Pending the preparation of definitive Unit Certificates, the Company
shall execute and deliver (together with an Issuer Order) to the Unit Agent, and
the Unit Agent shall authenticate, execute on behalf of the Holders, and
deliver, in lieu of such definitive Unit
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<PAGE> 22
Certificates, temporary Unit Certificates which are in substantially the form
set forth in Exhibit A or Exhibit B hereto, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Units are listed or Depositary therefor, or as
may, consistently herewith, be determined by the officers of the Company
executing such Unit Certificates, as evidenced by their execution of the Unit
Certificates.
If temporary Unit Certificates are issued, the Company will cause
definitive Unit Certificates to be prepared without unreasonable delay. After
the preparation of definitive Unit Certificates, the temporary Unit Certificates
shall be exchangeable for definitive Unit Certificates upon surrender of the
temporary Unit Certificates at the Corporate Trust Office, at the expense of the
Company and without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Unit Certificates, the Company shall execute and deliver
to the Unit Agent, and the Unit Agent shall authenticate, execute on behalf of
the Holder, and deliver in exchange therefor, one or more definitive Unit
Certificates of authorized denominations and evidencing a like number of Normal
Units or Stripped Units, as the case may be, as the temporary Unit Certificate
or Unit Certificates so surrendered. Until so exchanged, the temporary Unit
Certificates shall in all respects evidence the same benefits and the same
obligations with respect to the Units evidenced thereby as definitive Unit
Certificates.
SECTION 305. Registration; Registration of Transfer and Exchange.
The Unit Agent shall keep at the Corporate Trust Office registers (the
registers maintained in such office being herein referred to as the "Unit
Registers") in which, subject to such reasonable regulations as it may
prescribe, the Unit Agent shall provide for the registration of Unit
Certificates evidencing the Normal Units and the Stripped Units and of transfers
of Unit Certificates evidencing the Normal Units and the Stripped Units (the
Unit Agent, in such capacity, the "Unit Registrar"). Upon request from any
Trustee or Administrator of the Trust, the Unit Agent shall furnish to such
requesting party a copy of the Unit Register for the Unit Certificates
evidencing the Normal Units as promptly as practicable.
Upon surrender for registration of transfer of any Unit Certificate at
the Corporate Trust Office, the Company shall execute and deliver to the Unit
Agent, and the Unit Agent shall authenticate, execute on behalf of the
designated transferee or transferees, and deliver, in the name of the designated
transferee or transferees, one or more new Unit Certificates evidencing a like
number of Normal Units or Stripped Units, as the case may be.
At the option of the Holder, Unit Certificates may be exchanged for
other Unit Certificates evidencing a like number of Normal Units or Stripped
Units, as the case may be, upon surrender of the Unit Certificates to be
exchanged at the Corporate Trust Office.
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<PAGE> 23
Whenever any Unit Certificates are so surrendered for exchange, the Company
shall execute and deliver to the Unit Agent, and the Unit Agent shall
authenticate, execute on behalf of the Holder, and deliver the Unit Certificates
which the Holder making the exchange is entitled to receive.
All Unit Certificates issued upon any registration of transfer or
exchange of a Unit Certificate shall evidence the ownership of the same number
of Normal Units or Stripped Units, as the case may be, and be entitled to the
same benefits and subject to the same obligations, under the Principal
Agreements as the Normal Units or Stripped Units, as the case may be, evidenced
by the Unit Certificate surrendered upon such registration of transfer or
exchange.
Every Unit Certificate presented or surrendered for registration of
transfer or for exchange shall (if so required by the Unit Agent) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Unit Agent duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Unit Certificate, but the Company and the Unit Agent may require
payment from the Holder 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 Unit Certificates (which, for these purposes, includes a
Stripped Unit Creation or a transfer of Pledged Securities as contemplated by
Section 504(a)), other than any exchanges pursuant to Sections 304, 306 and 805
not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Unit Agent, and the Unit Agent shall not be obligated
to authenticate, execute on behalf of the Holder and deliver any Unit
Certificate in respect of a Unit Certificate presented or surrendered for
registration of transfer or for exchange on or after the Stock Purchase Date or
the Termination Date. In lieu of delivery of a new Unit Certificate, upon
satisfaction of the applicable conditions specified above in this Section and
receipt of appropriate registration or transfer instructions from such Holder,
the Unit Agent shall (a) if the Stock Purchase Date has occurred, deliver the
shares of Common Stock issuable in respect of the Purchase Contracts forming a
part of the Units evidenced by such Unit Certificate, or (b) if a Termination
Event shall have occurred on or prior to the Stock Purchase Date, transfer the
liquidation or principal amount of the Pledged Securities evidenced thereby, in
each case subject to the applicable conditions and in accordance with the
applicable provisions of Article Five hereof.
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The provisions of Clauses (a), (b), (c) and (d) below shall apply only
to Global Unit Certificates:
(a) Each Global Unit Certificate authenticated and executed on
behalf of the Holders under this Agreement shall be registered in the
name of the Depositary designated for such Global Unit Certificate or a
nominee thereof and delivered to such Depositary or a nominee thereof
or custodian therefor, and each such Global Unit Certificate shall
constitute a single Unit Certificate for all purposes of this
Agreement.
(b) Notwithstanding any other provision in this Agreement, no
Global Unit Certificate may be exchanged in whole or in part for Unit
Certificates registered, and no transfer of a Global Unit Certificate
in whole or in part may be registered, in the name of any Person other
than the Depositary for such Global Unit Certificate or a nominee
thereof unless (i) such Depositary (x) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Unit
Certificate or (y) has ceased to be a clearing agency registered under
the Exchange Act or (ii) there shall have occurred and be continuing a
default by the Company in respect of its obligations under one or more
Principal Agreements.
(c) Subject to Clause (b) above, any exchange of a Global Unit
Certificate for other Unit Certificates may be made in whole or in
part, and all Unit Certificates issued in exchange for a Global Unit
Certificate or any portion thereof shall be registered in such
names as the Depositary for such Global Unit Certificate shall direct.
(d) Every Unit Certificate authenticated and delivered upon
registration of transfer of, in exchange for or in lieu of a Global
Unit Certificate or any portion thereof, whether pursuant to this
Section, Section 304, 306 or 805 or otherwise, shall be authenticated,
executed on behalf of the Holders and delivered in the form of, and
shall be, a Global Unit Certificate, unless such Unit Certificate is
registered in the name of a Person other than the Depositary for such
Global Unit Certificate or a nominee thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Unit Certificates.
If any mutilated Unit Certificate is surrendered to the Unit Agent, the
Company shall execute and deliver to the Unit Agent, and the Unit Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange therefor,
a new Unit Certificate, evidencing the same number of Normal Units or Stripped
Units, as the case may be, and bearing a number not contemporaneously
outstanding.
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<PAGE> 25
If there shall be delivered to the Company and the Unit Agent (a)
evidence to their satisfaction of the destruction, loss or theft of any Unit
Certificate, and (b) such security or indemnity as may be required by them to
save each of them and any agent of any of them harmless, then, in the absence of
notice to the Company or the Unit Agent that such Unit Certificate has been
acquired by a bona fide purchaser, the Company shall execute and deliver to the
Unit Agent, and the Unit Agent shall authenticate, execute on behalf of the
Holder, and deliver to the Holder, in lieu of any such destroyed, lost or stolen
Unit Certificate, a new Unit Certificate, evidencing the same number of Normal
Units or Stripped Units, as the case may be, and bearing a number not
contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Unit Agent, and the Unit Agent shall not be obligated
to authenticate, execute on behalf of the Holder, and deliver to the Holder, on
or after the Stock Purchase Date or the Termination Date, a Unit Certificate in
respect of any mutilated, destroyed, lost or stolen Unit Certificate. In lieu of
delivery of a new Unit Certificate, upon satisfaction of the applicable
conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Unit Agent shall (a)
if the Stock Purchase Date has occurred, deliver the shares of Common Stock
issuable in respect of the Purchase Contracts forming a part of the Units
evidenced by such Unit Certificate, or (b) if a Termination Event shall have
occurred on or prior to the Stock Purchase Date, transfer the liquidation or
principal amount of the Pledged Securities evidenced thereby, in each case
subject to the applicable conditions and in accordance with the applicable
provisions of Article Five hereof.
Upon the issuance of any new Unit Certificate under this Section, the
Company and the Unit Agent may require the payment by the Holder 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
Unit Agent) connected therewith.
Every new Unit Certificate issued pursuant to this Section in lieu of
any destroyed, lost or stolen Unit Certificate shall constitute an original
additional contractual obligation of the Company and of the Holder, whether or
not the destroyed, lost or stolen Unit Certificate shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of the Principal Agreements equally and proportionately
with any and all other Unit Certificates delivered 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
settlement of mutilated, destroyed, lost or stolen Unit Certificates.
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SECTION 307. Persons Deemed Owners.
Prior to due presentment of a Unit Certificate for registration of
transfer, the Company and the Unit Agent, and any agent of the Company or the
Unit Agent, may treat the Person in whose name such Unit Certificate is
registered as the owner of the Units evidenced thereby, for the purpose of
receiving payments of distributions or interest on the Pledged Securities,
receiving or making payments of Contract Fees and performance of the underlying
Purchase Contracts and Call Options and for all other purposes whatsoever,
whether or not the payment of distributions or interest on the Pledged
Securities or any Contract Fee payable in respect of the Purchase Contracts
constituting a part of the Units evidenced thereby shall be overdue and
notwithstanding any notice to the contrary, and neither the Company nor the Unit
Agent, nor any agent of the Company or the Unit Agent, shall be affected by
notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Unit
Certificate, nothing herein shall prevent the Company, the Unit Agent or any
agent of the Company or the Unit Agent, from giving effect to any written
certification, proxy or other authorization furnished by any Depositary (or its
nominee), as a Holder, with respect to such Global Unit Certificate or impair,
as between such Depositary and owners of beneficial interests in such Global
Unit Certificate, the operation of customary practices governing the exercise of
rights of such Depositary (or its nominee) as Holder of such Global Unit
Certificate.
SECTION 308. Cancellation.
All Unit Certificates surrendered for delivery of shares of Common
Stock on or after the Stock Purchase Date, transfer of Pledged Securities after
the occurrence of a Termination Event or registration of transfer or exchange
shall, if surrendered to any Person other than the Unit Agent, be delivered to
the Unit Agent and, if not already canceled, shall be promptly canceled by it.
The Company may at any time deliver to the Unit Agent for cancellation any Unit
Certificates previously authenticated, executed and delivered hereunder which
the Company may have acquired in any manner whatsoever, and all Unit
Certificates so delivered shall, upon Issuer Order, be promptly canceled by the
Unit Agent. No Unit Certificates shall be authenticated, executed on behalf of
the Holder and delivered upon transfer of, in exchange for or in lieu of any
Unit Certificates canceled as provided in this Section, except as expressly
permitted by this Agreement. All canceled Unit Certificates held by the Unit
Agent shall be disposed of as directed by Issuer Order.
If the Company or any Affiliate of the Company shall acquire any Unit
Certificate, such acquisition shall not operate as a cancellation of such Unit
Certificate unless and until such Unit Certificate is delivered to the Unit
Agent canceled or for cancellation.
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<PAGE> 27
SECTION 309. Substitution of Pledged Securities and Creation of Stripped Units;
Units Not Otherwise Separable.
(a) A Holder of Normal Units may obtain the release from the Pledge of
such Holder's Pledged Securities underlying such Normal Units, free and clear of
the Company's and the Call Option Holder's security interests therein, and
convert such Normal Units into Stripped Units (collectively, a "Stripped Unit
Creation") at any time after the original issuance of such Normal Units and on
or prior to the second Business Day immediately preceding the Stock Purchase
Date by:
(i) delivering to the Collateral Agent: (w) Treasury Securities
that through their scheduled payments will generate not later than the
Stock Purchase Date an amount of cash that is at least equal to the
aggregate Stated Amount of such Normal Units, (x) if any Contract Fees
are or will be payable by the Holders to the Company, Treasury
Securities that through their scheduled payments will generate not
later than each Quarterly Payment Date falling after the date on which
the requirements for such Stripped Unit Creation contained in this
Section 309(a) are satisfied and on or before the Stock Purchase Date
an amount of cash that is at least equal to the aggregate Contract Fees
that are scheduled to be payable in respect of the Purchase Contracts
underlying such Normal Units on such Quarterly Payment Date (assuming
for this purpose that no Contract Fees will then have been deferred
under Section 503); (y) if there are any deferred Contract Fees payable
by such Holder to the Company on the date on which the requirements for
such Stripped Unit Creation contained in this Section 309(a) are
satisfied, an amount of cash equal to (1) the aggregate unpaid amount
of such Contract Fees accrued to such date, if such date is a Quarterly
Payment Date, and (2) the aggregate unpaid amount of such Contract Fees
accrued to the Quarterly Payment Date immediately preceding such date
plus interest thereon at a rate per annum equal to the Deferral Rate
for the period from and including such Quarterly Payment Date to but
excluding such date (calculated on the basis of a 360-day year of
twelve 30-day months), if such date is not a Quarterly Payment Date;
and (z) if the Call Options underlying such Normal Units remain
exercisable on the date on which the requirements contained in this
Section 309(a) for such Stripped Unit Creation are satisfied, an
instrument from the Call Option Holder releasing its security interest
in the Pledged Securities securing such Call Options and agreeing that
such Call Options no longer underlie such Normal Units (or the Stripped
Units they become); and
(ii) surrendering the Unit Certificate evidencing such Normal
Units, with the form of Request to Create Stripped Units thereon duly
completed and executed, to the Unit Agent, whereupon the Unit Agent
shall promptly request the Collateral Agent to release the Pledged
Securities underlying such Normal Units;
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provided, however, that if Treasury Securities are the Pledged Securities
underlying such Normal Units, a Stripped Unit Creation may only be effected with
respect to a number of Normal Units that will result in the release from the
Pledge of Treasury Securities in denominations of $1,000 and integral multiples
thereof.
(b) Upon receipt of the items described in clause (i) of Section 309(a)
above and the request from the Unit Agent described in clause (ii) of Section
309(a) above, the Collateral Agent will, in accordance with the terms of the
Pledge Agreement, release to the Unit Agent, on behalf of the Holder, from the
Pledge, free and clear of the Company's and the Call Option Holders's security
interests therein, the securities that theretofore had been the Pledged
Securities underlying such Normal Units, and upon receipt thereof the Unit Agent
shall promptly:
(i) cancel the Unit Certificate for such Normal Units;
(ii) transfer such released Pledged Securities to the Holder or,
subject to Section 305, the Holder's designee;
(iii) authenticate, execute on behalf of such Holder and deliver
to the Holder or, subject to Section 305, the Holder's designee a Unit
Certificate executed by the Company in accordance with Section 303
evidencing a number of Stripped Units equal to the number of such
Normal Units.
Concurrently with the release of the securities that theretofore had been the
Pledged Securities underlying such Normal Units as contemplated by the preceding
sentence, the Treasury Securities delivered to the Collateral Agent as
contemplated by clause (i) of Section 309(a) above shall thereupon be
substituted for such securities as Pledged Securities underlying the Stripped
Units created from such Normal Units.
(c) Except for a Stripped Unit Creation effected in compliance with
this Section 309, for so long as the Purchase Contract underlying a Normal Unit
remains in effect such Normal Unit shall not be separable into its constituent
parts, and the rights and obligations of the Holder of such Normal Unit in
respect of the Pledged Securities, Purchase Contract and Call Option underlying
such Normal Unit may be acquired, and may be transferred and exchanged, only as
an integrated Normal Unit. For so long as the Purchase Contract underlying a
Stripped Unit remains in effect such Stripped Unit shall not be separable into
its constituent parts, and the rights and obligations of the Holder of such
Stripped Unit in respect of the Pledged Securities and Purchase Contract
underlying such Stripped Unit may be acquired, and may be transferred and
exchanged, only as an integrated Stripped Unit. Other than a Unit Certificate,
no Holder of a Unit, nor any transferee thereof, shall be entitled to receive a
certificate evidencing the ownership of Pledged Securities or any other rights
or obligations underlying such Unit for so long as the Purchase Contract
underlying such Unit remains in effect.
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SECTION 310. Payments on the Units.
Contract Fees (if any) payable by the Company to the Holders, and all
amounts payable to Holders as required by Section 401 or 504(b), will be payable
at the office of the Unit Agent in The City of New York maintained for that
purpose or, at the option of the Company, by check mailed to the address of the
Person entitled thereto at such address as it appears on the relevant Unit
Register on the Record Date; provided, however, that for so long as any Units
are evidenced by Global Certificates, the Unit Agent will pay each such amount
payable in respect of such Units by wire transfer in same-day funds, no later
than 2:00 p.m., New York City time, on the Business Day such amount is received
by the Unit Agent from the Collateral Agent or the Company (or, if such amount
is received by the Unit Agent after 1:00 p.m., New York City time, on a Business
Day or on a day that is not a Business Day, no later than 10:00 a.m., New York
City time, on the next succeeding Business Day), to the Depositary, to the
account or accounts designated by it for such purpose.
ARTICLE FOUR
THE PLEDGED SECURITIES
SECTION 401. Payments on the Pledged Securities.
On each Quarterly Payment Date, as provided by the terms of the Pledge
Agreement, subject to receipt by the Collateral Agent of the relevant payments
in respect of the Pledged Securities underlying any Holder's Units, (a) the
Collateral Agent (i) shall, on behalf of such Holder, pay to the Company the
Contract Fees, if any, then payable by such Holder to the Company and (ii)
shall, subject to Section 504(b), remit to the Unit Agent the amount of such
payments remaining after the payment referred to in clause (i) and (b) the Unit
Agent shall pay the amount referred to in clause (a)(ii) above, subject to
receipt thereof by the Unit Agent from the Collateral Agent, to the Person in
whose name the Unit Certificate (or one or more Predecessor Unit Certificates)
evidencing such Units is registered at the close of business on the Record Date
next preceding such Quarterly Payment Date.
In addition, in the event that (a) the Call Options are exercised and
the Aggregate Consideration Deliverable on Exercise of the Call Options includes
a cash amount in respect of deferred distributions on the QUIPS or deferred
interest payments on the Junior Subordinated Debentures and (b) the Call
Settlement Date is not a Quarterly Payment Date, pursuant to the Pledge
Agreement the Collateral Agent shall, on behalf of the Holders of the Normal
Units, pay to the Company on the Call Settlement Date an amount equal to the
deferred Contract Fees, if any, then payable by such Holders to the Company.
Payments on the Pledged Securities on the Stock Purchase Date are
discussed at Section 504.
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SECTION 402. Transfer of Pledged Securities Upon Occurrence of Termination
Event.
Upon the occurrence of a Termination Event and the transfer of the
Pledged Securities underlying each Holder's Units to the Unit Agent pursuant to
the terms of the Pledge Agreement, the Unit Agent shall request transfer
instructions with respect to such Pledged Securities from such Holder by written
request mailed to such Holder at his address as it appears in the relevant Unit
Register. Thereafter, upon surrender to the Unit Agent of a Unit Certificate
evidencing a Holder's Units, with transfer instructions in proper form for
transfer of the underlying Pledged Securities, the Unit Agent shall transfer the
Pledged Securities evidenced by such Unit Certificate to such Holder in
accordance with such instructions; provided, however, that if the Pledged
Securities are to be transferred to a Person other than the Person in whose name
such Unit Certificate is registered, no such transfer shall be made unless the
Person requesting the transfer has paid any transfer and other taxes required by
reason of such transfer to a Person other than the registered Holder of such
Unit Certificate or has established to the satisfaction of the Company that such
tax either has been paid or is not payable. Until the foregoing conditions to
transfer any of the Pledged Securities underlying any Units has been met, the
Unit Agent shall hold such Pledged Securities as custodian for the Holder of
such Units.
If upon a Termination Event any Holder of Units would, after satisfying
the foregoing conditions, otherwise be entitled to receive (or have transferred
to such Holder's designee) Treasury Securities of any series having a principal
amount that is not an integral multiple of $1,000, such Holder shall instead be
entitled to receive (or have transferred to such Holder's designee) Treasury
Securities of such series in a principal amount equal to the next lower integral
multiple of $1,000 plus a portion of the net proceeds from the sale of Treasury
Securities of such series contemplated by the succeeding sentence representing
such Holder's interest therein. As soon as practicable after transfer to the
Unit Agent of the Pledged Securities as provided in the Pledge Agreement, the
Unit Agent shall, on behalf of all Holders who, by virtue of the preceding
sentence, will not be entitled to a portion of the Treasury Securities of any
series to which they would otherwise be entitled, aggregate and sell the
Treasury Securities of such series representing such portion to or through one
or more U.S. government securities dealers at then prevailing prices, deduct
from the proceeds of such sales all commissions and other out-of-pocket
transaction costs incurred in connection with such sales and, until the net
proceeds therefrom have been distributed to the Holders entitled thereto or
their designees, hold such proceeds in trust for such Holders.
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<PAGE> 31
ARTICLE FIVE
THE PURCHASE CONTRACTS
SECTION 501. Purchase of Shares of Common Stock.
Each Purchase Contract underlying a Unit shall obligate the Holder of
such Unit to purchase, and the Company to sell, on the Stock Purchase Date, at a
price equal to the Stated Amount, a number of shares of Common Stock equal to
the Settlement Rate, unless, on or prior to the Stock Purchase Date, there shall
have occurred a Termination Event. The "Settlement Rate" is equal to (a) if the
Applicable Market Value (as defined below) is greater than or equal to
$_____ (the "Threshold Appreciation Price"), ________ of a share of Common Stock
per Purchase Contract, (b) if the Applicable Market Value is less than the
Threshold Appreciation Price but is greater than the Stated Amount, a fractional
share of Common Stock per Purchase Contract equal to the Stated Amount divided
by the Applicable Market Value (rounded upward or downward to the nearest
1/10,000th of a share or, if there is not a nearest 1/10,000th of a share, to
the next lower 1/10,000th of a share) and (c) if the Applicable Market Value is
less than or equal to the Stated Amount, one share of Common Stock per Purchase
Contract, in each case subject to adjustment as provided in Section 506. As
provided in Section 509, no fractional shares of Common Stock will be issued
upon settlement of Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Prices
per share of Common Stock on each of the twenty consecutive Trading Days ending
on the last Trading Day immediately preceding the Stock Purchase Date. The
"Closing Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such
date or, if the Common Stock is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the Common
Stock is not so listed on a United States national or regional securities
exchange, as reported by The NASDAQ Stock Market, or, if the Common Stock is not
so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized investment
banking firm retained for this purpose by the Company. A "Trading Day" means a
day on which the Common Stock (A) is not suspended from trading on any national
or regional securities exchange or association or over-the-counter market at the
close of business and (B) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of the Common Stock.
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<PAGE> 32
Each Holder of a Unit Certificate evidencing Normal Units, by his
acceptance thereof, irrevocably authorizes the Unit Agent to enter into and
perform the underlying Purchase Contracts and Call Options on his behalf as his
attorney-in-fact, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform his obligations under such Purchase Contracts
and Call Options, consents to the provisions of the Principal Agreements,
irrevocably authorizes the Unit Agent to enter into and perform the Call Option
Agreement and the Pledge Agreement on his behalf as his attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Pledged Securities
underlying such Normal Units pursuant to the Pledge Agreement. Each Holder of a
Unit Certificate evidencing Stripped Units, by his acceptance thereof,
irrevocably authorizes the Unit Agent to enter into and perform the underlying
Purchase Contracts on his behalf as his attorney-in-fact, agrees to be bound by
the terms and provisions thereof, covenants and agrees to perform his
obligations under such Purchase Contracts, consents to the provisions of the
Principal Agreements, irrevocably authorizes the Unit Agent to perform the
Pledge Agreement on his behalf as his attorney-in-fact, and consents to and
agrees to be bound by the Pledge of the Pledged Securities underlying such
Stripped Units pursuant to the Pledge Agreement. Each Holder of Units, by his
acceptance thereof, further irrevocably covenants and agrees that, unless such
Holder satisfies its obligations to the Company under the Purchase Contracts
underlying such Units as provided in Section 504(a), then to the extent and in
the manner provided in Section 504(b) and the Pledge Agreement, but subject to
the terms thereof, payments in respect of all or a portion of the principal of
or proceeds from the Pledged Securities on the Stock Purchase Date shall be paid
by the Collateral Agent to the Company in satisfaction of such Holder's
obligations under such Purchase Contract and such Holder shall acquire no right,
title or interest in such payments.
Upon registration of transfer of a Unit Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee) by the terms of the Purchase Contracts and any Call Options
evidenced thereby and by the Pledge Agreement and the transferor shall be
released from all such obligations evidenced by the Unit Certificate so
transferred. The Company covenants and agrees, and each Holder of a Unit
Certificate, by his acceptance thereof, likewise covenants and agrees, to be
bound by the provisions of this para graph.
SECTION 502. Contract Fees.
Subject to Section 503, if any Contract Fees are or will be payable by
the Company to the Holders, the Company shall pay, prior to 1:00 p.m., New York
City time, on each Quarterly Payment Date to and including the Stock Purchase
Date, the Contract Fees payable in respect of each Purchase Contract to the
Person in whose name the Unit Certificate (or one or more Predecessor Unit
Certificates) evidencing such Purchase Contract is registered at the close of
business on the Record Date next preceding such Quarterly Payment Date. [The
Company's obligations with respect to such Contract Fees [subordination language
from indenture to be inserted].]
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Subject to Section 503, if any Contract Fees are or will be payable by
the Holders to the Company, the Collateral Agent, on behalf of the Holders,
shall pay, on each Quarterly Payment Date to and including the Stock Purchase
Date, the Contract Fees payable in respect of each Purchase Contract to the
Company. Such payment will be funded out of payments received by the Collateral
Agent in respect of Pledged Securities.
Each Unit Certificate delivered under this Agreement upon registration
of transfer of, in exchange for or in lieu of any other Unit Certificate shall
carry the rights to receive and obligations to pay Contract Fees accrued and
unpaid, and to accrue, which were carried by the Purchase Contracts evidenced by
such other Unit Certificate.
SECTION 503. Deferral of Payment Dates For Contract Fee.
So long as no default in the Company's obligations under the Principal
Agreements has occurred and is continuing, the Company shall have the right, at
any time prior to the Stock Purchase Date, to defer the payment of any or all of
the Contract Fees, if any, otherwise payable by the Company on any Quarterly
Payment Date, but only if the Company shall give the Holders and the Unit Agent
written notice of its election to defer such payment (specifying the amount to
be deferred) at least five Business Days prior to the earlier of (a) the next
succeeding Quarterly Payment Date or (b) the date the Company is required to
give notice of the Record Date or Quarterly Payment Date with respect to payment
of such Contract Fee to the NYSE or other applicable self-regulatory
organization or to Holders, or (c) the Record Date for such Quarterly Payment
Date. Any Contract Fees so deferred shall bear additional Contract Fees thereon
at a rate per annum equal to the Deferral Rate (computed on the basis of a
360-day year of twelve 30- day months), compounding on each succeeding Quarterly
Payment Date, until paid in full. Deferred Contract Fees (and additional
Contract Fees accrued thereon) shall be due on the next succeeding Quarterly
Payment Date except to the extent that payment is deferred pursuant to this
Section. No Contract Fees may be deferred to a date that is after the Stock
Purchase Date.
In the event the Company exercises its option to defer the payment of
Contract Fees (if any) payable by it, then, until all deferred Contract Fees
(including additional Contract Fees accrued thereon) have been paid in full, the
Company shall not (a) 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, (b) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior in right of payment to the Contract
Fees or (c) make any guarantee payments with respect to any guarantee by the
Company of any securities of any subsidiary of the Company if such guarantee
ranks pari passu or junior in right of payment to the Contract Fees (other than,
in the case of clauses (a), (b) and (c), (i) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, common stock of the Company, (ii) any declaration of a dividend in
connection with the implementation of a stockholder's rights plan, or the
issuance of stock
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under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (iii) payments under the Company's guarantee of the
QUIPS, (iv) as a result of a reclassification of the Company's capital stock
solely into shares of one or more classes or series of the Company's capital
stock or the exchange or conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock, (v)
the purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
securities being converted or exchanged and (vi) purchases of common stock in
connection with the satisfaction by the Company of its obligations under any of
the Company's benefit plans for its and its subsidiaries' directors, officers or
employees or any of the company's dividend reinvestment plans).
If any Contract Fees are payable by a Holder to the Company and
payments made in respect of Pledged Securities underlying such Holder's Units
are insufficient to cover such Holder's obligation to pay such Contract Fees,
such obligation shall be deferred until the earlier of the date sufficient cash
is available and the Stock Purchase Date. Any such Contract Fees so deferred
shall bear additional Contract Fees thereon at a rate per annum equal to the
Deferral Rate (computed on the basis of a 360-day year of twelve 30-day months),
compounding on each succeeding Quarterly Payment Date, until paid in full.
SECTION 504. Payment of Purchase Price.
(a) A Holder of Units shall, by no later than 10:00 a.m., New York City
time, on the Stock Purchase Date, deliver to the Unit Agent payment of the
purchase price for the shares of Common Stock to be purchased pursuant to the
Purchase Contracts underlying such Units, which payment shall be made in lawful
money of the United States by certified or cashier's check payable to the order
of the Company in immediately available funds in an amount equal to the
aggregate Stated Amount of such Holder's Units, plus, if there are unpaid
Contract Fees accrued and payable by such Holder to the Company on the Stock
Purchase Date and the cash received by the Collateral Agent on such date in
respect of the Pledged Securities underlying such Units is less than the amount
of such unpaid Contract Fees, an amount sufficient to cover such shortfall.
By 11:00 a.m., New York City time, on the Stock Purchase Date, the Unit
Agent shall (i) transfer to the Company all of the payments the Company is
entitled to receive as contemplated by the preceding sentence, (ii) notify the
Collateral Agent and the Company as to the number of Normal Units and the number
of Stripped Units, respectively, with respect to which payment has been received
as aforesaid (such Units being collectively referred to as "Paid Units") and the
number of Normal Units and the number of Stripped Units, respectively, with
respect to which payment has not been received as aforesaid (such Units being
collectively referred to as "Unpaid Units"), and (iii) request the Collateral
Agent (with notice of such request to the Company) to release the Pledged
Securities underlying the Paid Units (or, in the case of Treasury Securities,
the cash payments received thereon) from
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the Pledge and transfer such released Pledged Securities (or such cash) to the
Unit Agent for delivery to the Holders of such Units entitled thereto, free and
clear of the Company's security interest therein.
By 1:00 p.m., New York City time, on the Stock Purchase Date, the
Collateral Agent shall, as provided by the terms of the Pledge Agreement, comply
with the request referred to in clause (iii) of the preceding sentence (subject
to the Company's right under the Pledge Agreement to prevent the Collateral
Agent from doing so to the extent the aggregate amount the Company has received
as contemplated by clause (i) of the preceding sentence is less than the
aggregate amount payable with respect to the Units referred to in such request).
The Unit Agent shall thereupon, subject to its receipt from the Collateral Agent
of the Pledged Securities (or cash) referred to in such request and subject to
Section 305, transfer such released Pledged Securities (or cash) to the
respective Holders entitled thereto in accordance with the settlement
instructions specified in the form of Settlement Instructions appearing on the
Unit Certificates evidencing the Paid Units; provided, however, that if any such
Unit Certificate is not surrendered to the Unit Agent with the form of
Settlement Instructions thereon duly completed and executed, the Unit Agent
shall hold such Pledged Securities (or cash), and any distributions or interest
received on such Pledged Securities, as custodian for the Holder entitled
thereto, to be delivered to such Holder (without any interest thereon and
subject to Section 305) upon surrender of such Unit Certificate to the Unit
Agent (with the form of Settlement Instructions thereon duly completed and
executed).
(b) With respect to each Holder's Unpaid Units, pursuant to the terms
of the Pledge Agreement,
(i) (x) if QUIPS underlie such Unpaid Units, the Collateral Agent,
on behalf of such Holder, shall exercise such Holder's right under the
Declaration to require the Trust to distribute Junior Subordinated
Debentures having an aggregate principal amount equal to the aggregate
liquidation amount of such QUIPS, in exchange for such QUIPS, and, upon
receiving such Junior Subordinated Debentures, shall thereupon, as Put
Agent, exercise the Junior Subordinated Debenture Put Option with
respect thereto and (y) if Junior Subordinated Debentures underlie such
Unpaid Units, the Collateral Agent, on behalf of such Holder, shall, as
Put Agent, exercise the Junior Subordinated Debenture Put Option with
respect thereto;
(ii) the Collateral Agent shall deliver to the Company, out of the
proceeds from the exercise of such Junior Subordinated Debenture Put
Option or, if Treasury Securities underlie such Unpaid Units, the
proceeds from the payment of such Treasury Securities at maturity, an
amount equal to the aggregate Stated Amount of such Unpaid Units plus
the unpaid Contract Fees, if any, payable by such Holder to the Company
in respect of such Unpaid Units to satisfy in full such Holder's
obligations under such Unpaid Units; and
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(iii) the Collateral Agent shall remit to the Unit Agent, on
behalf of such Holder, the remainder of the proceeds, if any, from the
Pledged Securities underlying such Unpaid Units for distribution to
such Holder.
The amount referred to in clause (iii) above shall, subject to receipt thereof
by the Unit Agent from the Collateral Agent, be paid to the Person in whose name
the Unit Certificate (or one or more Predecessor Unit Certificates) evidencing
such Unpaid Units is registered at the close of Business on the Record Date next
preceding the Stock Purchase Date.
(c) Each Holder will be entitled to apply any unpaid amounts owing by
the Company to such Holder as a set-off to reduce, dollar-for-dollar, any
amounts then owing by such Holder to the Company in respect of such Holder's
Units, and such set-off amounts will be treated for all purposes as having been
paid in full by such Holder as required hereby.
(d) The Company shall not be obligated to issue any shares of Common
Stock in respect of a Purchase Contract or deliver any certificates therefor to
the Holder of the related Unit unless the Company shall have received payment in
full of the aggregate purchase price for the shares of Common Stock to be
purchased thereunder in the manner herein set forth (either directly or by
operation of set-off as contemplated by the preceding sentence).
SECTION 505. Issuance of Shares of Common Stock.
As promptly as practicable on or after the Stock Purchase Date, upon
receipt by the Company of payment in full of the aggregate purchase price for
the shares of Common Stock purchased by the Holders pursuant to the foregoing
provisions of this Article, and subject to Section 506(b), the Company shall
deposit with the Unit Agent, for the benefit of the Holders of the Units, one or
more certificates representing the shares of Common Stock registered in the name
of the Unit Agent (or its nominee) as custodian for the Holders (such
certificates for shares of Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Purchase Contract Settlement Fund") to which the Holders are entitled
hereunder. Subject to the foregoing, upon surrender of a Unit Certificate to the
Unit Agent on or after the Stock Purchase Date, with the form of Settlement
Instructions thereon duly completed and executed, the Holder of such Unit
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Common Stock which such Holder is
entitled to receive pursuant to the provisions of this Article Five (after
taking into account all Units then held by such Holder) together with cash in
lieu of fractional shares as provided in Section 509 and any dividends or
distributions with respect to such shares constituting part of the Purchase
Contract Settlement Fund, but without any interest thereon, and the Unit
Certificate so surrendered shall forthwith be cancelled. Such shares shall be
registered in the name of the Holder or the Holder's designee as specified in
the form of Settlement Instructions appearing on the surrendered Unit
Certificate.
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If any shares of Common Stock issued in respect of a Purchase Contract
are to be registered to a Person other than the Person in whose name the Unit
Certificate evidencing such Purchase Contract is registered, no such
registration shall be made unless the Person requesting such registration has
paid any transfer and other taxes required by reason of such registration in a
name other than that of the registered Holder of the Unit Certificate evidencing
such Purchase Contract or has established to the satisfaction of the Company
that such tax either has been paid or is not payable.
SECTION 506. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on any class of Common Stock of the Company in Common Stock, the
Settlement Rate in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be increased by dividing such Settlement
Rate by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Units upon settlement of the Purchase Contracts underlying such
Units) entitling them, for a period expiring within 45 days after the record
date for the determination of stockholders entitled to receive such rights,
options or warrants, to subscribe for or purchase shares of Common Stock at a
price per share less than the Current Market Price per share of the Common Stock
on the date fixed for the determination of stockholders entitled to receive such
rights, options or warrants (other than pursuant to a dividend reinvestment
plan), the Settlement Rate in effect at the opening of business on the day
following the date fixed for such determination shall be increased by dividing
such Settlement Rate by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for
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<PAGE> 38
subscription or purchase would purchase at such Current Market Price and the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, such increase to
become effective immediately after the opening of business on the day following
the date fixed for such determination. For the purposes of this paragraph (2),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company shall not issue any such rights, options or warrants in
respect of shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Settlement Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Settlement Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness or assets
(including securities, but excluding any rights or warrants referred to in
paragraph (2) of this Section, any dividend or distribution paid exclusively in
cash and any dividend or distribution referred to in paragraph (1) of this
Section), the Settlement Rate shall be increased so that the same shall equal
the rate determined by dividing the Settlement Rate in effect immediately prior
to the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the numerator shall
be the Current Market Price per share of the Common Stock on the date fixed for
such determination less the then fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Unit Agent) of the portion of the assets or evidences
of indebtedness so distributed applicable to one share of Common Stock and the
denominator shall all be such Current Market Price per share of the Common
Stock, such adjustment to become effective immediately prior to the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution. In any case in which this
paragraph (4) is applicable, paragraph (2) of this Section shall not be
applicable.
(5) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed in
a Reorganization Event to which Section 506(b) applies or as part of a
distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, when combined with (I) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution to the extent
such amount has not already been applied in a prior adjustment pursuant to this
paragraph (5) and (II) the
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aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the date of expiration of such tender or exchange offer, of
the consideration paid in respect of any tender or exchange offer by the Company
or any of its subsidiaries for all or any portion of the Common Stock expiring
within the 12 months preceding the date of payment of such distribution and in
respect of which no adjustment pursuant to paragraph (6) of this Section has
been made, exceeds 12.5% of the product of the Current Market Price per share of
the Common Stock on the date fixed for the determination of stockholders
entitled to receive such distribution times the number of shares of Common Stock
outstanding on such date (such excess portion of such distribution being herein
referred to as the "Excess Amount"), the Settlement Rate shall be increased so
that the same shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which (i) the numerator shall be the Current Market Price per share
of the Common Stock on the date fixed for such determination less an amount
equal to (x) such Excess Amount divided by (y) the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination and (ii) the denominator shall be the Current Market Price per
share of the Common Stock on the date fixed for such determination, such
adjustment to become effective immediately prior to the opening of business on
the day following the date fixed for the determination of stockholders entitled
to receive such distribution.
(6) In case the Company or any subsidiary of the Company shall
consummate a tender or exchange offer for all or any portion of the Common Stock
and pay an aggregate consideration in respect thereof having a fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) that, when combined with (I) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the date of expiration of such tender or exchange offer, of
the consideration paid in respect of any other tender or exchange offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
expiring within the 12 months preceding the date of expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to this paragraph
(6) has been made and (II) the aggregate amount of any distributions to all
holders of the Company's Common Stock made exclusively in cash within 12 months
preceding the date of expiration of such tender or exchange offer to the extent
such amount has not already been applied in a prior adjustment pursuant to
paragraph (5) of this Section, exceeds 12.5% of the product of the Current
Market Price per share of the Common Stock on the date of expiration of such
tender or exchange offer times the number of shares of Common Stock outstanding
(including any tendered shares) at the close of business on the date of such
expiration, the Settlement Rate shall be increased so that the same shall equal
the rate determined by dividing the Settlement Rate in effect immediately prior
to the close of business on the date of such expiration by a fraction of which
(i) the numerator shall be (A) the product of (I) the Current Market Price per
share of the Common Stock on the date of such expiration and (II) the number of
shares of Common Stock outstanding (including any tendered shares) at the close
of business on the date of such expiration less (B) the amount of cash plus the
fair market value (determined as aforesaid) of the aggregate consideration paid
in respect of such tender or exchange offer and (ii) the denominator shall be
the product of (A) the Current Market Price per share of the Common
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Stock on the date of such expiration and (B) the number of shares of Common
Stock outstanding (including any tendered shares) at the close of business on
the date of such expiration less the number of shares acquired pursuant to such
tender or exchange, such adjustment to become effective immediately prior to the
opening of business on the day following the date of such expiration.
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 506(b) applies) shall be deemed to involve
(i) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of stockholders entitled to receive
such distribution" and the "date fixed for such determination" within the
meaning of paragraph (4) of this Section), and (ii) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section).
(8) The "Current Market Price" per share of Common Stock on any day
means the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex" date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term " 'ex' date", when used
with respect to any issuance or distribution, shall mean the first date on which
the Common Stock trades regular way on such exchange or in such market without
the right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or, if there is not a nearest
1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 506(a), an adjustment shall also
be made to the Applicable Market Value solely to determine which of clauses (a),
(b) or (c) of the definition
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of Settlement Rate in Section 501 will apply on the Stock Purchase Date. Such
adjustment shall be made by multiplying the Applicable Market Value by a
fraction of which the numerator shall be the Settlement Rate immediately after
such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10)
of this Section 506(a) and the denominator shall be the Settlement Rate
immediately before such adjustment.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of shares of Common
Stock resulting from any dividend or distribution of stock or issuance of rights
or warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of the Company with or into
another Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (ii) any sale, transfer,
lease or conveyance to another Person of the property of the Company as an
entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company with another Person (other than in connection with a
merger or acquisition) or (iv) any liquidation, dissolution or winding up of the
Company (any such event, a "Reorganization Event"), the Settlement Rate will be
adjusted to provide that each Holder of Units will receive on the Stock Purchase
Date with respect to each Purchase Contract forming a part thereof, the kind and
amount of securities, cash and other property receivable upon such
Reorganization Event by a Holder of the number of shares of Common Stock
issuable on account of each Purchase Contract if the Stock Purchase Date had
occurred immediately prior to such Reorganization Event, assuming such Holder of
Common Stock is not a Person with which the Company consolidated or into which
the Company merged or which merged into the Company or to which such sale or
transfer was made, as the case may be ("constituent Person"), or an Affiliate of
a constituent Person, and failed to exercise his rights of election, if any, as
to the kind or amount of securities, cash and other property receivable upon
such Reorganization Event (provided that if the kind or amount of securities,
cash and other property receivable upon such Reorganization Event is not the
same for each share of Common Stock held immediately prior to such
Reorganization Event by other than a constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and amount
of securities, cash and other property receivable upon such Reorganization Event
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). In the event of
such a Reorganization Event, the Person formed by such consolidation, merger or
exchange or the Person which acquires the assets of the Company or, in the event
of a liquidation or dissolution of the Company, the Company or a liquidating
trust created in connection therewith, shall execute and deliver to the Unit
Agent an agreement supplemental hereto
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providing that the Holders of each Outstanding Unit shall have the rights
provided by this Section 506. Such supplemental agreement shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions of this
Section shall similarly apply to successive Reorganization Events.
SECTION 507. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided,
the Company shall:
(i) forthwith compute the adjusted Settlement Rate in accordance
with Section 506 and prepare and transmit to the Unit Agent an
Officers' Certificate setting forth the Settlement Rate, the method of
calculation thereof in reasonable detail, and the facts requiring such
adjustment and upon which such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an event
that permits or requires an adjustment to the Settlement Rate pursuant
to Section 506 (or if the Company is not aware of such occurrence, as
soon as practicable after becoming so aware), provide a written notice
to the Holders of the Units of the occurrence of such event and a
statement in reasonable detail setting forth the method by which the
adjustment to the Settlement Rate was determined and setting forth the
adjusted Settlement Rate.
(b) The Unit Agent shall not at any time be under any duty or
responsibility to any holder of Units to determine whether any facts exist which
may require any adjustment of the Settlement Rate, or with respect to the nature
or extent or calculation of any such adjustment when made, or with respect to
the method employed in making the same. The Unit Agent shall not be accountable
with respect to the validity or value (or the kind or amount) of any shares of
Common Stock, or of any securities or property, which may at the time be issued
or delivered with respect to any Purchase Contract; and the Unit Agent makes no
representation with respect thereto. The Unit Agent shall not be responsible for
any failure of the Company to issue, transfer or deliver any shares of Common
Stock pursuant to a Purchase Contract or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article.
SECTION 508. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Stock Purchase Date.
If Unit Certificates evidencing more than one Purchase Contract shall be
surrendered for settlement at one time by the same Holder, the number of full
shares of Common Stock which shall be delivered
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upon settlement shall be computed on the basis of the aggregate number of
Purchase Contracts evidenced by the Unit Certificates so surrendered. Instead of
any fractional share of Common Stock which would otherwise be deliverable upon
settlement of any Purchase Contracts on the Stock Purchase Date, the Company,
through the Unit Agent, shall make a cash payment in respect of such fractional
interest in an amount equal to such fraction times the Applicable Market Value.
The Company shall provide the Unit Agent from time to time with sufficient funds
to permit the Unit Agent to make all cash payments required by this Section 508
in a timely manner.
SECTION 509. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable
to the initial issuance and delivery of the shares of Common Stock pursuant to
the Purchase Contracts; provided, however, that the Company shall not be
required to pay any such tax or taxes which may be payable in respect of any
exchange of or substitution for a Unit Certificate evidencing a Purchase
Contract or any issuance of a share of Common Stock in a name other than that of
the registered Holder of a Unit Certificate surrendered in respect of the
Purchase Contracts evidenced thereby, other than in the name of the Unit Agent,
as custodian for such Holder, and the Company shall not be required to issue or
deliver such share certificates or Unit Certificates unless or until the Person
or Persons requesting the transfer or issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
SECTION 510. Termination Event; Notice.
The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, all obligations and
rights to pay or receive any accrued or deferred Contract Fees or to settle such
Purchase Contracts pursuant to this Article Five, shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Unit Agent or the Company, if, on or prior to the Stock Purchase
Date, a Termination Event shall have occurred. Upon the occurrence of a
Termination Event, the Company shall give written notice to the Unit Agent, the
Collateral Agent and the Holders, at their addresses as they appear in the Unit
Registers. Upon and after the occurrence of a Termination Event, the provisions
of this Article Five (other than this Section 510) shall automatically terminate
and be of no further force or effect, and the Unit Certificates shall thereafter
represent only the right to receive the Pledged Securities forming a part of the
Units theretofore evidenced thereby in accordance with the provisions of Section
402 and the Pledge Agreement.
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ARTICLE SIX
REMEDIES
SECTION 601. Unconditional Rights of Holders.
Notwithstanding any other provision in this Agreement, the Holder of any
Unit shall have the right, which is absolute and unconditional but which is
subject to Section 510, to purchase Common Stock pursuant to the Purchase
Contract underlying such Unit and to receive payment of Contract Fees, if any,
payable by the Company to such Holder with respect to such Purchase Contract
and, in each such case, to institute suit for the enforcement of any such right,
and such rights shall not be impaired without the consent of such Holder.
SECTION 602. Restoration of Rights and Remedies.
If any Holder of Units has instituted any proceeding to enforce any right
or remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company and such Holder shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of such Holder
shall continue as though no such proceeding had been instituted.
SECTION 603. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement of mutilated,
destroyed, lost or stolen Unit Certificates in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Holders of
Units 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.
SECTION 604. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy shall
impair any such right or remedy or constitute a waiver of any such right. Every
right and remedy given by this Article or by law to the Holders may be exercised
from time to time, and as often as may be deemed expedient, by such Holders.
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SECTION 605. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of any Unit by his
acceptance of the Unit Certificate evidencing such Unit shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement, or in any suit against
the Unit Agent for any action taken, suffered or omitted by it as Unit Agent,
the filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided that the provisions of this Section shall
not apply to any suit instituted by the Company, to any suit instituted by the
Unit Agent, to any suit instituted by any Holder of Units, or group of Holders,
holding in the aggregate more than 10% of the number of Outstanding Units, or to
any suit instituted by any Holder of Units for the enforcement of payments due
in respect of Pledged Securities or Contract Fees on Purchase Contracts
underlying such Units on or after the respective due dates therefor, or for
enforcement of the right to purchase shares of Common Stock under the Purchase
Contracts constituting a part of such Units.
SECTION 606. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Unit Agent or the Holders, but will suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE SEVEN
THE UNIT AGENT
SECTION 701. Certain Duties and Responsibilities.
(a)(i) The Unit Agent undertakes to perform, with respect to the
Units, such duties and only such duties as are specifically set forth in
this Agreement, and no implied covenants or obligations shall be read into
this Agreement against the Unit Agent; and
(ii) in the absence of bad faith or negligence on its part, the Unit
Agent may, with respect to the Units, conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
certificates or opinions
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furnished to the Unit Agent and conforming to the requirements of this
Agreement, but in the case of any certificates or opinions which by any
provision hereof are specifically required to be furnished to the Unit
Agent, the Unit Agent shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Agreement.
(b) No provision of this Agreement shall be construed to relieve the Unit
Agent from liability for its own negligent action, its own negligent failure to
act, or its own willful misconduct, except that
(i) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(ii) the Unit Agent shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that
the Unit Agent was negligent in ascertaining the pertinent facts; and
(iii) no provision of this Agreement shall require the Unit Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(c) Whether or not therein expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Unit Agent shall be subject to the provisions of this Section.
SECTION 702. Notice of Default.
Within 90 days after the occurrence of any default by the Company
hereunder, of which a Responsible Officer of the Unit Agent has actual
knowledge, the Unit Agent shall transmit by mail to all Holders of Units, as
their names and addresses appear in the Unit Registers, notice of such default
hereunder, unless such default shall have been cured or waived.
SECTION 703. Certain Rights of Unit Agent.
Subject to the provisions of Section 701:
(a) the Unit Agent may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of
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indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Unit Agent
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Unit Agent (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate of the Company;
(d) the Unit Agent may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Unit Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Unit Agent, in its discretion, may make reasonable
further inquiry or investigation into such facts or matters related to the
issuance of the Units and the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Unit Agent shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and promises of the Company,
personally or by agent or attorney; and
(f) the Unit Agent may execute any of its powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys
and the Unit Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 704. Not Responsible for Recitals or Issuance of Units.
The recitals contained herein and in the Unit Certificates shall be taken
as the statements of the Company and the Unit Agent assumes no responsibility
for their correctness. The Unit Agent makes no representations as to the
validity or sufficiency of this Agreement or of the Units. The Unit Agent shall
not be accountable for the use or application by the Company of the proceeds in
respect of the QUIPS or Purchase Contracts.
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SECTION 705. May Hold Units.
Any Unit Registrar or any other agent of the Company, or the Unit Agent, in
its individual or any other capacity, may become the owner or pledgee of Units
and may otherwise deal with the Company with the same rights it would have if it
were not Unit Registrar or such other agent, or the Unit Agent.
SECTION 706. Money Held in Trust.
Money held by the Unit Agent in trust hereunder need not be segregated from
other funds except to the extent required by law. The Unit Agent shall be under
no obligation to invest or pay interest on any money received by it hereunder
except as otherwise agreed with the Company.
SECTION 707. Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Unit Agent from time to time reasonable
compensation for all services rendered by it hereunder as the Company and
the Unit Agent shall from time to time agree in writing;
(b) except as otherwise expressly provided herein, to reimburse the
Unit Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Unit Agent in accordance with any
provision of this Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence
or bad faith; and
(c) to indemnify the Unit Agent and any predecessor Unit Agent and
their agents for, and to hold each of them harmless against, any and all
loss, damage, claim, liability or expense, including taxes (other than
taxes based upon, measured by or determined by the income of the Unit
Agent), incurred without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of its duties
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
SECTION 708. Corporate Unit Agent Required; Eligibility.
There shall at all times be an Unit Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust
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powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by Federal or State authority and having its
Corporate Trust Office in the Borough of Manhattan, The City of New York, if
there be such a corporation in the Borough of Manhattan, The City of New York
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Unit Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 709. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Unit Agent and no appointment of a
successor Unit Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Unit Agent in accordance with the
applicable requirements of Section 710.
(b) The Unit Agent may resign at any time by giving written notice thereof
to the Company 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Unit Agent required by Section 710 shall
not have been delivered to the Unit Agent within 30 days after the giving of
such notice of resignation, the resigning Unit Agent may petition any court of
competent jurisdiction for the appointment of a successor Unit Agent.
(c) The Unit Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Units delivered to the Unit Agent and the
Company.
(d) If at any time
(i) the Unit Agent fails to comply with Section 310(b) of the TIA,
as if the Unit Agent were an indenture trustee under an indenture qualified
under the TIA, after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Unit for at least six months,
or
(ii) the Unit Agent shall cease to be eligible under Section 708 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(iii) the Unit Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Unit Agent or of its
property shall be
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appointed or any public officer shall take charge or control of the Unit
Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (x) the Company by a Board Resolution may remove the
Unit Agent, or (y) any Holder who has been a bona fide Holder of a Unit for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Unit Agent
and the appointment of a successor Unit Agent.
(e) If the Unit Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Unit Agent for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Unit
Agent and shall comply with the applicable requirements of Section 710. If no
successor Unit Agent shall have been so appointed by the Company and accepted
appointment in the manner required by Section 710, any Holder who has been a
bona fide Holder of a Unit for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Unit Agent.
(f) The Company shall give, or shall cause such successor Unit Agent to
give, notice of each resignation and each removal of the Unit Agent and each
appointment of a successor Unit Agent by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders of Units as their names and
addresses appear in the Unit Registers. Each notice shall include the name of
the successor Unit Agent and the address of its Corporate Trust Office.
SECTION 710. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Unit Agent, every
such successor Unit Agent so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Unit Agent an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Unit Agent
shall become effective and such successor Unit Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, agencies
and duties of the retiring Unit Agent; but, on the request of the Company or the
successor Unit Agent, such retiring Unit Agent shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor Unit
Agent all the rights, powers and trusts of the retiring Unit Agent and shall
duly assign, transfer and deliver to such successor Unit Agent all property and
money held by such retiring Unit Agent hereunder.
(b) Upon request of any such successor Unit Agent, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Unit Agent all such rights, powers and agencies
referred to in paragraph (a) of this Section.
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(c) No successor Unit Agent shall accept its appointment unless at the
time of such acceptance such successor Unit Agent shall be qualified and
eligible under this Article.
SECTION 711. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Unit Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Unit Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Unit Agent, shall be the successor of the Unit Agent hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Unit Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Unit Agent then in office, any successor by merger, conversion or consolidation
to such Unit Agent may adopt such authentication and execution and deliver the
Unit Certificates so authenticated and executed with the same effect as if such
successor Unit Agent had itself authenticated and executed such Units.
SECTION 712. Preservation of Information; Communications to Holders.
(a) The Unit Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Unit Agent in
its capacity as Unit Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply in
writing to the Unit Agent, and furnish to the Unit Agent reasonable proof that
each such applicant has owned a Unit 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 with respect to their rights
under this Agreement or under the Units and is accompanied by a copy of the form
of proxy or other communication which such applicants propose to transmit, then
the Unit Agent shall, within five Business Days after the receipt of such
application, afford such applicants access to the information preserved at the
time by the Unit Agent in accordance with Section 712(a).
(c) Every Holder of Units, by receiving and holding the Unit Certificates
evidencing the same, agrees with the Company and the Unit Agent that none of the
Company, the Unit Agent nor any agent of any of them shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with Section 712(b), regardless of the
source from which such information was derived.
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SECTION 713. No Obligations of Unit Agent.
Except to the extent otherwise provided in this Agreement, the Unit Agent
assumes no obligations and shall not be subject to any liability under this
Agreement or any Purchase Contract or Call Option in respect of the obligations
of the Holder of any Unit thereunder. The Company agrees, and each Holder of a
Unit Certificate, by his acceptance thereof, shall be deemed to have agreed,
that the Unit Agent's execution of the Unit Certificates on behalf of the
Holders shall be solely as agent and attorney-in-fact for the Holders, and that
the Unit Agent shall have no obligation to perform such Purchase Contracts or
Call Options on behalf of the Holders, except to the extent expressly provided
in Article Five hereof.
SECTION 714. Tax Compliance.
(a) The Unit Agent, on its own behalf and on behalf of the Company, will
comply with all applicable certification, information reporting and withholding
(including "backup" withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i) any payments made
with respect to the Units or (ii) the issuance, delivery, holding, transfer,
redemption or exercise of rights under the Units. Such compliance shall include,
without limitation, the preparation and timely filing of required returns and
the timely payment of all amounts required to be withheld to the appropriate
taxing authority or its designated agent.
(b) The Unit Agent shall comply with any direction received from the
Company with respect to the application of such requirements to particular
payments or Holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 701(a)(ii) hereof.
(c) The Unit Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or to its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE EIGHT
SUPPLEMENTAL AGREEMENTS
SECTION 801. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the parties to any Principal Agreement,
at any time and from time to time, may enter into one or more agreements
supplemental hereto or thereto, in form satisfactory to such parties, for any of
the following purposes:
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(1) to evidence the succession of another Person to any such party,
and the assumption by any such successor of the covenants of such party
herein or therein and under the Units; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Unit Agent; or
(4) to evidence the succession of another Person to the rights of the
Call Option Holder under the Call Options, in connection with a transfer of
such rights by the Call Option Holder to such Person; or
(5) to make provision with respect to the rights of Holders pursuant
to the requirements of Section 506(b); or
(6) to cure any ambiguity, to correct or supplement any provisions
herein or therein which may be inconsistent with any other provisions
herein or therein, or to make any other provisions with respect to such
matters or questions arising under such Principal Agreement, provided such
action shall not adversely affect the interests of the Holders.
SECTION 802. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than a majority of the
Outstanding Units (or, with respect to modifications that adversely affect only
the Holders of Normal Units or only the Holders of Stripped Units, with the
consent of the Holders of not less than a majority of the Outstanding Units that
comprise Normal Units or Stripped Units, as the case may be), by Act of said
Holders delivered to the parties to any Principal Agreement, such parties (when
authorized, in the case of the Company, by a Board Resolution) may enter into an
agreement or agreements supplemental to such Principal Agreement for the purpose
of modifying in any manner the terms of the Units, or the provisions of such
Principal Agreement or the rights of the Holders in respect of the Units;
provided, however, that no such supplemental agreement shall, without the
consent of the Holder of each Outstanding Unit affected thereby,
(1) change any payment date;
(2) change the amount or type of Pledged Securities underlying a
Unit, impair the right of the Holder of any Unit to receive distributions
or interest payments on the underlying Pledged Securities or otherwise
adversely affect the Holder's rights
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in or to such Pledged Securities (including the rights of Holders of Normal
Units to effect a Stripped Unit Creation);
(3) reduce the Contract Fees, if any, or other amounts receivable by
Holders in respect of Units or increase the Contract Fees, if any, or other
amounts payable by Holders in respect of Units or change any place where,
or the coin or currency in which, any Contract Fees or other amounts
receivable or payable in respect of Units are payable;
(4) impair the right to institute suit for the enforcement of any
Purchase Contract;
(5) reduce the number of shares of Common Stock to be purchased
pursuant to any Purchase Contract, increase the price to purchase shares of
Common Stock upon settlement of any Purchase Contract, change the Stock
Purchase Date or otherwise adversely affect the Holder's rights under any
Purchase Contract; or
(6) reduce the amount payable on exercise of any Call Option, extend
the Call Option Expiration Date (as defined in the Call Option Agreement)
or otherwise adversely affect any Holder's rights under any Call Option; or
(7) reduce the percentage of the Outstanding Units the consent of
whose Holders is required for any such supplemental agreement.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any supplemental
agreement to any Principal Agreement. If a record date is fixed, the Holders on
such record date, or their duly designated proxies, and only such Persons, shall
be entitled to consent to such supplemental agreement, whether or not such
Holders remain Holders after such record date; provided, that unless such
consent shall have become effective by virtue of the requisite percentage having
been obtained prior to the date which is 90 days after such record date, any
such consent previously given shall automatically and without further action by
any Holder be cancelled and of no further effect.
SECTION 803. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by the Principal Agreements, the Unit Agent shall be
entitled to receive and (subject to
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Section 701) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental agreement is authorized or
permitted by this Agreement. The Unit Agent may, but shall not be obligated to,
enter into any such supplemental agreement which affects the Unit Agent's own
rights, duties or immunities under this Agreement or otherwise.
SECTION 804. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article, the
relevant Principal Agreement shall be modified in accordance therewith, and such
supplemental agreement shall form a part of such Principal Agreement for all
purposes; and every Holder of Unit Certificates theretofore or thereafter
authenticated, executed on behalf of the Holder and delivered hereunder shall be
bound thereby.
SECTION 805. Reference to Supplemental Agreements.
Unit Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Unit Agent, bear a notation in form
approved by the Unit Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Unit Certificates so modified
as to conform, in the opinion of the Unit Agent and the Company, to any such
supplemental agreement may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Unit Agent
in exchange for Outstanding Unit Certificates evidencing the same number of
Normal Units or Stripped Units, as the case may be.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 901. Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.
The Company covenants that it will not merge or consolidate with any other
Person or sell or convey all or substantially all of its assets to any Person,
except that the Company may merge or consolidate with, or sell or convey all or
substantially all of its assets to, any other Person, provided that (a) the
Company shall be the continuing corporation, or the successor (if other than the
Company) shall be a corporation organized and existing under the laws of the
United States of America or a State thereof and such corporation shall assume
the obligations of the Company under the Purchase Contracts and the Pledge
Agreement by one or more supplemental agreements in form satisfactory to the
Unit Agent and, in the case of the Pledge Agreement, the Collateral Agent,
executed and delivered to the Unit Agent, and, in the case of the Pledge
Agreement, the Collateral Agent by such corporation, and
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(b) the Company or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale or conveyance, be
in default in the performance of any covenant or condition under any Principal
Agreement or under any of the Units.
SECTION 902. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale or conveyance and upon any
such assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company with the same effect as if it had
been named in the Principal Agreements as the Company. Such successor
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of AmerUs Life Holdings, Inc., any or all of the Unit
Certificates evidencing Units issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Unit Agent; and, upon the
order of such successor corporation, instead of the Company, and subject to all
the terms, conditions and limitations in this Agreement prescribed, the Unit
Agent shall authenticate and execute on behalf of the Holders and deliver any
Unit Certificates which previously shall have been signed and delivered by the
officers of the Company to the Unit Agent for authentication and execution, and
any Unit Certificate evidencing Units which such successor corporation
thereafter shall cause to be signed and delivered to the Unit Agent for that
purpose. All the Unit Certificates so issued shall in all respects have the same
legal rank and benefit under this Agreement as the Unit Certificates theretofore
or thereafter issued in accordance with the terms of this Agreement as though
all of such Unit Certificates had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale or conveyance such change
in phraseology and form (but not in substance) may be made in the Unit
Certificates evidencing Units thereafter to be issued as may be appropriate.
SECTION 903. Opinion of Counsel to Unit Agent.
The Unit Agent, subject to Sections 701 and 703, may receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale or
conveyance, and any such assumption, complies with the provisions of this
Article.
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ARTICLE TEN
COVENANTS
SECTION 1001. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from time
to time of the Units that it will duly and punctually perform its obligations
under the Purchase Contracts in accordance with the terms of the Purchase
Contracts and this Agreement.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New York
an office or agency where Unit Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement and for transfer of
Pledged Securities upon occurrence of a Termination Event, where Unit
Certificates may be surrendered for registration of transfer or exchange or for
effecting Stripped Unit Creations, where payment of Contract Fees, if any,
payable by the Company to the Holders may be made and where notices and demands
to or upon the Company in respect of the Units and this Agreement may be served.
The Company will give prompt written notice to the Unit Agent of the location,
and any change in the location, of such office or agency. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Unit Agent with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Company hereby appoints the Unit Agent as its agent to receive
all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where Unit Certificates may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company will give prompt
written notice to the Unit Agent of any such designation or rescission and of
any change in the location of any such other office or agency. The Company
hereby designates as the place of payment for the Units the Corporate Trust
Office and appoints the Unit Agent at its Corporate Trust Office as paying agent
in such city.
SECTION 1003. Company to Reserve Common Stock.
The Company shall at all times prior to the Stock Purchase Date reserve and
keep available, free from preemptive rights, out of its authorized but unissued
Common Stock the full number of shares of Common Stock issuable against tender
of payment in respect of all Purchase Contracts underlying the Units.
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SECTION 1004. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be issued
against tender of payment in respect of the Purchase Contracts underlying the
Units will, upon issuance, be newly issued (i.e., not issued out of treasury
shares) and be duly authorized, validly issued, fully paid and nonassessable.
SECTION 1005. Statements of Officers of the Company as to Default.
The Company will deliver to the Unit Agent, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions hereof, and if the Company shall be in default,
specifying all such defaults and the nature and status thereof of which they may
have knowledge.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AMERUS LIFE HOLDINGS, INC.
By:_______________________________
FIRST UNION NATIONAL BANK, as Unit Agent
By: ______________________________
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EXHIBIT A
FORM OF NORMAL UNIT CERTIFICATE
AMERUS LIFE HOLDINGS, INC.
_____% ADJUSTABLE CONVERSION-RATE EQUITY SECURITY UNITS
(STATED AMOUNT $____ PER NORMAL UNIT)
CUSIP No. ______
No. _____ ________Normal Units
This Unit Certificate certifies that ____________ is the registered Holder
of the number of Normal Units set forth above. Each Normal Unit represents the
right to purchase Common Stock under a Purchase Contract with AmerUs Life
Holdings, Inc., an Iowa corporation (the "Company"), together with ownership of
the QUIPS(SM)(*) or other Pledged Securities pledged to secure the obligations
referred to in (a) and (b) below, subject to (a) the obligations owed to the
Company under such Purchase Contract, (b) for so long as any Call Options
remain exercisable, the obligations owed to the Call Option Holder under a Call
Option and (c) the pledge arrangements securing the foregoing obligations.
Each Purchase Contract evidenced hereby is governed by a Master Unit
Agreement, dated as of __________ (the "Master Unit Agreement"), between the
Company and First Union National Bank, as unit agent (herein called the "Unit
Agent"). All terms used herein which are defined in the Master Unit Agreement
have the meanings set forth therein. Each Call Option evidenced hereby is
governed by the Call Option Agreement. The Pledge of the Pledged Securities
evidenced hereby is governed by the Pledge Agreement. Reference is hereby made
to the Master Unit Agreement, the Call Option Agreement and the Pledge
Agreement, and any supplemental agreements thereto, for a description of the
respective rights, limitations of rights, obligations, duties and immunities
thereunder of the Unit Agent, the Company, the Call Option Holder, the
Collateral Agent and the Holders. The summary contained herein is qualified in
its entirety by the provisions of the Principal Agreements, and the Principal
Agreements shall govern the rights of the parties to the extent that there is
any conflict between such summary and such provisions.
Each Purchase Contract evidenced hereby obligates the Holder of this Unit
Certificate to purchase, and the Company to sell, on ___________ (the "Stock
Purchase Date"), at a price equal to $____ (the "Stated Amount"), a number of
shares of Class A Common Stock,
- ----------------
* QUIPS is a servicemark of Goldman, Sachs & Co.
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<PAGE> 61
no par value per share ("Common Stock"), of the Company equal to the Settlement
Rate, unless on or prior to the Stock Purchase Date there shall have occurred a
Termination Event. The "Settlement Rate" is equal to (a) if the Applicable
Market Value (as defined in the Master Unit Agreement) is greater than or equal
to $_____ (the "Threshold Appreciation Price"), _________ of a share of Common
Stock per Purchase Contract, (b) if the Applicable Market Value is less than the
Threshold Appreciation Price but is greater than the Stated Amount, a fractional
share of Common Stock per Purchase Contract equal to the Stated Amount divided
by the Applicable Market Value (rounded to the nearest 1/10,000th of a share or,
if there is no nearest 1/10,000th of a share, rounded downward to the nearest
1/10,000th of a share) and (c) if the Applicable Market Amount is less than or
equal to the Stated Amount, one share of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Master Unit Agreement. No
fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, but instead of issuing any fractional interest the Company shall make
a cash payment as provided in the Master Unit Agreement. The purchase price for
the shares of Common Stock to be purchased pursuant to each Purchase Contract
evidenced hereby, if not paid by 10:00 a.m., New York City time, on the Stock
Purchase Date, shall be paid by application of payments received by the Company
on the Stock Purchase Date from the Collateral Agent pursuant to the Pledge
Agreement in respect of the Pledged Securities pledged to secure such Holder's
obligations under such Purchase Contract.
The Purchase Contracts and the obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights and
obligations to receive and pay accrued or deferred Contract Fees, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Unit Agent or the Company, if, on or prior to the
Stock Purchase Date, a Termination Event shall have occurred. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Pledged Securities from the Pledge. The Normal Units shall thereafter represent
the right to receive the Pledged Securities forming a part of such Normal Units
in accordance with the provisions of the Master Unit Agreement and the Pledge
Agreement.
The Call Options evidenced hereby entitle the Call Option Holder to acquire
the QUIPS (or Junior Subordinated Debentures substituted therefor) evidenced
hereby on or before ______________, unless prior to the exercise thereof there
shall have occurred a Termination Event. The Call Option Holder may exercise
such Call Options only in whole together with the Call Options underlying the
other Normal Units, by delivering to the Unit Agent a notice of exercise and
delivering to the Collateral Agent the Aggregate Consideration Deliverable Upon
Exercise of Call Options, whereupon the QUIPS or Junior Subordinated Debentures
underlying the Normal Units will be released from the Pledge and the Treasury
Securities constituting all or part of the Aggregate Consideration Deliverable
Upon Exercise of Call Options delivered to the Collateral Agent will be
substituted as the Pledged Securities underlying the Normal Units.
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<PAGE> 62
The [Company] [Holder] shall pay, on each ________, ________, __________
and ___________, commencing ___________ (each, a "Quarterly Payment Date"), in
respect of each Purchase Contract evidenced hereby, a fee (the "Contract Fee")
accruing on the Stated Amount of such Unit from and including the date of first
issuance of any Units at a rate per annum equal to _____% (the "Contract Fee
Rate") (computed on the basis of a 360-day year of twelve 30-day months and
subject to deferral as described in the Master Unit Agreement), plus any
additional fees accrued thereon pursuant to Section 503 of the Master Unit
Agreement. [The Company's obligations with respect to Contract Fees shall be, to
the extent provided in the Master Unit Agreement, subordinate and subject in
right of payment to all Senior Indebtedness.] [Such payment will be funded out
of payments made in respect of the Pledged Securities evidenced hereby.]
Payments due to the Holder in respect of the Normal Units evidenced hereby
will be payable to the Person in whose name this Unit Certificate (or a
Predecessor Unit Certificate) is registered at the close of business on the
Record Date next preceding the relevant payment date.
The transfer of any Unit Certificate will be registered and Unit
Certificates may be exchanged as provided in the Master Unit Agreement. The Unit
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents permitted by the Master Unit Agreement. No
service charge shall be required for any such registration of transfer or
exchange, but the Company and the Unit Agent may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Except as provided in the Master Unit Agreement in connection with a
Stripped Unit Creation, for so long as the Purchase Contract underlying a Normal
Unit remains in effect, such Normal Unit shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such Normal
Unit in respect of the Pledged Securities and Purchase Contract constituting
such Normal Unit may be transferred and exchanged only as an integrated Normal
Unit.
Upon registration of transfer of this Unit Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee) by the terms of the Purchase Contracts and Call Options evidenced
hereby and by the Pledge Agreement, and the transferor shall be released from
such obligations. The Company covenants and agrees, and the Holder, by his
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Unit Certificate, by his acceptance hereof, irrevocably
authorizes the Unit Agent to enter into and perform the related Purchase
Contracts and Call Options evidenced hereby on his behalf as his
attorney-in-fact, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform his obligations under such Purchase Contracts
and Call Options, consents to the provisions of the Principal Agreements,
irrevocably authorizes the Unit Agent to enter into and perform the Call Option
Agreement
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and the Pledge Agreement on his behalf as his attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Pledged Securities
evidenced hereby pursuant to the Pledge Agreement.
Subject to certain exceptions, the provisions of the Principal Agreements
may be amended with the consent of the Holders of at least a majority of the
Outstanding Units or, if the amendment affects only the Holders of the Normal
Units or only the Holders of the Stripped Units, at least a majority of the
Outstanding Units comprising Normal Units or Stripped Units, as the case may be.
THE PURCHASE CONTRACTS AND CALL OPTIONS SHALL FOR ALL PURPOSES BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
The Company, the Unit Agent and any agent of the Company or the Unit Agent
may treat the Person in whose name this Unit Certificate is registered as the
owner of the Normal Units evidenced hereby for the purpose of receiving payments
of distributions or interest on the Pledged Securities, receiving the rights and
performing the obligations under the Purchase Contracts and for all other
purposes whatsoever, whether or not any payments in respect thereof be overdue
and notwithstanding any notice to the contrary, and neither the Company, the
Unit Agent nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
Copies of the Principal Agreements are available for inspection at the
offices of the Unit Agent.
Unless the certificate of authentication hereon has been executed by the
Unit Agent by manual signature, this Unit Certificate shall not be entitled to
any benefit under the Principal Agreements or be valid or obligatory for any
purpose.
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<PAGE> 64
IN WITNESS WHEREOF, the Company and the Holder hereby agree to their
respective obligations under the Purchase Contracts evidenced by this
instrument, and the Holder hereby acknowledges that the Pledged Securities
evidenced by this instrument are subject to the Pledge under the Pledge
Agreement.
AMERUS LIFE HOLDINGS, INC.
By:_________________________________
Attest: _______________________
HOLDER SPECIFIED ABOVE
By: First Union National Bank,
as Attorney-in-Fact of such Holder
By:_________________________________
IN WITNESS WHEREOF, the Holder hereby agrees, for the benefit of the Call Option
Holder, to its obligations under any Call Options evidenced by this instrument,
and the Holder hereby acknowledges, for the benefit of the Call Option Holder,
that the Pledged Securities evidenced by this instrument are subject to the
Pledge under the Pledge Agreement.
HOLDER SPECIFIED ABOVE
By: First Union National Bank,
as Attorney-in-Fact of such Holder
By:_________________________________
Dated:
Unit Agent's Certificate of Authentication
This is one of the Unit Certificates referred to in the within mentioned
Master Unit Agreement.
First Union National Bank,
as Unit Agent
By: __________________________
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<PAGE> 65
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Stock Purchase Date of the
Purchase Contracts underlying the number of Normal Units evidenced by this Unit
Certificate be registered in the name of, and delivered, together with a check
in payment for any fractional share, to the undersigned at the address indicated
below unless a different name and address have been indicated below. If shares
are to be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: _________________________ ____________________________________
Signature*
If shares are to be registered in the REGISTERED HOLDER
name of and delivered to a Person
other than the Holder, please print Please print name and address of
such Person's name and address: Registered Holder:
________________________________ ___________________________________
Name Name
________________________________ ___________________________________
Address Address
________________________________ ___________________________________
Social Security or other Taxpayer
Identification Number, if any
___________________________________
* Signature must be guaranteed by an eligible Guarantor Institution (banks,
stockbrokers, savings and loan associations and credit unions) with membership
in an approved signature medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if Common Stock is to be delivered other than to, and
in the name of, the registered Holder.
A-6
<PAGE> 66
REQUEST TO CREATE STRIPPED UNITS
The undersigned Holder directs that (a) the Pledged Securities
underlying the number of Normal Units indicated below (which number does not
exceed the number of Normal Units evidenced by this Unit Certificate) be
released from the Pledge and registered in the name of, and delivered to, the
undersigned at the address indicated below unless a different name and address
have been indicated below and (b) a corresponding number of Stripped Units be
registered in the name of, and delivered to, the undersigned at the address
indicated below unless a different name and address have been indicated below.
If the released Pledged Securities or the Stripped Units are to be registered in
the name of a Person other than the undersigned, the undersigned will pay any
transfer tax payable incident thereto.
The undersigned confirms that the requisite Treasury Securities, any
required cash and the instrument from the Call Option Holder have been delivered
to the Collateral Agent.
Dated: _________________________ ____________________________________
Signature*
If shares are to be registered in the REGISTERED HOLDER
name of and delivered to a Person
other than the Holder, please print Please print name and address of
such Person's name and address: Registered Holder:
________________________________ ___________________________________
Name Name
________________________________ ___________________________________
Address Address
________________________________ ___________________________________
Social Security or other Taxpayer
Identification Number, if any
___________________________________
If Stripped Units are to be registered in
the name of and delivered to a Person
other than the Holder, please print
such Person's name and address:
A-7
<PAGE> 67
________________________________
Name
________________________________
Address
________________________________
Social Security or other Taxpayer
Identification Number, if any
* Signature must be guaranteed by an eligible Guarantor Institution (banks,
stockbrokers, savings and loan associations and credit unions) with membership
in an approved signature medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if Pledged Securities or Stripped Units are to be
delivered other than to, and in the name of, the registered Holder.
A-8
<PAGE> 68
EXHIBIT B
FORM OF STRIPPED UNIT CERTIFICATE
AMERUS LIFE HOLDINGS, INC.
_____% ADJUSTABLE CONVERSION-RATE EQUITY SECURITY UNITS
(STATED AMOUNT $____ PER UNIT)
CUSIP No. _______
No. _____ _____ Stripped Units
This Unit Certificate certifies that ____________ is the registered Holder
of the number of Stripped Units set forth above. Each Stripped Unit represents
the right to purchase Common Stock under a Purchase Contract with AmerUs Life
Holdings, Inc., an Iowa corporation (the "Company"), together with ownership of
the Treasury Securities pledged to secure the obligations referred to in (a)
below, subject to (a) the obligations owed to the Company under such Purchase
Contract and (b) the pledge arrangements securing the foregoing obligations.
Each Purchase Contract evidenced hereby is governed by a Master Unit
Agreement, dated as of __________ (the "Master Unit Agreement"), between the
Company and First Union National Bank, as unit agent (herein called the "Unit
Agent"). All terms used herein which are defined in the Master Unit Agreement
have the meanings set forth therein. The Pledge of the Pledged Securities
evidenced hereby is governed by the Pledge Agreement. Reference is hereby made
to the Master Unit Agreement and the Pledge Agreement, and any supplemental
agreements thereto, for a description of the respective rights, limitations of
rights, obligations, duties and immunities thereunder of the Unit Agent, the
Company, the Collateral Agent and the Holders. The summary contained herein is
qualified in its entirety by the provisions of the Principal Agreements, and the
Principal Agreements shall govern the rights of the parties to the extent that
there is any conflict between such summary and such provisions.
Each Purchase Contract evidenced hereby obligates the Holder of this Unit
Certificate to purchase, and the Company to sell, on __________ (the "Stock
Purchase Date"), at a price equal to $_____ (the "Stated Amount"), a number of
shares of Class A Common Stock, no par value per share ("Common Stock"), of the
Company equal to the Settlement Rate, unless on or prior to the Stock Purchase
Date there shall have occurred a Termination Event. The "Settlement Rate" is
equal to (a) if the Applicable Market Value (as defined in the Master Unit
Agreement) is greater than or equal to $______ (the "Threshold Appreciation
Price"), ___________ of a share of Common Stock per Purchase Contract, (b) if
the Applicable Market Value is less than the Threshold Appreciation Price but is
greater than the Stated
B-1
<PAGE> 69
Amount, a fractional share of Common Stock per Purchase Contract equal to the
Stated Amount divided by the Applicable Market Value (rounded to the nearest
1/10,000th of a share or, if there is no nearest 1/10,000th of a share, rounded
downward to the nearest 1/10,000th of a share) and (c) if the Applicable Market
Amount is less than or equal to the Stated Amount, one share of Common Stock per
Purchase Contract, in each case subject to adjustment as provided in the Master
Unit Agreement. No fractional shares of Common Stock will be issued upon
settlement of Purchase Contracts, but instead of any fractional interest the
Company shall make a cash payment as provided in the Master Unit Agreement. The
purchase price for the shares of Common Stock to be purchased pursuant to each
Purchase Contract evidenced hereby, if not paid by 10:00 a.m., New York City
time, on the Stock Purchase Date, shall be paid by application of payments
received by the Company on the Stock Purchase Date from the Collateral Agent
pursuant to the Pledge Agreement in respect of the Pledged Securities pledged to
secure such Holder's obligations under such Purchase Contract.
The Purchase Contracts and the obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights and
obligations to receive and pay accrued or deferred Contract Fees, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Unit Agent or the Company, if, on or prior to the
Stock Purchase Date, a Termination Event shall have occurred. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Pledged Securities from the Pledge. The Stripped Units shall thereafter
represent the right to receive the Pledged Securities forming a part of such
Stripped Units in accordance with the provisions of the Master Unit Agreement
and the Pledge Agreement.
The [Company][Holder] shall pay, on each ________, ________, _______ and
__________, commencing ______________ (each, a "Quarterly Payment Date"), in
respect of each Purchase Contract evidenced hereby, a fee (the "Contract Fee")
accruing on the Stated Amount of such Unit from and including the date of first
issuance of any Units at a rate per annum equal to _____% (the "Contract Fee
Rate") (computed on the basis of a 360-day year of twelve 30-day months and
subject to deferral as described in the Master Unit Agreement), plus any
additional fees accrued thereon pursuant to Section 503 of the Master Unit
Agreement. [The Company's obligations with respect to Contract Fees shall be, to
the extent provided in the Master Unit Agreement, subordinated and subject in
right of payment to all Senior Indebtedness.] [Such payment will be funded out
of payments made in respect of the Pledged Securities evidenced hereby.]
Payments due to the Holder in respect of the Stripped Units evidenced
hereby will be payable to the Person in whose name this Unit Certificate (or a
Predecessor Unit Certificate) is registered at the close of business on the
Record Date next preceding the relevant payment date.
B-2
<PAGE> 70
The transfer of any Unit Certificate will be registered and Unit
Certificates may be exchanged as provided in the Master Unit Agreement. The Unit
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents permitted by the Master Unit Agreement. No
service charge shall be required for any such registration of transfer or
exchange, but the Company and the Unit Agent may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. For so long as the Purchase Contract underlying a Stripped Unit
remains in effect, such Stripped Unit shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such Stripped
Unit in respect of the Pledged Securities and Purchase Contract constituting
such Stripped Unit may be transferred and exchanged only as an integrated
Stripped Unit.
Upon registration of transfer of this Unit Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee) by the terms of the Purchase Contracts evidenced hereby and by the
Pledge Agreement, and the transferor shall be released from such obligations.
The Company covenants and agrees, and the Holder, by his acceptance hereof,
likewise covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Unit Certificate, by his acceptance hereof, irrevocably
authorizes the Unit Agent to enter into and perform the related Purchase
Contracts evidenced hereby on his behalf as his attorney-in-fact, agrees to be
bound by the terms and provisions thereof, covenants and agrees to perform his
obligations under such Purchase Contracts, consents to the provisions of the
Principal Agreements, irrevocably authorizes the Unit Agent to enter into and
perform the Pledge Agreement on his behalf as his attorney-in-fact, and consents
to and agrees to be bound by the Pledge of the Pledged Securities evidenced
hereby pursuant to the Pledge Agreement.
Subject to certain exceptions, the provisions of the Principal Agreements
may be amended with the consent of the Holders of at least a majority of the
Outstanding Units or, if the amendment affects only the Holders of the Normal
Units or only the Holders of the Stripped Units, at least a majority of the
Outstanding Units comprising Normal Units or Stripped Units, as the case may be.
THE PURCHASE CONTRACTS SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES THEREOF.
The Company, the Unit Agent and any agent of the Company or the Unit Agent
may treat the Person in whose name this Unit Certificate is registered as the
owner of the Stripped Units evidenced hereby for the purpose of receiving
payments of distributions or interest on the Pledged Securities, receiving the
rights and performing the obligations under the Purchase Contracts and for all
other purposes whatsoever, whether or not any payments in
B-3
<PAGE> 71
respect thereof be overdue and notwithstanding any notice to the contrary, and
neither the Company, the Unit Agent nor any such agent shall be affected by
notice to the contrary.
THE PURCHASE CONTRACTS SHALL NOT, PRIOR TO THE SETTLEMENT THEREOF, ENTITLE
THE HOLDER TO ANY OF THE RIGHTS OF A HOLDER OF SHARES OF COMMON STOCK, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Copies of the Principal Agreements are available for inspection at the
offices of the Unit Agent.
Unless the certificate of authentication hereon has been executed by the
Unit Agent by manual signature, this Unit Certificate shall not be entitled to
any benefit under the Principal Agreements or be valid or obligatory for any
purpose.
B-4
<PAGE> 72
IN WITNESS WHEREOF, the Company and the Holder hereby agree to their
respective obligations under the Purchase Contracts evidenced by this
instrument, and the Holder hereby acknowledges that the Pledged Securities
evidenced by this instrument are subject to the Pledge under the Pledge
Agreement.
AMERUS LIFE HOLDINGS, INC.
By:_________________________________
Attest: _______________________
HOLDER SPECIFIED ABOVE
By: First Union National Bank,
as Attorney-in-Fact of such Holder
By:_________________________________
Dated:
Unit Agent's Certificate of Authentication
This is one of the Unit Certificates referred to in the within mentioned
Master Unit Agreement.
First Union National Bank,
as Unit Agent
By: __________________________
B-5
<PAGE> 73
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Stock Purchase Date of the
Purchase Contracts underlying the number of Stripped Units evidenced by this
Unit Certificate be registered in the name of, and delivered, together with a
check in payment for any fractional share, to the undersigned at the address
indicated below unless a different name and address have been indicated below.
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated: _________________________ ____________________________________
Signature*
If shares are to be registered in the REGISTERED HOLDER
name of and delivered to a Person
other than the Holder, please print Please print name and address of
such Person's name and address: Registered Holder:
________________________________ ___________________________________
Name Name
________________________________ ___________________________________
Address Address
________________________________ ___________________________________
Social Security or other Taxpayer
Identification Number, if any
___________________________________
* Signature must be guaranteed by an eligible Guarantor Institution (banks,
stockbrokers, savings and loan associations and credit unions) with membership
in an approved signature medallion program pursuant to Securities and Exchange
Commission Rule 17Ad-15 if Common Stock is to be delivered other than to, and in
the name of, the registered Holder.
B-6
<PAGE> 1
The Sponsor will provide a copy of the Declaration, the
Indenture, the QUIPS Guarantee or the Common Trust Securities Guarantee (as may
be appropriate) and the Indenture (including any supplemental indenture) to a
Holder without charge on written request to the Sponsor at its principal place
of business.
A-10
<PAGE> 2
EXHIBIT A-1
FORM OF QUARTERLY INCOME PREFERRED SECURITIES
FORM OF FACE OF SECURITY
[IF THIS QUARTERLY INCOME PREFERRED SECURITY ("QUIPS") IS A
GLOBAL SECURITY, INSERT: THIS QUARTERLY INCOME PREFERRED SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY")
OR A NOMINEE OF THE CLEARING AGENCY. THIS QUIPS IS EXCHANGEABLE FOR QUIPS
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS QUIPS (OTHER THAN A TRANSFER OF THIS QUIPS AS A WHOLE BY THE
CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
[UNLESS THIS QUIPS IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK), A NEW YORK CORPORATION, TO THE TRUST OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY QUIPS ISSUED IS REGISTERED IN THE NAME
OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
Certificate Number Number of Quarterly Income Preferred Securities
CUSIP NO.
Certificate Evidencing Quarterly Income Preferred Securities
of
AmerUs Capital II
__% Quarterly Income Preferred Securities (liquidation amount $1,000 per
Quarterly Income Preferred Security)
AmerUs Capital II, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that __________ (the
"Holder") is the registered owner of _____
<PAGE> 3
securities of the Trust representing preferred undivided beneficial interests
in the assets of the Trust designated the ___% Quarterly Income Preferred
Securities (liquidation amount $1,000 per Quarterly Income Preferred Security)
(the "QUIPS"). Subject to the terms of the Declaration (as defined below), the
QUIPS are transferable on the books and records of the Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the QUIPS represented hereby are
issued and shall in all respects be subject to the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of May __, 1998, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the QUIPS as set forth in Annex I to the
Declaration. Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declaration, the QUIPS Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the QUIPS Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States
Federal income tax purposes, the Trust as a grantor trust, the Debentures as
indebtedness and the QUIPS as evidence of indirect beneficial ownership in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this _____ day of May, 1998.
AMERUS CAPITAL II
By:
-------------------------
Name:
Title: Administrator
A-2
<PAGE> 4
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Quarterly Income Preferred Securities
referred to in the within-mentioned Declaration.
Dated:
------------------
FIRST UNION NATIONAL BANK, not in its
individual capacity, but solely as
Property Trustee
By:
----------------------------
Authorized Signatory
A-3
<PAGE> 5
FORM OF REVERSE OF SECURITY
Distributions payable on each QUIPS will be fixed at a rate
per annum of ___% (the "Coupon Rate") of the liquidation amount of $1,000 per
QUIPS, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one
quarterly period will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions", as
used herein, includes such cash distributions and any such interest unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Debentures held by the Property Trustee and to the
extent the Property Trustee has funds on hand legally available therefor.
Distributions on the QUIPS will be cumulative, will accumulate
from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from May __, 1998 and will be payable quarterly
in arrears, on August __, November __, February __, and May __of each year,
commencing on August __, 1998, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to elect to defer payments of interest by extending the interest
payment period at any time and from time to time on the Debentures (each an
"Extension Period"), provided that no Extension Period shall end on a date
other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate of interest
then accruing on the Debentures) at the Coupon Rate compounded quarterly during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension Period may not
extend beyond the Maturity Date of the Debentures. Payments of accumulated
Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to the conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and, after satisfaction of liabilities to creditors of
the Trust as required by applicable law, cause the Debentures to be distributed
to the holders of the Securities in liquidation of the Trust.
The QUIPS will be subject to mandatory redemption on the
Maturity Date of the Debentures as provided in the Declaration.
A-4
<PAGE> 6
The QUIPS and the rights of the Holders shall be governed by
and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws.
A-5
<PAGE> 7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Security to:
- --------------------
- --------------------
- --------------------
(Insert assignee's social security or tax identification number)
- --------------------
- --------------------
- --------------------
(Insert address and zip code of assignee)
- --------------------
- --------------------
- --------------------
and irrevocably appoints agent to transfer this Security on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
--------------------------------
Signature:
---------------------------
(Sign exactly as your name appears on the other side of this Security)
Signature Guarantee(1):
-----------------------
- --------------------
(1)Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A-6
<PAGE> 8
NOTICE TO REQUIRE EXERCISE OF JUNIOR SUBORDINATED
DEBENTURE PUT OPTION
The undersigned holder of this Security hereby irrevocably exercises the right
to require the Trust to distribute to the Put Agent Debentures having an
aggregate principal amount equal to the Liquidation Amount of the number of
QUIPS listed below (which number does not exceed the number evidenced hereby)
in exchange for such number of QUIPS, on the Put Date indicated below in
connection with the concurrent exercise by the Put Agent on behalf of the
holder of this Security of the Debenture Put Option related hereto on such
date. Pursuant to the aforementioned exercise of the right to require the
Trust to distribute to the Put Agent Debentures in exchange for such number of
QUIPS, the undersigned hereby directs the Property Trustee to take any actions
necessary to effect the exchange of such number of QUIPS for such principal
amount of Debentures.
Date:
--------------------
Put Date (check one)
Stock Purchase Date
- -----
Final Put Date
- -----
Number of QUIPS (not to exceed number of QUIPS evidenced hereby)
Signature:
---------------------------
(Sign exactly as your name appears on the other side of this Security)
Please Print or Type Name and Address,
Including Zip Code, and Social Security
or Other Identifying Number
- --------------------
- --------------------
- --------------------
Signature Guarantee(1):
--------------------------
- --------------------
(1)Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities and Exchange Act of 1934, as amended.
A-7
<PAGE> 1
EXHIBIT 4.14
------------------------------------------------------------------------------
AMERUS LIFE HOLDINGS, INC.
GOLDMAN, SACHS & CO.,
as Call Option Holder
-------------------------
as Collateral Agent
AND
FIRST UNION NATIONAL BANK,
as Unit Agent and as Attorney-In-Fact
---------------------------
PLEDGE AGREEMENT
---------------------------
Dated as of ______________
------------------------------------------------------------------------------
<PAGE> 2
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of __________, among AmerUs Life Holdings,
Inc., an Iowa corporation (the "Company", as such term is more fully defined in
the Master Unit Agreement referred to below), Goldman, Sachs & Co., as Call
Option Holder, _____________, as Collateral Agent, and First Union National
Bank, as Unit Agent and as attorney-in-fact of the Holders from time to time of
the Units.
RECITALS
The Company and the Unit Agent are parties to the Master Unit
Agreement, dated as of the date hereof (as the same may be supplemented or
amended from time to time in accordance with the terms thereof, the "Master Unit
Agreement"). The Master Unit Agreement contemplates that the QUIPS(SM)*, Junior
Subordinated Debentures and Treasury Securities that from time to time underlie
the Units be pledged to the Collateral Agent to secure the obligations of the
Holders of Units under the Purchase Contracts and Call Options that underlie
such Units.
Pursuant to the terms of the Principal Agreements and the Unit
Certificates, the Holders from time to time of the Units irrevocably authorize
the Unit Agent, as attorney-in-fact of such Holders, to execute and deliver this
Agreement on behalf of such Holders and to grant the pledge provided hereby of
the Pledged Securities underlying such Units as provided herein and subject to
the terms hereof.
Accordingly, the Company, the Call Option Holder, the Collateral Agent
and the Unit Agent, in its capacity as Unit Agent and as attorney-in-fact of the
Holders from time to time of the Units, agree as follows:
SECTION 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) capitalized terms used herein and not defined are used
herein as defined in the Master Unit Agreement; and
(b) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Aggregate Consideration Deliverable on Exercise of the Call Options"
has the meaning specified in the Call Option Agreement.
- -------------
* QUIPS is a servicemark of Goldman, Sachs & Co.
<PAGE> 3
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Applicable Treasury Regulations" means Subpart O-Book-Entry Procedure
of Title 31 of the Code of Federal Regulations (31 CFR ss. 306.115 et seq.) and
any other regulations of the United States Treasury Department from time to time
applicable to the transfer or pledge of book-entry Treasury Securities.
"Date of Deemed Receipt" means, with respect to any payment received by
the Collateral Agent, the date of receipt thereof; provided, however, that if
such payment is received on a date which is not a Quarterly Payment Date and is
not either a payment in respect of defaulted distributions or interest on QUIPS
or Junior Subordinated Debentures or a payment comprising a part of the
Aggregate Consideration Deliverable on Exercise of the Call Options, "Date of
Deemed Receipt" means, with respect to such payment, the Quarterly Payment Date
next succeeding such date of receipt.
SECTION 2. The Pledge. The Holders from time to time of the Units
acting through the Unit Agent, as their attorney-in-fact, hereby pledge to the
Collateral Agent (for the benefit of the Company and the Call Option Holder as
their interests may appear), and grant to the Collateral Agent, the Company and
the Call Option Holder (as their interests may appear) a security interest in
all of the right, title and interest of such Holders in and to the Pledged
Securities underlying such Units (and proceeds therefrom), as collateral
security to ensure the performance when due by such Holders of their respective
obligations under the Purchase Contracts and Call Options underlying such Units.
Concurrently with the execution of this Agreement, the initial Holders of the
[first] ____________ Normal Units issued under the Master Unit Agreement, the
Unit Agent and the Collateral Agent are causing ________ QUIPS to be delivered
to, and registered in the name of, the Collateral Agent, and such QUIPS will
thereupon constitute Pledged Securities forming a part of such Normal Units. As
used in this Section 2, the term "delivery" shall have the meaning ascribed to
it in the Uniform Commercial Code of the State of New York. [In the event that
any or all of the additional __________ Normal Units that may be issued as a
result of an exercise of the overallotment option of the underwriters under the
Underwriting Agreement are issued pursuant to the Master Unit Agreement at or
after the execution of this Agreement, the initial Holders of such Normal Units,
the Unit Agent and the Collateral Agent shall cause a number of QUIPS equal to
the number of such Normal Units to be delivered to, and registered in the name
of, the Collateral Agent, and such QUIPS will thereupon constitute Pledged
Securities forming a part of such Normal Units.] In addition, the execution
hereof by the Unit Agent and the Collateral Agent shall constitute an
acknowledgment by the Collateral Agent (as securities intermediary or otherwise)
of the Pledge and of its holding of such QUIPS or other Pledged Securities
substituted therefor in accordance with the provisions hereof subject to the
Pledge and of its crediting such QUIPS or other Pledged Securities to a separate
account
-2-
<PAGE> 4
for purposes of perfecting the Pledge under applicable law, including, to the
extent applicable, the Uniform Commercial Code as adopted and in effect in any
applicable jurisdiction and the Applicable Treasury Regulations. Subject to the
Pledge, the Holders from time to time of the Units shall have full beneficial
ownership of the Pledged Securities underlying such Units, and shall be entitled
(directly or through the Collateral Agent) to all of the rights provided by such
Pledged Securities, and the Company and the Call Option Holder shall have no
rights with respect to such Pledged Securities other than their respective
security interests therein.
SECTION 3. Payments in Respect of the Pledged Securities. Any payment
received by the Collateral Agent in respect of the Pledged Securities underlying
any Normal Units or Stripped Units shall be paid by the Collateral Agent, by
wire transfer in same day funds no later than 1:00 p.m., New York City time, on
the Date of Deemed Receipt (or, if the Date of Deemed Receipt is not a Business
Day or if such payment is received by the Collateral Agent after noon, New York
City time, on the Date of Deemed Receipt, then such payment shall be made by the
Collateral Agent no later than 10:00 a.m., New York City time, on the next
succeeding Business Day), as follows:
(a) in the case of payments not scheduled to fall on and that
are not in respect of amounts due on the Stock Purchase Date, (i)
first, to the Company, to the account designated by it for such
purpose, in an amount equal to the Contract Fees, if any, then payable
to the Company in respect of such Units, and (ii) second, to the extent
of any amount remaining after the payment (if any) referred to in
clause (i) above, to the Unit Agent, to the account designated by it
for payments in respect of Normal Units or the account designated by it
for payments in respect of Stripped Units, as the case may be; and
(b) in the case of payments scheduled to fall on or that are in
respect of amounts due on the Stock Purchase Date, (i) with respect to
payments received in respect of Units which are Paid Units (as
specified in the notice from the Unit Agent referred to in Section 4),
(x) first, to the Company, to the account designated by it for such
purpose, in an amount equal to the unpaid Contract Fees, if any,
payable to the Company in respect of such Paid Units, and (y) second,
to the extent of any amount remaining after the payment (if any)
referred to in clause (x) above, to the Unit Agent, to the account
designated by it for payments in respect of Paid Units which are Normal
Units or the account designated by it for payments in respect of Paid
Units which are Stripped Units, as the case may be; and (ii) with
respect to payments received in respect of Units which are Unpaid Units
(as specified in the notice from the Unit Agent referred to in Section
4), (x) first, to the Company, to the account designated by it for such
purpose, in an amount equal to the aggregate amount payable to the
Company in respect of such Unpaid Units, and (y) second, to the extent
of any amount remaining after the payment (if any) referred to in (x)
above,
-3-
<PAGE> 5
to the Unit Agent, to the account designated by it for payments in
respect of Unpaid Units which are Normal Units; provided, however, that
if the Company disputes the notice from the Unit Agent referred to in
Section 4 and notifies the Collateral Agent, prior to noon, New York
City time, on the Stock Purchase Date, that the number of Paid Units or
the number of Unpaid Units (or both) is different than that indicated
in such notice, the foregoing payments with respect to any Paid Units
or Unpaid Units subject to dispute shall not be paid until such dispute
is resolved.
All payments received by the Unit Agent as provided herein shall
be applied by the Unit Agent pursuant to the provisions of the Master Unit
Agreement.
SECTION 4. Notice with Respect to Numbers of Paid Units and Unpaid
Units; Exercise of Junior Subordinated Debenture Put Options with Respect to
Unpaid Units. By 11:00 a.m., New York City time, on the Stock Purchase Date, the
Unit Agent shall, as provided in the Master Unit Agreement, notify the Company
and the Collateral Agent as to the number of Normal Units and the number of
Stripped Units, respectively, which are Paid Units and the number of Normal
Units and the number of Stripped Units, respectively, which are Unpaid Units.
Promptly after receiving such notification, (a) if QUIPS underlie the Unpaid
Units of any Holder, the Collateral Agent, on behalf of such Holder, shall
exercise such Holder's right under the Declaration to require the Trust to
distribute Junior Subordinated Debentures having an aggregate principal amount
equal to the aggregate liquidation amount of such QUIPS, in exchange for such
QUIPS, and, upon receiving such Junior Subordinated Debentures, shall thereupon,
as Put Agent, exercise the Junior Subordinated Debenture Put Option with respect
thereto and (b) if Junior Subordinated Debentures underlie such Unpaid Units,
the Collateral Agent, on behalf of such Holder, shall, as Put Agent, exercise
the Junior Subordinated Debenture Put Option with respect thereto. The payment
received by the Collateral Agent from the exercise of any Junior Subordinated
Debenture Put Option shall then be applied by the Collateral Agent in accordance
with Section 3(b).
SECTION 5. Release and Substitution of Pledged Securities. (a) Upon
notice to the Collateral Agent by the Company or the Unit Agent that there has
occurred a Termination Event, the Collateral Agent shall release all Pledged
Securities from the Pledge and shall transfer, without recourse, such released
Pledged Securities, free and clear of any lien, pledge or security interest
created hereby, to the Unit Agent for delivery by the Unit Agent pursuant to the
provisions of the Master Unit Agreement.
(b) Upon notice to the Collateral Agent by the Call Option Holder
that the Call Option Holder is exercising the Call Options in accordance with
the terms of the Call Option Agreement with respect to the QUIPS or Junior
Subordinated Debentures underlying the Normal Units, provided that the
Collateral Agent receives the requisite Aggregate Consideration Deliverable on
Exercise of the Call Options on the Call Settlement Date
-4-
<PAGE> 6
specified in such notice, the Collateral Agent shall release such QUIPS or
Junior Subordinated Debentures from the Pledge and transfer, without recourse,
such released QUIPS or Junior Subordinated Debentures, free and clear of any
lien, pledge or security interest created hereby, to the Call Option Holder or
its designee as specified in such notice, whereupon (i) the Treasury Securities
constituting all or a part of the Aggregate Consideration Deliverable On
Exercise of the Call Options so received by the Collateral Agent shall be
subject to the Pledge with respect to the Normal Units and (ii) the Pledge shall
cease to constitute a security interest for the benefit of the Call Option
Holder.
(c) In connection with a Stripped Unit Creation, upon request by the
Unit Agent to the Collateral Agent to release the then Pledged Securities
underlying the number of Normal Units indicated in such request, provided that
the Collateral Agent has received (i) the Treasury Securities and cash required
by Section 309(a)(i) of the Master Unit Agreement for a Stripped Unit Creation
relating to such Normal Units and (ii) if the Call Options underlying such
Normal Units remain exercisable on the date of receipt of such instruction, an
instrument from the Call Option Holder releasing its security interest in the
Pledged Securities underlying such Normal Units and agreeing that such Call
Options no longer underlie such Normal Units (or the Stripped Units they
become), the Collateral Agent shall release such Pledged Securities from the
Pledge and transfer, without recourse, such released Pledged Securities, free
and clear of any lien, pledge or security interest created hereby, to the Unit
Agent for delivery by the Unit Agent pursuant to the provisions of the Master
Unit Agreement, whereupon the Treasury Securities so received by the Collateral
Agent in connection with such Stripped Unit Creation shall be subject to the
Pledge and constitute the Pledged Securities underlying the Stripped Units so
created.
(d) In connection with the delivery to the Collateral Agent of
Treasury Securities pursuant to Section 5(b) or (c), such delivery shall be by
Federal Reserve Bank-Wire to the account of the Collateral Agent designated by
it for such purpose, and the Collateral Agent and the Call Option Holder or
transferring Holder of Normal Units, as the case may be, shall take appropriate
action (i) so that the applicable Federal Reserve Bank through which such
Treasury Securities have been purchased will reflect such transfer and the
Pledge of such Treasury Securities in accordance with Applicable Treasury
Regulations and (ii) as may be required to perfect the Pledge under Applicable
Treasury Regulations.
(e) In the event the Trust is dissolved while any QUIPS are Pledged
Securities underlying Normal Units, the Junior Subordinated Debentures issued
upon dissolution thereof shall be delivered to the Collateral Agent in exchange
for such QUIPS, whereupon such QUIPS shall cease to constitute Pledged
Securities and the Junior Subordinated Debentures so received by the Collateral
Agent shall be subject to the Pledge and constitute the Pledged Securities
underlying such Normal Units.
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<PAGE> 7
(f) On the Stock Purchase Date, the Collateral Agent shall release
the QUIPS or Junior Subordinated Debentures underlying Units which are Paid
Units (as specified in the notice from the Unit Agent referred to in Section 4)
from the Pledge and transfer, without recourse, such released QUIPS or Junior
Subordinated Debentures, free and clear of any lien, pledge or security interest
created hereby, to the Unit Agent for delivery pursuant to the provisions of the
Master Unit Agreement; provided, however, that if the Company disputes the
notice from the Unit Agent referred to in Section 4 and notifies the Collateral
Agent, prior to noon, New York City time, on the Stock Purchase Date, that the
number of Paid Units is different from that indicated in such notice, the
foregoing release with respect to any Paid Units subject to dispute shall not be
made until such dispute is resolved.
SECTION 6. Rights and Remedies. (a) The Collateral Agent shall have all
of the rights and remedies with respect to the Pledged Securities of a secured
party under the Uniform Commercial Code as in effect in the State of New York
(the "Code") (whether or not said Code is in effect in the jurisdiction where
the rights and remedies are asserted) and, with respect to Pledged Securities
which are Treasury Securities, the Applicable Treasury Regulations, and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments due to the Company pursuant to the Purchase Contracts
underlying any Units, the Collateral Agent shall have and may exercise, with
reference to the Pledged Securities underlying such Units and the obligations of
the Holders of such Units, any and all of the rights and remedies available to a
secured party under the Code and the Applicable Treasury Regulations after
default by a debtor, and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of principal of or distributions
or interest on the Pledged Securities, in each case subject to the provisions
hereof.
(d) The Unit Agent, the Call Option Holder and each Holder of Units
agree that, from time to time, upon the written request of the Collateral Agent,
the Unit Agent, the Call Option Holder or such Holder of Units shall execute and
deliver such further documents and do such other acts and things as the
Collateral Agent may reasonably request in order to maintain the Pledge, and the
perfection and priority thereof, and to confirm the rights of the Collateral
Agent hereunder.
SECTION 7. The Collateral Agent. The Collateral Agent, the Company and
the Call Option Holder hereby agree among themselves as follows (it being
understood and agreed
-6-
<PAGE> 8
that, except as provided in Section 7.08, neither the Unit Agent nor any Holder
of Units shall have any rights or duties under this Section 7):
7.01 Appointment, Powers and Immunities. The Collateral Agent shall act
hereunder as agent for the Company and the Call Option Holder, with such powers
as are specifically vested in the Collateral Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
The Collateral Agent: (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants or obligations
shall be inferred from this Agreement against the Collateral Agent, nor shall
the Collateral Agent be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof; (b) shall not be responsible to the
Company or the Call Option Holder for any recitals contained in this Agreement,
or in any certificate or other document referred to or provided for in, or
received by it under, this Agreement, the Units, the Master Unit Agreement, or
the Call Option Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement (other than as
against the Collateral Agent), the Units, the Master Unit Agreement or the Call
Option Agreement or any other document referred to or provided for herein or
therein or for any failure by the Company, the Call Option Holder, or any other
Person (except the Collateral Agent) to perform any of its obligations hereunder
or thereunder; (c) shall not be required to initiate or conduct any litigation
or collection proceedings hereunder (except pursuant to directions furnished
under Section 7.02 hereof); (d) shall not be responsible for any action taken or
omitted to be taken by it hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith or therewith,
except for its own negligence; and (e) shall not be required to advise any party
as to selling or retaining, or taking or refraining from taking any action with
respect to, any Units or any property deposited hereunder. Subject to the
foregoing, during the term of this Agreement the Collateral Agent shall take all
reasonable action in connection with the safekeeping and preservation of the
Pledged Securities hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the value of the Pledged Securities.
7.02 Instructions of the Company. The Company (or, with respect to
matters relating to the Call Options, the Call Option Holder) shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for any right or remedy available to the Collateral Agent, or of
exercising any power conferred on the Collateral Agent, or to direct the taking
or refraining from taking of any action authorized by this Agreement; provided,
however, that (a) no Company direction shall in any way adversely affect the
rights of the Call Option Holder hereunder or under the Call Options and no Call
Option Holder direction shall in any
-7-
<PAGE> 9
way adversely affect the rights of the Company hereunder or under the Purchase
Contracts, (b) such direction shall not conflict with the provisions of any law
or of this Agreement and (c) the Collateral Agent shall be adequately
indemnified as provided herein. Nothing in this Section 7.02 shall impair the
right of the Collateral Agent in its discretion to take any action or omit to
take any action which it deems proper and which is not inconsistent with such
direction.
7.03 Reliance by Collateral Agent. The Collateral Agent shall be
entitled to rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof by telephone,
telecopy, telex, telegram or cable) believed by it to be genuine and correct and
to have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of any fact stated
therein), and upon advice and statements of legal counsel and other experts
selected by the Collateral Agent. As to any matters not expressly provided for
by this Agreement, the Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
given by the Company or the Call Option Holder, as the case may be, in
accordance with this Agreement.
7.04 Rights in Other Capacities. The Collateral Agent and its
affiliates may (without having to account therefor to the Company or the Call
Option Holder) accept deposits from, lend money to, make investments in and
generally engage in any kind of banking, trust or other business with the Unit
Agent and any Holder of Units as if it were not acting as the Collateral Agent,
and the Collateral Agent and its affiliates may accept fees and other
consideration from the Unit Agent and any Holder of Units without having to
account for the same to the Company or the Call Option Holder, provided that the
Collateral Agent covenants and agrees with the Company and the Call Option
Holder that the Collateral Agent shall not accept, receive or permit there to be
created in its favor any security interest, lien or other encumbrance of any
kind in or upon the Pledged Securities.
7.05 Non-Reliance on Collateral Agent. The Collateral Agent shall not
be required to keep itself informed as to the performance or observance by the
Unit Agent or any Holder of Units of this Agreement, the Master Unit Agreement,
the Call Option Agreement, the Units or any other document referred to or
provided for herein or therein or to inspect the properties or books of the Unit
Agent or any Holder of Units. The Collateral Agent shall not have any duty or
responsibility to provide the Company or the Call Option Holder with any credit
or other information concerning the affairs, financial condition or business of
the Unit Agent or any Holder of Units that may come into the possession of the
Collateral Agent or any of its affiliates.
7.06 Compensation and Indemnity. The Company agrees: (a) to pay the
Collateral Agent from time to time reasonable compensation for all services
rendered by it hereunder and (b) to indemnify the Collateral Agent for, and to
hold it harmless against, any loss,
-8-
<PAGE> 10
liability or expense including taxes (other than taxes based upon, measured by
or determined by the income of the Collateral Agent) incurred without negligence
or bad faith on its part, arising out of or in connection with the acceptance or
administration of its powers and duties under this Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of such powers and duties.
7.07 Failure to Act. In the event of any ambiguity in the provisions of
this Agreement or any dispute between or conflicting claims by or among the
undersigned and/or any other person or entity with respect to any funds or
property deposited hereunder, the Collateral Agent shall be entitled, at its
sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and the Collateral Agent shall not be or become liable
in any way to any of the undersigned for its failure or refusal to comply with
such conflicting claims, demands or instructions. The Collateral Agent shall be
entitled to refuse to act until either (a) such conflicting or adverse claims or
demands shall have been finally determined by a court of competent jurisdiction
or settled by agreement between the conflicting parties as evidenced in a
writing satisfactory to the Collateral Agent or (b) the Collateral Agent shall
have received security or an indemnity satisfactory to the Collateral Agent
sufficient to save the Collateral Agent harmless from and against any and all
loss, liability or expense which the Collateral Agent may incur by reason of its
acting. The Collateral Agent may in addition elect to commence an interpleader
action or seek other judicial relief or orders as the Collateral Agent may deem
necessary. Notwithstanding anything contained herein to the contrary, the
Collateral Agent shall not be required to take any action that is in its opinion
contrary to law or to the terms of this Agreement, or which would in its opinion
subject it or any of its officers, employees or directors to liability.
7.08 Resignation of Collateral Agent. Subject to the appointment and
acceptance of a successor Collateral Agent as provided below, (a) the Collateral
Agent may resign at any time by giving notice thereof to the Company, the Unit
Agent and, if the Call Options are exercisable or have been exercised but not
settled, the Call Option Holder, (b) the Collateral Agent may be removed at any
time by the Company (provided, that, if the Call Options are exercisable or have
been exercised but not settled, the Call Option Holder shall have consented to
such removal), and (c) if the Collateral Agent fails to perform any of its
material obligations hereunder in any material respect for a period of not less
than 20 days after receiving notice of such failure by the Unit Agent and such
failure shall be continuing, the Collateral Agent may be removed by the Unit
Agent. The Unit Agent shall promptly notify the Company and, if the Call Options
are exercisable or have been exercised but not settled, the Call Option Holder
of any removal of the Collateral Agent pursuant to clause (c) of the immediately
preceding sentence. Upon any such resignation or removal, the Company and, if
the Call Options are exercisable or have been exercised but not settled, the
Call Option Holder shall have the right to appoint a successor Collateral Agent.
If no successor Collateral Agent shall have been so appointed and shall have
accepted such appointment
-9-
<PAGE> 11
within 30 days after the retiring Collateral Agent's giving of notice of
resignation or such removal, then the retiring Collateral Agent may petition any
court of competent jurisdiction for the appointment of a successor Collateral
Agent. The Collateral Agent shall be a bank which has an office in New York, New
York with a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Collateral Agent hereunder by a successor
Collateral Agent, such successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent, and the retiring Collateral Agent shall take all appropriate
action to transfer any money and property held by it hereunder (including the
Pledged Securities) to such successor Collateral Agent. The retiring Collateral
Agent shall, upon such succession, be discharged from its duties and obligations
as Collateral Agent hereunder. After any retiring Collateral Agent's resignation
hereunder as Collateral Agent, the provisions of this Section 7 shall continue
in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Collateral Agent.
7.09 Right to Appoint Agent or Advisor. The Collateral Agent shall have
the right to appoint agents or advisors in connection with any of its duties
hereunder, and the Collateral Agent shall not be liable for any action taken or
omitted by such agents or advisors selected in good faith.
The provisions of this Section 7 shall survive termination of this
Agreement and the resignation or removal of the Collateral Agent.
SECTION 8 Miscellaneous.
8.01 Amendments. This Agreement may be amended in the manner set forth
in Section 801 of the Master Unit Agreement for supplemental agreements. In
executing any amendment permitted by this Section, the Collateral Agent shall be
entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Agreement and is for a purpose
set forth in Section 801 of the Master Unit Agreement.
8.02 No Waiver. No failure on the part of the Collateral Agent or any
of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any of its agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
8.03 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
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<PAGE> 12
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
The Company, the Call Option Holder, the Collateral Agent and the Holders from
time to time of the Units, acting through the Unit Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Company, the Call Option Holder, the Collateral Agent and the
Holders from time to time of the Units, acting through the Unit Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
8.04 Legal Holidays. In any case where any Quarterly Payment Date or
the Stock Purchase Date shall not be a Business Day, then (notwithstanding any
other provision of this Agreement or of the Units) the actions required by this
Agreement to occur on such date shall not occur on such date, but instead shall
occur on the next succeeding Business Day with the same force and effect as if
they had occurred on such Quarterly Payment Date or Stock Purchase Date, as the
case may be; except that if such next succeeding Business Day is in the next
calendar year, such actions shall occur on the immediately preceding Business
Day with the same force and effect as if made on such Quarterly Payment Date or
Stock Purchase Date.
8.05 Notices. All notices, requests, consents and other communications
provided for herein (including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or, as to any party, at such other address as shall be designated by such
party in a notice to the other parties. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
transmitted by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
8.06 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the Company,
the Call Option Holder, the Collateral Agent and the Unit Agent, and the Holders
from time to time of the Units, by their acceptance of the same, shall be deemed
to have agreed to be bound by the provisions hereof and to have ratified the
agreements of, and the grant of the Pledge hereunder by, the Unit Agent, as
their attorney-in-fact.
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<PAGE> 13
8.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.08 Severability. If any provision hereof is invalid or unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (b) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
8.09 Expenses, etc. The Company agrees to reimburse the Collateral
Agent for: (a) all reasonable out-of-pocket costs and expenses of the Collateral
Agent (including, without limitation, the reasonable fees and expenses of
counsel to the Collateral Agent), in connection with (i) the negotiation,
preparation, execution and delivery or performance of this Agreement and (ii)
any modification, supplement or waiver of any of the terms of this Agreement;
(b) all reasonable costs and expenses of the Collateral Agent (including,
without limitation, reasonable fees and expenses of counsel) in connection with
(i) any enforcement or proceedings resulting or incurred in connection with
causing any Holder of Units to satisfy its obligations under the Purchase
Contracts or Call Options forming a part of the Units and (ii) the enforcement
of this Section 8.09; and (c) all transfer, stamp, documentary or other similar
taxes, assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any other document referred to herein and all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated hereby.
8.10 Security Interest Absolute. All rights of the Collateral Agent and
security interests hereunder, and all obligations of the Holders from time to
time of the Units here under, shall be absolute and unconditional irrespective
of:
(a) any lack of validity or enforceability of any provision of
the Units or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of the
obligations of Holders of Units under the related Purchase Contracts or
Call Options or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Master Unit
Agreement or any Units or any other agreement or instrument relating
thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AMERUS LIFE HOLDINGS, INC.
By:
----------------------------------
Name:
Title:
Address for Notices:
699 Walnut Street
Des Moines, Iowa 50309-3948
Attention: General Counsel
Telecopy:
GOLDMAN, SACHS & CO.,
as Call Option Holder
-------------------------------------
(Goldman, Sachs & Co.)
Address for Notices:
85 Broad Street
New York, New York 10004
Attention: Registration Department
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<PAGE> 15
--------------------,
as Collateral Agent
By:
----------------------------------
Name:
Title:
Address for Notices:
------------------------
------------------------
Telecopy:
---------------
Attention:
--------------
FIRST UNION NATIONAL BANK,
as Unit Agent and as attorney-in-fact of
the Holders from time to time of the
Units
By:
----------------------------------
Name:
Title:
Address for Notices:
------------------------
------------------------
Attention:
----------------------
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<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
AmerUs Life Holdings, Inc.
We consent to the incorporation by reference in pre-effective amendment no.1 to
registration statement no.333-50249 on Form S-3 of AmerUs Life Holdings, Inc. of
our report dated February 13, 1998, relating to the consolidated balance sheets
of AmerUs Life Holdings, Inc. and subsidiaries as of December 31, 1997 and
1996, and the related consolidated statements of income, stockholders' equity,
and cash flows and related schedules for each of the years in the three-year
period ended December 31, 1997, which reports appear in the December 31, 1997
annual report on Form 10-K of AmerUs Life Holdings, Inc., and to the reference
to our firm under the headings "Experts" and "Selected Consolidated Financial
and Operating Data" in the registration statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
June 4, 1998
<PAGE> 1
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________
FIRST UNION NATIONAL BANK
(Exact name of trustee as specified in its charter)
United States National Bank 56-0900030
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union National Bank
230 South Tryon Street, 9th Floor
Charlotte, North Carolina 28288-1179
(Address of principal (Zip Code)
executive offices)
Same as above
(Name, address and telephone number, including
area code, of trustee's agent for service)
AMERUS LIFE HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
IOWA
(State or other jurisdiction of incorporation or organization)
42-1459712
(I.R.S. employer identification no.)
James A. Smallenberger
Senior Vice President and Secretary
699 Walnut Street
Des Moines, Iowa 50309-3948
(515) 362-3600
(Address, including zip code, of principal executive offices)
____________________
Junior Subordinated Debt Securities
(Title of the indenture securities)
________________________________________________
<PAGE> 2
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject
- -------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor and underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under indentures
under which the applicant is trustee, Items 3 through 15 are not required
herein.
16. List of Exhibits.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union National Bank
as now in effect, which contain the authority to commence business
and a grant of powers to exercise corporate trust powers is filed with
the T-1 for Financial Security Assurance Holdings LTD, as filed with
the Securities and Exchange Commission on September 8, 1997 as
Registration No. 333-34181.
2
<PAGE> 3
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the Articles of Association is
filed with the T-1 for Financial Security Assurance Holdings LTD, as
filed with the Securities and Exchange Commission on September 8, 1997
as Registration No. 333-34181.
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents
specified in exhibits (1) or (2) above is filed with the T-1 for
Financial Security Assurance Holdings LTD, as filed with the
Securities and Exchange Commission on September 8, 1997 as
Registration No. 333-34181.
4. A copy of the existing By-laws of the trustee, or instruments
corresponding thereto is filed with the T-1 for Financial
Security Assurance Holdings LTD, as filed the Securities and Exchange
Commission on September 8, 1997 as Registration No. 333-34181.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement.
7. A copy of the latest report of condition of the trustee published
pursuant to law or to the requirements of its supervising or examining
authority is attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE> 4
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information. Item 2 may, however, be
considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union National Bank, a national association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Charlotte, and State of North Carolina, on the 4th day of June, 1998.
FIRST UNION NATIONAL BANK
(trustee)
By: /s/ Shawn K. Bednasek
---------------------------------
Its: Vice President
-----------------------------
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended, and
in connection with the proposed issuance by AmerUs Life Holdings, Inc. of its
Junior Subordinated Debt Securities, First Union National Bank as the trustee
herein named, hereby consents that reports of examinations of said Trustee by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
FIRST UNION NATIONAL BANK
By: /s/ Daniel J. Ober
---------------------------------
Name: Daniel J. Ober
----------------------------
Its: Vice President
----------------------------
Dated: June 4, 1998
4
<PAGE> 5
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
Dollar Amount in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS /////////////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): /////////////////////////
a. Noninterest-bearing balances and currency and coin (1) .............................. 0081 5,350,509 1.a.
b. Interest-bearing balances (2) ....................................................... 0071 527,082 1.b.
2. Securities: /////////////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) .......................... 1754 1,679,050 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ........................ 1773 16,948,015 2.b.
3. Federal funds sold and securities purchased under agreements to resell .................. 1350 2,626,508 3.
4. Loans and lease financing receivables /////////////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C)...RCFD 2122 83,315,758 ///////////////////////// 4.a.
b. LESS: Allowance for loan and lease losses ......................RCFD 3123 1,005,217 ///////////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ..........................RCFD 3128 0 ///////////////////////// 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c) ............................................ 2126 82,310,541 4.d.
5. Trading assets (from Schedule RC-D) ..................................................... 3545 3,322,404 5.
6. Premises and fixed assets (including capitalized leases) ................................ 2145 2,167,626 6.
7. Other real estate owned (from Schedule RC-M) ............................................ 2150 70,835 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M) ...................................................... 2180 181,970 8.
9. Customers' liability to this bank on acceptances outstanding ............................ 2155 761,776 9.
10. Intangible assets (from Schedule RC-M) .................................................. 2143 2,539,719 10.
11. Other assets (from Schedule RC-F) ....................................................... 2160 6,508,589 11.
12. Total assets (sum of items 1 through 11) ................................................ 2170 124,994,624 12.
</TABLE>
__________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 6
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amount in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES ////////////////////////////////
13. Deposits: ////////////////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, ////////////////////////////////
part I) ......................................................................... RCON 2200 79,161,386 13.a.
(1) Noninterest-bearing (1)............................. RCON 6631 15,696,570 /////////////////////////////// 13.a.(1)
(2) Interest-bearing ................................... RCON 6636 63,464,816 /////////////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, ///////////////////////////////
part II) ........................................................................ RCFN 2200 11,656,207 13.b.
(1) Noninterest-bearing ................................ RCFN 6631 0 /////////////////////////////// 13.b.(1)
(2) Interest-bearing ................................... RCFN 6636 11,656,207 /////////////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase ......... RCFD 2800 13,333,348 14.
15. a. Demand notes issued to the U.S. Treasury ........................................ RCON 2840 258,807 15.a.
b. Trading liabilities (from Schedule RC-D) ........................................ RCFD 3548 3,030,911 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under ///////////////////////////////
capitalized leases): ............................................................... ///////////////////////////////
a. With a remaining maturity of one year or less ................................... RCFD 2332 2,092,679 16.a.
b. With a remaining maturity of more than one year through three years ............. RCFD A547 325,781 16.b.
c. With a remaining maturity of more than three years .............................. RCFD A548 58,347 16.c.
17. Not applicable ..................................................................... ///////////////////////////////
18. Bank's liability on acceptances executed and outstanding ........................... RCFD 2920 761,776 18.
19. Subordinated notes and debentures (2) .............................................. RCFD 3200 2,347,834 19.
20. Other liabilities (from Schedule RC-G) ............................................. RCFD 2930 2,480,990 20.
21. Total liabilities (sum of items 13 through 20) ..................................... RCFD 2948 115,508,066 21.
22. Not applicable...................................................................... ///////////////////////////////
EQUITY CAPITAL ///////////////////////////////
23. Perpetual preferred stock and related surplus ...................................... RCFD 3838 0 23.
24. Common stock ....................................................................... RCFD 3230 82,795 24.
25. Surplus (exclude all surplus related to preferred stock) ........................... RCFD 3839 6,695,493 25.
26. a. Undivided profits and capital reserves .......................................... RCFD 3632 2,498,515 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities .......... RCFD 8434 209,755 26.b.
27. Cumulative foreign currency translation adjustments ................................ RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) .................................. RCFD 3210 9,486,558 28.
29. Total liabilities and equity capital (sum of items 21 and 28) ...................... RCFD 3300 124,994,624 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the
statement below that best describes the most
comprehensive level of auditing work performed for
the bank by independent external Number
auditors as of any date during 1996 ............... RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
__________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
<PAGE> 1
EXHIBIT 25.4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________
FIRST UNION NATIONAL BANK
(Exact name of trustee as specified in its charter)
United States National Bank 56-0900030
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union National Bank
230 South Tryon Street, 9th Floor
Charlotte, North Carolina 28288-1179
(Address of principal (Zip Code)
executive offices)
Same as above
(Name, address and telephone number, including
area code, of trustee's agent for service)
AMERUS CAPITAL II
(Exact name of obligor as specified in its charter)
IOWA
(State or other jurisdiction of incorporation or organization)
42-6571888
(I.R.S. employer identification no.)
James A. Smallenberger
Senior Vice President and Secretary
699 Walnut Street
Des Moines, Iowa 50309-3948
(515) 362-3600
(Address, including zip code, of principal executive offices)
____________________
Capital Securities
(Title of the indenture securities)
________________________________________________
<PAGE> 2
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject
- -------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor and underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under indentures
under which the applicant is trustee, Items 3 through 15 are not required
herein.
16. List of Exhibits.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union National Bank
as now in effect, which contain the authority to commence business
and a grant of powers to exercise corporate trust powers is filed with
the T-1 for Financial Security Assurance Holdings LTD, as filed with
the Securities and Exchange Commission on September 8, 1997 as
Registration No. 333-34181.
2
<PAGE> 3
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the Articles of Association is
filed with the T-1 for Financial Security Assurance Holdings LTD, as
filed with the Securities and Exchange Commission on September 8, 1997
as Registration No. 333-34181.
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents
specified in exhibits (1) or (2) above is filed with the T-1 for
Financial Security Assurance Holdings LTD, as filed with the
Securities and Exchange Commission on September 8, 1997 as
Registration No. 333-34181.
4. A copy of the existing By-laws of the trustee, or instruments
corresponding thereto is filed with the T-1 for Financial
Security Assurance Holdings LTD, as filed the Securities and Exchange
Commission on September 8, 1997 as Registration No. 333-34181.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement.
7. A copy of the latest report of condition of the trustee published
pursuant to law or to the requirements of its supervising or examining
authority is attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE> 4
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information. Item 2 may, however, be
considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union National Bank, a national association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Charlotte, and State of North Carolina, on the 4th day of June, 1998.
FIRST UNION NATIONAL BANK
(trustee)
By: /s/ Shawn K. Bednasek
---------------------------------
Its: Vice President
-----------------------------
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended, and
in connection with the proposed issuance by AmerUs Capital II of its Capital
Securities, First Union National Bank as the trustee herein named, hereby
consents that reports of examinations of said Trustee by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon requests therefor.
FIRST UNION NATIONAL BANK
By: /s/ Daniel J. Ober
---------------------------------
Name: Daniel J. Ober
----------------------------
Its: Vice President
----------------------------
Dated: June 4, 1998
4
<PAGE> 5
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
Dollar Amount in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS /////////////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): /////////////////////////
a. Noninterest-bearing balances and currency and coin (1) .............................. 0081 5,350,509 1.a.
b. Interest-bearing balances (2) ....................................................... 0071 527,082 1.b.
2. Securities: /////////////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) .......................... 1754 1,679,050 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ........................ 1773 16,948,015 2.b.
3. Federal funds sold and securities purchased under agreements to resell .................. 1350 2,626,508 3.
4. Loans and lease financing receivables /////////////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C)...RCFD 2122 83,315,758 ///////////////////////// 4.a.
b. LESS: Allowance for loan and lease losses ......................RCFD 3123 1,005,217 ///////////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ..........................RCFD 3128 0 ///////////////////////// 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c) ............................................ 2126 82,310,541 4.d.
5. Trading assets (from Schedule RC-D) ..................................................... 3545 3,322,404 5.
6. Premises and fixed assets (including capitalized leases) ................................ 2145 2,167,626 6.
7. Other real estate owned (from Schedule RC-M) ............................................ 2150 70,835 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M) ...................................................... 2180 181,970 8.
9. Customers' liability to this bank on acceptances outstanding ............................ 2155 761,776 9.
10. Intangible assets (from Schedule RC-M) .................................................. 2143 2,539,719 10.
11. Other assets (from Schedule RC-F) ....................................................... 2160 6,508,589 11.
12. Total assets (sum of items 1 through 11) ................................................ 2170 124,994,624 12.
</TABLE>
__________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 6
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amount in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES ////////////////////////////////
13. Deposits: ////////////////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, ////////////////////////////////
part I) ......................................................................... RCON 2200 79,161,386 13.a.
(1) Noninterest-bearing (1)............................. RCON 6631 15,696,570 /////////////////////////////// 13.a.(1)
(2) Interest-bearing ................................... RCON 6636 63,464,816 /////////////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, ///////////////////////////////
part II) ........................................................................ RCFN 2200 11,656,207 13.b.
(1) Noninterest-bearing ................................ RCFN 6631 0 /////////////////////////////// 13.b.(1)
(2) Interest-bearing ................................... RCFN 6636 11,656,207 /////////////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase ......... RCFD 2800 13,333,348 14.
15. a. Demand notes issued to the U.S. Treasury ........................................ RCON 2840 258,807 15.a.
b. Trading liabilities (from Schedule RC-D) ........................................ RCFD 3548 3,030,911 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under ///////////////////////////////
capitalized leases): ............................................................... ///////////////////////////////
a. With a remaining maturity of one year or less ................................... RCFD 2332 2,092,679 16.a.
b. With a remaining maturity of more than one year through three years ............. RCFD A547 325,781 16.b.
c. With a remaining maturity of more than three years .............................. RCFD A548 58,347 16.c.
17. Not applicable ..................................................................... ///////////////////////////////
18. Bank's liability on acceptances executed and outstanding ........................... RCFD 2920 761,776 18.
19. Subordinated notes and debentures (2) .............................................. RCFD 3200 2,347,834 19.
20. Other liabilities (from Schedule RC-G) ............................................. RCFD 2930 2,480,990 20.
21. Total liabilities (sum of items 13 through 20) ..................................... RCFD 2948 115,508,066 21.
22. Not applicable...................................................................... ///////////////////////////////
EQUITY CAPITAL ///////////////////////////////
23. Perpetual preferred stock and related surplus ...................................... RCFD 3838 0 23.
24. Common stock ....................................................................... RCFD 3230 82,795 24.
25. Surplus (exclude all surplus related to preferred stock) ........................... RCFD 3839 6,695,493 25.
26. a. Undivided profits and capital reserves .......................................... RCFD 3632 2,498,515 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities .......... RCFD 8434 209,755 26.b.
27. Cumulative foreign currency translation adjustments ................................ RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) .................................. RCFD 3210 9,486,558 28.
29. Total liabilities and equity capital (sum of items 21 and 28) ...................... RCFD 3300 124,994,624 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the
statement below that best describes the most
comprehensive level of auditing work performed for
the bank by independent external Number
auditors as of any date during 1996 ............... RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
__________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
<PAGE> 1
EXHIBIT 25.5
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________
FIRST UNION NATIONAL BANK
(Exact name of trustee as specified in its charter)
United States National Bank 56-0900030
(State of incorporation if (I.R.S. employer
not a national bank) identification no.)
First Union National Bank
230 South Tryon Street, 9th Floor
Charlotte, North Carolina 28288-1179
(Address of principal (Zip Code)
executive offices)
Same as above
(Name, address and telephone number, including
area code, of trustee's agent for service)
AMERUS CAPITAL III
(Exact name of obligor as specified in its charter)
IOWA
(State or other jurisdiction of incorporation or organization)
42-6571890
(I.R.S. employer identification no.)
James A. Smallenberger
Senior Vice President and Secretary
699 Walnut Street
Des Moines, Iowa 50309-3948
(515) 362-3600
(Address, including zip code, of principal executive offices)
____________________
Capital Securities
(Title of the indenture securities)
________________________________________________
<PAGE> 2
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject
- -------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------
Federal Reserve Bank of Richmond, VA Richmond, VA
Comptroller of the Currency Washington, D.C.
Securities and Exchange Commission
Division of Market Regulation Washington, D.C.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor and underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
(See Note 1 on Page 4.)
Because the obligor is not in default on any securities issued under indentures
under which the applicant is trustee, Items 3 through 15 are not required
herein.
16. List of Exhibits.
All exhibits identified below are filed as a part of this statement of
eligibility.
1. A copy of the Articles of Association of First Union National Bank
as now in effect, which contain the authority to commence business
and a grant of powers to exercise corporate trust powers is filed with
the T-1 for Financial Security Assurance Holdings LTD, as filed with
the Securities and Exchange Commission on September 8, 1997 as
Registration No. 333-34181.
2
<PAGE> 3
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the Articles of Association is
filed with the T-1 for Financial Security Assurance Holdings LTD, as
filed with the Securities and Exchange Commission on September 8, 1997
as Registration No. 333-34181.
3. A copy of the authorization of the trustee to exercise corporate trust
powers, if such authorization is not contained in the documents
specified in exhibits (1) or (2) above is filed with the T-1 for
Financial Security Assurance Holdings LTD, as filed with the
Securities and Exchange Commission on September 8, 1997 as
Registration No. 333-34181.
4. A copy of the existing By-laws of the trustee, or instruments
corresponding thereto is filed with the T-1 for Financial
Security Assurance Holdings LTD, as filed the Securities and Exchange
Commission on September 8, 1997 as Registration No. 333-34181.
5. Inapplicable.
6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939 is included at Page 4 of this Form T-1 Statement.
7. A copy of the latest report of condition of the trustee published
pursuant to law or to the requirements of its supervising or examining
authority is attached hereto.
8. Inapplicable.
9. Inapplicable.
3
<PAGE> 4
NOTE
Note 1: Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information. Item 2 may, however, be
considered correct unless amended by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, First Union National Bank, a national association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Charlotte, and State of North Carolina, on the 4th day of June, 1998.
FIRST UNION NATIONAL BANK
(trustee)
By: /s/ Shawn K. Bednasek
---------------------------------
Its: Vice President
-----------------------------
CONSENT OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939, as amended, and
in connection with the proposed issuance by AmerUs Capital III of its Capital
Securities, First Union National Bank as the trustee herein named, hereby
consents that reports of examinations of said Trustee by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon requests therefor.
FIRST UNION NATIONAL BANK
By: /s/ Daniel J. Ober
---------------------------------
Name: Daniel J. Ober
----------------------------
Its: Vice President
----------------------------
Dated: June 4, 1998
4
<PAGE> 5
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
Dollar Amount in Thousands RCFD Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS /////////////////////////
1. Cash and balances due from depository institutions (from Schedule RC-A): /////////////////////////
a. Noninterest-bearing balances and currency and coin (1) .............................. 0081 5,350,509 1.a.
b. Interest-bearing balances (2) ....................................................... 0071 527,082 1.b.
2. Securities: /////////////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) .......................... 1754 1,679,050 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ........................ 1773 16,948,015 2.b.
3. Federal funds sold and securities purchased under agreements to resell .................. 1350 2,626,508 3.
4. Loans and lease financing receivables /////////////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C)...RCFD 2122 83,315,758 ///////////////////////// 4.a.
b. LESS: Allowance for loan and lease losses ......................RCFD 3123 1,005,217 ///////////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ..........................RCFD 3128 0 ///////////////////////// 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c) ............................................ 2126 82,310,541 4.d.
5. Trading assets (from Schedule RC-D) ..................................................... 3545 3,322,404 5.
6. Premises and fixed assets (including capitalized leases) ................................ 2145 2,167,626 6.
7. Other real estate owned (from Schedule RC-M) ............................................ 2150 70,835 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M) ...................................................... 2180 181,970 8.
9. Customers' liability to this bank on acceptances outstanding ............................ 2155 761,776 9.
10. Intangible assets (from Schedule RC-M) .................................................. 2143 2,539,719 10.
11. Other assets (from Schedule RC-F) ....................................................... 2160 6,508,589 11.
12. Total assets (sum of items 1 through 11) ................................................ 2170 124,994,624 12.
</TABLE>
__________
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 6
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amount in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES ////////////////////////////////
13. Deposits: ////////////////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, ////////////////////////////////
part I) ......................................................................... RCON 2200 79,161,386 13.a.
(1) Noninterest-bearing (1)............................. RCON 6631 15,696,570 /////////////////////////////// 13.a.(1)
(2) Interest-bearing ................................... RCON 6636 63,464,816 /////////////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, ///////////////////////////////
part II) ........................................................................ RCFN 2200 11,656,207 13.b.
(1) Noninterest-bearing ................................ RCFN 6631 0 /////////////////////////////// 13.b.(1)
(2) Interest-bearing ................................... RCFN 6636 11,656,207 /////////////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase ......... RCFD 2800 13,333,348 14.
15. a. Demand notes issued to the U.S. Treasury ........................................ RCON 2840 258,807 15.a.
b. Trading liabilities (from Schedule RC-D) ........................................ RCFD 3548 3,030,911 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under ///////////////////////////////
capitalized leases): ............................................................... ///////////////////////////////
a. With a remaining maturity of one year or less ................................... RCFD 2332 2,092,679 16.a.
b. With a remaining maturity of more than one year through three years ............. RCFD A547 325,781 16.b.
c. With a remaining maturity of more than three years .............................. RCFD A548 58,347 16.c.
17. Not applicable ..................................................................... ///////////////////////////////
18. Bank's liability on acceptances executed and outstanding ........................... RCFD 2920 761,776 18.
19. Subordinated notes and debentures (2) .............................................. RCFD 3200 2,347,834 19.
20. Other liabilities (from Schedule RC-G) ............................................. RCFD 2930 2,480,990 20.
21. Total liabilities (sum of items 13 through 20) ..................................... RCFD 2948 115,508,066 21.
22. Not applicable...................................................................... ///////////////////////////////
EQUITY CAPITAL ///////////////////////////////
23. Perpetual preferred stock and related surplus ...................................... RCFD 3838 0 23.
24. Common stock ....................................................................... RCFD 3230 82,795 24.
25. Surplus (exclude all surplus related to preferred stock) ........................... RCFD 3839 6,695,493 25.
26. a. Undivided profits and capital reserves .......................................... RCFD 3632 2,498,515 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities .......... RCFD 8434 209,755 26.b.
27. Cumulative foreign currency translation adjustments ................................ RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) .................................. RCFD 3210 9,486,558 28.
29. Total liabilities and equity capital (sum of items 21 and 28) ...................... RCFD 3300 124,994,624 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the
statement below that best describes the most
comprehensive level of auditing work performed for
the bank by independent external Number
auditors as of any date during 1996 ............... RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
__________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposit.
(2) Includes limited-life preferred stock and related surplus.
