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: July 3, 1996 Date of Earliest Event Reported: July 3, 1996
EQUITABLE OF IOWA COMPANIES
(Exact Name of Registrant as Specified in Its Charter)
Iowa
(State or Other Jurisdiction of Incorporation)
0-8590 42-1083593
(Commission File Number) (I.R.S. Employer Identification No.)
604 Locust Street, P.O. Box 1635, Des Moines, IA 50306
(Address of Principal Executive Offices) (Zip Code)
(515) 245-6911
(Registrant's Telephone Number, Including Area Code)
ITEM 5. Other Events.
This report is being filed for purposes of filing the exhibits
referenced in Item 7 below to the Registration Statement on Form S-3,
Registration No. 333-1909, filed by Equitable of Iowa Companies (the
"Company") and Equitable of Iowa Companies Capital Trust on March 22, 1996,
as amended, which exhibits are by this reference incorporated therein and
herein.
On April 24, 1996 in announcing results for the quarter ended March 31,
1996, but prior to entering into an agreement to acquire Golden American Life
Insurance Company ("Golden American"), the President and CEO of the Company
stated as follows:
Hubbell continued, "We are on track to reach our annual goals of 15
percent return on equity and 1 percent return on assets. In addition,
we have had a goal of averaging 20 percent annual asset growth over each
three-year planning cycle. We have achieved an average annual growth
rate of 22 percent since March 31, 1993. However, if sales continue at
the current pace, we may fall short of our three-year goal at the end of
the year. Our pursuit of these goals should continue to position us as
a significant competitor in the growing retirement savings market."
With the announcement of the agreement to acquire Golden American, the Company
remains on track to reach its annual goals of 15% return on equity and 1%
return on assets in 1996, whether or not the Golden American acquisition is
consummated. With the Golden American acquisition, the Company would be on
track to reach its 20% three-year average annual asset growth goal. However,
without the Golden American acquisition, the Company continues to believe it
may fall short of its three-year average annual growth of 20% for the three
years ended December 31, 1996.
The above contains a forward-looking statement. Actual results for the
Company may vary materially from the Company's goals and will depend, among
other things, on the following important factors, among other risks and
uncertainties inherent in the Company's business:
1. Prevailing interest rate levels, including any continuation of the
current relatively flat yield curve for short-term investments in
comparison to long-term investments, which may affect the ability of the
Company to sell its products, the market value of the Company's
investments and the lapse rate of the Company's policies, notwithstanding
product design features intended to enhance persistency of the Company's
products.
2. Changes in the federal income tax laws and regulations which may affect
the relative tax advantages of the Company's products.
3. Changes in the regulation of financial services, including bank sales and
underwriting of insurance products, which may affect the competitive
environment for the Company's products.
4. Consummation of the Golden American acquisition.
5. Factors affecting the performance of the Company and Golden American,
including, but not limited to, interest rates, stock market performance,
tax and regulatory changes, investment performance of the underlying
portfolios of the variable annuity product, variable annuity product
design and sales volume by significant sellers of Golden American's
variable annuities.
ITEM 7. Financial Statements and Exhibits.
7(c) Exhibits:
1.3 Form of Underwriting Agreement for Preferred Securities
4.7.1 Form of First Supplemental Indenture, including therein the
Form of Subordinated Deferrable Interest Debenture
4.9.1 Form of First Amendment to Declaration of Trust of Equitable
of Iowa Companies Capital Trust, including therein the Form
of Preferred Securities
4.10 Form of Preferred Securities Guarantee Agreement by Equitable
of Iowa Companies (as amended)
4.11.1 Form of Subordinated Deferrable Interest Debenture (included
in Exhibit 4.7.1)
4.14 Form of Preferred Security (included in Exhibit 4.9.1)
8 Opinion of Nyemaster, Goode, McLaughlin, Voigts, West,
Hansell & O'Brien, P.C. as to certain federal income
taxation matters
12 Computation of Ratio of Earnings to Fixed Charges --
supplementing and superseding Exhibit 12 which was filed as
part of the Registrant's Registration Statement on Form S-3,
Registration No. 333-1909 filed March 22, 1996, as amended
23.1 Consent of Nyemaster, Goode, McLaughlin, Voigts, West,
Hansell & O'Brien, P.C. (included in Exhibits 5.1 and 8
hereto)
99 Additional Exhibits
(a) Pro Forma Condensed Consolidated Financial Statements
(Unaudited) for Equitable of Iowa Companies
and BT Variable, Inc.
SIGNATURES
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 hereunto duly authorized.
EQUITABLE OF IOWA COMPANIES
Date: July 3, 1996 By /s/ John A. Merriman
_______________________________
John A. Merriman,
General Counsel and Secretary
EXHIBIT INDEX
Exhibit No. Description
1.3 Form of Underwriting Agreement for Preferred Securities
4.7.1 Form of First Supplemental Indenture, including therein
the Form of Subordinated Deferrable Interest Debenture
4.9.1 Form of First Amendment to Declaration of Trust of
Equitable of Iowa Companies Capital Trust, including therein
the Form of Preferred Securities
4.10 Form of Preferred Securities Guarantee Agreement by
Equitable of Iowa Companies (as amended)
4.11.1 Form of Subordinated Deferrable Interest Debenture
(included in Exhibit 4.7.1)
4.14 Form of Preferred Security (included in Exhibit 4.9.1)
8 Opinion of Nyemaster, Goode, McLaughlin, Voigts,
West, Hansell & O'Brien, P.C. as to certain federal
income taxation matters
12 Computation of Ratio of Earnings to Fixed Charges --
supplementing and superseding Exhibit 12 which was
filed as part of the Registrant's Registration Statement
on Form S-3, Registration No. 333-1909 filed March 22,
1996, as amended
23.1 Consent of Nyemaster, Goode, McLaughlin, Voigts, West, Hansell &
O'Brien, P.C. (included in Exhibits 5.1 and 8 hereto)
99 Additional Exhibits
(a) Pro Forma Condensed Consolidated Financial Statements
(Unaudited) for Equitable of Iowa Companies
and BT Variable, Inc.
Form of Underwriting Agreement
==============================
__________ Preferred Securities
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST
(a Delaware Trust)
___% Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 per Preferred Security) SM
UNDERWRITING AGREEMENT
----------------------
____________, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DAIN BOSWORTH INC.
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
THE ROBINSON-HUMPHREY COMPANY, INC.
as the Representatives of the several Underwriters
c/o Merrill Lynch & Co.
5500 Sears Tower
Chicago, Illinois 60606
Ladies and Gentlemen:
Equitable of Iowa Companies Capital Trust (the "Trust"), a statutory
business trust organized under the Business Trust Act (the "Delaware Act") of
the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
Sections 3801 et seq.), and Equitable of Iowa Companies, an Iowa corporation
(the "Company" and, together with the Trust, the "Offerors"), confirm their
agreement (the "Agreement") with Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), Dain Bosworth Inc., Dean
Witter Reynolds Inc., Goldman, Sachs & Co. and The Robinson-Humphrey Company,
Inc. as representatives (in such capacity, collectively, the "Representatives")
of the several Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), with respect to the sale by the
Trust and the purchase by the Underwriters, acting severally and not jointly,
of the respective number of ____% Trust Originated Preferred Securities
(liquidation amount of $25 per preferred security) of the Trust ("Preferred
Securities") set forth in said Schedule A, except as may otherwise be provided
in the Pricing Agreement, as hereinafter defined. The Preferred Securities
will be guaranteed by the Company, to the extent described in the Prospectus
(as defined below), with respect to distributions and payments upon
liquidation, redemption and otherwise (the "Preferred Securities Guarantee")
pursuant to the Preferred Securities Guarantee Agreement (the "Preferred
- --------------------------
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co. Inc.
Securities Guarantee Agreement"), dated as of __________, 1996, between the
Company and First National Bank of Chicago, as trustee (the "Guarantee
Trustee"), and in certain circumstances described in the Prospectus, the
Trust will distribute Subordinated Debt Securities (as defined herein) to
holders of Preferred Securities. The Preferred Securities, together with the
related Preferred Securities Guarantee and the Subordinated Debt Securities
are collectively referred to herein as the "Securities".
Prior to the purchase and public offering of the Preferred Securities by
the several Underwriters, the Offerors and the Representatives, acting on
behalf of the several Underwriters, shall enter into an agreement
substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The
Pricing Agreement may take the form of an exchange of any standard form of
written telecommunication between the Offerors and the Representatives and
shall specify such applicable information as is indicated in Exhibit A
hereto. The offering of the Securities will be governed by this Agreement,
as supplemented by the Pricing Agreement. From and after the date of the
execution and delivery of the Pricing Agreement, this Agreement shall be
deemed to incorporate the Pricing Agreement.
The Offerors have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-1909) and pre-
effective amendment nos. 1 and 2 thereto covering the registration of
securities of the Company and the Trust, including up to a combination of
$300,000,000 of (i) the Preferred Securities, (ii) the Preferred Securities
Guarantees and (iii) the Subordinated Debt Securities under the Securities
Act of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus, and the offering thereof from time to time in accordance with
Rule 415 of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and the Offerors have filed such post-effective
amendments thereto as may be required prior to the execution of the Pricing
Agreement. Such registration statement, as so amended, has been declared
effective by the Commission. Such registration statement, as so amended,
including the exhibits and schedules thereto, if any, and the information, if
any, deemed to be a part thereof pursuant to Rule 430A(b) of the 1933 Act
Regulations (the "Rule 430A Information") or Rule 434(d) of the 1933 Act
Regulations (the "Rule 434 Information"), is referred to herein as the
"Registration Statement"; and the final prospectus and the prospectus
supplement relating to the offering of the Securities, in the form first
furnished to the Underwriters by the Offerors for use in connection with the
offering of the Securities, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall be deemed to include all documents
incorporated therein by reference pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"), prior to the execution of the applicable
Pricing Agreement; and provided, further, that if the Offerors elect to rely
upon Rule 434 of the 1933 Act Regulations, then all references to
"Prospectus" shall be deemed to include the final or preliminary prospectus
and the applicable term sheet or abbreviated term sheet (the "Term Sheet"),
as the case may be, in the form first furnished to the Underwriters by the
Offerors in reliance upon Rule 434 of the 1933 Act Regulations, and all
references in this Underwriting Agreement to the date of the Prospectus shall
mean the date of the Term Sheet. A "preliminary prospectus" shall be deemed
to refer to any prospectus used before the registration statement became
effective and any prospectus that omitted, as applicable, the Rule 430A
Information, the Rule 434 Information or other information to be included
upon pricing in a form of prospectus filed with the Commission pursuant to
Rule 424(b) of the 1933 Act Regulations, that was used after such
effectiveness and prior to the execution and delivery of the applicable
Pricing Agreement. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is
incorporated by reference in the Registration Statement, any preliminary
prospectus or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to mean and include
the filing of any document under the 1934 Act which is incorporated by
reference in the Registration Statement, such preliminary prospectus or the
Prospectus, as the case may be.
The Offerors understand that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable
after the Pricing Agreement has been executed and delivered, and the
Declaration (as defined herein), the Indenture (as defined herein), and the
Preferred Securities Guarantee Agreement have been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"). The entire proceeds from
the sale of the Preferred Securities will be combined with the entire
proceeds from the sale by the Trust to the Company of its common securities
(the "Common Securities," and together with the Preferred Securities, the
"Trust Securities"), as guaranteed by the Company, to the extent set forth in
the Prospectus, with respect to distributions and payments upon liquidation
and redemption (the "Common Securities Guarantee" and together with the
Preferred Securities Guarantee, the "Guarantees") pursuant to the Common
Securities Guarantee Agreement (the "Common Securities Guarantee Agreement"
and, together with the Preferred Securities Guarantee Agreement, the
"Guarantee Agreements"), dated as of ______, 1996, between the Company and
Guarantee Trustee, as Trustee, and will be used by the Trust to purchase
$__________ of ____% subordinated deferrable interest debt securities (the
"Subordinated Debt Securities") issued by the Company. The Preferred
Securities and the Common Securities will be issued pursuant to the
Declaration of Trust of the Trust, dated as of March 19, 1996, as amended and
restated on ______, 1996 (the "Declaration"), among the Company, as Sponsor,
Fred S. Hubbell, Paul E. Larson and John A. Merriman (the "Regular
Trustees"), First National Bank of Chicago, as property trustee (the
"Property Trustee"), and First Chicago Delaware, Inc. (the "Delaware
Trustee," and, together with the Property Trustee and the Regular Trustees,
the "Trustees"), and the holders from time to time of undivided beneficial
interests in the assets of the Trust. The Subordinated Debt Securities will
be issued pursuant to an indenture, dated as of January 17, 1995 (the "Base
Indenture"), between the Company and First National Bank of Chicago as
trustee (the "Debt Trustee"), and a supplement to the Base Indenture, dated
as of ______, 1996 (the "Supplemental Indenture," and together with the Base
Indenture and any other amendments or supplements thereto, the "Indenture"),
between the Company and the Debt Trustee.
SECTION 1. Representations and Warranties.
(a) The Offerors jointly and severally represent and warrant to each
Underwriter as of the date hereof and as of the date of the Pricing Agreement
(such later date being hereinafter referred to as the "Representation Date")
that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or, to the knowledge of the Offerors, threatened by the
Commission.
(ii) Each of the Offerors meets, and at the respective
times of commencement and consummation of the Offering of the Securities will
meet, the requirements for the use of Form S-3 under the 1933 Act.
(iii) The Registration Statement has become effective under
the 1933 Act, and at the time of effectiveness and at the Representation Date,
the Registration Statement conformed and will conform in all material respects
to the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact and did not and
will not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and the Prospectus,
at the time the Registration Statement became effective (unless the term
"Prospectus" refers to a prospectus which has been provided to the
Underwriters by the Company for use in connection with the offering of the
Securities which differs from the Prospectus on file at the Commission at the
time the Registration Statement became effective, in which case at the time
it is first provided to the Underwriters for such use) and at the
Representation Date and at the Closing Time referred to in Section 2, did not
and will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this subsection
shall not apply to statements contained in or omitted from the Registration
Statement or the Prospectus in reliance upon, and in conformity with,
(A) information furnished to the Offerors in writing by any Underwriter
through Merrill Lynch expressly for use in the Registration Statement or the
Prospectus, or (B) that part of the Registration Statement which shall
constitute the Statement of Eligibility (Form T-1) under the 1939 Act.
(iv) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement or the Prospectus, at
the time they were or hereafter are filed or last amended, as the case may be,
with the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act, and the rules and regulations of Commission
thereunder (the "1934 Act Regulations"), and at the time of filing or as of
the time of any subsequent amendment, did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading; and any
additional documents deemed to be incorporated by reference in the
Registration Statement or the Prospectus will, if and when such documents are
filed with the Commission, or when amended, as appropriate, comply in all
material respects to the requirements of the 1934 Act and the 1934 Act
Regulations and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to any
statements contained in or omitted from such documents made in reliance upon
and in conformity with information furnished to the Offerors in writing by
any Underwriter through Merrill Lynch expressly for use in such documents.
(v) The accountants who certified the financial statements
and supporting schedules included or incorporated by reference in the
Registration Statement are independent public accountants as required by the
1933 Act and the 1933 Act Regulations.
(vi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization; and (ii) assets are
safeguarded and transactions are recorded to permit preparation of financial
statements in conformity with generally accepted accounting principles and,
as of the Closing Time, the Company will continue to maintain such a system.
(vii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as otherwise
stated therein, (A) there has been no material adverse change and no develop-
ment which could reasonably be expected to result in a material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Trust or the Company and its Subsidiaries (as
defined below) considered as one enterprise, whether or not arising in the
ordinary course of business or those referred to in or contemplated by the
Registration Statement, (B) there have been no transactions entered into by
the Trust or the Company or any of its Subsidiaries which are material with
respect to the Trust or the Company and its Subsidiaries considered as one
enterprise, other than those in the ordinary course of business or those
referred to in or contemplated by the Registration Statement and (C) there
has not been any material change in the long term debt of the Company.
(viii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of Iowa,
with corporate power and authority to own, lease and operate its properties
and to conduct its business as presently conducted and as described in the
Prospectus; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
or be in good standing would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its Subsidiaries considered as one
enterprise.
(ix) Each of the corporations of which a majority of the
outstanding voting equity securities are owned, directly or indirectly, by the
Company ("Subsidiaries") has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own, lease and
operate its properties and to conduct its business as presently conducted and
as described in the Prospectus, and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the failure
to so qualify or be in good standing would not have a material adverse effect
on the condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its Subsidiaries considered as one
enterprise.
(x) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus; since the date indicated in
the Prospectus there has been no change in the consolidated capitalization of
the Company and its Subsidiaries (other than changes in outstanding Common
Stock resulting from employee benefit plan or dividend reinvestment and stock
purchase plan transactions); and all of the issued and outstanding capital
stock of the Company have been duly authorized and validly issued, are fully
paid and non-assessable and conform to the descriptions thereof contained in
the Prospectus and the Registration Statement.
(xi) Each of Equitable Life Insurance Company of Iowa
("Equitable Life"), USG Annuity & Life Company ("USG") and each other
Subsidiary of the Company, if any, which is engaged in the business of
insurance or reinsurance (collectively, the "Insurance Subsidiaries") holds
such insurance licenses, certificates and permits from governmental authorities
(including, without limitation, from the insurance regulatory agencies of the
various jurisdictions where it conducts business (the "Insurance Licenses"))
as are necessary to the conduct of its business as described in the Prospectus;
the Company and each Insurance Subsidiary have fulfilled and performed all
obligations necessary to maintain the Insurance Licenses; except as disclosed
in the Prospectus, there is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or investigation that could reasonably be
expected to result in the revocation, termination or suspension of any
Insurance License; and except as disclosed in the Prospectus, no insurance
regulatory agency or body has issued, or commenced any proceeding for the
issuance of, any order or decree impairing, restricting or prohibiting the
payment of dividends by any Insurance Subsidiary to its parent.
(xii) Except as disclosed in the Prospectus, the Company
and the Insurance Subsidiaries have made no material changes in their
insurance reserving practices since the most recent audited financial
statements included or incorporated in the Prospectus.
(xiii) All reinsurance treaties and arrangements to which
any Insurance Subsidiary is a party are in full force and effect and no
Insurance Subsidiary is in violation of or in default in the performance,
observance or fulfillment of, any obligation, agreement, covenant or condition
contained therein; no Insurance Subsidiary has received any notice from any of
the other parties to such treaties, contracts or agreements that such other
party intends not to perform such treaty and, to the best knowledge of the
Company and the Insurance Subsidiaries, the Company and the Insurance
Subsidiaries have no reason to believe that any of the other parties to such
treaties or arrangements will be unable to perform such treaty or arrangement
except to the extent adequately and properly reserved for in the consolidated
financial statements of the Company included in the Prospectus.
(xiv) The statutory financial statements of the Insurance
Subsidiaries from which certain ratios and other statistical data filed as
part of the Registration Statement or included or incorporated in the
Prospectus have been derived, have for each relevant period been prepared in
conformity with statutory accounting principles or practices required or
permitted by the National Association of Insurance Commissioners and by the
appropriate Insurance Department of the jurisdiction of domicile of each
Insurance Subsidiary, and such statutory accounting practices have been
applied on a consistent basis throughout the periods involved, except as may
otherwise be indicated therein or in the notes thereto, and present fairly
the statutory financial position of the Insurance Subsidiaries as of the
dates thereof, and the statutory basis results of operations of the Insurance
Subsidiaries for the periods covered thereby.
(xv) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act with the
power and authority to own property and to conduct its business as described
in the Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement, the Pricing Agreement, the Preferred
Securities, the Common Securities and the Declaration; the Trust is duly
qualified to transact business as a foreign company and is in good standing
in any other jurisdiction in which such qualification is necessary, except to
the extent that the failure to so qualify or be in good standing would not
have a material adverse effect on the Trust; the Trust is not a party to or
otherwise bound by any agreement other than those described in the
Prospectus; the Trust is and will, under current law, be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.
(xvi) The Common Securities have been duly authorized by
the Declaration and, when issued and delivered by the Trust to the Company
against payment therefor as described in the Registration Statement and
Prospectus, will be validly issued and will represent undivided beneficial
interests in the assets of the Trust and will conform in all material
respects to the description thereof contained in the Prospectus; the issuance
of the Common Securities is not subject to preemptive or other similar
rights; and at the Closing Time all of the issued and outstanding Common
Securities of the Trust will be directly owned by the Company free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equitable right.
(xvii) This Agreement and the Pricing Agreement have been
duly authorized, executed and delivered by each of the Offerors.
(xviii) The Declaration has been duly authorized by the
Company and, at the Closing Time, will have been duly executed and delivered
by the Company and the Trustees, and assuming due authorization, execution and
delivery of the Declaration by the Property Trustee and the Delaware Trustee,
the Declaration will, at the Closing Time, be a valid and binding obligation
of the Company and the Regular Trustees, enforceable against the Company and
the Regular Trustees in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally or by
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity) (the "Bankruptcy Exceptions") and will
conform in all material respects to the description thereof contained in the
Prospectus.
(xix) Each of the Guarantee Agreements has been duly
authorized by the Company and, when validly executed and delivered by the
Company, and, in the case of the Preferred Securities Guarantee Agreement,
assuming due authorization, execution and delivery of the Preferred Securities
Guarantee by the Guarantee Trustee, will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, and each of the Guarantees and the Guarantee
Agreements will conform in all material respects to the description thereof
contained in the Prospectus.
(xx) The Preferred Securities have been duly authorized
and, when issued and delivered against payment therefor as provided herein,
will be validly issued and fully paid and non-assessable undivided beneficial
interests in the assets of the Trust and will conform in all material respects
to the description thereof contained in the Prospectus; the issuance of the
Preferred Securities is not subject to preemptive or other similar rights.
(xxi) The Indenture has been duly authorized and qualified
under the 1939 Act and, at the Closing Time, will have been duly executed and
delivered and will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions;
the Indenture will conform in all material respects to the description thereof
contained in the Prospectus.
(xxii) The Subordinated Debt Securities have been duly
authorized by the Company and, at the Closing Time, will have been duly
executed by the Company and, when authenticated in the manner provided for in
the Indenture and delivered against payment therefor as described in the
Prospectus, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions,
and will be in the form contemplated by, and entitled to the benefits of, the
Indenture and will conform in all material respects to the description thereof
in the Prospectus.
(xxiii) Each of the Regular Trustees of the Trust is an
employee of the Company and has been duly authorized by the Company to
execute and deliver the Declaration.
(xxiv) None of the Offerors is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxv) The Trust is not in violation of the Declaration or
its certificate of trust filed with the State of Delaware on March 19, 1996
(the "Certificate of Trust"); none of the execution, delivery and performance
of this Agreement, the Pricing Agreement, the Declaration, the Preferred
Securities, the Common Securities, the Indenture, the Subordinated Debt
Securities, the Guarantee Agreements and the Guarantees and the consummation
of the transactions contemplated herein and therein and compliance by the
Offerors with their respective obligations hereunder and thereunder did or
will result in a breach of any of the terms or provisions of, or constitute a
default or require the consent of any party under the Certificate of Trust or
the Company's Articles of Incorporation or by-laws, any material agreement or
instrument to which either Offeror is a party, any existing applicable law,
rule or regulation or any judgment, order or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over either Offeror or any of its properties or assets, or did
or will result in the creation or imposition of any lien on the properties or
assets of either Offeror.
(xxvi) No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration with any
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, and no filing, recording,
publication or registration in any public office or any other place, was or
is now required in connection with the issuance and sale of the Common
Securities or the offering of the Preferred Securities, the Subordinated Debt
Securities or the Guarantees hereunder, except for such as may be required
under the 1933 Act or state securities laws and the qualification of the
Declaration, the Preferred Securities Guarantee Agreement and the Indenture
under the 1939 Act.
(xxvii) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or any of
its Subsidiaries is a party or of which any property of the Company or any of
its Subsidiaries is the subject which, if determined adversely to the Company
or any of its subsidiaries, would individually or in the aggregate have a
material adverse effect on the consolidated position, stockholders' equity or
results of operations of the Company and its Subsidiaries considered as one
enterprise; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others.
(xxviii) No "forward looking statement" (as defined in Rule 175
under the 1933 Act) contained in the Registration Statement, any preliminary
prospectus or the Prospectus was made or reaffirmed without a reasonable
basis or was disclosed other than in good faith.
(b) Any certificate signed by any trustee of the Trust or any officer of
the Company and delivered to the Representatives or to counsel for the Under
writers shall be deemed a representation and warranty by the Trust or the
Company, as the case may be, to each Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Trust agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Trust, at the price
per security set forth in the Pricing Agreement, the number of Preferred
Securities set forth in Schedule A hereto opposite the name of such
Underwriter, plus any additional number of Preferred Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(1) If the Offerors have elected not to rely upon Rule 430A of the
1933 Act Regulations, the initial public offering price per Preferred Security
and the purchase price per Preferred Security to be paid by the several Under
writers for the Preferred Securities have each been determined and set forth
in the Pricing Agreement, dated the date hereof, and any necessary amendments
to the Registration Statement and the Prospectus will be filed before the
Registration Statement becomes effective.
(2) If the Offerors have elected to rely upon Rule 430A of the 1933
Act Regulations, the purchase price per Preferred Security to be paid by the
several Underwriters shall be an amount equal to the initial public offering
price per Preferred Security, less an amount per Preferred Security to be
determined by agreement between the Underwriters and the Offerors. The
initial public offering price per Preferred Security shall be a fixed price
to be determined by agreement between the Underwriters and the Offerors. The
initial public offering price and the purchase price, when so determined,
shall be set forth in the Pricing Agreement. In the event that such prices
have not been agreed upon and the Pricing Agreement has not been executed and
delivered by all parties thereto by the close of business on the fourth
business day following the date of this Agreement, this Agreement shall
terminate forthwith, without liability of any party to any other party,
unless otherwise agreed to by the Offerors and the Underwriters.
(3) In either event, as compensation to the Underwriters for their
commitments hereunder and in view of the fact that the proceeds of the sale
of the Preferred Securities will be used to purchase the Subordinated Debt
Securities of the Company, the Company hereby agrees to pay at Closing Time
to the Representatives, for the accounts of the several Underwriters, a
commission per Preferred Security determined by agreement between the
Representatives and the Company for the Preferred Securities to be delivered
by the Trust hereunder at Closing Time. The commission, when so determined,
shall be set forth in the Pricing Agreement.
(b) Delivery of certificates for the Securities shall be made at the
offices of the Underwriters in New York, and payment of the purchase price
for the Securities shall be made at the offices of LeBoeuf, Lamb, Greene &
MacRae, L.L.P., 125 West 55th Street, New York, New York 10019 or at such
other place as shall be agreed upon by the Underwriters and the Offerors, at
10:00 a.m. (New York time) on the third business day after the date the
Registration Statement becomes effective (or, if the Offerors have elected to
rely upon Rule 430A, the third full business day after execution of the
Pricing Agreement (or, if pricing of the Securities occurs after 4:30 p.m.
Eastern time, on the fourth full business day thereafter)), or such other
time not later than ten business days after such date as shall be agreed upon
by the Underwriters and the Offerors (such time and date of payment and
delivery being herein called the "Closing Time"). Payment for the Securities
purchased by the Underwriters shall be made to the Trust by wire transfer of
immediately available funds, payable to the order of the Trust, against
delivery to the respective accounts of the Underwriters of certificates for
the Preferred Securities to be purchased by them. Certificates for the
Securities shall be in such denominations and registered in such names as the
Underwriters may request in writing at least two full business days before
the Closing Time. Merrill Lynch, individually and not as representative of
the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Securities, if any, to be purchased by any Underwriter
whose check has not been received by the Closing Time, but such payment shall
not relieve such Underwriter from its obligations hereunder. The
certificates for the Securities, will be made available for examination and
packaging by the Underwriters no later than 10:00 a.m. (New York City time)
on the last business day prior to the Closing Time.
SECTION 3. Covenants of the Offerors. Each of the Offerors jointly
and severally agrees with each Underwriter as follows:
(a) The Offerors will comply with the requirements of Rule 430A of the
1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations if and as
applicable, and will notify the Underwriters immediately, and confirm the
notice in writing, (i) of the effectiveness of the Registration Statement and
any amendment thereto (including any post-effective amendment) or the filing
of any supplement or amendment to the Prospectus, (ii) of any request by the
Commission for any amendment to the Registration Statement and any amendment
thereto including any post-effective amendment) or any amendment or
supplement to the Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose and (iv) of the issuance by any state securities commission or other
regulatory authority of any order suspending the qualification or the
exemption from qualification of the Securities or the Shares under state
securities or Blue Sky laws or the initiation or threatening of any
proceeding for such purpose. The Offerors will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued,
to obtain the lifting thereof at the earliest possible moment.
(b) The Offerors will give the Representatives notice of their
intention to file or prepare (i) any amendment to the Registration Statement
(including any post-effective amendment) or (ii) any amendment or supplement
to the Prospectus (including any revised prospectus which the Offerors
propose for use by the Underwriters in connection with the offering of the
Preferred Securities which differs from the prospectus on file at the
Commission at the time the Registration Statement became effective, whether
or not such revised prospectus is required to be filed pursuant to
Rule 424(b) of the 1933 Act Regulations), will furnish the Representatives
with copies of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file
any such amendment or supplement or use any such prospectus to which the
Representatives or counsel for the Underwriters shall reasonably object.
Subject to the foregoing, the Offerors will promptly prepare a supplement to
the Prospectus to reflect the terms of the Preferred Securities and the terms
of the offering. The Offerors will file the Prospectus as so supplemented
pursuant to Rule 424(b) of the 1933 Act Regulations not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) of the 1933 Act Regulations.
(c) The Offerors will deliver to each of the Representatives one signed
copy of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein and documents incorporated or deemed to be incorporated by reference
therein) and will also deliver to the Representatives, without charge, as
many conformed copies of the Registration Statement as originally filed and
of each amendment thereto (without exhibits) as the Representatives may
reasonably request. If applicable, the copies of the Registration Statement
and each amendment thereto furnished to the Underwriters will be identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(d) The Offerors will deliver to each Underwriter, without charge, as
many copies of each preliminary prospectus as such Underwriter may reasonably
request, and the Offerors hereby consent to the use of such copies for
purposes permitted by the 1933 Act. The Offerors will furnish to each
Underwriter, from time to time during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. If applicable, the Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(e) If at any time when the Prospectus is required by the 1933 Act to
be delivered in connection with sales of the Preferred Securities, any event
shall occur as a result of which it is necessary, in the opinion of counsel
for the Underwriters, to amend or supplement the Prospectus or to file under
the 1934 Act any document incorporated by reference in the Prospectus in
order to make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, the Offerors will
forthwith amend or supplement the Prospectus or file such document (in form
and substance satisfactory to counsel for the Underwriters) so that, as so
amended or supplemented, the Prospectus will not include an untrue statement
of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances existing at
the time it is delivered to a purchaser, not misleading, and the Company will
furnish to the Underwriters a reasonable number of copies of such amendment
or supplement.
(f) The Offerors will endeavor, in cooperation with the Underwriters,
to qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States
as the Underwriters may designate; provided, however, that the Offerors shall
not be obligated to qualify as a foreign corporation in any jurisdiction in
which they are not so qualified. In each jurisdiction in which the Preferred
Securities have been so qualified, the Offerors will file such statements and
reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required in connection with
distribution of the Securities.
(g) The Company confirms as of the date hereof that it is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act
Relating to Disclosure of Doing Business with Cuba, and the Company further
agrees that if it commences engaging in business with the government of Cuba
or with any person or affiliate located in Cuba after the date the
Registration Statement becomes or has become effective with the Commission or
with the Florida Department of Banking and Finance (the "Department"),
whichever date is later, or if the information reported in the Prospectus, if
any, concerning the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the Company will
provide the Department notice of such business or change, as appropriate, in
a form acceptable to the Department.
(h) The Company will make generally available to its securityholders as
soon as practicable, but not later than 45 days (or 90 days, in the case of a
period that is also the Company's fiscal year) after the close of the period
covered thereby, an earnings statement (in form complying with the provisions
of Rule 158 of the 1933 Act Regulations) covering a twelve-month period
beginning not later than the first day of the Trust's fiscal quarter next
following the "effective date" (as defined in said Rule 158) of the
Registration Statement.
(i) The Trust will use the net proceeds received by it from the sale of
the Securities in the manner specified in the Prospectus under "Use of
Proceeds".
(j) If, at the time that the Registration Statement became (or in the
case of a post-effective amendment becomes) effective, any information shall
have been omitted therefrom in reliance upon Rule 430A or Rule 434 of the
1933 Act Regulations, then immediately following the execution of the Pricing
Agreement, the Trust will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A or Rule 434 and Rule 424(b) of
the 1933 Act Regulations, copies of an amended Prospectus, or Term Sheet, or,
if required by such Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus), containing all information so
omitted.
(k) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act, will file all documents required to be filed
with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within
the time periods required by the Exchange Act and the 1934 Act Regulations.
(l) The Company will use its best efforts to effect the listing of the
Preferred Securities (including the Preferred Securities Guarantee with
respect thereto) on the New York Stock Exchange and to cause the Preferred
Securities to be registered under the 1934 Act. If the Preferred Securities
are exchanged for Subordinated Debt Securities, the Company will use its best
efforts to effect the listing of the Subordinated Debt Securities on the
exchange on which the Preferred Securities were then listed and to cause the
Subordinated Debt Securities to be registered under the 1934 Act.
(m) During a period of 180 days from the date of the Pricing Agreement,
neither the Trust nor the Company will, without the prior written consent of
the Underwriters, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, or enter into any agreement
to sell, any Preferred Securities, any security convertible into or
exchangeable or exercisable for Preferred Securities, or the Subordinated
Debt Securities or any debt securities substantially similar to the
Subordinated Debt Securities or any equity securities substantially similar
to the Preferred Securities (except the Subordinated Debt Securities and the
Preferred Securities issued pursuant to this Agreement).
(n) During a period of two years from the Closing Time, the Company
will make generally available to the Underwriters copies of all reports and
other communications (financial or other) mailed to stockholders, and deliver
to the Underwriters promptly after they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company
is listed; and shall furnish such additional information concerning the
business and financial condition of the Company as the Underwriters may from
time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission).
SECTION 4. Payment of Expenses. The Company agrees with the several
Underwriters to pay all expenses incident to the performance of each Offeror's
obligations under this Agreement and the Pricing Agreement, including, without
limitation, expenses related to the following, if incurred (i) the
preparation, delivery, printing and filing of the Registration Statement and
Prospectus as originally filed (including financial statements and exhibits)
and of each amendment thereto; (ii) the printing and delivery to the
Underwriters of this Agreement, the Pricing Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with
offering, purchase, sale and delivery of the Securities; (iii) the
preparation, issuance and delivery of the certificates for the Preferred
Securities; (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors or agents (including the transfer agents and
registrars); (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(g), including filing fees and the
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and
any Legal Investment Survey; (vi) the printing and delivery to the
Underwriters of copies of the Registration Statement as originally filed and
of each amendment thereto, of each preliminary prospectus, any Term Sheet and
of the Prospectus and any amendments or supplements thereto; (vii) the
printing and delivery to the Underwriters of copies of the Blue Sky Survey
and any Legal Investment Survey; (viii) any fees payable in connection with
the rating of the Securities by nationally recognized statistical rating
organizations; (ix) the filing fees incident to, and the fees and
disbursements of counsel to the Underwriters in connection with, the review,
if any, by the National Association of Securities Dealers, Inc. (the "NASD")
of the terms of the sale of the Preferred Securities; (x) any fees payable to
the Commission; (xi) the fees and expenses incurred in connection with the
listing of the Preferred Securities (and the related Preferred Securities
Guarantee) and, if applicable, the Subordinated Debt Securities on the New
York Stock Exchange; (xii) the fees and expenses of the Debt Trustee, the
Property Trustee and the Guarantee Trustee, including fees and disbursements
of counsel for such trustees, in connection with the Indenture and the
Subordinated Debt Securities, the Declaration, the Certificate of Trust and
the Guarantee; and (xiii) the cost of qualifying the Preferred Securities
with the Depository Trust Company.
If this Agreement is terminated by the Representatives in
accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of LeBoeuf, Lamb,
Greene & MacRae, L.L.P., counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the representa-
tions and warranties of the Offerors herein contained, to the performance by
the Offerors of their obligations hereunder, and to the following further
conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 p.m., New York City time, on the date hereof, and on the date
hereof and at the Closing Time, no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued under
the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the satisfaction of counsel to
the Underwriters. A prospectus containing information relating to the
description of the Securities, the specific method of distribution and
similar matters shall have been filed with the Commission in accordance with
Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any required post-
effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A), or, if
the Offerors have elected to rely upon Rule 434 of the 1933 Act Regulations,
a Term Sheet including the Rule 434 Information shall have been filed with
the Commission in accordance with Rule 424(b)(7).
(b) At the Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of the Closing Time, of
Nyemaster, Goode, McLaughlin, Voigts, West, Hansell & O'Brien, P.C., counsel
for the Company, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) Each of the Company and Equitable Life, Equitable
American Insurance Company, Equitable Investment Services, Inc. and Locust
Street Securities, Inc. has been duly incorporated and is validly existing
under the laws of the State of Iowa and USG has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Oklahoma, in each case with corporate power and authority to carry on the
business in which it is engaged and to own, lease and operate its properties
and conduct its business as described in the Prospectus.
(ii) The capital stock of the Company conforms in all
material respects to the description thereof in the Prospectus.
(iii) The Trust is not required to be qualified and in good
standing as a foreign company in Iowa, except to the extent that the failure
to so qualify or be in good standing would not have a material adverse effect
on the Trust; and the Trust is not a party to or otherwise bound by any
agreement other than those described in the Prospectus.
(iv) The Declaration has been duly authorized, executed
and delivered by the Company and the Trustees and is a valid and binding
obligation of the Company, enforceable against the Company and each of the
Regular Trustees in accordance with its terms, except as enforcement thereof
may be limited by the Bankruptcy Exceptions; and the Declaration has been duly
qualified under the 1939 Act.
(v) All legally required proceedings in connection with
the authorization, issuance and validity of the Securities and the sale of the
Securities in accordance with this Agreement (other than the filing of post-
issuance reports, the non-filing of which would not render the Securities
invalid) have been taken and all legally required orders, consents or other
authorizations or approvals of any other public boards or bodies in
connection with the authorization, issuance and validity of the Securities
and the sale of the Securities in accordance with this Agreement (other than
in connection with or in compliance with the provisions of the securities or
Blue Sky laws of any jurisdictions, as to which no opinion need be expressed)
have been obtained and are in full force and effect.
(vi) The Registration Statement is effective under the
1933 Act and, to the best knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued under the 1933
Act, and no proceedings therefor have been initiated or threatened by the
Commission.
(vii) The Registration Statement as of its effective date
and the Prospectus and each amendment or supplement thereto as of its issue
date (in each case, other than the operating statistics, the financial
statements and the notes thereto, the financial schedules, and any other
financial data included or incorporated by reference therein, as to which
such counsel need express no belief), complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations;
and the Declaration, the Indenture, the Preferred Securities Guarantee
Agreement and the Statements of Eligibility on Forms T-1 with respect to each
of the Property Trustee, the Debt Trustee, and the Guarantee Trustee filed
with the Commission as part of the Registration Statement complied as to form
in all material respects with the requirements of the 1939 Act and the 1939
Act Regulations.
(viii) Each of the documents incorporated by reference in
the Registration Statement or the Prospectus at the time they were filed or
last amended (other than the financial statements and the notes thereto, the
financial schedules, and any other financial or statistical data included or
incorporated by reference therein, as to which such counsel need express no
belief) complied as to form in all material respects with the requirements of
the 1934 Act, and the 1934 Act Regulations, as applicable.
(ix) Each of the Offerors meets the registrant requirements
for use of Form S-3 under the 1933 Act Regulations.
(x) The Common Securities, the Preferred Securities, the
Subordinated Debt Securities, each of the Guarantees, the Declaration, the
Indenture and each of the Guarantee Agreements conform in all material respects
to the descriptions thereof contained in the Prospectus.
(xi) The descriptions in the Registration Statement and
the Prospectus and each amendment or supplement thereto of regulations,
statutes, legal and governmental proceedings and contracts and other documents
are accurate and fairly present the information required to be shown and such
counsel does not know of any legal or governmental proceedings required to be
described in the Registration Statement or the Prospectus or any amendment or
supplement thereto that are not so described (or the descriptions of which are
not incorporated by reference) or of any contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or
any amendment or supplement thereto or to be filed as exhibits to the
Registration Statement or any amendment thereto that are not so described (or
the descriptions of which are not incorporated by reference) or so filed.
(xii) All of the issued and outstanding Common Securities
of the Trust are directly owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equitable right.
(xiii) This Agreement and the Pricing Agreement have been
duly authorized, executed and delivered by each of the Trust and the Company.
(xiv) Each of the Guarantee Agreements has been duly
authorized, executed and delivered by the Company; the Preferred Securities
Guarantee Agreement, assuming it is duly authorized, executed, and delivered
by the Guarantee Trustee, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
to the extent that enforcement thereof may be limited by Bankruptcy Exceptions;
and the Preferred Securities Guarantee Agreement has been duly qualified under
the 1939 Act.
(xv) The Indenture has been duly executed and delivered by
the Company and, assuming due authorization, execution, and delivery thereof
by the Debt Trustee, is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by the Bankruptcy Exceptions;
and the Indenture has been duly qualified under the 1939 Act.
(xvi) The Subordinated Debt Securities are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Debt Trustee in the
manner provided for in the Indenture and delivered against payment therefor
as provided in this Agreement, will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
except to the extent that enforcement thereof may be limited by the Bankruptcy
Exceptions.
(xvii) Neither the Company nor the Trust is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the 1940 Act.
(xviii) The execution, delivery and performance of this
Agreement, the Pricing Agreement, the Declaration, the Preferred Securities,
the Common Securities, the Indenture, the Subordinated Debt Securities, the
Guarantee Agreements, and the Guarantees; the consummation of the transactions
contemplated herein and therein; and the compliance by each of the Offerors
with their respective obligations hereunder and thereunder do not and will
not conflict with, result in a breach of, or constitute a default under the
charter or by-laws of the Company or any of its Subsidiaries or the terms of
any indenture or other agreement or instrument known to such counsel and to
which the Company or any of its Subsidiaries is a party or bound, or result
in a violation of any statute or regulation, or any order or decree known to
such counsel to be applicable to the Company or any of its Subsidiaries of
any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its Subsidiaries;
(xix) Each Insurance Subsidiary holds such insurance
licenses, certificates and permits from governmental authorities (including,
without limitation, Insurance Licenses) which are necessary to the conduct of
its business as described in the Prospectus; to the best knowledge of such
counsel, there is no pending or threatened action, suit, proceeding or
investigation that could reasonably be expected to result in the revocation,
termination or suspension of any Insurance License; and to the knowledge of
such counsel, no insurance regulatory agency or body has issued, or commenced
any proceeding for the issuance of, any order or decree impairing,
restricting or prohibiting the payment of dividends by any Insurance
Subsidiary to its parent; and
(xx) To the best knowledge of such counsel, all reinsurance
treaties and arrangements to which any Insurance Subsidiary is a party are in
full force and effect and no Insurance Subsidiary is in violation of or in
default in the performance, observance or fulfillment of, any obligation,
agreement, covenant or condition contained therein.
Moreover, such counsel shall confirm that nothing has come to such
counsel's attention that would lead such counsel to believe that the
Registration Statement, including any information provided pursuant to Rule
430A or Rule 434 (except for financial statements and related schedules and
other financial data included or incorporated by reference therein or in the
related Forms T-1, as to which counsel need express no opinion), at the time
it became effective or at the Representation Date, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading
or that the Prospectus (except for financial statements and related schedules
and other financial data included or incorporated by reference therein or in
the related Forms T-1, as to which counsel need express no opinion), at the
Representation Date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by the Company for use in
connection with the offering of the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
became effective, in which case at the time it is first provided to the
Underwriters for such use) or at Closing Time, included (or includes) an
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of Delaware, Iowa and
the federal law of the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Underwriters and (B) as to matters of Delaware Law, upon the opinion of
Richards, Layton & Finger, P.A., special Delaware counsel to the Offerors, in
which case the opinion shall state that such counsel believes that you and
such counsel are entitled to so rely.
(2) The Offerors shall have furnished to the Representatives the
opinion of Shaw, Pittman, Potts & Trowbridge, counsel for the Offerors,
covering matters set forth in subparagraph (b)(1)(xv) above.
(3) The favorable opinion, dated as of Closing Time, of Richards,
Layton & Finger, P.A., special Delaware counsel to the Offerors, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware Act, 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) Under the Delaware Act and the Declaration, the Trust
has the power and authority to own property and conduct its business, all as
described in the Prospectus.
(iii) The Declaration constitutes a valid and binding
obligation of the Company and the Trustees and is enforceable against the
Company and the Trustees in accordance with its terms, subject, as to
enforcement, to (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance and other similar laws
relating to or affecting the rights and remedies of creditors generally, (ii)
principles of equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in equity or at
law), and (iii) the effect of applicable public policy on the enforceability
of provisions relating to indemnification and contribution.
(iv) Under the Delaware Act and the Declaration, the Trust
has the power and authority to (i) execute and deliver, and to perform its
obligations under, this Agreement and the Pricing Agreement and (ii) issue,
and perform its obligations under, the Trust Securities.
(v) Under the Delaware Act and the Declaration, the
execution and delivery by the Trust of this Agreement and the Pricing Agree-
ment, and the performance by the Trust of its obligations hereunder and under
the Pricing Agreement, have been duly authorized by all necessary action on
the part of the Trust.
(vi) The certificates for the Preferred Securities are in
due and proper form; the Preferred Securities have been duly authorized by the
Declaration and are duly and validly issued and, subject to qualifications
hereinafter expressed in this paragraph (vi), fully paid and nonassessable
undivided beneficial interests in the assets of the Trust; the holders of the
Preferred Securities, 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; said counsel may note that the holders of the Preferred
Securities may be obligated to make payments as set forth in the Declaration.
(vii) The Common Securities have been duly authorized by
the Declaration and are duly and validly issued and represent undivided
beneficial interests in the assets of the Trust.
(viii) Under the Delaware Act and the Declaration, the
issuance of the Trust Securities is not subject to preemptive rights.
(ix) The issuance and sale by the Trust of the Trust
Securities, the purchase by the Trust of the Subordinated Debt Securities,
the execution, delivery and performance by the Trust of this Agreement and
the Pricing Agreement, the consummation by the Trust of the transactions
contemplated hereby and by the Pricing Agreement and compliance by the Trust
with its obligations hereunder and thereunder will not violate (i) any of the
provisions of the Certificate of Trust or the Declaration or (ii) any
applicable Delaware law or administrative regulation.
(4) The favorable opinion, dated as of Closing Time, of the law
department of the First National Bank of Chicago, counsel of the First
National Bank of Chicago, as Property Trustee under the Declaration, and
Guarantee Trustee under the Preferred Securities Guarantee Agreements, in
form and substance satisfactory to counsel for the Underwriters, to the
effect that:
(i) The First National Bank of Chicago is a national
banking association with trust powers, duly organized, validly existing and
in good standing under the laws of the United States with all necessary power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of the Declaration and the Preferred Securities
Guarantee Agreement.
(ii) The execution, delivery and performance by the
Property Trustee of the Declaration and the execution, delivery and performance
by the Guarantee Trustee of the Preferred Securities Guarantee Agreement have
been duly authorized by all necessary corporation action on the part of the
Property Trustee and the Guarantee Trustee, respectively. The Declaration
and the Preferred Securities Guarantee Agreement have been duly executed and
delivered by the Property Trustee and the Guarantee Trustee, respectively,
and constitute the legal, valid and binding obligations of the Property
Trustee and the Guarantee Trustee, respectively, enforceable against the
Property Trustee and the Guarantee Trustee, respectively, in accordance with
their terms, except to the extent the enforcement thereof may be limited by
the Bankruptcy Exceptions.
(iii) The execution, delivery and performance of the
Declaration and the Preferred Securities Guarantee Agreement by the Property
Trustee and the Guarantee Trustee, respectively, do not conflict with or
constitute a breach of the Articles of Organization or Bylaws of the Property
Trustee and the Guarantee Trustee, respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any state or federal banking authority is
required for the execution, delivery or performance by the Property Trustee
and the Guarantee Trustee of the Declaration and the Preferred Securities
Guarantee Agreement.
(5) The opinion of Nyemaster, Goode, McLaughlin, Voigts, West,
Hansell & O'Brien, P.C., special tax counsel to the Offerors, generally to the
effect that the discussion set forth in the Prospectus under the heading
"Certain United States Federal Income Tax Consequences" is a fair and accurate
summary of the matters addressed therein, based upon current law and the
assumptions stated or referred to therein. Such opinion may be conditioned
on, among other things, the initial and continuing accuracy of the facts,
financial and other information, covenants and representations set forth in
certificates of officers of the Company and the Trust and other documents
deemed necessary for such opinion.
(6) The favorable opinion, dated as of Closing Time, of LeBoeuf,
Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters, in form and
substance satisfactory to the Underwriters with respect to the incorporation
and legal existence of the Company, the Preferred Securities, the Indenture,
the Preferred Securities Guarantee Agreement, this Agreement, the Pricing
Agreement, the Registration Statement, the Prospectus and other related
matters as the Representative may require. In giving its opinion, LeBoeuf,
Lamb, Greene & MacRae, L.L.P. may rely as to certain matters of Iowa and
Delaware law upon the opinions of Nyemaster, Goode, McLaughlin, Voigts, West,
Hansell & O'Brien, P.C. and Richards, Layton & Finger, P.A., counsel for the
Offerors, which shall be delivered in accordance with Section 5(b)(1) and
5(b)(3) hereto.
(c) Between the date of this Agreement and prior to the Closing Time,
no material adverse change shall have occurred in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Trust or the Company and its Subsidiaries considered as one enterprise,
whether or not in the ordinary course of business.
(d) At Closing Time, the Representatives shall have received a
certificate of an executive officer of the Company and a certificate of a
Regular Trustee of the Trust, and dated as of Closing Time, to the effect
that to the best of such person's knowledge, information and belief (i) there
has been no material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Trust or
the Company and its Subsidiaries considered as one enterprise, whether or not
in the ordinary course of business, (ii) the representations and warranties
in Section 1 hereof are true and correct as though expressly made at and as
of Closing Time, (iii) the Trust and the Company have complied with all
agreements and satisfied all conditions on their part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or threatened by the
Commission.
(e) At the time of the execution of this Agreement and at the Closing
Time, Ernst & Young LLP shall have furnished to the Representatives a letter
or letters, dated respectively as of the date of this Agreement and as of the
Closing Time, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the
Act and the Exchange Act and the applicable published rules and regulations
thereunder and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules incorporated in the Registration Statement
and the Prospectus and reported on by them comply in form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its subsidiaries; their
limited review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited interim financial
information as indicated in their report thereon; carrying out certain
specified procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such letter; a reading
of the minutes of the meetings of the stockholders, directors and executive
and audit committees of the Company, Equitable Life and USG; and inquiries of
certain officials of the Company who have responsibility for financial and
accounting matters of the Company and its subsidiaries as to transactions and
events subsequent to the date of the most recent audited financial statements
included or incorporated into the Registration Statement, nothing came to
their attention which caused them to believe that:
(1) the unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do not comply
in form in all material respects with applicable accounting requirements of
the Act and the Exchange Act and with the published rules and regulations of
the Commission with respect to financial statements included or incorporated
in quarterly reports on Form 10-Q under the Exchange Act; and said unaudited
financial statements are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements incorporated in the Registration Statement and
the Prospectus; or
(2) with respect to the period subsequent to the
date of the most recent financial statements, audited or unaudited, in or
incorporated in the Registration Statement and the Prospectus, there were any
changes, at a specified date not more than five business days prior to the
date of the letter, in the debt of the Company and its subsidiaries or capital
stock of the Company or decreases in the stockholders' equity of the Company
as compared with the amounts shown on the most recent consolidated balance
sheet incorporated in the Registration Statement and the Prospectus, or for
the period from the date of the most recent financial statements incorporated
in the Prospectus to such specified date there were any decreases, as compared
with the corresponding period in the preceding year, in net investment
income, total revenues, income before income taxes or net income of the
Company and its subsidiaries, except in all instances for changes or
decreases set forth in such letter, in which case the letter shall be
accompanied by an explanation by the Company as to the significance thereof
unless said explanation is not deemed necessary by the Representatives; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain information of
an accounting, financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general accounting
records of the Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus, including, without limitation, the information
set forth under the captions "Ratio of Earnings to Fixed Charges" and such
other captions as the Representatives may reasonably request in the Prospectus,
the information included or incorporated in Items 1, 5, 6, 7, 11 and 13 of the
Company's most recent Annual Report on Form 10-K, incorporated in the
Registration Statement and the Prospectus, and the information included in the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated in the Company's Quarterly Reports on
Form 10-Q that have been filed since the date of the Company's most recent
Annual Report on Form 10-K, incorporated in the Registration Statement and the
Prospectus, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation.
(f) At Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
Preferred Securities as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations or warranties,
or the fulfillment of any of the conditions herein contained; and all
proceedings taken by the Offerors in connection with the issuance and sale of
the Preferred Securities as herein contemplated shall be satisfactory in form
and substance to the Underwriters and counsel for the Underwriters.
(g) At Closing Time, the Preferred Securities shall be rated "BBB-" or
higher by Standard & Poor's Corporation ("S&P") or "Baa3" or higher by
Moody's Investors Services ("Moody's") and the Trust shall have delivered to
the Representatives a letter, dated the Closing Time, from S&P or Moody's, or
other evidence satisfactory to the Representatives, confirming that the
Preferred Securities have such ratings; and there shall not have occurred any
decrease in the ratings of any of the debt securities of the Company or of
the Preferred Securities by either S&P or Moody's and neither S&P nor Moody's
shall have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the debt securities of
the Company or of the Preferred Securities.
(h) At Closing Time, the Preferred Securities shall have been approved
for listing on the New York Stock Exchange upon notice of issuance.
(i) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriters by notice to the Offerors at any time at or
prior to Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 4.
SECTION 6. Indemnification.
(a) The Offerors agree to jointly and severally indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto) or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section 6(d)
below) any such settlement is effected with the written consent of the
Offerors; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that the foregoing indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to the
Offerors by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430(A)
Information and the Rule 434 Information deemed to be a part thereof, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto). The foregoing indemnity with respect to any untrue
statement contained in or omission from a preliminary prospectus shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, liability, claim,
damage or expense purchased any of the Securities that are the subject
thereof if such person was not sent or given a copy of the Prospectus (or the
Prospectus as amended or supplemented) (in each case exclusive of the
documents from which information is incorporated by reference) at or prior to
the written confirmation of the sale of such Securities to such person and
the untrue statement contained in or omission from such preliminary
prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented).
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, the Trust and each of its Trustees who signed the Registration
Statement, and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection
(a) of this Section, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430(A)
Information and the Rule 434 Information deemed to be a part thereof, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Offerors by such Underwriter through Merrill
Lynch expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the Prospectus (or any amendment
or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve such indemnifying party from any
liability hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability which it may
have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 6(a) above, counsel to the
indemnified parties shall be selected by Merrill Lynch, provided, however,
that such counsel shall be satisfactory to the Offerors. In the case of
parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Offerors, provided, however,
such counsel shall be satisfactory to Merrill Lynch. An indemnifying party
may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the indemnified
party. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for
in Section 6 is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company, the
Trust and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company, the Trust and one or more of the
Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the
underwriting compensation paid by the Company appearing on the cover page of
the Prospectus bears to the initial public offering price appearing thereon
and the Company or the Trust, as the case may be, is responsible for the
balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as such Underwriter, each
trustee of the Trust and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company or the Trust within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers
of the Company or trustees of the Trust submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or controlling person, or by or on
behalf of the Trust or the Company, and shall survive delivery of the Preferred
Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Offerors at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse
change or any development which could reasonably be expected to result in a
prospective material adverse change in the business or the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Trust or Company and its Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial
markets in the United States or any outbreak of hostilities or escalation of
hostilities or other calamity or crisis, or any change or development
involving a prospective change in national or international political,
financial or economic conditions the effect of which is such as to make it,
in the judgment of the Underwriters, impracticable to market the Preferred
Securities or to enforce contracts for the sale of the Preferred Securities,
or (iii) if trading in the Preferred Securities or any securities of the
Company has been suspended or limited by the Commission, NASD or the New York
Stock Exchange, or if trading generally on either the American Stock Exchange
or the New York Stock Exchange has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by either of said Exchanges or by order of the
Commission or any other governmental authority, or (iv) if a banking
moratorium has been declared by either Federal, New York or Iowa authorities.
(b) If this Agreement and the Pricing Agreement are terminated pursuant
to this Section, such termination shall be without liability of any party to
any other party except as provided in Section 4, and provided, further, that
Sections 1, 6 and 7 shall survive such termination and remain in full force
and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time to purchase the Securities
which it or they are obligated to enter into under this Agreement and the
Pricing Agreement (the "Defaulted Securities"), the Representatives shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of such Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
total number of Securities, the non-defaulting Underwriters shall be
obligated to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
Securities, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company
shall have the right to postpone the Closing Time for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Under-
writers shall be directed to c/o Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated at 5550 Sears Tower, Chicago, Illinois 60606,
Attention of David C. Sherwood, Director, with a copy to LeBoeuf, Lamb, Greene
& MacRae, L.L.P., 125 West 55th Street, New York, New York 10019-5389,
Attention of Michael Groll, Esq.; notices to the Offerors shall be directed to
Equitable of Iowa Companies at 604 Locust Street, P.O. Box 1635, Des Moines,
Iowa 50306-1635, Attention of Secretary/General Counsel, with a copy to
Nyemaster, Goode, McLaughlin, Voigts, West, Hansell & O'Brien, P.C., 1900 Hub
Tower, Des Moines, Iowa 50309, Attention of G.R. Neumann, Esq.
SECTION 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters and the
Offerors and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Offerors and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the Underwriters and the Offerors and their
respective successors and legal representatives, and said controlling persons
and officers and directors and their heirs and legal representatives, and for
the benefit of no other person, firm or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of
the State of New York applicable to agreements made and to be performed in
said State. Specified times of day refer to New York City time unless
otherwise indicated.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof,
whereupon this instrument, along with all counterparts, shall become a
binding agreement among the Underwriters and the Offerors in accordance with
its terms.
Very truly yours,
EQUITABLE OF IOWA COMPANIES
By: _________________________________
Name:
Title:
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST
By: _______________________________
Title: Regular Trustee
By: _______________________________
Title: Regular Trustee
By: _______________________________
Title: Regular Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DAIN BOSWORTH INC.
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
THE ROBINSON-HUMPHREY COMPANY, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _______________________________________
Authorized Signatory:
For themselves and as the Representatives of the
several Underwriters named in Schedule A hereto.
SCHEDULE A
Name of Underwriter Number of Shares
------------------- ----------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DAIN BOSWORTH INC.
DEAN WITTER REYNOLDS INC..
GOLDMAN, SACHS & CO
THE ROBINSON-HUMPHREY COMPANY, INC.
Total
EXHIBIT A
__________ Preferred Securities
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST
(a Delaware business trust)
___% Trust Originated Preferred Securities ("TOPrS")
(Liquidation Amount of $25 Per Security)_
PRICING AGREEMENT
MERRILL LYNCH & CO. _________, 1996
Merrill Lynch, Pierce, Fenner
& Smith Incorporated as
Representative of the several
Underwriters named in the within-
mentioned Underwriting Agreement
Merrill Lynch World Headquarters
5500 Sears Tower
Chicago, Illinois 60606
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated __________, 1996
(the "Underwriting Agreement"), relating to the purchase by the several
Underwriters named in Schedule A thereto, for whom Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Dain Bosworth Inc., Dean
Witter Reynolds Inc., Goldman, Sachs & Co. and the Robinson-Humphrey Company,
Inc. are acting as representatives (the "Representatives"), of the above ___%
Trust Originated Preferred Securities (the "Preferred Securities"), of
Equitable of Iowa Companies Capital Trust, a Delaware business trust (the
"Trust").
Pursuant to Section 2 of the Underwriting Agreement, the Trust and
Equitable of Iowa Companies (the "Company"), an Iowa corporation, agree with
each Underwriter as follows:
1. The initial public offering price per security for the Preferred
Securities, determined as provided in said Section 2, shall be $_____.
2. The purchase price per security for the Preferred Securities to be
paid by the several Underwriters shall be $_____, being an amount equal to
the initial public offering price set forth above.
3. The compensation per Preferred Security to be paid by the Company to
the several Underwriters in respect of their commitments hereunder shall be
$__________; provided, however, that the compensation per Preferred Security
for sales of 10,000 or more Preferred Securities to a single purchaser shall
be $_________.
_______________________________
SM "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co. Inc.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Trust a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Trust and the Company in
accordance with its terms.
Very truly yours,
EQUITABLE OF IOWA COMPANIES
By: ______________________________
Name:
Title:
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST
By: _______________________________
Title: Regular Trustee
By: _______________________________
Title: Regular Trustee
By: _______________________________
Title: Regular Trustee
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DAIN BOSWORTH INC.
DEAN WITTER REYNOLDS INC.
GOLDMAN, SACHS & CO.
THE ROBINSON-HUMPHREY COMPANY, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: __________________________________
Authorized Signatory:
For themselves and as the Representatives of the
several Underwriters named in the Underwriting Agreement.
EXHIBIT 4.7.1
======================================
FIRST SUPPLEMENTAL INDENTURE
between
EQUITABLE OF IOWA COMPANIES
and
THE FIRST NATIONAL BANK OF CHICAGO
Dated as of ____________, 1996
======================================
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE SUBORDINATED DEBENTURES
SECTION 2.1. Designation and Principal Amount; Purchase Price;
Payment of Principal; Global Securities
SECTION 2.2. Maturity
SECTION 2.3. Form and Payment
SECTION 2.4. Global Subordinated Debenture
SECTION 2.5. Interest
SECTION 2.6. Authorized Denominations
SECTION 2.7. Conversion and Redemption
SECTION 2.8. Paying Agent and Authenticating Agent
SECTION 2.9. Defeasance
SECTION 2.10. No Sinking Fund
SECTION 2.11. Trustee
SECTION 2.12. Depositary
ARTICLE III
REDEMPTION OF THE SUBORDINATED DEBENTURES
SECTION 3.1. Special Event Redemption
SECTION 3.2. Optional Redemption
SECTION 3.3. Partial Redemption
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period
SECTION 4.2. Notice of Extension
SECTION 4.3. Limitation of Transactions
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses
SECTION 5.2. Payment Upon Resignation or Removal
ARTICLE VI
SUBORDINATION
SECTION 6.1. Agreement to Subordinate
SECTION 6.2. Default on Senior Indebtedness
SECTION 6.3. Liquidation; Dissolution; Bankruptcy
SECTION 6.4. Prior Payment to Senior Indebtedness Upon
Acceleration of Subordinated Debentures
SECTION 6.5. Subrogation
SECTION 6.6. Trustee to Effectuate Subordination
SECTION 6.7. Notice by the Issuer
SECTION 6.8. Rights of the Trustee; Holders of Senior
Indebtedness
SECTION 6.9. Subordination May Not Be Impaired
ARTICLE VII
COVENANT TO LIST ON EXCHANGE
SECTION 7.1. Listing on an Exchange
ARTICLE VIII
FORM OF SUBORDINATED DEBENTURE
SECTION 8.1. Form of Subordinated Debenture
ARTICLE IX
ORIGINAL ISSUE OF SUBORDINATED DEBENTURES
SECTION 9.1. Original Issue of Subordinated Debentures
SECTION 9.2. Reports by the Trustee
ARTICLE X
COVENANTS
SECTION 10.1. Covenants as to Trust
SECTION 10.2. Omission of Certain Covenants
ARTICLE XI
DEFAULT
SECTION 11.1. Additional Event of Default
SECTION 11.2. Waiver of Past Defaults; Supplemental
Indentures
SECTION 11.3. Acknowledgment of Rights
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Ratification of Indenture
SECTION 12.2. Trustee Not Responsible for Recitals
SECTION 12.3. Governing Law
SECTION 12.4. Separability
SECTION 12.5. Counterparts
SECTION 12.6. Effect of Headings
SECTION 12.7. Third Party Beneficiaries
FIRST SUPPLEMENTAL INDENTURE dated as of _______________, 1996 (the "First
Supplemental Indenture") between Equitable of Iowa Companies, an Iowa
corporation (the "Issuer"), and The First National Bank of Chicago, as
trustee (the "Trustee") under the Indenture dated as of January 17, 1995
between the Issuer and the Trustee (the "Indenture").
WHEREAS, the Issuer executed and delivered the Indenture to the Trustee to
provide for the future issuance of the Issuer's unsecured debt securities to
be issued from time to time in one or more series as might be determined by
the Issuer under the Indenture, in an unlimited aggregate principal amount
which may be authenticated and delivered as provided in the Indenture;
WHEREAS, pursuant to the terms of the Indenture, the Issuer established a
series of its Securities known as its 8-1/2% Notes Due 2005 (the "Notes"),
the form and substance of such Notes and the terms, provisions and conditions
thereof set forth as provided in the Indenture and an Officers' Certificate
dated as of February 14, 1995;
WHEREAS, pursuant to the terms of the Indenture, the Issuer desires to
provide for the establishment of a new series of its Securities to be known
as its ____% Subordinated Deferrable Interest Debentures due 2026 (the
"Subordinated Debentures"), the form and substance of such Subordinated
Debentures and the terms, provisions and conditions thereof to be set forth
as provided in the Indenture and this First Supplemental Indenture;
WHEREAS, Equitable of Iowa Companies Capital Trust, a Delaware statutory
business trust (the "Trust"), is offering to the public $125,000,000
aggregate liquidation amount of its ___ % Trust Originated Preferred
Securities (the "Preferred Securities"), representing preferred undivided
beneficial interests in the assets of the Trust and proposes to invest the
proceeds from such offering, together with the proceeds of the issuance and
sale by the Trust to the Issuer of $_________________ million aggregate
liquidation amount of its ___% Trust Originated Common Securities (the"Common
Securities"), in $_______________ million aggregate principal amount of the
Subordinated Debentures;
WHEREAS, the Issuer has requested that the Trustee execute and deliver this
First Supplemental Indenture; and
WHEREAS, all requirements necessary to make this First Supplemental Indenture
a valid instrument in accordance with its terms and to make the Subordinated
Debentures, when executed by the Issuer and authenticated and delivered by
the Trustee as provided in the Indenture, the valid obligations of the Issuer
have been performed, and the execution and delivery of this First
Supplemental Indenture has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the purchase and acceptance of the
Subordinated Debentures by the Holders thereof, and for the purpose of
setting forth, as provided in the Indenture, the form and substance of the
Subordinated Debentures and the terms, provisions and conditions thereof, the
Issuer covenants and agrees with the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definition of Terms.
Unless the context otherwise requires:
(a) a term defined in the Indenture (including as set forth in the first
paragraph of Section 1.1 of the Indenture) has the same meaning when used in
this First Supplemental Indenture unless otherwise defined herein;
(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) a reference to a Section or Article is to a Section or Article of this
First Supplemental Indenture unless otherwise specified herein;
(e) headings are for convenience of reference only and do not affect
interpretation;
(f) the following terms have the meanings given to them in the Declaration
(as defined herein) or in the terms of the Trust Securities (as defined
herein) as established in accordance with the Declaration:
(i) Affiliate;
(ii) Business Day;
(iii) Debenture Issuer;
(iv) Delaware Trustee;
(v) Distribution;
(vi) Investment Company Event;
(vii) Preferred Security Certificate;
(viii) Pricing Agreement;
(ix) Pro Rata;
(x) Property Trustee;
(xi) Regular Trustees;
(xii) Securities;
(xiii) Securities Guarantees;
(xiv) Special Event;
(xv) Sponsor;
(xvi) Tax Event; and
(xvii) Underwriting Agreement;
(g) The following terms have the meanings given to them in this Section
1.1(g):
"Compounded Interest" shall have the meaning set forth in Section 4.1.
"Coupon Rate" shall have the meaning set forth in Section 2.5(a).
"Declaration" means the Declaration of Trust of Equitable of Iowa Companies
Capital Trust, a Delaware statutory business trust, dated as of March 19,
1996, as the foregoing may be amended from time to time.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Dissolution Event" means that as a result of an election by the Issuer, the
Trust is to be dissolved in accordance with the Declaration, and the
Subordinated Debentures held by the Property Trustee are to be distributed to
the holders of the Trust Securities Pro Rata in accordance with the
Declaration.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.
"Extension Conditions" means the following:
(i) the Issuer is not in bankruptcy or otherwise insolvent;
(ii) the Issuer is not in default on any Subordinated Debentures
issued to the Trust or to any trustee of the Trust in connection with the
issuance of Trust Securities by the Trust;
(iii) the Issuer has made timely payments on the Subordinated Debentures
for the immediately preceding six quarters without deferrals;
(iv) the Trust is not in arrears on payments of Distributions on the
Trust Securities;
(v) the Subordinated Debentures or the Preferred Securities are rated
investment grade by any one of Standard & Poor's Corporation, Moody's
Investors Service, Inc., Fitch Investor Service, LP, Duff & Phelps Credit
Rating Company or any other nationally recognized statistical rating
organization; and
(vi) the final maturity of such Subordinated Debentures is no later than
the forty-ninth anniversary of the issuance of the Preferred Securities.
"Global Subordinated Debenture" shall have the meaning set forth in Section
2.4(a)(i).
"Interest Deduction Date" shall have the meaning set forth in Section 2.2(b).
"Interest Payment Date" shall have the meaning set forth in Section 2.5(a).
"Maturity Date" shall have the meaning set forth in Section 2.2(a).
"Non Book-Entry Preferred Securities" shall have the meaning set forth in
Section 2.4(a)(ii).
"Optional Redemption Price" shall have the meaning set forth in Section 3.2.
"Preceding Maturity Date" shall have the meaning set forth in Section 2.2(c).
"Redemption Price" shall have the meaning set forth in Section 3.1.
"Scheduled Maturity Date" means __________, 2026.
"Senior Indebtedness" means all indebtedness of the Issuer, whether now
existing or hereafter created, but excluding trade accounts payable arising
in the ordinary course of business. Without limiting the generality of the
foregoing, "Senior Indebtedness" shall include (i) the principal, premium, if
any, and interest in respect of (A) indebtedness of the Issuer for money
borrowed and (B) indebtedness evidenced by securities, debentures, bonds or
other similar instruments issued by the Issuer; (ii) all capital lease
obligations of the Issuer; (iii) all obligations of the Issuer issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of the Issuer and all obligations of the Issuer under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of the Issuer for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) above of other Persons for the
payment of which the Issuer is responsible or liable as obligor, guarantor or
otherwise, including under all support agreements or guarantees by the Issuer
of debentures, notes and other securities issued by its subsidiaries; and
(vi) all obligations of the type referred to in clauses (i) through (v) above
of other Persons secured by any lien on any property or asset of the Issuer
(whether or not such obligation is assumed by the Issuer); provided that
Senior Indebtedness shall not include (1) any indebtedness of the Issuer that
is by its terms subordinated to or pari passu with the Subordinated
Debentures, and (2) any indebtedness between or among the Issuer and any of
its Affiliates. Such Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the benefits of the subordination provisions
of this First Supplemental Indenture, regardless of any amendment,
modification or waiver of any term of such Senior Indebtedness.
"Trust Securities" shall mean the Securities.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE SUBORDINATED DEBENTURES
SECTION 2.1. Designation and Principal Amount; Purchase Price;
Payment of Principal; Global Securities.
(a) There is hereby authorized a series of Securities designated the "___%
Subordinated Deferrable Interest Debentures due 2026," limited in aggregate
principal amount to $______________ million (not including Subordinated
Debentures authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Subordinated Debentures pursuant to
Sections 2.8, 2.9, 2.11, 5.3, 8.5 or 12.3 of the Indenture), which amount
shall be as set forth in an Issuer Order for the authentication and delivery
of Subordinated Debentures pursuant to Section 2.4 of the Indenture.
(b) The Subordinated Debentures shall be issued for a purchase price equal to
100% of the principal amount of such Subordinated Debentures.
(c) The principal of the Subordinated Debentures shall be due and payable in
full on the Maturity Date.
(d) The Subordinated Debentures shall initially be issued in fully registered
non-book entry certificated form in the aggregate principal amount of
$_________.
SECTION 2.2. Maturity.
(a) The Maturity Date means the date on which the Subordinated
Debentures mature and on which the principal shall be due and payable
together with all accrued and unpaid interest thereon (including Compounded
Interest, if any), which date shall be the Scheduled Maturity Date unless the
Maturity Date has been changed pursuant to Section 2.2(c) or (d), in which
case the Maturity Date shall be the Maturity Date most recently established
in accordance with Section 2.2(c) or (d).
(b) The Interest Deduction Date shall mean the date which is six months
earlier than the ending date of the maximum term (beginning on the date of
issue of the Subordinated Debentures and including any extensions thereof),
as determined under any federal statute applicable by its terms to the
Subordinated Debentures which is enacted at any time after the issuance of
the Subordinated Debentures, of a debt instrument for which interest is
deductible for federal income tax purposes.
(c) If the Issuer has elected to dissolve the Trust and cause the
Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust in accordance with Section 8.1(a)(v)
of the Declaration, then the Issuer may elect to shorten the Maturity Date to
a date not earlier than ___________________, 2001, or extend the Maturity
Date to a date which is not later than the earlier of (i) ________, 2045, or
(ii) the Interest Deduction Date, and such election shall be made, and such
change in the Maturity Date shall be effective, on such date as notice
thereof has been given in accordance with Section 2.2(e) so long as, in the
case of an extension of the Maturity Date, the Issuer meets the Extension
Conditions on such date; provided that (i) any such extension of the Maturity
Date shall cease to be in effect (and the Maturity Date shall be the Maturity
Date in effect prior to such extension (the "Preceding Maturity Date"))
unless the Extension Conditions also are met on the Preceding Maturity Date,
and (ii) in no event shall an extended Maturity Date be later than the
Interest Deduction Date even if the Maturity Date has previously been
extended to a date beyond the Interest Deduction Date.
(d) The Issuer may at any time before the date which is 90 days before
the Maturity Date, elect to extend the Maturity Date for one or more periods,
but in no event to a date later than the earlier of (i) ____________ 2045, or
(ii) the Interest Deduction Date, and such election shall be made, and such
extension of the Maturity Date shall be effective, on such date as notice
thereof has been given in accordance with Section 2.2(e) so long as the
Issuer meets the Extension Conditions on such date; provided that (i) any
such extension of the Maturity Date shall cease to be in effect (and the
Maturity Date shall be the Preceding Maturity Date) unless the Extension
Conditions also are met on the Preceding Maturity Date, and (ii) in no event
shall an extended Maturity Date be later than the Interest Deduction Date
even if the Maturity Date has previously been extended to a date beyond the
Interest Deduction Date.
(e) If the Issuer desires to change the Maturity Date pursuant to
Section 2.2(c) or (d), the Issuer shall give notice to Holders of the
Subordinated Debentures, the Property Trustee, the Trust and the Trustee of
the new Maturity Date.
SECTION 2.3. Form and Payment.
Except as provided in Section 2.4, the Subordinated Debentures shall be
issued as Registered Securities in fully registered certificated form without
interest coupons. The place where principal of and interest (including the
Compounded Interest, if any) on the Subordinated Debentures will be payable,
the Subordinated Debentures may be surrendered for registration of transfer
or exchange, and where notices and demands to or upon the Issuer in respect
of the Subordinated Debentures and the Indenture may be served shall be the
location specified in Section 3.2 of the Indenture, which shall initially be
at the office of the Trustee at The First National Bank of Chicago, c/o First
Chicago Trust Company of New York, 14 Wall Street, 8th Floor, New York, New
York 10005, Attention: Corporate Trust Administration and One First National
Plaza - Suite 0126, Chicago Illinois 60670-0126, Attention: Corporate Trust
Services Division; provided, however, that payment of interest may be made at
the option of the Issuer by wire transfer to an account maintained by a
Holder (upon appropriate instructions from such Holder) or by check mailed to
the Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of any Subordinated
Debentures is the Property Trustee, the payment of the principal of and
interest (including Compounded Interest, if any) on such Subordinated
Debentures held by the Property Trustee will be made by wire transfer of
immediately available funds at such place and to such account as may be
designated by the Property Trustee. Payment of principal of the Subordinated
Debentures will only be made upon surrender of the Subordinated Debentures to
the Trustee. The Subordinated Debentures will be denominated in Dollars and
payment of principal and interest on the Subordinated Debentures shall be
made in Dollars.
SECTION 2.4. Global Subordinated Debenture.
(a) In connection with a distribution of the Subordinated Debentures to the
holders of the Trust Securities pursuant to the Declaration:
(i) The Subordinated Debentures in certificated form may be presented to
the Trustee by the Property Trustee in exchange for a global Subordinated
Debenture in an aggregate principal amount equal to the aggregate principal
amount of all Outstanding Subordinated Debentures of such series (a "Global
Subordinated Debenture"), to be registered in the name of the Depositary, or
its nominee, and delivered by the Trustee to the Depositary for crediting to
the accounts of its participants pursuant to the instructions of the Regular
Trustees. The Issuer upon any such presentation shall execute a Global
Subordinated Debenture in such aggregate principal amount and deliver the
same to the Trustee for authentication and delivery in accordance with the
Indenture and this First Supplemental Indenture. Payments on the
Subordinated Debentures issued as a Global Subordinated Debenture will be
made to the Depositary.
(ii) If any Preferred Securities are held in non book-entry certificated
form, the Subordinated Debentures in certificated form may be presented to
the Trustee by the Property Trustee and any Preferred Security Certificate
which represents Preferred Securities other than Preferred Securities held by
the Depositary or its nominee ("Non Book-Entry Preferred Securities") will be
deemed to represent beneficial interests in Subordinated Debentures presented
to the Trustee by the Property Trustee having an aggregate principal amount
equal to the aggregate liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security Certificates are presented to the
Security Registrar for transfer or reissuance at which time such Preferred
Security Certificates will be canceled and a Subordinated Debenture,
registered in the name of the holder of the Preferred Security Certificate or
the transferee of the holder of such Preferred Security Certificate, as the
case may be, with an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Security Certificate canceled, will be
executed by the Issuer and delivered to the Trustee for authentication and
delivery in accordance with the Indenture and this First Supplemental
Indenture. On issue of such Subordinated Debentures, Subordinated Debentures
with an equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be deemed to have been canceled.
(b) Unless and until it is exchanged for Subordinated Debentures in
registered certificated form, a Global Subordinated Debenture may be
transferred, in whole but not in part, only by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary selected or approved by the Issuer or a nominee of such
successor Depositary.
(c) If at any time the Depositary for the Subordinated Debentures notifies
the Issuer that it is unwilling or unable to continue as Depositary for the
Subordinated Debentures or if at any time the Depositary for the Subordinated
Debentures shall no longer be registered or in good standing as a clearing
agency under the Securities Exchange Act of 1934, as amended, or other
applicable statute or regulation, at a time at which the Depositary is
required to be so registered to act as Depositary for the Subordinated
Debentures, and a successor Depositary for such series is not appointed by
the Issuer within 90 days after the Issuer receives such notice or becomes
aware of such condition, as the case may be, the Issuer will execute, and,
subject to Article Two of the Indenture, the Trustee, upon written notice
from the Issuer, will authenticate and deliver the Subordinated Debentures
in definitive registered form without coupons, in authorized denominations,
and in an aggregate principal amount equal to the principal amount of the
Global Subordinated Debenture in exchange for such Global Subordinated
Debenture. In addition, the Issuer, in its sole discretion, may at any time
determine that the Subordinated Debentures shall no longer be represented by
a Global Subordinated Debenture. In such event the Issuer will execute, and
subject to Article Two of the Indenture, the Trustee, upon receipt of an
Officers' Certificate evidencing such determination by the Issuer, will
authenticate and deliver the Subordinated Debentures in definitive registered
form without coupons, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global Subordinated
Debenture in exchange for such Global Subordinated Debenture. Upon the
exchange of the Global Subordinated Debenture for such Subordinated
Debentures in definitive registered form without coupons, in authorized
denominations, the Global Subordinated Debenture shall be canceled by the
Trustee. Such Subordinated Debentures in definitive registered form issued
in exchange for the Global Subordinated Debenture shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. The Trustee shall deliver such registered
certificated Subordinated Debentures in definitive form in exchange for the
Global Subordinated Debenture to the Depositary for delivery to the Persons
in whose names such Subordinated Debentures are so registered.
(d) The Issuer shall also be required under Section 2.8 of the Indenture to
deliver Subordinated Debentures in definitive registered form in exchange for
a Global Subordinated Debenture upon the occurrence of an Event of Default
specified in Section 5.1(a), (b) or (c) of the Indenture.
(e) None of the Issuer, the Trust, the Trustee, any paying agent or any
other agent of any such party shall have any responsibility, obligation or
liability with respect to any aspect of the records relating to or payments
made on account of beneficial ownership interests in a Global Subordinated
Debenture or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests, including (without limiting the
generality of the foregoing) any responsibility, obligation or liability with
respect to: (x) the maintenance, review or accuracy of the records of the
Depositary or of any of its direct or indirect participants or participating
organizations with respect to any ownership interest in or payments with
respect to the Subordinated Debentures represented by such Global
Subordinated Debenture, (y) any communication with or delivery of any notice
(including notices of redemption) with respect to the Subordinated Debentures
represented by such Global Subordinated Debenture to any Person having any
beneficial ownership interest in such Global Subordinated Debenture or to any
of the Depositary's direct or indirect participants or participating
organizations, or (z) any payment made on account of any beneficial ownership
interest in such Global Subordinated Debentures.
SECTION 2.5. Interest.
(a) The Subordinated Debentures will bear interest at the fixed rate of ____%
per annum (the "Coupon Rate") from the original date of issuance or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for until the principal thereof becomes due and payable, and on any
overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at
the Coupon Rate, compounded quarterly, payable (subject to the provisions of
Article IV) quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year (each, an "Interest Payment Date"), commencing on
________________, 1996. Interest on the Subordinated Debentures (except
defaulted interest) shall be paid to the Persons in whose name the
Subordinated Debentures are registered, at the close of business on the
regular Record Date for such interest installment (including Subordinated
Debentures that are cancelled after the Record Date and before the Interest
Payment Date), which, with respect to any Subordinated Debentures of which
the Property Trustee is the Holder or with respect to a Global Subordinated
Debenture, shall be the close of business on the Business Day next preceding
that Interest Payment Date. Notwithstanding the foregoing sentence, if the
Preferred Securities are no longer in book-entry only form or if, pursuant to
the Indenture and this First Supplemental Indenture the Subordinated
Debentures are not represented by a Global Subordinated Debenture, the Issuer
may select a regular Record Date for such interest installment which shall
conform to the rules of any securities exchange, interdealer quotation system
or other organization on which the Subordinated Debentures are listed and
which shall be at least one Business Day but less than 60 Business Days
before the applicable Interest Payment Date. Notwithstanding the foregoing,
any interest that is payable at maturity shall be payable to the Person to
whom principal payable at maturity shall be payable.
(b) The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months, and for any period shorter
than a full quarter on the basis of the actual number of days elapsed in such
90-day quarter. In the event that any date on which interest is payable on
the Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of
any such delay), except that, notwithstanding any provision of the Indenture
to the contrary, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date.
(c) Any installment of interest not punctually paid or duly provided for
shall forthwith cease to be payable to the Holders of the Subordinated
Debentures on the regular Record Date and may be paid to the Person in whose
name the Subordinated Debentures are registered at the close of business on a
special Record Date to be fixed by the Trustee for the payment of such
defaulted interest, notice of which shall be given to the Holders of the
Subordinated Debentures not less than 10 days prior to such special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange, interdealer quotation
system or other organization on which the Subordinated Debentures may be
listed, and upon such notice as may be required by such exchange, system or
organization.
SECTION 2.6. Authorized Denominations.
The Subordinated Debentures shall be issuable in denominations of $25 and
integral multiples of $25 in excess thereof.
SECTION 2.7. Conversion and Redemption.
The Subordinated Debentures are not subject to conversion at the option of
the Holder or otherwise. The Subordinated Debentures are not subject to
redemption at the option of the Holder and are subject to redemption at the
option of the Issuer or otherwise as provided in Article III hereof.
SECTION 2.8 Paying Agent and Authenticating Agent.
The Trustee is hereby appointed as the initial paying agent, transfer agent
and Security Registrar for the Subordinated Debentures, and the appointment
of the Trustee as Authenticating Agent is hereby ratified and approved.
SECTION 2.9 Defeasance.
The Subordinated Debentures shall not be subject to the provisions of Article
Ten of the Indenture concerning the satisfaction and discharge of the
Issuer's indebtedness and obligations under the Indenture and the termination
of certain covenants of the Issuer under the Indenture.
SECTION 2.10 No Sinking Fund.
The Subordinated Debentures shall not be entitled to the benefit of any
sinking fund or analogous provision.
SECTION 2.11 Trustee.
The initial Trustee for the Subordinated Debentures shall be The First
National Bank of Chicago and the Corporate Trust Office of the Trustee for
purposes of the Indenture shall initially be located at One First National
Plaza - Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust
Services Division.
SECTION 2.12 Depositary.
The Depository Trust Company (or its nominee) shall act as the initial
Depositary for any Global Subordinated Debenture which may be issued pursuant
to this First Supplemental Indenture.
ARTICLE III
REDEMPTION OF THE SUBORDINATED DEBENTURES
SECTION 3.1. Special Event Redemption.
If a Special Event has occurred and is continuing then, notwithstanding
Section 3.2 but subject to the provisions of Article Twelve of the Indenture,
the Issuer shall have the right, upon not less than 30 days' nor more than 60
days' notice to the Holders of the Subordinated Debentures, to redeem the
Subordinated Debentures, in whole (but not in part), for cash within 90 days
following the occurrence of such Special Event at a redemption price equal to
100% of the principal amount to be redeemed plus any accrued and unpaid
interest thereon (including Compounded Interest, if any) to the date of such
redemption (the "Redemption Price"). The Redemption Price shall be paid
prior to 12:00 noon, New York time, on the date of such redemption or at such
earlier time as the Issuer determines and specifies in the notice of
redemption, provided the Issuer shall deposit with the Trustee an amount
sufficient to pay the Redemption Price by 11:00 a.m. on the date such
Redemption Price is to be paid.
SECTION 3.2. Optional Redemption.
Subject to the provisions of Section 3.3 and Article Twelve of the
Indenture, the Issuer shall have the right to redeem the Subordinated
Debentures, in whole or in part, at any time or from time to time, on or after
______________, 2001, at a redemption price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon,
(including Compounded Interest, if any), to the date of such redemption (the
"Optional Redemption Price"). Any redemption pursuant to this paragraph will
be made upon not less than 30 days nor more than 60 days notice to the Holder
of the Subordinated Debentures, at the Optional Redemption Price. The
Optional Redemption Price shall be paid prior to 12:00 noon, New York time,
on the date of such redemption or at such earlier time as the Issuer
determines and specifies in the notice of redemption, provided that the
Issuer shall deposit with the Trustee an amount sufficient to pay the
Optional Redemption Price by 11:00 a.m., New York time, on the date such
Optional Redemption Price is to be paid.
SECTION 3.3. Partial Redemption.
(a) If a partial redemption of the Subordinated Debentures would result in
the delisting of the Preferred Securities issued by the Trust from any
national securities exchange, interdealer quotation system or other
organization on which the Preferred Securities are then listed, the Issuer
shall not be permitted to effect such partial redemption and may only redeem
the Subordinated Debentures in whole.
(b) The Issuer may not redeem fewer than all of the Outstanding Subordinated
Debentures unless all accrued and unpaid interest on the Subordinated
Debentures has been paid as of the Interest Payment Date next preceding the
Redemption Date.
(c) If the Subordinated Debentures are only partially redeemed pursuant to
Section 3.2, the Subordinated Debentures will be redeemed pro rata or by lot
or by any other method utilized by the Trustee; provided that if at the time
of redemption the Subordinated Debentures are registered as a Global
Subordinated Debenture, the Depositary shall determine, in accordance with
its procedures, the principal amount of such Subordinated Debentures credited
to each of its participant accounts to be redeemed.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1. Extension of Interest Payment Period.
The Issuer shall have the right, at any time and from time to time during the
term of the Subordinated Debentures, to defer payments of interest on the
Subordinated Debentures by extending the interest payment period of the
Subordinated Debentures for a period not exceeding 20 consecutive quarters
(the "Extended Interest Payment Period"), during which Extended Interest
Payment Period no interest shall be due and payable; provided that no
Extended Interest Payment Period may extend beyond the Maturity Date. To the
extent permitted by applicable law, interest, the payment of which has been
deferred because of the extension of the interest payment period pursuant to
this Section 4.1, will bear interest thereon at the Coupon Rate compounded
quarterly for each quarter of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest Payment Period,
the Issuer shall pay all interest accrued and unpaid on the Subordinated
Debentures, including any Compounded Interest (all such interest the
"Deferred Interest") that shall be payable to the Holders of the Subordinated
Debentures in whose names the Subordinated Debentures are registered in the
Security Register as of the Record Date relating to the Interest Payment Date
that corresponds to the end of such Extended Interest Payment Period. Before
the termination of any Extended Interest Payment Period, the Issuer may
further extend such period, provided that such period together with all such
previous and further extensions thereof shall not exceed 20 consecutive
quarters or extend beyond the Maturity Date. Upon the termination of any
Extended Interest Payment Period and upon the payment of all Deferred
Interest then due, the Issuer may commence a new Extended Interest Payment
Period, subject to the foregoing requirements. No interest shall be due and
payable during an Extended Interest Payment Period, except at the end
thereof, but the Issuer may prepay at any time all or any portion of the
Deferred Interest accrued during an Extended Interest Payment Period.
SECTION 4.2. Notice of Extension.
(a) If the Property Trustee is the only registered Holder of the Subordinated
Debentures at the time the Issuer selects an Extended Interest Payment
Period, the Issuer shall give written notice to the Regular Trustees and the
Property Trustee of its selection of such Extended Interest Payment Period
one Business Day before the earlier of (i) the next succeeding date on which
Distributions on the Trust Securities are payable, or (ii) the date the
Regular Trustees, on behalf of the Trust, are required to give notice of the
record date, or the date such Distributions are payable, to the New York
Stock Exchange or other applicable self-regulatory organization or to holders
of the Preferred Securities.
(b) If the Property Trustee is not the only Holder of the Subordinated
Debentures at the time the Issuer selects an Extended Interest Payment
Period, the Issuer shall give the Holders of the Subordinated Debentures
written notice of its selection of such Extended Interest Payment Period 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Issuer is required to give notice of the record or
payment date of such interest payment to the New York Stock Exchange or other
applicable self-regulatory organization or to Holders of the Subordinated
Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs (a) or
(b) of this Section 4.2 shall be counted as one of the 20 quarters permitted
in the maximum Extended Interest Payment Period permitted under Section 4.1.
SECTION 4.3. Limitation of Transactions.
If the Issuer shall exercise its right to defer payment of interest as
provided in Section 4.1, during any Extended Interest Payment Period (a) the
Issuer shall not declare or pay any dividends on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, (b) the Issuer shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Issuer that rank pari passu with or
junior to the Subordinated Debentures and (c) the Issuer shall not make
guarantee payments with respect to the foregoing (other than pursuant to the
Securities Guarantees); provided, however, that notwithstanding the
restriction in clause (a) above, the Issuer may declare and pay a stock
dividend where the stock dividend is the same stock as that on which the
dividend is being paid.
ARTICLE V
EXPENSES
SECTION 5.1. Payment of Expenses.
In connection with the offering, sale and issuance of the Subordinated
Debentures to the Property Trustee in connection with the sale of the Trust
Securities by the Trust and during the existence of the Trust, the Issuer, in
its capacity as borrower with respect to the Subordinated Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Subordinated Debentures, including commissions to the
underwriters payable pursuant to the Underwriting Agreement and compensa-
tion of the Trustee under the Indenture in accordance with the provisions
of Section 6.6 of the Indenture;
(b) pay other debts and obligations of the Trust (other than with
respect to the Trust Securities) and all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to the
organization, maintenance and dissolution of the Trust, the offering, sale
and issuance of the Trust Securities (including commissions to the under-
writers payable pursuant to the Pricing Agreement), the retention of the
Equitable Trustees, reimbursement of the Regular Trustees as provided in
the Declaration, the fees and expenses of the Property Trustee and the
Delaware Trustee, the trustee under the Preferred Securities Guarantee and
the Common Securities Guarantee, the costs and expenses relating to the
operation of the Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses
for printing and engraving and computing or accounting equipment, paying
agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing and disposition of
Trust assets, and the fees and expenses related to the enforcement by the
Property Trustee of the rights of the holders of the Preferred Securities)
and all other amounts payable by the Issuer pursuant to the Declaration;
(c) be primarily liable for any indemnification obligations arising with
respect to the Declaration; and
(d) pay any and all taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed on the Trust or its
assets and all liabilities, costs and expenses of the Trust with respect to
such taxes, duties, assessments or governmental charges.
SECTION 5.2. Payment Upon Resignation or Removal.
Upon termination of this First Supplemental Indenture or the Indenture or the
removal or resignation of the Trustee pursuant to Section 6.10 of the
Indenture, the Issuer shall pay to the Trustee all amounts due to the Trustee
accrued to the date of such termination, removal or resignation. Upon
termination of the Declaration or the removal or resignation of the Delaware
Trustee or the Property Trustee, as the case may be, pursuant to Section 5.6
of the Declaration, the Issuer shall pay to the Delaware Trustee or the
Property Trustee, as the case may be, all amounts due to such trustee accrued
to the date of such termination, removal or resignation.
ARTICLE VI
SUBORDINATION
SECTION 6.1. Agreement to Subordinate.
The Issuer covenants and agrees, and each Holder of Subordinated Debentures
issued hereunder by such Holder's acceptance thereof likewise covenants and
agrees, that all Subordinated Debentures shall be issued subject to the
provisions of this Article VI; and each Holder of a Subordinated Debenture,
whether upon original issue or upon transfer or assignment thereof, accepts
and agrees to be bound by such provisions.
The payment by the Issuer of the principal of and interest on all
Subordinated Debentures issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment
to the prior payment in full of all Senior Indebtedness of the Issuer,
whether outstanding at the date of this First Supplemental Indenture or
thereafter incurred.
No provision of this Article VI shall prevent the occurrence of any default
or Event of Default hereunder or under the Indenture.
SECTION 6.2. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Issuer in the
payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Issuer, or in the event that the maturity of any
Senior Indebtedness of the Issuer has been accelerated because of a default,
then, in either case, no payment shall be made by the Issuer with respect to
the principal (including redemption payments) of or interest on the
Subordinated Debentures.
In the event that, notwithstanding the foregoing, any payment or distribution
of assets of the Issuer of any kind or character, whether in cash, property
or securities, prohibited by the foregoing shall be received by the Trustee
before all Senior Indebtedness of the Issuer is paid in full, or provision is
made for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of, and shall be paid
over or delivered to, the holders of Senior Indebtedness (pro rata to such
holders on the basis of the respective amounts of Senior Indebtedness held by
such holders, as calculated by the Issuer) or their respective representative
or representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as
their respective interests may appear, but only to the extent that the
holders of the Senior Indebtedness (or their respective representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.
SECTION 6.3. Liquidation; Dissolution; Bankruptcy.
Upon any payment or distribution of assets of the Issuer of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding-up or liquidation or reorganization of the Issuer,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership
or other proceedings, all principal, premium, if any, and interest due or to
become due upon all Senior Indebtedness of the Issuer shall first be paid in
full, or payment thereof provided for in money in accordance with its terms,
before any payment is made by the Issuer on account of the principal or
interest on the Subordinated Debentures; and upon any such dissolution or
winding-up or liquidation or reorganization, any payment or distribution of
assets of the Issuer of any kind or character whether in cash, property or
securities, that the Holders of the Subordinated Debentures or the Trustee
would be entitled to receive from the Issuer, except for the provisions of
this Article VI, shall be paid by the Issuer or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Subordinated Debentures or by the
Trustee under the Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Issuer (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders,
as calculated by the Issuer) or their respective representative or
representatives, or to the trustee or trustees under any indenture pursuant
to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of all Senior
Indebtedness of the Issuer remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full, in money or money's worth, in accordance
with its terms, after giving effect to any concurrent payment or distribution
to or for the benefit of the holders of such Senior Indebtedness, before any
payment or distribution is made to the Holders of Subordinated Debentures or
to the Trustee.
In the event that, notwithstanding the foregoing, any payment or distribution
of assets of the Issuer of any kind or character, whether in cash, property
or securities, prohibited by the foregoing, shall be received by the Trustee
before all Senior Indebtedness of the Issuer is paid in full, or provision is
made for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over
or delivered to the holders of such Senior Indebtedness (pro rata to such
holders on the basis of the respective amounts of Senior Indebtedness held by
such holders, as calculated by the Issuer) or their respective representative
or representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as
their respective interests may appear, for application to the payment of all
Senior Indebtedness of the Issuer remaining unpaid to the extent necessary to
pay such Senior Indebtedness in full, in money or money's worth, in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of such Senior
Indebtedness.
For purposes of this Article VI, the words "cash, property or securities"
shall not be deemed to include shares of stock of the Issuer as reorganized
or readjusted, or securities of the Issuer or any other corporation provided
for by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article VI with respect
to the Subordinated Debentures to the payment of all Senior Indebtedness of
the Issuer that may at the time be outstanding, provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any
such reorganization or readjustment, and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders,
altered by such reorganization or readjustment. The consolidation of the
Issuer with, or the merger of the Issuer into, another corporation or the
liquidation or dissolution of the Issuer following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article Nine of the
Indenture shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 6.3 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions stated in Article Nine of the Indenture. Nothing
in Section 6.2 or in this Section 6.3 shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.6 of the Indenture.
SECTION 6.4 Prior Payment to Senior Indebtedness Upon Acceleration of
Subordinated Debentures.
In the event that the Subordinated Debentures are declared due and payable
before the Maturity Date, then and in such event the holders of the Senior
Indebtedness outstanding at the time such Subordinated Debentures so become
due and payable shall be entitled to receive payment in full of all amounts
due or to become due on or in respect of all Senior Indebtedness, or
provision shall be made for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of such Senior
Indebtedness, before the Holders of the Subordinated Debentures are entitled
to receive or retain any principal of or interest on the Subordinated
Debentures (including any payment that may be payable by reason of the
payment of any other indebtedness of the Issuer being subordinated to the
payment of the Subordinated Debentures).
In the event that, notwithstanding the foregoing, the Issuer shall make any
payment of principal or interest on the Subordinated Debentures to the
Trustee or any Holder of the Subordinated Debentures prohibited by the
foregoing provisions of this Section 6.4 and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the
case may be, such Holder, then and in such event such payment shall be paid
over and delivered forthwith to the Issuer.
SECTION 6.5. Subrogation.
Subject to the payment in full of all amounts due or to become due on or in
respect of Senior Indebtedness of the Issuer, the rights of the Holders of
the Subordinated Debentures shall be subrogated (equally and ratably with the
holders of all indebtedness of the Issuer that by its express terms is
subordinated to indebtedness of the Issuer to substantially the same extent
as the Subordinated Debentures are subordinated and is entitled to like
rights of subrogation) to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Issuer applicable to such Senior Indebtedness until the
principal of and interest on the Subordinated Debentures shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions
to the holders of such Senior Indebtedness of any cash, property or
securities to which the Holders of the Subordinated Debentures or the Trustee
would be entitled except for the provisions of this Article VI, and no
payment over pursuant to the provisions of this Article VI to or for the
benefit of the holders of such Senior Indebtedness by Holders of the
Subordinated Debentures or the Trustee, shall, as between the Issuer, its
creditors other than holders of Senior Indebtedness of the Issuer, and the
holders of the Subordinated Debentures, be deemed to be a payment by the
Issuer to or on account of such Senior Indebtedness. It is understood that
the provisions of this Article VI are and are intended solely for the
purposes of defining the relative rights of the Holders of the Subordinated
Debentures, on the one hand, and the holders of such Senior Indebtedness on
the other hand.
Nothing contained in this Article VI or in the Indenture, elsewhere in this
First Supplemental Indenture or in the Subordinated Debentures is intended to
or shall impair, as between the Issuer, its creditors other than the holders
of Senior Indebtedness of the Issuer, and the Holders of the Subordinated
Debentures, the obligation of the Issuer, which is absolute and
unconditional, to pay to the Holders of the Subordinated Debentures the
principal of and interest on the Subordinated Debentures as and when the same
shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders of the Subordinated
Debentures and creditors of the Issuer other than the holders of Senior
Indebtedness of the Issuer, nor shall anything herein or therein prevent the
Trustee or the Holder of any Subordinated Debenture from exercising all
remedies otherwise permitted by applicable law upon default under the
Indenture, subject to the rights, if any, under this Article VI of the
holders of such Senior Indebtedness in respect of cash, property or
securities of the Issuer received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Issuer referred to in this
Article VI, the Trustee, subject to the provisions of Section 6.2 of the
Indenture, and the Holders of the Subordinated Debentures shall be entitled
to conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Subordinated Debentures, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Issuer, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article VI.
SECTION 6.6. Trustee to Effectuate Subordination.
Each Holder of Subordinated Debentures by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article VI and appoints the Trustee such Holder's
attorney-in-fact for any and all such purposes.
SECTION 6.7. Notice by the Issuer.
The Issuer shall give prompt written notice to a Responsible Officer of the
Trustee of any fact known to the Issuer that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Subordinated
Debentures pursuant to the provisions of this Article VI. Notwithstanding
the provisions of this Article VI or any other provision of the Indenture and
this First Supplemental Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Subordinated
Debentures pursuant to the provisions of this Article VI, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
from the Issuer or a holder or holders of Senior Indebtedness or from any
representative or trustee therefor; and before the receipt of any such
written notices the Trustee, subject to the provisions of Section 6.2 of the
Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 6.7 at least two Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of or
interest on any Subordinated Debenture), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes 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.
The Trustee, subject to the provisions of Section 6.2 of the Indenture, shall
be entitled to conclusively rely on the delivery to it of a written notice by
a Person representing himself to be a holder of Senior Indebtedness of the
Issuer (or a representative or trustee on behalf of such holder) to establish
that such notice has been given by a holder of such Senior Indebtedness or a
representative or trustee on behalf of any such holder or holders. In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article VI, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such 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 VI, and, if such evidence is
not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such
payment.
SECTION 6.8. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article VI in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any
of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Issuer, the Trustee
undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article VI, and no implied
covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into the Indenture or this First Supplemental
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of such Senior Indebtedness and, subject to the
provisions of Section 6.2 of the Indenture, the Trustee shall not be liable
to any holder of such Senior Indebtedness if it shall pay over or deliver to
Holders of Subordinated Debentures, the Issuer or any other Person money or
assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article VI or otherwise.
SECTION 6.9. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of the
Issuer 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
Issuer, as the case may be, or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Issuer with the terms,
provisions and covenants of the Indenture or this First Supplemental
Indenture, regardless of any knowledge thereof that any such holder may have
or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Issuer may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of
the Subordinated Debentures, without incurring responsibility to the Holders
of the Subordinated Debentures and without impairing or releasing the
subordination provided in this Article VI or the obligations hereunder of the
Holders of the Subordinated Debentures to the holders of such 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, such Senior Indebtedness, or otherwise amend or supplement in any
manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable
in any manner for the collection of such Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Issuer and any
other Person.
ARTICLE VII
COVENANT TO LIST ON EXCHANGE
SECTION 7.1. Listing on an Exchange.
If the Subordinated Debentures are to be distributed to the holders of the
Preferred Securities as described in Section 2.4(a), the Issuer will, if the
Subordinated Debentures are not already so listed, use its best efforts to
list such Subordinated Debentures on the New York Stock Exchange, Inc. or on
such other exchange or other organization as the Preferred Securities are
then listed.
ARTICLE VIII
FORM OF SUBORDINATED DEBENTURE
SECTION 8.1. Form of Subordinated Debenture.
The Subordinated Debentures and the Trustee's Certificate of Authentication
to be endorsed thereon are to be substantially in the following forms:
(IF THE SUBORDINATED DEBENTURE IS TO BE A GLOBAL SUBORDINATED DEBENTURE,
INSERT - This Subordinated Debenture is a Global Subordinated Debenture
within the meaning of the Indenture hereinafter referred to and is registered
in the name of a Depositary or a nominee of a Depositary. This Subordinated
Debenture is exchangeable for Subordinated Debentures registered in the name
of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this
Subordinated Debenture (other than a transfer of this Subordinated Debenture
as a whole by the Depositary to a nominee of the Depositary or by a nominee
of the Depositary to the Depositary or another nominee of the Depositary) may
be registered except in limited circumstances.
Unless this Subordinated Debenture is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the issuer or its agent for registration of transfer, exchange or
payment, and any Subordinated Debenture issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment hereon is made to Cede & Co. or to such other entity as
is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.)
EQUITABLE OF IOWA COMPANIES
___% SUBORDINATED DEFERRABLE INTEREST DEBENTURE
No.___ DUE 2026 REGISTERED
$______
Equitable of Iowa Companies, an Iowa corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to__________________
, or registered assigns, the principal sum of _____________ Dollars on ______
, 2026 (or on such date that is no earlier than _______ , 2001 or such date
that is no later than the earlier of: (i) __________ , 2045, or (ii) the
Interest Deduction Date, if the Company elects to shorten or extend the
Maturity Date as further described herein), and to pay interest on said
principal sum from _______________ , 1996, or from the most recent interest
payment date (each such date, an "Interest Payment Date") to which interest
has been paid or duly provided for, quarterly (subject to deferral as set
forth herein) in arrears on March 31, June 30, September 30 and December 31
of each year commencing ____________ , 1996, at the rate of ____ % per annum
until the principal hereof shall have become due and payable, and on any
overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment
of interest at the same rate per annum compounded quarterly. The amount of
interest payable on any Interest Payment Date shall be computed on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarter on the basis of the actual number of days elapsed in such 90-day
quarter. In the event that any date on which interest is payable on this
Subordinated Debenture is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the person in whose name this Subordinated Debenture is
registered at the close of business on the regular record date for such
interest installment, which shall be the close of business on the Business
Day next preceding such Interest Payment Date. {IF THE PREFERRED SECURITIES
ARE NO LONGER REPRESENTED BY A GLOBAL CERTIFICATE OR IF THE SUBORDINATED
DEBENTURES ARE NOT REPRESENTED BY A GLOBAL SUBORDINATED DEBENTURE -- which
shall be the close of business on the ___ Business Day next preceding such
Interest Payment Date.} Notwithstanding the foregoing, any interest that is
payable on the Maturity Date shall be payable to the Person to whom principal
payable at the Maturity Date shall be payable. Any such interest installment
not punctually paid or duly provided for shall forthwith cease to be payable
to the registered Holders on such regular record date and may be paid to the
Person in whose name this Subordinated Debenture is registered at the close
of business on a special record date to be fixed by the Trustee for the
payment of such defaulted interest, notice whereof shall be given to the
registered Holders of the Subordinated Debentures not less than 10 days prior
to such special record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Subordinated Debentures may be listed, and upon such notice as may
be required buy such exchange, all as more fully provided in the Indenture.
The principal of and the interest on this Subordinated Debenture shall be
payable at the office or agency of the Trustee maintained for that purpose in
any coin or currency of the United States of America that at the time of
payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the registered Holder at such address as shall appear in the
Security Register. Notwithstanding the foregoing, so long as the Holder of
this Subordinated Debenture is the Property Trustee, the payment of the
principal of and interest on this Subordinated Debenture will be made by wire
transfer in immediately available funds at such place and to such account as
may be designated by the Property Trustee. Payment of principal of the
Subordinated Debentures will only be made upon surrender of the Subordinated
Debentures to the Trustee.
The indebtedness evidenced by this Subordinated Debenture 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 this
Subordinated Debenture is issued subject to the provisions of the Indenture
with respect thereto. Each Holder of this Subordinated Debenture, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such action
as may be necessary or appropriate to acknowledge or 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 his or her
acceptance hereof, hereby 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.
This Subordinated Debenture shall not be entitled to any benefit under
the Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Subordinated Debenture are continued on the
reverse side hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: _________________, 1996.
EQUITABLE OF IOWA COMPANIES
By: _________________________________
By: _________________________________
SEAL
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Debentures referred to in the within-
mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By: ______________________________
Authorized Officer
(FORM OF REVERSE OF SUBORDINATED DEBENTURE)
This Subordinated Debenture is one of a duly authorized series of
Subordinated Debentures of the Company (herein sometimes referred to as the
"Subordinated Debentures"), specified in the Indenture, all issued or to be
issued in one or more series under and pursuant to an Indenture dated as of
January 17, 1995, duly executed and delivered between the Company and The
First National Bank of Chicago, as Trustee (the 'Trustee'), as supplemented
by the First Supplemental Indenture dated as of _____________, 1996, between
the Company and the Trustee (the Indenture as so supplemented, the
"Indenture"), to which a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the Holders of the Subordinated Debentures, and to all of which provisions
the Holder of this Subordinated Debenture by acceptance hereof, assents and
agrees. By the terms of the Indenture, the Subordinated Debentures are
issuable in series that may vary as to amount, date of maturity, rate of
interest and in other respects as provided in the Indenture. This series of
Subordinated Debentures is limited in aggregate principal amount as specified
in said Supplemental Indenture.
Except as provided in the next paragraph with respect to the occurrence
of a Special Event, the Subordinated Debentures may not be redeemed by the
Company prior to _____, 2001. The Company shall have the right to redeem
this Subordinated Debenture at the option of the Company, without premium or
penalty, in whole or in part at any time and from time to time on or after
, 2001 (an "Optional Redemption"), at a redemption price equal to 100% of the
principal amount plus any accrued and unpaid interest, including any
Compounded Interest, if any, to the date of such redemption (the "Optional
Redemption Price"). Any redemption pursuant to this paragraph will be made
upon not less than 30 nor more than 60 days' notice at the Optional
Redemption Price.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined below, a "Special Event") shall occur and be continuing, the Company
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Subordinated Debentures in whole (but not in part) for cash at the
Optional Redemption Price within 90 days following the occurrence of such
Special Event.
"Tax Event" means that the Regular Trustees shall have received an
opinion of independent tax counsel experienced in such matters to the effect
that, as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment, or change
is effective or such pronouncement or decision is announced on or after the
date of original issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days after the
date thereof, subject to United States federal income tax with respect to
interest accrued or received on the Subordinated Debentures, (ii) the Trust
is, or will be within 90 days after the date thereof, subject to more than a
de minimis amount of taxes, duties or other governmental charges, or (iii)
interest payable to the Trust on the Subordinated Debentures is not, or
within 90 days of the date thereof, will not be deductible, in whole or in
part, by the Company for United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "1940 Act"), to the effect
that, as a result of the occurrence of a change in law or regulation or a
change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an insubstantial risk that the
Trust is or will be considered an "investment company" which is required to
be registered under the 1940 Act, which Change in 1940 Act Law becomes
effective on or after the date of original issuance of the Preferred
Securities.
If the Subordinated Debentures are only partially redeemed by the Company
pursuant to an Optional Redemption, the Debentures will be redeemed pro rata
or by lot or in some other equitable manner determined by the Trustee.
Notwithstanding the foregoing, if a partial redemption of the Subordinated
Debentures would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed, the Company shall not be permitted to effect such
partial redemption and will only redeem the Subordinated Debentures in whole.
In the event of redemption of this Subordinated Debenture in part only, a
new Subordinated Debenture or Subordinated Debentures of this series (for the
unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Subordinated
Debentures may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions and
limitations provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Subordinated Debentures of each series affected at
the time outstanding, as defined in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the
Holders of the Subordinated Debentures; provided, however, that no such
supplemental indentures shall (i) extend the time of payment of the principal
of any Subordinated Debentures of any series, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable upon the redemption thereof, without
the consent of the Holder of each Subordinated Debenture so affected, or (ii)
reduce the aforesaid percentage of Subordinated Debentures, the Holders of
which are required to consent to any such supplemental indenture, without the
consent of the Holders of each Subordinated Debenture then outstanding and
affected thereby. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Subordinated
Debentures of any series at the time outstanding affected thereby, on behalf
of all of the Holders of the Subordinated Debentures of such series, to waive
any past default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture with respect to such
series, and its consequences, except a default in respect of a covenant or
provision of the Indenture or the Subordinated Debentures of such series
which cannot be modified or amended without the consent of each Holder of
Subordinated Debentures of such series. Any such consent or waiver by the
registered Holder of this Subordinated Debenture (unless revoked as provided
in the Indenture) shall be conclusive and binding upon such Holder and upon
all future Holders and owners of this Subordinated Debenture and of any
Subordinated Debentures issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether
or not any notation of such consent or waiver is made upon this Subordinated
Debenture.
No reference herein to the Indenture and no provision of this
Subordinated Debenture or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Subordinated Debenture at the time and
place and at the rate and in the money herein prescribed.
The Company shall have the right at any time during the term of the
Subordinated Debentures from time to time to extend the interest payment
period of such Subordinated Debentures for up to 20 consecutive quarters not
to extend beyond the Maturity Date of the Subordinated Debentures (an
"Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest then accrued and unpaid (together with interest
thereon at the rate specified for the Subordinated Debentures to the extent
that payment of such interest is enforceable under applicable law). In the
event that the Company exercises the right to defer interest payments, then,
prior to the payment of all accrued interest on outstanding Subordinated
Debentures, (a) the Company shall not declare or pay dividends on, or make a
distribution with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock, (b) the
Company shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities issued by the Company
that rank pari passu with or junior to the Subordinated Debentures and (c)
the Company shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Securities Guarantees); provided,
however, that restriction (a) above does not apply to any stock dividends
paid by the Company where the dividend stock is the same stock as that on
which the dividend is being paid. Before the termination of any such Extended
Interest Payment Period, the Company may further extend such Extended
Interest Payment Period, provided that such Extended Interest Payment Period
together with all such previous and further extensions thereof shall not
exceed 20 consecutive quarters and shall not extend beyond the Maturity Date
of the Subordinated Debentures. At the termination of any such Extended
Interest Payment Period and upon the payment of all accrued and unpaid
interest and any additional amounts then due, the Company may commence a new
Extended Interest Payment Period.
At any time the Company will have the right to dissolve the Trust and
cause the Subordinated Debentures to be distributed to the holders of the
Trust Securities in liquidation of the Trust. If the Company elects to
dissolve the Trust and thereby causes the Subordinated Debentures to be
distributed to the holders of the Trust Securities, the Company shall have
the right to (a) shorten the Maturity Date to any date that is not earlier
than _____, 2001 and (b) to extend the Maturity Date to a date no later than
the earlier of (i) __________, 2045, or (ii) the Interest Deduction Date,
provided the conditions in clauses (i) through (vi) below are met on the date
the Company exercises such right and on the Maturity Date in effect prior to
such proposed extension (the "Preceding Maturity Date"). In addition, the
Company shall have the right, which must be exercised at least 90 days prior
to the Maturity Date then in effect, to extend the Maturity Date for one or
more periods, but in no event to a date later than the earlier of (i) ,
2045, or (ii) the Interest Deduction Date, provided that the Company must
satisfy the following conditions on the date it exercises such right and on
the Preceding Maturity Date: (i) the Company is not in bankruptcy or
otherwise insolvent, (ii) the Company is not in default on any Subordinated
Debentures issued to the Trust or any trustee of the Trust in connection with
the issuance of Trust Securities by the Trust, (iii) the Company has made
timely payments on the Subordinated Debentures for the immediately preceding
six quarters without deferrals, (iv) the Trust is not in arrears on payment
of distributions on the Trust Securities, (v) the Subordinated Debentures or
the Preferred Securities are rated investment grade by a nationally
recognized statistical rating organization, and (vi) the final maturity of
the Subordinated Debentures is no later than the forty-ninth anniversary of
the issuance of the Preferred Securities. In the event the conditions
specified in clauses (i) through (vi) above are not satisfied on the date of
exercise of the right to extend the Maturity Date and on the Preceding
Maturity Date, then the Maturity Date of the Subordinated Debentures shall be
the Preceding Maturity Date. In no event shall an extended Maturity Date be
later than the Interest Deduction Date even if the Maturity Date has
previously been extended to a date beyond the Interest Deduction Date.
As provided in the Indenture and subject to certain limitations therein
set forth, this Subordinated Debenture is transferable by the registered
Holder hereof on the Security Register of the Company, upon surrender of this
Subordinated Debenture for registration of transfer at the Corporate Trust
Office of the Trustee accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by
the registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Subordinated Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Subordinated Debenture, the Company, the Trustee, any paying agent and any
Security Registrar may deem and treat the registered holder hereof as the
absolute owner hereof (whether or not this Subordinated Debenture shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Security Registrar) for the purpose of receiving
payment of or on account of the principal hereof and interest due hereon and
for all other purposes, and neither the Company nor the Trustee nor any
paying agent nor any Security Registrar shall be affected by any notice to
the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Subordinated Debenture or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present of
future, as such, of the Company or of any predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration
for the issuance hereof, expressly waived and released.
[The Subordinated Debentures of this series are issuable only in
registered form without coupons in denominations of $25 and any integral
multiple thereof, provided that this Global Subordinated Debenture is
exchangeable for Subordinated Debentures in definitive form only under
certain limited circumstances set forth in the Indenture.] As provided in
the Indenture and subject to certain limitations herein and therein set
forth, Subordinated Debentures of this series so issued are exchangeable for
a like aggregate principal amount of Subordinated Debentures of this series
of a different authorized denomination, as requested by the Holder
surrendering the same. All terms used in this Subordinated Debenture that
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
ARTICLE IX
ORIGINAL ISSUE OF SUBORDINATED DEBENTURES
SECTION 9.1. Original Issue of Subordinated Debentures.
Subordinated Debentures in the aggregate principal amount of
$________________ may, upon execution of this First Supplemental Indenture,
be executed by the Issuer and delivered to the Trustee for authentication,
and the Trustee shall thereupon authenticate and deliver such Subordinated
Debentures to or upon the written order of the Issuer, signed by its
Chairman, its Vice Chairman, its President, or any Vice President and its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary, without any further action by the Issuer.
SECTION 9.2. Reports by the Trustee.
Up until and including the Maturity Date, the Trustee shall, in respect of
each applicable date, make such reports within such time periods as are
required to be made by the Trustee under the Trust Indenture Act and the
Indenture.
ARTICLE X
COVENANTS
SECTION 10.1. Covenants as to Trust.
In the event Subordinated Debentures are issued and sold to the Property
Trustee in connection with the issuance of Trust Securities by the Trust, for
so long as the Trust Securities remain outstanding, the Issuer will (i)
maintain 100% direct or indirect ownership of the Common Securities of the
Trust; provided, however, that any permitted successor of the Issuer under
the Indenture may succeed to the Issuer's ownership of the Common Securities,
(ii) not voluntary dissolve, windup or terminate the Trust, except in
connection with the distribution of Subordinated Debentures upon a
Dissolution Event or otherwise, and in connection with certain mergers,
consolidations or amalgamations permitted by the Declaration, (iii) timely
perform its duties as sponsor of the Trust, (iv) use its reasonable efforts
to cause the Trust (a) to remain a business trust, except in connection with
the distribution of Subordinated Debentures as provided in the Declaration,
the redemption of the Trust Securities or in connection with certain mergers,
consolidations or amalgamations as permitted by the Declaration, and (b)
otherwise continue not to be treated as an association taxable as a
corporation or partnership for United States federal income tax purposes, and
(v) use its reasonable efforts to cause each holder of Trust Securities to be
treated as owning an individual beneficial interest in the Subordinated
Debentures. This covenant is intended solely for the benefit of the Holders
of the Subordinated Debentures issued pursuant to this First Supplemental
Indenture and shall not be applicable to the Securities of any other series
issued pursuant to the Indenture.
SECTION 10.2. Omission of Certain Covenants.
The covenants of the Issuer contained in Section 3.6 and Section 3.7 of the
Indenture shall not be applicable to the Subordinated Debentures issued
pursuant to this First Supplemental Indenture and the failure by the Issuer
to comply with or observe either such covenant shall not constitute a default
or an Event of Default with respect to the Subordinated Debentures.
ARTICLE XI
DEFAULT
SECTION 11.1. Additional Event of Default.
There is hereby established as an additional Event of Default (as
contemplated by Section 5.1(i) of the Indenture) the following:
In the event the Subordinated Debentures are issued and sold to the
Property Trustee in connection with the issuance of Trust
Securities by the Trust, the Trust shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise
terminated its existence except in connection with (i) the
distribution of the Subordinated Debentures to holders of Trust
Securities in liquidation or redemption of their interests in the
Trust, (ii) the redemption of all or part of the outstanding Trust
Securities of the Trust or (iii) certain mergers, consolidations or
amalgamations of the Trust, each as permitted by the Declaration of
the Trust.
The foregoing Event of Default is intended solely for the benefit of the
Holders of the Subordinated Debentures issued pursuant to this First
Supplemental Indenture and shall not be applicable to any other series of
Securities heretofore or hereafter issued pursuant to the Indenture.
SECTION 11.2 Waiver of Past Defaults; Supplemental Indentures.
(a) Prior to the declaration of acceleration of the maturity of the
Subordinated Debentures as provided in Section 5.1 of the Indenture, the
Holders of a majority in aggregate principal amount of the Subordinated
Debentures then Outstanding may on behalf of the Holders of all of the
Subordinated Debentures then Outstanding waive any past default or Event of
Default not theretofore cured with respect to the Subordinated Debentures and
its consequences, except a default or an Event of Default:
(1) in the payment of the principal of or interest on any Subordinated
Debenture, or
(2) in respect of a covenant or provision of the Indenture, this First
Supplemental Indenture or the Subordinated Debentures which under Article
Eight of the Indenture cannot be modified or amended without the consent
of the holder of each Outstanding Subordinated Debenture affected;
provided, however, that notwithstanding anything to the contrary contained in
Section 7.3 of the Indenture, if the Subordinated Debentures are held by the
Trust or by the Property Trustee, such waiver or modification to such waiver
shall not be effective until the holders of a majority in liquidation
preference of the Trust Securities shall have consented to such waiver or
modification to such waiver; provided further, that if the consent of the
Holder of each Outstanding Subordinated Debenture is required in connection
with such waiver or modification, such waiver or modification shall not be
effective until each holder of the Trust Securities shall have consented to
such waiver or modification.
Upon any such waiver, such default shall cease to exist and shall be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, in each case for every purpose
of the Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
(b) Notwithstanding anything to the contrary contained in Section 7.3 of the
Indenture, if the Subordinated Debentures are held by the Trust or the
Property Trustee, a supplemental indenture that requires the consent of the
Holders of the Outstanding Subordinated Debentures as provided in Section 8.2
of the Indenture shall not be effective until the holders of a majority in
liquidation preference of Trust Securities shall have consented to such
supplemental indenture; provided, however, that if the consent of the Holder
of each Outstanding Subordinated Debenture is required in connection with a
supplemental indenture, such supplemental indenture shall not be effective
until each holder of the Trust Securities shall have consented to such
supplemental indenture.
(c) Notwithstanding anything to the contrary contained in Section 7.3 of the
Indenture, if the Subordinated Debentures are held by the Trust or by the
Property Trustee, a waiver by the Holders of the Subordinated Debentures
pursuant to Section 11.13 of the Indenture shall not be effective until the
holders of a majority in liquidation preference of Trust Securities shall
have consented to such waiver; provided, however, that if the consent of the
Holder of each Outstanding Subordinated Debenture is required in connection
with a waiver, such waiver shall not be effective until each holder of the
Trust Securities shall have consented to such waiver.
(d) the Trustee shall not take any action in accordance with the directions
of the Holders of the Subordinated Debentures under this Section 11.2 unless
the Property Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not
be classified as other than a grantor trust on account of such action.
SECTION 11.3. Acknowledgment of Rights.
The Issuer acknowledges that, with respect to any Subordinated Debentures
held either by the Trust or by the Property Trustee, if the Property Trustee
fails to enforce its rights under the Indenture, this First Supplemental
Indenture or the Subordinated Debentures as the Holder of the Subordinated
Debentures held as the assets of the Trust, any record holder of Preferred
Securities may institute legal proceedings directly against the Issuer to
enforce the Property Trustee's rights under the Indenture, this First
Supplemental Indenture or the Subordinated Debentures without first
instituting any legal proceedings against such Property Trustee or any other
person or entity. Notwithstanding the foregoing, if an Event of Default
under the Declaration has occurred and is continuing and such event is
attributable to the failure of the Issuer to pay interest or principal on the
Subordinated Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the applicable redemption date),
the Issuer acknowledges that a record holder of Preferred Securities may
institute a proceeding directly against the Issuer for enforcement of payment
to the record holder of the Preferred Securities of the principal of or
interest on the Subordinated Debentures on or after the respective due date
specified in the Subordinated Debentures., and the amount of payment will be
based on the holder's pro rata share of the amount due and owing on all the
Preferred Securities.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Ratification of Indenture.
The Indenture, as supplemented by this First Supplemental Indenture, is in
all respects ratified and confirmed, and this First Supplemental Indenture
shall be deemed part of the Indenture in the manner and to the extent herein
and therein provided.
SECTION 12.2. Trustee Not Responsible for Recitals.
The recitals contained herein and in the Subordinated Debentures, except for
the Trustee's certificate of authentication, shall be taken as the statements
of the Issuer and not of the Trustee, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this First Supplemental
Indenture or of the Subordinated Debentures.
SECTION 12.3. Governing Law.
This First Supplemental Indenture and each Subordinated Debenture shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State,
except as may otherwise be required by mandatory provisions of law.
SECTION 12.4. Separability.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Subordinated Debentures shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this First Supplemental Indenture or of the Subordinated
Debentures, but this First Supplemental Indenture and the Subordinated
Debentures shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.
SECTION 12.5. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 12.6. Effect of Headings.
The Article and Section headings herein and the Table of Contents hereto
are for convenience only and shall not affect the construction hereof.
SECTION 12.7 Third Party Beneficiaries.
Notwithstanding Section 11.2 of the Indenture (i) the Property Trustee, the
trustee under the Preferred Securities Guarantee and the Delaware Trustee are
each a third party beneficiary of, and shall be entitled to enforce and to
exercise all rights and remedies with respect to the provisions of Article V
of this First Supplemental Indenture, and (ii) each of the holders of
Preferred Securities is a third party beneficiary of, and shall be entitled
to enforce and exercise all rights and remedies with respect to Section 11.3
of this First Supplemental Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the day and year first above written.
EQUITABLE OF IOWA COMPANIES
By _________________________________________
Name: ______________________________________
Title: _______________________________________
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By _________________________________________
Name: ______________________________________
Title: _______________________________________
EXHIBIT 4.9.1
FIRST AMENDMENT TO DECLARATION OF TRUST
THIS FIRST AMENDMENT TO DECLARATION OF TRUST ("Amendment") is made and
entered into as of the ___ day of _________,1996, by and among Equitable of
Iowa Companies, an Iowa Corporation, as Sponsor, and Fred S. Hubbell, Paul E.
Larson, John A. Merriman, The First National Bank of Chicago, a national
banking association, and First Chicago Delaware, Inc., a Delaware Corporation,
not in their in individual capacities, but solely as Trustees, and the holders
from time to time, of undivided beneficial interests in the Trust to be issued
from time to time pursuant to the Declaration as amended hereby. Capitalized
terms used in this Amendment and not otherwise defined herein shall be used as
defined in the Declaration.
WHEREAS, the parties executing this Amendment (the "Parties") have entered
into a Declaration of Trust as of March 19, 1996 ("Declaration"); and
WHEREAS, the Parties wish to amend the Declaration in the manner set forth
in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the Parties agree
as follows:
1. The definition of "Debentures" in Section 1.1 of the Declaration is
hereby amended to read in its entirety as follows:
""DEBENTURES" means the series of subordinated deferrable interest
debentures to be issued by the Debenture Issuer under the Indenture
to be held by the Property Trustee."
2. The definition of "Trustees' Authorization Certificate" in Section
1.1 of the Declaration is hereby amended to read in its entirety as follows:
""TRUSTEES' AUTHORIZATION CERTIFICATE" means a written certificate
signed by two of the Regular Trustees for the purpose of establishing
or amending the terms and form of the Preferred Securities and the
Common Securities in accordance with Section 7.1."
3. The last sentence of Section 3.1 of the Declaration is hereby amended
to read in its entirety as follows:
"This Declaration, as amended or supplemented from time to time,
and any Trustees' Authorization Certificate, if and when issued,
shall constitute the governing instrument of the Trust."
4. Section 3.6(a) of the Declaration is hereby amended to read in its
entirety as follows:
"(a) to establish or amend the terms and form of the Preferred
Securities and the Common Securities in the manner specified in
Section 7.1 and issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; PROVIDED,
HOWEVER, that the Trust may issue no more than one series of
Preferred Securities and no more than one series of Common Securities
and, PROVIDED FURTHER, there shall be no interests in the Trust other
than the Securities, and the issuance of the Securities shall be
limited to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities on the Closing Date;"
5. Section 3.6(d) of the Declaration is hereby amended to read in its
entirety as follows:
"(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event (as defined in the terms
of the Securities);"
6. Section 3.6(m) of the Declaration is hereby amended to read in its
entirety as follows:
"(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election
(i) to defer payments of interest on the Debentures by extending the
interest payment period under the Indenture, or (ii) to shorten or
extend the maturity date on the Debentures;"
7. The last unnumbered paragraph of Section 3.6 of the Declaration is
hereby amended to read in its entirety as follows:
"Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be paid by the Sponsor in accordance with
Section 4.3."
8. Section 3.8(c)(iii) of the Declaration is hereby amended to read in
its entirety as follows:
"(iii) upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in
such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to the Holders of the
Securities upon the Sponsor's election to dissolve the Trust in
accordance with Section 8.1(a)(v)."
9. Section 3.10(a)(ii) of the Declaration is hereby amended to read in
its entirety as follows:
"any direction or act of the Sponsor or the Regular Trustees as
contemplated by this Declaration shall be sufficiently evidenced by
an Officers' Certificate (or, with respect to the establishment or
amendment of the terms and form of the Securities by the Regular
Trustees in accordance with Section 7.1, by a Trustees' Authorization
Certificate);"
10. Section 3.14 of the Declaration is hereby amended to read in its
entirety as follows:
"The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence for fifty-five (55) years from the
Closing Date."
11. A new Section 4.3 is hereby added to the Declaration to read in its
entirety as follows:
"Expenses.
(a) The Sponsor shall be responsible for and shall pay all debts
and obligations (other than with respect to the Securities) and all
costs and expenses of the Trust (including, but not limited to, costs
and expenses relating to the organization of the Trust, the issuance
and sale of the Preferred Securities, the fees and expenses (including
reasonable counsel fees and expenses) of the Trustees, the costs and
expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or
accounting equipment, Paying Agents(s), registrar(s), transfer
agents(s), duplication, travel and telephone and other tele-
communications expenses and costs and expenses incurred in connection
with the disposition of Trust assets).
(b) The Sponsor will pay any and all taxes (other than United
States withholding taxes attributable to the Trust or its assets)
and all liabilities, costs and expenses with respect to such taxes
of the Trust.
(c) The Sponsor's obligations under this Section 4.3 shall be for
the benefit of, and shall be enforceable by, any Person to whom any
such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice hereof.
Any such Creditor may enforce the Sponsor's obligations under this
Section 4.3 directly against the Sponsor and the Sponsor irrevocably
waives any right or remedy to require that any such Creditor take any
action against the Trust or any other Person before proceeding against
the Sponsor. The Sponsor agrees to execute such additional agreements
as may be necessary or desirable in order to give full effect to the
provisions of this Section 4.3."
12. A new Section 4.4 is hereby added to the Declaration to read in its
entirety as follows:
"Right to Dissolve Trust.
The Sponsor shall have the right at any time after the Closing
Date to elect to dissolve the Trust in accordance with the terms of
the Securities and to direct the Property Trustee to take such action
as shall be necessary to distribute the Debentures to the Holders of
the Securities in exchange for all of the Securities."
13. A new Section 4.5 is hereby added to the Declaration to read in its
entirety as follows:
"Direct Right of Action.
Notwithstanding any provision of this Declaration to the
contrary, any Holder of Securities may enforce directly against
the Sponsor the obligation of the Sponsor under Section 3.1 of the
base Indenture to duly and punctually pay the principal and interest
when due under the Debentures and the Sponsor irrevocably waives any
right or remedy to require that any such Holder take any action
against the Trust or any other Person before proceeding against the
Sponsor."
14. Section 6.1 of the Declaration is hereby amended to read in its
entirety as follows:
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's
Securities. Distributions shall be made on the Preferred Securities
and the Common Securities in accordance with the preferences set forth
in their respective terms. If and to the extent that the Debenture
Issuer makes a payment of interest (including "Compounded Interest" as
defined in the Indenture) or principal on the Debentures held by the
Property Trustee (the amount of any such payment being a "Payment
Amount"), the Property Trustee shall and is directed, to the extent
funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders.
15. Section 7.1(a) of the Declaration is hereby amended to read in its
entirety as follows:
(a) The Regular Trustee shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial
interests in the assets of the Trust (the "Preferred Securities")
having such terms and in such form as are set forth in Annex I
attached hereto (as such Annex I may be amended from time to time in
accordance with the provisions of this Declaration) and which Annex I
is incorporated herein by this reference, and one class of common
securities representing undivided beneficial interests in the assets
of the Trust (the "Common Securities") having such terms and in such
form as are set forth in Annex I (as such Annex I may be amended from
time to time in accordance with the provisions of this Declaration).
Prior to the issuance of the Preferred Securities and the Common
Securities on the Closing Date, the terms and form of the Preferred
Securities or the Common Securities may be amended or established
by the Regular Trustees pursuant to a Trustees' Authorization
Certificate. The Trust shall issue no securities or other interests
in the assets of the Trust other than the Preferred Securities and the
Common Securities.
16. Section 8.1(a)(v) of the Declaration is hereby amended to read in
its entirety as follows:
"(v) an election by the Sponsor, effective upon notice to the Trust,
the Property Trustee and the Delaware Trustee, to dissolve the Trust
in accordance with the terms of the Securities and the distribution
of all of the Debentures to the Holders of the Securities in exchange
for all of the Securities;"
17. Except is as specifically provided herein, this Amendment shall not
be deemed to amend or modify the Declaration. The Declaration, as modified
herein, is in all respects ratified and confirmed by the Parties, and the
terms, covenants and agreements therein, as amended by this Amendment, shall
remain in full force and effect.
18. This Amendment may be executed in any number of counterparts each
of which shall be an original; but such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
EQUITABLE OF IOWA COMPANIES, as Sponsor
and Debenture Issuer
By:____________________________________
Name:__________________________________
Title:_________________________________
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
By:____________________________________
Name:__________________________________
Title:_________________________________
FIRST CHICAGO DELAWARE, INC.,
as Delaware Trustee
By:____________________________________
Name:__________________________________
Title:_________________________________
_______________________________________
Fred S. Hubbell, as Regular Trustee
_______________________________________
Paul E. Larson, as Regular Trustee
_______________________________________
John A. Merriman, as Regular Trustee
ANNEX I
TERMS OF
_____% TRUST ORIGINATED PREFERRED SECURITIES
_____% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Declaration of Trust, dated as of March 19,
1996 (as amended from time to time, the "Declaration"), the designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities and the Common Securities are set forth below (each
capitalized term used but not defined herein having the meaning set forth in
the Declaration or, if not defined in the Declaration, as defined in the
Prospectus referred to below):
1. Designation and Number.
(a) PREFERRED SECURITIES. [__________] Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust
of ____________________ Dollars ($__________) and a liquidation amount with
respect to the assets of the Trust of $25 per Preferred Security, are hereby
designated for the purposes of identification only as "____% Trust Originated
Preferred SecuritiesSM ('TOPrS'SM)" (the "Preferred Securities"). The Preferred
Security Certificates evidencing the Preferred Securities shall be substantially
in the form of Exhibit A-l hereto, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice or
to conform to the rules of any stock exchange on which the Preferred Securities
are listed.
(b) COMMON SECURITIES. [ ] Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of [ ]
Dollars ($[ ]) and a liquidation amount with respect to the assets of
the Trust of $25 per Common Security, are hereby designated for the purposes of
identification only as "____% Trust Originated Common Securities" (the "Common
Securities"). The Common Security Certificates evidencing the Common Securities
shall be substantially in the form of Exhibit A-2 hereto, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of ____% (the "Coupon Rate") of the stated liquidation amount of $25
per Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than
one quarter will bear interest thereon from and including the last day of
such quarter at the Coupon Rate compounded quarterly (to the extent permitted
by applicable law). The term "Distributions" as used herein includes such
cash distributions and any such interest payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect
of the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter
than a full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue from
_______________, 1996, and will be payable quarterly in arrears, on March 31,
June 30, September 30 and December 31 of each year, commencing on
_______________________, 1996, except as otherwise described below. The
Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period at any
time and from time to time for a period not exceeding 20 consecutive quarters
(each an "Extension Period"), during which Extension Period no interest shall
be due and payable on the Debentures, PROVIDED THAT no Extension Period shall
last beyond the date of maturity of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the Coupon Rate compounded quarterly during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period, PROVIDED THAT
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters and may not extend beyond the
date of maturity of the Debentures. Payments of deferred Distributions will be
payable to Holders of record of the Securities as they appear on the books and
records of the Trust on the record date for Distributions due at the end of such
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in global form, the
relevant record dates shall be one Business Day prior to the relevant payment
dates which payment dates correspond to the interest payment dates on the
Debentures. Subject to any applicable laws and regulations and the provisions
of the Declaration, each such payment in respect of the Preferred Securities
will be made as described under the heading "Description of the Preferred
Securities -- Book-Entry Issuance -- The Depository Trust Company" in the
Prospectus Supplement dated __________, 1996, to the Prospectus dated
___________, 1996 (together, the "Prospectus") included in the Registration
Statement on Form S-3 of the Sponsor and the Trust. The relevant record dates
for the Common Securities shall be the same record date as for the Preferred
Securities. If the Preferred Securities shall not continue to remain in global
form, the relevant record dates for the Preferred Securities shall conform to
the rules of any securities exchange on which the Preferred Securities are
listed and, if none, shall be selected by the Regular Trustees, which dates
shall be at least one Business Day but less than 60 Business Days before the
relevant payment dates, which payment dates correspond to the interest payment
dates on the Debentures. Distributions payable on any Securities that are not
punctually paid on any Distribution payment date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, will cease to be
payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable
to the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
(a) In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the liquidation, dissolution, winding-up or termination, as the case may
be, will be entitled to receive solely out of the assets of the Trust available
for distribution to Holders of Securities, after satisfaction of liabilities of
creditors, an amount equal to the aggregate of the stated liquidation amount of
$25 per Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such liquidation, dissolution, winding-up or termination,
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Securities, with an interest rate equal to the
Coupon Rate of, and bearing accrued and unpaid interest in an amount equal to
the accrued and unpaid Distributions on, such Securities, shall be distributed
on a Pro Rata basis to the Holders of the Securities in exchange for such
Securities in accordance with Section 4(e) hereof.
(b) If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part, whether at
maturity or upon redemption (such redemption being either at the option of the
Debenture Issuer on or after _______________, 2001 or at the option of the
Debenture Issuer in connection with the occurrence of a Special Event as
described below), the proceeds from such repayment or redemption shall be
simultaneously applied to redeem Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Debentures so repaid or
redeemed at a redemption price of $25 per Security plus an amount equal to
accrued and unpaid Distributions thereon at the date of the redemption, payable
in cash (the "Redemption Price"). Holders will be given not less than 30 nor
more than 60 days notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Preferred Securities will be redeemed Pro Rata
and the Preferred Securities to be redeemed will be as described in Section
4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event (each as
defined below, and each a "Special Event") shall occur and be continuing the
Debenture Issuer shall have the right, upon not less than 30 nor more than 60
days notice, to redeem the Debentures in whole (but not in part) for cash within
90 days following the occurrence of such Special Event, and, following such
redemption, Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so redeemed shall be redeemed by
the Trust at the Redemption Price on a Pro Rata basis in accordance with
Section 8 hereof. The Common Securities will be redeemed Pro Rata with the
Preferred Securities, except that if an Event of Default has occurred and is
continuing, the Preferred Securities will have priority over the Common
Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have received an opinion
of an independent tax counsel experienced in such matters to the effect that, as
a result of (i) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or (ii) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Preferred Securities, there is more than an insubstantial risk
that (A) the Trust is, or will be within 90 days after the date thereof, subject
to United States federal income tax with respect to interest accrued or received
on the Debentures, (B) the Trust is, or will be within 90 days after the date
thereof, subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (C) interest payable by the Debenture Issuer to the
Trust on the Debentures is not, or within 90 days of the date thereof, will not
be deductible, in whole or in part, by the Debenture Issuer for United States
federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of an independent counsel experienced in practice under
the Investment Company Act to the effect that, as a result of the occurrence
of a change in law or regulation or a change in interpretation or application
of law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is a more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the Investment Company Act,
which Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Preferred Securities.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities
for all quarterly Distribution periods terminating on or before the date of
redemption.
(e) In the event that the Sponsor makes the election referred to in
Section 8.1(a)(v) of the Declaration, the Regular Trustees shall dissolve the
Trust and, after satisfaction of creditors, cause Debentures, held by the
Property Trustee, having an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the Coupon
Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on and having the same record date for payment, as the Securities,
to be distributed to the Holders of the Securities in liquidation of such
Holders' interests in the Trust on a Pro Rata basis in accordance with Section 8
hereof. On and from the date fixed by the Regular Trustees for any distribution
of Debentures and dissolution of the Trust: (i) the Securities will no longer
be deemed to be outstanding, and (ii) the Depositary or its nominee (or any
successor Depository or its nominee) will receive one or more global certificate
or certificates representing the Debentures to be delivered upon such
distribution, and having an aggregate principal amount equal to the aggregated
stated liquidation amount of, with an interest rate identical to the Coupon Rate
of, and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities. Any certificates representing Securities, except for
certificates representing Preferred Securities held by the Depositary or its
nominee (or any successor Clearing Agency or its nominee), will be deemed to
represent beneficial interests in the Debentures having an aggregate principal
amount equal to the aggregated stated liquidation amount of, with an interest
rate identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on such Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissue. If the
Debentures are distributed to Holders of the Securities, pursuant to the terms
of the Indenture, the Debenture Issuer will use its best efforts to have the
Debentures listed on the New York Stock Exchange or on such other exchange as
the Preferred Securities were listed immediately prior to the distribution of
the Debentures.
(f) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of Debentures
in exchange for the Securities (a "Redemption/Distribution Notice") will be
given by the Trust by mail to each Holder of Securities to be redeemed or
exchanged not fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For purposes of the calculation of
the date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(f)(i), a Redemption/Distribution Notice shall be
deemed to be given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of Securities at the address of each such
Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to
be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from
each Holder of Preferred Securities, it being understood that, in respect of
Preferred Securities registered in the name of and held of record by the
Depositary or its nominee (or any successor Clearing Agency or its nominee),
the distribution of the proceeds of such redemption will be made to each
Clearing Agency Participant (or Person on whose behalf such nominee holds such
securities) in accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (which notice will be irrevocable), then (A)
while the Preferred Securities are in global form, with respect to the
Preferred Securities, by 12:00 noon, New York City time, on the redemption
date, provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Debentures, the Property Trustee will deposit irrevocably with the
Depositary or its nominee (or successor Clearing Agency or its nominee) funds
sufficient to pay the applicable Redemption Price with respect to the Preferred
Securities and will give the Depositary irrevocable instructions and authority
to pay the Redemption Price to the Holders of the Preferred Securities, and
(B) with respect to Preferred Securities issued in definitive form and Common
Securities, provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Debentures, the Property Trustee will pay the relevant Redemption Price
to the Holders of such Securities by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on the redemption date.
If a Redemption/Distribution Notice shall have been given and funds deposited as
required, then immediately prior to the close of business on the date of such
deposit, Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for redemption
will cease, except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities 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 (and 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 fixed for redemption. If the Debenture Issuer
fails to repay the Debentures on maturity or if payment of the Redemption
Price in respect of any Securities is improperly withheld or refused and not
paid either by the Property Trustee or by the Sponsor as guarantor pursuant
to the relevant Securities Guarantee, Distributions on such Securities will
continue to accrue at the then applicable rate from the original redemption
date to the actual date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees
on behalf of the Trust to (A) in respect of the Preferred Securities, the
Depositary or its nominee (or any successor Clearing Agency or its nominee) if
the Global Certificates have been issued or, if Definitive Preferred Security
Certificates have been issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Sponsor or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 5(b) and 7 and as otherwise required
by law and the Declaration, the Holders of the Preferred Securities will have no
voting rights.
(b) Subject to the requirements set forth in this paragraph, the Holders
of a Majority in Liquidation Amount of the Preferred Securities, voting
separately as a class, may direct the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee, or direct
the exercise of any trust or power conferred upon the Property Trustee under
the Declaration, including the right to direct the Property Trustee, as
Holder of the Debentures, to (i) exercise the remedies available under the
Indenture with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under the Indenture, or (iii) exercise any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable, or consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent would be required; PROVIDED
THAT where a consent or action under the Indenture would require the consent or
act of the Holders of greater than a majority in principal amount of Debentures
affected thereby (a "Super Majority"), the Property Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Preferred Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. The Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of the Preferred
Securities. Other than with respect to directing the time, method and place of
conducting a proceeding for any remedy available to the Property Trustee or the
Debenture Trustee as set forth above, the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Preferred
Securities under this paragraph unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Property Trustee fails to enforce its
rights with respect to the Debentures held by the Trust, any Holder of Preferred
Securities may institute legal proceedings directly against the Debenture Issuer
to enforce the Property Trustee's rights under the Debentures without first
instituting any legal proceedings against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, if an Event of Default under
the Declaration has occurred and is continuing and such event is attributable
to the failure of the Debenture Issuer to pay interest or principal on the
Debentures issued to the Trust on the date such interest or principal is
otherwise payable, then a Holder of Preferred Securities may institute a
proceeding directly against the Debenture Issuer for enforcement of payment
to the Holder of the Preferred Securities of the principal of or interest on
the Debentures on or after the respective due dates specified in the Debentures,
and the amount of the payment will be based on the Holder's pro rata share of
the amount due and owing on all of the Preferred Securities.
Any approval or direction of Holders of Preferred Securities may be given
at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of Preferred Securities. Each such notice will include
a statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), (c) and 7 and as otherwise
required by law and the Declaration, the Holders of the Common Securities
will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with
Article V of the Declaration, to vote to appoint, remove or replace any Trustee
or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the Event
of Default with respect to the Preferred Securities has been cured, waived or
otherwise eliminated and subject to the requirements set forth in this
paragraph, the Holders of a Majority in Liquidation Amount of the Common
Securities, voting separately as a class, may direct the time, method and
place of conducting any proceeding for any remedy available to the Property
Trustee, or direct the exercise of any trust or power conferred upon the
Property Trustee under the Declaration, including the right to direct the
Property Trustee, as Holder of the Debentures, to (i) exercise the remedies
available under the Indenture with respect to the Debentures, (ii) waive any
past default and its consequences that is waivable under the Indenture, or
(iii) exercise any right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable, or consent to any amendment,
modification or termination of the Indenture or the Debentures, where such
consent would be required; PROVIDED THAT, where a consent or action under the
Indenture would require the consent or act of a Super Majority of the Holders
of the Debentures affected thereby, the Property Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Common Securities which the relevant
Super Majority represents of the aggregate principal amount of the Debentures
outstanding. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Common Securities. Other
than with respect to directing the time, method and place of conducting a
proceeding for any remedy available to the Property Trustee or the Debenture
Trustee as set forth above, the Property Trustee shall not take any action in
accordance with the directions of the Holders of the Common Securities under
this paragraph unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action. If the Property Trustee fails to enforce its rights with respect to
the Debentures held by the Trust, any Holder of Common Securities may institute
legal proceedings directly against the Debenture Issuer to enforce the Property
Trustee's rights under the Debentures without first instituting any legal
proceedings against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default under the Declaration has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures issued to the
Trust on the date such interest or principal is otherwise payable, then a Holder
of Common Securities may institute a proceeding directly against the Debenture
Issuer for enforcement of payment to the Holder of the Common Securities of
the principal of or interest on the Debentures on or after the respective due
dates specified in the Debentures, and the amount of the payment will be based
on the Holder's pro rata share of the amount due and owing on all of the Common
Securities.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be required
for the Trust to redeem and cancel Common Securities or to distribute the
Debentures in accordance with the Declaration and the terms of the Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the Declaration,
if any proposed amendment to the Declaration provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Securities, whether by way of
amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up
or termination of the Trust, other than as described in Section 8.1 of the
Declaration, then the Holders of outstanding Securities voting together as a
single class, will be entitled to vote on such amendment or proposal (but not
on any other 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 Securities affected thereby, voting together as a
single class; PROVIDED, HOWEVER, if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or only
the Common Securities, then only the affected 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 a Majority in Liquidation Amount of such class of
Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the Property
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination and shall vote
with respect to such amendment, modification or termination as directed by a
Majority in Liquidation Amount of the Securities voting together as a single
class; PROVIDED, HOWEVER, that where a consent under the Indenture would
require the consent of a Super Majority of the Holders of the Debentures, the
Property Trustee may only give such consent at the direction of the Holders
of at least the proportion in liquidation amount of the Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding; PROVIDED, FURTHER, that the Property Trustee shall
not take any action in accordance with the directions of the Holders of the
Securities under this Section 7(b) unless the Property Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified as other than a
grantor trust on account of such action.
8. Pro Rata.
A reference in these terms of the Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder of
Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities,
to each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Preferred Securities rank PARI PASSU and payment thereon shall be
made Pro Rata with the Common Securities except that, where an Event of
Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Preferred Securities.
10. Listing.
The Regular Trustees shall use their best efforts to cause the Preferred
Securities to be listed for quotation on the New York Stock Exchange, Inc.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT -
This Preferred Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered
in the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company ("DTC") to the Trust or its
agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of DTC and any payment hereon is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO. 294513 20 5
Certificate Evidencing Preferred Securities
of
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST
____% Trust Originated Preferred SecuritiesSM ("TOPrS"SM)
(liquidation amount $25 per Preferred Security)
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that ___________________________________________ (the "Holder") is
the registered owner of preferred securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the
____% Trust Originated Preferred SecuritiesSM (liquidation amount $25 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities
are transferable on the books and records of the Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Declaration of Trust of the Trust dated as of March
19, 1996, as the same may be amended from time to time (the "Declaration''),
including the designation of the terms of the Preferred Securities as set
forth in Annex I to the Declaration. Capitalized terms used herein but not
defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Preferred Securities Guarantee to the extent
provided therein. The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day of
___________________, 199___.
___________________________________
as Trustee
By: _______________________________
Name: _____________________________
Title: ______________________________
___________________________________
,as Trustee
___________________________________
,as Trustee
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert assignee's social security or tax identification number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_____________________________________________________________________________
_____________________________________________________________________________
___________________________________________ agent to transfer this Preferred
Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: __________________
Signature: _____________________________
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST
_____% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that ___________________ (the "Holder") is the registered owner of
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the _____% Trust Originated Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). The
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject
to the provisions of the Declaration of Trust of the Trust dated as of March 19,
1996, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth
in Annex I to the Declaration. Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled to
the benefits of the Common Securities Guarantee to the extent provided therein.
The Sponsor will provide a copy of the Declaration, the Common Securities
Guarantee and the Indenture to a Holder without charge upon written request to
the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day of
________________, 199___.
___________________________________
as Trustee
By: _______________________________
Name: _____________________________
Title: ______________________________
___________________________________
,as Trustee
___________________________________
,as Trustee
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert assignee's social security or tax identification number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_____________________________________________________________________________
_____________________________________________________________________________
______________________________________________________________agent to
transfer this Common Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date: ________________________
Signature: ______________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
EXHIBIT 4.10
=====================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
EQUITABLE OF IOWA COMPANIES CAPITAL TRUST
Dated as of ___________, 1996
=====================================================================
CROSS REFERENCE TABLE*
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c)
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d); 3.2(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7(a)
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6; 5.4(a)
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10; 5.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
______________________
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not have any bearing upon the interpretation of any of
its terms or provisions.
TABLE OF CONTENTS
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
SECTION 2.2 Lists of Holders of Securities
SECTION 2.3 Reports by Preferred Guarantee Trustee
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
SECTION 2.5 Evidence of Compliance with Conditions Precedent
SECTION 2.6 Guarantee Event of Default; Waiver
SECTION 2.7 Guarantee Event of Default; Notice
SECTION 2.8 Conflicting Interests
SECTION 2.9 Disclosure of Information
SECTION 2.10 Preferred Guarantee Trustee May File Proofs of
Claim
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Preferred Guarantee Trustee
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
SECTION 3.3 Not Responsible for Recitals or Issuance of
Guarantee
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
SECTION 4.2 Appointment, Removal and Resignation of
Preferred Guarantee Trustee
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
SECTION 5.2 Waiver of Notice and Demand
SECTION 5.3 Obligations Not Affected
SECTION 5.4 Rights of Holders
SECTION 5.5 Guarantee of Payment
SECTION 5.6 Subrogation
SECTION 5.7 Independent Obligations
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
SECTION 6.2 Ranking
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
SECTION 8.2 Indemnification
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
SECTION 9.2 Amendments
SECTION 9.3 Notices
SECTION 9.4 Benefit
SECTION 9.5 Governing Law
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of _______, 1996, is executed and delivered by Equitable of Iowa
Companies, an Iowa corporation (the "Guarantor"), and The First National Bank
of Chicago, as trustee (the "Preferred Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Equitable of Iowa Companies Capital Trust,
a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to the Declaration (as defined herein), the Issuer is
issuing on the date hereof [ ] preferred securities, having an
aggregate liquidation amount of [ $ ], designated the ____% Trust
Originated Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (as amended, modified or supplemented from time to time, the
"Common Securities Guarantee") in substantially identical terms to this
Preferred Securities Guarantee 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 payments under the Common
Securities Guarantee are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments under this Preferred Securities
Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Interpretation and Definitions.
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guarantee but
not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee has
the same meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to Articles
and Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"AFFILIATE" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"BUSINESS DAY" means any day other than a day on which banking
institutions in New York, New York are authorized or required by law to
close.
"COMMON SECURITIES" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"CORPORATE TRUST OFFICE" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Preferred Securities Guarantee is
located at One First National Plaza - Suite 0126, Chicago, Illinois 60670-
0126, Attention: Corporate Trust Services Division; telecopy no. (312) 407-
1708.
"COVERED PERSON" means any Holder or beneficial owner of Preferred
Securities.
"DEBENTURES" means the series of subordinated deferrable interest
debentures to be issued by the Guarantor designated the ___% Subordinated
Deferrable Interest Debentures due 2026 held by the Property Trustee (as
defined in the Declaration) of the Issuer.
"DECLARATION" means the Declaration of Trust, dated as of March 19,
1996, as amended, modified or supplemented from time to time, among the
trustees of the Issuer named therein, the Guarantor, as sponsor, and the
Holders from time to time of undivided beneficial interests in the assets of
the Issuer.
"GUARANTEE EVENT OF DEFAULT" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.
"GUARANTEE PAYMENTS" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Preferred
Securities to the extent the Issuer shall have funds available therefor, (ii)
the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price") to the extent the Issuer has
funds available therefor, with respect to any Preferred Securities called for
redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Declaration or the redemption of all
the Preferred Securities upon maturity or redemption of the Debentures as
provided in the Declaration), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution"). 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 payments under the Common Securities Guarantee
are subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments under this Preferred Securities Guarantee.
"HOLDER" shall mean any holder, as registered on the books and records
of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor;
and provided further, that in determining whether the Holders of the
requisite liquidation amount of Preferred Securities have voted on any matter
provided for in this Preferred Securities Guarantee, then for the purpose of
such determination only (and not for any other purpose hereunder), if the
Preferred Securities remain in the form of one or more Global Certificates
(as defined in the Declaration), the term "Holders" shall mean the holder of
the Global Certificate acting at the direction of the Preferred Security
Beneficial Owners (as defined in the Declaration).
"INDEMNIFIED PERSON" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"INDENTURE" means the Indenture dated as of January 17, 1995, among the
Guarantor (the "Debenture Issuer") and The First National Bank of Chicago, as
trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the Property Trustee (as defined in the
Declaration) of the Issuer.
"MAJORITY IN LIQUIDATION AMOUNT OF THE PREFERRED SECURITIES" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Preferred Securities, voting
separately as a class, who are the record holders of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
of all outstanding Preferred Securities. In determining whether the Holders
of the requisite amount of Preferred Securities have voted, Preferred
Securities which are owned by the Guarantor or any Affiliate of the Guarantor
or any other obligor on the Preferred Securities shall be disregarded for the
purpose of any such determination.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed by two Authorized Officers (as defined in the Declaration) of such
Person. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Preferred Securities Guarantee
shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each 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, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"PREFERRED GUARANTEE TRUSTEE" means The First National Bank of Chicago,
until a Successor Preferred Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Preferred Securities
Guarantee and thereafter means each such Successor Preferred Guarantee
Trustee.
"RESPONSIBLE OFFICER" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant
vice-president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer or other officer of the Corporate Trust Office of the
Preferred Guarantee Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"SUCCESSOR PREFERRED GUARANTEE TRUSTEE" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Preferred Securities Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee 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 Lists of Holders of Securities.
(a) The Guarantor shall provide the Preferred Guarantee Trustee with a
list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and addresses of the Holders of the Preferred Securities ("List
of Holders"), (i) within one Business Day after January 1 and June 30 of each
year and current as of such date, and (ii) at any other time, within 30 days
of receipt by the Guarantor of a written request from the Preferred Guarantee
Trustee for a List of Holders as of a date no more than 14 days before such
List of Holders is given to the Preferred Guarantee Trustee; provided, that
the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Preferred Guarantee Trustee by the Guarantor. The Preferred
Guarantee Trustee shall preserve, in as current a form as is reasonably
practicable, all information contained in Lists of Holders given to it,
provided that it may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by Preferred Guarantee Trustee.
Within 60 days after May 15 of each year (commencing with the year of
the first anniversary of the issuance of the Preferred Securities), the
Preferred Guarantee Trustee shall provide to the Holders of the Preferred
Securities 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. The Preferred Guarantee Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) 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.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.
SECTION 2.6 Guarantee Event of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Guarantee Event of Default and its consequences.
Upon such waiver, any such Guarantee Event of Default shall cease to exist,
and any Guarantee Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Preferred Securities Guarantee, but no
such waiver shall extend to any subsequent or other default or Guarantee
Event of Default or impair any right consequent thereon.
SECTION 2.7 Guarantee Event of Default; Notice.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of a Guarantee Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Guarantee Events of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee, unless such defaults have been cured before the
giving of such notice; provided, that the Preferred Guarantee Trustee shall
be protected in withholding such notice if and so long as a Responsible
Officer of the Preferred Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the
Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Guarantee Event of Default unless the Preferred Guarantee
Trustee shall have received written notice thereof, or a Responsible Officer
of the Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge thereof.
SECTION 2.8 Conflicting Interests.
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 2.9 Disclosure of Information.
The disclosure of information as to the names and addresses of the
Holders of the Preferred Securities in accordance with Section 312 of the
Trust Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or any
law hereafter enacted which does not specifically refer to Section 312 of the
Trust Indenture Act, nor shall the Preferred Guarantee Trustee be held
accountable by reason of mailing any material pursuant to a request made
under Section 312(b) of the Trust Indenture Act.
SECTION 2.10 Preferred Guarantee Trustee May File Proofs of Claim.
Upon the occurrence of a Guarantee Event of Default, the Preferred
Guarantee Trustee is hereby authorized to (a) recover judgment, in its own
name and as trustee of an express trust, against the Guarantor for the whole
amount of any Guarantee Payments remaining unpaid and (b) file such proofs of
claim and other papers or documents as may be necessary or advisable in order
to have its claims and those of the Holders of the Preferred Securities
allowed in any judicial proceedings relative to the Guarantor, its creditors
or its property.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of Preferred Guarantee Trustee.
(a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee on behalf of the Issuer for the benefit of the Holders of
the Preferred Securities, and the Preferred Guarantee Trustee shall not
transfer this Preferred Securities Guarantee to any Person except a Holder of
Preferred Securities exercising his or her rights pursuant to Section 5.4(b)
or to a Successor Preferred Guarantee Trustee on acceptance by such Successor
Preferred Guarantee Trustee of its appointment to act as Successor Preferred
Guarantee Trustee. The right, title and interest of the Preferred Guarantee
Trustee in and to this Preferred Securities Guarantee shall automatically
vest in any Successor Preferred Guarantee Trustee, 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 Preferred Guarantee Trustee.
(b) If a Guarantee Event of Default actually known to a Responsible
Officer of the Preferred Guarantee Trustee has occurred and is continuing,
the Preferred Guarantee Trustee shall enforce this Preferred Securities
Guarantee for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Guarantee Event of Default and after the curing of all Guarantee Events of
Default that may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee. In case a Guarantee Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) and
is actually known to a Responsible Officer of the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall exercise such of the rights
and powers vested in it by this Preferred Securities Guarantee, 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 Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Guarantee Event of Default and after
the curing or waiving of all such Guarantee Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred Guarantee Trustee
shall be determined solely by the express provisions of this Preferred
Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred Securities Guarantee against
the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred 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 Preferred
Guarantee Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such certificates or opinions
that by any provision hereof are specifically required to be furnished to the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred 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 Preferred Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Preferred Guarantee Trustee, or exercising any trust or power conferred upon
the Preferred Guarantee Trustee under this Preferred Securities Guarantee;
and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred 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 Preferred
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 Preferred Securities Guarantee or indemnity, reasonably
satisfactory to the Preferred Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document 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
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal matters shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance
with such advice or opinion. Such counsel may be counsel to the Guarantor or
any of its Affiliates and may include any of its employees. The Preferred
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Preferred Securities Guarantee from any
court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the Preferred Guarantee Trustee such security
and indemnity, reasonably satisfactory to the Preferred Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses and the
expenses of the Preferred Guarantee Trustee's agents, nominees or custodians)
and liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by the
Preferred Guarantee Trustee; provided, that nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee, upon
the occurrence of a Guarantee Event of Default, of its obligation to exercise
the rights and powers vested in it by this Preferred Securities Guarantee.
(vii) The Preferred 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 Preferred Guarantee Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by or
through agents, nominees, custodians or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and the
signature of the Preferred Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall be
required to inquire as to the authority of the Preferred Guarantee Trustee to
so act or as to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be conclusively evidenced
by the Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Preferred Guarantee Trustee (i) may request
instructions from the Holders of a Majority in Liquidation Amount of the
Preferred Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii)
shall be protected in conclusively relying on or acting in accordance with
such instructions.
(b) No provision of this Preferred Securities Guarantee shall be deemed
to impose any duty or obligation on the Preferred 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 Preferred 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 Preferred Guarantee Trustee shall be
construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency
of this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
Section 4.1 Preferred Guarantee Trustee; Eligibility.
(a) There shall be at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted
by the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial
or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii), 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 Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
Section 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustee.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee
Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Preferred Guarantee
Trustee and delivered to the Guarantor, which resignation shall not take
effect until a Successor Preferred Guarantee Trustee has been appointed and
has accepted such appointment by instrument in writing executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor and the
resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal
or resignation of the Preferred Guarantee Trustee pursuant to this Section
4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all amounts
owing for fees and reimbursement of expenses which have accrued to the date
of such termination, removal or resignation.
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 the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
Section 5.2 Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands. Notwithstanding anything to
the contrary herein, the Guarantor retains all of its rights under the
Indenture to (i) extend the interest payment period on the Debentures and the
Guarantor shall not be obligated hereunder to make any Guarantee Payments
during any Extended Interest Payment Period (as defined in the Indenture)
with respect to the Distributions (as defined in the Declaration) on the
Preferred Securities, and (ii) change the maturity date of the Debentures to
the extent permitted by the Indenture.
Section 5.3 Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Preferred Securities Guarantee shall be absolute and unconditional and
shall remain in full force and effect until the entire liquidation amount of
all outstanding Preferred Securities shall have been paid and such obligation
shall in no way be affected or impaired by reason of the happening from time
to time of any event, including without limitation, the following, whether or
not with notice to, or the consent of, the Guarantor:
(a) The release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) The extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Preferred Securities or
the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Preferred Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the
extension of any interest payment period on the Debentures or any change
to the maturity date of the Debentures permitted by the Indenture);
(c) Any failure, omission, delay or lack of diligence on the part of the
Property Trustee or the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Property Trustee or the
Holders pursuant to the terms of the Preferred Securities, or any action
on the part of the Issuer granting indulgence or extension of any kind;
(d) The voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) Any invalidity of, or defect or deficiency in, the Preferred
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, 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 Preferred Guarantee Trustee or the
Holders to give notice to, or obtain consent of, the Guarantor or any other
Person with respect to the happening of any of the foregoing.
No setoff, counterclaim, reduction or diminution of any obligation, or
any defense of any kind or nature that the Guarantor has or may have against
any Holder shall be available hereunder to the Guarantor against such Holder
to reduce the payments to it under this Preferred Securities Guarantee.
SECTION 5.4 Rights of Holders.
(a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting
of any proceeding for any remedy available to the Preferred Guarantee Trustee
in respect of this Preferred Securities Guarantee or exercising any trust or
power conferred upon the Preferred Guarantee Trustee under this Preferred
Securities Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce this Preferred
Securities Guarantee, then any Holder of Preferred Securities may institute a
legal proceeding directly against the Guarantor to enforce the Preferred
Guarantee Trustee's rights under this Preferred Securities Guaranee without
first instituting a legal proceeding against the Issuer, the Preferred
Guarantee Trustee or any other person or entity. Notwithstanding the
foregoing, if the Guarantor has failed to make a Guarantee Payment, a Holder
of Preferred Securities may directly institute a proceeding against the
Guarantor for enforcement of the Preferred Securities Guarantee for such
payment to the Holder of the Preferred Securities of the principal of or
interest on the Debentures on or after the respective due dates specified in
the Debentures, and the amount of the payment will be based on the Holder's
pro rata share of the amount due and owing on all of the Preferred
Securities. The Guarantor hereby waives any right or remedy to require that
any action on this Preferred Securities Guarantee be brought first against
the Issuer or any other person or entity before proceeding directly against
the Guarantor.
SECTION 5.5 Guarantee of Payment.
This Preferred Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.6 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
of Preferred Securities against the Issuer in respect of any amounts paid to
such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise
any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. 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 Preferred Guarantee Trustee for the benefit of the
Holders.
SECTION 5.7 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if there shall
have occurred a Guarantee Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its capital stock, (b) the
Guarantor shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Guarantor which rank pari passu with or junior to
the Debentures and (c) the Guarantor shall not make any guarantee payments
with respect to the foregoing (other than pursuant to this Preferred
Securities Guarantee); provided, however, the Guarantor may declare and pay a
stock dividend where the dividend stock is the same stock as that on which
the dividend is being paid.
SECTION 6.2 Ranking.
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor, except those
liabilities of the Guarantor made pari passu or subordinate by their terms,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Guarantor and with any guarantee now or hereafter
entered into by the Guarantor in respect of any preferred or preference stock
of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common
stock.
If an Event of Default has occurred and is continuing under the
Declaration, the rights of the holders of the Common Securities to receive
any payments under the Common Securities Guarantee Agreement shall be
subordinated to the rights of the Holders of Preferred Securities to receive
Guarantee Payments hereunder.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in accordance
with the Declaration upon liquidation of the Issuer. Notwithstanding the
foregoing, this Preferred Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any Holder of
Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters
the Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Preferred Securities might
properly be paid.
SECTION 8.2 Indemnification.
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The obligation to indemnify as set forth in this Section
8.2 shall survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding.
SECTION 9.2 Amendments.
Except with respect to any changes that do not adversely affect the
rights of the Holders (in which case no consent of the Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Section 12.2 of the Declaration
with respect to meetings of, and action by written consent of, the Holders of
the Securities apply to the giving of such approval.
SECTION 9.3 Notices.
All notices provided for in this Preferred Securities Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address
as the Preferred Guarantee Trustee may give notice of to the Guarantor
and the Holders of the Preferred Securities):
The First National Bank of Chicago
One First National Plaza - Suite 0126
Chicago, Illinois 60670-0126
Attn: Corporate Trust Services Division
Telecopy No. (312) 407-1708
(b) If given to the Guarantor, at the Guarantor's mailing addresses
forth below (or such other address as the Guarantor may give notice of to
the Preferred Guarantee Trustee and the Holders of the Preferred
Securities):
Equitable of Iowa Companies
604 Locust Street
Des Moines, Iowa 50309
Attn: John A. Merriman
Telecopy No. (515) 245-6973
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no
notice was given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit.
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF IOWA.
IN WITNESS WHEREOF, this Preferred Securities Guarantee is executed as
of the day and year first above written.
EQUITABLE OF IOWA COMPANIES,
as Guarantor
By: __________________________
Name:_________________________
Title:________________________
THE FIRST NATIONAL BANK OF CHICAGO,
as Preferred Guarantee Trustee
By: __________________________
Name:_________________________
Title:________________________
Exhibit 8 to Registration Statement
July 3, 1996
Equitable of Iowa Companies
P. O. Box 1635
Dear Moines, Iowa 50306-1635
Re: Subordinated Debentures and Preferred Securities
Gentlemen:
We have acted as counsel to Equitable of Iowa Companies (the "Company")
and Equitable of Iowa Companies Capital Trust ("Equitable Trust") in
connection with the issuance of securities by the Company, and by Equitable
Trust, as described in the Registration Statement on Form S-3 (Registration
No. 333-1909) filed with the Securities and Exchange Commission on March 22,
1996, as amended, ("Registration Statement"), and the Prospectus Supplement
incorporated therein (the "Prospectus Supplement").
We understand that the transaction will consist of the following:
The Company, a domestic corporation, will issue subordinated debt
securities (the "Subordinated Debentures") which will be held by Equitable
Trust, a Delaware business trust. Equitable Trust will initially have five
trustees (the "Trustees"), three of whom will be persons employed by or
affiliated with the Company. The fourth trustee, First Chicago Delaware, Inc.,
is a Delaware corporation, unaffiliated with the Company, whose principal
place of business is in Delaware. The fifth trustee, The First National Bank
of Chicago, a financial institution unaffiliated with the Company is the
indenture trustee ("Property Trustee"). The Declaration of Trust, as amended,
establishing Equitable Trust (the "Declaration") authorizes the Trustees to
have Equitable Trust issue (a) preferred securities (the "Preferred Secur-
ities") representing beneficial undivided interests in Equitable Trust and (b)
common securities (the "Common Securities") representing all residual
beneficial undivided interests in Equitable Trust. All of the Common
Securities will be acquired and owned by the Company. The Declaration will
not permit the issuance by Equitable Trust of any securities or other
beneficial interests other than the Preferred Securities and the Common
Securities. The Property Trustee will receive all interest and principal
paid in respect of the Subordinated Debentures and will maintain such funds
in a segregated account pending distribution.
Holders of the Preferred Securities will be entitled to receive
cumulative cash distributions ("Distributions") at a fixed specified annual
rate of the liquidation preference of $25 per Preferred Security, accruing
from the date of original issuance and payable quarterly in arrears on the
last day of March, June, September and December of each year. The Preferred
Securities are expected to be rated at least investment grade by one of
Standard and Poors, Moody's or Duff & Phelps. The fixed annual rate will be
determined immediately prior to sale of the Preferred Securities and will be
a market rate. The Company will guarantee (the "Guarantee") the payment of
distributions by Equitable Trust if and to the extent Equitable Trust has
funds available for such purpose. In the event Equitable Trust does not have
sufficient funds to pay such distributions, the holders of Preferred
Securities will be entitled to direct the Property Trustee to enforce the
Property Trustee's rights under the indenture relating to the Subordinated
Debentures.
The Subordinated Debentures will have a maturity of 30 years and will pay
interest accruing from the date of original issuance and payable quarterly in
arrears on the last day of March, June, September and December of each year,
at an annual rate equal to the annual rate of interest on the Preferred
Securities. The Company has the right to defer payments of interest on the
Subordinated Debentures by extending the interest payment period on the
Subordinated Debentures at any time for up to 20 consecutive quarters (each
an "Extension"). If interest payments are so deferred, Distributions will
also be deferred. During such extension period, Distributions will continue
to accrue with interest thereon at the same annual rate. In addition, the
Company will also have an option (the "Extension Option") to extend the
maturity of the Subordinated Debentures for a period of up to the earlier to
occur of the Interest Deduction Date or 19 years from the original maturity
date, provided however that the Company may only exercise the Extension
Option if it satisfies certain financial covenants at the time of the
extension and at the end of the initial 30 year term. Among these covenants
is a requirement that the Preferred Securities be rated at least investment
grade at the time of the Extension. The Subordinated Debentures will be
subordinate to all indebtedness of the Company, except trade accounts payable
arising in the ordinary course of business, and will be senior to all classes
of equity. The Company reasonably expects that, as of the date of issuance
and throughout the term of the Subordinated Debentures, it will have assets
and cash flow sufficient to service the Subordinated Debentures pursuant to
their terms.
In rendering our opinion, we have reviewed and relied upon (i) the
Registration Statement, (ii) the Prospectus Supplement, (iii) certificates of
officers of the Company and (iv) such other documents, and have made such
further investigations as we have deemed necessary to render the opinion set
forth below. In performing our examination, as to any facts material to our
opinion, we have, when relevant facts were not independently established by
us, relied upon representations to us by representatives of the Company and
Equitable Trust, and have assumed the truth and accuracy of the
representations in the documents and instruments described herein.
Based upon the foregoing, and subject to the assumptions and
qualifications set forth herein, we are of the opinion that:
1. Equitable Trust will be classified as a grantor trust for United
States Federal income tax purposes rather than as an association taxed as a
corporation or as a partnership. Accordingly, each beneficial owner of the
Preferred Securities will be treated for United States Federal income tax
purposes as the owner of an undivided interest in the Subordinated
Debentures.
2. The Subordinated Debentures will constitute indebtedness of the
Company for United States Federal income tax purposes. Accordingly, interest
on the Subordinated Debentures will be deductible by the Company on an
economic accrual basis, regardless of when such interest is actually paid.
3. Because the Company has the right to defer payments of interest on
the Subordinated Debentures, the Subordinated Debentures will, for United
States Federal income tax purposes, be considered issued with original issue
discount. Accordingly, holders will be required to include interest income
in gross income currently on an economic accrual basis, regardless of when
such interest is actually paid.
4. The discussion set forth in the Prospectus Supplement under the
headings "United States Federal Income Taxation", "Risk Factors-Tax
Consequences of Extension of Interest Payment Period", and "Risk Factors-
Proposed Tax Law Changes" are fair and accurate summaries of the matters
addressed therein, based upon current law and the assumptions stated or
referred to therein.
The above opinions are based upon provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), its legislative history, the Treasury
Regulations thereunder, and published rulings and court decisions in effect
as of the date hereof, all of which are subject to change, possibly
retroactively, and no assurance can be given that the Internal Revenue
Service will not take contrary positions. In particular, we direct your
attention to the provisions of the Revenue Reconciliation Bill of 1996 which,
if enacted and applicable to the Subordinated Debentures by reason of its
effective date, may make the Company unable to deduct interest on the
Subordinated Debentures under certain circumstances described in the
Prospectus Supplement. We are admitted to the practice of law in the State
of Iowa, and we express no opinion herein as to any laws other than the
Federal tax laws of the United States of America.
We hereby consent to the inclusion of this opinion as Exhibit 8 to the
Registration Statement and to all references to this law firm in the
Registration Statement or the Prospectus or Prospectus Supplement included
therein.
Very truly yours,
Nyemaster, Goode, McLaughlin, Voigts,
West, Hansell & O'Brien, P.C.
By /s/ Steven J. Roy
_______________________________
Steven J. Roy
Exhibit 12
EQUITABLE OF IOWA COMPANIES AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
The following table reflects the company's computation of the ratio of
earnings to fixed charges for the last five years:
<TABLE>
<CAPTION>
For the three
months ended
March 31, 1996
--------------------
(Dollars in thousands)
<S> <C>
Consolidated pretax income
from continuing operations
before equity income,
extraordinary items and
cumulative effect of
accounting change $46,787
Share of pretax losses of
unconsolidated majority-
owned affiliate --
Share of pretax earnings
of 50% owned affiliates 6
Distributed earnings of less
than 50% owned affiliates 734
Interest 3,333
Amortization of debt issuance
expenses --
Interest portion of rental
expense 213
--------------------
Earnings $51,073
====================
Interest $3,333
Amortization of debt issuance
expenses --
Interest portion of rental
expense 213
--------------------
Fixed Charges $3,546
====================
Ratio of Earnings to
Fixed Charges 14.40
====================
</TABLE>
<TABLE>
<CAPTION>
For the Year ended December 31,
---------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Consolidated pretax income
from continuing operations
before equity income,
extraordinary items and
cumulative effect of
accounting change $128,506 $151,244 $134,995 $83,743 $43,128
Share of pretax losses of
unconsolidated majority-
owned affiliate -- -- -- -- --
Share of pretax earnings
of 50% owned affiliates 23 60 (368) (268) (392)
Distributed earnings of less
than 50% owned affiliates 3,689 137 321 464 128
Interest 13,809 8,071 11,177 11,099 10,012
Amortization of debt issuance
expenses 1 1 8 8 8
Interest portion of rental
expense 896 966 771 949 924
---------------------------------------------
Earnings $146,924 $160,479 $146,904 $95,995 $53,808
=============================================
Interest $13,809 $8,071 $11,177 $11,099 $10,012
Amortization of debt issuance
expenses 1 1 8 8 8
Interest portion of rental
expense 896 966 771 949 924
---------------------------------------------
Fixed Charges $14,706 $9,038 $11,956 $12,056 $10,944
=============================================
Ratio of Earnings to
Fixed Charges 9.99 17.76 12.29 7.96 4.92
=============================================
<FN>
No preferred stock dividends were paid during the periods presented.
Accordingly, the ratio of earnings to combined fixed charges and preferred
stock dividends is the same as the ratio of earnings to fixed charges.
The company guarantees debt of an unaffiliated party. Fixed charges of:
1996 - $566,000; 1995 - $2,310,000; 1994 - $2,327,000; 1993 - $2,359,000;
1992 - $2,389,000; and 1991 - $2,416,000 have been excluded from the
computation of the ratio of earnings to fixed charges because the company
does not believe it probable that it will be required to satisfy this
guarantee.
</TABLE>
Pro Forma Condensed Consolidated Financial Statements (Unaudited)
Equitable of Iowa Companies and BTV Variable, Inc.
The following pro forma condensed consolidated balance sheet as of March 31,
1996, and the pro forma condensed consolidated statements of income for the
year ended December 31, 1995 and the three months ended March 31, 1996 give
the estimated effect to: (1) the pending acquisition of the outstanding
shares of BT Variable, Inc. ("BTV") by Equitable of Iowa Companies ("EIC")
pursuant to a Stock Purchase Agreement dated May 3, 1996 ("Stock Purchase
Agreement") and (2) the proposed issuance of $125,000,000 of Company-obligated
mandatorily-redeemable preferred securities of subsidiary, Equitable of Iowa
Companies Capital Trust ("Trust"), holding solely debt securities of EIC
("Preferred Securities") to fund, in part, the pending acquisition (the
"Transactions"). The pro forma condensed consolidated balance sheet assumes
the Transactions had occurred as of March 31, 1996 and the pro forma condensed
consolidated statements of income assume the Transactions had occurred as of
January 1, 1995. The pro forma information is based on the historical
financial statements of EIC and BTV giving effect to the proposed Transactions
under the purchase method of accounting and the assumptions and adjustments
in the accompanying notes to the pro forma condensed consolidated financial
statements.
The pro forma statements have been prepared by EIC's management based upon the
financial statements of BTV. The pro forma statements may not be indicative
of the results that actually would have occurred if the Transactions had been
in effect on the dates indicated or which may be obtained in the future. The
pro forma financial statements should be read in conjunction with EIC's
audited financial statements and notes included in its 1995 Form 10-K and the
unaudited financial statements and notes included in its March 31, 1996 Form
10-Q (not included herein).
<TABLE>
<CAPTION>
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET (UNAUDITED)
March 31, 1996
As Reported Pro forma
----------------------- --------------------------
EIC BTV Adjustments Consolidated
----------------------- ---------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
ASSETS
Investments:
Fixed maturities
available for sale,
at market $7,279,727 $105,793 ($8,536)(C) $7,376,984
Mortgage loans on
real estate 1,344,824 -- -- 1,344,824
Other 271,207 20,698 (15,674)(C) 276,231
----------------------- ---------- ------------
TOTAL INVESTMENTS 8,895,758 126,491 (24,210) 8,998,039
Deferred policy acquisition
costs 672,012 76,766 (76,766)(B) 672,012
Present value of future
profits -- 7,029 88,481 (B) 95,510
Goodwill and other
intangibles 3,677 -- 25,193 (C) 28,870
Other assets 238,316 11,018 (439)(B) 248,895
Separate account assets 208,635 1,100,781 -- 1,309,416
----------------------- ---------- ------------
TOTAL ASSETS $10,018,398 $1,322,085 $12,259 $11,352,742
======================= ========== ============
LIABILITIES
Policy liabilities, accruals
and other policyholders'
funds $8,498,572 $110,373 ($7,849)(B) $8,601,096
Income taxes 46,948 1,267 (1,009)(B) 47,206
Debt 258,000 51,439 (51,439)(B) 258,000
Other liabilities 224,353 5,351 430 (B) 230,134
Separate account liabilities 208,635 1,100,781 -- (B) 1,309,416
----------------------- ---------- ------------
TOTAL LIABILITIES 9,236,508 1,269,211 (59,867) 10,445,852
Company-obiligated manda-
torily-redeemable preferred
securities of subsidiary,
Equitable of Iowa Companies
Capital Trust, holding solely
debt securities of the
company -- -- 125,000 (C) 125,000
TOTAL STOCKHOLDERS' EQUITY 781,890 52,874 (52,874)(B) 781,890
----------------------- ---------- ------------
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY $10,018,398 $1,322,085 $12,259 $11,352,742
======================= ========== ============
<FN>
See notes to unaudited pro forma condensed consolidated financial statements
</TABLE>
<TABLE>
<CAPTION>
PROFORMA CONDENSED CONSOLIDATED
INCOME STATEMENT (UNAUDITED)
Year ended December 31, 1995
As Reported Pro forma
---------------------- --------------------------
EIC BTV Adjustments Consolidated
---------------------- ---------- ------------
(Dollars in thousands, except per share)
<S> <C> <C> <C> <C>
REVENUES:
Annuity and universal life
product charges $51,466 $18,405 $3,467 (D) $73,338
Traditional life insurance
premiums 43,425 -- -- 43,425
Net investment income 641,094 3,028 (1,504)(D) 642,618
Realized gains on investments 9,524 297 -- 9,821
Other income 19,353 9,429 -- 28,782
---------------------- ---------- ------------
764,862 31,159 1,963 797,984
INSURANCE BENEFITS AND EXPENSES:
Annuity, universal life and
other policy benefits 487,031 3,146 -- 490,177
Underwriting, acquisition and
insurance expenses:
Commissions, general expenses
and insurance taxes 232,470 30,071 821 (D) 263,362
Policy acquisition costs
deferred (178,133) (10,423) 666 (D) (187,890)
Amortization of deferred
acquisition costs 72,537 2,736 (2,506)(D) 72,767
Amortization of present value
of future profits -- 1,862 8,179 (D) 10,041
---------------------- ---------- ------------
613,905 27,392 7,160 648,457
Interest expense 13,779 3,042 (2,949)(D) 13,872
Other expenses 8,672 -- -- 8,672
---------------------- ---------- ------------
636,356 30,434 4,211 671,001
---------------------- ---------- ------------
128,506 725 (2,248) 126,983
Income taxes 43,633 (1,109) (4,678)(D) 37,846
---------------------- ---------- ------------
84,873 1,834 2,430 89,137
Equity income, net of related
income taxes 17 -- -- 17
</TABLE>
<TABLE>
<CAPTION>
PROFORMA CONDENSED CONSOLIDATED
INCOME STATEMENT (UNAUDITED) (Continued)
Year ended December 31, 1995
As Reported Pro forma
---------------------- --------------------------
EIC BTV Adjustments Consolidated
---------------------- ---------- ------------
(Dollars in thousands, except per share)
<S> <C> <C> <C> <C>
Dividends on Company-obligated
mandatorily-redeemable pre-
ferred securities of subsidiary,
Equitable of Iowa Companies
Capital Trust, holding solely
debt securities of the
company -- -- 10,625 (D) 10,625
---------------------- ---------- ------------
Net income $84,890 $1,834 ($8,195) $78,529
====================== ========== ============
Net income per common share $2.68 $2.48
============ ============
Weighted average common
shares outstanding 31,709,032 31,709,032
============ ============
<FN>
See notes to unaudited pro forma condensed consolidated financial statements
</TABLE>
<TABLE>
<CAPTION>
PROFORMA CONDENSED CONSOLIDATED
INCOME STATEMENT (UNAUDITED)
Three months ended March 31, 1996
As Reported Pro forma
---------------------- --------------------------
EIC BTV Adjustments Consolidated
---------------------- ---------- ------------
(Dollars in thousands, except per share)
<S> <C> <C> <C> <C>
REVENUES:
Annuity and universal life
product charges $14,717 $2,694 $283 (D) $17,694
Traditional life insurance
premiums 10,151 -- -- 10,151
Net investment income 171,212 511 (376)(D) 171,347
Realized gains (losses) on
investments 5,150 (327) -- 4,823
Other income 4,346 2,766 -- 7,112
---------------------- ---------- ------------
205,576 5,644 (93) 211,127
INSURANCE BENEFITS AND EXPENSES:
Annuity, universal life and
other policy benefits 126,916 394 -- 127,310
Underwriting, acquisition and
insurance expenses:
Commissions, general expenses
and insurance taxes 46,533 11,560 205 (D) 58,298
Policy acquisition costs
deferred (39,681) (8,414) 254 (D) (47,841)
Amortization of deferred
acquisition costs 18,123 293 (672)(D) 17,744
Amortization of present value
of future profits -- 248 1,781 (D) 2,029
---------------------- ---------- ------------
151,891 4,081 1,568 157,540
Interest expense 3,326 699 (685)(D) 3,340
Other expenses 3,571 -- -- 3,571
---------------------- ---------- ------------
158,788 4,780 883 164,451
---------------------- ---------- ------------
46,788 864 (976) 46,676
Income taxes (benefits) 16,468 (172) (1,057)(D) 15,239
---------------------- ---------- ------------
30,320 1,036 81 31,437
Equity loss, net of related
income taxes (115) -- -- (115)
</TABLE>
<TABLE>
<CAPTION>
PROFORMA CONDENSED CONSOLIDATED
INCOME STATEMENT (UNAUDITED) (Continued)
Three months ended March 31, 1996
As Reported Pro forma
---------------------- --------------------------
EIC BTV Adjustments Consolidated
---------------------- ---------- ------------
(Dollars in thousands, except per share)
<S> <C> <C> <C> <C>
Dividends on Company-obligated
mandatorily-redeemable pre-
ferred securities of subsidiary,
Equitable of Iowa Companies
Capital Trust, holding solely
debt securities of the
company -- -- 2,656 (D) 2,656
---------------------- ---------- ------------
Net income $30,205 $1,036 ($2,575) $28,666
====================== ========== ============
Net income per common share $0.95 $0.90
============ ============
Weighted average common
shares outstanding 31,816,700 31,816,700
============ ============
<FN>
See notes to unaudited pro forma condensed consolidated financial statements
</TABLE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
EIC has agreed to purchase all of the outstanding shares of BTV, including its
subsidiaries, Golden American Life Insurance Company ("Golden American") and
Directed Services, Inc. ("DSI"), for a cash payment of $144,000,000, including
the repayment of debt of $51,000,000. Closing of the transaction is subject
to certain regulatory approvals and other customary closing conditions and is
expected to occur during the third quarter of 1996. The company expects to
incur additional costs relating to professional fees and other expenses of
$550,000 which are to be included as part of the cost of acquisition. The
pro forma condensed consolidated financial statements were prepared assuming
the transaction will be accounted for as a purchase.
(A) The cost of the acquisition is comprised of the following:
<TABLE>
<CAPTION>
Cost of acquisition: (Dollars in thousands)
<S> <C>
Cash $ 93,000
Repayment of debt 51,000
--------
Purchase price 144,000
Professional fees and
other expenses 550
--------
Total acquisition cost $144,550
========
</TABLE>
Certain of the above costs are estimated and could vary at the actual
date of acquisition.
(B) Under purchase accounting, BTV's assets and liabilities are required
to be adjusted to their estimated fair values. The estimated fair
value adjustments have been determined by EIC based upon available
information set forth in BTV's financial statements and an independent
appraisal of BTV obtained from BTV's management. EIC cannot be sure
that such estimated fair values represent fair values that would
ultimately be determined at the acquisition date anticipated to occur
in the third quarter of 1996.
<TABLE>
<CAPTION>
Reconciliation of BTV equity to cost of acquisition
(Dollars in thousands)
<S> <C> <C>
Equity as reported by BTV $52,874
Fair value adjustments:
Elimination of BTV's deferred
policy acquisition costs (76,766)
Elimination of BTV's present value
of future profits (7,029)
Present value of future profits on
business acquired 95,510 88,481
--------
Cash received from Bankers Trust
for Escrow Balance net of Note 3,789
Elimination of Escrow Balance (4,228) (439)
--------
Elimination of BTV's unearned
revenue reserve 7,849
Elimination of BTV's deferred tax
liability 1,009
Repayment of BTV short term debt 51,000
Elimination of Golden American Note 439 51,439
--------
Establishment of liability for
severance pay to BTV employees
related to the acquisition (430)
Cost in excess of net assets of
company acquired (goodwill) 20,533
---------
Cost of acquisition $144,550
=========
</TABLE>
Certain amounts on BTV's balance sheet as of March 31, 1996 relating
to an Exchange Agreement have been eliminated. The Exchange Agreement
related to the acquisition of Golden American and DSI by Bankers Trust
Company ("Bankers Trust") from Mutual Benefit Life Insurance Company
in Rehabilitation ("Mutual Benefit") on September 30, 1992. Under the
Exchange Agreement (which is described in detail in Note 1 to Golden
American's financial statements included in Form 10-K filed by Golden
American for the year ended December 31, 1995), Bankers Trust settled
certain pre-existing claims against Mutual Benefit by exchanging such
claims for the outstanding common stock of Golden American and DSI.
Because the ultimate value of Bankers Trust's claims against Mutual
Benefit had not been determined by the Superior Court of New Jersey
(in which the rehabilitation proceeding was pending), Golden American
was required to execute in connection with the Exchange Agreement an
adjustable principal amount promissory note, 7.5% due 1997 ("Note"),
under which Golden American has been required to make periodic
payments into an escrow account in which such funds are to be held
until the value of Bankers Trust's claims is determined in accordance
with the rehabilitation proceedings. As of March 31, 1996, the escrow
account ("Escrow Balance") established by Golden American was
$4,228,000. Bankers Trust has estimated that the contingent liability
due from Golden American with respect to the Note amounted to $439,000
as of March 31, 1996.
Under the terms of the Stock Purchase Agreement, Bankers Trust has
agreed at closing to make a cash payment to Golden American in an
amount equal to the Escrow Balance less the sum of the $439,000 Note
and to either prepay the maximum potential amount remaining due under
the Note or to deliver to Golden American an irrevocable undertaking
to make all such payments as they become due under the terms of the
Note. In exchange, Golden American has agreed to irrevocably assign
to Bankers Trust all of Golden American's rights to receive any
amounts to be disbursed from the Escrow Account in accordance with the
terms of the agreement governing the Escrow Account. As a result,
other assets reflects a net reduction of $439,000 for the elimination
of the Escrow Balance of $4,228,000 less cash received at closing of
$3,789,000 and debt has been reduced by $439,000 for the elimination
of the liability relating to the obligation of Golden American under
the terms of the Note.
The carrying values of BTV's fixed maturity investments are at market
value since all such investments are reported as available for sale.
Accordingly, no fair value adjustments for investments are required.
The present value of future profits ("PVFP") of the insurance inforce
at the date of the acquisition is determined by estimating the gross
profits to be realized from the insurance contracts inforce at the
time the acquisition occurs and discounting the profits back to the
acquisition date. The discount rate utilized in calculating the PVFP
was 10%.
The "As Reported" amounts established by BTV for PVFP, unearned
revenue reserves and deferred policy acquisition costs (the cost
associated with generating sales of insurance policies) are eliminated
and replaced by the PVFP determined as of the acquisition date. BTV's
"As Reported" amounts for policy liabilities, accruals and other
policyholder funds are held at account values and, accordingly,
reflect the fair value of such liabilities. As a result, no fair
market value adjustment is required for such liabilities. "As
Reported" amounts for separate account assets and liabilities are
carried at their fair value and, accordingly, no fair value adjustment
is required. EIC has elected to step-up the tax basis of the assets
associated with BTV at the acquisition date, and as a result, BTV's
deferred income tax liability and expense have been eliminated.
(C) The costs associated with the issuance of the $125,000,000 of
Preferred Securities are estimated to approximate $4,660,000 which
will be deferred and amortized over 30 years to the date of required
redemption of the Preferred Securities, excluding any optional
election by EIC to extend such redemption for up to an additional 19
years. Accordingly, the net proceeds from the sale of the Preferred
Securities will approximate $120,340,000. EIC intends to use the net
proceeds from the sale of Preferred Securities ($120,340,000), which
will be loaned to EIC in exchange for EIC debt securities to be issued
to the Trust, to fund most of the cost of the acquisition of
approximately $144,550,000. EIC and its subsidiaries will fund the
remainder of the acquisition cost by reducing short-term investments
($15,674,000) and selling fixed maturity securities ($8,536,000).
Funds generated by subsidiaries for this purpose will be passed to EIC
in the form of dividends. The total amount of goodwill and other
intangibles deferred relating to the Transactions ($25,193,000), is
comprised of goodwill of $20,533,000 and $4,660,000 of estimated costs
of issuance of the Preferred Securities.
(D) For purposes of determining the pro forma effect of the BTV
acquisition on EIC's consolidated statement of income, the following
pro forma adjustments have been made:
<TABLE>
<CAPTION>
Year ended Three months
December ended March
31, 1995 31, 1996
------------------------
Increase (Decrease)
Income
(Dollars in thousands)
<S> <C> <C>
Elimination of BTV's amortization of the unearned
revenue reserve relating to policies issued prior
to January 1, 1995 $5,067 $1,068
Deferral and amortization of sales loads on policies
acquired after the acquisition date (1,600) (785)
------------------------
3,467 283
Decrease in investment income resulting from reduction
of short-term investments and fixed maturities used
for the acquisition of BTV (1,504) (376)
Amortization over a period of 25 years of cost in
excess of net assets of company acquired (goodwill) (821) (205)
Elimination of deferred policy acquisition costs on
business issued prior to January 1, 1995 (666) (254)
Elimination of BTV's amortization of policy acquisition
costs relating to policies issued prior to January
1, 1995 2,506 672
Elimination of BTV's amortization of PVFP 1,862 248
Amortization of PVFP established at acquisition date (10,041) (2,029)
------------------------
(8,179) (1,781)
Elimination of interest expenses on $51,000 of short-
term debt of BTV paid off at acquisition date 3,104 724
Amortization of expenses deferred with the issuance
of the $125,000 of Preferred Securities (155) (39)
------------------------
2,949 685
------------------------
Pro forma income effect before income taxes and
dividends on Preferred Securities (2,248) (976)
Decrease in income taxes associated with above
adjustments and dividends on Preferred Securities 4,506 1,271
Elimination of BTV's deferred income taxes 172 (214)
------------------------
Pro forma tax benefit 4,678 1,057
------------------------
Pro forma income effect before dividends on Preferred
Securities 2,430 81
Dividends on Preferred Securities (10,625) (2,656)
------------------------
Pro forma income effect ($8,195) ($2,575)
========================
</TABLE>
The allocation of the purchase price at the date of acquisition which is
expected to occur in the third quarter of 1996, will vary from those
reflected above, due, in part, to the following items: 1) The present
value of future profits and corresponding amortization thereof, will be
based upon the in force of Golden American at the date of the acquisition
and not the in force at March 31, 1996 as reflected on the pro forma
consolidated balance sheet, or January 1, 1995 utilized to determine the
adjustments on the pro forma consolidated income statements. 2) As Golden
American continues to write business in 1996, the amortized cost of fixed
maturities will increase, however, the market values of the fixed
maturities could vary based upon the changes in the level of interest
rates. 3) The level of goodwill established will be adjusted by the items
previously discussed and the ultimate market value of the assets and
liabilities at the acquisition date. Additionally, the pro forma income
statements reflect the issuance of $125,000,000 of Preferred Securities at
8.5%. The actual dividend rate established at issuance could vary, and the
corresponding dividend payment would be adjusted accordingly.
The actual effect on earnings is forecasted to be less than reflected above
based upon higher anticipated production levels by Golden American in 1996
and 1997 compared to the levels achieved in 1995 as well as anticipated
cost savings from consolidation which are not reflected in the pro forma
financial statements. Premium levels in the first quarter of 1996 for BTV
were $116,000,000 compared to $125,000,000 for all of 1995. The above
contains a forward looking statement. Actual results for BTV may vary
materially from forecasted results and will depend, among other things, on
interest rates, stock market performance, tax and regulatory changes,
investment performance of the underlying portfolios of the variable annuity
product, variable annuity product design and sales volume by significant
sellers of BTV's variable annuities.
