SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - December 31, 1997
HSB GROUP, INC.
(Exact name of registrant as specified in its charter)
Connecticut 001-13135 06-1475343
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification No.)
One State Street, Hartford, Connecticut 06102-5024
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (860-722-1866)
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Item 5. Other Events.
On January 6, 1998 The Hartford Steam Boiler Inspection and Insurance Company
("HSB"), the principal subsidiary of HSB Group, Inc. (the "Company") sold its
interest in Industrial Risk Insurers ("IRI") to Employers Reinsurance
Corporation in accordance with a previously announced purchase and sale
agreement between ERC and IRI's twenty-three member insurers. IRI is an
unincorporated joint underwriting association which underwrites property
insurance on highly protected risks. HSB received gross proceeds of
approximately $50 million, prior to transaction costs, for its 23.5% share in
IRI. Because the sale was structured in part as a reinsurance transaction, a
portion of HSB's gain will be deferred and recognized over the remaining term of
IRI's in-force business as of the date of the closing of the sale.
Contemporaneous with the close of the sale, IRI was reconstituted with ERC (with
a 99.5% share ) and HSB (with a .5% share) as its sole members. Michael L.
Downs, senior vice president of the Company and HSB, will be appointed chairman
and chief executive officer of the reconstituted IRI. HSB will write the
business for the reconstituted IRI using its insurance licenses and will provide
certain other services. It is anticipated that HSB will transfer its domestic
highly protected risk manufacturing book of business to IRI and will retain 85%
of the equipment breakdown business and 15% of the property business of the
combined insurance portfolio.
In a related transaction, a Delaware business trust newly formed by the Company
has sold $300 million of 7% Convertible Capital Securities ("Convertible Capital
Securities") to ERC. The proceeds from the sale were used by the trust to
purchase 7% Convertible Subordinated Deferrable Interest Debentures (the
"Debentures") from the Company pursuant to the terms of an Indenture dated
December 31,1997, issued by the Company to the First National Bank of Chicago,
as Trustee, (the "Indenture") a copy of which is attached as Exhibit 4.2. The
Company contributed $250 million of the proceeds it received upon the sale of
its Debentures to HSB to support the anticipated increase in its direct writings
attributable to the IRI business.
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The following represents a pro forma condensed balance sheet of the Company at
September 30, 1997 assuming the Convertible Capital Securities had been issued
as of September 30, 1997.
(in millions except ratios)
Actual ProForma
9/30/97 9/30/97
------- --------
Cash & Invested Assets $713.3 $1,013.3
Insurance Premiums Receivable 126.8 126.8
Prepaid Acquisition Costs 45.5 45.5
Reinsurance Assets 146.4 146.4
Investment in Radian 85.0 85.0
Other 139.7 139.7
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Total Assets $1,256.7 $1,556.7
============== ==============
Unearned Insurance Premiums $295.8 $295.8
Claims & Adjustment Expenses 278.8 278.8
Debt 43.1 43.1
Other Liabilities 189.6 189.6
-------------- --------------
Total Liabilities 807.3 807.3
-------------- --------------
Convertible Redeemable Preferred Stock 20.0 *
HSB Capital Securities I 108.9 108.9
HSB Capital Securities II 300.0
Shareholders' Equity 320.5 340.5
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Total $1,256.7 $1,556.7
============== ==============
*The pro forma condensed balance sheet includes adjustments for (i) the issuance
of $300 million of Convertible Capital Securities; and (ii) the issuance of
398,406 shares of common stock on October 30, 1997 upon conversion of the
convertible redeemable preferred stock.
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The following represents a pro forma ratio of earnings to fixed charges assuming
the Convertible Capital Securities had been issued as of January 1, 1997.
Actual ProForma
1/1/97 1/1/97
------ ---------
Ratio of Earnings to
Fixed Charges 5.27 2.42 *
* If pro forma data were adjusted to reflect the potential investment earnings
at a 7% rate on the proceeds from the sale of the $300 million of Convertible
Capital Securities, the ratio would be approximately 2.96%.
The Convertible Capital Securities are callable by the Company at its option (i)
at any time after seven years; (ii) upon the occurrence of a tax event as
defined in the Indenture; (iii) in the event that the Company vetoes a
prospective purchaser of the Convertible Capital Securities; or (iv) in the
event of a change in control of ERC. The Convertible Capital Securities are
mandatorily redeemable on December 31, 2017, and are redeemable at par plus a
redemption premium, at the option of ERC, in the event of a change in control of
the Company within five years following issuance of the securities.
The Convertible Capital Securities are convertible, in whole or in part, at
ERC's option at any time, subject to regulatory approval, into shares of Company
common stock at a conversion price of $85, subject to adjustment. The Company
has provided certain registration rights to ERC in connection with the common
stock into which the Convertible Capital Securities are convertible pursuant to
a Registration Rights Agreement dated December 31, 1997, a copy of which is
attached as Exhibit 4.8.
The foregoing summary of the terms of the Convertible Capital Securities is
qualified by reference to the Trust Agreement dated December 31, 1997 among the
Company, the First National Bank of Chicago, as Property Trustee, First Chicago
Delaware Inc., as Delaware Trustee and the Administrative Trustees named
therein, a copy of which is attached as Exhibit 4.5.
Were ERC to exercise its conversion rights in total, it would hold, on a fully
diluted basis, approximately 15.3% of the Company's common stock. Pursuant to
certain provisions contained in the Purchase Agreement dated December 31, 1997
attached as Exhibit 4.1, ERC has agreed to certain "standstill" arrangements
which for a period of five years will preclude ERC from purchasing any common
stock of the Company, other than by exercise of its conversion rights, and will
limit its ability to take certain other actions with respect to the Company
during that period.
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Item 7(c) Exhibits.
Exhibit
4.1 Purchase Agreement dated as of December 31, 1997 among Employers
Reinsurance Corporation, ERC Life Reinsurance Corporation and HSB
Group, Inc.
4.2 Indenture of HSB Group, Inc. relating to the 7.0% Convertible
Subordinated Deferrable Interest Debenture Due December 31, 2017
4.3 Form of Certificate of 7.0% Convertible Subordinated Deferrable
Interest Debentures due December 31, 2017
4.4 Certificate of Trust of HSB Capital II
4.5 Trust Agreement dated as of December 31, 1997 among HSB Group,
Inc., The First National Bank of Chicago, First Chicago Delaware Inc.
and The Administrative Trustees named therein.
4.6 Form of Capital Securities Certificate of HSB Capital II
4.7 Guarantee Agreement between HSB Group, Inc. and The First
National Bank of Chicago dated as of December 31, 1997 relating
to HSB Capital II.
4.8 Registration Rights Agreement dated as of December 31, 1997 among
Employers Reinsurance Corporation, ERC Life Reinsurance Corporation and
HSB Group, Inc.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HSB GROUP, INC.
Dated: January 12, 1998 /s/ Saul L. Basch
Saul L. Basch
Senior Vice President, Treasurer and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
4.1 Purchase Agreement dated as of December 31, 1997 among Employers
Reinsurance Corporation, ERC Life Reinsurance Corporation and HSB
Group, Inc.
4.2 Indenture of HSB Group, Inc. relating to the 7.0% Convertible
Subordinated Deferrable Interest Debenture Due December 31, 2017
4.3 Form of Certificate of 7.0% Convertible Subordinated Deferrable
Interest Debentures due December 31, 2017
4.4 Certificate of Trust of HSB Capital II
4.5 Trust Agreement dated as of December 31, 1997 among HSB Group,
Inc., The First National Bank of Chicago, First Chicago Delaware Inc.
and The Administrative Trustees named therein.
4.6 Form of Capital Securities Certificate of HSB Capital II
4.7 Guarantee Agreement between HSB Group, Inc. and The First
National Bank of Chicago dated as of December 31, 1997 relating
to HSB Capital II.
4.8 Registration Rights Agreement dated as of December 31, 1997 among
Employers Reinsurance Corporation, ERC Life Reinsurance Corporation and
HSB Group, Inc.
Exhibit 4.1
$300,000,000
HSB CAPITAL II
Convertible Capital Securities
(liquidation amount $1,000 per Capital Security)
fully and unconditionally guaranteed to the extent set forth in
the Guarantee by
HSB Group, Inc.
Purchase Agreement
December 31, 1997
ERC Life Reinsurance Corporation
Employers Reinsurance Corporation
5200 Metcalf
P.O. Box 2991
Overland Park, Kansas 66201-1391
Ladies and Gentlemen:
HSB Capital II (the "Trust"), a statutory business trust created under
the Business Trust Act of the State of Delaware (the "Delaware Business Trust
Act"), and HSB Group, Inc., a Connecticut corporation, as depositor of the Trust
and as Guarantor (the "Guarantor"), propose, subject to the terms and conditions
stated herein (including the attached term sheet (the "Term Sheet")), that the
Trust issue and sell to the Purchasers named in Schedule I hereto (the
"Purchasers"), an aggregate liquidation amount of $300,000,000 of Convertible
Capital Securities (liquidation amount $1,000 per Capital Security) (the
"Securities") representing undivided beneficial interests in the assets of the
Trust, guaranteed by the Guarantor as to the payment of distributions, and as to
payments on liquidation or redemption, to the extent set forth in a guarantee
agreement (the "Guarantee") between the Guarantor and The First National Bank of
Chicago, as Trustee (the "Guarantee Trustee"). The proceeds of the sale of the
Securities and an aggregate liquidation amount of $9,300,000 of its Common
Securities (liquidation amount $1,000 per common security) (the "Common
Securities") are to be invested by the Trust in 7.0% Convertible Subordinated
Deferrable Interest Debentures (the "Subordinated Debentures") of the Guarantor,
to be issued pursuant to an Indenture (the "Indenture") between the Guarantor
and The First National Bank of Chicago, as Trustee (the "Debenture Trustee").
The Common Stock of Guarantor issuable upon conversion of the Securities (the
"Guarantor Common Stock") will be subject to a registration rights agreement
("Registration Rights Agreement") between the Guarantor and the Purchasers. The
Guarantor is the holding company of The Hartford Steam Boiler Insurance and
Inspection Company (the "Principal Subsidiary") and certain of its subsidiaries.
1. The Guarantor and the Trust jointly and severally represent and
warrant to, and agree with, the Purchasers that:
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(a) The Principal Subsidiary's Annual Report on Form 10-K/A for
the fiscal year ended December 31, 1996 and the Guarantor's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997 have been
made available to the Purchasers in connection with the offering of the
Securities. All documents of the Guarantor or of the Principal
Subsidiary subsequently filed with the United States Securities and
Exchange Commission (the "Commission") pursuant to Section 13(a), 13(c)
or 15(d) of the United States Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or prior to the date hereof and any
reference to the documents prepared or distributed in connection with
the offering of the Securities shall be deemed to include any documents
filed with the Commission pursuant to Section 13(a), 13(c) or 15(d) of
the Exchange Act after the date hereof and prior to such specified
date; all documents filed under the Exchange Act by the Guarantor or
the Principal Subsidiary and so deemed to be included, or any amendment
or supplement thereto, are hereinafter called the "Exchange Act
Reports". The Exchange Act Reports, when they were or are filed with
the Commission, conformed or will conform in all material respects to
the applicable requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder. The Exchange Act
Reports did not and will not, as of their respective dates, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(b) There has not been any material adverse change in, or any
adverse development which materially affects, the business, properties
or financial condition or results of operations of the Guarantor and
its subsidiaries taken as a whole since September 30, 1997 otherwise
than as set forth or contemplated herein; and, since September 30, 1997
and except as otherwise set forth herein, there has not been any
material change in the capital stock or long-term debt of the Guarantor
or any of its subsidiaries or any material adverse change or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Guarantor and its
subsidiaries taken as a whole, otherwise than as set forth or
contemplated herein;
(c) The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Connecticut, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Exchange
Act Reports, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction; and each significant
subsidiary (as defined in Regulation S-X of the Commission, each a
"Significant Subsidiary") of the Guarantor has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation;
(d) The Guarantor has an authorized capitalization as set forth
in the Exchange Act Reports, and all of the issued shares of capital
stock of the Guarantor have been duly and validly authorized and issued
and are fully paid and non-assessable; and all of the issued shares of
capital stock of each Significant Subsidiary of the Guarantor have been
duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares) are owned
directly or indirectly by the Guarantor, free and clear of all liens,
encumbrances, equities or claims;
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(e) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Delaware Business
Trust Act with the power and authority to own its properties and
conduct its business as described in the Trust Agreement, and the Trust
has conducted no business to date other than as contemplated by this
Agreement, and it will conduct no business in the future that would be
inconsistent with the Trust Agreement (as defined below); the Trust is
not a party to or bound by any agreement or instrument other than this
Agreement, the Trust Agreement (the "Trust Agreement") among the
Guarantor, the Administrative Trustees named therein, and The First
National Bank of Chicago, as Property Trustee (the "Property Trustee"),
and First Chicago Delaware Inc., as Delaware Trustee (the "Delaware
Trustee" and, together with the Administrative Trustees, and the
Property Trustee, the "Issuer Trustees") and the holders of the
Securities issued thereunder, and the agreements and instruments
contemplated by the Trust Agreement; the Trust has no liabilities or
obligations other than those arising out of the transactions
contemplated by this Agreement and the Trust Agreement; based on
current law, the Trust is not and will not be classified as an
association taxable as a corporation for United States federal income
tax purposes; and the Trust is not a party to or subject to any action,
suit or proceeding of any nature;
(f) The Securities have been duly and validly authorized by the
Trust, and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable undivided beneficial interests in the assets of the
Trust; the issuance of the Securities is not subject to preemptive or
other similar rights; the Securities will have the rights set forth in
the Trust Agreement, and the terms of the Securities are valid and
binding on the Trust; the holders of the Securities (the
"Securityholders") will 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;
(g) The Common Securities of the Trust have been duly and
validly authorized by the Trust and upon delivery by the Trust to the
Guarantor against payment therefor, will be duly and validly issued
undivided beneficial interests in the assets of the Trust; the issuance
of the Common Securities is not subject to preemptive or other similar
rights; and at the Time of Delivery (as defined in Section 4(a) below),
all of the issued and outstanding Common Securities of the Trust will
be directly owned by the Guarantor free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity;
(h) The Guarantee, the Subordinated Debentures, the Trust
Agreement, the Indenture and the Registration Rights Agreement (the
Guarantee, the Subordinated Debentures, the Trust Agreement, and the
Indenture being collectively referred to as the "Guarantor Agreements")
have been duly and validly authorized by the Guarantor and, when
validly executed and delivered by the Guarantor and, in the case of the
Guarantee, by the Guarantee Trustee, in the case of the Trust
Agreement, by the Trustees and, in the case of the Indenture, by the
Debenture Trustee, will constitute valid and legally binding
obligations of the Guarantor, enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and the Subordinated Debentures are entitled to the
benefits of the Indenture;
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(i) The execution and delivery of this Agreement and the
Guarantor Agreements and the consummation of the transactions
contemplated herein and therein, have been duly authorized by all
necessary corporate action on the part of the Guarantor, and when
executed by the Guarantor and the other parties thereto will not
conflict with or result in any breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any security interest, lien, charge or
encumbrance upon any property or assets of the Guarantor or its
Significant Subsidiaries pursuant to any indenture, mortgage, deed of
trust, loan agreement, contract or other agreement or instrument to
which the Guarantor or any of its Significant Subsidiaries is a party
or by which the Guarantor or any of its Significant Subsidiaries may be
bound or to which any of the property or assets of the Guarantor or any
of its Significant Subsidiaries is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation
or the By-laws of the Guarantor or the Certificate of Incorporation or
By-laws of any of its Significant Subsidiaries or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Guarantor or any of its Significant
Subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the issue and sale
of the Securities or the consummation by the Guarantor of the
transactions contemplated by this Agreement or the Guarantor
Agreements, except such as have been, or will have been obtained or
received prior to the Time of Delivery;
(j) The Trust is not, and after giving effect to the offering
and sale of the Securities will not be, an "investment company", or an
entity "controlled" by an "investment company", as such terms are
defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act");
(k) Neither the Guarantor nor any of its Significant
Subsidiaries is in violation of its Certificate of Incorporation or
By-laws or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound;
(l) There are no legal or governmental proceedings pending to
which the Guarantor or any of its Significant Subsidiaries is a party
or of which any property of the Guarantor or any of its Significant
Subsidiaries is the subject which, if determined adversely to the
Guarantor or any of its Significant Subsidiaries, would individually or
in the aggregate have a material adverse effect on the current or
future financial position, shareholders' equity or results of
operations of the Guarantor and its subsidiaries taken as a whole; and,
to the best of the Guarantor's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
2. Subject to the terms and conditions herein set forth, the Trust and
the Guarantor agree that the Trust shall issue and sell to the Purchasers, and
the Purchasers agree to purchase from the Trust, at a purchase price of $1,000
per Security, the Securities.
3. (a) The Purchasers hereby acknowledge and agree with the Guarantor
and the Trust that the Securities have not been and will not be registered under
the Securities Act of 1933 (the "Securities Act") and may not be offered or sold
except pursuant to an exemption from the registration requirements of the
Securities Act and subject to the restrictions on
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transfer and redemption rights of the Guarantor under the Indenture and the
Trust Agreement. The Purchasers further agree that they have not entered and
will not enter into any contractual arrangement with respect to the distribution
or delivery of the Securities, except with the prior written consent of the
Company.
(b) The Purchasers hereby acknowledge and agree that they will
not sell, transfer, assign or otherwise dispose of any Guarantor Common Stock
other than in a broad public distribution pursuant to the Registration Rights
Agreement or Rule 144 under the Securities Act. In any such distribution, the
Purchasers will make reasonable efforts to ensure that no one purchaser or group
of related purchasers acquires more than 3.5% of the outstanding Common Stock of
Guarantor in such distribution.
4. (a) The Securities to be purchased by the Purchasers hereunder will
be represented by one or more definitive certificated Securities. The Trust will
deliver the Securities to the Purchasers, against payment by or on behalf of
such Purchasers of the purchase price therefor by wire transfer of Federal (same
day) funds to an account designated by the Trust or against payment by or on
behalf of the Purchasers of the purchase price therefor by certified or official
bank check or checks, payable to the order of the Trust in Federal (same day)
funds. The time and date of such delivery and payment shall be 11:30 a.m., New
York City time, on December 31, 1997 or such other time and date as the
Purchasers and the Trust may agree upon in writing. Such time and date are
herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including any
additional documents requested by the Purchasers pursuant to Section 7(e) hereof
and the Securities will be delivered at such time and date at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden Arps"), 919 Third Avenue, New
York, New York 10022 (the "Closing Location"), all at the Time of Delivery. For
the purposes of this Section 4, "New York Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close.
5. The Guarantor and the Trust jointly and severally agree with the
Purchasers:
(a) Not to have the Trust be or become, at any time prior to the
expiration of three years after the Time of Delivery, an open-end
investment company, unit investment trust, closed-end investment
company or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act;
(b) At any time when the Guarantor is not subject to Section 13
or 15(d) of the Exchange Act and prior to two years from the Time of
Delivery, for the benefit of the holders from time to time of
Securities, to furnish at its expense, upon request, to holders of
Securities information (the "Additional Issuer Information") satisfying
the requirements of subsection (d)(4)(i) of Rule 144A under the
Securities Act;
(c) To make available to the holders of the Securities as soon
as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders'
equity and cash flows of the Guarantor and its consolidated
subsidiaries certified by independent public accountants) and, as soon
as practicable after the end of each of the first three quarters of
each fiscal year (beginning with the fiscal quarter ending after the
date hereof), consolidated summary financial information of the
Guarantor and its subsidiaries for such quarter in reasonable detail;
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(d) During a period of five years from the date hereof, to make
available to you copies of all reports or other communications
(financial or other) furnished to shareholders of the Guarantor, and to
make available to the Purchasers (i) as soon as they are generally
available, copies of any reports and financial statements furnished to
or filed with the Commission or any securities exchange on which the
Securities or any class of securities of the Guarantor is listed; and
(ii) such additional information concerning the business and financial
condition of the Guarantor as the Purchasers may from time to time
reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Guarantor and its subsidiaries
are consolidated in reports furnished to its shareholders generally or
to the Commission;
(e) During the period of two years after the Time of Delivery,
the Guarantor will not, and will not permit any of its "affiliates" (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities or Subordinated Debentures which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them;
and
(f) To issue the Guarantee and the Subordinated Debentures
concurrently with the issue and sale of the Securities as contemplated
herein.
6. The Guarantor and the Trust jointly and severally covenant and agree
with the Purchasers that the Guarantor and the Trust will pay or cause to be
paid the following: (i) the cost of producing this Agreement, any Guarantor
Agreement, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (ii) the cost of preparing the certificates for the Securities and
the Subordinated Debentures; (iii) the fees and expenses of the Trustees, the
Guarantee Trustee and the Debenture Trustee and any agent of the Trustees, the
Guarantee Trustee and the Debenture Trustee and the fees and disbursements of
counsel for the Trustees in connection with the Trust Agreement and the
Securities, counsel for the Guarantee Trustee in connection with the Guarantee
and counsel for the Debenture Trustee in connection with the Indenture and the
Subordinated Debentures; and (iv) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, the Purchasers will pay all of its own costs and
expenses, including the fees of its counsel.
7. The obligations of the Purchasers to purchase the Securities shall
be subject to the accuracy of the representations and warranties on the part of
the Guarantor and the Trust contained herein as of the date hereof and the Time
of Delivery, to the accuracy of the statements of the Guarantor and the Trust
made in any certificates pursuant to the provisions hereof, to the performance
by each of the Guarantor and the Trust of its obligations hereunder and (unless
delivery is not required until a subsequent date) to the following additional
conditions:
(a) Robert C. Walker, Senior Vice President and General Counsel
of the Guarantor and the Trust, shall have furnished to you his written
opinion, dated on a date not more than five New York Business Days
after the Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) Each of the Guarantor and the Principal Subsidiary has
been duly incorporated and is validly existing as a corporation
in good standing under the laws of the State of Connecticut,
with corporate power and authority to own its properties and
conduct its business as described in the Exchange Act Reports;
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(ii) The Guarantor has an authorized capitalization as set
forth in the Exchange Act Reports; and all of the issued shares
of capital stock of the Principal Subsidiary have been duly and
validly authorized and issued and are fully paid and
non-assessable and (except for directors' qualifying shares) are
owned, to the best of such counsel's knowledge, directly or
indirectly by the Guarantor, free and clear of all liens,
encumbrances, equities or claims;
(iii) To the best of such counsel's knowledge and other than
as set forth in Exchange Act Reports, there are no legal or
governmental proceedings pending to which the Guarantor or any
of its Significant Subsidiaries is a party or of which any
property of the Guarantor or any of its Significant Subsidiaries
is the subject which, if determined adversely to the Guarantor
or any of its Significant Subsidiaries, could individually or in
the aggregate have a material adverse effect on the current or
future consolidated financial position, shareholders' equity or
results of operations of the Guarantor and its subsidiaries
taken as a whole; and, to the best of such counsel's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(iv) This Agreement has been duly authorized, executed and
delivered by the Guarantor and the Trust;
(v) The Guarantee, the Trust Agreement, the Indenture and
the Registration Rights Agreement have each been duly
authorized, executed and delivered by the Guarantor, and, when
validly authorized, executed and delivered by the Guarantee
Trustee in the case of the Guarantee, when validly authorized,
executed, and delivered by the Debenture Trustee in the case of
the Indenture, and when validly authorized, executed and
delivered by the Issuer Trustees in the case of the Trust
Agreement, will constitute valid and legally binding instruments
and obligations of the Guarantor enforceable against the
Guarantor, in accordance with their respective terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(vi) The Subordinated Debentures, when duly executed,
authenticated and issued in accordance with the Indenture and
delivered and paid for in accordance with this Agreement, will
be valid and legally binding obligations of the Guarantor,
enforceable in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and entitled
to the benefits provided by the Indenture;
(vii) The issuance by the Guarantor of the Guarantee and the
Subordinated Debentures, the compliance by the Guarantor with
all of the provisions of this Agreement and the Guarantor
Agreements, the execution, delivery and performance by the
Guarantor of this Agreement and the Guarantor Agreements and the
consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any
of the material terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which the
Guarantor or any of its Significant Subsidiaries is a party or
by
7
<PAGE>
which the Guarantor or any of its Significant Subsidiaries is
bound or to which any of the property or assets of the Guarantor
or any of its Significant Subsidiaries is subject, nor will such
actions result in any violation of the provisions of the
Articles of Incorporation or By-Laws of the Guarantor or any
statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction
over the Guarantor or any of its Significant Subsidiaries or any
of their properties;
(viii) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required of the Guarantor for the
consummation by the Guarantor of the transactions contemplated
by this Agreement or the Guarantor Agreements;
(ix) Neither the Guarantor nor any of its Significant
Subsidiaries is in violation of its Certificate of Incorporation
or By-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it is a party or by which it
or any of its properties may be bound;
(x) The Exchange Act Reports (other than the financial
statements and related schedules and other financial data
therein, as to which such counsel need express no opinion), when
they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act, and
the rules and regulations of the Commission thereunder; and such
counsel has no reason to believe that any of such documents,
when they were so filed, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such documents
were so filed, not misleading;
(xi) The offer, sale and delivery of the Securities and the
Subordinated Debentures in the manner contemplated by this
Agreement do not require registration under the Securities Act;
and the Trust Agreement, the Guarantee and the Indenture do not
require qualification under the Trust Indenture Act of 1939, as
amended; and
(xii) The Trust is not, and after giving effect to the
offering and sale of the Securities will not be, an "investment
company" or an entity "controlled" by an "investment company",
as such terms are defined in the Investment Company Act.
Such opinion of Robert C. Walker may be limited to New York,
Connecticut, Delaware and Federal law. To the extent such opinions
involve matters governed by New York law, such counsel may assume that
there are no differences between New York Law and Connecticut law. In
giving such opinions, such counsel may also rely, as to all matters
governed by the laws of jurisdictions in which such counsel is not
qualified, upon opinions of other counsel, who shall be counsel
satisfactory to counsel for the Purchasers, in which case the opinion
shall state that he believes you and they are entitled to rely on such
opinions.
8
<PAGE>
(b) You shall receive not later than five New York Business Days
from the Time of Delivery the opinion of Skadden Arps, special Delaware
Counsel for the Trust and the Guarantor, to the effect that:
(i) The Trust has been duly created and is validly existing
as a business trust in good standing under the Delaware Business
Trust Act and, under the Trust Agreement and the Delaware
Business Trust Act, has the trust power and authority to own its
properties and conduct its business, all as described in the
Trust Agreement, and all filings required under the laws of the
State of Delaware with respect to the creation and valid
existence of the Trust as a business trust have been made;
(ii) The Trust Agreement, when duly authorized, executed and
delivered by the Guarantor, the Property Trustee, and the
Delaware Trustee and when duly executed and delivered by the
Administrative Trustee, will constitute a valid and binding
obligation of the Guarantor and the Administrative Trustees, and
is enforceable against the Guarantor and the Trustees, in
accordance with its terms, and the terms of the Securities as
set forth in the Trust Agreement, to the extent they are
obligations of the Trust, are valid and binding obligations of
the Trust in accordance with the terms of the Trust Agreement,
all subject to the effect upon the Trust Agreement of (a)
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally, and (b) general principles of equity
(regardless of whether enforcement is considered in a proceeding
in equity or at law) and except to the extent that the rights to
indemnity and contribution contained therein may be limited by
state securities laws or the public policy underlying such laws;
(iii) Under the Trust Agreement and the Delaware Business
Trust Act, the Trust has the trust power and authority to (a)
execute and deliver this Agreement and to perform its
obligations under this Agreement, and (b) issue and perform its
obligations under the Securities and the Common Securities;
(iv) Under the Trust Agreement and the Delaware Business
Trust Act, the execution and delivery by the Trust of this
Agreement and the performance by the Trust of its obligations
thereunder have been duly authorized by all necessary trust
action on the part of the Trust;
(v) The Securities have been duly and validly authorized by
the Trust Agreement, and, when issued and delivered against
payment therefor as provided herein, will be duly and validly
issued and, subject to the qualifications set forth herein,
fully paid and non-assessable undivided beneficial interests in
the assets of the Trust; under the Trust Agreement and the
Delaware Business Trust Act, the issuance of the Securities is
not subject to preemptive or other similar rights; the
Securities will have the rights set forth in the Trust
Agreement; the Securityholders, as beneficial owners of the
Trust, will 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; provided that such counsel may note that the
Securityholders may be obligated, pursuant to the Trust
Agreement, to (a) provide indemnity and/or security in
connection with and pay taxes or governmental charges arising
from transfers or exchanges of Capital Securities Certificates
(as defined in the Trust Agreement) and the issuance of
replacement Capital Securities Certificates and (b) provide
9
<PAGE>
security and indemnity in connection with requests of or
directions to the Property Trustee (as defined in the Trust
Agreement) to exercise its rights and remedies under the Trust
Agreement;
(vi) The Common Securities have been duly and validly
authorized by the Trust Agreement; under the Trust Agreement and
the Delaware Business Trust Act, the issuance of the Common
Securities is not subject to preemptive or other similar rights;
(vii) This Agreement has been duly authorized, executed and
delivered by the Trust;
(viii) The issue and sale of the Securities and the Common
Securities by the Trust, the execution and delivery of this
Agreement by the Trust, the compliance by the Trust with all of
the provisions of the Securities, and this Agreement, the
purchase by the Trust of the Subordinated Debentures and the
consummation of the transactions herein and therein contemplated
do not violate (a) the Trust Agreement or the Certificate of
Trust of the Trust, or (b) any Applicable Delaware Law;
(ix) Based on such counsel's review of Applicable Delaware
Laws, no Governmental Delaware Approval which has not been
obtained or taken and is not in full force and effect is
required to authorize or is required in connection with the
execution or delivery by the Trust of the Purchase Agreement or
the performance by the Trust of the transactions contemplated
thereby except that such counsel need not express any opinion in
this paragraph, however, as to any Governmental Approvals which
may be required under state securities of "blue sky" laws.
In giving such opinion, Skadden Arps may state that (a) the term
"Applicable Delaware Laws" means only the Delaware Trust Act, the
General Corporation Law of the State of Delaware and those laws, rules
and regulations of the State of Delaware which, in its experience, are
ordinarily applicable to transactions of the type contemplated by the
Purchase Agreement (excluding those laws, rules and regulations
relating specifically to insurance holding companies); (b) the term
"Delaware Governmental Authorities" means any Delaware legislative,
judicial, administrative or regulatory body under Applicable Laws; (c)
the term "Delaware Governmental Approval" means any consent, approval,
license, authorization or validation of, or filing, qualification or
registration with, any Delaware Governmental Authority pursuant to
Applicable Laws. In giving such opinion, Skadden Arps may rely, as to
all matters governed by the laws of jurisdictions in which such counsel
is not qualified, upon opinions of other counsel, who shall be counsel
satisfactory to counsel for the Purchasers, in which case the opinion
shall state that they believe you and they are entitled to rely on such
opinions.
(c) Skadden Arps, special tax counsel for the Guarantor and the
Trust, shall furnish to you their written opinion, dated not later than
five New York Business Days after the Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Trust will be classified as a grantor trust and not
as an association taxable as a corporation for United States
federal income tax purposes.
10
<PAGE>
(ii) The Subordinated Debentures will be classified for
United States federal income tax purposes as indebtedness of the
Company.
(d) Prior to the Time of Delivery, the Guarantor and the Trust
shall have furnished to you such further information, certificates and
documents as you may reasonably request.
(e) (i) There has not been any material adverse change in, or
any adverse development which materially affects, the business,
properties or financial condition or results of operations of the
Guarantor and its subsidiaries taken as a whole since the date hereof
otherwise than as set forth or contemplated herein, and (ii) since the
date hereof there shall not have been any change in the capital stock
or long-term debt of the Guarantor or any of its Significant
Subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the
Guarantor and its subsidiaries taken as a whole, otherwise than as set
forth or contemplated herein, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the Purchasers
so material and adverse as to make it impracticable or inadvisable to
proceed with the offering or the delivery of the Securities on the
terms and in the manner contemplated herein;
(f) On or after the date hereof and prior to the Time of
Delivery, there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on
the New York Stock Exchange; (ii) a suspension or material limitation
in trading in the Guarantor's securities on the New York Stock
Exchange, (iii) a general moratorium on commercial banking activities
declared by either Federal, New York State or Connecticut authorities;
or (iv) the outbreak or escalation of hostilities involving the United
States or the declaration by the United States of a national emergency
or war, if the effect of any such event specified in this clause (iv)
in the judgment of the Purchasers makes it impracticable or inadvisable
to proceed with the offering or the delivery of the Securities on the
terms and in the manner contemplated herein;
(g) The Guarantor and the Trust shall have furnished to you
certificates of the Guarantor and the Trust, signed, in the case of the
Guarantor, by the Chief Executive Officer, the President or a Senior
Executive Vice President of the Guarantor and by the principal
accounting or financial officer of the Guarantor, and in the case of
the Trust, by an Administrative Trustee, dated the Time of Delivery, as
to the accuracy of the representations and warranties of the Guarantor
and the Trust herein at and as of such Time of Delivery, as to the
performance by the Guarantor and the Trust of all of their respective
obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as the you may reasonably
request.
8. (a) As of the Closing, the Purchasers and their Affiliates (as
defined in the Exchange Act) will have no beneficial ownership (as defined in
Rule 13d-3 promulgated under the Exchange Act) of any securities of Guarantor
other than as a result of the Purchasers' acquisition of the Securities.
(b) The Purchasers hereby agree that, for a period of five (5)
years from the date hereof, the Purchasers and their Affiliates will
not:
11
<PAGE>
(i) in any manner acquire, agree to acquire, make any public
or private offer or proposal to acquire or announce or disclose
any intention to make an offer or proposal to acquire, directly
or indirectly, by purchase or otherwise (except pursuant to a
stock split, stock dividend, or other pro rata distribution by
Guarantor to holders of any class of its outstanding securities
entitled to vote generally in the election of directors ("Voting
Securities") or upon conversion of the Securities), any Voting
Securities other than the Securities;
(ii) propose to enter into, or announce or disclose any
intention to propose to enter into, directly or indirectly, any
merger, business combination or similar transaction involving
Guarantor or its Affiliates or to purchase, directly or
indirectly, all or a material portion of the assets of Guarantor
or any of its Affiliates;
(iii) make, or in any way participate, directly or indirectly,
in any "solicitation" of "proxies" (as such terms are defined or
used in Regulation 14A of the Exchange Act) to vote, or seek to
advise or influence any person with respect to the voting of,
any Voting Securities, or become a "participant" in an "election
contest" (as such terms are defined or used in Regulation 14A of
the Exchange Act) relating to the election of directors of
Guarantor, or initiate, propose or solicit holders of Voting
Securities for the approval of any shareholder proposal (under
Rule 14a-8 under the Exchange Act or otherwise), provided that
the Purchasers shall not be deemed to have engaged in a
"solicitation" or to have become a "participant" in accordance
with this Agreement or by reason of participation in Guarantor's
solicitation of proxies in connection with any annual or special
meeting of shareholders of Guarantor;
(iv) form, join or in any way participate in a "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) or
otherwise act in concert with any Person, (x) for the purpose of
circumventing the provisions of this Agreement or (y) for the
purpose of acquiring, holding, voting or disposing of any Voting
Securities;
(v) (x) request Guarantor (or its directors, officers,
employees or agents), directly or indirectly, to take any action
which might require Guarantor or any of its Affiliates to make a
public announcement regarding the possibility of (A) the
acquisition of Voting Securities by the Purchasers, (B) a
business combination, merger or similar transaction involving
the Purchasers, on the one hand, and Guarantor or any of its
Affiliates, on the other hand, (C) the sale to the Purchasers of
all or a material portion of the assets of Guarantor or any of
its Affiliates, or (D) the amendment or waiver of any of the
provisions hereof, or (y) make any public statement regarding
any of the foregoing or with respect to the business, management
or conduct of Guarantor or its Affiliates;
(vi) deposit any Voting Securities in a voting trust or
subject them to a voting agreement or other agreement of similar
effect;
(vii) arrange, or participate in the arranging of, financing
for the purchase of any Voting Securities by any person or
entity, provided that the Purchasers may, as part of their
normal business practices (now or as hereinafter adopted),
provide bona fide financing to a third party so long as the
effect of such financing would not otherwise violate any of the
provisions of this Agreement;
12
<PAGE>
(viii) participate in any action by written consent of the
shareholders of Guarantor unless so requested by the management
or board of directors of the Guarantor; or
(ix) otherwise act, alone or in concert with others
(including by providing financing for another party), to seek or
offer to control or influence, in any manner, the management,
Board of Directors or policies of Guarantor, including, without
limitation, by seeking to add or remove any member of the Board
of Directors of Guarantor.
(c) Notwithstanding the provisions of clause (ii) of paragraph
(b), the Purchasers shall be permitted to make a proposal otherwise
subject thereto if another person or entity has made such a proposal
and such proposal has been publicly announced, provided (i) ten New
York Business Days have elapsed since the date of public announcement
of such other party's proposal and the Guarantor has not publicly
rejected such proposal and (ii) the Purchasers' proposal is made
privately to the Guarantor and is not publicized by the Purchasers in
any manner. Notwithstanding the provisions of clause (v)(x)(D) of
paragraph (b), the Purchasers may request an amendment or waiver of
paragraph (b), provided that (i) the Purchasers' request is made
privately to the Chief Executive Officer of the Guarantor and (ii) if
rejected, no further communication with respect thereto is made
publicly by the Purchasers to any person in any manner. It is
anticipated that the Purchasers and the Guarantor will be discussing
and entering into various business and contractual relationships.
Notwithstanding the provisions of clause (ix) of paragraph (b), the
Purchasers shall be free to (i) discuss such relationships with the
Guarantor and to fully assert and protect their rights thereunder or
(ii) meet privately with the Chief Executive Officer and/or Chairman of
the Board of Guarantor to discuss matters generally of interest to
shareholders other than matters related to control or change of control
of Guarantor.
(d) The Purchasers agree that they will, and will cause their
Affiliates to, vote any Voting Securities of Guarantor in accordance
with the recommendation of the Board of Directors of Guarantor at any
annual or special meeting or in any action by consent. If the foregoing
provision is inconsistent with any law, rule or regulation applicable
to Guarantor, such Voting Securities will be voted in proportion to the
votes of all other holders of Voting Securities.
(e) The parties hereto jointly and severally agree and covenant
that any breach of this Section 8 by any of them will cause immediate
and irreparable harm to the other, for which there is no adequate
remedy at law, and each hereby acknowledges and consents to the right
of the other to seek the entry, by a court of competent jurisdiction,
of any temporary, preliminary or permanent injunction, or other
remedial relief which would arrest or redress any such breaches of
this Section 8.
9. The respective agreements, representations, warranties and other
statements of the Guarantor and the Trust and the Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of the Purchasers or any controlling person of any Purchasers, or the Guarantor
and the Trust, or any officer or director or controlling person of the Guarantor
or the Trust, and shall survive delivery of and payment for the Securities.
13
<PAGE>
10. This Agreement may be terminated by mutual agreement of the
parties, in which event, (i) the Guarantor and the Trust shall not then be under
any liability or obligation to the Purchasers with respect to the Securities
except as provided in Section 6 hereof and (ii) the Purchasers shall not then be
under any liability or obligation to the Guarantor with respect to this
Agreement except as provided in Section 6 or 8 hereof.
11. All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Purchasers shall be delivered or sent by mail, telex
or facsimile transmission to: ERC Life Reinsurance Corporation and Employers
Reinsurance Corporation, 5200 Metcalf, P.O. Box 2991, Overland Park, Kansas
66201-1391, Attention: General Counsel; and if to the Guarantor or the Trust
shall be delivered or sent by mail or facsimile transmission to HSB Group, Inc.,
One State Street, Hartford, Connecticut 06102, Attention: General Counsel. Any
such statements, requests, notices or agreements shall take effect upon receipt
thereof.
12. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers, the Guarantor and the Trust and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Securities from
the Purchasers shall be deemed a successor or assign by reason merely of such
purchase.
13. Time shall be of the essence of this Agreement.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
14
<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us six counterparts hereof, and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
between the Purchasers and the Guarantor and the Trust.
Very truly yours,
HSB CAPITAL II
By: HSB GROUP, INC.,
as Depositor
By: /s/ Saul L. Basch
Name: Saul L. Basch
Title: Senior Vice President, Treasurer and Chief Financial Officer
HSB GROUP, INC.
By: /s/ Saul L. Basch_
Name: Saul L. Basch
Title: Senior Vice President, Treasurer and Chief Financial Officer
Accepted as of the date hereof:
EMPLOYERS REINSURANCE CORPORATION
By:/s/ John M. Connelly
ERC LIFE REINSURANCE CORPORATION
By:/s/ John M. Connelly
<PAGE>
SCHEDULE I
Liquidation
Number of Amount of
Securities Securities
to be to be
Purchasers Purchased Purchased
---------- ----------- ------------
Employers Reinsurance Corporation......... 180,000 $180,000,000
ERC Life Reinsurance Corporation.......... 120,000 120,000,000
=========== ============
Total.......................... 300,000 $300,000,000
=========== ============
16
<PAGE>
December 30, 1997
TERMS OF $300 MILLION CONVERTIBLE SECURITY
A. Preliminary financial terms
Issuer : newly created HSB Delaware business trust
Maturity: 20 years
Ranking: Pari passu with HSB Group Global Floating Rate Junior
Subordinated Debentures, Series B (subordinate to senior
indebtedness)
Rate: 7.0% coupon, payable semi-annually
Extension periods: Interest may be deferred for up to 10 consecutive interest
periods, provided that during such period HSB cannot pay
dividends on its common stock or repay debt that ranks pari
passu or junior provided that no extension period may extend
beyond the stated maturity date.
Redemption: Upon maturity
At option of ERC (non-transferable right), (i) upon change
in control of HSB Group occurring within five years of
issuance, redemption at par plus redemption premium, if any,
calculated in accordance with Schedule A; (ii) if ERC's
purchase of IRI does not close before March 31, 1998; (iii)
if after good-faith negotiations and revisions (if any) to
the documentation in accordance with this Term Sheet, ERC
determines that the Securities do not conform to the
fundamental economic terms set forth herein or contain
provisions that impose material legal or tax consequences or
risks on ERC that could not have been reasonably
anticipated.
Callable: Upon change in control of purchaser, at par
"Tax event" (loss of tax deductibility)
After 7 years at par under any circumstances
If ERC's purchase of IRI does not close before March 31,
1998
In the event that HSB vetos a purchaser of the convertible
securities
Convertibility: HSB Group common stock at any time, subject to regulatory
approval, at conversion price of $85
B. Standstill Agreement
Term: 5 year term; subject to earlier termination as mutually
agreed by the parties
Voting: Agreement to vote its shares in accordance with
recommendation of Board, or if unenforceable in accordance
with NYSE policy, then proportionate to voting of
non-affiliated shareholders
Prohibited
activities: Acquiring additional shares beyond current ownership (need
representation on this) and conversion
Participating in proxy solicitation/consent solicitation
Making shareholder proposal
Public or private proposal with respect to a business
combination, except for private proposal to HSB following
a public proposal for business combination which has not
been rejected within 10 business days thereafter by Board of
Directors
Seeking to add/remove director from board
Forming 13D group with other stockholders
Making public statements on business management or conduct
of HSB
Requesting amendment of standstill agreement, other than a
non-public request to CEO which, if rejected, may not be
followed by a public request
Dispositions of
Convertible: Rule 144A placement where purchaser agrees to be bound by
agreement, subject to HSB right to call at par and to veto
the purchaser(s); limit on number of purchasers
No registration rights
Disposition of
Common: Demand registration rights; limits on frequency and number
of shares that can be covered; must be in broad public
distribution with limit on blocks that can be purchased by
third parties; subject to customary hold-backs and
black-outs
<PAGE>
Schedule A
(assuming 7% coupon)
In the event of a change in control of HSB Group within five years of the
closing, if the per share price paid in the acquisition comprising the
change in control is below the per share price specified below for the year
within which the change in control occurs, HSB Group must redeem the note
at the redemption value specified in the following table.
Minimum Minimum
Per share Premium Redemption Redemption ERC
Redemption Price to Par Par Value Premium Value IRR*
- ---------- ------- ------- --------- ---------- ---------- -------
Year 1 $92.65 9.00% $300 M $ 27,000,000 $327,000,000 16.00%
Year 2 90.95 7.00% 300 M 21,000,000 321,000,000 10.33%
Year 3 89.25 5.00% 300 M 15,000,000 315,000,000 8.53 %
Year 4 87.55 3.00% 300 M 9,000,000 309,000,000 7.67%
Year 5 85.85 1.00% 300 M 3,000,000 303,000,000 7.17%
*assuming payments at year-end
Exhibit 4.2
HSB GROUP, INC.
to
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
---------------------------
INDENTURE
Dated as of December 31, 1997
---------------------------
7.0% CONVERTIBLE SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE DECEMBER 31, 2017
<PAGE>
HSB GROUP, INC.
Reconciliation and tie between the Trust Indenture Act of 1939
(including cross-references to provisions of Section 310 to and including 317
which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended
by the Trust Reform Act of 1990, are a part of and govern the Indenture whether
or not physically contained therein) and the Indenture, dated as of December 31,
1997.
TRUST INDENTURE ACT SECTION INDENTURE SECTION
(ss.) 310 (a) (1), (2) and (5).............................. 6.9
(a) (3)........................................... Not Applicable
(a)(4)............................................ Not Applicable
(b)............................................... 6.8
.................................................. 6.10
(c)............................................... Not Applicable
(ss.) 311 (a)............................................... 6.13
(b)............................................... 6.13
(b) (2)........................................... 7.3(a)
.................................................. 7.3(a)
(ss.) 312 (a)............................................... 7.1
.................................................. 7.2(a)
(b)............................................... 7.2(b)
(c)............................................... 7.2(c)
(ss.) 313 (a)............................................... 7.3(a)
(b)............................................... 7.3(b)
(c)............................................... 7.3(a), 7.3(b)
(d)............................................... 7.3(c)
(ss.) 314 (a) (1), (2) and (3).............................. 7.4
(a) (4)........................................... 10.5
(b)............................................... Not Applicable
(c)(1)............................................ 1.2
(c)(2)............................................ 1.2
(c)(3)............................................ Not Applicable
(d)............................................... Not Applicable
(e)............................................... 1.2
(f)............................................... Not Applicable
(ss.) 315 (a)............................................... 6.1(a)
(b)............................................... 6.2
.................................................. 7.3(a)
(c)............................................... 6.1(b)
(d)............................................... 6.1(c)
(d)(1)............................................ 6.1(a)(1)
<PAGE>
(d)(2)............................................ 6.1(c)(2)
(d)(3)............................................ 6.1(c)(3)
(e)............................................... 5.14
(ss.) 316 (a)............................................... 1.1
(a)(1)(A)......................................... 5.12
(a)(1)(B)......................................... 5.13
(a)(2)............................................ Not Applicable
(b)............................................... 5.8
(c)............................................... 1.4(f)
(ss.) 317 (a)(1)............................................ 5.3
(a)(2)............................................ 5.4
(b)............................................... 10.3
(ss.) 318 (a)............................................... 1.7
- --------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..... 1
SECTION 1.1. Definitions................................................ 1
SECTION 1.2. Compliance Certificate and Opinions........................ 10
SECTION 1.3. Forms of Documents Delivered to Trustee.................... 11
SECTION 1.4. Acts of Holders............................................ 11
SECTION 1.5. Notices, Etc. to Trustee and Corporation................... 13
SECTION 1.6. Notice to Holders; Waiver.................................. 14
SECTION 1.7. Conflict with Trust Indenture Act.......................... 14
SECTION 1.8. Effect of Headings and Table of Contents................... 14
SECTION 1.9. Successors and Assigns..................................... 14
SECTION 1.10. Separability Clause....................................... 15
SECTION 1.11. Benefits of Indenture..................................... 15
SECTION 1.12. Governing Law............................................. 15
SECTION 1.13. Non-Business Days......................................... 15
ARTICLE II
SECURITY FORMS.................................................... 15
SECTION 2.1. Forms Generally............................................ 15
SECTION 2.2. Form of Face of Security................................... 16
SECTION 2.3. Form of Reverse of Security................................ 19
SECTION 2.4. Restrictive Legends........................................ 21
SECTION 2.5. Form of Trustee's Certificate of Authentication............ 22
ARTICLE III
THE SECURITIES.................................................... 22
SECTION 3.1. Title and Terms............................................. 22
SECTION 3.2. Denominations............................................... 22
SECTION 3.3. Execution, Authentication and Dating........................ 23
SECTION 3.4. Temporary Securities........................................ 23
SECTION 3.5. Registration, Transfer and Exchanges........................ 24
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities............ 27
SECTION 3.7. Payment of Interest; Interest Rights Preserved.............. 28
SECTION 3.8. Persons Deemed Owners....................................... 29
SECTION 3.9. Cancellation................................................ 30
SECTION 3.10. Computation of Interest.................................... 30
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SECTION 3.11. Deferrals of Interest Payment Dates....................... 30
SECTION 3.12. Right of Set-Off.......................................... 31
SECTION 3.13. Agreed Tax Treatment...................................... 31
SECTION 3.14. Shortening of Stated Maturity............................. 31
SECTION 3.15. CUSIP Numbers............................................. 31
ARTICLE IV
SATISFACTION AND DISCHARGE........................................... 32
SECTION 4.1. Satisfaction and Discharge of Indenture.................... 32
SECTION 4.2. Application of Trust Money................................. 33
ARTICLE V
REMEDIES....................................................... 33
SECTION 5.1. Events of Default..............................................33
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.............34
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee....................................................... 36
SECTION 5.4. Trustee May File Proofs of Claim.............................. 36
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.... 37
SECTION 5.6. Application of Money Collected................................ 37
SECTION 5.7. Limitation on Suits........................................... 38
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Capital Securities....... 39
SECTION 5.9. Restoration of Rights and Remedies............................ 39
SECTION 5.10. Rights and Remedies Cumulative............................... 39
SECTION 5.11. Delay or Omission Not Waiver................................. 39
SECTION 5.12. Control by Holders........................................... 40
SECTION 5.13. Waiver of Past Defaults...................................... 40
SECTION 5.14. Undertaking for Costs........................................ 41
SECTION 5.15. Waiver of Usury, Stay or Extension Laws...................... 41
ARTICLE VI
THE TRUSTEE..................................................... 41
SECTION 6.1. Certain Duties and Responsibilities........................... 41
SECTION 6.2. Notice of Defaults............................................ 43
SECTION 6.3. Certain Rights of Trustee..................................... 43
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities........ 44
SECTION 6.5. May Hold Securities........................................... 44
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SECTION 6.6. Money Held in Trust.......................................... 44
SECTION 6.7. Compensation and Reimbursement............................... 44
SECTION 6.8. Disqualification; Conflicting Interests...................... 45
SECTION 6.9. Corporate Trustee Required; Eligibility...................... 45
SECTION 6.10. Resignation and Removal; Appointment of Successor........... 46
SECTION 6.11. Acceptance of Appointment by Successor...................... 47
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. 48
SECTION 6.13. Preferential Collection of Claims Against Corporation....... 49
SECTION 6.14. Appointment of Authenticating Agent......................... 49
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND CORPORATION................ 50
SECTION 7.1. Corporation to Furnish Trustee Names and Addresses of Holders. 50
SECTION 7.2. Preservation of Information, Communications to Holders........ 51
SECTION 7.3. Reports by Trustee............................................ 51
SECTION 7.4. Reports by Corporation........................................ 51
ARTICLE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.............. 52
SECTION 8.1. Corporation May Consolidate, Etc., Only on Certain Terms...... 52
SECTION 8.2. Successor Corporation Substituted............................. 53
ARTICLE IX
SUPPLEMENTAL INDENTURES....................... 53
SECTION 9.1. Supplemental Indentures Without Consent of Holders............ 53
SECTION 9.2. Supplemental Indentures with Consent of Holders............... 54
SECTION 9.3. Execution of Supplemental Indentures.......................... 56
SECTION 9.4. Effect of Supplemental Indentures............................. 56
SECTION 9.5. Conformity with Trust Indenture Act........................... 56
SECTION 9.6. Reference in Securities to Supplemental Indentures............ 56
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ARTICLE X
COVENANTS................................................ 56
SECTION 10.1. Payment of Principal, Premium and Interest.................... 56
SECTION 10.2. Maintenance of Office or Agency............................... 57
SECTION 10.3. Money for Security Payments to be Held in Trust............... 57
SECTION 10.4. Statement as to Compliance.................................... 59
SECTION 10.5. Waiver of Certain Covenants................................... 59
SECTION 10.6. Additional Sums............................................... 59
SECTION 10.7. Additional Covenants.......................................... 60
ARTICLE XI
REDEMPTION OF SECURITIES.......................................... 61
SECTION 11.1. Applicability of This Article................................. 61
SECTION 11.2. Election to Redeem; Notice to Trustee......................... 61
SECTION 11.3. Selection of Securities to be Redeemed........................ 61
SECTION 11.4. Notice of Redemption.......................................... 62
SECTION 11.5. Deposit of Redemption Price................................... 63
SECTION 11.6. Payment of Securities Called for Redemption................... 63
SECTION 11.7. Right of Redemption of Securities Initially Issued to an
Issuer Trust.................................................. 63
SECTION 11.8. Mandatory Redemption Provisions............................... 64
ARTICLE XII
RANKING; SUBORDINATION OF SECURITIES.................................. 65
SECTION 12.1. Ranking; Securities Subordinate to Senior Indebtedness....... 65
SECTION 12.2. No Payment When Senior Indebtedness in Default; Payment
Over of Proceeds Upon Dissolution, Etc............................. 65
SECTION 12.3. Payment Permitted If No Default.............................. 67
SECTION 12.4. Subrogation to Rights of Holders of Senior Indebtedness...... 67
SECTION 12.5. Provisions Solely to Define Relative Rights.................. 68
SECTION 12.6. Trustee to Effectuate Subordination.......................... 68
SECTION 12.7. No Waiver of Subordination Provisions........................ 68
SECTION 12.8. Notice to Trustee............................................ 69
SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating
Agent........................................................ 70
SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.... 70
SECTION 12.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights................................... 70
SECTION 12.12. Article Applicable to Paying Agents......................... 70
SECTION 12.13. Certain Conversions or Exchanges Deemed Payment............. 70
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ARTICLE XIII
CONVERSION OF SECURITIES............................................... 71
SECTION 13.1. Conversion Rights............................................ 71
SECTION 13.2. Conversion Procedures........................................ 71
SECTION 13.3. Conversion Price Adjustments................................. 74
SECTION 13.4. Notice of Adjustments of Conversion Price.................... 77
SECTION 13.5. Prior Notice of Certain Events............................... 77
SECTION 13.6. Dividend or Interest Reinvestment Plans...................... 78
SECTION 13.7. Certain Additional Rights.................................... 78
SECTION 13.8. Restrictions on Common Stock Issuable Upon Conversion........ 79
SECTION 13.9. Trustee Not Responsible for Determining Conversion Price or
Adjustments........................................................ 79
ARTICLE XIV
EXPENSES....................................................... 80
SECTION 14.1. Payment of Expenses by the Corporation....................... 80
SECTION 14.2. Term of Agreement............................................ 80
SECTION 14.3. Waiver of Notice............................................. 81
SECTION 14.4. No Impairment................................................ 81
SECTION 14.5. Enforcement.................................................. 81
SECTION 14.6. Subrogation.................................................. 81
SECTION 14.7. Amendment.................................................... 82
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INDENTURE, dated as of December 31, 1997, between HSB GROUP, INC., a
Connecticut corporation (the "Corporation"), having its principal office at One
State Street, Hartford, Connecticut, and The First National Bank of Chicago, a
national banking association, as Trustee (the "Trustee").
Recitals of the Corporation
Whereas, the Corporation has duly authorized the execution and delivery
of this Indenture to provide for the issuance of its 7.0% Convertible
Subordinated Deferrable Interest Debentures (the "Securities") of substantially
the tenor hereinafter provided, including Securities issued to evidence loans
made to the Corporation with the proceeds from the issuance by HSB Capital II, a
Delaware business trust (the "Issuer Trust") of preferred undivided beneficial
interests in the assets of such Issuer Trust (the "Capital Securities") and
common undivided interests in the assets of such Issuer Trust (the "Common
Securities"), and to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered; and
Whereas, all things necessary to make this Indenture a valid agreement
of the Corporation, in accordance with its terms, have been done.
Now Therefore, this Indenture Witnesseth:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, 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;
(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
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(c) The words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(d) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(e) Whenever the context may require, any gender shall be deemed
to include the others;
(f) Unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the
case may be, of this Indenture; and
(g) The words "hereby", "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified
in Section 1.4.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which an Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate the
Securities.
"Bankruptcy Code" means Title 11 of the United States Code or any
successor statute thereto, in each case as amended from time to time.
"Board of Directors" means the board of directors of the Corporation or
the Executive Committee of the board of directors of the Corporation (or any
other committee of the board of directors of the Corporation performing similar
functions) or a committee designated by the board of directors of the
Corporation (or such committee), comprised of two or more members of the board
of directors of the Corporation or officers of the Corporation, or both.
"Board Resolution" means a copy of a resolution certified by the
Corporate Secretary or an Assistant Secretary of the Corporation to have been
duly adopted by the Board of Directors,
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or officers of the Corporation to which authority to act on behalf of the Board
of Directors has been delegated, and to be in full force and effect on the date
of such certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii)
a day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (iii) a day on which the
Corporate Trust Office of the Trustee, or the Corporate Trust Office (as defined
in the related Trust Agreement) of the Property Trustee or the Delaware Trustee
under the related Trust Agreement, is closed for business.
"Capital Securities" has the meaning specified in the first recital of
this Indenture.
"Change of Control" shall mean an acquisition of greater than 50% of
the outstanding voting securities of either HSB Group, Inc. or Employers
Reinsurance Corporation, as the case may be.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Securities and Exchange Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of
this Indenture.
"Common Stock" means common stock, no par value, of the Corporation.
"Conversion Agent" has the meaning specified in Section 13.2.
"Conversion Date" has the meaning specified in Section 13.2.
"Conversion Price" has the meaning specified in Section 13.1.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered.
"corporation" includes a corporation, association, company, limited
liability company, joint-stock company or business trust.
"Corporation" means the Person named as the "Corporation" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Corporation" shall mean such successor corporation.
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"Corporation Request" and "Corporation Order" mean, respectively, a
written request or order signed in the name of the Corporation by its Chief
Executive Officer, its President, one of its Senior Vice Presidents or Vice
Presidents and by its Chief Financial Officer, Treasurer, Controller, its
Corporate Secretary or an Assistant Secretary, and delivered to the Trustee.
"Current Market Price" means for any day the last reported sale price,
regular way, on such day of Common Stock, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Composite Transactions Tape,
or, if the Common Stock is not listed or admitted to trading on the NYSE on such
day, on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, exchange, or the Nasdaq National Market, or, if
the Common Stock is not quoted or admitted to trading on such quotation system,
on the principal quotation system on which the Common Stock may be listed or
admitted to trading or quoted, or, if not listed or admitted to trading or
quoted on any national securities exchange or quotation system, the average of
the closing bid and asked prices of the Common Stock in the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or, if not so
available in such manner, as furnished by any NYSE member firm selected from
time to time by the Board od Directors for that purpose or, if not so available
in such manner, as otherwise determined in good faith by the Board of Directors.
"Debt" means, with respect to any Corporation, whether recourse is to
all or a portion of the assets of such Corporation and whether or not contingent
and without duplication, (i) every obligation of such Corporation for money
borrowed; (ii) every obligation of such Corporation evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of such Corporation with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of
such Corporation; (iv) every obligation of such Corporation issued or assumed as
the deferred purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Corporation; (vi) all
indebtedness of the Corporation, whether incurred on or prior to the date of
this Indenture or thereafter incurred, for claims in respect of derivative
products, including interest rate, foreign exchange rate and commodity forward
contracts, options and swaps and similar arrangements; and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another Person
and all dividends of another Person the payment of which, in either case, such
Corporation has guaranteed or is responsible or liable for, directly or
indirectly, as obligor or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Delaware Trustee" means, with respect to any Issuer Trust, the Person
identified as the "Delaware Trustee" in the related Trust Agreement, solely in
its capacity as Delaware Trustee of such Issuer Trust under such Trust Agreement
and not in its individual capacity, or its
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successor in interest in such capacity, or any successor Delaware trustee
appointed as therein provided.
"Distributions", with respect to the Trust Securities issued by an
Issuer Trust, means amounts payable in respect of such Trust Securities as
provided in the related Trust Agreement and referred to therein as
"Distributions".
"Dollar" or "$" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public and
private debts.
"Event of Default" has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 or any
successor statute thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.11.
"Guarantee Agreement" means, with respect to any Issuer Trust, the
Guarantee Agreement executed by the Corporation for the benefit of the Holders
of the Capital Securities issued by such Issuer Trust, as modified, amended or
supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Rate" means the rate of interest specified or determined as
specified in the Security as being the rate of interest payable on such
Security.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security or any 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.
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"Notice of Conversion" means the notice given by a holder of Capital
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Capital Securities for Securities and to convert such Securities into
Common Stock on behalf of such holder.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(3).
"Officers' Certificate" means a certificate signed by its Chief
Executive Officer, the President or a Senior Vice President, and by the Chief
Financial Officer, Treasurer or the Corporate Secretary or Assistant Secretary,
of the Corporation and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Corporation or any Affiliate of the
Corporation.
"Original Issue Date" means the date of issuance specified as such in
each Security.
"Outstanding" means, when used in reference to any Securities, 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;
(ii) Securities for whose payment money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent in
trust for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other
Securities have been authenticated and delivered or that have been
paid pursuant to Section 3.7, unless proof satisfactory to the Trustee
is presented that any such Securities are held by Holders in whose
hands such Securities are valid, binding and legal obligations of the
Corporation;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Corporation or any other obligor upon the Securities or any Affiliate of
the Corporation or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities that the Trustee knows to be so owned shall
be so disregarded. Securities so owned that 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 Corporation or any other obligor upon the Securities or
any Affiliate of the Corporation or such other obligor. Upon the written request
of the Trustee, the Corporation shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Securities, if any, known by
the Corporation to be owned or held by or for the account of the Corporation or
any other obligor on the Securities, or any Affiliate of the
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Corporation or such obligor, and subject to the provisions of Section 6.1, the
Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Securities not
listed therein are Outstanding for the purpose of any such determination.
Notwithstanding anything herein to the contrary, Securities shall be deemed to
be Outstanding notwithstanding the ownership by the Corporation or an Affiliate
of any beneficial interest in such Issuer Trust.
"Paying Agent" means the Trustee or any Person authorized by the
Corporation to pay the principal of (or premium, if any) or interest on, or
other amounts in respect of, any Securities on behalf of the Corporation.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Place of Payment" means, with respect to the Securities, New York, New
York or Chicago, Illinois, where the principal of (and premium, if any) and
interest on the Securities are payable.
"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. For the purposes of this definition, any security
authenticated and delivered under Section 3.6 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.
"Procedures" has the meaning specified in Section 13.3.
"Proceeding" has the meaning specified in Section 12.2.
"Property Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Property Trustee" in the related Trust Agreement, solely in
its capacity as Property Trustee of such Issuer Trust under such Trust Agreement
and not in its individual capacity, or its successor in interest in such
capacity, or any successor property trustee appointed as therein provided.
"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 or the terms of such Security.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture or the terms of such Security.
"Regular Record Date" for the interest payable on any Interest Payment
Date, the day that is fifteen days next preceding such Interest Payment Date
(whether or not a Business Day).
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"Responsible Officer", when used with respect to the Trustee, means 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 vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Securities" means all Securities for which it is required
pursuant to Section 2.4 to bear a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning specified in Section
2.4.
"Restricted Security" means each Security required to bear the
Restricted Securities Legend.
"Rights Plan" means a plan of the Corporation providing for the
issuance by the Corporation to all holders of its Common Stock of rights
entitling the holders thereof to subscribe for or purchase shares of any class
or series of capital stock of the Corporation, which rights are (i) deemed to be
transferred with such shares of Common Stock and (ii) also issued in respect of
future issuances of such Common Stock, in each case until the occurrence of a
specified event or events.
"Securities Act" means the Securities Act of 1933 or any successor
statute thereto, in each case as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Security" means any debt security authenticated and delivered under
this Indenture.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Corporation whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt of the Corporation, whether incurred on or prior to the date of this
Indenture or hereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Securities or
to other Debt that is pari passu with, or subordinated to, the Securities,
provided, however, that Senior Indebtedness shall not be deemed to include (a)
any Debt of the Corporation that, when incurred and without respect to any
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election under Section 1111(b) of the Bankruptcy Reform Act of 1978, was without
recourse to the Corporation, (b) any Debt of the Corporation to any of its
Subsidiaries, (c) any Debt of the Corporation to any Person who is an employee
of the Corporation and (d) any Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof (or premium, if any) or interest thereon, means
the date specified pursuant to the terms of such Security as the fixed date on
which the principal of such Security or such installment of principal (or
premium, if any) or interest is due and payable, as such date may be shortened
as provided pursuant to the terms of such Security and this Indenture, in the
case of the Stated Maturity of any Security, and subject to the deferral of any
such date during any Extension Period, in the case of any installment of
interest.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Corporation or by
one or more other Subsidiaries, or by the Corporation and one or more other
Subsidiaries. For purposes of this definition, "voting stock" means stock that
ordinarily has voting power for the election of directors, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security. For the purposes of this definition, any Security
authenticated and delivered under Section 3.6 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.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Capital Securities of such Issuer Trust, there is more than an insubstantial
risk that (i) such Issuer Trust is, or within 90 days of the delivery of such
Opinion of Counsel will be, subject to United States federal income tax with
respect to income received or accrued on the Securities issued by the
Corporation to such Issuer Trust, (ii) interest payable by the Corporation on
such Securities is not, or within 90 days of the delivery of such Opinion of
Counsel will not be, deductible by the Corporation, in whole or in part, for
United States federal income tax purposes, or (iii) such Issuer Trust is, or
within 90 days of the delivery of such Opinion of Counsel will be, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
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"Trust Agreement" means, with respect to the Issuer Trust, the trust
agreement or other governing instrument of such Issuer Trust.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that if
the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture
Act" means the Trust Indenture Act of 1939 as so amended.
"Trust Securities" means the Common Securities and the Capital
Securities.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument, solely in its capacity as such Trustee and not in
its individual capacity, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder and,
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities shall mean the Trustee with respect to Securities.
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Corporation to the Trustee to
take any action under any provision of this Indenture, the Corporation shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent (including covenants compliance with which constitutes a condition
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 (including covenants
compliance with which constitutes a condition precedent), if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 10.4) shall include:
(1) a statement by each individual signing such certificate or
opinion that such individual has read such covenant or condition and
the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions of
such individual contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or
she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
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(4) a statement as to whether, in the opinion of such
individual, such condition or covenant has been complied with.
SECTION 1.3. 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 may certify or give an opinion as to other matters,
and any of such Persons may certify or give an opinion as to such matters
contained in one or several documents.
Any certificate or opinion of an officer of the Corporation 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, opinion or representations
with respect to matters upon which his or her certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more officers of the Corporation stating that the
information with respect to such factual matters is in the possession of the
Corporation, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate, opinion or representations with respect to
matters upon which his or her certificate 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 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to 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 an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Corporation. 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 (subject to Section 6.1) conclusive in favor of
the Trustee and the Corporation, if made in the manner provided in this Section
1.4.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary
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public or other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing acknowledged
to such notary the execution thereof. Where such execution is by a Person acting
in other than such Persons's individual capacity, such certificate or affidavit
shall also constitute sufficient proof of such Person's authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Corporation in
reliance thereon, whether or not notation of such action is made upon such
Security.
(f) The Corporation may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Corporation 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 succeeding paragraph. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities 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 (as defined below) by Holders of the requisite principal amount
of Outstanding Securities on such record date. Nothing in this paragraph shall
be construed to prevent the Corporation 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 principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Corporation, 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 Trustee in writing and to each Holder of Securities in the
manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.2, (iii) any request to institute proceedings referred
to in Section 5.7(2), or (iv) any direction referred to in Section 5.12, in each
case with respect to Securities. If any record date is set pursuant to this
paragraph, the
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Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to join in such notice, declaration, request or direction,
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 principal amount of
Outstanding Securities on such 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 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 on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Trustee,
at the Corporation's expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Corporation in writing and to each Holder of Securities in the manner set forth
in Section 1.6.
With respect to any record date set pursuant to this Section 1.4, the
party hereto that sets such record date may designate any day 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 other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 1.6, 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 1.4, the party hereto
that set such record date 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.
(g) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Corporation.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Capital
Securities or the Corporation shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the
Trustee at its Corporate Trust office, or
(2) the Corporation by the Trustee, any Holder or any holder
of Capital Securities shall be sufficient for every purpose (except as
otherwise provided in
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Section 5.1) hereunder if in writing and mailed, first-class postage
prepaid, to the Corporation addressed to it at the address of its
principal office specified in the first paragraph of this Indenture or
at any other address previously furnished in writing to the Trustee by
the Corporation.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail service or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture or of
the relevant Securities, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
The Trust Indenture Act shall apply as a matter of contract to this
Indenture for purposes of interpretation, construction and defining the rights
and obligations hereunder, and this Indenture, the Corporation and the Trustee
shall be deemed for all purposes hereof to be subject to and governed by the
Trust Indenture Act to the same extent as would be the case if this Indenture
were qualified under that Act on the date hereof. Except as otherwise expressly
provided herein, if and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by any of Sections 310 to
317, inclusive, of the Trust Indenture Act through operation of Section 318(c)
thereof, such imposed duties shall control.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
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SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Corporation shall
bind its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
If any provision in this Indenture or in 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 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Capital Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity shall
not be a Business Day, then (notwithstanding any other provision of this
Indenture or the Securities) payment of principal of (and premium, if any) or
interest or other amounts in respect of such Security need not be made on such
date, but may be made on the next succeeding Business Day (and no interest shall
accrue in respect of the amounts whose payment is so delayed for the period from
and after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, until such next succeeding Business Day) except that, if such
Business Day falls in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business
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Day (in each case with the same force and effect as if made on the Interest
Payment Date or Redemption Date or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities and the Trustee's certificate of authentication shall be
in substantially the forms set forth in this Article, or in such other form or
forms 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 applicable tax laws or the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
SECTION 2.2. Form of Face of Security.
HSB GROUP, INC.
7.0% Convertible Subordinated Deferrable Interest Debentures due December 31,
2017
No. 1 $309,300,000
HSB GROUP, INC., a Connecticut corporation (hereinafter called the
"Corporation", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to The
First National Bank of Chicago, as Property Trustee, pursuant to the Trust
Agreement of HSB Capital II, dated as of December 31, 1997, or registered
assigns, the principal sum of Three Hundred Nine Million Three Hundred Thousand
($309,300,000) Dollars on December 31, 2017; provided that the Corporation may
shorten the Stated Maturity of the principal of this Security to a date not
earlier than December 31, 2012 in the circumstances described on the reverse
hereof. The Corporation further promises to pay interest on said principal sum
from December 31, 1997 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually (subject to deferral
as set forth herein) in arrears on January 15 and July 15 of each year,
commencing January 15,
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1998, at the rate of 7.0% per annum, together with Additional Sums, if any, as
provided in Section 10.6 of the Indenture until the principal hereof is paid or
duly provided for or made available for payment. The amount of interest payable
for any period less than a full interest period shall be computed on the basis
of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. The amount of interest payable for any full
interest period shall be computed by dividing the applicable rate per annum by
two. The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
installment, which shall be the January 1 or July 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Security may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the
Corporation shall have the right, at any time during the term of this Security,
from time to time to defer the payment of interest on this Security for up to
ten consecutive semi-annual interest payment periods with respect to each
deferral period (each an "Extension Period"), during which Extension Periods the
Corporation shall have the right to make partial payments of interest on any
Interest Payment Date, and at the end of which the Corporation shall pay all
interest then accrued and unpaid; provided, however, that no Extension Period
shall extend beyond the Stated Maturity of the principal of this Security as
then in effect, and no such Extension Period may end on a date other than an
Interest Payment Date; and provided further, however, that during any such
Extension Period, the Corporation 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 Corporation's capital stock, or (ii) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation that rank pari passu in all
respects with or junior in interest to this Security or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt securities
of any subsidiary of the Corporation if such guarantee ranks pari passu with or
junior in interest to the Securities (other than (a) dividends or distributions
in common stock of the Corporation, (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 Guarantee
and (d) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's or its subsidiaries' benefit plans for
their directors, officers or employees). Prior to the termination of any such
Extension Period, the Corporation may further defer the payment of interest,
provided that no Extension Period shall exceed ten consecutive semi-annual
interest payment
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periods, and shall not extend beyond the Stated Maturity of the principal of
this Security or end on a date other than an Interest Payment Date. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest then due on any Interest Payment Date, the Corporation may elect
to begin a new Extension Period, subject to the above conditions. The
Corporation shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral or so long as such Securities are held by HSB
Capital II, at least one Business Day prior to the earlier of (i) the next
succeeding date on which Distributions on the Capital Securities of such Issuer
Trust would be payable but for such deferral, and (ii) the date on which the
Property Trustee of such Issuer Trust is required to give notice to holders of
such Capital Securities of the record date or the date such Distributions are
payable.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Corporation maintained for
that purpose in New York, New York or Chicago, Illinois, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Corporation payment of interest may be made (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Securities Register, or (ii) by wire transfer in immediately available funds at
such place and to such account as may be designated by the Person entitled
thereto as specified in the Securities Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and ranks pari passu with HSB Group,
Inc.'s Global Floating Rate Junior Subordinated Debentures, Series B, and this
Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on
such Holder's behalf to take such actions as may be necessary or appropriate to
effectuate the subordination so provided, and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each Holder hereof, by such
Holder's acceptance hereof, waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Corporation has caused this instrument to be
duly executed under its corporate seal.
HSB GROUP, INC.
By: --------------------
Name: Saul L. Basch
Title: Senior Vice President,
Treasurer and Chief
Financial Officer
Attest:
- -------------------
Corporate Secretary
SECTION 2.3. Form of Reverse of Security.
This Security is a duly authorized issue of securities of the
Corporation (herein called the "Securities"), limited in aggregate principal
amount to $309,300,000, issued under the Indenture, dated as of December 31,
1997 (herein called the "Indenture"), between the Corporation and The First
National Bank of Chicago, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Corporation, the Trustee, the holders of Senior Indebtedness and the Holders
of the Securities, and of the terms upon which the Securities are, and are to
be, authenticated and delivered.
All terms used in this Security that are defined in the Indenture or in
the Trust Agreement, dated as of December 31, 1997 (as modified, amended or
supplemented from time to time, the "Trust Agreement"), relating to HSB Capital
II (the "Issuer Trust") among the Corporation, as Depositor, the Trustees named
therein and the Holders from time to time of the Trust Securities issued
pursuant thereto, shall have the meanings assigned to them in the Indenture or
the Trust Agreement, as the case may be.
The Corporation may at any time, at its option, (i) on or after
December 31, 2004 or (ii) for a reason specified in Article XI of the Indenture,
in both cases subject to the terms and conditions of Article XI of the
Indenture, redeem this Security in whole at any time or in part from time to
time at a Redemption Price equal to 100% of the principal amount hereof,
together, in the case of any such redemption, with accrued interest to but
excluding the Redemption Date fixed for redemption.
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Under limited circumstances, Employers Reinsurance Corporation may, at
its option and subject to the terms and conditions of Article XI of the
Indenture, require the Corporation to redeem this Security in whole, at a
Redemption Price as stated in Section 11.8 of the Indenture.
In addition, upon the occurrence and during the continuation of a Tax
Event in respect of the Issuer Trust, the Corporation may, at its option, at any
time within 90 days of the occurrence and during the continuation of such Tax
Event, redeem this Security, in whole but not in part, subject to the terms and
conditions of Article XI of the Indenture, at a Redemption Price equal to 100%
of the principal amount of the 7.0% Convertible Subordinated Deferrable Interest
Debentures so redeemed plus accrued and unpaid interest thereon to the date of
redemption.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Corporation with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Corporation and the Trustee at any time to enter into a supplemental indenture
or indentures for the purpose of modifying in any manner the rights and
obligations of the Corporation and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all Securities, to waive compliance by the Corporation with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to the Securities at the time Outstanding occurs
and is continuing, then and in every such case the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Outstanding Securities may
declare the principal amount of all the Outstanding Securities to be due and
payable immediately, by a notice in writing to the Corporation (and to the
Trustee if given by Holders), provided that, if upon an Event of Default, the
Trustee or such Holders fail to declare the principal of all the Outstanding
Securities to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount of the Capital Securities then Outstanding shall
have the right to make such declaration by a notice in writing to the
Corporation and the Trustee; and upon any such declaration the principal of and
the accrued interest on all the Securities shall become immediately due and
payable, provided that the
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payment of such principal and interest on such Securities shall remain
subordinated to the extent provided in Article XII of the Indenture.
Subject to the terms and conditions set forth in Article XIII of the
Indenture, this Security is convertible, at the option of the Holder, into
shares of Common Stock.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Corporation,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Corporation maintained under Section 10.2 of the
Indenture for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the
Securities Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities,
of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $10,000,000 and any integral multiple of $100,000 in excess
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Corporation may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Corporation, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Corporation and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
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SECTION 2.4. Restrictive Legends.
Restricted Securities shall bear the following legend (the
"Restricted Securities Legend") unless the Corporation determines otherwise in
accordance with applicable law:
"THE CONVERTIBLE SUBORDINATED DEFERRABLE INTEREST DEBENTURES
EVIDENCED HEREBY AND THE COMMON STOCK ISSUABLE UPON THEIR CONVERSION
HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT IN WHOLE OR IN PART (BUT IF IN PART, IN
AMOUNTS NOT LESS THAN $10,000,000 IN PRINCIPAL AMOUNT) AND ONLY IN
COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OR PURSUANT TO
AN APPLICABLE EXEMPTION THEREFROM."
SECTION 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities designated therein referred to in the
within-mentioned Indenture.
Dated: December 31, 1997
----------------------------
as Trustee
By:
Authorized Officer
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is $309,300,000, except for Securities
authenticated and delivered upon registration of, transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Sections 3.4, 3.5 or 3.6.
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SECTION 3.2. Denominations.
The Securities shall be in registered form without coupons and shall be
issuable in denominations of $10,000,000 and any integral multiple of $100,000
thereof.
SECTION 3.3. Execution, Authentication and Dating.
The Securities shall be executed on behalf of the Corporation by its
Chief Executive Officer, its President or one of its Senior Vice Presidents or
Vice Presidents and attested by its Corporate Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Corporation shall bind the
Corporation, 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 after the execution and delivery of this Indenture, the Corporation
may deliver Securities executed by the Corporation to the Trustee for
authentication, together with a Corporation Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Corporation
Order shall authenticate and deliver such Securities. Securities may be
authenticated on original issuance from time to time and delivered pursuant to
such procedures acceptable to the Trustee ("Procedures") as may be specified
from time to time by Corporation Order. Procedures may authorize authentication
and delivery pursuant to oral instructions of the Corporation or a duly
authorized agent, which instructions shall be promptly confirmed in writing.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Corporation, and the Corporation shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities, the Corporation may
execute, and upon Corporation Order the Trustee shall authenticate and deliver,
temporary Securities that are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any denomination,
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substantially of the tenor 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
evidenced by their execution of such Securities.
If temporary Securities are issued, the Corporation will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Corporation designated for that
purpose without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Corporation shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
Securities of any authorized denominations, of like tenor and aggregate
principal amount, bearing such restrictive legends as may be required by this
Indenture and bearing a number not contemporaneously outstanding. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 3.5. Registration, Transfer and Exchanges.
(a) Registration, Transfer and Exchange Generally. The Corporation
shall cause to be kept at the Corporate Trust Office of the Trustee a register
or registers (the "Securities Register") in which the registrar and transfer
agent with respect to the Securities (the "Securities Registrar"), subject to
such reasonable regulations as it may prescribe, shall provide for the
registration of Securities and of transfers and exchanges of Securities as
herein provided. The Trustee is hereby appointed Securities Registrar for the
purpose of registering Securities and transfers and exchanges of Securities as
herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Corporation designated for that purpose, the Corporation
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations, of like tenor and aggregate principal amount, bearing
such restrictive legends as may be required by this Indenture and bearing a
number not contemporaneously outstanding.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations, of like tenor and aggregate
principal amount, bearing such restrictive legends as may be required by this
Indenture and bearing a number not contemporaneously outstanding, upon surrender
of the Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Corporation shall execute, and
the Trustee shall authenticate and deliver, the Securities that the Holder
making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall
be the valid obligations of the Corporation, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
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Neither the Corporation, the Trustee nor the Securities Registrar shall
be required, pursuant to the provisions of this Section 3.5, (i) to issue,
register the transfer of or exchange any Security during a period beginning at
the opening of business 15 days before the day of selection for redemption of
Securities pursuant to Article XI and ending at the close of business on the day
of mailing of the notice of redemption, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except, in
the case of any such Security to be redeemed in part, any portion thereof not to
be redeemed.
Every Security presented or surrendered for registration of transfer or
exchange shall (if so required by the Corporation or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Corporation and the Securities Registrar, duly executed by
the Holder thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities, but the Corporation may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Securities.
(b) Registration, Transfer, and Exchange. A Security may be
transferred, in whole or in part, to a Person who takes delivery in the form of
another Security, provided that the following provisions are met. When
Securities are presented to the Securities Registrar with a request: (1) to
register the transfer of such Securities; or (2) to exchange such Securities for
Securities in an equal aggregate principal amount of Securities of other
authorized denominations, the Securities Registrar shall register the transfer
or make the exchange as requested if the requirements for such transaction are
met; provided, however, that the Securities surrendered for transfer or
exchange:
(A) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory
to the Trustee and the Securities Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing,
delivered to the Corporation at least 30 Business Days before
such intended transfer, and the Corporation shall not have
delivered a written notice of objection to the Holder within 5
Business Days prior to the intended transfer, which notice of
objection shall state whether the Corporation is objecting
pursuant to subsection (D) or (E) below;
(B) in the case of Restricted Securities, are being
transferred in compliance with the requirements of the
Securities Act or pursuant to an applicable exemption
therefrom and are accompanied by the following additional
information and documents: a Restricted Security Certificate,
satisfactory to the Trustee and duly executed by the
transferor Holder or his attorney duly authorized in writing,
in the form attached hereto as Exhibit A (a "Restricted
Securities Transfer Certificate") and an Opinion of Counsel
reasonably acceptable to the Corporation and to the Securities
Registrar to the effect that such transfer is in
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compliance with the Securities Act, in which case the
transferee Holder shall take delivery in the form of a
Restricted Security, subject to Section 3.5(c);
(C) shall be accompanied by a statement that such
transferee agrees in writing to be bound by the terms and
provisions of the Trust Agreement and the Purchase Agreement;
(D) shall be subject to the right of the Corporation
to veto the Holder's choice of such Person to whom the
proposed transfer or disposition is to occur by giving notice
of such objection to the Holder as described in (A) above; and
(E) shall, pursuant to Section 4.2(a)(iii) of the
Trust Agreement, be subject to the right of the Corporation to
cause the Issuer Trust to redeem at a Redemption Price stated
in Section 11.7, the Security or Securities surrendered for
transfer or exchange by giving notice of such objection to the
Holder as described in (A) above.
(c) Securities Act Legends. Except as set forth below, all
Securities or a new Security that is issued in exchange for another Security or
any portion thereof, upon transfer or otherwise, shall bear a Restricted
Securities Legend:
(i) At any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject
to transfer restrictions pursuant to the Securities Act, a new Security
which does not bear a Securities Act Legend may be issued in exchange
for or in lieu of a Security or any portion thereof which bears such a
legend if the Corporation has received from the Holder an Opinion of
Counsel as described in subsection (vi) below and if the Trustee has
received an Unrestricted Securities Transfer Certificate in the form of
Exhibit B hereto (an "Unrestricted Securities Transfer Certificate"),
satisfactory to the Trustee and duly executed by the Holder of such
legended Security or his attorney duly authorized in writing, and after
such date and receipt of such certificate, the Trustee shall
authenticate and deliver such a new Security in exchange for or in lieu
of such other Security as provided in this section;
(ii) a new Security that does not bear a Restricted Securities
Legend may be issued in exchange for or in lieu of a Restricted
Security or any portion thereof that bears such a legend if, after the
receipt by the Corporation of an Opinion of Counsel as described in
subsection (vi) below, in the Corporation's sole judgment, placing such
a legend upon such new Security is not and will not be necessary to
ensure compliance with the registration requirements of the Securities
Act, and the Trustee, at the written direction of the Corporation in
the form of an Officers' Certificate, shall authenticate and deliver
such a new Security as provided in this section;
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(iii) Securities distributed to a holder of Capital Securities
upon dissolution of the Issuer Trust shall bear a Restricted Securities
Legend if the Capital Securities so held bear a similar legend; and
(iv) The Holder agrees that it will not effect the proposed
transfer or disposition of the Security until such Holder has provided
to the Corporation an Opinion of Counsel satisfactory in form and
substance to the Corporation that such proposed disposition or transfer
is exempt from registration under the Securities Act and any applicable
state securities laws. The Corporation shall use its best efforts to
comply with any state securities laws, but shall in no event be
required, in connection therewith, to qualify to do business in any
state where it is not then qualified or to take any action that would
subject it to tax or to the general service of process in any state
where it is not then subject.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Corporation or the Trustee
to save each of them harmless, the Corporation shall execute and the Trustee
shall authenticate and deliver in exchange therefor a new Security, of like
tenor and aggregate principal amount, bearing the same legends, and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Corporation and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Corporation or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Corporation shall execute and upon its request the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security, of like tenor and aggregate principal amount, bearing the same legends
as such destroyed, lost or stolen Security, and bearing a number not
contemporaneously outstanding.
If any such mutilated, destroyed, lost or stolen Security has become or
is about to become due and payable, the Corporation in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.6, the
Corporation may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Corporation, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall
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be entitled to the same benefits of this Indenture equally and proportionately
with any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 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.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security that 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 for such interest in respect
of such Securities, except that, unless otherwise provided in the Securities,
interest payable on the Stated Maturity of the principal of a Security shall be
paid to the Person to whom principal is paid. The initial payment of interest on
any Security that is issued between a Regular Record Date and the related
Interest Payment Date shall be payable as provided in such Security.
Any interest on any Security that is due and payable, but is not timely
paid or duly provided for, on any Interest Payment Date for Securities (herein
called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Corporation, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Corporation may elect to make payment of any Defaulted
Interest to the Persons in whose names the 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 Corporation
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Corporation shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as provided
in this Clause (1). 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 Corporation of such Special Record Date and, in the
name and at the expense of the Corporation, 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 a
Security at the address of such Holder as it appears in the Securities
Register not less than 10 days prior to such Special Record Date. The
Trustee may, in its discretion, in the name and at the expense
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of the Corporation, cause a similar notice to be published at least
once in a newspaper, customarily published in the English language on
each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, but such publication shall not be a
condition precedent to the establishment of such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered
on such Special Record Date and shall no longer be payable pursuant to
the following Clause (2).
(2) The Corporation may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities in respect of which
interest is in default may be listed and, upon such notice as may be
required by such exchange (or by the Trustee if the Securities are not
listed), if, after notice given by the Corporation to the Trustee of
the proposed payment pursuant to this Clause (2), such payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.7, each Security
delivered under this Indenture upon 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, that were carried by such other Security.
SECTION 3.8. Persons Deemed Owners.
The Corporation, the Trustee and any agent of the Corporation or the
Trustee shall treat the Person in whose name any Security is registered as the
owner of such Security for the purpose of receiving payment of principal of and
(subject to Section 3.7) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Corporation, the Trustee nor any agent of the Corporation or the Trustee shall
be affected by notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities and Securities surrendered
directly to the Trustee for any such purpose shall be promptly canceled by it.
The Corporation may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder that the Corporation
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section 3.9, except as expressly permitted by this Indenture. All canceled
Securities shall be destroyed by the Trustee and the Trustee shall deliver to
the Corporation a certificate of such destruction.
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SECTION 3.10. Computation of Interest.
Interest on the Securities for any partial period shall be computed on
the basis of a 360- day year of twelve 30-day months and the actual number of
days elapsed in any partial month in such period, and interest on the Securities
for a full period shall be computed by dividing the rate per annum by the number
of interest periods that together constitute a full twelve months.
SECTION 3.11. Deferrals of Interest Payment Dates.
So long as no Event of Default has occurred and is continuing, the
Corporation shall have the right, at any time during the term, from time to time
to defer the payment of interest on such Securities for up to ten consecutive
semi-annual interest payment periods with respect to each such deferral period
(each, an "Extension Period"), during which Extension Periods the Corporation
shall have the right to make partial payments of interest on any Interest
Payment Date. No Extension Period shall end on a date other than an Interest
Payment Date. At the end of any such Extension Period the Corporation shall pay
all interest then accrued and unpaid on the Securities; provided, however, that
no Extension Period shall extend beyond the Stated Maturity of the principal of
the Securities; and provided further, however that during any such Extension
Period, the Corporation 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 Corporation's capital stock, or (ii) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation that rank pari passu in all
respects with or junior in interest to the Securities or make any guarantee
payments with respect to any guarantee by the Corporation of the debt securities
of any Subsidiary of the Corporation if such guarantee ranks pari passu with or
junior in interest to the Securities (other than (a) dividends or distributions
of Common Stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of Common Stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guarantee
Agreement and (d) purchases of Common Stock related to the issuance of Common
Stock or rights under any of the Corporation's or any Subsidiary of the
Corporation's benefit plans for their directors, officers or employees. Prior to
the termination of any such Extension Period, the Corporation may further defer
the payment of interest, provided that no Event of Default has occurred and is
continuing, and provided further that no Extension Period shall exceed the
period or periods specified in such Securities, extend beyond the Stated
Maturity of the principal of such Securities or end on a date other than an
Interest Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest then due on any Interest
Payment Date, the Corporation may elect to begin a new Extension Period, subject
to the above conditions. The Corporation shall give the Holders of the
Securities and the Trustee notice of its election to begin any such Extension
Period at least one Business Day prior to the next succeeding Interest Payment
Date on which interest on Securities would be payable but for such deferral or
so long as any such Securities are held by such Issuer Trust, at least one
Business Day prior to the earlier of (i) the next succeeding date on which
Distributions on the Capital Securities of such Issuer Trust would be payable
but for such deferral, and (ii) the date
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on which the Property Trustee of such Issuer Trust is required to give notice to
holders of such Capital Securities of the record date or the date such
Distributions are payable.
The Trustee shall promptly give notice of the Corporation's election to
begin any such Extension Period to the Holders of the Outstanding Securities.
SECTION 3.12. Right of Set-Off.
Notwithstanding anything to the contrary herein, the Corporation shall
have the right to set off any payment it is otherwise required to make in
respect of any such Security to the extent the Corporation has theretofore made,
or is concurrently on the date of such payment making, a payment under the
Guarantee Agreement relating to such Security or to a holder of Capital
Securities pursuant to an action undertaken under Section 5.8 of this Indenture.
SECTION 3.13. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Corporation and,
by its acceptance of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a beneficial interest in, such Security agree that
for United States federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
SECTION 3.14. Shortening of Stated Maturity.
If specified or as contemplated by Section 2.1, the Corporation shall
have the right to shorten the Stated Maturity of the principal of the Securities
at any time to any date.
SECTION 3.15. CUSIP Numbers.
The Corporation in issuing the Securities may (but is not required to)
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption and other similar or related
materials as a convenience to Holders; provided that any such notice or other
materials may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of
redemption or other materials 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.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
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This Indenture shall, upon Corporation Request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and as otherwise provided
in this Section 4.1) and the Trustee, on demand of and at the expense of the
Corporation, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A)(1) all Securities theretofore authenticated and
delivered (other than (i) Securities that have been destroyed,
lost or stolen and that have been replaced or paid as provided
in Section 3.6 and (ii) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Corporation and thereafter repaid to the
Corporation or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities 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 of the date of
deposit, or
(iii) 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
Corporation, or
(iv) are tendered for conversion pursuant to
Section 13.2,
and the Corporation, in the case of subclause (B)(i), (ii) or (iii)
above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount in the currency or
currencies in which the Securities are payable sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest to the date of such deposit (in the case of
Securities that have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Corporation has paid or caused to be paid all other sums
payable hereunder by the Corporation; and
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(3) the Corporation has 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 have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Corporation to the Trustee under Section 6.7, the obligations
of the Trustee 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 4.1, the obligations of the Trustee under Section 4.2 and
the last paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by the Trustee, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Corporation acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the
Securities, means any one of the following events (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 judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of 30 days (subject to the deferral of any due date in respect
of any interest in the case of an Extension Period); or
(2) default in the payment of the principal of (or premium, if
any, on) any Security at its Maturity; or
(3) failure on the part of the Corporation duly to observe or
perform in any material respects any other of the covenants or
agreements on the part of the Corporation in the Securities or in this
Indenture for a period of 90 days after the date on which
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written notice of such failure, requiring the Corporation to remedy the
same and stating that such notice is a "Notice of Default" shall have
been given by registered or certified mail to the Corporation by the
Trustee or to the Corporation and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Outstanding Securities;
or
(4) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Corporation a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization of the Corporation under the Bankruptcy Code or any
other similar applicable Federal or State law, which decree or order
shall have continued undischarged and unstayed for a period of 60 days;
or the entry of 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 Corporation or of its
property, or for the winding up or liquidation of its affairs, which
decree or order shall have continued undischarged and unstayed for a
period of 60 days; or
(5) the commencement by the Corporation of voluntary
proceedings to be adjudicated a bankrupt, or the consent by the
Corporation to the filing of a bankruptcy proceeding against it, or the
filing by the Corporation of a petition or answer or consent seeking
reorganization under the Bankruptcy Code or any other similar Federal
or State law, or the consent by the Corporation to the filing of any
such petition, or the consent by the Corporation to the appointment of
a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property, or the making by the Corporation
of an assignment for the benefit of creditors, or the admission by the
Corporation in writing of its inability to pay its debts generally as
they become due; or
(6) any other Event of Default provided with respect to
Securities.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(4) or 5.1(5)) with respect to Securities at the time Outstanding
occurs and is continuing, then and in every such case the Trustee or the Holders
of not less than 25% in aggregate principal amount of the Outstanding Securities
may declare the principal amount of all the Securities to be due and payable
immediately, by a notice in writing to the Corporation (and to the Trustee if
given by Holders), provided that, if, upon an Event of Default, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities fail to declare the principal of all the Outstanding Securities (or
specified portion thereof) to be immediately due and payable, the holders of at
least 25% in aggregate Liquidation Amount (as defined in the related Trust
Agreement) of Capital Securities issued by such Issuer Trust then outstanding
shall have the right to make such declaration by a notice in writing to the
Corporation and the Trustee; and upon any such declaration such principal amount
(or specified portion thereof) of and the accrued interest on all the Securities
shall become immediately due and payable. If an Event of Default specified in
Section 5.1(4) or 5.1(5) with respect to Securities at the time Outstanding
occurs, the principal amount of all the Securities and the accrued interest on
all the Securities shall
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automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable. Payment of principal
(and premium, if any) and interest on such Securities shall remain subordinated
to the extent provided in Article XII notwithstanding that such amount shall
become immediately due and payable as herein provided.
At any time after such a declaration of acceleration with respect to
Securities has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article V
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Securities, by written notice to the Corporation and the Trustee,
may rescind and annul such declaration and its consequences if:
(1) the Corporation has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue installments of interest on all Securities,
(B) the principal of (and premium, if any, on) any
Securities that have become due otherwise than by such
declaration of acceleration, and
(C) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities, other than
the non-payment of the principal of Securities that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.13.
If the Holders of the Securities fail to annul such declaration and
waive such default, the holders of a Majority in Liquidation Amount of the
Capital Securities (as defined in the related Trust Agreement) issued by such
Issuer Trust shall also have the right to rescind and annul such declaration and
its consequences by written notice to the Corporation and the Trustee, subject
to the satisfaction of the conditions set forth in Clauses (1) and (2) above of
this Section 5.2.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Corporation covenants that if:
(1) default is made in the payment of any installment of
interest on any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
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(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Corporation will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal (and premium, if any), including any sinking
fund payment or analogous obligations, and interest, and, in addition thereto,
all amounts owing to the Trustee under Section 6.7.
If the Corporation fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Corporation or any other obligor upon such
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Corporation or any other
obligor upon the Securities, wherever situated.
If an Event of Default with respect to Securities 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 by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Corporation or any other obligor upon the Securities
or the property of the Corporation or of such other obligor or their creditors,
(a) the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Corporation for the payment of overdue
principal (or premium, if any) or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid
in respect of the Securities and to file such other papers or
documents as may be necessary or advisable and to take any and
all actions as are authorized under the Trust Indenture Act in
order to have the claims of the Holders and any predecessor to
the Trustee under Section 6.7 allowed in any such judicial
proceedings; and
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(2) 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 in
accordance with Section 5.6; and
(b) 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 for distribution in accordance with Section 5.6, and in the
event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it and
any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder 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 5.5. Trustee May Enforce Claim Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, subject to
Article XII and after provision for the payment of all the amounts owing the
Trustee and any predecessor Trustee under Section 6.7, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to Securities pursuant to this Article V shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money or property on account of principal (or premium, if
any) or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7;
SECOND: Subject to Article XII, to the payment of the amounts
then due and unpaid upon Securities of principal (and premium, if any)
and interest in respect of which or for the benefit of which such
money has been collected, ratably, without preference
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or priority of any kind, according to the amounts due and payable on
such Securities for principal (and premium, if any) and interest,
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver, assignee, trustee, liquidator or
sequestrator (or other similar official) or for any other remedy hereunder,
unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Securities;
(2) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of Capital Securities.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Sections 3.7 and 3.11) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such right
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shall not be impaired without the consent of such Holder. Any registered holder
of Capital Securities shall have the right, upon the occurrence of an Event of
Default described in Section 5.1(1) or 5.1(2), to institute a suit directly
against the Corporation for enforcement of payment to such holder of principal
of (premium, if any) and (subject to Sections 3.7 and 3.11) interest on the
Securities having a principal amount equal to the aggregate Liquidation Amount
(as defined in the related Trust Agreement) of such Capital Securities held by
such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Capital Securities issued
by any Issuer Trust 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, such Holder or such
holder of Capital Securities, then and in every such case the Corporation, the
Trustee, such Holders and such holder of Capital Securities shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and such holder of Capital Securities shall continue as
though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.6, 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 right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Capital Security to exercise any right or remedy accruing upon any
Event of Default with respect to the Securities shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein.
Every right and remedy given by this Article V or by law to the Trustee
or to the Holders and the right and remedy given to the holders of Capital
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Capital
Securities, as the case may be.
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SECTION 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee, with respect to the
Securities, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the proceeding
so directed would be unjustly prejudicial to the Holders not joining in any
such direction or would involve the Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities affected thereby and, the holders of a Majority in
Liquidation Amount of the Capital Securities (as defined in the related Trust
Agreement) issued by such Issuer Trust may waive any past default or Event of
Default hereunder and its consequences with respect to such Securities except a
default:
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (unless such default has been cured and the
Corporation has paid to or deposited with the Trustee a sum sufficient
to pay all matured installments of interest and all principal of (and
premium, if any, on) all Securities due otherwise than by
acceleration), or
(2) in respect of a covenant or provision hereof that under
Article IX cannot be modified or amended without the consent of each
Holder of any Outstanding Security affected.
Any such waiver shall be deemed to be on behalf of the Holders of all
the Securities and in the case of a waiver by holders of Capital Securities
issued by the Issuer Trust, by the holders of all the Capital Securities issued
by such Issuer Trust.
Upon any such waiver, such default or Event of Default shall cease to
exist, and any default or Event of Default arising therefrom shall be deemed to
have been cured, for every
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purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security,
by its acceptance thereof, shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.14 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder or group of Holders holding in the
aggregate more than 10% in aggregate principal amount of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security on
or after the respective Stated Maturities expressed in such Security.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Corporation 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 Corporation (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
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certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions that by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Indenture.
(b) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct except that:
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section 6.1;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of Holders pursuant to Section 5.12 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to the Securities.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) 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 6.1.
SECTION 6.2. Notice of Defaults.
Within 30 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities, the Trustee shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Securities Register, notice of such
default, unless such default shall have been cured or waived; provided, however,
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that, except in the case of a default in the payment of the principal of (or
premium, if any) or interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of Securities; and provided further, however, that, in
the case of any default of the character specified in Section 5.1(3), no such
notice to Holders of Securities shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section 6.2, the term "default"
means any event that is, or after notice or lapse of time or both would become,
an Event of Default with respect to Securities.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security 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 Corporation mentioned herein shall
be sufficiently evidenced by a Corporation Request or Corporation Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee 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 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 that might be incurred by it in complying with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit; and
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Corporation, and neither the Trustee nor any Authenticating Agent assumes
any responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Corporation of the Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Corporation, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Corporation with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent,
Securities Registrar or such other agent.
SECTION 6.6. 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 (including the Trust
Indenture Act). The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Corporation.
SECTION 6.7. Compensation and Reimbursement.
The Corporation agrees:
(1) to pay to the Trustee from time to time such reasonable
compensation for all services rendered by it hereunder in such amounts
as the Corporation and the Trustee shall agree from time to time (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
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(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel) incurred without negligence, wilful misconduct or bad faith,
arising out of or in connection with the acceptance or administration
of this trust or the performance 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. This indemnification shall survive the termination of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or 5.1(5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Code.
SECTION 6.8. Disqualification; Conflicting Interests.
(a) The Trustee for the Securities shall be subject to the provisions
of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the
Trustee from filing with the Commission the application referred to in the
second to last paragraph of said Section 310(b).
(b) The Trust Agreement and the Guarantee Agreement with respect to
each Issuer Trust shall be deemed to be specifically described in this Indenture
for the purposes of clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act.
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be:
(a) a corporation organized and doing business under the laws
of the United States of America or of any State or Territory thereof or
the District of Columbia, authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority, or
(b) a corporation or other Person organized and doing business
under the laws of a foreign government that is permitted to act as
Trustee pursuant to a rule, regulation or order of the Commission,
authorized under such laws to exercise corporate trust powers, and
subject to supervision or examination by authority of such foreign
government or a political subdivision thereof substantially equivalent
to supervision or examination applicable to United States institutional
trustees,
in either case having at the time of appointment securities rated in one of the
three highest rating categories by a nationally recognized statistical rating
organization and a combined capital and surplus of at least $50,000,000. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section 6.9 and to the extent permitted by the Trust
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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. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.9, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article VI. Neither the Corporation nor any Person directly or indirectly
controlling, controlled by or under common control with the Corporation shall
serve as Trustee for the Securities.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VI shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities
by giving written notice thereof to the Corporation. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee with respect to the Securities.
(c) The Trustee may be removed at any time with respect to the
Securities by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities, delivered to the Trustee and to the Corporation.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Corporation or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and shall
fail to resign after written request therefor by the Corporation or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Corporation, acting pursuant to the authority of
a Board Resolution, may remove the Trustee with respect to the Securities, or
(ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of such Holder and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to the Securities and the appointment of a successor
Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities, the Corporation, by a Board Resolution, shall
promptly appoint a successor Trustee with respect to the Securities. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities shall be
appointed by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities delivered to the Corporation and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee with respect to the Securities
and supersede the successor Trustee appointed by the Corporation. If no
successor Trustee with respect to the Securities shall have been so appointed by
the Corporation or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Security
for at least six months may, subject to Section 5.14, on behalf of such Holder
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the Securities.
(f) The Corporation shall give notice of each resignation and each
removal of the Trustee with respect to the Securities and each appointment of a
successor Trustee with respect to the Securities by mailing written notice of
such event by first-class mail, postage prepaid, to the Holders of Securities as
their names and addresses appear in the Securities Register. Each notice shall
include the name of the successor Trustee with respect to the Securities and the
address of its Corporate Trust Office.
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 so appointed shall
execute, acknowledge and deliver to the Corporation and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Corporation 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, the Corporation, the retiring Trustee and each
successor Trustee with respect to the Securities shall execute and deliver an
indenture supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities, (2) 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 of the
retiring Trustee with respect to the Securities, and (3) shall add to or change
any of the
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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 any other 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; but, on request of the
Corporation 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.
(c) Upon request of any such successor Trustee, the Corporation shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in paragraph (a) or (b) of this Section 6.11, 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 this Article VI.
SECTION 6.12. 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 of the corporate trust
business of the Trustee, shall be the successor Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article VI,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. If 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, and if any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Corporation.
If and when the Trustee shall be or become a creditor of the
Corporation (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection of
claims against the Corporation (or any such other obligor).
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SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to the Securities, which shall be authorized to act on behalf of the Trustee to
authenticate the Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.5, 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. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or to 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
or the Authenticating Agent's certificate of authentication set forth for this
Section 6.14. Each Authenticating Agent shall be acceptable to the Corporation
and shall at all times be a corporation organized and doing business under the
laws of the United States of America or of any State or Territory thereof 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, State, Territorial or District of
Columbia authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 6.14
and to the extent permitted by the Trust Indenture Act, 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. If
at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 6.14, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 6.14.
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 all or substantially all of
the corporate trust business of an Authenticating Agent, shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
qualified and eligible under this Section 6.14, without the execution or filing
of any paper or any further act on the part of the Trustee or the Authenticating
Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Corporation. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Corporation. 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 6.14, the Trustee may appoint a successor
Authenticating Agent, which shall be acceptable to the Corporation and shall
give notice of such appointment in the manner provided in Section 1.6 to all
Holders of Securities with respect to which such Authenticating Agent will
serve. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor
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hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provision of this Section 6.14.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.14, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment is made pursuant to this Section 6.14, the Securities
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities designated therein referred to in the
within mentioned Indenture.
Dated: ___________________ -------------------
as Trustee
By: ------------------
As Authenticating Agent
By:-------------------
Authorized Officer
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND CORPORATION
SECTION 7.1. Corporation to Furnish Trustee Names and Addresses of Holders.
The Corporation will furnish or cause to be furnished to the Trustee:
(a) semi-annually, on or before January 1 or July 1 of each
year, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Holders as of a date not more than 15
days prior to the delivery thereof, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Corporation of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished,
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in each case to the extent such information is in the possession or control of
the Corporation and has not otherwise been received by the Trustee in its
capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by its acceptance thereof, agrees with
the Corporation and the Trustee that neither the Corporation nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted no later than July 15 in each calendar
year, commencing with the first July 15 after the first issuance of Securities
under this Indenture.
(c) If this Indenture shall have been qualified under the Trust
Indenture Act, a copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each securities exchange
upon which any Securities are listed and also with the Commission. The
Corporation will notify the Trustee when any Securities are listed on any
securities exchange.
SECTION 7.4. Reports by Corporation.
The Corporation shall file with the Trustee and with the Commission,
and transmit to the Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided in the Trust Indenture Act; provided
that any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be
filed with the Trustee within 15 days after the same is required to be filed
with the Commission. At any time when the Corporation is not subject to Section
13 or 15(d) of the Exchange Act,
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upon the request of a Holder or beneficial owner of a Security, the Corporation
shall continue to file with the Commission and provide the Trustee and Holders
with the annual reports and the information, documents and other reports which
are specified in Sections 13 and 15(d) of the Exchange Act. The Corporation also
shall comply with the other provisions of Trust Indenture Act Section 314(a),
provided, however, that the Corporation shall be required, pursuant to this
Section 7.4, to provide any document, report or other information to the
Commission only if this Indenture shall have been qualified under the Trust
Indenture Act.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Corporation May Consolidate, Etc., Only on Certain Terms.
The Corporation shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and no Person shall consolidate with or merge into
the Corporation or convey, transfer or lease its properties and assets
substantially as an entirety to the Corporation, unless:
(1) if the Corporation shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the corporation formed by
such consolidation or into which the Corporation is merged or the
Person that acquires by conveyance or transfer, or that leases, the
properties and assets of the Corporation substantially as an entirety
shall be a corporation, partnership or trust organized and existing
under the laws of the United States of America or any State thereof or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities
and the performance of every covenant of this Indenture on the part of
the Corporation to be performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event that, after notice or lapse of time, or
both, would constitute an Event of Default, shall have occurred and be
continuing; and
(3) the Corporation has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any such
supplemental indenture comply with this Article VIII and that all
conditions precedent herein provided for relating to such transaction
have been complied with; and the Trustee, subject to Section 6.1, may
rely upon such Officers' Certificate and Opinion of Counsel as
conclusive evidence that such transaction complies with this Section
8.1.
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SECTION 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Corporation with or into any
other Person, or any conveyance, transfer or lease by the Corporation of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1, the successor corporation formed by such consolidation or into
which the Corporation is merged or to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Corporation under this Indenture with the same effect as if
such successor Person had been named as the Corporation herein; and in the event
of any such conveyance, transfer or lease, the Corporation shall be discharged
from all obligations and covenants under this Indenture and the Securities.
Such successor Person may cause to be executed, and may issue either in
its own name or in the name of the Corporation, any or all of the Securities
issuable hereunder that theretofore shall not have been signed by the
Corporation and delivered to the Trustee; and, upon the order of such successor
Person instead of the Corporation and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities that previously shall have been signed and
delivered by the officers of the Corporation to the Trustee for authentication
pursuant to such provisions and any Securities that such successor Person
thereafter shall cause to be executed and delivered to the Trustee on its behalf
for the purpose pursuant to such provisions. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture.
In case of any such consolidation, merger, conveyance, transfer or
lease, such changes in phraseology and form may be made in the Securities
thereafter to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Corporation, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Corporation, and the assumption by any such successor of the covenants
of the Corporation contained herein and in the Securities contained; or
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(2) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee or to surrender any right or power
herein conferred upon the Corporation; or
(3) to add to the covenants of the Corporation for the
benefit of the Holders of Securities; or
(4) to add any additional Events of Default for the benefit of
the Holders of Securities; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall (a)
become effective only when there is no Security Outstanding created
prior to the execution of such supplemental indenture that is entitled
to the benefit of such provision or (b) not apply to any Outstanding
Securities; or
(6) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided that such
action pursuant to this clause (6) shall not adversely affect the
interest of the Holders of Securities in any material respect or for so
long Capital Securities issued by the Issuer Trust shall remain
outstanding, the holders of such Capital Securities; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities 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(b); or
(8) to comply with the requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the
Trust Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Corporation and the Trustee, the Corporation, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment
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where, or the coin or currency in which, any Security or interest
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), or
(2) reduce the percentage in aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section 9.2, Section
5.13 or Section 10.5, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Security
affected thereby;
provided further, however, that, so long as Capital Securities remain
outstanding, (i) no such amendment shall be made that adversely affects the
holders of such Capital Securities in any material respect, and no termination
of this Indenture shall occur, and no waiver of any Event of Default or
compliance with any covenant under this Indenture shall be effective, without
the prior consent of the holders of at least a Majority in Liquidation Amount of
such Capital Securities (as defined in the related Trust Agreement) unless and
until the principal of (and premium, if any, on) the Securities and all accrued
and (subject to Section 3.11) unpaid interest thereon have been paid in full,
and (ii) no amendment shall be made to Section 5.8 of this Indenture that would
impair the rights of the holders of Capital Securities issued by the Issuer
Trust provided therein without the prior consent of the holders of each such
Capital Security then outstanding unless and until the principal of (and
premium, if any, on) the Securities and all accrued and (subject to Section
3.11) unpaid interest thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture that has expressly been included solely for
the benefit of the Securities or any Capital Securities of the Issuer Trust that
holds the Securities, or that modifies the rights of the Holders of Securities
or holders of such Capital Securities with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities or holders of Capital Securities.
It shall not be necessary for any Act of Holders under this Section 9.2
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
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SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent herein provided for relating to such action have
been complied with. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article IX,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and shall if required by
the Corporation, bear a notation in form approved by the Corporation as to any
matter provided for in such supplemental indenture. If the Corporation shall so
determine, new Securities so modified as to conform, in the opinion of the
Corporation, to any such supplemental indenture may be prepared and executed by
the Corporation and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Corporation covenants and agrees for the benefit of the Securities
that it will duly and punctually pay the principal of (and premium, if any) and
interest on the Securities in accordance with the terms of such Securities and
this Indenture.
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SECTION 10.2. Maintenance of Office or Agency.
The Corporation will maintain in each Place of Payment for the
Securities an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Corporation in respect of
the Securities and this Indenture may be served. The Corporation initially
appoints the Trustee, acting through its Corporate Trust Office, as its agent
for said purposes. The Corporation will give prompt written notice to the
Trustee of any change in the location of any such office or agency. If at any
time the Corporation shall fail to maintain such 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 Corporation hereby appoints the Trustee as its agent to receive
all such presentations, surrenders, notices and demands.
The Corporation may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all of 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 Corporation of its obligation to maintain an office or agency in
each Place of Payment for Securities for such purposes. The Corporation will
give prompt written notice to the Trustee of any such designation and any change
in the location of any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Corporation shall at any time act as its own Paying Agent with
respect to the Securities, it will, on or before each due date of the principal
of (or premium, if any) or interest on any of the Securities, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (or 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 of its failure so to act.
Whenever the Corporation shall have one or more Paying Agents, it will,
prior to 10:00 a.m., New York City time, on each due date of the principal of
(or premium, if any) or interest on any Securities, deposit with a Paying Agent
a sum sufficient to pay the amount so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such amount, and (unless such Paying
Agent is the Trustee) the Corporation will promptly notify the Trustee of its
failure so to act.
The Corporation will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 10.3,
that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) and interest on the Securities in trust for
the benefit of the Persons entitled thereto
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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 Corporation
(or any other obligor upon such Securities) in the making of any
payment of principal (or premium, if any) or interest in respect of any
Security;
(3) at any time during the continuance of any default with
respect to the Securities, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such Paying
Agent; and
(4) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent.
The Corporation may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Corporation Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Corporation or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the
Corporation 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 Corporation in trust for the payment of the principal of (or premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (or premium, if any) or interest has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Corporation Request to the
Corporation, or (if then held by the Corporation) shall (unless otherwise
required by mandatory provision of applicable escheat or abandoned or unclaimed
property law) be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Corporation
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Corporation 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 Corporation 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 Borough of Manhattan, The City of New York, notice
that such money remains unclaimed and that, after a date specified therein,
which 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
Corporation.
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SECTION 10.4. Statement as to Compliance.
The Corporation shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Corporation ending after the date hereof, an
Officers' Certificate covering the preceding calendar year, stating whether or
not to the best knowledge of the signers thereof the Corporation 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
Corporation shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge. For the purpose of this Section
10.4, compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Capital Securities specified in
Section 9.2, if any, the Corporation may omit in any particular instance to
comply with any covenant or condition provided pursuant to Section 9.1(3) or
9.1(4) with respect to the Securities, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Corporation in respect of any such
covenant or condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
So long as no Event of Default has occurred and is continuing and
except as otherwise specified or as contemplated by Section 2.1, if (i) the
Issuer Trust is the Holder of all of the Outstanding Securities, and (ii) a Tax
Event has occurred and is continuing in respect of such Issuer Trust, the
Corporation shall pay to such Issuer Trust (or its permitted successor under the
related Trust Agreement) for so long as such Issuer Trust (or its permitted
successor) is the registered holder of the Outstanding Securities, together with
any payment of principal of (or premium, if any) or interest on such Securities,
such additional sums as may be necessary in order that the amount of
Distributions then payable by such Issuer Trust in respect of the related
Capital Securities and Common Securities in accordance with the terms thereof
shall not be reduced as a result of any Additional Taxes arising from such Tax
Event (the "Additional Sums"). Whenever in this Indenture or the Securities
there is a reference in any context to the payment of principal of (or premium,
if any) or interest on the Securities, such mention shall be deemed to include
mention of the payments of the Additional Sums provided for in this paragraph to
the extent that, in such context, Additional Sums are, were or would be payable
in respect thereof pursuant to the provisions of this paragraph, and any express
mention of the payment of Additional Sums (if applicable) in any provision
hereof shall not be construed as excluding Additional Sums in those provisions
hereof where such express mention is not made; provided, however, that the
deferral of the payment of interest pursuant to Section 3.11 or the
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terms of the Securities shall not defer the payment of any Additional Sums that
may be due and payable.
SECTION 10.7. Additional Covenants.
The Corporation covenants and agrees with each Holder of Securities
that it shall not, and it shall not permit any Subsidiary of the Corporation to,
(x) declare or pay any dividends or distributions on, or redeem purchase,
acquire or make a liquidation payment with respect to, any shares of the
Corporation's capital stock, or (y) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Corporation that rank pari passu in all respects with or junior in interest to
the Securities or make any guarantee payments with respect to any guarantee by
the Corporation of the debt securities of any Subsidiary of the Corporation if
such guarantee ranks pari passu with or junior in interest to the Securities
(other than (a) dividends or distributions in common stock of the Corporation,
(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 Guarantee Agreement and (d) purchases of common stock related
to the issuance of common stock or rights under any of the Corporation's or any
Subsidiary of the Corporation's benefit plans for their directors, officers or
employees if at such time (i) there shall have occurred any event of which the
Corporation has actual knowledge that (A) with the giving of notice or the lapse
of time, or both, would constitute an Event of Default and (B) in respect of
which the Corporation shall not have taken reasonable steps to cure, (ii) the
Corporation shall be in default with respect to its payment of any obligations
under the Guarantee Agreement relating to the Capital Securities issued by such
Issuer Trust, or (iii) the Corporation shall have given notice of its selection
of an Extension Period with respect to the Securities as provided herein and
shall not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
The Corporation also covenants with each Holder of Securities issued to
the Issuer Trust (i) to hold, directly or indirectly, 100% of the Common
Securities of such Issuer Trust, provided that any permitted successor of the
Corporation hereunder may succeed to the Corporation's ownership of such Common
Securities, (ii) as holder of such Common Securities, not to voluntarily
terminate, wind-up or liquidate such Issuer Trust, other than (a) in connection
with a distribution of the Securities to the holders of the related Capital
Securities in liquidation of such Issuer Trust, or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the related Trust
Agreement, and (iii) to use its reasonable efforts, consistent with the terms
and provisions of such Trust Agreement, to cause such Issuer Trust to continue
to be classified as a grantor trust and not to be taxable as a corporation for
United States federal income tax purposes.
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ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article.
Redemption of Securities as permitted or required by any form of
Security issued pursuant to this Indenture shall be made in accordance with such
form of Security and this Article XI; provided, however, that if any provision
of any such form of Security shall conflict with any provision of this Article
XI, the provision of such form of Security shall govern. Each Security shall be
subject to partial redemption only in integral multiples of $100,000.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Corporation to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at the
election of the Corporation, the Corporation shall, not less than 30 nor more
than 60 days prior to the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee and the Property Trustee under
the related Trust Agreement, of such date and of the principal amount of
Securities to be redeemed and provide the additional information required to be
included in the notice or notices contemplated by Section 11.4; provided that
for so long as the Securities are held by the Issuer Trust, such notice shall be
given not less than 30 nor more than 75 days prior to such Redemption Date
(unless a shorter notice shall be satisfactory to the Property Trustee under the
related Trust Agreement). In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities, the Corporation shall furnish the Trustee with an Officers'
Certificate and an Opinion of Counsel evidencing compliance with such
restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security, 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 promptly notify the Corporation in writing of the
Securities selected for partial redemption and the principal amount thereof to
be redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security that has been or is to be
redeemed.
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SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at the address of such Holder
as it appears in the Securities Register, provided that; for so long as the
Securities are held by the Issuer Trust, such notice shall be given not less
than 30 nor more than 75 days prior to such Redemption Date (unless a shorter
notice shall be satisfactory to the Property Trustee under the related Trust
Agreement).
With respect to Securities to be redeemed, each notice of redemption
shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, an
estimate of the Redemption Price together with a statement that it is
an estimate and that the actual Redemption Price will be calculated on
the third Business Day prior to the Redemption Date (and, if such an
estimate of the Redemption Price is given, a subsequent notice shall be
given as set forth above on the date that such Redemption Price is
calculated setting forth the actual Redemption Price);
(c) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the respective principal amounts) of the particular Securities to be
redeemed;
(d) if the Securities are convertible, (A) that a Holder of
Securities who desires to convert such Securities called for redemption
must satisfy the requirements for conversion contained in Article XIII
below and (B) the Conversion Price;
(e) that on the Redemption Date, the Redemption Price will
become due and payable upon each such Security or portion thereof, and
that interest thereon, if any, shall cease to accrue on and after said
date;and
(f) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Corporation shall be given by the Corporation or, at the Corporation's
request, by the Trustee in the name and at the expense of the Corporation and
shall be irrevocable. The notice if mailed in the manner provided above shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
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SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.4, the
Corporation will deposit with the Trustee or with one or more Paying Agents (or,
if the Corporation is acting as its own Paying Agent, the Corporation will
segregate and hold in trust as provided in Section 10.3) an amount of money
sufficient to pay the Redemption Price of, and any accrued interest on, all the
Securities (or portions thereof) that are to be redeemed on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4,
the Securities or portion of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest to the Redemption Date. On presentation and surrender of such
Securities at a Place of Payment in said notice specified, the said Securities
or the specified portions thereof shall be paid and redeemed by the Corporation
at the applicable Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders of
such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant record dates according to their terms and
the provisions of Section 3.8.
Upon presentation of any Security redeemed in part only, the
Corporation shall execute and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Corporation, a new Security or Securities,
of authorized denominations, in aggregate principal amount equal to the
unredeemed portion of the Security so presented and having the same Original
Issue Date, Stated Maturity and terms.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal of (and premium, if any, on)
such Security shall, until paid, bear interest from the Redemption Date at the
rate prescribed therefor in such Security.
SECTION 11.7. Right of Redemption of Securities Initially Issued to an
Issuer Trust.
The Corporation, at its option, may redeem such Securities (i) on or
after December 31, 2004, in whole at any time or in part from time to time at a
Redemption Price specified in such Security, together with accrued interest to
but excluding the Redemption Date, (ii) upon the occurrence and during the
continuation of a Tax Event in whole (but not in part) at any time within 90
days following the occurrence and during the continuation of such Tax Event at a
Redemption Price specified in such Security, together with accrued interest to
but excluding the Redemption Date, (iii) upon a Change of Control of Employers
Reinsurance Corporation, in whole at any time or in part from time to time at a
Redemption Price equal to 100% of the principal amount of the Securities,
together, in the case of any such redemption, with accrued
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interest to but excluding the Redemption Date, (iv) in connection with Employers
Reinsurance Corporation's proposed transfer or disposition of Securities
pursuant to Section 5.4(c) of the Trust Agreement or Section 3.5(b) of the
Indenture, in whole at any time or in part from time to time at a Redemption
Price equal to 100% of the principal amount of the Securities, together, in the
case of any such redemption, with accrued interest to but excluding the
Redemption Date and (v) on or after March 31, 1998, in the event that the sale
of Industrial Risk Insurers to Employers Reinsurance Corporation has not been
completed, in whole at any time or in part from time to time at a Redemption
Price equal to 100% of the principal amount of the Securities, together, in the
case of any such redemption, with accrued interest to but excluding the
Redemption Date.
If less than all the Securities are to be redeemed, the aggregate
principal amount of such Securities remaining Outstanding after giving effect to
such redemption shall be sufficient to satisfy any provisions of the Trust
Agreement related to the Issuer Trust to which such Securities were issued,
including any requirement in such Trust Agreement as to the minimum Liquidation
Amount (as defined in such Trust Agreement) of Capital Securities that may be
held by a holder of Capital Securities thereunder.
SECTION 11.8. Mandatory Redemption Provisions.
(i) In the event of a Change of Control of HSB Group, Inc. within five
years after the Original Issuance Date, if the per share price paid in the
acquisition comprising the Change of Control is below the per share price
specified below for the year within which the Change of Control occurs,
Employers Reinsurance Corporation, at its option (which right shall not be
transferable), may require the Corporation to redeem all Outstanding Securities
in whole (but not in part) at any time at a Redemption Price equal to the
Redemption Value for each Security as specified in the following table:
Redemption Minimum Per Share Price Redemption Value
- ---------- ----------------------- ----------------
Year 1 $ 92.65 109.00%
Year 2 90.95 107.00%
Year 3 89.25 105.00%
Year 4 87.55 103.00%
Year 5 85.85 101.00%
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The Minimum Per Share Price stated above shall be subject to adjustment
in accordance with the provisions of Article XIII.
(ii) In addition, (A) if, on or prior to January 8, 1998, after good
faith negotiation and revisions (if any) to the documentation in accordance with
the provisions of the Term Sheet attached to the Purchase Agreement, Employers
Reinsurance Corporation determines that the Securities do not conform to the
fundamental economic terms set forth in the Term Sheet or contain provisions
that impose material legal or tax consequences or risks on Employers Reinsurance
Corporation that could not have been reasonably anticipated prior to the
purchase of the Securities or Employers Reinsurance Corporation has not
receieved the opinions of counsel referred to in Section 7(b) and (c) of the
Purchase Agreement, or (B) on or after March 31, 1998, in the event that the
sale of Industrial Risk Insurers to Employers Reinsurance Corporation has not
been completed, then, in the case of either (A) or (B), Employers Reinsurance
Corporation, at its option (which right shall not be transferable), may require
the Corporation to redeem within sixty (60) days after notice to the Corporation
of such desired redemption all Outstanding Securities in whole (but not in part)
at any time at a Redemption Price equal to 100% of the principal amount of the
Securities, together, in the case of any such redemption, with accrued interest
to but excluding the Redemption Date.
ARTICLE XII
RANKING; SUBORDINATION OF SECURITIES
SECTION 12.1. Ranking; Securities Subordinate to Senior Indebtedness.
The Corporation covenants and agrees, and each Holder of a Security, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article XII, the payment of the
principal of (and premium, if any) and interest on each and all of the
Securities are hereby expressly made subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness. The payment of the
principal of (and premium, if any) and interest on each and all of the
Securities shall rank pari passu with HSB Group, Inc.'s Global Floating Rate
Junior Subordinated Debentures, Series B.
SECTION 12.2. No Payment When Senior Indebtedness in Default; Payment Over
of Proceeds Upon Dissolution, Etc.
If the Corporation shall default in the payment of any principal of (or
premium, if any) or interest on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Corporation by the holders of Senior Indebtedness or any trustee
therefor, unless and until such 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 principal of (or premium, if
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any) or interest on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities.
In the event of (a) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceedings relating to the Corporation, its creditors or its property, (b) any
proceeding for the liquidation, dissolution or other winding up of the
Corporation, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings, (c) any assignment by the Corporation for the benefit of
creditors or (d) any other marshaling of the assets of the Corporation (each
such event, if any, herein sometimes referred to as a "Proceeding"), all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made to
any Holder of any of the Securities on account thereof. Any payment or
distribution, whether in cash, securities or other property (other than
securities of the Corporation 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 these subordination provisions with respect to the
indebtedness evidenced by the Securities, 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), that would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of the Securities shall be paid or delivered directly to the holders of
Senior Indebtedness in accordance with the priorities then existing among such
holders until all Senior Indebtedness (including any interest thereon accruing
after the commencement of any Proceeding) shall have been paid in full.
In the event of any Proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holders of the Securities, together
with the holders of any obligations of the Corporation ranking on a parity with
the Securities, shall be entitled to be paid from the remaining assets of the
Corporation the amounts at the time due and owing on account of unpaid principal
of (and premium, if any) and interest on the Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Corporation ranking junior to the Securities and such other obligations.
If, notwithstanding the foregoing, any payment or distribution of any
character or any security, whether in cash, securities or other property (other
than securities of the Corporation 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 these subordination provisions with respect to
the indebtedness evidenced by the Securities, 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), shall be
received by the Trustee or any Holder in contravention of any of the terms
hereof and before all Senior Indebtedness (including any interest thereon
accruing after the commencement of any Proceeding) shall have been paid in full,
such payment or distribution or security shall be received in trust for the
benefit of, and shall be paid over or delivered and transferred to, the holders
of the Senior Indebtedness at the time outstanding in
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accordance with the priorities then existing among such holders for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all such Senior Indebtedness (including any interest thereon
accruing after the commencement of any Proceeding) in full. If the Trustee or
any Holder fails to endorse or assign any such payment, distribution or
security, each holder of Senior Indebtedness is hereby irrevocably authorized to
endorse or assign the same.
The Trustee and the Holders shall take such action (including the
delivery of this Indenture to an agent for the holders of Senior Indebtedness or
consent to the filing of a financing statement with respect hereto) as may, in
the opinion of counsel designated by the holders of a majority in principal
amount of the Senior Indebtedness at the time outstanding, be necessary or
appropriate to assure the effectiveness of the subordination effected by these
provisions.
The provisions of this Section 12.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Corporation in
respect of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
The securing of any obligations of the Corporation, otherwise ranking
on a parity with the Securities or ranking junior to the Securities, shall not
be deemed to prevent such obligations from constituting, respectively,
obligations ranking on a parity with the Securities or ranking junior to the
Securities.
SECTION 12.3. Payment Permitted If No Default.
Nothing contained in this Article XII or elsewhere in this Indenture or
in any of the Securities shall prevent (a) the Corporation, at any time, except
during the pendency of the conditions described in the first paragraph of
Section 12.2 or of any Proceeding referred to in Section 12.2, from making
payments at any time of principal of (and premium, if any) or interest on the
Securities, or (b) the application by the Trustee of any moneys deposited with
it hereunder to the payment of or on account of the principal of (and premium,
if any) or interest on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the provisions of this
Article XII.
SECTION 12.4. 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 this Article XII (equally and ratably with the
holders of all indebtedness of the Corporation that by its express terms is
subordinated to Senior Indebtedness of the Corporation to substantially the same
extent as the Securities are
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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 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
interest on the Securities shall be paid in full. For purposes of such
subrogation, 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 XII, and no payments over pursuant to the provisions of this Article XII
to the holders of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as among the Corporation, its creditors other than holders of
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment or distribution by the Corporation to or on account of such Senior
Indebtedness.
SECTION 12.5. Provisions Solely to Define Relative Rights.
The provisions of this Article XII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Corporation and
the Holders of the Securities, the obligations of the Corporation, which are
absolute and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms; (b) affect
the relative rights against the Corporation of the Holders of the Securities and
creditors of the Corporation other than their rights in relation to the holders
of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
(or to the extent expressly provided herein, the holder of any Capital Security)
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, including filing and voting claims in any Proceeding,
subject to the rights, if any, under this Article XII of the holders of Senior
Indebtedness to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 12.6. Trustee to Effectuate Subordination.
Each Holder of a Security, by its acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination provided
in this Article XII and appoints the Trustee such Holder's attorney-in-fact for
any and all such purposes.
SECTION 12.7. 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
Corporation or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Corporation with the terms, provisions and
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covenants of this Indenture, regardless of any knowledge thereof that any such
holder may have or be otherwise 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 to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to such Holders and without
impairing or releasing the subordination as provided in this Article XII or the
obligations hereunder of such Holders 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 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 Corporation and any other Person.
SECTION 12.8. Notice to Trustee.
The Corporation shall give prompt written notice to the Trustee of any
fact known to the Corporation that would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Corporation or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; provided, however, that if the Trustee shall not have
received the notice provided for in this Section 12.8 at least two Business Days
prior to the date upon which by the terms hereof any monies may become payable
for any purpose (including the payment of the principal of (and premium, if any,
on) or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself or herself to be a holder of Senior Indebtedness (or a trustee or
attorney-in-fact therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor). If
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 XII, 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 XII, and if such evidence is
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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 12.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Corporation referred
to in this Article XII, the Trustee, subject to the provisions of Section 6.1,
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 any 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 Corporation, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XII.
SECTION 12.10. 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 Corporation or to any
other Person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article XII or otherwise.
SECTION 12.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XII with respect to any Senior Indebtedness
that may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
SECTION 12.12. Article Applicable to Paying Agents.
If at any time any Paying Agent other than the Trustee shall have been
appointed by the Corporation 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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SECTION 12.13. Certain Conversions or Exchanges Deemed Payment.
For the purpose of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities shall not be deemed
to constitute a payment or distribution on account of the principal of (or
premium, if any) or interest on the Securities or on account of the purchase or
other acquisition of Securities, and (b) the payment, issuance or delivery of
cash (including any payments for fractional shares), property or securities
(other than junior securities) upon conversion or exchange of a Security shall
be deemed to constitute payment on account of the principal of such security.
For the purpose 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, the Securities
are so subordinated as provided in this Article.
ARTICLE XIII
CONVERSION OF SECURITIES
SECTION 13.1. Conversion Rights. Subject to and upon compliance with
the provisions of this Article and subject to the receipt by the Corporation and
the Holder of the appropriate Regulatory Approvals (as defined below) and the
termination of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the related regulations and
published interpretations, the Securities are convertible, at the option of the
Holder, into fully paid and nonassessable shares of Common Stock of the
Corporation at an initial conversion rate of 11.7647 shares of Common Stock for
each $1,000 in aggregate principal amount of Securities (equal to a conversion
price of $85 per share of Common Stock), subject to adjustment as described in
this Article XIII (as adjusted the "Conversion Price"). A Holder of Securities
may convert any portion of the principal amount of the Securities into that
number of fully paid and nonassessable shares of Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) obtained by dividing the
principal amount of the Securities to be converted by the Conversion Price. In
case a Security or portion thereof is called for redemption, such conversion
right in respect of the Security or portion so called shall expire at the close
of business on the Business Day immediately preceding the corresponding
Redemption Date, unless the Corporation defaults in making the payment due upon
redemption.
"Regulatory Approvals" shall mean all necessary insurance regulatory
and other filings and/or approvals and any licenses and permits, authorizations,
consents, orders or approvals of, or registrations, declarations or filings with
all regulatory bodies as may be required to be obtained or made with respect to
either party in order to permit the parties to consummate the transactions
contemplated hereby which are to be consummated on or prior to the Closing Date
(as defined in the Trust Agreement).
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SECTION 13.2. Conversion Procedures. (a) In order to convert all or a
portion of the Securities, the Holder thereof shall deliver to the Property
Trustee, as conversion agent or to such other agent appointed for such purposes
(the "Conversion Agent") an irrevocable Notice of Conversion in the form
attached hereto as Exhibit C setting forth the principal amount of Securities to
be converted, together with the name or names, if other than the Holder, in
which the shares of Common Stock should be issued upon conversion and, surrender
to the Conversion Agent the Securities to be converted, duly endorsed or
assigned to the Corporation or in blank. In addition, a holder of Capital
Securities may exercise its right under the Trust Agreement to convert such
Capital Securities into Common Stock by delivering to the Conversion Agent an
irrevocable Notice of Conversion setting forth the information called for by the
preceding sentence and directing the Conversion Agent (i) to exchange such
Capital Security for a portion of the Securities held by the Trust (at an
exchange rate of $1000 principal amount of Securities for each Capital Security)
and (ii) to immediately convert such Securities, on behalf of such holder, into
Common Stock of the Corporation pursuant to this Article XIII and, if such
Capital Securities are in definitive form, surrendering such Capital Securities,
duly endorsed or assigned to the Corporation or in blank. So long as any Capital
Securities are outstanding, the Trust shall not convert any Securities except
pursuant to a Notice of Conversion delivered to the Conversion Agent by a holder
of Capital Securities.
If a Notice of Conversion is delivered on or after the Regular Record
Date and prior to the subsequent Interest Payment Date, the Holder of record on
the Regular Record Date will be entitled to receive the interest paid on the
subsequent Interest Payment Date on the portion of Securities to be converted
notwithstanding the conversion thereof prior to such Interest Payment Date.
However, if aredemption date falls between a record date and the subsequent
Interest Payment Date, the holder will be entitled to receive, on such Interest
Payment Date, the interest accured to, but excluding, the redemption date.
Except as otherwise provided in the first and second sentences of this
paragraph, in the case of any Security which is converted, interest whose Stated
Maturity is on or after the date of conversion of such Security shall not be
payable, and the Corporation shall not make nor be required to make any other
payment, adjustment or allowance with respect to accrued but unpaid interest on
the Securities being converted, which shall be deemed to be paid in full. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the day on which the Notice of Conversion was received (the
"Conversion Date") by the Conversion Agent from the Holder or from a holder of
the Capital Securities effecting a conversion thereof pursuant to its conversion
rights under the Trust Agreement, as the case may be. The Person or Persons
entitled to receive the Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Common Stock as
of the Conversion Date and such Person or Persons will cease to be a record
Holder or record Holders of the Securities on that date. As promptly as
practicable on or after the Conversion Date, the Corporation shall issue and
deliver at the office of the Conversion Agent, unless otherwise directed by the
Holder or holder in the Notice of Conversion, a certificate or certificates for
the number of full shares of Common Stock issuable upon such conversion,
together with the cash payment, if any, in lieu of any fraction of any share to
the Person or Persons entitled to receive the same. The Conversion Agent shall
deliver such certificate or certificates to such Person or Persons.
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(b) The Corporation's delivery upon conversion of the fixed
number of shares of Common Stock into which the Securities are convertible
(together with the cash payment, if any, in lieu of fractional shares) shall be
deemed to satisfy the Corporation's obligation to pay the principal amount at
Maturity of the portion of Securities so converted and any unpaid interest
accrued on such Securities at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Corporation shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Current Market Price with respect to such fractional interest on the date on
which the Securities or Capital Securities, as the case may be, were duly
surrendered to the Conversion Agent for conversion, and the Conversion Agent in
turn will make such payment, if any, to the Holder of the Securities or the
holder of the Capital Securities so converted.
(d) In the event of the conversion of any Security in part
only, a new Security or Securities for the unconverted portion thereof will be
issued in the name of the Holder thereof upon the cancellation of the Security
converted in part in accordance with Section 3.5.
(e) In effecting the conversion transactions described in this
Section, the Conversion Agent is acting as agent of the holders of Capital
Securities (in the exchange of Capital Securities for Securities) and as agent
of the Holders of Securities (in the conversion of Securities into Common
Stock), as the case may be. The Conversion Agent is hereby authorized (i) to
exchange Securities held by the Trust from time to time for Capital Securities
in connection with the conversion of such Capital Securities in accordance with
this Article XIII and (ii) to convert all or a portion of the Securities into
Common Stock and thereupon to deliver such shares of Common Stock in accordance
with the provisions of this Article XIII and to deliver to the Trust a new
Security or Securities for any resulting unconverted principal amount.
(f) All shares of Common Stock delivered upon any conversion
of Restricted Securities shall bear a Restrictive Securities Legend
substantially in the form of the legend required to be set forth on such
Securities and shall be subject to the restrictions on transfer provided in such
legend and in Section 3.5 hereof. Neither the Trustee nor the Conversion Agent
shall have any responsibility for the inclusion or content of any such
Restrictive Securities Legend on such Common Stock; provided, however, that the
Trustee or the Conversion Agent shall have provided to the Corporation or to the
Corporation's transfer agent for such Common Stock, prior to or concurrently
with a request to the Corporation to deliver to such Conversion Agent
certificates for such Common Stock, written notice that the Securities delivered
for conversion are Restricted Securities.
(g) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for issuance
upon the conversion of the Securities, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the Securities
then outstanding. Notwithstanding the foregoing, the Corporation shall be
entitled to deliver upon conversion of Securities shares of Common Stock
reacquired and held
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in the treasury of the Corporation (in lieu of the issuance of authorized and
unissued shares of Common Stock) so long as any such treasury shares are free
and clear of all liens, charges, security interests or encumbrances. Whenever
the Corporation issues shares of Common Stock upon conversion of Securities and
the Corporation has in effect at such time a share purchase rights agreement
under which holders of Common Stock are issued rights ("Rights") entitling the
holders under certain circumstances to purchase an additional share or shares of
stock, the Corporation will issue, together with each such share of Common
Stock, such number of Rights (which number may be a fraction) as shall at that
time be issuable with a share of Common Stock pursuant to such share purchase
rights agreement (currently, half of a Right). Any shares of Common Stock issued
upon conversion of the Securities shall be duly authorized, validly issued and
fully paid and nonassessable. The Conversion Agent shall deliver the shares of
Common Stock received upon conversion of the Securities to the converting Holder
free and clear of all liens, charges, security interests and encumbrances,
except for United States withholding taxes. The Corporation shall use its
reasonable best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, in order
to enable the Corporation to lawfully issue Common Stock upon conversion of the
Securities and to lawfully deliver the Common Stock to each Holder upon
conversion of the Securities.
(h) The Corporation will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Common Stock on
conversion of Securities. The Corporation shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the Person requesting such issue has paid to the
Conversion Agent the amount of any such tax, or has established to the
satisfaction of the Conversion Agent that such tax has been paid.
(i) Nothing in this Article XIII shall limit the requirement
of the Corporation to withhold taxes pursuant to the terms of the Securities or
as set forth in this Agreement or otherwise require the Trustee or the
Corporation to pay any amounts on account of such withholdings.
SECTION 13.3. Conversion Price Adjustments. The conversion price shall be
subject to adjustment (without duplication) from time to time as follows:
(a) In case the Corporation shall, while any of the Securities
are outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Corporation, the conversion
privilege and the Conversion Price in effect immediately prior to such action
shall be adjusted so that the Holder of any Securities thereafter surrendered
for conversion shall be entitled to receive the number of shares of capital
stock of the Corporation which he would have owned immediately following such
action had such Securities been converted immediately prior thereto. An ad-
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justment made pursuant to this subsection (a) shall become effective immediately
after the record date in the case of a dividend or other distribution and shall
become effective immediately after the effective date in case of a subdivision,
combination or reclassification (or immediately after the record date if a
record date shall have been established for such event). If, as a result of an
adjustment made pursuant to this subsection (a), the Holder of any Security
thereafter surrendered for conversion shall become entitled to receive shares of
two or more classes or series of capital stock of the Corporation, the Board of
Directors (whose determination shall be conclusive and shall be described in a
Board Resolution filed with the Trustee) shall determine the allocation of the
adjusted Conversion Price between or among shares of such classes or series of
capital stock. In the event that such dividend, distribution, subdivision,
combination or issuance is not so paid or made, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
record date had not been fixed.
(b) In case the Corporation shall, while any of the Securities
are Outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a price
per share less than the Current Market Price per share of Common Stock on the
record date mentioned below, the Conversion Price for the Securities shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of issuance of such
rights or warrants by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered for subscription or purchase would purchase at
such Current Market Price, and of which the denominator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights or warrants. To the extent that no shares of Common Stock are so
delivered after the expiration of such rights or warrants, the Conversion Price
shall be adjusted to the Conversion Price whixh would then be in effect if such
date fixed for the determination of stockholders entitled to receive such rights
or warrants had not been fixed. For the purposes of this subsection, the number
of shares of Common Stock at any time outstanding shall not include shares held
in the treasury of the Corporation. The Corporation shall not issue any rights
or warrants in respect of shares of Common Stock held in the treasury of the
Corporation. In case any rights or warrants referred to in this subsection in
respect of which an adjustment shall have been made shall expire unexercised
within 45 days after the same shall have been distributed or issued by the
Corporation, the Conversion Price shall be readjusted at the time of such
expiration to the Conversion Price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(c) Subject to the last sentence of this subparagraph, in case
the Corporation shall, by dividend or otherwise, distribute to all holders of
its Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets(or rights or warrants
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to subscribe for or purchase any of its securities, but excluding any rights or
warrants referred to in subparagraph (b), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in subparagraph
(a) of this Section 13.3), the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (c) by a fraction of which the numerator shall
be the Current Market Price per share of the Common Stock on the date fixed for
the payment of such distribution (the "Reference Date") less the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed or of such
subscription rights or warrants applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the Reference Date; provided, however, that in the event
the numerator shall be less than one, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder of Securities shall have
the right to receive upon conversion the amount of such distribution such Holder
would have received had such Holder converted each Security immediately prior to
the reference date. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or distribution had not
occurred. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (c) by reference to the actual or
when issued trading market for any securities comprising such distribution, it
must in doing so consider the prices in such market over the same period used in
computing the current market price per share of Common Stock. For purposes of
this subparagraph (c), any dividend or distribution that includes shares of
Common Stock or rights or warrants to subscribe for or purchase shares of Common
Stock shall be deemed instead to be (i) a dividend or distribution of the
evidences of indebtedness, shares of capital stock, cash or assets other than
such shares of Common Stock or such rights or warrants (making any Conversion
Price reduction required by this subparagraph (c)) immediately followed by (ii)
a dividend or distribution of such shares of Common Stock or such rights or
warrants (making any further conversion price reduction required by subparagraph
(a) or (b)), except (A) the Reference Date of such dividend or distribution as
defined in this subparagraph shall be substituted as (x) "the record date in the
case of a dividend or other distribution," and (y) "the record date for the
determination of stockholders entitled to receive such rights or warrants" and
(z) "the date fixed for such determination" within the meaning of subparagraphs
(a) and (b) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed outstanding for purposes of computing any
adjustment of the conversion price in subparagraph (a).
(d) If the distribution date for the Rights of the Corporation
provided in the Shareholders Rights Plan, as presently constituted or under any
similar plan occurs prior to the Conversion Date, and a Holder of the Securities
who converts such Securities after such distribution date is not entitled to
receive the Rights that would otherwise be attached (but for the date of
conversion) to the shares of Common Stock received upon such conversion, then an
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adjustment shall be made to the Conversion Price pursuant to clause (ii) of
Section 13.4(a) as if the Rights were being distributed to the common
stockholders of the Corporation immediately prior to such conversion. If such an
adjustment is made and the Rights are later redeemed, invalidated or terminated,
then a corresponding reversing adjustment shall be made to the Conversion Price,
on an equitable basis, to take account of such event.
(e) The Corporation shall have the right to reduce from time
to time the Conversion Price by any amount selected by the Corporation for any
period of at least 30 days, provided, that Corporation shall give at least 15
days' notice of such reduction to the Trustee and the Property Trustee. The
Corporation may, at its option, make such reductions in the Conversion Price, in
addition to those set forth above in Section 13.3(a), as the Board of Directors
deems advisable to avoid or diminish any income tax to holders 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. No adjustment
of the Conversion Price will be made upon the issuance of any shares of Common
Stock pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation and the
investment of additional optional amounts in shares of Common Stock under any
such plan, or the issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any present or future employee benefit plan or
program of the Corporation or pursuant to any option, warrant, right, or
exercisable, exchangeable or convertible security which does not constitute an
issuance to all holders of Common Stock of rights or warrants entitling holders
of such rights or warrants to subscribe for or purchase Common Stock at less
than the Current Market Price. There shall also be no adjustment of the
Conversion Price in case of the issuance of any Common Stock (or securities
convertible into or exchangeable for Common Stock), except as specifically
described above.
(f) If any action would require adjustment of the Conversion
Price pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the Holder of the Securities.
SECTION 13.4. Notice of Adjustments of Conversion Price. Whenever the
Conversion Price is adjusted as herein provided:
(a) the Corporation shall compute the adjusted conversion
price and shall prepare a certificate signed by the Chief Financial Officer or
the Treasurer of the Corporation setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the Trustee, the Conversion Agent
and the transfer agent for the Capital Securities and the Securities; and
(b) a notice stating the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Corporation to all record holders of Capital Securities and the
Securities at their last addresses as they appear upon the stock transfer books
of the Corporation and the Trust and the Securities Registrar.
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SECTION 13.5. Prior Notice of Certain Events.
In case:
(i) the Corporation shall declare any dividend (or
any other distribution) on its Common Stock, other than (x) a dividend
payable in shares of Common Stock or (y) a dividend payable in cash
that would not require an adjustment pursuant to Section 13.3(c);
(ii) the Corporation shall authorize the granting to
all holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other
rights or warrants;
(iii) of any reclassification of Common Stock (other
than a subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par
value to par value), or of any consolidation or merger to which the
Corporation is a party and for which approval of stockholders of the
Corporation shall be required, or of the sale or transfer of all or
substantially all of the assets of the Corporation or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall (A) if any Capital Securities are outstanding under
the Trust Agreement, cause to be filed with the transfer agent for the Capital
Securities, and shall cause to be mailed to the holders of record of the Capital
Securities, at their last addresses as they shall appear upon the stock transfer
books of the Trust or (B) shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Security Register, at least 15 days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
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SECTION 13.6. Dividend or Interest Reinvestment Plans. Notwithstanding
anything to the contrary in this Article 13, the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under any such plan, and
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any employee benefit plan or program of the Corporation or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Securities were first
issued, shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Corporation to which
any of the adjustment provisions described above applies. There shall also be no
adjustment of the Conversion Price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the Corporation except
as specifically described in this Article XIII.
SECTION 13.7. Certain Additional Rights.
In case the Corporation shall, by dividend or otherwise, declare or
make a distribution on its Common Stock referred to in Section 13.3(c)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 13.3(c)), the Holders of the Securities, upon the
conversion thereof subsequent to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution and prior to
the effectiveness of the Conversion Price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which the Securities are converted, the portion of the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash and assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Corporation (whose election
shall be evidenced by a resolution of the Board of Directors) with respect to
all Holders so converting, the Corporation may, in lieu of distributing to such
Holder any portion of such distribution not consisting of cash or securities of
the Corporation, pay such Holder an amount in cash equal to the fair market
value thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors). If any conversion of Securities described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the Holder of Securities so converted is entitled
to receive in accordance with the immediately preceding sentence, the
Corporation may elect (such election to be evidenced by a resolution of the
Board of Directors) to distribute to such Holder a due bill for the shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets to which such Holder is so entitled, provided, that such
due bill (i) meets any applicable requirements of the principal national
securities exchange or other market on which the Common Stock is then traded and
(ii) requires payment or delivery of such shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets no
later than the date of payment or delivery thereof to holders of shares of
Common Stock receiving such distribution.
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SECTION 13.8. Restrictions on Common Stock Issuable Upon Conversion.
(a) Shares of Common Stock to be issued upon conversion of a
Security in respect of Restricted Capital Securities shall bear such restrictive
legends as the Corporation may provide in accordance with applicable law.
(b) If shares of Common Stock to be issued upon conversion of
a Security in respect of Restricted Capital Securities are to be registered in a
name other than that of the Holder of such Capital Security, then the Person in
whose name such shares of Common Stock are to be registered must deliver to the
Conversion Agent a certificate satisfactory to the Corporation and signed by
such Person, as to compliance with the restrictions on transfer applicable to
such Capital Security. Neither the Trustee nor any Conversion Agent or Registrar
shall be required to register in a name other than that of the Holder shares of
Common Stock issued upon conversion of any such Security in respect of such
Capital Securities not so accompanied by a properly completed certificate.
SECTION 13.9. Trustee Not Responsible for Determining Conversion Price or
Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be under
any duty or responsibility to any Holder of any Security or to any holder of a
Capital Security to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed, or herein
or in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any Conversion Agent shall be accountable with respect
to the validity or value (or the kind of account) of any shares of Common Stock
or of any securities or property, which may at any time be issued or delivered
upon the conversion of any Security; and neither the Trustee nor any Conversion
Agent makes any representation with respect thereto. Neither the Trustee nor any
Conversion Agent shall be responsible for any failure of the Corporation to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates or other securities or property upon the surrender of any
Security for the purpose of conversion, or, except as expressly herein provided,
to comply with any of the covenants of the Corporation contained in Article 10
or this Article 13.
ARTICLE XIV
EXPENSES
SECTION 14.1. Payment of Expenses by the Corporation.
The Corporation hereby irrevocably and unconditionally
guarantees to each person or entity to whom any Issuer Trust is now or hereafter
becomes indebted or liable (the "Expense Beneficiaries") the full payment, when
and as due, of any and all Expense Obligations (as hereinafter defined) to such
Expense Beneficiaries. As used herein, "Expense Obligations" means
- 80 -
<PAGE>
any costs, expenses or liabilities of any Issuer Trust, other than obligations
of an Issuer Trust to pay to holders of any Capital Securities or other similar
interests in such Issuer Trust the amounts due such holders pursuant to the
terms of the Capital Securities or such other similar interests, as the case may
be. This Article XIV is intended to be for the benefit of, and to be enforceable
by, all such Expense Beneficiaries, whether or not such Expense Beneficiaries
have received notice hereof.
SECTION 14.2. Term of Agreement.
This Article XIV shall terminate and be of no further force
and effect with respect to holders of securities of an Issuer Trust upon the
later of (a) the date on which full payment has been made of all amounts payable
to all holders of all the Capital Securities (whether upon redemption,
liquidation, exchange or otherwise) of such Issuer Trust and (b) the date on
which there are no Expense Beneficiaries remaining; provided, however, that this
Article XIV shall continue to be effective or shall be reinstated, as the case
may be, with respect to such Issuer Trust, if at any time any holder of Capital
Securities of such Issuer Trust or any Expense Beneficiary must restore payment
of any sums paid under the Capital Securities of such Issuer Trust, under any
Expense Obligation, under the guarantee agreement by the Corporation in favor of
holders of Capital Securities of such Issuer Trust or under this Article XIV for
any reason whatsoever. Subject to the terms of this Article XIV, the obligations
of the Corporation under this Article XIV are continuing, irrevocable,
unconditional and absolute.
SECTION 14.3. Waiver of Notice.
The Corporation hereby waives notice of acceptance of the agreements
contained in this Article XIV and of any Expense Obligation to which it applies
or may apply, and the Corporation hereby waives presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 14.4. No Impairment.
The obligations, covenants, agreements and duties of the Corporation
under this Article XIV shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Expense Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Expense
Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Expense Beneficiaries to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Expense Beneficiaries with respect
to the Expense Obligations or any action on the part of the Issuer Trust
granting indulgence or extension of any kind; or
- 81 -
<PAGE>
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Issuer Trust.
There shall be no obligation of the Expense Beneficiaries to give notice to, or
obtain the consent of, the Corporation with respect to the happening of any of
the foregoing.
SECTION 14.5. Enforcement.
An Expense Beneficiary may enforce this Article directly
against the Corporation and the Corporation waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against the Corporation.
SECTION 14.6. Subrogation.
The Corporation shall be subrogated to all (if any) rights of the Trust
in respect of any amounts paid to the Expense Beneficiaries by the Corporation
under this Article XIV with respect to the applicable Issuer Trust; provided,
however, that the Corporation 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 Article XIV, if, at
the time of any such payment, any amounts are due and unpaid under this Article
XIV.
SECTION 14.7. Amendment.
So long as there remains any Expense Beneficiary or any
Capital Securities of an Issuer Trust are outstanding, this Article XIV shall
not be modified or amended in any manner adverse to such Expense Beneficiary of
such Issuer Trust or to the holders of the Capital Securities of such Issuer
Trust without the written consent of such Expense Beneficiary or such holders,
as applicable.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and attested, all as of the day and year first above written.
HSB GROUP, INC.
By: /s/ Saul L. Basch
Name: Saul L. Basch
Title: Senior Vice President, Chief
Financial Officer, Treasurer
Attest:
By: /s/ R. Kevin Price
Corporate Secretary
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By: /s/ Melissa G. Weisman
Name: Melissa G. Weisman
Title: Vice President
Attest:
By:
<PAGE>
Exhibit A -- Form of Restricted
Securities Transfer Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.5(b) of
the Indenture referred to below)
[-------------------------],
as Securities Registrar
[address]
Re: 7.0% Convertible Subordinated Deferrable Interest Debentures of HSB Group,
Inc. (the "Securities")
Reference is made to the Indenture, dated as of December 31, 1997 (the
"Indenture"), between HSB Group, Inc., a Connecticut corporation, and The First
National Bank of Chicago, as Trustee. Terms used herein and defined in the
Indenture or in Regulation S, Rule 144A or Rule 144 under the U.S. Securities
Act of 1933, as amended (the "Securities Act"), are used herein as so defined.
This certificate relates to $__________ aggregate principal
amount of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
Such Specified Securities are registered in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to
another person (the "Transferee") who will take delivery in the form of a
Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
compliance with the requirements of the Securities Act or pursuant to an
applicable exemption therefrom and in accordance with all applicable securities
laws of the states of the United States and other jurisdictions.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Corporation and the Purchaser (as defined in the
Trust Agreement relating to the Issuer Trust to which the Securities were
initially issued).
A-1
<PAGE>
Dated:
(Print the name of the
Undersigned, as such term
is defined in the second
paragraph of this
certificate.)
By:
Name:
Title:
(If the Undersigned is a
corporation, partnership or
fiduciary, the title of the
person signing on behalf of
the Undersigned must be
stated.)
A-2
<PAGE>
EXHIBIT B -- Form of Unrestricted
Securities Transfer Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section
3.5(c) of the Indenture )
The First National Bank of Chicago
One First National Plaza - Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Administration
Re: 7.0% Convertible Subordinated Deferrable Interest Debentures (the
"Securities")
Reference is made to the Indenture, dated as of December 31,
1997, between HSB Group. Inc. (the "Corporation") and The First National Bank of
Chicago, as Trustee (the "Trustee"). Terms used herein and defined in the
Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of 1933,
as amended (the "Securities Act"), are used herein as so defined.
This certificate relates to ________________ shares of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ____________________________
CERTIFICATE No(s). ______________________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are registered in the name of the Undersigned as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Securities Act Legend pursuant to Section 5.4(d) of the
Trust Agreement and Section 3.5(c) of the Indenture. In connection with such
exchange, the Owner hereby certifies that the exchange is occurring after a
holding period of at least two years (computed in accordance with paragraph (d)
of Rule 144) has elapsed since the Specified Securities were last acquired from
the Trust or from an affiliate of the Trust, whichever is later, and the Owner
is not, and during the preceding three months has not been, an affiliate of the
Trust. The Owner also acknowledges that any future transfers of the Specified
Securities must comply with all applicable securities laws of the states of the
United States and other jurisdictions.
B-1
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Trust and the Purchaser.
Dated:___________________________________
(Print the name of the Undersigned, as such term is defined in
the second paragraph of this certificate.)
By:____________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of the
Undersigned must be stated.)
B-2
<PAGE>
EXHIBIT C
NOTICE OF CONVERSION
To: HSB Group, Inc.
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or the portion below designated, into Common
Stock of HSB GROUP, INC. in accordance with the terms of the Indenture referred
to in this Security, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned, unless a different name has
been indicated in the assignment below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Any Holder, upon the exercise of its conversion rights in accordance
with the terms of the Indenture and the Security, agrees to be bound by the
terms of the Registration Rights Agreement relating to the Common Stock issuable
upon conversion of the Security.
Date:
in whole
----------
Portions of Security to be converted
in part ($1,000 or integral multiples thereof):
----------
$
----------------------------
----------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
------------------------------------
Signature Guarantee: *
---------------------
* Signature must be guaranteed by an institution which is a member of one
of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) in such other guarantee programs
acceptable to the Trustee.
0148917.04-01S7a
C-1
<PAGE>
Exhibit 4.3
HSB GROUP, INC.
7.0% Convertible Subordinated Deferrable Interest Debentures due December 31,
2017
THE CONVERTIBLE SUBORDINATED INTEREST DEFERRABLE DEBENTURES EVIDENCED HEREBY AND
THE COMMON STOCK ISSUABLE UPON THEIR CONVERSION HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN WHOLE OR IN PART
(BUT IF IN PART, IN AMOUNTS NOT LESS THAN $10,000,000 IN PRINCIPAL AMOUNT) AND
ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR PURSUANT TO AN APPLICABLE EXCEMPTION THEREFROM.
No. R-1 $309,300,000
HSB GROUP, INC., a Connecticut corporation (hereinafter called the
"Corporation", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to The
First National Bank of Chicago, as Property Trustee, pursuant to the Trust
Agreement of HSB Capital II, dated as of December 31, 1997, or registered
assigns, the principal sum of Three Hundred Nine Million Three Hundred Thousand
($309,300,000) Dollars on December 31, 2017; provided that the Corporation may
shorten the Stated Maturity of the principal of this Security to a date not
earlier than December 31, 2012 in the circumstances described on the reverse
hereof. The Corporation further promises to pay interest on said principal sum
from December 31, 1997 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually (subject to deferral
as set forth herein) in arrears on January 15 and July 15 of each year,
commencing January 15, 1998, at the rate of 7.0% per annum, together with
Additional Sums, if any, as provided in Section 10.6 of the Indenture until the
principal hereof is paid or duly provided for or made available for payment. The
amount of interest payable for any period less than a full interest period shall
be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. The amount of interest
payable for any full interest period shall be computed by dividing the
applicable rate per annum by two. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest installment, which shall be the January 1 or July
1 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holder on such Regular Record
Date and may either be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Security may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the Corporation
shall have the right, at any time during the term of this Security, from time to
time to defer the payment of interest on this Security for up to ten consecutive
semi-annual interest payment periods with respect to each deferral period (each
an "Extension Period"), during which Extension Periods the Corporation shall
have the right to make partial payments of interest on any Interest Payment
Date, and at the end of which the Corporation shall pay all interest then
accrued and unpaid; provided, however, that no Extension Period shall extend
beyond the Stated Maturity of the principal of this Security as then in effect,
and no such Extension Period may end on a date other than an Interest Payment
Date; and provided further, however, that during any such Extension Period, the
Corporation 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 Corporation's capital stock, or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation that rank pari passu in all respects with or
junior in interest to this Security or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation if such guarantee ranks pari passu with or junior
in interest to the Securities (other than (a) dividends or distributions in
common stock of the Corporation, (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 Guarantee and (d) purchases of
common stock related to the issuance of common stock or rights under any of the
Corporation's or its subsidiaries' benefit plans for their directors, officers
or employees). Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest, provided that no
Extension Period shall exceed ten consecutive semi-annual interest payment
periods, and shall not extend beyond the Stated Maturity of the principal of
this Security or end on a date other than an Interest Payment Date. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest then due on any Interest Payment Date, the Corporation may elect
to begin a new Extension Period, subject to the above conditions. The
Corporation shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral or so long as such Securities are held by HSB
Capital II, at least one Business Day prior to the earlier of (i) the next
succeeding date on which Distributions on the Capital Securities of such Issuer
Trust would be payable but for such deferral, and (ii) the date on which the
Property Trustee of such Issuer Trust is required to give notice to holders of
such Capital Securities of the record date or the date such Distributions are
payable.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Corporation maintained for
that purpose in New York, New York or Chicago, Illinois, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Corporation payment of interest may be made (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Securities Register, or (ii) by wire transfer in immediately available funds at
such place and to such account as may be designated by the Person entitled
thereto as specified in the Securities Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and ranks pari passu with HSB Group,
Inc.'s Global Floating Rate Junior Subordinated Debentures, Series B, and this
Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on
such Holder's behalf to take such actions as may be necessary or appropriate to
effectuate the subordination so provided, and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each Holder hereof, by such
Holder's acceptance hereof, waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
duly executed under its corporate seal.
HSB GROUP, INC.
By: /s/ Saul L. Basch
Name: Saul L. Basch
Title: Senior Vice President,
Treasurer and Chief
Financial Officer
Attest:
/s/ Roberta A. O'Brien
Assistant Corporate Secretary
SECTION 2.3. Form of Reverse of Security.
This Security is a duly authorized issue of securities of the
Corporation (herein called the "Securities"), limited in aggregate principal
amount to $309,300,000, issued under the Indenture, dated as of December 31,
1997 (herein called the "Indenture"), between the Corporation and The First
National Bank of Chicago, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Corporation, the Trustee, the holders of Senior Indebtedness and the Holders
of the Securities, and of the terms upon which the Securities are, and are to
be, authenticated and delivered.
All terms used in this Security that are defined in the Indenture or in
the Trust Agreement, dated as of December 31, 1997 (as modified, amended or
supplemented from time to time, the "Trust Agreement"), relating to HSB Capital
II (the "Issuer Trust") among the Corporation, as Depositor, the Trustees named
therein and the Holders from time to time of the Trust Securities issued
pursuant thereto, shall have the meanings assigned to them in the Indenture or
the Trust Agreement, as the case may be.
The Corporation may at any time, at its option, (i) on or after
December 31, 2004 or (ii) for a reason specified in Article XI of the Indenture,
in both cases subject to the terms and conditions of Article XI of the
Indenture, redeem this Security in whole at any time or in part from time to
time at a Redemption Price equal to 100% of the principal amount hereof,
together, in the case of any such redemption, with accrued interest to but
excluding the Redemption Date fixed for redemption.
Under limited circumstances, Employers Reinsurance Corporation may, at
its option and subject to the terms and conditions of Article XI of the
Indenture, require the Corporation to redeem this Security in whole, at a
Redemption Price as stated in Section 11.8 of the Indenture.
In addition, upon the occurrence and during the continuation of a Tax
Event in respect of the Issuer Trust, the Corporation may, at its option, at any
time within 90 days of the occurrence and during the continuation of such Tax
Event, redeem this Security, in whole but not in part, subject to the terms and
conditions of Article XI of the Indenture, at a Redemption Price equal to 100%
of the principal amount of the 7.0% Convertible Subordinated Deferrable Interest
Debentures so redeemed plus accrued and unpaid interest thereon to the date of
redemption.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Corporation with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Corporation and the Trustee at any time to enter into a supplemental indenture
or indentures for the purpose of modifying in any manner the rights and
obligations of the Corporation and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all Securities, to waive compliance by the Corporation with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, if an Event
of Default with respect to the Securities at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities may declare
the principal amount of all the Outstanding Securities to be due and payable
immediately, by a notice in writing to the Corporation (and to the Trustee if
given by Holders), provided that, if upon an Event of Default, the Trustee or
such Holders fail to declare the principal of all the Outstanding Securities to
be immediately due and payable, the holders of at least 25% in aggregate
Liquidation Amount of the Capital Securities then Outstanding shall have the
right to make such declaration by a notice in writing to the Corporation and the
Trustee; and upon any such declaration the principal of and the accrued interest
on all the Securities shall become immediately due and payable, provided that
the payment of such principal and interest on such Securities shall remain
subordinated to the extent provided in Article XII of the Indenture.
Subject to the terms and conditions set forth in Article XIII of the
Indenture, this Security is convertible, at the option of the Holder, into
shares of Common Stock.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Corporation,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Corporation maintained under Section 10.2 of the
Indenture for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the
Securities Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities,
of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $10,000,000 and any integral multiple of $100,000 in excess
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Corporation may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Corporation, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Corporation and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities referred to in the within-mentioned Indenture.
Dated: December 31, 1997
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By: /s/ Steve M. Husbands
Authorized Officer
Exhibit 4.4
CERTIFICATE OF TRUST
OF HSB CAPITAL II
This Certificate of Trust of HSB Capital II (the "Trust"),
dated as of December 31, 1997, is being duly executed and filed by the
undersigned, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. C. (S) 3801 et seq.).
1. NAME. The name of the business trust being formed hereby is
HSB Capital II.
2. DELAWARE TRUSTEE. The name and business address of the
trustee of the Trust with a principal place of business in the State of Delaware
is: First Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801.
3. EFFECTIVE DATE. This Certificate of Trust shall be
affective upon the filing of this Certificate of Trust.
IN WITNESS WHEREOF, the undersigned trustee of the Trust, has
executed this Certificate of Trust as of the date first above written.
Name: Saul L. Basch
Title: Administrative Trustee
Name: Roberta O'Brien
Title: Administrative Trustee
Name: Robert C. Walker
Title: Administrative Trustee
FIRST CHICAGO DELAWARE INC.,
as Delaware Trustee
By:
Name: Melissa G. Weisman
Title: Vice President
Exhibit 4.5
TRUST AGREEMENT
among
HSB GROUP, INC.,
as Depositor
THE FIRST NATIONAL BANK OF CHICAGO
as Property Trustee
FIRST CHICAGO DELAWARE INC.
as Delaware Trustee
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
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Dated as of December 31, 1997
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HSB CAPITAL II
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HSB CAPITAL II
Certain Sections of this Trust Agreement relating
to Sections 310 through 318 of the Trust Indenture
Act of 1939:
Trust Indenture Act Section Trust Agreement Section
((ss.)) 310 (a)(1)..................................... 8.7
(a)(2)..................................... 8.7
(a)(3)..................................... 8.9
(a)(4)..................................... 2.7(a)(ii)
(b)........................................ 8.8
((ss.)) 311 (a)....................................... 8.13
(b)........................................ 8.13
((ss.)) 312 (a)........................................ 5.7
(b)........................................ 5.7
(c)........................................ 5.7
((ss.)) 313 (a)........................................ 8.15
(a)(4)..................................... 8.15
(b)........................................ 8.15
(c)........................................ 10.8
(d)........................................ 8.15(c)
((ss.)) 314 (a)........................................ 8.16
(b)........................................ Not Applicable
(c)(1)..................................... 8.17
(c)(2)..................................... 8.17
(c)(3)..................................... Not Applicable
(d)........................................ Not Applicable
(e)........................................ 1.1, 8.17
((ss.)) 315 (a)........................................ 8.1(a), 8.3(a)
(b)........................................ 8.2, 10.8
(c)........................................ 8.1(a)
(d)........................................ 8.1, 8.3
(e)........................................ Not Applicable
((ss.)) 316 (a)........................................ Not Applicable
(a)(1)(A).................................. Not Applicable
(a)(1)(B).................................. Not Applicable
(a)(2)..................................... Not Applicable
(b)........................................ 5.12
(c)........................................ 6.7
((ss.)) 317 (a)(1)..................................... Not Applicable
(a)(2)..................................... Not Applicable
(b)........................................ 5.9
((ss.)) 318 (a)........................................ 10.10
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Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to
be a part of the Trust Agreement.
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.................................................... 1
ARTICLE II
ESTABLISHMENT OF THE ISSUER TRUST
SECTION 2.1. Name ....................................................... 11
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business.... 11
SECTION 2.3. Initial Contribution of Trust Property; Organizational Expenses 11
SECTION 2.4. Issuance of the Capital Securities............................. 12
SECTION 2.5. Issuance of the Common Securities; Subscription and Purchase o f
Debentures............................................ 12
SECTION 2.6. Declaration of Trust........................................... 12
SECTION 2.7. Authorization to Enter into Certain Transactions............... 13
SECTION 2.8. Assets of Trust................................................ 16
SECTION 2.9. Title to Trust Property........................................ 16
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account................................................. 16
ARTICLE IV
DISTRIBUTIONS; REDEMPTION; CONVERSION
SECTION 4.1. Distributions................................................... 17
SECTION 4.2. Redemption...................................................... 18
SECTION 4.3. Conversion...................................................... 21
SECTION 4.4. Subordination of Common Securities.............................. 23
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SECTION 4.5. Payment Procedures.............................................. 24
SECTION 4.6. Tax Returns and Reports......................................... 24
SECTION 4.7. Payment of Taxes, Duties, Etc. of the Issuer Trust.............. 24
SECTION 4.8. Payments under Indenture or Pursuant to Direct Actions.......... 24
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.............................................. 25
SECTION 5.2. The Trust Securities Certificates.............................. 25
SECTION 5.3. Execution and Delivery of Trust Securities Certificates........ 25
SECTION 5.4. Registration, Transfer and Exchange Generally; Certain Transfers
and Exchanges; Securities Act Legends.......................... 26
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates................................................... 29
SECTION 5.6. Persons Deemed Holders......................................... 30
SECTION 5.7. Access to List of Holders' Names and Addresses................. 30
SECTION 5.8. Maintenance of Office or Agency................................ 30
SECTION 5.9. Appointment of Paying Agents................................... 31
SECTION 5.10. Ownership of Common Securities by Depositor................... 31
SECTION 5.11. Restrictive Legends........................................... 32
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights.....................................34
SECTION 6.2. Notice of Meetings...............................................35
SECTION 6.3. Meetings of Holders of the Capital Securities....................35
SECTION 6.4. Voting Rights....................................................36
SECTION 6.5. Proxies, etc.....................................................36
SECTION 6.6. Holder Action by Written Consent.................................36
SECTION 6.7. Record Date for Voting and Other Purposes........................36
SECTION 6.8. Acts of Holders..................................................37
SECTION 6.9. Inspection of Records............................................38
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee................................................ 38
SECTION 7.2. Representations and Warranties of Depositor..................... 39
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ARTICLE VIII
THE ISSUER TRUSTEES; PAYING AGENTS
SECTION 8.1. Certain Duties and Responsibilities.......................... 40
SECTION 8.2. Certain Notices.............................................. 42
SECTION 8.3. Certain Rights of Property Trustee........................... 43
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities....... 45
SECTION 8.5. May Hold Securities.......................................... 45
SECTION 8.6. Compensation; Indemnity; Fees................................ 45
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Issuer
Trustees..................................................... 46
SECTION 8.8. Conflicting Interests........................................ 47
SECTION 8.9. Co-Trustees and Separate Trustee............................. 47
SECTION 8.10. Resignation and Removal; Appointment of Successor........... 49
SECTION 8.11. Acceptance of Appointment by Successor...................... 50
SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business. 51
SECTION 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust................................................ 51
SECTION 8.14. Property Trustee May File Proofs of Claim................... 51
SECTION 8.15. Reports by Property Trustee................................. 52
SECTION 8.16. Reports to the Property Trustee............................. 53
SECTION 8.17. Evidence of Compliance with Conditions Precedent............ 53
SECTION 8.18. Number of Issuer Trustees................................... 53
SECTION 8.19. Delegation of Power......................................... 53
SECTION 8.20. Appointment of Administrative Trustees...................... 54
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date............................. 54
SECTION 9.2. Early Dissolution............................................ 55
SECTION 9.3. Termination.................................................. 55
SECTION 9.4. Liquidation.................................................. 55
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Issuer Trust................................................. 57
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders............................. 58
SECTION 10.2. Amendment................................................... 58
SECTION 10.3. Separability................................................ 59
SECTION 10.4. Governing Law............................................... 59
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SECTION 10.5. Payments Due on Non-Business Day............................. 60
SECTION 10.6. Successors................................................... 60
SECTION 10.7. Headings..................................................... 60
SECTION 10.8. Reports, Notices and Demands................................. 60
SECTION 10.9. Agreement Not to Petition.................................... 61
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act...... 62
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee Agreement
and Indenture............................................... 62
Exhibit A Certificate of Trust
Exhibit B Form of Common Securities Certificate
Exhibit C Form of Capital Securities Certificate
Exhibit D Form of Restricted Securities Certificate
Exhibit E Form of Unrestricted Securities Certificate
Exhibit F Notice of Conversion
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TRUST AGREEMENT, dated as of December 31, 1997, among (i) HSB Group,
Inc., a Connecticut corporation (including any successors or assigns, the
"Depositor"), (ii) The First National Bank of Chicago, a national banking
association as property trustee (in such capacity, the "Property Trustee" and,
in its separate corporate capacity and not in its capacity as Property Trustee,
the "Bank"), (iii) First Chicago Delaware Inc., a Delaware corporation, as
Delaware trustee (in such capacity, the "Delaware Trustee"), and (iv) Saul L.
Basch, an individual, Roberta O'Brien, an individual, and Robert C. Walker, an
individual, each of whose address is c/o HSB Group, Inc., One State Street,
Hartford, Connecticut 06102 (each an "Administrative Trustee"), (the Property
Trustee, the Delaware Trustee and the Administrative Trustees being referred to
collectively as the "Issuer Trustees").
WITNESSETH
WHEREAS, the Depositor and the Issuer Trustees hereby declare and
create a business trust pursuant to the Delaware Business Trust Act by entering
into this Trust Agreement, dated as of December 31, 1997 (the "Trust
Agreement"), and by the execution of the Certificate of Trust by the Issuer
Trustees and the filing of such Certificate of Trust with the Secretary of State
of the State of Delaware on December 31, 1997, attached as Exhibit A; and
WHEREAS, the Depositor and the Issuer Trustees desire to enter into
this Trust Agreement to provide for, among other things, (i) the issuance and
sale of the Common Securities by the Issuer Trust to the Depositor, (ii) the
issuance and sale of the Capital Securities by the Issuer Trust pursuant to the
Purchase Agreement, (iii) the acquisition by the Issuer Trust from the Depositor
of all of the right, title and interest in the Debentures, and (iv) the
appointment of the Property Trustee and certain additional Administrative
Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby enters into this Trust
Agreement and agrees as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust 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;
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(b) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;
(e) Unless the context otherwise requires, any reference to an
"Article", a "Section" or an "Exhibit" refers to an Article, a Section or an
Exhibit, as the case may be, of or to this Trust Agreement; and
(f) The words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrative Trustee" means each Person appointed in accordance with
Section 8.20 solely in such Person's capacity as Administrative Trustee of the
Issuer Trust heretofore created and continued hereunder and not in such Person's
individual capacity, or any successor Administrative Trustee appointed as herein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its
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affairs, and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or
the Executive Committee of the board of directors of the Depositor (or any other
committee of the board of directors of the Depositor performing similar
functions) or a committee designated by the board of directors of the Depositor
(or any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in The City of New York are authorized by law
or executive order to remain closed, or (c) a day on which the Property
Trustee's corporate trust office or the corporate trust office of the Debenture
Trustee is closed for business.
"Capital Securities Certificate" means a certificate evidencing
ownership of Capital Securities, substantially in the form attached as Exhibit
C.
"Capital Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $1,000 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution to the extent provided herein, and
designated as Convertible Capital Securities, Series A.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, or, if at any time after the execution of this instrument
such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.
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"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit B.
"Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $1,000 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution to the extent provided herein.
"Common Stock" means common stock, no par value per share, of the
Depositor.
"Conversion Agent" has the meaning specified in Section 4.3.
"Conversion Date" has the meaning specified in Section 4.3.
"Conversion Price" has the meaning specified in Section 4.3.
"Corporate Trust Office" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located in
Chicago, Illinois, and (ii) when used with respect to the Debenture Trustee, the
principal office of the Debenture Trustee located in Chicago, Illinois.
"Current Market Price", with respect to the Common Stock, means for any
day the last reported sale price, regular way, on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the New York Stock Exchange
Composite Transactions Tape, or, if the Common Stock is not listed or admitted
to trading on the New York Stock Exchange on such day, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
if the Common Stock is listed on a national securities exchange, or the Nasdaq
National Market, or, if the Common Stock is not quoted or admitted to trading on
such quotation system, on the principal quotation system on which the Common
Stock may be listed or admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities exchange or quotation
system, the average of the closing bid and asked prices of the Common Stock in
the over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose or, if not so available in such manner, as otherwise determined
in good faith by the Board of Directors.
"Debenture Event of Default" means any "Event of Default" specified in
Section 5.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed as set forth under the Indenture, the date fixed for redemption of such
Debentures under the Indenture.
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"Debenture Trustee" means the Person identified as the "Trustee" in the
Indenture, solely in its capacity as Trustee pursuant to the Indenture and not
in its individual capacity, or its successor in interest in such capacity, or
any successor Trustee appointed as provided in the Indenture.
"Debentures" means the Depositor's 7.0% Convertible Subordinated
Deferrable Interest Debentures, issued pursuant to the Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., or any successor statute thereto,
in each case as amended from time to time.
"Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Delaware Trustee of the trust heretofore created and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor Delaware trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Direct Action" has the meaning specified in Section 5.12(c).
"Distribution Amount" means, with respect to any Trust Security and any
Distribution period, the amount of Distributions payable in respect of such
Distribution period, which amount shall be calculated by applying the
Distribution Rate to the Liquidation Amount of each Trust Security Outstanding
at the commencement of the Distribution period, by multiplying each such amount
by the actual number of days in the Distribution period concerned (which actual
number of days shall include the first day but exclude the last day of such
Distribution period) divided by 360 and rounding the resultant figure upwards to
the nearest cent (half a cent being rounded upwards). The determination of the
Distribution Rate and the Distribution Amount by or on behalf of the Issuer
Trust shall (in the absence of manifest error) be final and binding on all
parties.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distribution period" means the period for payment on the Trust
Securities set forth in Section 4.1(a).
"Distribution Rate" means, with respect to any Distribution period, a
rate per annum equal to the Interest Rate (as defined in and determined in
accordance with the Indenture) with respect to the Interest Payment Date (as
defined in the Indenture) that begins on the same date as such Distribution
period begins and ends on the same date as such Distribution period ends.
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
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"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such event 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) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days (subject to the deferral of any due
date in the case of an Extension Period, as such term is defined in the
Indenture); or
(c) default by the Issuer Trust in the payment of any
Redemption Price of any Trust Security when it becomes due and payable;
or
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in this
Trust Agreement (other than those specified in clause (b) or (c) above)
and continuation of such default or breach for a period of 90 days
after there has been given, by registered or certified mail, to the
Issuer Trustees by the Holders of at least 25% in aggregate Liquidation
Amount of the outstanding Capital Securities a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee if a successor Property Trustee has not been appointed
within 90 days thereof.
"Expiration Date" has the meaning specified in Section 9.1.
" Guarantee Agreement" means the Capital Securities Guarantee Agreement
executed and delivered by the Depositor and The First National Bank of Chicago,
as guarantee trustee, contemporaneously with the execution and delivery of this
Trust Agreement, for the benefit of the Holders of the Capital Securities, as
amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities are registered in the Securities Register; any such Person shall be a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Issuer Trust" means the Delaware business trust known as "HSB Capital
II", created on December 31, 1997, under the Delaware Business Trust Act
pursuant to this Trust Agreement.
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"Issuer Trustees" means, collectively, the Property Trustee, the
Delaware Trustee and the Administrative Trustees.
"Indenture" means the Indenture, dated as of December 31, 1997, between
the Depositor and the Debenture Trustee, as trustee, as amended or supplemented
from time to time.
"Investment Company Act" means the Investment Company Act of 1940, or
any successor statute thereto, in each case as amended from time to time.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (i) with respect to a redemption of Capital
Securities, Capital Securities having a Liquidation Amount (as defined below)
equal to that portion of the principal amount of Debentures to be
contemporaneously redeemed in accordance with the Debentures, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of the Capital Securities and (ii) with respect to a
distribution of Debentures to holders of Capital Securities in connection with a
dissolution or liquidation of the Issuer Trust, Debentures having a principal
amount equal to the Liquidation Amount of the Capital Securities of the holder
to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust
Security.
"Liquidation Date" means the date of the dissolution, winding-up or
termination of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"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 aggregate Liquidation Amount of all then Outstanding
Capital Securities.
"Notice of Conversion" means the notice given by a holder of Capital
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Capital Security for Debentures and to convert such Debentures into Common
Stock on behalf of such holder. Such notice is substantially in the form set
forth in Exhibit F.
"Officers' Certificate" means a certificate signed by the Chief
Executive Officer, the President or one of the Senior Vice Presidents or Vice
Presidents, and by the Treasurer, an Assistant Treasurer, the Corporate
Secretary or an Assistant Secretary, of the Depositor, and delivered to the
Issuer Trustees. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Trust Agreement shall include:
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(a) a statement by each officer signing the Officers'
Certificate that such officer 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 such officer in rendering
the Officers' Certificate;
(c) a statement that 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
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.
"Outstanding", when used with respect to Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent; provided that, if such Trust Securities
are to be redeemed, notice of such redemption has been duly given
pursuant to this Trust Agreement; and
(c) Trust Securities that have been paid or in exchange for or
in lieu of which other Capital Securities have been executed and
delivered pursuant to Sections 5.4, 5.5 and 5.11;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Capital Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Capital
Securities owned by the Depositor, any Issuer Trustee or any Affiliate of the
Depositor or any Issuer Trustee shall be disregarded and deemed not to be
Outstanding, except that (a) in determining whether any Issuer Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Capital Securities that such Issuer Trustee
knows to be so owned shall be so disregarded, and (b) the foregoing clause (a)
shall not apply at any time when all of the Outstanding Capital Securities are
owned by the Depositor, one or more of the Issuer Trustees and/or any such
Affiliate. Capital Securities so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Administrative
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Trustees the pledgee's right so to act with respect to such Capital Securities
and that the pledgee is not the Depositor or any Affiliate of the Depositor.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.9 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Holders in which all amounts paid in respect
of the Debentures will be held and from which the Property Trustee, through the
Paying Agent, shall make payments to the Holders in accordance with Sections 4.1
and 4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated association, or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Plan" means an employee benefit or other plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended, or Section 4975
of the Code.
"Plan Asset Entity" means any Person whose underlying assets include
"plan assets" by reason of any Plan's investment in such Person.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Property Trustee of the trust heretofore created and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor property trustee appointed as herein provided.
"PTCE" means a U.S. Department of Labor Prohibited Transaction Class
Exemption.
"Purchase Agreement" means the Purchase Agreement, dated as of December
31, 1997, among the Issuer Trust, the Depositor and the Purchaser, as the same
may be amended from time to time.
"Purchaser" means Employers Reinsurance Corporation and ERC Life
Reinsurance Corporation.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus
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the related amount of the premium, if any, paid by the Depositor upon the
concurrent redemption of a Like Amount of Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Restricted Capital Securities" means the Capital Securities and the
Capital Securities Certificate, for which it is required pursuant to Section
5.4(c) to bear a Restricted Capital Securities Legend.
"Restricted Capital Securities Legend" means a legend substantially in
the form of the legend required in the form of Capital Securities Certificate
set forth in Exhibit C to be placed upon a Restricted Securities Certificate.
"Restricted Certificated Securities" has the meaning specified in Section
5.2.
"Restricted Securities Certificate" has the meaning specified in
Section 5.4(b) and is substantially in the form attached as Exhibit D.
"Restricted Securities Legend" has the meaning specified in Section
5.13(a).
"Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Securities Act" means the Securities Act of 1933, and any successor
statute thereto, in each case as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.4(a).
"Successor Capital Securities" of any particular Capital Securities
Certificate means every Capital Securities Certificate issued after, and
evidencing all or a portion of the same beneficial interest in the Issuer Trust
as that evidenced by, such particular Capital Securities Certificate; and, for
the purposes of this definition, any Capital Securities Certificate executed and
delivered under Section 5.5 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Capital Securities Certificate shall be deemed to
evidence the same beneficial interest in the Issuer Trust as the mutilated,
destroyed, lost or stolen Capital Securities Certificate.
"Trust Agreement" means this Trust Agreement, as the same may be
modified, amended or supplemented in accordance with the applicable provisions
hereof, including (i) all Exhibits, and (ii) for all purposes of this Trust
Agreement and any such modification, amendment or supplement, the provisions of
the Trust Indenture Act that are deemed to be a part of and govern this Trust
Agreement and any such modification, amendment or supplement, respectively.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that if
the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture
Act" means, to the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account, and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Securities Certificate" means any Common Securities Certificate
or Capital Securities Certificate.
"Trust Security" means any one of the Common Securities or the Capital
Securities.
"Unrestricted Securities Certificate" has the meaning specified in
Section 5.4(c).
ARTICLE II
ESTABLISHMENT OF THE ISSUER TRUST
SECTION 2.1. Name.
The trust created hereby shall be known as "HSB Capital II", as such
name may be modified from time to time by the Administrative Trustees following
written notice to the Holders of Trust Securities and the other Issuer Trustees,
in which name the Issuer Trustees (other than the Delaware Trustee) may conduct
the business of the Issuer Trust, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is 300
King Street, Wilmington, DE 19801, or such other address in the State of
Delaware as the Delaware Trustee may designate by written notice to the Holders,
the Depositor, the Property Trustee and the Administrative Trustees. The
principal executive office of the Issuer Trust is c/o HSB Group, Inc., One State
Street, Hartford, Connecticut 06102, Attention: Corporate Secretary.
SECTION 2.3. Initial Contribution of Trust Property; Organizational
Expenses.
It is the intention of the parties hereto that the Issuer Trust
created hereby constitute a business trust under the Delaware Business Trust
Act, and that this document constitutes the governing instrument of the Trust.
The Trustee and the Delaware Trustee are hereby authorized and directed to
execute and file a certificate of trust substantially in the form of Annex A
with
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the Delaware Secretary of State in accordance with the provisions of the
Delaware Business Trust Act. The Depositor shall pay organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such expenses paid by such Issuer
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.4. Issuance of the Capital Securities.
On the Closing Date, an Administrative Trustee, on behalf of the Issuer
Trust, shall execute in accordance with Sections 5.2 and 5.3, cause to be
authenticated, and deliver a Capital Securities Certificate registered in the
name of the Purchaser, in an aggregate amount of 300,000 Capital Securities
having an aggregate Liquidation Amount of $300,000,000, against receipt of an
aggregate purchase price plus accumulated distributions from December 31, 1997
on such Capital Securities of $300,000,000, which amount such Administrative
Trustee shall promptly deliver to the Property Trustee.
SECTION 2.5. Issuance of the Common Securities; Subscription and
Purchase of Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Issuer Trust, shall
execute in accordance with Section 5.2 and 5.3 and the Property Trustee shall
deliver to the Depositor a Common Securities Certificate, registered in the name
of the Depositor, evidencing an aggregate of 9,300 Common Securities having an
aggregate Liquidation Amount of $9,300,000 against receipt of the aggregate
purchase price of such Common Securities of $9,300,000 (plus accrued
Distributions, if any), to the Property Trustee. Contemporaneously therewith,
the Depositor shall issue and sell to the Issuer Trust, and the Issuer Trust
shall purchase from the Depositor, Debentures having an aggregate principal
amount equal to $309,300,000 registered in the name of the Property Trustee on
behalf of the Issuer Trust and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Issuer Trust, shall deliver
to the Depositor the sum of $309,300,000 (plus accrued Distributions, if any)
(being the sum of the amounts delivered to the Property Trustee pursuant to (i)
the second sentence of Section 2.4, and (ii) the first sentence of this Section
2.5).
SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are (a) to
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Debentures, (b) to make Distributions to holders, and (c) to engage in only
those activities necessary or incidental thereto. The Depositor hereby appoints
the Issuer Trustees as trustees of the Issuer Trust, to have all the rights,
powers and duties to the extent set forth herein, and the respective Issuer
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the benefit of the Issuer Trust and the Holders. The
Administrative Trustees shall have all rights, powers and duties set
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forth herein and in accordance with applicable law. 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 Issuer Trustees set forth herein,
except as required by the Delaware Business Trust Act. The Delaware Trustee
shall be one of the trustees of the Issuer Trust for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Delaware Business
Trust Act and for taking such actions as are required to be taken by a Delaware
trustee under the Delaware Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees shall conduct the affairs of the Issuer Trust
in accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section 2.7, and in accordance with the
following provisions (i) and (ii), the Property Trustee and the Administrative
Trustees shall have the authority to enter into all transactions and agreements
determined by the Property Trustee and Administrative Trustees to be appropriate
in exercising the authority, express or implied, otherwise granted to such
Issuer Trustees, as the case may be, under this Trust Agreement, and to perform
all acts in furtherance thereof, including the following:
(i) As among the Issuer Trustees, each Administrative Trustee,
acting individually or jointly, shall have the power and authority to
act on behalf of the Issuer Trust with respect to the following
matters:
(A) the issuance and sale of the Trust Securities;
(B) causing the Issuer Trust to enter into, and to
execute, deliver and perform on behalf of the Issuer Trust,
such agreements as may be necessary or desirable in connection
with the purposes and function of the Issuer Trust;
(C) causing the Trust to assist in the qualifications
of this Trust Agreement as a trust indenture under the Trust
Indenture Act;
(D) assisting in compliance with the duties and
obligations of the Issuer Trust under the Securities Act and
applicable state securities or blue sky laws and the Trust
Indenture Act;
(E) assisting in the sending of notices (other than
notices of default) and other information regarding the Trust
Securities and the Debentures to the Holders in accordance
with this Trust Agreement;
(F) consenting to the appointment of a Paying Agent,
authenticating agent and Securities Registrar in accordance
with this Trust Agreement (which consent shall not be
unreasonably withheld);
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(G) executing the Trust Securities on behalf of the
Issuer Trust in accordance with this Trust Agreement;
(H) executing and delivering closing certificates, if
any, pursuant to the Purchase Agreement and application for a
taxpayer identification number for the Issuer Trust;
(I) unless otherwise determined by the Property
Trustee or Holders of at least a Majority in Liquidation
Amount of the Capital Securities or as otherwise required by
the Delaware Business Trust Act or the Trust Indenture Act,
executing on behalf of the Issuer Trust (either acting alone
or together with any other Administrative Trustee) any
documents that the Administrative Trustees have the power to
execute pursuant to this Trust Agreement; and
(J) taking any action incidental to the foregoing as
the Issuer Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement.
(ii) The Property Trustee shall have the power, duty and
authority to act on behalf of the Issuer Trust with respect to the
following matters:
(A) establishing the Payment Account;
(B) receiving the Debentures;
(C) collecting interest, principal and any other
payments made in respect of the Debentures and the holding of
such amounts in the Payment Account;
(D) distributing through any Paying Agent of amounts
distributable to the Holders in respect of the Trust
Securities;
(E) exercising all of the rights, powers and
privileges of a holder of the Debentures;
(F) sending notices of default and other information
regarding the Trust Securities and the Debentures to the
Holders in accordance with this Trust Agreement;
(G) distributing the Trust Property in accordance
with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
winding up the affairs of and liquidating the Issuer Trust and
preparing, executing and filing the certificate of
cancellation with the Secretary of State of the State of
Delaware;
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(I) after an Event of Default (other than under
paragraph (b), (c), (d) or (e) of the definition of such term
if such Event of Default is by or with respect to the Property
Trustee) taking of any action incidental to the foregoing as
the Property Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement and to protect and conserve the Trust Property
for the benefit of the Holders (without consideration of the
effect of any such action on any particular Holder);
(b) So long as this Trust Agreement remains in effect, the Issuer Trust
(or the Issuer Trustees acting on behalf of the Issuer Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, the Issuer Trustees, acting in
their capacity as such, shall not (i) acquire any investments or engage in any
activities not authorized by this Trust Agreement, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust
Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected to
cause the Issuer Trust to become taxable as a corporation or classified as other
than a grantor trust for United States Federal income tax purposes, (iv) incur
any indebtedness for borrowed money or issue any other debt, or (v) take or
consent to any action that would result in the placement of a Lien on any of the
Trust Property. The Administrative Trustees shall defend all claims and demands
of all Persons at any time claiming any Lien on any of the Trust Property
adverse to the interest of the Issuer Trust or the Holders in their capacity as
Holders.
(c) In connection with the issue and sale of the Capital Securities,
the Depositor shall have the right and responsibility to assist the Issuer Trust
with respect to, or effect on behalf of the Issuer Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the taking of any action necessary or desirable to sell
the Capital Securities in a transaction or a series of transactions
exempt from the registration requirements of the Securities Act;
(ii) the determination of the States, or other jurisdictions,
if any, in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and the determination of any
and all such acts, other than actions that must be taken by or on
behalf of the Issuer Trust, and the advice to the Issuer Trustees of
actions they must take on behalf of the Issuer Trust, and the
preparation for execution and filing of any documents to be executed
and filed by the Issuer Trust or on behalf of the Issuer Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such States in connection with the sale of the
Capital Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Purchase Agreement; and
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(iv) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Issuer Trust
and to operate the Issuer Trust so that the Issuer Trust will not be deemed to
be an "investment company" required to be registered under the Investment
Company Act, and will not be taxable as a corporation or classified as other
than a grantor trust for United States Federal income tax purposes and so that
the Debentures will be treated as indebtedness of the Depositor for United
States Federal income tax purposes. In this connection, each Administrative
Trustee and the Holder of the Common Securities are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or this
Trust Agreement, that such Administrative Trustee or Holder of the Common
Securities determines in its discretion to be necessary or desirable for such
purposes, as long as such action does not adversely affect in any material
respect the interests of the Holders of the Outstanding Capital Securities. In
no event shall the Issuer Trustees be liable to the Issuer Trust or the Holders
for any failure to comply with this section that results from a change in law or
regulation or in the interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist of the Trust Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee in trust for the benefit of the Issuer Trust and the
Holders in accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the Holders
and for distribution as herein provided, including (and subject to) any priority
of payments provided for herein.
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(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION; CONVERSION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests in
the Trust Property, and distributions ("Distributions"), comprised of (i) the
Distribution Amount, (ii) any Additional Sums and (iii) and other payments in
respect of the Debentures, will be made on the Trust Securities on the dates
that payments of interest are made on the Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative,
and shall accumulate whether or not there are funds of the Issuer Trust
available for the payment of Distributions. Distributions shall
accumulate from December 31, 1997, and, except in the event (and to the
extent) that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable
semi-annually in arrears on January 15 and July 15 of each year,
commencing January 15, 1998. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day, then
the payment of such Distribution shall 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 next succeeding
Business Day falls within the next 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 on which such payment was
originally payable (each date on which distributions are payable in
accordance with this Section 4.1(a)(i), a "Distribution Date").
(ii) The Trust Securities shall be entitled to Distributions
(before giving effect to any Additional Sums) payable at the
Distribution Rate multiplied by the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any period will be
computed on the basis of the actual number of days in the applicable
Distribution period (which actual number of days shall include the
first day but exclude the last day of such Distribution period) divided
by 360. The period beginning on, and including, the date of original
issuance, and ending on, but excluding, the first Distribution Date,
and each successive period beginning on, and including, a Distribution
Date, and ending on, but excluding, the next succeeding Distribution
Date is herein called a "Distribution period"). The amount of
Distributions payable for any period shall also include any Additional
Sums, if any, so payable in respect of such period.
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(iii) Distributions on the Trust Securities shall be made by
the Property Trustee from the Payment Account and shall be payable on
each Distribution Date only to the extent that the Issuer Trust has
funds then on hand and available in the Payment Account for the payment
of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
January 1 or July 1 (whether or not a Business Day) next preceding the relevant
Distribution Date.
(c) (i) The Issuer Trust shall cause the Distribution Rate, the
Distribution Amount in respect of each Trust Security and the Distribution Date
for each Distribution period to be notified to the Property Trustee, each Paying
Agent appointed by the Issuer Trust and any securities exchange or automated
quotation system on which the Trust Securities are listed or quoted and also to
be notified to the Holders of the Trust Securities in accordance with the
provisions of Section 10.8, in each case as soon as practicable after the
determination thereof but in no event later than the second Business Day after
the Determination Date in respect of such Distribution period.
(ii) All calculations of the Distribution Rate and the
Distribution Amount by or on behalf of the Issuer Trust shall (in the absence of
manifest error) be final and binding on all parties, and all certificates,
communications, opinions, determinations, calculations, quotations and decisions
given, expressed, made or obtained for the purposes of the provisions of this
Section 4.1(c) or the provisions of the Indenture relating to the calculation of
the Interest Rate (as defined in the Indenture), shall (in the absence of
willful default, bad faith or manifest error) be binding on the Issuer Trust,
the Depositor, the Debenture Trustee and all of the Holders of the Trust
Securities, and no liability shall (in the absence of willful default, bad faith
or manifest error) attach to the Debenture Trustee in connection with the
exercise or non-exercise by it of its powers, duties and discretions.
SECTION 4.2. Redemption.
(a) (i) On each Debenture Redemption Date and on the stated maturity of
the Debentures, the Issuer Trust will be required to redeem a Like Amount of
Trust Securities at the Redemption Price.
(ii) If at any time following a Conversion Date, less than
five percent (5%) in principal amount of the Debentures originally issued by the
Depositor remain outstanding, such Debentures are redeemable, at the option of
the Depositor, in whole but not in part, at a Redemption Price equal to the
aggregate principal amount thereof, and all accrued and unpaid interest; in such
event, the proceeds from such redemption shall be applied to redeem the
Outstanding Trust Securities.
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(iii) In addition, the Issuer Trust will be required to redeem
at the Redemption Price stated in Section 11.7 of the Indenture, the amount of
Trust Securities that the Purchaser proposes to dispose or transfer, if subject
to Section 5.4(b)(2)(E), the Depositor vetoes the Purchaser's choice of Person
to whom the Purchaser desires to dispose or transfer such Securities.
(iv) Pursuant to Section 11.8 of the Indenture, the Depositor
may be required to redeem all Outstanding Trust Securities at a Redemption Price
stated in Section 11.8 of the Indenture.
(b) Notice of redemption shall be given by the Property Trustee and the
Conversion Agent by first-class mail, postage prepaid, mailed not less than 30
nor more than 60 days prior to the Redemption Date to each Holder of Trust
Securities to be redeemed, at such Holder's address appearing in the Security
Register. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price provided pursuant to (and as defined
in) the Indenture together with a statement that it is an estimate and
that the actual Redemption Price will be calculated on the third
Business Day prior to the Redemption Date (and, if an estimate is
provided, that a further notice shall be sent of the actual Redemption
Price on the date on which such Redemption Price is calculated);
(iii) the CUSIP number or CUSIP numbers of the Capital
Securities affected;
(iv) if less than all the Outstanding Trust Securities are to
be redeemed, the identification and the aggregate Liquidation Amount of
the particular Trust Securities to be redeemed;
(v) If the Capital Securities are convertible, (A) that a
Holder of Capital Securities who desires to convert such Capital
Securities called for redemption must satisfy the requirements for
conversion contained in Section 4.3 below and (B) the Conversion Price;
(vi) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed and
that Distributions thereon will cease to accumulate on and after such
date, except as provided in Section 4.2(d) below; and
(vii) the place or places where the Trust Securities are to be
surrendered for the payment of the Redemption Price.
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The Issuer Trust in issuing the Trust Securities may use "CUSIP" or
"private placement" numbers (if then generally in use), and, if so, the Property
Trustee shall indicate the "CUSIP" or "private placement" numbers of the Trust
Securities in notices of redemption and related materials 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 Trust Securities
or as contained in any notice of redemption and related materials.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the extent
that the Issuer Trust has funds then on hand and available in the Payment
Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Capital Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to the Capital Securities, irrevocably deposit with the Paying Agent or
Paying Agents, to the extent available therefor, funds sufficient to pay the
applicable Redemption Price and will give the Paying Agent or Paying Agents
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Capital Securities upon surrender of their Capital Securities
Certificates. Notwithstanding the foregoing, Distributions payable on or prior
to the Redemption Date for any Trust Securities called for redemption shall be
payable to the Holders of such Trust Securities as they appear on the Securities
Register on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required, then
upon the date of such deposit, all rights of Holders holding Trust Securities so
called for redemption will cease, except the right of such Holders to receive
the Redemption Price and any Distribution payable in respect of the Trust
Securities on or prior to the Redemption Date, but without interest, and such
Securities will cease to be Outstanding. In the event that any date on which any
Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next 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 such date. In the event that
payment of the Redemption Price in respect of any Trust Securities called for
redemption is improperly withheld or refused and not paid either by the Issuer
Trust or by the Depositor pursuant to the Guarantee Agreement, Distributions on
such Trust Securities will continue to accumulate, as set forth in Section 4.1,
from the Redemption Date originally established by the Issuer Trust for such
Trust Securities to the date such Redemption Price is actually paid, in which
case the actual payment date will be the date fixed for redemption for purposes
of calculating the Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated pro
rata to the Common Securities and the Capital Securities based upon the relative
Liquidation Amounts of such classes. The particular Capital Securities
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to be redeemed shall be selected on a pro rata basis based upon their respective
Liquidation Amounts not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Capital Securities not previously called
for redemption, provided that, after giving effect to such redemption, no Holder
shall hold Capital Securities with an aggregate Liquidation Amount of less than
$1,000. The Property Trustee shall promptly notify the Securities Registrar in
writing of the Capital Securities selected for redemption and, in the case of
any Capital Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of this Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of Capital
Securities shall relate, in the case of any Capital Securities redeemed or to be
redeemed only in part, to the portion of the aggregate Liquidation Amount of
Capital Securities that has been or is to be redeemed.
SECTION 4.3. Conversion. The Holders of Trust Securities, subject to
the limitations set forth in this Section, shall have the right, at their
option, to cause the Conversion Agent to convert Trust Securities, on behalf of
the converting Holders, into shares of Common Stock in the manner described
herein on and subject to the following terms and conditions:
(i) Subject to the receipt by the Purchaser and the Depositor
of the appropriate Regulatory Approvals (as defined below) and the
termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the related regulations and published interpretations, the Trust
Securities will be convertible into fully paid and nonassessable shares
of Common Stock pursuant to the Holder's direction to the Conversion
Agent to exchange such Trust Securities for a portion of the
Debentures, and immediately convert such amount of Debentures into
fully paid and nonassessable shares of Common Stock at an initial rate
of 11.7647 shares of Common Stock for each Trust Security (which is
equivalent to a conversion price of $85 per share of Common Stock),
subject to certain adjustments set forth in the Indenture (as so
adjusted, "Conversion Price"). "Regulatory Approvals" shall mean all
necessary insurance regulatory and other filings and/or approvals and
any licenses and permits, authorizations, consents, orders or approvals
of, or registrations, declarations or filings with all regulatory
bodies as may be required to be obtained or made with respect to either
party in order to permit the parties to consummate the transactions
contemplated hereby which are to be consummated on or prior to the
Closing Date.
(ii) In order to convert Trust Securities into Common Stock,
the Holder of such Trust Securities shall submit to the Conversion
Agent an irrevocable Notice of Conversion, as set forth in Exhibit F,
to convert Trust Securities on behalf of such Holder, together, with
the certificates representing the Trust Securities. The Notice of
Conversion shall (i) set forth the number of Trust Securities to be
converted and the name or names, if other than the Holder, in which the
shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Trust Securities for a portion of the
Debentures held by the Property Trustee (at the rate of exchange
specified in the preceding paragraph) and (b) to immediately convert
such Debentures, on behalf of such Holder, into Common Stock (at the
conversion rate specified in the preceding
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paragraph). The Conversion Agent shall notify the Property Trustee of
the Holder's election to exchange Trust Securities for a portion of the
Debentures held by the Property Trustee and the Property Trustee shall,
upon receipt of such notice, deliver to the Conversion Agent the
appropriate principal amount of Debentures for exchange in accordance
with this Section. The Conversion Agent shall thereupon notify the
Depositor of the Holder's election to convert such Debentures into
shares of Common Stock. Holders of Trust Securities at the close of
business on a Distribution payment record date will be entitled to
receive the Distribution paid on such Trust Securities on the
corresponding Distribution Date notwithstanding the conversion of such
Trust Securities following such record date but prior to such
Distribution Date. Except as provided above, neither the Trust nor the
Depositor will make, or be required to make, any payment, allowance or
adjustment upon any conversion on account of any accumulated and unpaid
Distributions whether or not in arrears accrued on the Trust Securities
surrendered for conversion, or on account of any accumulated and unpaid
dividends on the shares of Common Stock issued upon such conversion.
Trust Securities shall be deemed to have been converted immediately
prior to the close of business on the day on which an irrevocable
Notice of Conversion relating to such Trust Securities is received by
the Conversion Agent in accordance with the foregoing provision (the
"Conversion Date"). The Person or Persons entitled to receive the
Common Stock issuable upon conversion of the Debentures shall be
treated for all purposes as the record holder or holders of such Common
Stock on the date of conversion. As promptly as practicable on or after
the Conversion Date, the Depositor shall issue and deliver at the
office of the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion,
together with the cash payment, if any, in lieu of any fraction of any
share to the Person or Persons entitled to receive the same, unless
otherwise directed by the Holder in the notice of conversion and the
Conversion Agent shall distribute such certificate or certificates to
such Person or Persons.
(iii) Each Holder of a Trust Security by its acceptance
thereof initially appoints the Property Trustee, not in its individual
capacity but solely as conversion agent (the "Conversion Agent") for
the purpose of effecting the conversion of Trust Securities in
accordance with this Section. In effecting the conversion and
transactions described in this Section, the Conversion Agent shall be
acting as agent of the Holders of Trust Securities directing it to
effect such conversion transactions. The Conversion Agent is hereby
authorized (i) to exchange Trust Securities from time to time for
Debentures held by the Trust in connection with the conversion of such
Trust Securities in accordance with this Section and (ii) to convert
all or a portion of the Debentures into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with the provisions
of this Section and to deliver to the Property Trustee any new
Debenture or Debentures for any resulting unconverted principal amount
delivered to the Conversion Agent by the Debenture Trustee.
(iv) No fractional shares of Common Stock will be issued as a
result of conversion, but, in lieu thereof, such fractional interest
will be paid in cash by the
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Depositor to the Conversion Agent in an amount equal to the Current
Market Price of the fractional share of the Common Stock, and the
Conversion Agent will in turn make such payment to the Holder or
Holders of Trust Securities so converted.
(v) Nothing in this Section 4.3 shall limit the requirement of
the Trust to withhold taxes pursuant to the terms of the Trust
Securities or as set forth in this Agreement or otherwise required of
the Property Trustee or the Trust to pay any amounts on account of such
withholdings.
SECTION 4.4. Subordination of Common Securities.
(a) Payment of Distributions on, the Redemption Price of, and the
Liquidation Distribution in respect of the Trust Securities, as applicable,
shall be made, subject to Section 4.2(e), pro rata among the Common Securities
and the Capital Securities based on the Liquidation Amount of the Trust
Securities; provided, however, that if on any Distribution Date, Redemption Date
or Liquidation Date any Event of Default resulting from a Debenture Event of
Default specified in Section 5.1(1) or 5.1(2) of the Indenture shall have
occurred and be continuing, no payment of any Distribution on, Redemption Price
of, or Liquidation Distribution in respect of any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all Outstanding Capital Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all Outstanding
Capital Securities then called for redemption, or in the case of payment of the
Liquidation Distribution the full amount of such Liquidation Distribution on all
Outstanding Capital Securities, shall have been made or provided for, and all
funds immediately available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions on, the Redemption Price of or
the Liquidation Distribution in respect of the Capital Securities then due and
payable.
(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holder of the Common Securities shall
have no right to act with respect to any such Event of Default under this Trust
Agreement until the effects of all such Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Capital
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Capital Securities and
not on behalf of the Holder of the Common Securities, and only the Holders of
the Capital Securities will have the right to direct the Property Trustee to act
on their behalf.
SECTION 4.5. Payment Procedures.
Payments of Distributions or of the Redemption Price, Liquidation
Amount or any other amounts in respect of the Capital Securities shall be made
by check mailed to the address of the Person entitled thereto as such address
shall appear on the Securities Register. Payments in
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respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Holder of all the Common
Securities.
SECTION 4.6. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States Federal, state and local tax
and information returns and reports required to be filed by or in respect of the
Issuer Trust. In this regard, the Administrative Trustees shall (a) prepare and
file (or cause to be prepared and filed) all Internal Revenue Service forms
required to be filed in respect of the Issuer Trust in each taxable year of the
Issuer Trust, and (b) prepare and furnish (or cause to be prepared and
furnished) to each Holder all Internal Revenue Service forms required to be
provided by the Issuer Trust. The Administrative Trustees shall provide the
Depositor and the Property Trustee with a copy of all such returns and reports
promptly after such filing or furnishing. The Issuer Trustees shall comply with
United States Federal withholding and backup withholding tax laws and
information reporting requirements with respect to any payments to Holders under
the Trust Securities.
SECTION 4.7. Payment of Taxes, Duties, Etc. of the Issuer Trust.
Upon receipt under the Indenture of Additional Sums, the Property
Trustee shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Issuer Trust by
the United States or any other taxing authority with respect to which such
Additional Sums were paid.
SECTION 4.8. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Capital Securities shall
be reduced by the amount of any corresponding payment such Holder has directly
received pursuant to Section 5.9 of the Indenture or Section 5.12 of this Trust
Agreement.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the creation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are Outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.
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SECTION 5.2. The Trust Securities Certificates.
Unless otherwise set forth herein, a single Capital Securities
Certificate representing the Capital Securities shall be issued to the Purchaser
in the form of a definitive Capital Securities Certificate. A single Common
Security Certificate representing the Common Securities shall be issued to the
Depositor in the form of a definitive Common Securities Certificate. The
consideration received by the Trust for the issuance of the Trust Securities
shall constitute a contribution to the capital of the Trust and shall not
constitute a loan to the Trust.
The Purchaser shall receive a Capital Securities Certificate bearing
the Restricted Securities Legend ("Restricted Certificated Securities").
Restricted Certificated Securities shall include the Restricted Securities
Legend unless removed in accordance with Section 5.4(c) hereof.
The Trust Securities Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of at least one Administrative Trustee
and authenticated by the Property Trustee. Trust Securities Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Issuer Trust, shall be validly issued and entitled to the benefit of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.4.
SECTION 5.3. Execution and Delivery of Trust Securities Certificates.
On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust and delivered
to or upon the written order of the Depositor, executed by an authorized officer
thereof, without further corporate action by the Depositor, in authorized
denominations.
SECTION 5.4. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) Registration, Transfer and Exchange Generally. The Administrative
Trustees shall keep or cause to be kept, at the office or agency maintained
pursuant to Section 5.8, a register or registers (the "Securities Register") in
which the registrar and transfer agent with respect to the Trust Securities (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of the Capital Securities
Certificate and (subject to Section 5.10) the Common Securities Certificate and
of transfers and exchanges of the Capital Securities Certificate as herein
provided. The Property Trustee is hereby appointed Securities
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Registrar for the purpose of registering the Capital Securities Certificate and
(subject to Section 5.10) the Common Securities Certificate and transfers and
exchanges thereof as provided herein.
Upon surrender for registration of transfer of the Capital Securities
Certificate at the office or agency maintained pursuant to Section 5.8, the
Administrative Trustees or any one of them shall execute and deliver to the
Property Trustee, and the Property Trustee shall deliver, in the name of the
designated transferee or transferees, one or more new Capital Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
and bearing such restrictive legends as may be required by this Trust Agreement,
dated the date of execution by such Administrative Trustee or Trustees.
At the option of the Holder, the Capital Securities Certificate may be
exchanged for other Capital Securities Certificates of the same series of any
authorized denominations, of like tenor and aggregate Liquidation Amount,
bearing such restrictive legends as may be required by this Trust Agreement and
bearing a number not contemporaneously Outstanding, upon surrender of the
Capital Securities Certificate to be exchanged at such office or agency.
Whenever any Capital Securities Certificate is so surrendered for exchange, the
Administrative Trustees or any one of them shall execute and deliver to the
Property Trustee, and the Property Trustee shall deliver, the Capital Securities
Certificates that the Holder making the exchange is entitled to receive.
All Capital Securities issued upon any transfer or exchange of Capital
Securities shall evidence the same interest in the assets of the Issuer Trust,
and be entitled to the same benefits under this Trust Agreement, as the Capital
Securities surrendered upon such transfer or exchange.
The Securities Registrar shall not be required, (i) to issue, register
the transfer of or exchange any Capital Security during a period beginning at
the opening of business 15 days before the day of selection for redemption of
such Capital Securities pursuant to Article IV and ending at the close of
business on the day of mailing of the notice of redemption, or (ii) to register
the transfer of or exchange any Capital Security so selected for redemption in
whole or in part, except, in the case of any such Capital Security to be
redeemed in part, any portion thereof not to be redeemed.
The Capital Securities Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to an Administrative
Trustee and the Securities Registrar duly executed by the Holder or such
Holder's attorney duly authorized in writing. The Capital Securities Certificate
surrendered for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Property Trustee in accordance with its
customary practice.
No service charge shall be made for any registration of transfer or
exchange of the Capital Securities Certificate, but the Issuer Trust may require
payment of a sum sufficient to
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cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Capital Securities Certificate.
(b) Registration, Transfer, and Exchange. A Security may be
transferred, in whole or in part, to a Person who takes delivery in the form of
another Security, provided that the following provisions are met. When Capital
Securities are presented to the Securities Registrar with a request: (1) to
register the transfer of such Securities; or (2) to exchange such Securities for
Capital Securities in an equal aggregate principal amount of Capital Securities
of other authorized denominations, the Securities Registrar shall register the
transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Capital Securities
surrendered for transfer or exchange:
(A) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory
to the Property Trustee and the Securities Registrar, duly
executed by the Purchaser or his attorney duly authorized in
writing, delivered to the Depositor at least 30 Business Days
before such intended transfer, and the Depositor shall not
have delivered a written notice of objection to the Purchaser
within 5 Business Days prior to the intended transfer, which
notice of objection shall state whether the Depositor is
objecting pursuant to subsection (D) or (E) below;
(B) in the case of Restricted Securities, are being
transferred pursuant to an applicable exemption from the
Securities Act and are accompanied by the following additional
information and documents: a Restricted Security Certificate,
satisfactory to the Property Trustee and duly executed by the
transferor Holder or his attorney duly authorized in writing,
in the form attached hereto as Exhibit D (the "Restricted
Securities Certificate") and an opinion of counsel (as
described in subsection (c)(v) below) reasonably acceptable to
the Depositor and to the Securities Registrar to the effect
that such transfer is in compliance with the Securities Act,
in which case the transferee Holder shall take delivery in the
form of a Restricted Security, subject to Section 5.4(c);
(C) shall be accompanied by a written statement that
such transferee agrees to be bound by the terms and provisions
of this Trust Agreement and the Purchase Agreement;
(D) shall be subject to the right of the Depositor to
veto the Purchaser's choice of such Person to whom the
proposed transfer or disposition is to occur by giving notice
of such objection to the Purchaser as described in (A) above;
and
(E) shall, pursuant to Section 4.2(a)(iii), be
subject to the right of the Depositor to cause the Issuer
Trust to send out a notice of redemption to redeem at a
Redemption Price specified in Section 11.7 of the Indenture,
the Security or
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Securities surrendered for transfer or exchange by giving
notice of such objection to the Purchaser as described in (A)
above.
(c) Securities Act Legends. Except as set forth below, Certificated
Capital Securities, their respective Successor Securities and a new Capital
Security which is issued in exchange for another Capital Security or any portion
thereof, upon transfer or otherwise, shall bear a Restricted Securities Legend
as set forth in Section 5.11:
(i) at any time after the Capital Securities may be freely
transferred without registration under the Securities Act or without
being subject to transfer restrictions pursuant to the Securities Act,
a new Capital Security which does not bear a Securities Act Legend may
be issued in exchange for or in lieu of a Capital Security or any
portion thereof which bears such a legend if the Depositor has received
from the Purchaser an opinion of counsel as described in subsection (v)
below and if the Property Trustee has received an Unrestricted
Securities Certificate, in the form of Exhibit E hereto (an
"Unrestricted Securities Certificate"), satisfactory to the Property
Trustee and duly executed by the Holder of such legended Capital
Security or his attorney duly authorized in writing, and after such
date and receipt of such certificate, the Property Trustee shall
authenticate and deliver such a new Capital Security in exchange for or
in lieu of such other Capital Security as provided in this Article 5;
(ii) a new Capital Security which does not bear a Securities
Act Legend may be issued in exchange for or in lieu of a Capital
Security or any portion thereof which also does not bear such a legend
if, after the receipt by the Depositor of an opinion of counsel as
described in subsection (v) below, in the Depositor's judgment, placing
such a legend upon such new Capital Security is not necessary to ensure
compliance with the registration requirements of the Securities Act,
and the Property Trustee, at the direction of the Depositor, shall
authenticate and deliver such a new Capital Security as provided in
this Article 5; and
(iii) the Purchaser agrees that it will not effect the
proposed transfer or disposition of the Capital Security until such
Purchaser has provided to the Depositor an opinion of counsel
satisfactory in form and substance to the Depositor that such proposed
disposition or transfer is exempt from registration under the
Securities Act and any applicable state securities laws. The Depositor
shall use its best efforts to comply with any state securities laws,
but shall in no event be required, in connection therewith, to qualify
to do business in any state where it is not then qualified or to take
any action that would subject it to tax or to the general service of
process in any state where it is not then subject.
(d) Any purchaser or Holder of any Capital Securities or any interest
therein will be deemed to have represented by its purchase and holding thereof
that it either (i) is not a Plan or a Plan Asset Entity and is not purchasing
such Capital Securities on behalf of or with "plan assets" of any Plan, or (ii)
is eligible for the exemptive relief available under PTCE 96-23, 95-
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60, 91-38, 90-1 or 84-14 or another applicable exemption with respect to such
purchase or holding. The Securities Registrar may, and if the Depositor shall so
request, the Securities Registrar shall, before registering for transfer or
exchange any Capital Securities Certificates as provided in Sections 5.2, 5.4 or
5.5 of this Trust Agreement, (A) require the purchaser or Holder of such Capital
Securities Certificates to confirm that it either (x) is not a Plan, a Plan
Asset Entity or a Person investing "plan assets" of any Plan or (y) is eligible
for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or
84-14, and (B) if such purchaser or Holder does not provide such confirmation,
require an Opinion of Counsel or other evidence satisfactory to the Depositor of
the availability to such purchaser or Holder of another applicable exemption
with respect to such purchase or holding.
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate, and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Issuer Trust shall execute and make available for delivery, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Trust Securities
Certificate, a new Trust Securities Certificate of like class, tenor and
denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section 5.5, the Administrative Trustees or the
Securities Registrar 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 Trust Securities Certificate issued pursuant to this Section 5.5
shall constitute conclusive evidence of an undivided beneficial interest in the
assets of the Issuer Trust corresponding to that evidenced by the lost, stolen
or destroyed Trust Securities Certificate, as if originally issued, whether or
not the lost, stolen or destroyed Trust Securities Certificate shall be found at
any time.
SECTION 5.6. Persons Deemed Holders.
The Issuer Trustees and the Securities Registrar shall each treat the
Person in whose name any Trust Securities Certificate shall be registered in the
Securities Register as the owner of such Trust Securities Certificate for the
purpose of receiving Distributions and for all other purposes whatsoever, and
none of the Issuer Trustees and the Securities Registrar shall be bound by any
notice to the contrary.
SECTION 5.7. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor or the Issuer Trustees accountable by reason of the disclosure of
its name and address, regardless of the source from which such information was
derived.
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SECTION 5.8. Maintenance of Office or Agency.
The Administrative Trustees shall maintain an office or offices or
agency or agencies where Capital Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Issuer Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate HSB Group, Inc., One
State Street, Hartford, Connecticut 06102 as its office and agency for such
purposes. The Administrative Trustees shall give prompt written notice to the
Depositor, the Property Trustee and to the Holders of any change in the location
of the Securities Register or any such office or agency.
SECTION 5.9. Appointment of Paying Agents.
The Paying Agent or Agents shall make Distributions to Holders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account solely for the
purpose of making the Distributions referred to above. The Administrative
Trustees may revoke such power and remove the Paying Agent in its sole
discretion. The Paying Agent shall initially be the Bank and any co-paying agent
chosen by the Property Trustee and acceptable to the Administrative Trustees and
the Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees and the
Property Trustee. If the Bank shall no longer be the Paying Agent or a successor
Paying Agent shall resign or its authority to act be revoked, the Administrative
Trustees shall appoint a successor (which shall be a bank or trust company) that
is reasonably acceptable to the Depositor to act as Paying Agent. Such successor
Paying Agent or any additional Paying Agent shall execute and deliver to the
Issuer Trustees an instrument in which such successor Paying Agent or additional
Paying Agent shall agree with the Issuer Trustees that as Paying Agent, such
successor Paying Agent or additional Paying Agent will hold all sums, if any,
held by it for payment to the Holders in trust for the benefit of the Holders
entitled thereto until such sums shall be paid to such Holders. The Paying Agent
shall return all unclaimed funds to the Property Trustee and upon removal of a
Paying Agent such Paying Agent shall also return all funds in its possession to
the Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall
apply to the Bank also in its role as Paying Agent, for so long as the Bank
shall act as Paying Agent and, to the extent applicable, to any other paying
agent appointed hereunder. Any reference in this Agreement to the Paying Agent
shall include any co-paying agent unless the context requires otherwise.
SECTION 5.10. Ownership of Common Securities by Depositor.
On the Closing Date, the Depositor shall acquire, and thereafter shall
retain, beneficial and record ownership of the Common Securities. Neither the
Depositor nor any successor Holder of the Common Securities may transfer less
than all the Common Securities (except in connection with a redemption thereof),
and the Depositor or any such successor Holder may transfer the Common
Securities only (i) in connection with a consolidation or merger of the
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Depositor into another corporation, or any conveyance, transfer or lease by the
Depositor of its properties and assets substantially as an entirety to any
Person, pursuant to Section 8.1 of the Indenture, or (ii) to the Depositor or an
Affiliate of the Depositor in compliance with applicable law (including the
Securities Act and applicable state securities and blue sky laws). To the
fullest extent permitted by law, any attempted transfer of the Common Securities
other than as set forth in the next proceeding sentence shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued to
the Depositor to contain a legend stating substantially "THIS CERTIFICATE IS NOT
TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN
COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.10 OF THE TRUST AGREEMENT."
SECTION 5.11. Restrictive Legends.
The Capital Securities Certificate shall bear the following legend (the
"Restricted Securities Legend") unless the Depositor determines otherwise in
accordance with applicable law:
"THE CAPITAL SECURITIES EVIDENCED HEREBY, ANY CONVERTIBLE
SUBORDINATED DEFERRABLE INTEREST DEBENTURES ISSUABLE HEREWITH AND THE
COMMON STOCK ISSUABLE UPON THEIR CONVERSION HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN WHOLE
OR IN PART (BUT IF IN PART, IN AMOUNTS NOT LESS THAN $10,000,000 IN
PRINCIPAL AMOUNT) AND ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF THE
SECURITIES ACT OR PURSUANT TO AN APPLICABLE EXEMPTION THEREFROM."
SECTION 5.12. Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Issuer Trust except as described below. The
Trust Securities shall be personal property giving only the rights specifically
set forth therein and in this Trust Agreement. The Trust Securities shall have
no preemptive or similar rights and when issued and delivered to Holders against
payment of the purchase price therefor will be fully paid and nonassessable by
the Issuer Trust. The Holders of the Trust Securities, in their capacities as
such, 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.
(b) For so long as any Capital Securities remain Outstanding, if, upon
a Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount
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of the outstanding Debentures fail to declare the principal of all of the
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Capital Securities then Outstanding shall have the
right to make such declaration by a notice in writing to the Property Trustee,
the Depositor and the Debenture Trustee.
At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Property Trustee fails to annul any such declaration and waive
such default, the Holders of at least a Majority in Liquidation Amount of the
Capital Securities, by written notice to the Property Trustee, the Depositor and
the Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay:
(A) all overdue installments of interest on all of the
Debentures,
(B) the principal of (and premium, if any, on) any
Debentures that have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Debentures, and
(C) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture Trustee
and the Property Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Debentures,
other than the non-payment of the principal of the Debentures that has
become due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture.
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities may, on behalf of the Holders of all the Trust Securities, waive any
past default or Event of Default under the Indenture, except a default or Event
of Default in the payment of principal or interest (unless such default or Event
of Default 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) or a default or Event of Default in respect of a
covenant or provision that under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Debenture. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of any part of
the Capital Securities, a record date shall be established for determining
Holders of Outstanding Capital Securities entitled to join in such notice, which
record date shall be at the close of business on the day the Property Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies,
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and only such Persons, shall be entitled to join in such notice, whether or not
such Holders remain Holders after such record date; provided, that, unless such
declaration of acceleration, or rescission and annulment, as the case may be,
shall have become effective by virtue of the requisite percentage having joined
in such notice prior to the day that is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be canceled
and of no further effect. Nothing in this paragraph shall prevent a Holder, or a
proxy of a Holder, from giving, after expiration of such 90-day period, a new
written notice of declaration of acceleration, or rescission and annulment
thereof, as the case may be, that is identical to a written notice that has been
canceled pursuant to the proviso to the preceding sentence, in which event a new
record date shall be established pursuant to the provisions of this Section
5.12(b).
(c) For so long as any Capital Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Capital Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.9 of the Indenture, for enforcement of payment to such Holder of any
amounts payable in respect of Debentures having an aggregate principal amount
equal to the aggregate Liquidation Amount of the Capital Securities of such
Holder (a "Direct Action"). Except as set forth in Section 5.12(b) and this
Section 5.12(c), the Holders of Capital Securities shall have no right to
exercise directly any right or remedy available to the holders of, or in respect
of, the Debentures.
(d) Except as otherwise provided in paragraphs (a), (b) and (c) of this
Section 5.12, the Holders of at least a Majority in Liquidation Amount of the
Capital Securities may, on behalf of the Holders of all the Trust Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights.
(a) Except as expressly provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Capital Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Issuer Trust or the obligations
of the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Trust Securities Certificates, be construed so as to constitute the
Holders from time to time as partners or members of an association.
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(b) So long as any Debentures are held by the Property Trustee on
behalf of the Issuer Trust, the Property Trustee shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or execute any trust or power conferred on the Property
Trustee with respect to the Debentures, (ii) waive any past default that may be
waived under Section 5.13 of the Indenture, (iii) exercise any right to rescind
or annul a declaration that the principal of all the Debentures shall be due and
payable, 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 at least a Majority in
Liquidation Amount of the Capital Securities, 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 Property
Trustee without the prior written consent of each Holder of Capital Securities.
The Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Capital Securities, except by a
subsequent vote of the Holders of the Capital Securities. The Property Trustee
shall notify all Holders of the Capital Securities of any notice of default
received with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Issuer Trustees shall, at the expense of the Depositor,
obtain an Opinion of Counsel experienced in such matters to the effect that such
action shall not cause the Issuer Trust to be taxable as a corporation or
classified as other than a grantor trust for United States Federal income tax
purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Capital Securities, whether by way of amendment to the Trust
Agreement or otherwise, or (ii) the dissolution, winding-up or termination of
the Issuer Trust, other than pursuant to the terms of this Trust Agreement, then
the Holders of Outstanding Capital Securities as a class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities. Notwithstanding any other
provision of this Trust Agreement, no amendment to this Trust Agreement may be
made if, as a result of such amendment, it would cause the Issuer Trust to be
taxable as a corporation or classified as other than a grantor trust for United
States Federal income tax purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders of the Capital Securities,
stating the time, place and purpose of the meeting, shall be given by the
Property Trustee pursuant to Section 10.8 to each Holder of Capital Securities,
at such Holder's registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further notice.
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SECTION 6.3. Meetings of Holders of the Capital Securities.
No annual meeting of Holders is required to be held. The Administrative
Trustees, however, shall call a meeting of the Holders of the Capital Securities
to vote on any matter upon the written request of the Holders of at least 25% in
aggregate Liquidation Amount of the Outstanding Capital Securities and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of the Capital Securities to vote on
any matters as to which such Holders are entitled to vote.
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities, present in person or by proxy, shall constitute a quorum at any
meeting of the Holders of the Capital Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders
present, in person or by proxy, holding Capital Securities representing at least
a majority of the aggregate Liquidation Amount of the Capital Securities held by
the Holders present, either in person or by proxy, at such meeting shall
constitute the action of the Holders of the Capital Securities, unless this
Trust Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $1,000 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote
by proxy, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Administrative Trustees, or with such other
officer or agent of the Issuer Trust as the Administrative Trustees may direct,
for verification prior to the time at which such vote shall be taken. Pursuant
to a resolution of the Property Trustee, proxies may be solicited in the name of
the Property Trustee or one or more officers of the Property Trustee. Only
Holders of record shall be entitled to vote. When Trust Securities are held
jointly by several persons, any one of them may vote at any meeting in person or
by proxy in respect of such Trust Securities, but if more than one of them shall
be present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
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SECTION 6.6. Holder Action by Written Consent.
Any action that may be taken by Holders of Capital Securities at a
meeting may be taken without a meeting if Holders holding at least a Majority in
Liquidation Amount of the Capital Securities entitled to vote in respect of such
action (or such larger proportion thereof as shall be required by any other
provision of this Trust Agreement) shall consent to the action in writing. Any
action that may be taken by the Holder of all the Common Securities may be taken
if such Holder shall consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of Holders or the payment of a
distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
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 an agent
duly appointed in writing; and, except as otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to an Administrative Trustee. 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 Trust Agreement and (subject to Section
8.1) conclusive in favor of the Issuer Trustees, if made in the manner provided
in this Section 6.8.
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 execution is by
a signer acting in a capacity other than such signer's individual capacity, such
certificate or affidavit shall also constitute sufficient proof of such signer's
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 that any Issuer Trustee receiving the same deems sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
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Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust 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 Issuer
Trustees, the Depositor or the Issuer Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise among the Holders or the Issuer Trustees
with respect to the authenticity, validity or binding nature of any request,
demand, authorization, direction, consent, waiver or other Act of such Holder or
Issuer Trustee under this Article VI, then the determination of such matter by
the Property Trustee shall be conclusive with respect to such matter.
SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by Holders
(and other Issuer Trustees) during normal business hours for any purpose
reasonably related to such Holder's interest as a Holder (or such Issuer
Trustee's service as a Trustee hereunder).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf
of and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:
(a) the Property Trustee is a national banking association with trust
powers, duly organized, validly existing and in good standing under the laws of
the United States;
(b) the Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
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(c) the Delaware Trustee is a Delaware corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
and satisfies for the Issuer Trust the requirements of Section 3807(a) of the
Delaware Business Trust Act;
(d) the Delaware Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(e) this Trust Agreement has been duly authorized, executed and
delivered by the Property Trustee and the Delaware Trustee and constitutes the
valid and legally binding agreement of each of the Property Trustee and the
Delaware Trustee enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(f) the execution, delivery and performance of this Trust Agreement
have been duly authorized by all necessary corporate or other action on the part
of the Property Trustee and the Delaware Trustee and do not require any approval
of stockholders of the Property Trustee and the Delaware Trustee and such
execution, delivery and performance will not (i) violate the Charter or By-laws
of the Property Trustee or the Delaware Trustee, (ii) violate any provision of,
or constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of, any Lien on any properties included in
the Trust Property pursuant to the provisions of, any indenture, mortgage,
credit agreement, license or other agreement or instrument to which the Property
Trustee or the Delaware Trustee is a party or by which it is bound, or (iii)
violate any law, governmental rule or regulation of the United States or the
State of Delaware, as the case may be, governing the banking, trust or general
powers of the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property Trustee or
the Delaware Trustee;
(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee, as the
case may be, contemplated herein requires the consent or approval of, the giving
of notice to, the registration with or the taking of any other action with
respect to any governmental authority or agency under any existing law of the
United States or the State of Delaware governing the banking, trust or general
powers of the Property Trustee or the Delaware Trustee, appropriate in context;
and
(h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal that,
individually or in the aggregate, would materially and adversely affect the
Issuer Trust or would question the right, power and authority of the Property
Trustee or the Delaware Trustee, as the case may be, to enter into or perform
its obligations as one of the Issuer Trustees under this Trust Agreement.
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SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued on the Closing Date on
behalf of the Issuer Trust have been duly authorized and will have been duly and
validly executed, issued and delivered by the Issuer Trustees pursuant to the
terms and provisions of, and in accordance with the requirements of, this Trust
Agreement and the Holders will be, as of such date, entitled to the benefits of
this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either Issuer Trustee
of this Trust Agreement.
ARTICLE VIII
THE ISSUER TRUSTEES; PAYING AGENTS
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee,
subject to the Trust Indenture Act. Notwithstanding the foregoing, but subject
to Section 8.1(c) and 8.1(e), no provision of this Trust Agreement shall require
any of the Issuer Trustees to expend or risk its or their own funds or otherwise
incur any financial liability in the performance of any of its or their duties
hereunder, or in the exercise of any of its or their rights or powers, if it or
they 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 or them. Whether or not therein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Issuer Trustees shall be subject to the provisions
of this Section 8.1. Nothing in this Trust Agreement shall be construed to
release an Administrative Trustee from liability for his or her own gross
negligent action, his or her own gross negligent failure to act, or his or her
own wilful misconduct. To the extent that, at law or in equity, an Issuer
Trustee has duties and liabilities relating to the Issuer Trust or to the
Holders, such Issuer Trustee shall not be liable to the Issuer Trust or to any
Holder for such Issuer Trustee's good faith reliance on the provisions of this
Trust Agreement. The provisions of this Trust Agreement, to the extent that they
restrict the duties and liabilities of the Issuer Trustees otherwise existing at
law or in equity, are agreed by the Depositor and the Holders to replace such
other duties and liabilities of the Issuer Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only
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to the extent that there shall be sufficient revenue or proceeds from the Trust
Property to enable the Property Trustee or a Paying Agent to make payments in
accordance with the terms hereof. Each Holder, by its acceptance of a Trust
Security, agrees that it will look solely to the revenue and proceeds from the
Trust Property to the extent legally available for distribution to it as herein
provided and that the Issuer Trustees are not personally liable to it for any
amount distributable in respect of any Trust Security or for any other liability
in respect of any Trust Security. This Section 8.1(b) does not limit the
liability of the Issuer Trustees expressly set forth elsewhere in this Trust
Agreement or, in the case of the Property Trustee, in the Trust Indenture Act.
(c) If an Event of Default has occurred and is continuing, the Property
Trustee shall enforce this Trust Agreement for the benefit of the Holders.
(d) 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
Trust Agreement (including pursuant to Section 10.10), and no implied covenants
shall be read into this Trust Agreement against the Property Trustee. If an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 5.12), the Property Trustee shall exercise such of the rights and powers
vested in it by this Trust Agreement, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(e) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that:
(i) prior to the occurrence of any 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 Trust Agreement (including pursuant to Section 10.10),
and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Trust Agreement (including pursuant to
Section 10.10); 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 Trust 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 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 Trust Agreement.
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(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized 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 at least 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 Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Payment 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 Trust Agreement and the
Trust Indenture Act;
(v) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to Section
3.1 and except to the extent otherwise required by law; and
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the default or misconduct of
any other Issuer Trustee or the Depositor;
(f) The Administrative Trustees shall not be responsible for monitoring
the compliance by the Issuer Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall either Administrative Trustee be
liable for the default or misconduct of any other Issuer Trustee or the
Depositor. The Delaware Trustee shall not be responsible for monitoring
compliance by the Property Trustee, the Administrative Trustees or the Depositor
with their respective duties under this Trust Agreement, nor shall the Delaware
Trustee be liable for the default or misconduct of any other Issuer Trustee or
the Depositor.
SECTION 8.2. Certain Notices.
Within thirty (30) days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such Event of
Default to the Holders and the Administrative Trustee, unless such Event of
Default shall have been cured or waived.
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Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures, the Property Trustee shall transmit, in the manner and to the extent
provided in Section 10.8, notice of such exercise to the Holders and the
Administrative Trustees, unless such exercise shall have been revoked.
The Property Trustee shall not be deemed to have knowledge of any Event
of Default unless the Property Trustee shall have received written notice, or a
Responsible Officer charged with the administration of this Trust Agreement
shall have obtained actual knowledge, of such Event of Default.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of 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) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action,
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein, or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to which
the Holders of the Capital Securities are entitled to vote under the terms of
this Trust Agreement, the Property Trustee shall deliver a notice to the
Depositor requesting the Depositor's opinion as to the course of action to be
taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Holders, in which event
the Property Trustee shall have no liability except for its own bad faith,
negligence or wilful misconduct;
(c) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;
(d) any direction or act of an Administrative Trustee contemplated by
this Trust Agreement shall be sufficiently evidenced by a certificate executed
by such Administrative Trustee and setting forth such direction or act;
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(e) 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;
(f) the Property Trustee may consult with counsel (which counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees) and the advice of such 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 and in accordance with
such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction; provided that, nothing
contained in this Section 8.3(g) 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 Trust Agreement;
(h) 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, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall be responsible for
its own negligence, bad faith or wilful misconduct with respect to selection of
any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement 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
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust 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 acting in
accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
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No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on any Issuer 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 it 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 any Issuer Trustee shall be construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Depositor and the Issuer Trust, and the
Issuer Trustees do not assume any responsibility for their correctness. The
Issuer Trustees shall not be accountable for the use or application by the
Depositor of the proceeds of the Debentures.
The Property Trustee may conclusively assume that any funds held by it
hereunder are legally available unless an officer of the Property Trustee
assigned to its Corporate Trust division shall have received written notice from
the Depositor, any Holder or any other Issuer Trustee that such funds are not
legally available.
SECTION 8.5. May Hold Securities.
Any Issuer Trustee or any agent of any Issuer Trustee or the Issuer
Trust, in its individual or any other capacity, may become the owner or pledgee
of Trust Securities and, subject to Sections 8.8 and 8.13 and, except as
provided in the definition of the term "Outstanding" in Article I, may otherwise
deal with the Issuer Trust with the same rights it would have if it were not an
Issuer Trustee or such agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to each Issuer Trustee and Paying Agent from time to time
such reasonable compensation for all services rendered by them hereunder as may
be agreed by the Depositor and such Issuer Trustee or Paying Agent, as the case
may be, from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to reimburse each
Issuer Trustee and Paying Agent upon request for all reasonable expenses,
disbursements and advances incurred or made by each Issuer Trustee and Paying
Agent in accordance with any provision of this Trust Agreement (including the
reasonable compensation and the expenses and disbursements of their agents and
counsel), except any such expense, disbursement or advance as may be
attributable to their negligence, bad faith or wilful misconduct; and
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(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Paying Agent, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee or
agent of the Issuer Trust (referred to herein as an "Indemnified Person") from
and against any loss, damage, liability, tax, penalty, expense or claim of any
kind or nature whatsoever incurred by such Indemnified Person by reason of the
creation, operation or termination of the Issuer Trust or any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Issuer Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this Trust
Agreement, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified Person by
reason of negligence, bad faith or wilful misconduct with respect to such acts
or omissions.
(d) to the fullest extent permitted by applicable law, the parties
intend that Section 3561 of Title 12 of the Delaware Code shall not apply to the
Issuer Trust and that compensation payable to any Issuer Trustee pursuant to
this Section 8.6 not be subject to review by any court under Section 3560 of
Title 12 of the Delaware Code or otherwise.
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement and the resignation or removal of any Issuer Trustee.
No Issuer Trustee or Paying Agent may claim any Lien on any Trust
Property as a result of any amount due pursuant to this Section 8.6.
The Depositor, any Issuer Trustee (subject to Section 8.8(a)) and any
Paying Agent 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 Issuer Trust, and the Issuer Trust and the Holders of
Trust Securities shall have no rights by virtue of this Trust Agreement 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 Issuer
Trust, shall not be deemed wrongful or improper. Neither the Depositor, any
Paying Agent nor any Issuer Trustee shall be obligated to present any particular
investment or other opportunity to the Issuer Trust even if such opportunity is
of a character that, if presented to the Issuer Trust, could be taken by the
Issuer Trust, and the Depositor, any Issuer Trustee or any Paying Agent 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 Issuer Trustee or Paying Agent may engage or be interested in
any financial or other transaction with the Depositor or any Affiliate of the
Depositor, or may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Issuer
Trustees.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national or state chartered bank and
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eligible pursuant to the Trust Indenture Act to act as such, and that has at the
time of such appointment securities rated in one of the three highest rating
categories by a nationally recognized statistical rating organization and a
combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes of
this Section 8.7 and to the extent permitted by the Trust Indenture Act, 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. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section 8.7, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. At the time of appointment, the Property
Trustee must have securities rated in one of the three highest rating categories
by a nationally recognized statistical rating organization.
(b) There shall at all times be one or more Administrative Trustees
hereunder. Each Administrative 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
persons authorized to bind that entity.
(c) There shall at all times be a Delaware Trustee hereunder. The
Delaware Trustee shall either be (i) a natural person who is at least 21 years
of age and a resident of the State of Delaware, or (ii) a legal entity with its
principal place of business in the State of Delaware and that otherwise meets
the requirements of applicable Delaware law and that shall act through one or
more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 8.9. Co-Trustees and Separate Trustee.
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 the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, Depositor and the Administrative Trustees,
by agreed action of the majority of them shall have power to appoint, and upon
the written request of the Administrative Trustee and the Depositor shall for
such purpose join with the Administrative Trustees in the execution, delivery,
and performance of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Property Trustee either to act as
co-trustee, jointly with the Property Trustee, of all or
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any part of such Trust Property, or to the extent required by law 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 the capacity aforesaid, any property, title, right or power deemed necessary
or desirable, subject to the other provisions of this Section 8.9. Any
co-trustee or separate trustee appointed pursuant to this Section 8.9 shall
either be (i) a natural person who is at least 21 years of age and a resident of
the United States, or (ii) a legal entity with its principal place of business
in the United States that shall act through one or more persons authorized to
bind such entity. If an Event of Default under the Indenture shall have occurred
and be continuing, the Property Trustee alone shall have the power to make such
appointment.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed by one or more
Administrative Trustees, and the Trust Securities shall be delivered by the
Property Trustee, and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Property Trustee specified
hereunder shall be exercised solely by the Property Trustee and not by such
co-trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under this
Section 8.9, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigning or removed may be appointed in the manner provided in this Section
8.9.
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(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any other
trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
Article shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time by giving written notice thereof to the Holders. If the
instrument of acceptance by the successor Issuer Trustee required by Section
8.11 shall not have been delivered to the Relevant Trustee within 60 days after
the giving of such notice of resignation, the Relevant Trustee may petition, at
the expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by Act of the Holder
of the Common Securities. If a Debenture Event of Default shall have occurred
and be continuing, the Property Trustee or the Delaware Trustee, or both of
them, may be removed at such time by Act of the Holders of a Majority in
Liquidation Amount of the Capital Securities, delivered to the Relevant Trustee
(in its individual capacity and, in the case of the Property Trustee, on behalf
of the Issuer Trust). An Administrative Trustee may only be removed by the
Holder of the Common Securities and may be so removed at any time.
If any Issuer Trustee shall resign, be removed or become incapable of
acting as Issuer Trustee, or if a vacancy shall occur in the office of any
Issuer Trustee for any cause, at a time when no Debenture Event of Default shall
have occurred and be continuing, the Holder of the Common Securities, by Act
delivered to the retiring Issuer Trustee, shall promptly appoint a successor
Issuer Trustee or Issuer Trustees, and such successor Issuer Trustee shall
comply with the applicable requirements of Section 8.11. If the Property Trustee
or the Delaware Trustee shall resign, be removed or become incapable of
continuing to act as the Property Trustee or the Delaware Trustee, as the case
may be, at a time when a Debenture Event of Default shall have occurred and be
continuing, the Holders of Capital Securities, by Act of the Holders of a
Majority in Liquidation Amount of the Capital Securities delivered to the
retiring Relevant Trustee, shall promptly appoint a successor Relevant Trustee
or Trustees, and such successor Issuer Trustee shall comply with the applicable
requirements of Section 8.11. If an
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Administrative Trustee shall resign, be removed or become incapable of acting as
Administrative Trustee, at a time when a Debenture Event of Default shall have
occurred and be continuing, the Holder of the Common Securities by Act delivered
to the Administrative Trustee shall promptly appoint a successor Administrative
Trustee or Administrative Trustees and such successor Administrative Trustee or
Trustees shall comply with the applicable requirements of Section 8.11. If no
successor Relevant Trustee shall have been so appointed by the Holder of the
Common Securities or the Holders of a Majority in Liquidation Amount of the
Capital Securities, as the case may be, and accepted appointment in the manner
required by Section 8.11, any Holder who has been a Holder of Trust Securities
for at least six months may, on behalf of such Holder and all others similarly
situated, or any other Issuer Trustee, may petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each
removal of an Issuer Trustee and each appointment of a successor Issuer Trustee
to all Holders in the manner provided in Section 10.8 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, if any Delaware Trustee who is a natural person dies or becomes, in
the opinion of the Depositor, incompetent or incapacitated, the vacancy created
by such death, incompetence or incapacity may be filled by (a) the unanimous act
of the remaining Administrative Trustees if there are at least two of them or
(b) otherwise by the Depositor (with the successor in either case being a Person
who satisfies the eligibility requirement for the Delaware Trustee set forth in
Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee with respect
to the Trust Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which (a)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Issuer Trust, and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Issuer Trust by more than one Relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Relevant Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Relevant Trustee; but, on request of the Issuer Trust or any successor Relevant
Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver
to such successor Relevant
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Trustee all Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Trust Securities and the Issuer
Trust.
Upon request of any Issuer Trustee or any such successor Relevant
Trustee, the retiring Relevant Trustee or the Issuer Trust, as the case may be,
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee 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 Relevant
Trustee shall be a party, or any Person, succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided that such Person 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.
SECTION 8.13. Preferential Collection of Claims Against Depositor or Issuer
Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor or the Issuer Trust (or any other obligor upon the Capital
Securities), the Property Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Depositor or
the Issuer Trust (or any such other obligor).
SECTION 8.14. Property Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable and irrespective of whether
the Property Trustee shall have made any demand on the Issuer Trust for the
payment of any past due Distributions) shall be entitled and empowered, to the
fullest extent permitted by law, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Property Trustee (including any claim for the
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reasonable compensation, expenses, disbursements and advances of the Property
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) 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 Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Not later than 60 days following May 15 of each year commencing
with May 15, 1998, the Property Trustee shall transmit to all Holders in
accordance with Section 10.8, and to the Depositor, a brief report dated as of
the immediately preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if
to the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the
twelve-month period (or, in the case of the initial report, the period
since the Closing Date) ending with such May 15 or, if the Property
Trustee has not complied in any material respect with such obligations,
a description of such noncompliance; and
(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
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(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with each national stock exchange,
the Nasdaq National Market or such other interdealer quotation system or
self-regulatory organization upon which the Trust Securities are listed or
traded, with the Commission and with the Depositor.
SECTION 8.16. Reports to the Property Trustee.
Each of the Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall provide to the Property Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act. The Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall annually file with the Property Trustee a certificate
specifying whether such Person is in compliance with all of the terms and
covenants applicable to such Person hereunder.
SECTION 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust 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) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The initial number of Issuer Trustees shall be five, provided that
the Property Trustee and the Delaware Trustee may be the same Person if the
Property Trustee satisfies the applicable requirements.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to annul, dissolve or terminate the Issuer Trust.
SECTION 8.19. Delegation of Power.
(a) Any Administrative Trustee, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 such
Administrative Trustee's power for the purpose of executing any documents
contemplated in Section 2.7(a), including any
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registration statement or amendment thereto filed with the Commission, or making
any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Issuer Trust or the
names of the Administrative Trustees or otherwise as the Administrative Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrative Trustees.
(a) The Administrative Trustees shall initially be Saul L. Basch,
Roberta O'Brien and Robert C. Walker, and their successors shall be appointed by
the Holder of all the Common Securities. The Administrative Trustees may resign
or be removed by the Holder of all the Common Securities at any time. Upon any
resignation or removal of an Administrative Trustee, the Depositor shall appoint
a successor Administrative Trustee. If at any time there is no Administrative
Trustee, the Property Trustee or any Holder who has been a Holder of Trust
Securities for at least six months may petition any court of competent
jurisdiction for the appointment of one or more Administrative Trustees.
(b) Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with this Section 8.20, the Administrative Trustees in
office, regardless of their number (and notwithstanding any other provision of
this Agreement), shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Trust Agreement.
(c) Notwithstanding the foregoing or any other provision of this Trust
Agreement, if any Administrative Trustee who is a natural person dies or
becomes, in the opinion of the Holder of all the Common Securities, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by the unanimous act of the remaining Administrative Trustees, if
there were at least two of them prior to such vacancy, and by the Depositor, if
there were not two such Administrative Trustees immediately prior to such
vacancy (with the successor being a Person who satisfies the eligibility
requirement for Administrative Trustees set forth in Section 8.7).
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
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Unless earlier dissolved, the Issuer Trust shall automatically dissolve
on December 31, 2017 (the "Expiration Date"), and shall thereafter be terminated
by filing a Certificate of Cancellation with the Secretary of State of the State
of Delaware, following the distribution of the Trust Property in accordance with
Section 9.4.
SECTION 9.2. Early Dissolution.
The first to occur of any of the following events is an "Early
Termination Event" upon the occurrence of which the Trust shall be dissolved:
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Holder of all the Common Securities;
(b) the written direction to the Property Trustee from the Holder of
all the Common Securities at any time to dissolve the Issuer Trust and to
distribute the Debentures to Holders in exchange for the Capital Securities
(which direction is optional and wholly within the discretion of the Holder of
all the Common Securities);
(c) the redemption or conversion of all of the Capital Securities in
connection with the redemption or conversion of all the Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a
court of competent jurisdiction.
SECTION 9.3. Termination.
The respective obligations and responsibilities of the Issuer Trustees
and the Issuer Trust created and continued hereby shall terminate upon the
latest to occur of the following: (a) the distribution by the Property Trustee
to Holders of all amounts required to be distributed hereunder upon the
liquidation of the Issuer Trust pursuant to Section 9.4, or upon the redemption
of all of the Trust Securities pursuant to Section 4.2; (b) the payment of any
expenses owed by the Issuer Trust; and (c) the discharge of all administrative
duties of the Administrative Trustees, including the performance of any tax
reporting obligations with respect to the Issuer Trust or the Holders.
SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d)
of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Issuer Trustees as expeditiously as the Issuer Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by Section 3808(e) of the Delaware
Business Trust Act and any other applicable law, to each Holder a Like Amount of
Debentures, subject to Section 9.4(d). Notice of liquidation shall be given by
the Property Trustee by first-class mail, postage prepaid mailed not less than
30 nor more than 60 days prior to the
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Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All such notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for
Debentures, or if Section 9.4(d) applies receive a Liquidation
Distribution, as the Property Trustee and the Administrative Trustees
shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Issuer Trust and distribution of the Debentures to
Holders, the Property Trustee, either itself acting as exchange agent or through
the appointment of a separate exchange agent, shall establish a record date for
such distribution (which shall be not more than 45 days prior to the Liquidation
Date) and establish such procedures as it shall deem appropriate to effect the
distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures will be
issued to Holders of Trust Securities Certificates, upon surrender of such Trust
Securities Certificates to the exchange agent for exchange, (iii) any Trust
Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Trust
Securities Certificates until such certificates are so surrendered (and until
such certificates are so surrendered, no payments of interest or principal will
be made to Holders of Trust Securities Certificates with respect to such
Debentures), and (iv) all rights of Holders holding Trust Securities will cease,
except the right of such Holders to receive Debentures upon surrender of Trust
Securities Certificates.
(d) If, upon dissolution of the Trust, notwithstanding the other
provisions of this Section 9.4, whether because of an order for dissolution
entered by a court of competent jurisdiction or otherwise, distribution of the
Debentures in the manner provided herein is determined by the Property Trustee
not to be practical, or if an Early Termination Event specified in clause (c) of
Section 9.2 occurs, the Trust Property shall be liquidated by the Property
Trustee in such manner as the Property Trustee determines. In such event, in
connection with the winding-up of the Issuer Trust, Holders will be entitled to
receive out of the assets of the Issuer Trust available for distribution to
Holders, after satisfaction of liabilities to creditors of the Issuer Trust as
provided by Section 3808(e) of the Delaware Business Trust Act and other
applicable law, an amount equal to the Liquidation Amount per Trust Security
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the
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"Liquidation Distribution"). If, upon any such winding up, the Liquidation
Distribution can be paid only in part because the Issuer Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Issuer Trust
on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holder of all the Common Securities will be entitled
to receive Liquidation Distributions upon any such winding-up pro rata
(determined as aforesaid) with Holders of Capital Securities, except that, if a
Debenture Event of Default specified in Section 5.1(1) or 5.1(2) of the
Indenture has occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities as provided in Section 4.4.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5. The Issuer Trust may, at the request of the Holder of all
the Common Securities and, with the consent of the Administrative Trustees, but
without the consent of the Holders of the Outstanding Trust Securities, the
Property Trustee or the Delaware Trustee, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of the Issuer Trust with respect to the Capital
Securities, or (b) substitutes for the Capital Securities other securities
having substantially the same terms as the Capital Securities (the "Successor
Securities") so long as the Successor Securities have the same priority as the
Capital Securities with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) a trustee of such successor entity possessing the
same powers and duties as the Property Trustee is appointed to hold the
Debentures, (iii) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization that then assigns a rating to the Capital
Securities, (iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect, (v) such successor entity has a purpose
substantially identical to that of the Issuer Trust, (vi) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Issuer Trust has received an opinion from independent counsel experienced in
such matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of the Capital Securities (including
any Successor Securities) in any material respect, and (b) following such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Issuer Trust nor such successor entity will be required to register
as an "investment company" under the Investment Company Act, and (vii) the
Depositor or its permitted successor or transferee 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 Guarantee Agreement. Notwithstanding the foregoing, the Issuer Trust
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<PAGE>
shall not, except with the consent of holders of all of the Capital Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation or classified as other than a grantor
trust for United States Federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death, incapacity, dissolution,
termination or bankruptcy of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to annul, dissolve or terminate
this Trust Agreement, nor entitle the legal representatives, successors or heirs
of such Person or any Holder for such person, to claim an accounting, take any
action or bring any proceeding in any court for a partition or winding up of the
arrangements contemplated hereby, nor otherwise affect the rights, obligations
and liabilities of the parties hereto or any of them.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Administrative Trustees and the Holder of the Common
Securities, without the consent of the Delaware Trustee or any Holder of the
Capital Securities, (i) to cure any ambiguity, correct or supplement any
provision herein that may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Trust Agreement, which shall not be inconsistent with the other provisions
of this Trust Agreement, or (ii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Issuer Trust will not be taxable as a corporation or will be classified as a
grantor trust for United States Federal income tax purposes at all times that
any Trust Securities are Outstanding or to ensure that the Issuer Trust will not
be required to register as an "investment company" under the Investment Company
Act; provided, however, that in either case (i) or (ii) such action shall not
adversely affect in any material respect the interests of the Delaware Trustee
or any Holder.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Property Trustee, the Administrative
Trustees and the Holder of the Common Securities, without the consent of the
Delaware Trustee, and with (i) the consent of Holders of at least a Majority in
Liquidation Amount of the Capital Securities, and (ii) receipt by the Issuer
Trustees of an Opinion of Counsel to the effect that such amendment or the
57
<PAGE>
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not cause the Issuer Trust to be taxable as a corporation or as
other than a grantor trust for United States Federal income tax purposes or
affect the Issuer Trust's exemption from status as an "investment company" under
the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder, this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date, or (ii) restrict the right of a Holder to institute suit for the
enforcement of any such payment on or after such date; and notwithstanding any
other provision herein, without the unanimous consent of the Holders, this
paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement that would cause the Issuer Trust to fail or cease to qualify for the
exemption from status as an "investment company" under the Investment Company
Act or to be taxable as a corporation or to be classified as other than a
grantor trust for United States Federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
(i) without the consent of the Depositor and the Administrative Trustees, this
Trust Agreement may not be amended in a manner that imposes any additional
obligation on the Depositor or the Administrative Trustees, and (ii) without the
consent of the Delaware Trustee, this Trust Agreement may not be amended in a
manner that imposes any additional obligation on the Delaware Trustee.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees or the Property Trustee shall promptly provide to
the Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement that affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates 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.
58
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SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR AND THE ISSUER TRUSTEES WITH RESPECT TO
THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS. THE PROVISIONS OF SECTION 3540 OF TITLE 12 OF THE
DELAWARE CODE SHALL NOT APPLY TO THIS TRUST.
To the fullest extent permitted by Delaware law, there shall not be
applicable to the Issuer Trust, the Issuer Trustees or this Trust Agreement any
provisions of law (whether statutory or common) of the State of Delaware
pertaining to trusts (other than the Delaware Business Trust Act) that relate to
or regulate in a manner inconsistent with the terms hereof (a) the filing with
any court or governmental body or agent of trustee accounts or schedules of
trustee fees and charges, (b) affirmative requirements to post bonds for
trustees, officers, agents or employees of a trust, (c) the acquisition, holding
or disposition of any property, (d) the allocation of receipts and expenditures
between income and principal, (e) restrictions or limitation on the permissible
nature, amount or concentration of trust investment or requirements relating to
the titling, storage or other manner of holding or investing trust assets, or
(f) the establishment of fiduciary or other standards of responsibility or
limitations on the acts or powers of trustees that are inconsistent (whether
more or less restrictive) with this provision.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.1(a) and 4.2(d)), with the same force and
effect as though made on the date fixed for such payment, and no Distributions
shall accumulate on such unpaid amount for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust and any Issuer
Trustee, including any successor by operation of law. Except in connection with
a consolidation, merger or sale involving the Depositor that is permitted under
Article VIII of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
59
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SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
(a) Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Holder or the Depositor may be given or served in writing by
deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case of
a Holder of Capital Securities, to such Holder as such Holder's name and address
may appear on the Securities Register; and (b) in the case of the Holder of the
Common Securities or the Depositor, to HSB Group, Inc., One State Street,
Hartford, Connecticut 06102, Attention: Corporate Secretary, facsimile no.:
(860) 493-1038, or to such other address as may be specified in a written notice
by the Holder of the Common Securities or the Depositor, as the case may be, to
the Property Trustee. Such notice, demand or other communication to or upon a
Holder shall be deemed to have been sufficiently given or made, for all
purposes, upon hand delivery, mailing or transmission. Such notice, demand or
other communication to or upon the Depositor shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the
Depositor.
(b) Any notice, demand or other communication that by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Issuer Trust or any Issuer Trustee may be given or served in writing by
deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case of
the Property Trustee to The First National Bank of Chicago, One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust
Services Division; (b) with respect to the Delaware Trustee, Attention: First
Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801, Attention:
Michael J. Majchrzak; (c) in the case of the Administrative Trustees, to them at
the address above for notices to the Depositor, marked "Attention:
Administrative Trustees of HSB Capital II"; and (d) in the case of the Issuer
Trust, to its principal executive office specified in Section 2.2, with a copy
to each of the Property Trustee, the Delaware Trustee and the Administrative
Trustees, or, in each such case, to such other address as may be specified in a
written notice by the applicable Person to the Property Trustee, the Depositor
and the Holders. Such notice, demand or other communication to or upon the
Property Trustee, the Delaware Trustee, the Administrative Trustees or the
Issuer Trust shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Property Trustee, the Delaware Trustee,
such Administrative Trustees or the Issuer Trust, as the case may be.
60
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SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees and the Depositor agree for the benefit of
the Holders that, until at least one year and one day after the Issuer Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Issuer Trust under any bankruptcy,
insolvency, reorganization or other similar law (including the United States
Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the
commencement of any proceeding against the Issuer Trust under any Bankruptcy
Law. The Property Trustee and the Depositor agree, for the benefit of Holders,
that if the Depositor or any Issuer Trustee takes action in violation of this
Section 10.9, then at the expense of the Depositor, the Property Trustee or
Depositor, as the case may be, shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor against
the Issuer Trust or the commencement of such action and raise the defense that
the Depositor has agreed in writing not to take such action and should be
estopped and precluded therefrom and such other defenses, if any, as counsel for
the Issuer Trustees or the Issuer Trust may assert.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required or deemed to be part of this Trust Agreement
pursuant to the terms herein and shall, to the extent applicable, be governed by
such provisions.
(b) The Property Trustee shall be the only Issuer Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required or deemed to be included in this Trust
Agreement by any of the provisions of the Trust Indenture Act, such required or
deemed provision shall control. If any provision of this Trust 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
Trust Agreement as so modified or excluded, as the case may be.
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee Agreement
and Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT
AND THE INDENTURE, AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS
OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT
OF THE ISSUER TRUST,
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SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE ISSUER TRUST
AND SUCH HOLDER AND SUCH OTHERS.
This Trust Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Trust
Agreement as of the day and year first above written.
HSB GROUP, INC.
as Depositor
By: /s/ Saul L. Basch
Name: Saul L. Basch
Title: Senior Vice President, Treasurer and
Chief Financial Officer
The First National Bank of Chicago
as Property Trustee
By: /s/ Melissa G. Weisman
Name: Melissa G. Weisman
Title: Vice President
First Chicago Delaware Inc.
as Delaware Trustee
By: /s/ Melissa G. Weisman
Name: Melissa G. Weisman
Title: Vice President
<PAGE>
HSB Capital II
By: /s/ Saul L. Basch
Name: Saul L. Basch
as Administrative Trustee
By: /s/ Roberta O'Brien
Name: Roberta O'Brien
as Administrative Trustee
By: /s/ Robert C. Walker
Name: Robert C. Walker
as Administrative Trustee
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Exhibit A
CERTIFICATE OF TRUST
OF HSB CAPITAL II
This Certificate of Trust of HSB Capital II (the "Trust"),
dated as of December 31, 1997, is being duly executed and filed by the
undersigned, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. C. (S) 3801 et seq.).
1. NAME. The name of the business trust being formed hereby is
HSB Capital II.
2. DELAWARE TRUSTEE. The name and business address of the
trustee of the Trust with a principal place of business in the State of Delaware
is: First Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801.
3. EFFECTIVE DATE. This Certificate of Trust shall be
affective upon the filing of this Certificate of Trust.
IN WITNESS WHEREOF, the undersigned trustee of the Trust, has
executed this Certificate of Trust as of the date first above written.
Name: Saul L. Basch
Title: Administrative Trustee
Name: Roberta O'Brien
Title: Administrative Trustee
Name: Robert C. Walker
Title: Administrative Trustee
FIRST CHICAGO DELAWARE INC.,
as Delaware Trustee
By:
Name: Melissa G. Weisman
Title: Vice President
A-1
<PAGE>
Exhibit B
[Form of Common Securities Certificate]
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN
AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.10 OF THE TRUST AGREEMENT.
Certificate Number Aggregate Liquidation Amount
C-1 $9,300,000
Certificate Evidencing Common Securities
of
HSB Capital II
Convertible Common Securities
(liquidation amount $1,000 per Common Security)
HSB Capital II, a statutory business trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that HSB GROUP,
INC. (the "Holder") is the registered owner of Nine Thousand Three Hundred
(9,300) common securities (aggregate Liquidation Amount Nine Million Three
Hundred Thousand dollars ($9,300,000) of the Issuer Trust representing common
undivided beneficial interests in the assets of the Issuer Trust and designated
the Convertible Common Securities (liquidation amount $1,000 per Common
Security) (the "Common Securities"). Except in accordance with Section 5.10 of
the Trust Agreement (as defined below), the Common Securities are not
transferable and any attempted transfer hereof other than in accordance
therewith shall be void. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Trust Agreement of the Issuer Trust, dated as of December 31, 1997, as the same
may be amended from time to time (the "Trust Agreement"), among HSB Group, Inc.,
a Delaware corporation, as Depositor, The First National Bank of Chicago, as
Property Trustee, First Chicago Delaware, Inc., as Delaware Trustee, and the
Administrative Trustees named therein, including the designation of the terms of
the Common Securities as set forth therein. The Issuer Trust will furnish a copy
of the Trust Agreement to the Holder without charge upon written request to the
Issuer Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the
Trust Agreement.
B-1
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer
Trust has executed this certificate this 31st day of December, 1997.
HSB CAPITAL II
By:
Name:
Administrative Trustee
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred to in the
within-mentioned Trust Agreement
THE FIRST NATIONAL BANK OF CHICAGO, as Property Trustee
By:
Name:
Title:
<PAGE>
Exhibit C
[Form of Capital Securities Certificate]
THE CAPITAL SECURITIES EVIDENCED HEREBY, ANY CONVERTIBLE SUBORDINATED
DEFERRABLE INTEREST DEBENTURES ISSUABLE HEREWITH AND THE COMMON STOCK ISSUABLE
UPON THEIR CONVERSION HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN WHOLE OR IN PART (BUT IF IN PART, IN AMOUNTS NOT LESS THAN
$10,000,000 IN PRINCIPAL AMOUNT) AND ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF
THE SECURITIES ACT OR PURSUANT TO AN APPLICABLE EXEMPTION THEREFROM.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THIS CAPITAL SECURITIES CERTIFICATE OR
ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING AND, IN THE CASE
OF ANY PURCHASER OR HOLDER RELYING ON ANY EXEMPTION OTHER THAN PTCE 96-23,
95-60, 91-38, 90-1 OR 84-14, HAS COMPLIED WITH ANY REQUEST BY THE DEPOSITOR OR
THE ISSUER TRUST FOR AN OPINION OF COUNSEL OR OTHER EVIDENCE WITH RESPECT TO THE
AVAILABILITY OF SUCH EXEMPTION. ANY PURCHASER OR HOLDER OF THIS CAPITAL
SECURITIES CERTIFICATE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED
BY ITS PURCHASE AND HOLDING HEREOF THAT IT EITHER (A) IS NOT A PLAN OR A PLAN
ASSET ENTITY AND IS NOT PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN
ASSETS" OF ANY PLAN, OR (B) IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH
RESPECT TO SUCH PURCHASE OR HOLDING.
C-1
<PAGE>
Certificate Number Aggregate Liquidation Amount
P-___ $300,000,000
Certificate Evidencing Capital Securities
of
HSB Capital II
Convertible Capital Securities
(liquidation amount $1,000 per Capital Security)
HSB Capital II, a statutory business trust created under the laws of the
State of Delaware (the "Issuer Trust"), hereby certifies that [Name of Holder]
(the "Holder") is the registered owner of Three Hundred Thousand (300,000)
capital securities (aggregate Liquidation Amount Three Hundred Million dollars
($300,000,000)) of the Issuer Trust representing a preferred undivided
beneficial interest in the assets of the Issuer Trust and designated the
Convertible Capital Securities (liquidation amount $1,000 per Capital Security)
(the "Capital Securities"). The Capital Securities are transferable on the books
and records of the Issuer Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
as provided in Section 5.4 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and
the Capital Securities represented hereby are issued and shall in all respects
be subject to the terms and provisions of, the Trust Agreement of the Issuer
Trust, dated as of December 31, 1997, as the same may be amended from time to
time (the "Trust Agreement"), among HSB Group, Inc., a Delaware corporation, as
Depositor, The First National Bank of Chicago, as Property Trustee, First
Chicago Delaware, Inc., as Delaware Trustee, and the Administrative Trustees
named therein, including the designation of the terms of the Capital Securities
as set forth therein. The Holder is entitled to the benefits of the Guarantee
Agreement, dated as of December 31, 1997 (the "Guarantee Agreement"), entered
into by HSB Group, Inc. and The First National Bank of Chicago, as guarantee
trustee, to the extent provided therein. The Issuer Trust will furnish a copy of
the Trust Agreement and the Guarantee Agreement to the Holder without charge
upon written request to the Issuer Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
C-2
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer Trust
has executed this certificate this 31st day of December, 1997.
HSB CAPITAL II
By:
Name:
Administrative Trustee
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred to in the
within-mentioned Trust Agreement
THE FIRST NATIONAL BANK OF CHICAGO, as Property Trustee
By:
Name:
Title:
C-3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
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 Capital Securities Certificate on the books of the Issuer
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 Capital
Security Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
C-4
<PAGE>
Exhibit D
[Form of Restricted Securities Certificate]
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Sections 5.4(b) of the Trust Agreement)
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
Re: Convertible Capital Securities
of HSB Capital II (the "Securities")
Reference is made to the Trust Agreement, dated as of December
31, 1997 (the "Trust Agreement"), among HSB Group, Inc. (the "Company"), The
First National Bank of Chicago as Property Trustee and the Administrative
Trustees named therein. Terms used herein and defined in the Trust Agreement or
under the U.S. Securities Act of 1933, as amended (the "Securities Act") are
used herein as so defined.
This certificate relates to _________ shares of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ________________________
CERTIFICATE No(s). __________________
The Person in whose name this certificate is executed below
(the "Undersigned") hereby certifies that either (i) it is the sole beneficial
owner of the Specified Securities or (ii) it is acting on behalf of all the
beneficial owners of the Specified Securities and is duly authorized by them to
do so. Such beneficial owner or owners are referred to herein collectively as
the "Owner." Such Specified Securities are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected only in
compliance with the requirements of the Securities Act or pursuant to an
applicable exemption
D-1
<PAGE>
therefrom. Such transfer is being effected in whole or in part, but if in part,
in amounts not less than $10,000,000 in principal amount. The Owner also hereby
certifies that it agrees to be bound by the terms and provisions of the Trust
Agreement, including Section 5.4(b), and the other documents mentioned therein.
This certificate and the statements contained herein are made for your
benefit and benefit of the Trust and the Purchaser.
Dated:___________________________
(Print the name of the Undersigned, as such term is defined in the
second paragraph of this certificate.)
By:__________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the
title of the person signing on behalf of the Undersigned must be
stated.)
D-2
<PAGE>
Exhibit E
[Form of Unrestricted Securities Certificate]
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section 5.4(c))
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
Re: Convertible Capital Securities of HSB Group, Inc. (the "Securities")
Reference is made to the Trust Agreement, dated as of December 31, 1997
(the "Trust Agreement"), among HSB Group, Inc. (the "Company"), The First
National Bank of Chicago as Property Trustee and the Administrative Trustees
named therein. Terms used herein and defined in the Trust Agreement are used
herein as so defined.
This certificate relates to ___________ shares of Securities, which are
evidenced by the following certificate(s) (the "Specified Securities"):
CUSIP No(s). _____________________
CERTIFICATE No(s). _______________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner."
The Specified Securities are registered in the name of the Undersigned as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Securities Act Legend pursuant to Section 5.4(c) of the
Trust Agreement. In connection with such exchange, the Owner hereby certifies
that the exchange is occurring after a holding period of at least two years
(computed in accordance with paragraph (d) of Rule 144) has elapsed since the
Specified Securities were last acquired from the Trust or from an affiliate of
the Trust, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Trust. The Owner also
acknowledges that any future transfers of the Specified
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Securities must comply with all applicable securities laws of the states of the
United States and other jurisdictions. The Owner also hereby certifies that it
agrees to be bound by the terms and provisions of the Trust Agreement, including
Section 5.4(b), and the other documents mentioned therein.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Trust and the Purchaser.
Dated:
(Print the name of the Undersigned, as such term is defined in
the second paragraph of this certificate.)
By:
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of the
Undersigned must be stated.)
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Exhibit F
NOTICE OF CONVERSION
To: The First National Bank of Chicago
as Property Trustee of
HSB Capital II
The undersigned owner of these Capital Securities hereby
irrevocably exercises the option to convert these Capital Securities, or the
portion below designated, into Common Stock of HSB GROUP, INC. (the "HSB Common
Stock") in accordance with the terms of the Trust Agreement (the "Trust
Agreement"), dated as of December 31, 1997, by Saul L. Basch, Roberta O'Brien
and Robert C. Walker, as Administrative Trustees, First Chicago Delaware Inc.,
as Delaware Trustee, The First National Bank of Chicago, as Property Trustee,
HSB Group, Inc., as Depositor, and by the Holders, from time to time, of
individual beneficial interests in the Trust to be issued pursuant to the Trust
Agreement. Pursuant to the aforementioned exercise of the option to convert
these Capital Securities, the undersigned hereby directs the Conversion Agent
(as that term is defined in the Trust Agreement) to (i) exchange such Capital
Securities for a portion of the Debentures (as that term is defined in the Trust
Agreement) held by the Trust (at the rate of exchange specified in the terms of
the Capital Securities set forth in the Trust Agreement) and (ii) immediately
convert such Debentures on behalf of the undersigned, into HSB Common Stock (at
the conversion rate specified in the terms of the Capital Securities set forth
in the Trust Agreement).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the assignment
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Trust Agreement and the Capital Securities,
agrees to be bound by the terms of the Registration Rights Agreement relating to
the HSB Common Stock issuable upon conversion of the Capital Securities.
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Date: ____________, ____
in whole __ in part __
Number of Capital
Securities to be converted:
-------------------
If a name or names other
than the undersigned,
please indicate in the
spaces below the name or
names in which the shares
of HSB Common Stock are to
be issued, along with the
address or addresses of
such person or persons
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or Other
Identifying Number
Signature Guarantee:*
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* (Signature must be guaranteed by an institution which is a member of
the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) in such other guarantee programs
acceptable to the
Trustee.)
0148490.06-01S7a
F-2
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Exhibit 4.5
[Form of Capital Securities Certificate]
THE CAPITAL SECURITIES EVIDENCED HEREBY, ANY CONVERTIBLE SUBORDINATED
DEFERRABLE INTEREST DEBENTURES ISSUABLE HEREWITH AND THE COMMON STOCK ISSUABLE
UPON THEIR CONVERSION HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN WHOLE OR IN PART (BUT IF IN PART, IN AMOUNTS NOT LESS THAN
$10,000,000 IN PRINCIPAL AMOUNT) AND ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF
THE SECURITIES ACT OR PURSUANT TO AN APPLICABLE EXEMPTION THEREFROM.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THIS CAPITAL SECURITIES CERTIFICATE OR
ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING AND, IN THE CASE
OF ANY PURCHASER OR HOLDER RELYING ON ANY EXEMPTION OTHER THAN PTCE 96-23,
95-60, 91-38, 90-1 OR 84-14, HAS COMPLIED WITH ANY REQUEST BY THE DEPOSITOR OR
THE ISSUER TRUST FOR AN OPINION OF COUNSEL OR OTHER EVIDENCE WITH RESPECT TO THE
AVAILABILITY OF SUCH EXEMPTION. ANY PURCHASER OR HOLDER OF THIS CAPITAL
SECURITIES CERTIFICATE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED
BY ITS PURCHASE AND HOLDING HEREOF THAT IT EITHER (A) IS NOT A PLAN OR A PLAN
ASSET ENTITY AND IS NOT PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN
ASSETS" OF ANY PLAN, OR (B) IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH
RESPECT TO SUCH PURCHASE OR HOLDING.
<PAGE>
Certificate Number Aggregate Liquidation Amount
P-___ $300,000,000
Certificate Evidencing Capital Securities
of
HSB Capital II
Convertible Capital Securities
(liquidation amount $1,000 per Capital Security)
HSB Capital II, a statutory business trust created under the laws of the
State of Delaware (the "Issuer Trust"), hereby certifies that [Name of Holder]
(the "Holder") is the registered owner of Three Hundred Thousand (300,000)
capital securities (aggregate Liquidation Amount Three Hundred Million dollars
($300,000,000)) of the Issuer Trust representing a preferred undivided
beneficial interest in the assets of the Issuer Trust and designated the
Convertible Capital Securities (liquidation amount $1,000 per Capital Security)
(the "Capital Securities"). The Capital Securities are transferable on the books
and records of the Issuer Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
as provided in Section 5.4 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and
the Capital Securities represented hereby are issued and shall in all respects
be subject to the terms and provisions of, the Trust Agreement of the Issuer
Trust, dated as of December 31, 1997, as the same may be amended from time to
time (the "Trust Agreement"), among HSB Group, Inc., a Delaware corporation, as
Depositor, The First National Bank of Chicago, as Property Trustee, First
Chicago Delaware, Inc., as Delaware Trustee, and the Administrative Trustees
named therein, including the designation of the terms of the Capital Securities
as set forth therein. The Holder is entitled to the benefits of the Guarantee
Agreement, dated as of December 31, 1997 (the "Guarantee Agreement"), entered
into by HSB Group, Inc. and The First National Bank of Chicago, as guarantee
trustee, to the extent provided therein. The Issuer Trust will furnish a copy of
the Trust Agreement and the Guarantee Agreement to the Holder without charge
upon written request to the Issuer Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer Trust
has executed this certificate this 31st day of December, 1997.
HSB CAPITAL II
By:
Name:
Administrative Trustee
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred to in the
within-mentioned Trust Agreement
THE FIRST NATIONAL BANK OF CHICAGO, as Property Trustee
By:
Name:
Title:
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security to:
-------------------------------------------------------------
(Insert assignee's social security or tax identification number)
--------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
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agent to transfer this Capital Securities Certificate on the books of the Issuer
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 Capital
Security Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
Exhibit 4.7
GUARANTEE AGREEMENT
between
HSB GROUP, INC.,
as Guarantor
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Guarantee Trustee
Relating to
HSB Capital II
---------------------------
Dated as of December 31, 1997
---------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions..................................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application................................ 5
SECTION 2.2. List of Holders................................................. 5
SECTION 2.3. Reports by the Guarantee Trustee................................ 5
SECTION 2.4. Periodic Reports to the Guarantee Trustee....................... 6
SECTION 2.5. Evidence of Compliance with Conditions Precedent................ 6
SECTION 2.6. Events of Default; Waiver....................................... 6
SECTION 2.7. Event of Default; Notice........................................ 6
SECTION 2.8. Conflicting Interests........................................... 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee...................... 7
SECTION 3.2. Certain Rights of Guarantee Trustee............................. 8
SECTION 3.3. Compensation; Fees.............................................. 10
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.................................. 11
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee... 11
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ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee..................................................... 12
SECTION 5.2. Waiver of Notice and Demand................................... 12
SECTION 5.3. Obligations Not Affected...................................... 12
SECTION 5.4. Rights of Holders............................................. 13
SECTION 5.5. Guarantee of Payment.......................................... 14
SECTION 5.6. Subrogation................................................... 14
SECTION 5.7. Independent Obligations....................................... 14
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination................................................. 14
SECTION 6.2. Pari Passu Guarantees......................................... 15
ARTICLE VII
TERMINATION
SECTION 7.1. Termination................................................... 15
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns........................................ 16
SECTION 8.2. Amendments.................................................... 16
SECTION 8.3. Notices....................................................... 16
SECTION 8.4. Benefit....................................................... 17
SECTION 8.5. Governing Law................................................. 17
SECTION 8.6. Counterparts.................................................. 17
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GUARANTEE AGREEMENT, dated as of December 31, 1997, between HSB GROUP,
INC., a Connecticut corporation (the "Guarantor"), having its principal office
at One State Street, Hartford, Connecticut 06102 and The First National Bank of
Chicago, a national banking association, as trustee (the "Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Capital Securities (as defined herein) of HSB Capital II, a Delaware statutory
business trust (the "Issuer Trust").
RECITALS OF THE CORPORATION
WHEREAS, pursuant to a Trust Agreement, dated as of December 31, 1997
(the "Trust Agreement"), among HSB Group, Inc., as Depositor, The First National
Bank of Chicago, as Property Trustee, First Chicago Delaware Inc. as Delaware
Trustee, and the Administrative Trustees named therein, the Issuer Trust is
issuing $300,000,000 aggregate Liquidation Amount (as defined in the Trust
Agreement) of its Convertible Capital Securities (liquidation amount $1,000 per
capital security) (the "Capital Securities"), representing preferred undivided
beneficial interests in the assets of the Issuer Trust and having the terms set
forth in the Trust Agreement; and
WHEREAS, the Capital Securities will be issued by the Issuer Trust and
the proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust's Common Securities (as defined herein), will be used to purchase the
Debentures (as defined in the Trust Agreement) of the Guarantor, which
Debentures will be deposited with The First National Bank of Chicago, as
Property Trustee under the Trust Agreement, as trust assets; and
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 of the Capital Securities the
Guarantee Payments (as defined herein) on the terms and conditions set forth
herein.
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Guarantee Agreement, for the benefit of the holders of the Common
Securities (as defined herein), except that if an Event of Default (as defined
in the Declaration) has occurred and is continuing, the rights of holders of the
Common Securities to receive Guarantee Payments under the Common Securities
Guarantee are subordinated, to the extent and in the manner set forth in the
Common Securities Guarantee, to the rights of holders of Capital Securities to
receive Guarantee Payments under this Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase of Capital Securities
by each Holder, which purchase the Guarantor hereby acknowledges will benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time.
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
For all purposes of this Guarantee 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;
(b) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;
(e) Unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Guarantee Agreement; and
(f) The words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Guarantee Agreement as a 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 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.
"Board of Directors" means the board of directors of the Guarantor or
the Executive Committee of the board of directors of the Guarantor (or any other
committee of the board of directors of the Guarantor performing similar
functions) or a committee designated by the board of directors of the Guarantor
(or such committee), comprised of two or more members of the board of directors
of the Guarantor or officers of the Guarantor, or both.
"Capital Securities" means the capital securities of the Issuer Trust
defined in the Trust Agreement referred to in the recitals to this Guarantee
Agreement, as modified, amended or supplemented from time to time.
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"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement or (ii) a default by the
Guarantor in any material respect of any other obligation hereunder that remains
unremedied for 90 days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means 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 Trust: (i) any accrued and unpaid
Distributions required to be paid on the Capital Securities, to the extent the
Issuer Trust has funds on hand available therefor at such time, (ii) the
Redemption Price with respect to any Capital Securities called for redemption,
to the extent the Issuer Trust has funds on hand available therefor at such
time, and (iii) upon a voluntary or involuntary termination, winding up or
liquidation of the Issuer Trust (unless the Debentures are distributed to the
Holders) the lesser of (a) the Liquidation Distribution (as defined in the Trust
Agreement) with respect to the Capital Securities, and (b) the amount of assets
of the Issuer Trust remaining available for distribution to Holders on
liquidation of the Issuer Trust.
"Guarantee Trustee" means The First National Bank of Chicago, solely in
its capacity as Guarantee Trustee and not in its individual capacity, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement, and thereafter means each
such Successor Guarantee Trustee.
"Guarantor" has the meaning specified in the first paragraph of this
Guarantee Agreement.
"Holder" means any Holder (as defined in the Trust Agreement) 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 Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee
Trustee.
"Indenture" means the Indenture, dated as of December 31, 1997, between
HSB Group, Inc. and The First National Bank of Chicago, as trustee, as the same
may be modified, amended or supplemented from time to time.
"Issuer Trust" has the meaning specified in the first paragraph of
this Guarantee Agreement.
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"List of Holders" has the meaning specified in Section 2.2(a).
"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 aggregate Liquidation Amount (as defined in the Trust
Agreement) of all Capital Securities then Outstanding (as defined in the Trust
Agreement).
"Officers' Certificate" means a certificate signed by one of the Senior
Vice Presidents or Chief Executive Officer or the President or Vice Presidents
of the Guarantor, and by the Treasurer, an Assistant Treasurer, the Corporate
Secretary or an Assistant Corporate Secretary of the Guarantor, and delivered to
the Guarantee Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer 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 such officer in rendering
the Officers' Certificate;
(c) a statement that 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
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, company,
limited liability company, trust, business trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer or any other officer of the Corporate
Trust Department of the Guarantee Trustee and also means, with respect to a
particular matter, any other officer to whom such matter is referred because of
that officer's knowledge of and familiarity with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Trust Agreement of the Issuer Trust
referred to in the recitals to this Guarantee Agreement, as modified, amended or
supplemented from time to time.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this Guarantee Agreement was executed; provided,
however, that if the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
Except as otherwise expressly provided herein, the Trust Indenture Act
shall apply as a matter of contract to this Guarantee Agreement for purposes of
interpretation, construction and defining the rights and obligations hereunder,
and this Guarantee Agreement, the Guarantor and the Guarantee Trustee shall be
deemed for all purposes hereof to be subject to and governed by the Trust
Indenture Act to the same extent as would be the case if this Guarantee
Agreement were qualified under that Act on the date hereof. Except as otherwise
expressly provided herein, if and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2. List of Holders.
(a) Commencing July 1, 1998, the Guarantor shall furnish or cause to be
furnished to the Guarantee Trustee (a) semi-annually, on or before January 1 and
July 1 of each year, a list, in such form as the Guarantee Trustee may
reasonably require, of the names and addresses of the Holders (a "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 Guarantee 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 Guarantee
Trustee in its capacity as such. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with the requirements of Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than 60 days following May 15 of each year, commencing May
15, 1998, the Guarantee 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 of the Trust Indenture Act. If this Guarantee
Agreement shall have been qualified under the Trust
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Indenture Act, the Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee and the Holders
such documents, reports and information, if any, as required by Section 314 of
the Trust Indenture Act 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 that such documents, reports
and information shall not be required to be provided to the Securities and
Exchange Commission unless this Guarantee Agreement shall have been qualified
under the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
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 of the Guarantor pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities may, by vote, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 30 days after the occurrence of
an Event of Default known to it, transmit by mail, first class postage prepaid,
to the Holders, notice of any such Event of Default, unless such 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 Guarantee
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 Guarantee Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer
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charged with the administration of this Guarantee Agreement shall have obtained
actual knowledge, of such Event of Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement and the Indenture shall be deemed to be
specifically described in this 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 THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee hereunder. The right, title and interest of the Guarantee
Trustee, as such, hereunder shall automatically vest in any Successor Guarantee
Trustee, upon acceptance by such Successor Guarantee 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 Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee 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 Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own wilful misconduct, except that:
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(i) Prior to the occurrence of any 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 Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement (including pursuant to Section
2.1), and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement (including
pursuant to Section 2.1); and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee 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 Guarantee Trustee and conforming to
the requirements of this 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 Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Guarantee Agreement.
(ii) The Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such
judgment was made.
(iii) The Guarantee 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 Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee, under this Guarantee Agreement.
(iv) Subject to Sections 3.1(b) and 3.1(d), no provision of
this Guarantee Agreement shall require the Guarantee 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 Guarantee 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 Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
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(i) The Guarantee Trustee may 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 Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee 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 Guarantee Trustee, shall be promptly
delivered by the Guarantor.
(iv) The Guarantee Trustee may 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 to be taken by 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 or their employees. The Guarantee
Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder unless such Holder
shall have provided to the Guarantee Trustee such adequate security and
indemnity as would satisfy a reasonable person in the position of the
Guarantee 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 Guarantee Trustee; provided that
nothing contained in this Section 3.2(a)(v) shall be taken to relieve
the Guarantee Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Guarantee Agreement.
(vi) The Guarantee 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 Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
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(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed by it with due care hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (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.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee 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 Guarantee 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 Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3. Compensation; Fees.
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time such
reasonable compensation for all services rendered by it hereunder as
may be agreed by the Guarantor and the Guarantee Trustee from time to
time (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust); and
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Guarantee
Trustee in accordance with any provision of this Guarantee 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 the fullest extent permitted by applicable law, to
indemnify and hold harmless (i) the Guarantee Trustee, (ii) any
Affiliate of the Guarantee Trustee, and (iii) any officer, director,
shareholder, employee, representative or agent of the Guarantee Trustee
(referred to herein as an "Indemnified Person"), from and a any loss,
damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person in connection with this
Guarantee Agreement or any act or omission performed or omitted by such
Indemnified Person in good faith and in manner
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such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Guarantee
Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of negligence or willful misconduct with
respect to such acts or omissions.
The Guarantee Trustee will not claim or exact any lien or charge on any
Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement.
The provisions of this Section 3.3 shall survive the termination of
this Guarantee Agreement or the resignation or removal of the Guarantee Trustee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is a national or state chartered bank
and eligible pursuant to the Trust Indenture Act to act as such, and
that has at the time of such appointment securities rated in one of the
three highest rating categories by a nationally recognized statistical
rating organization and a combined capital and surplus of at least
$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 its supervising or examining authority, then, for
the purposes of this Section 4.1 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 Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2.
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
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SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) Subject to Section 4.2(c), the Guarantee Trustee may be appointed
or removed at any time by the Guarantor.
(b) Subject to Section 4.2(c), the Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by giving written
notice thereof to the Holders and the Guarantor and by appointing a successor
Guarantee Trustee.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed and shall have accepted
such appointment. No removal or resignation of a Guarantee Trustee shall be
effective until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor and, in the case of any
resignation, the resigning Guarantee Trustee.
(d) If the Guarantee Trustee shall resign, be removed or become
incapable of acting as Guarantee Trustee and a replacement shall not be
appointed prior to such resignation or removal, or if a vacancy shall occur in
the office of Guarantee Trustee for any reason, and no Successor Guarantee
Trustee shall have been appointed and accepted appointment as provided in this
Section 4.2 within 60 days after delivery to the Holders and the Guarantor of a
notice of resignation, the resigning Guarantee Trustee may petition, at the
expense of the Guarantor, any court of competent jurisdiction for appointment of
a Successor Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1. 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 Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer Trust may have or
assert, except the defense of payment. 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 Trust to pay such amounts
to the Holders.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to
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require a proceeding first against the Guarantee Trustee, the Issuer Trust 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 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this 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
(other than by Act (as defined in the Trust Agreement) of the Holders),
of the performance or observance by the Issuer Trust of any express or
implied agreement, covenant, term or condition relating to the Capital
Securities to be performed or observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer Trust
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 provided in the
Indenture), 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;
(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 Trust granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the Issuer Trust or
any of the assets of the Issuer Trust;
(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 5.3 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 the
consent of, the Guarantor with respect to the happening of any of the foregoing.
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SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this 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
Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee Agreement;
and (iv) any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust
or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer Trust) or upon the distribution of Debentures to Holders as
provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; 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 Guarantee Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this 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 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust 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 Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (f), inclusive, of Section 5.3 hereof.
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ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the
Indenture) of the Guarantor to the extent and in the manner set forth in the
Indenture with respect to the Debentures, and the provisions of Article XII of
the Indenture will apply, mutatis mutandis, to the obligations of the Guarantor
hereunder. The obligations of the Guarantor hereunder do not constitute Senior
Indebtedness (as defined in the Indenture) of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with the obligations of the Guarantor under (i) any similar
guarantee agreements issued by the Guarantor on behalf of the holders of
preferred or capital securities issued by any Issuer Trust (as defined in the
Indenture); (ii) the Indenture and the Securities (as defined therein) issued
thereunder; and (iii) any other security, guarantee or other agreement or
obligation that is expressly stated to rank pari passu with the obligations of
the Guarantor under this Guarantee Agreement or with any obligation that ranks
pari passu with the obligations of the Guarantor under this Guarantee Agreement.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price (as defined in the Trust
Agreement) of all Capital Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Capital Securities, (iii) full payment of the
amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust or (iv) the distribution of the Guarantor's
common stock to the Holders in respect of the conversion of all of the Capital
Securities into the Guarantor's common stock. Notwithstanding the foregoing,
this Guarantee Agreement will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder is required to repay any sums paid
with respect to Capital Securities or this Guarantee Agreement.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this 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 that is permitted under Article VIII 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 8.2. Amendments.
Except with respect to any changes that do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in Liquidation Amount
of the Capital Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
SECTION 8.3. Notices.
(a) 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, by facsimile or first class mail as follows:
(i) if given to the Guarantor, to the address or facsimile number set
forth below or such other address or facsimile number as the Guarantor may give
notice to the Guarantee Trustee and the Holders:
HSB Group, Inc.
One State Street
Hartford, Connecticut 06102
General Counsel
Facsimile: (860) 722-1818
(ii) if given to the Guarantee Trustee, at the address or facsimile
number set forth below or such other address or facsimile number as the
Guarantee Trustee may give notice to the Guarantor and the Holders:
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The First National Bank of Chicago
One First National Plaza, Suite #0126
Chicago, Illinois 60070-0126
Corporate Trust Division
Facsimile: (312) 407-1708
(iii) if given to any Holder, in the manner set forth in Section 10.8
of the Trust Agreement.
(b) All notices hereunder shall be deemed to have been given when
received in person, by facsimile 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, provided that any
notice given as provided in Section 8.3(a)(iii) shall be deemed to have been
given at the time specified in Section 10.8 of the Trust Agreement.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Capital Securities.
SECTION 8.5. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 8.6. Counterparts.
This Guarantee Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Guarantee
Agreement to be duly executed, and their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
HSB GROUP, INC.
By: /s/ Saul L. Basch
Name: Saul L. Basch
Title: Senior Vice President, Treasurer
and Chief Financial Officer
THE FIRST NATIONAL BANK OF CHICAGO,
as Guarantee Trustee
By: /s/ Melissa G. Weisman
Name: Melissa G. Weisman
Title: Vice President
0151329.03-01S7a
<PAGE>
Exhibit 4.8
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of December 31, 1997,
between Employers Reinsurance Corporation and ERC Life Reinsurance Corporation
(collectively, "ERC") and HSB Group, Inc. (the "Company").
WHEREAS, as of the date of this Agreement, ERC owns 300,000
capital securities (the "Capital Securities") of HSB Capital II, a statutory
business trust created under the laws of the State of Delaware, which Capital
Securities are convertible into shares of Common Stock of the Company, no par
value per share (the "Common Stock"), pursuant to the Trust Agreement among HSB
Group, Inc. as Depositor, The First National Bank of Chicago as Property Trustee
and First Chicago Delaware Inc. as Delaware Trustee, dated December 31, 1997
(the "Trust Agreement");
WHEREAS, the Board of Directors of the Company has authorized
the officers of the Company to execute and deliver this Agreement in the name
and on behalf of the Company;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties to this Agreement hereby agree as
follows:
1. Definitions. As used in this Agreement,
the following terms shall have the following meanings:
"Holder" means ERC and any other person that owns Registrable
Securities, including their respective successors and assigns who acquire
Registrable Securities, directly or indirectly, from ERC or such other person.
For purposes of this Agreement, the Company may deem and treat the registered
holder of a Registrable Security as the Holder and absolute owner thereof, and
the Company shall not be affected by any notice to the contrary.
"Registrable Securities" means (a) the Common Stock owned by
ERC upon conversion of the Capital Securities pursuant to the Trust Agreement,
(b) any Common Stock acquired by ERC in the open market at a time when ERC is
deemed to be an Affiliate (as such term is defined under Rule 144 under the
Securities Act) of the Company,
<PAGE>
and (c) any securities issued or issuable in respect of the Common Stock
referred to in clauses (a) and (b) above, by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
reclassification, merger or consolidation, and any other securities issued
pursuant to any other pro rata distribution with respect to such Common Stock.
For purposes of this Agreement, a Registrable Security ceases to be a
Registrable Security when (x) it has been effectively registered under the
Securities Act and sold or distributed to the public in accordance with an
effective registration statement covering it (and has not been reacquired in the
manner described in clause (b) above), or (y) it is sold or distributed to the
public pursuant to Rule 144 (or any successor or similar provision) under the
Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
2. Demand Registration. (a) If at any time Holders that in the
aggregate beneficially own a majority of the Registrable Securities then
outstanding (the "Majority") shall request the Company in writing to register
under the Securities Act all or a part of the Registrable Securities held by
such Holders (a "Demand Registration"), the Company shall use all reasonable
efforts to cause to be filed (but in no event later than the 45th day after such
Holders' request is made) and declared effective as soon as reasonably
practicable thereafter, a registration statement, on such appropriate form as
the Company in its discretion shall determine, providing for the sale of all
such Registrable Securities held by the Majority. The Company agrees to use its
best efforts to keep any such registration statement continuously effective and
usable for resale of Registrable Securities for a period of 180 days following
the effective date of such registration statement. The Company shall be
obligated to file two registration statements pursuant to this Section 2(a)
covering such Registrable Securities. Each registration statement filed pursuant
to this Section 2(a) is hereinafter referred to as a "Demand Registration
Statement."
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(b) The Company agrees (i) not to effect any public or private
sale, distribution or purchase of any of its securities which are the same as or
similar to the Registrable Securities, including a sale pursuant to Regulation D
under the Securities Act but excluding a private sale in the context of an
acquisition and any purchases of Common Stock related to the issuance of Common
Stock or rights under any of the Company's benefit plans for its directors,
officers or employees or the Company's dividend reinvestment plan, during the
15-day period prior to, and during the 45-day period beginning on, the closing
date of each underwritten offering under any Demand Registration Statement, and
(ii) to use reasonable best efforts to cause each holder of its securities
purchased from the Company, at any time on or after the date of this Agreement
(other than in a registered public offering) to agree not to effect any public
sale or distribution of any such securities during such period, excluding any
sales by directors or officers pursuant to Rule 144 under the Securities Act.
(c) The Company may postpone for a reasonable period of time,
not to exceed 60 days, the filing or the effectiveness of any Demand
Registration Statement if the Board of Directors of the Company in good faith
determines that (A) such registration might have a material adverse effect on
any plan or proposal by the Company with respect to any financing, acquisition,
recapitalization, reorganization or other material transaction, or (B) the
Company is in possession of material non-public information that, if publicly
disclosed, could result in a material disruption of a major corporate
development or transaction then pending or in progress or in other material
adverse consequences to the Company.
(d) If at any time the Majority desires to sell Registrable
Securities in an underwritten offering, such Holders shall have the right to
select any nationally recognized investment banking firm(s) to administer the
offering, subject to the approval of the Company, which approval shall not be
unreasonably withheld, and the Company shall enter into underwriting agreements
with the underwriter(s) of such offering, which agreements shall contain such
representations and warranties by the Company, and such other terms, conditions
and indemnities as are at the time customarily contained in underwriting
agreements for similar offerings.
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3. Incidental Registration. Subject to the other terms and
conditions set forth in this Section 3, if the Company proposes at any time to
register any shares of Common Stock (the "Initially Proposed Shares") under the
Securities Act for sale, whether or not for its own account, pursuant to an
underwritten offering, the Company will promptly give written notice to the
Holders of its intention to effect such registration (such notice to specify,
among other things, the proposed offering price, the kind and number of
securities proposed to be registered and the distribution arrangements,
including identification of the underwriter(s)), and the Holders shall be
entitled to include in such registration statements, as a part of such
underwritten offering, such number of shares (the "Holder Shares") to be
sold for the account of the Holders (on the same terms and conditions as the
Initially Proposed Shares) as shall be specified in a request in writing
delivered to the Company within 15 days after the date upon which the Company
gave the aforementioned notice.
The Company's obligations to include Holder Shares in a
registration statement pursuant to this Section 3 is subject to each of the
following limitations, conditions and qualifications:
(i) If, at any time after giving written notice of
its intention to effect a registration of any of its shares of Common
Stock and prior to the effective date of any registration statement
filed in connection with such registration, the Company shall determine
for any reason not to register all of such shares, the Company may, at
its election, give written notice of such determination to the Holders
and thereupon it shall be relieved of its obligation to use any efforts
to register any Holder Shares in connection with such aborted
registration.
(ii) If, in the opinion of the managing
underwriter(s) of such offering, the distribution of all or a specified
portion of the Holder Shares would materially interfere with the
registration and sale, in accordance with the intended method thereof,
of the Initially Proposed Shares, then the number of Holder Shares to
be included in such registration statement shall be reduced to such
number, if any, that, in the opinion of such manag-
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ing underwriter(s), can be included without such interference. The
shares of Common Stock to be included therein shall be apportioned as
follows: (i) first, the Company and any holders of securities of the
Company (other than the Holders) exercising any demand registration
right granted to such holders shall be entitled to register all shares
of Common Stock that the Company or such other holders propose to sell
for their own account, in such proportion as they shall agree upon; and
(ii) second, the Holders shall be entitled to register, on a pro rata
basis (based on the number of shares of Common Stock proposed to be
registered by each), up to that number of Registrable Securities that
is equal to the remaining number of shares of Common Stock that the
managing underwriter(s) will permit to be registered in connection with
such offering. If, as a result of the cutback provisions of the
preceding sentences, the Holders are not entitled to include all of the
Holder Shares in such registration, such Holders may elect to withdraw
their request to include Holder Shares in such registration (a
"Withdrawal Election").
If the Company shall so request in writing, each Holder agrees
not to effect any public or private sale or distribution of any Registrable
Securities (other than the Holder Shares) during the 15-day period prior to and
during the 45-day period beginning on, the closing date of any underwritten
public offering of shares of Common Stock made for the Company's own
account.
4. Registration Procedures. (a) Whenever the Company is
required to use all reasonable efforts to effect the registration of any
Registrable Securities under the Securities Act pursuant to the terms and
conditions of Section 2(a) or 3 (such Registrable Securities being hereinafter
referred to as "Subject Shares"), the Company will use all reasonable efforts to
effect the registration and sale of the Subject Shares in accordance with the
intended method of disposition thereof. Without limiting the generality of the
foregoing, the Company will as soon as practicable:
(i) prepare and file with the Securities and Exchange
Commission (the "SEC") a registration statement with respect to the
Subject Shares in form
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and substance satisfactory to the Holders of the Subject Shares, and
use all reasonable efforts to cause such registration statement to
become effective as soon as possible;
(ii) prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective for the applicable period and to comply with the
provisions of the Securities Act with respect to the disposition of all
Subject Shares and other securities covered by such registration
statement;
(iii) furnish the Holders covered by such
registration statement, without charge, such number of conformed copies
of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number
of copies of the prospectus included in such registration statement
(including each preliminary prospectus), such documents incorporated by
reference in such registration statement or prospectus, and such other
documents, as such Holders may reasonably request;
(iv) use all reasonable efforts to register or
qualify the Subject Shares covered by such registration statement under
the securities or blue sky laws of such jurisdictions as the managing
underwriter(s) shall reasonably recommend, which jurisdictions shall be
limited to jurisdictions within the United States, and do any and all
other acts and things which may be reasonably necessary or advisable to
enable the Holders to consummate the disposition in such jurisdictions
of the Subject Shares covered by such registration statement, except
that the Company shall not for any such purpose be required to (A)
qualify generally to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified, (B) subject itself to
taxation in any jurisdiction wherein it is not so subject, or (C)
consent to general service of process in any such jurisdiction or
otherwise take any action that would subject it to the general
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jurisdiction of the courts of any jurisdiction in
which it is not so subject;
(v) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC;
(vi) furnish, at the Company's expense,
unlegended certificates representing ownership of the securities being
sold in such denominations as shall be requested and instruct the
transfer agent to release any stop transfer orders with respect to the
Subject Shares being sold;
(vii) notify each Holder at any time when a
prospectus relating to the Subject Shares is required to be delivered
under the Securities Act of the happening of any event as a result of
which the prospectus included in such Registration Statement contains
any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of the circumstances
under which they were made) not misleading, and the Company will, as
promptly as practicable thereafter, prepare and file with the SEC and
furnish a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of Subject Shares such
prospectus will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(viii) enter into customary agreements (including an
underwriting agreement in customary form in the case of an underwritten
offering) and make such representations and warranties to the sellers
and underwriter(s) as in form and substance and scope are customarily
made by issuers to underwriters in underwritten offerings and take such
other actions as the Holders or the managing underwriter(s) or agent,
if any, reasonably require in order to expedite or facilitate the
disposition of such Subject Shares;
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<PAGE>
(ix) make available for inspection by the Holders,
any underwriter or agent participating in any disposition pursuant to
such Registration Statement, and any attorney, accountant or other
similar professional advisor retained by any such holders or
underwriter (collectively the "Inspectors"), all pertinent
financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement. The Holders
agree that Records and other information which the Company determines,
in good faith, to be confidential and of which determination the
Inspectors are so notified shall not be disclosed by the Inspectors
unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in the Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena, court
order or regulatory or agency request or (iii) the information in such
Records has been generally disseminated to the public. Each Holder
agrees that it will, upon learning that disclosure of such Record is
sought in a court of competent jurisdiction or by a governmental
agency, give notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(x) in the case of an underwritten offering, obtain
for delivery to the Company, the underwriter(s) or their agent, with
copies to the Holders, a "cold comfort" letter from the
Company's independent public accountants in customary form and
covering such matters of the type customarily covered by "cold
comfort" letters as the Holders or the managing underwriter(s)
reasonably request;
(xi) in the case of an underwritten offering, obtain
for delivery to the Holders and the underwriter(s) or their agent an
opinion or opinions from counsel for the Company in customary form and
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<PAGE>
reasonably satisfactory to the Holder, underwriters
or agents and their counsel;
(xii) make available to its security holders earnings
statements, which need not be audited, satisfying the provisions of
Section 11(a) of the Securities Act no later than 90 days after the end
of the 12-month period beginning with the first month of the Company's
first quarter commencing after the effective date of the
Registration Statement, which earnings statements shall cover said
12-month period;
(xiii) make every reasonable effort to prevent the
issuance of any stop order suspending the effectiveness of the
registration statement or of any order preventing or suspending the
effectiveness of such registration statement at the earliest
practicable moment;
(xiv) cause the Subject Shares to be registered with
or approved by such other governmental agencies or authorities within
the United States as may be necessary to enable the sellers thereof or
the underwriters(s), if any, to consummate the disposition of such
Subject Shares;
(xv) cooperate with the Holders and the managing
underwriter(s), if any, or any other interested party (including any
interested broker-dealer) in making any filings or submission required
to be made, and the furnishing of all appropriate information in
connection therewith, with the National Association of Securities
Dealers, Inc. ("NASD");
(xvi) cause its significant subsidiaries to take
action necessary to effect the registration of the Subject Shares
contemplated hereby, including filing any required financial
information;
(xvii) effect the listing of the Subject Shares on
the New York Stock Exchange or such other national securities exchange
or over-the-counter market on which shares of the Common Stock shall
then be listed; and
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<PAGE>
(xviii) take all other steps necessary to effect the
registration of the Subject Shares contemplated hereby.
(b) The Holders shall provide (in writing
and signed by the Holders and stated to be specifically for use in the related
registration statement, preliminary prospectus, prospectus or other document
incident thereto) all such information and materials and take all such action as
may be required in order to permit the Company to comply with all applicable
requirements of the SEC and any applicable state securities laws and to obtain
any desired acceleration of the effective date of any registration statement
prepared and filed by the Company pursuant to this Agreement.
(c) The Holders shall, if requested by
the Company or the managing underwriter(s) in connection with any proposed
registration and distribution pursuant to this Agreement, (i) agree to sell the
Subject Shares on the basis provided in any underwriting arrangements entered
into in connection therewith and (ii) complete and execute all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
customary in similar offerings.
(d) Upon receipt of any notice from the
Company that the Company has become aware that the prospectus (including any
preliminary prospectus) included in any registration statement filed pursuant to
Section 2(a) or 3, as then in effect, contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, the Holders shall
forthwith discontinue disposition of Subject Shares pursuant to the registration
statement covering the same until the Holders' receipt of copies of a
supplemented or amended prospectus and, if so directed by the Company, deliver
to the Company (at the Company's expense) all copies other than permanent
file copies then in the Holder's possession, of the prospectus covering
the Subject Shares that was in effect prior to such amendment or supplement.
(e) The Holders shall pay all out-of-pocket
expenses incurred in connection with any Demand Registration Statements filed
pursuant to Section
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2(a) of this Agreement, including, without limitation, all SEC and blue sky
registration and filing fees (including NASD fees), printing expenses, transfer
agents and registrars' fees, underwriting discounts, commissions and
expenses attributable to securities sold for the account of the Holders pursuant
to such registration statement, fees and disbursements of the Company's
counsel and accountants and fees and disbursements of experts used by the
Company in connection with such registration statement. The Company shall pay
any such out-of-pocket expenses incurred in connection with any registration
statement filed pursuant to Section 3 of this Agreement, except that the Holders
shall pay all underwriting discounts, commissions and expenses attributable to
the Holder Shares sold pursuant to any such registration statement and the
incremental portion of the SEC registration and filing fees relating to the
Holder Shares.
(f) In connection with any sale of Sub-
ject Shares that are registered pursuant to this Agreement, the Company and the
Holders shall enter into an agreement providing for indemnification of the
Holders by the Company, and indemnification of the Company by the Holders, on
terms customary for such agreements at that time (it being understood that any
disputes arising as to what is customary shall be resolved by counsel to the
underwriter(s)).
5. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answerback received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the third business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual service, fully prepaid, addressed to such address, or upon actual receipt
of such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to the Company, to:
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P.O. Box 5024
One State Street
Hartford, CT
06102-5024
Attn: Roberta O'Brien
Telecopy: (860) 722-5710
If to ERC, to:
5200 Metcalf
P.O. Box 2991
Overland Park, KS
66201-1391
Attn: John Connelley
Telecopy: (913) 676-5483
If to any other Holder, to such name at such address as such
Holder shall have indicated in a written notice delivered to
the other parties to this Agreement.
Any party hereto may from time to time change its address for notices under this
Section 5 by giving at least 10 days' notice of such changes to the other
parties hereto.
6. Waivers. No waiver by any party of any default with respect
to any provision, condition or requirement hereof shall be deemed to be a
continuing waiver in the future thereof or a waiver of any other provision,
condition or requirement hereof; nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
7. Headings. The headings herein are for convenience
only, do not constitute a part of this Agree- ment and shall not be deemed to
limit or affect any of the provisions hereof.
8. Successors and Assigns; Amendments. This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns, includ- ing without limitation and without the
need for an ex- press assignment to each subsequent Holder of any Regis- trable
Securities. Except as provided in this Section 8, neither the Company nor any
Holder shall assign this Agreement or any rights hereunder without the prior
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<PAGE>
written consent of the other parties hereto. The assignment by a party of this
Agreement or any rights hereunder shall not affect the obligations of such party
hereunder. This Agreement may not be amended except by a written instrument
executed by the parties hereto.
9. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
10. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York; without regard to the principles of conflicts of laws.
12. Entire Agreement. This Agreement contains the entire
agreement of the parties hereto in respect of the subject matter hereof and
supersedes all prior agreements and understandings between the parties with
respect to the subject matter hereof.
13. Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
date hereof.
HSB GROUP, INC.
By: /s/ Saul L. Basch
Name: Saul L. Basch
Title: Senior Vice President, Treasurer
and Chief Financial Officer
EMPLOYERS REINSURANCE CORPORATION
By: /s/ John M. Connelly
Name: John M. Connelly
Title: Senior Vice President, General
Counsel & Secretary
ERC LIFE REINSURANCE CORPORATION
By: /s/ John M. Connelly
Name: John M. Connelly
Title: General Counsel
0154453.03-01S7a
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