As filed with the Securities and Exchange Commission on February 6, 1996
Registration No. 33-65471
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
USF&G Corporation Maryland 52-12220567
USF&G Capital I Delaware 52-1953822
USF&G Capital II Delaware 52-1953824
(Exact name of registrants (State or other jurisdiction of (I.R.S. Employer
as specified in charter or incorporation or organization) Identification No.)
trust agreements)
100 Light Street
Baltimore, Maryland 21202
(410) 547-3000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
John A. MacColl, Esq.
100 Light Street
Baltimore, Maryland 21202
(410) 547-3000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Approximate date of commencement of proposed sale to the public: After the
Registration Statement becomes effective, as determined by market conditions and
other factors.
_
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Amount Maximum Aggregate
Title of Each Class of To Be Offering Price Offering Amount of
Securities To Be Registered Registered(1) Per Price(2)(3) Price(2)(3) Registration
Unit(2)(3) Fee
<S> <C> <C> <C> <C>
USF&G Capital I and II
Cumulative Quarterly Income
Preferred Securities.................
USF&G Corporation
Guarantees with respect to Preferred Securities(4)
USF&G Corporation
Deferrable Interest
Subordinated Debentures..............
Total $ 210,000,000 100% $210,000,000 $72,413.79
</TABLE>
(1)There are being registered hereunder a presently indeterminate number of
Cumulative Quarterly Income Preferred Securities of USF&G Capital I and II,
together with related Guarantees and Deferrable Interest Subordinated
Debentures of USF&G Corporation. Under certain circumstances, the Deferrable
Interest Subordinated Debentures of USF&G Corporation may be sold directly to
the public. The aggregate initial public offering price of all securities
sold pursuant to this registration statement will not exceed $210,000,000.
(2)Estimated solely for the purpose of determining the registration fee.
(3)Pursuant to Rule 457(n) and (o), the registration fee is calculated on the
basis of the proposed maximum offering price of the Cumulative Quarterly
Income Preferred Securities.
(4)This registration is deemed to include the rights of holders of the
Preferred Securities under the Guarantees, the Indenture related to the
Subordinated Debentures and the Trust Agreement related to the Preferred
Securities as described in the Registration Statement.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
USF&G Capital I
USF&G Capital II
Cumulative Quarterly Income Preferred Securities(QUIPSSM)*
guaranteed to the extent such Issuer has funds as set forth herein by
USF&G Corporation
USF&G Capital I and USF&G Capital II, each a statutory business trust
created under the laws of the State of Delaware (each, the "Issuer," and
collectively, the "Issuers") may severally offer, from time to time, their
respective cumulative quarterly income preferred securities (the "Preferred
Securities") representing preferred undivided beneficial interests in the assets
of each Issuer. USF&G Corporation, a Maryland corporation ("USF&G"), will be the
owner of beneficial interests represented by common securities (the "Common
Securities") of each Issuer. The Bank of New York is the Property Trustee of
each Issuer. The payment of periodic cash distributions ("Distributions") with
respect to the Preferred Securities of each Issuer and payments on liquidation
or redemption with respect to such Preferred Securities, in each case out of
funds held by such Issuer, are each guaranteed by USF&G to the extent described
herein (each, a "Guarantee"). The obligations of USF&G under each Guarantee will
be subordinate and junior in right of payment to all liabilities of USF&G except
any liabilities that may be made pari passu or subordinate to the Guarantee
expressly by their terms. Concurrently with the issuance by each Issuer of its
Preferred Securities, such Issuer will invest the proceeds thereof in a
corresponding series of USF&G's deferrable interest subordinated debentures (the
"Debentures") with terms corresponding to that Issuer's Preferred Securities.
The Debentures will be unsecured and subordinate and junior in right of payment
to Senior Indebtedness (as defined herein) of USF&G. The Debentures will be the
sole assets of each Issuer and the interest on the Debentures will be the only
revenue of each Issuer. Upon the occurrence of certain events as will be
described in the accompanying Prospectus Supplement, USF&G may redeem the
Debentures or may terminate each Issuer and cause the Debentures to be
distributed to the holders of the Preferred Securities in liquidation of their
interest in such Issuer. See "Description of the Preferred
Securities--Liquidation Distribution Upon Termination."
The Preferred Securities may be offered in amounts, at prices and on terms
to be determined at the time of offering, provided, however, that the aggregate
initial public offering price of all Preferred Securities issued pursuant to the
Registration Statement of which this Prospectus forms a part shall not exceed
$210,000,000. Certain specific terms of a particular Issuer's Preferred
Securities in respect of which this Prospectus is being delivered will be set
forth in an accompanying Prospectus Supplement (the "Prospectus Supplement"),
including where applicable and to the extent not set forth herein, the identity
of that Issuer, the specific title, the aggregate amount, the Distribution rate,
the maturity, the stated liquidation preference, redemption provisions, other
rights, the initial public offering price, and any other special terms, as well
as any planned listing on a securities exchange, of such Preferred Securities.
The Preferred Securities may be sold in a public offering to or through
underwriters or dealers designated from time to time. See "Plan of
Distribution." The names of any such underwriters or dealers involved in the
sale of the Preferred Securities of any particular Issuer in respect of which
this Prospectus is being delivered, the number of Preferred Securities to be
purchased by any such underwriters or dealers and any applicable commissions or
discounts will be set forth in the Prospectus Supplement. The net proceeds to
each Issuer will also be set forth in the Prospectus Supplement.
See "Risk Factors" at page 5 hereof for certain information relevant to an
investment in the Preferred Securities, including the period and circumstances
during which payment of Distributions on the Preferred Securities and related
Debentures may be deferred and the related federal income tax consequences.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL
OFFENSE.
*QUIPS is a service mark of Goldman, Sachs & Co.
The date of this Prospectus is February __, 1996.
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<PAGE>
AVAILABLE INFORMATION
USF&G Corporation, a Maryland corporation ("USF&G"), is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference room of the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C., and the public reference
facilities in the Commission's Regional Offices located at Seven World Trade
Center, 7th Floor, New York, New York and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois. Copies of such material can be obtained
at prescribed rates by writing to the Securities and Exchange Commission, Public
Reference Section, Washington, D.C.
20549. Such material can also be inspected at the New York Stock Exchange.
USF&G and each of USF&G Capital I and USF&G Capital II, each a statutory
business trust formed under the laws of the State of Delaware, have filed with
the Commission a Registration Statement on Form S-3 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"). This Prospectus does not contain
all of the information set forth in the Registration Statement as certain parts
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
No separate financial statements of any Issuer have been included herein.
USF&G and the Issuers do not consider that such financial statements would be
material to holders of Preferred Securities offered hereby because each Issuer
is a newly formed special purpose entity, has no operating history or
independent operations and is not engaged in, and does not propose to engage in,
any activity other than as set forth below. See "The Issuers."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by USF&G with the Commission are incorporated
by reference in this Prospectus:
1. USF&G's annual report on Form 10-K/A for the year ended December 31,
1994.
2. USF&G's quarterly report on Form 10-Q/A for the quarter ended March 31,
1995, and quarterly reports on Form 10-Q for the quarters ended June 30, 1995
and September 30, 1995.
3. USF&G's current reports on Form 8-K dated January 12, 1995, January 20,
1995, January 25, 1995 and October 12, 1995.
All other documents filed by USF&G pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and the accompanying
Prospectus Supplement and prior to the termination of the offering of the
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<PAGE>
Preferred Securities shall be deemed to be incorporated by reference in this
Prospectus and the accompanying Prospectus Supplement, and to be a part hereof
from the respective dates of the filing of such documents.
Any statement contained herein or in a document all or a portion of which
is incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus and the
accompanying Prospectus Supplement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or the
accompanying Prospectus Supplement.
USF&G hereby undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, on
the written or oral request of any such person, a copy of any or all the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents which are not
specifically incorporated by reference in the information that this Prospectus
incorporates. Requests should be directed to USF&G Corporation, 100 Light
Street, Baltimore, Maryland 21202, Attention: John F. Hoffen, Jr., Secretary
(telephone: 410-547-3310).
THE ISSUERS
Each of USF&G Capital I and USF&G Capital II is a statutory business trust
created under Delaware law pursuant to (i) a trust agreement executed by USF&G,
as sponsor for the Issuer, and the trustees of such Issuer and (ii) the filing
of a certificate of trust with the Delaware Secretary of State. Each trust
agreement will be amended and restated in its entirety (each, as so amended and
restated, the "Trust Agreement") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. Each Trust
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Each Issuer exists for the
exclusive purposes of (i) issuing and selling its Preferred Securities and
Common Securities, (ii) using the proceeds from the sale of such Preferred
Securities and Common Securities to acquire a corresponding series of Debentures
issued by USF&G, (iii) maintaining its status as a grantor trust for United
States federal income tax purposes and (iv) engaging in those activities
necessary or incidental thereto. All of the Common Securities will be owned by
USF&G. The Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities, except that upon the occurrence
and continuance of a Debenture Event of Default (as defined herein) under the
Trust Agreement, the rights of the holders of the Common Securities to payment
in respect of Distributions and payments upon liquidation, redemption or other
acquisition of Common Securities will be subordinated to the rights of the
holders of the Preferred Securities. USF&G will acquire Common Securities in an
aggregate liquidation amount equal to 3% of the total capital of each Issuer.
Each Issuer has a term of approximately 50 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer's business and affairs
are conducted by its trustees, each appointed by USF&G as holder of the Common
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Securities: The Bank of New York (the "Property Trustee"), The Bank of New York
(Delaware) (the "Delaware Trustee") and three individual trustees (the
"Administrative Trustees") who are employees or officers of or affiliated with
USF&G. The Property Trustee, the Delaware Trustee and the Administrative
Trustees are collectively referred to herein as the "Issuer Trustees." The
holder of the Common Securities, or the holders of a majority in liquidation
preference of the Preferred Securities if a Debenture Event of Default has
occurred and is continuing, will be entitled to appoint, remove or replace the
Property Trustee and the Delaware Trustee. In no event will the holders of the
Preferred Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
holder of the Common Securities. The duties and obligations of each of the
Issuer Trustees are governed by the applicable Trust Agreement. USF&G will pay
all fees and expenses related to the Issuers and the offering of the Preferred
Securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of the Issuers. The principal place of business of each Issuer is
c/o USF&G Corporation, 100 Light Street, Baltimore, Maryland 21202, and its
telephone number is (410) 547-3000. The office of the Delaware Trustee in the
State of Delaware is White Clay Center, Route 273, Newark, Delaware 19711.
USF&G CORPORATION
USF&G is a holding company whose principal subsidiaries are engaged in
writing property/casualty insurance and life insurance/annuities.
Property/casualty insurance is written primarily by United States Fidelity and
Guaranty Company, founded in 1896, and is sold through independent agents
supported by the Company's underwriting, marketing, administrative and claim
services offices located throughout the United States. Life insurance and
annuities are written primarily by Fidelity and Guaranty Life Insurance Company,
founded in 1959, and are sold throughout the United States through independent
agents, managing general agents and regional and national securities brokerage
firms. USF&G is incorporated in Maryland, and its principal executive office is
located at 100 Light Street, Baltimore, Maryland 21202, and its telephone number
is (410) 547-3000.
5
<PAGE>
RISK FACTORS
Prospective purchasers of the Preferred Securities should consider the
following matters in addition to the other information contained in this
Prospectus and in the Prospectus Supplement.
Subordinated Obligations under the Debentures and the Guarantee
USF&G's obligations under the Debentures are subordinate and junior in
right of payment to all Senior Indebtedness of USF&G. At December 31, 1995, the
Senior Indebtedness of USF&G aggregated approximately $841 million, including
$234 million of Intercompany Indebtedness (as defined herein). In addition, as
of such date, USF&G's subsidiaries had total liabilities of approximately $
million (including estimated liabilities for insurance claims) to which the
Debentures will be effectively subordinated. The obligations of USF&G under each
Guarantee issued by USF&G for the benefit of the holders of the Preferred
Securities are subordinate and junior in right of payment to all liabilities of
USF&G, except that made pari passu or subordinate to the Guarantee expressly by
their terms. There are no terms in the Preferred Securities, the Debentures or
the Guarantee that limit USF&G's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Debentures and the Guarantee.
See "Description of the Guarantee - Status of the Guarantee" and "Description of
the Debentures - Subordination."
The ability of the Issuers to pay amounts due on the Preferred Securities
is entirely dependent upon USF&G making payments on the Debentures as and when
required.
Option to Extend Interest Payment Period; Tax Consequences
To the extent and as further provided in the Prospectus Supplement, so long
as an Event of Default under the Indenture has not occurred and is continuing,
USF&G will have the right at any time and from time to time to extend interest
payment periods on a series of Debentures for up to 60 months (an "Extension
Period"), and, as a consequence, quarterly Distributions on the Preferred
Securities will be deferred by an Issuer during any Extension Period.
Distributions in arrears after the quarterly payment date therefor will
accumulate additional distributions thereon at the rate specified in the
Prospectus Supplement (to the extent permitted by law). In the event USF&G
exercises its right to extend the interest payment periods on the Debentures,
USF&G will not, and will not permit any subsidiary of USF&G to, declare or pay
any dividend or distribution on, or redeem, purchase, acquire, or make a
liquidation or guarantee payment (other than payments under a Guarantee) with
respect to, any shares of USF&G's capital stock or any other security of USF&G
(including other Debentures) ranking pari passu with or junior in interest to
the Debentures, except in each case for (i) payments with securities junior in
interest to the Debentures, (ii) payments made on any series of Debentures upon
the stated maturity of such Debentures, or (iii) payments of accrued dividends
(and cash in lieu of fractional shares) upon conversion into common stock of any
convertible preferred stock of USF&G of any series now or hereinafter
outstanding, in accordance with the terms of such stock. As a result, this
covenant requires that an interest payment on one series of Debentures may be
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<PAGE>
extended only if the interest periods on all series of Debentures are likewise
extended. Prior to the termination of any Extension Period, USF&G may further
extend the interest payment period, provided that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
60 months or extend beyond the maturity or redemption date of the Debentures.
Upon the termination of any Extension Period and the payment of all amounts then
due, USF&G may elect a new Extension Period subject to the above requirements.
See "Description of the Preferred Securities--Distributions."
Should an Extension Period occur, an Issuer will continue to accrue income
for United States federal income tax purposes which will be allocated, but not
distributed, to holders of the Preferred Securities. As a result, a holder of
Preferred Securities will include such interest in gross income for United
States federal income tax purposes in advance of the receipt of cash, and will
not receive from the corresponding Issuer the cash related to such income if the
holder disposes of the Preferred Securities prior to the record date for the
payment of Distributions. See "United States Taxation--Potential Extension of
Interest Payment Period and Original Issue Discount."
Should USF&G determine to exercise its right to defer payments of interest
by extending the interest payment period on the Debentures, the market price of
the Preferred Securities is likely to be affected. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of USF&G's right
to defer interest payments, the market price of the Preferred Securities (which
represent an undivided beneficial interest in the Debentures) may be more
volatile than other securities on which original issue discount accrues that do
not have such rights.
Proposed Tax Legislation
On December 7, 1995, the U.S. Department of Treasury announced a Balanced
Budget Proposal which contained an amendment to the Code which would classify a
debt instrument issued on or after December 7, 1995 as equity if the instrument
had a term exceeding 20 years and was not classified as indebtedness on the
issuer's balance sheet. On December 19, 1995, the Treasury announced that it
will recommend that Congress grandfather issues filed with the Commission before
December 7, 1995. A text of proposed statutory language published on January 23,
1996 embodies the December 7, 1995 effective date recommendation. Because the
registration statement for the Preferred Securities was filed with the
Commission on December 29, 1995, the provisions of the proposed amendment would
be applicable to the Preferred Securities if such provisions were enacted with
the currently proposed effective date. Accordingly, if Debentures having a term
in excess of 20 years were issued and the proposal were subsequently enacted in
its current form, the Debentures would be subject to redemption, or the related
Issuer could be liquidated by distributing the Debentures to the
Securityholders, at the option of USF&G as described under "Description of the
Preferred Securities--Redemption and "Description of Preferred Securities
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Liquidation Distribution Upon Termination."' USF&G cannot predict whether this
proposed amendment may be modified or other legislation may be enacted which
might affect the character of the Debentures or otherwise affect the Preferred
Securities offered hereby.
Special Event Redemption or Distribution
Upon the occurrence and continuation of a Special Event as further
described in "Description of the Preferred Securities - Redemption," USF&G will
have the right to redeem the Debentures affected by such Special Event and
therefore cause a mandatory redemption of the corresponding Preferred
Securities. In addition, upon the occurrence of such a Special Event or a
Grantor Trust Event as further described in the Prospectus Supplement, USF&G
will have the right to terminate the corresponding Issuer and cause the
Debentures to be distributed to the holders of the Preferred Securities in
liquidation of such holders' interests in the Issuer. See "Description of the
Preferred Securities--Redemption." See also, "Description of Preferred
Securities-Liquidation Upon Termination." Certain proposed tax legislation, if
enacted subsequent to the issuance of the Preferred Securities, could give rise
to USF&G's redemption or termination rights. See "Proposed Tax Legislation." See
also "United States Taxation - Receipt of Debentures Upon Liquidation of an
Issuer."
Rights Under the Guarantee
Each Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Bank of New York will act as the Guarantee Trustee under each Guarantee
for the purposes of compliance with the Trust Indenture Act. The Guarantee
Trustee will hold each Guarantee for the benefit of the holders of the related
Preferred Securities and The Bank of New York will also be the trustee for the
Debentures and the Property Trustee.
Each Guarantee guarantees on a subordinated basis to the holders of the
related Preferred Securities the payment (but not the collection) of (i) any
accrued and unpaid Distributions required to be paid on such Preferred
Securities, to the extent the Issuer has funds on hand available therefor, (ii)
the Redemption Price, including all accrued and unpaid Distributions to the date
of redemption, with respect to such Preferred Securities called for redemption
by the Issuer, to the extent the Issuer has funds on hand available therefor,
and (iii) upon a voluntary or involuntary termination, winding-up or liquidation
of the Issuer (unless the Debentures are distributed to holders of such
Preferred Securities), (a) the aggregate liquidation preference of $25 per
Preferred Security plus all accrued and unpaid Distributions on the Preferred
Securities to the date of payment, to the extent the Issuer has funds on hand
available to make such payment or, if different, (b) the amount of assets of the
Issuer remaining available for distribution to holders of the Preferred
Securities in liquidation of the Issuer. The holders of not less than a majority
in aggregate liquidation preference of the Preferred Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee or to direct the exercise of any trust or
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power conferred upon the Guarantee Trustee under a Guarantee. Any holder of the
related Preferred Securities may institute a legal proceeding directly against
USF&G to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Guarantee Trustee, the Issuer or any other person
or entity. If USF&G were to default on its obligations under the Debentures, the
Issuer would lack available funds for the payment of Distributions or amounts
payable on redemption of the Preferred Securities or otherwise, and in such
event holders of the Preferred Securities would not be able to rely upon a
Guarantee for payment of such amounts. Instead, holders of the Preferred
Securities would be required either (i) to rely on the enforcement of their
rights against USF&G pursuant to the terms of the Debentures or (ii) to enforce,
to the fullest extent permitted by law, the Property Trustee's rights against
USF&G. See "Description of the GuaranteeStatus of the Guarantee" and
"Description of the Debentures--Subordination." The Trust Agreement for each
series of Preferred Securities provides that each holder of Preferred Securities
by acceptance thereof agrees to the provisions of the Guarantee and the
Indenture.
Limited Voting Rights
Holders of Preferred Securities will have limited voting rights and, except
upon the occurrence of an Event of Default under the Trust Agreement as a result
of an event of default under the Indenture (a "Debenture Event of Default"),
will not be entitled to vote to appoint, remove or replace the Property Trustee
or the Delaware Trustee, which voting rights are vested exclusively in the
holder of Common Securities unless and until a Debenture Event of Default has
occurred and is continuing. In no event will the holders of the Preferred
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
holder of the Common Securities. See "Description of the Preferred
Securities--Events of Default; Notice."
Trading Characteristics of Preferred Securities
Application has been made to list the Preferred Securities on the New York
Stock Exchange. The Preferred Securities are expected to trade at a price that
takes into account the value, if any, of accrued and unpaid Distributions; thus,
purchasers will not pay and sellers will not receive any accrued and unpaid
interest with respect to their undivided beneficial interests in Debentures
owned through the Preferred Securities that is not included in the trading price
of the Preferred Securities. However, interest on the Debentures will be
included in the gross income of U.S. holders of Preferred Securities as it
accrues, rather than when it is paid. See "United States Taxation--Income from
Preferred Securities" and "United States Taxation--Potential Extension of
Interest Payment Period and Original Issue Discount." The trading price of the
Preferred Securities is likely to be sensitive to the level of interest rates
generally. If interest rates rise in general, the trading price of the Preferred
Securities may decline to reflect the additional yield requirements of the
purchasers. Conversely, a decline in interest rates may increase the trading
price of the Preferred Securities, although any increase may be moderated by
other factors, including by USF&G's ability to redeem the Debentures on the
dates set forth in the Prospectus Supplement. In addition, because payment of
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Distributions on the Preferred Securities is dependent upon USF&G's ability to
pay interest on the Debentures, negative developments affecting USF&G may
adversely affect the trading price of the Preferred Securities.
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USE OF PROCEEDS
Each of USF&G Capital I and USF&G Capital II will use all proceeds received
from the sale of its Preferred Securities to purchase Debentures of USF&G.
Unless otherwise set forth in the applicable Prospectus Supplement, the net
proceeds from the sale of the Debentures are expected to be used by USF&G for
general corporate purposes, including redemption, in whole or in part, of
outstanding shares of USF&G's $4.10 Series A Convertible Exchangeable Preferred
Stock.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
On a consolidated basis, the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends include the
earnings and fixed charges of USF&G and its subsidiaries for the periods
indicated.
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<TABLE>
<CAPTION>
Nine Months Ended Years Ended December 31
September 30, 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges . . . . . . 3.9 .8 (A) 2.5 1.4 (B) (C)
Ratio of Earnings to
Combined Fixed
Charges and Preferred
Stock Dividends . . . . . 2.7 .6 (A) 1.5 .8 (B) (C)
- ---------
</TABLE>
(A) USF&G's earnings were inadequate to cover fixed charges and combined
fixed charges and preferred stock dividends by $43 million and $89
million, respectively, for the year ended December 31, 1994. In 1994,
USF&G recorded facilities exit costs of $183,000,000 relating to its
plan to consolidate its Baltimore headquarters facilities by relocating
all USF&G personnel currently located at its office building in
downtown Baltimore to other facilities owned by USF&G. The ratio of
consolidated earnings before facilities exit costs to fixed charges was
3.1 in 1994, and the ratio of consolidated earnings before facilities
exit costs to combined fixed charges and preferred stock dividends was
1.8 in 1994.
(B) USF&G had a net loss for the year ended December 31, 1991 and earnings
were inadequate to cover fixed charges and combined fixed charges and
preferred stock dividends by $150 million and $187 million,
respectively, for the year ended December 31, 1991.
(C) USF&G had a net loss for the year ended December 31, 1990 and earnings
were inadequate to cover fixed charges and combined fixed charges and
preferred stock dividends by $436 million and $453 million,
respectively, for the year ended December 31, 1990.
The ratios were determined by dividing consolidated earnings by total
fixed charges and total fixed charges and preferred stock dividends,
respectively. Earnings consist of income from continuing operations before
considering income taxes, the cumulative effect of accounting changes, and fixed
charges. Fixed charges consist of interest and that portion of rentals which is
deemed to be an appropriate interest factor. All amounts have been restated to
reflect the mergers with Discover Re Managers, Inc. and Victoria Financial
Corporation, both of which were consummated in the second quarter of 1995 and
were accounted for as pooling-of-interests.
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DESCRIPTION OF THE PREFERRED SECURITIES
Pursuant to the terms of each Trust Agreement, the Issuers will issue the
Preferred Securities and the Common Securities (together, the "Trust
Securities"). The Preferred Securities of a particular issue will represent
undivided beneficial interests in the assets of the related Issuer and the
holders thereof will be entitled to a preference in certain circumstances with
respect to Distributions and amounts payable on redemption or liquidation over
the Common Securities of such Issuer, as well as other benefits as described in
the corresponding Trust Agreement. This summary of certain provisions of each
Trust Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of each Trust
Agreement, including the definitions therein of certain terms, and the Trust
Indenture Act. The form of the Trust Agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part and each Trust
Agreement has been qualified as an indenture under the Trust Indenture Act. Each
of the Issuers is a legally separate entity and the assets of one are not
available to satisfy the obligations of the other.
General
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer except
as described under "--Subordination of Common Securities." The Debentures will
be held in trust by the Property Trustee for the benefit of the holders of the
related Trust Securities. Each Guarantee Agreement executed by USF&G for the
benefit of the holders of each Issuer's Preferred Securities (each, the
"Guarantee") is a guarantee on a subordinated basis with respect to the related
Preferred Securities but only guarantees payment of Distributions or amounts
payable on redemption or liquidation of such Preferred Securities when the
related Issuer has funds on hand available to make such payments, and does not
otherwise guarantee such payments. See "Description of the Guarantee." USF&G
has, through the Guarantee, the Trust Agreement, the Debentures, the Indenture
and the Expense Agreement, taken together, fully and unconditionally guaranteed
all of the Issuer's obligations under the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer's obligations under the Preferred
Securities. See "Relationship Among the Preferred Securities, the Debentures and
the Guarantee."
Distributions
Each Issuer's Preferred Securities represent undivided beneficial interests
in the assets of such Issuer. The Distributions on each Preferred Security will
be payable at a rate specified in the Prospectus Supplement for such Preferred
Securities. The amount of Distributions payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months.
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Distributions on the Preferred Securities will be cumulative, will accrue
from the date of original issuance and will be payable quarterly in arrears on
the dates in each year specified in the Prospectus Supplement (each date on
which Distributions are payable in accordance with the foregoing, a
"Distribution Date") (except as otherwise described below). In the event that
any date on which Distributions are otherwise payable on the Preferred
Securities is not a Business Day, 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 to any such delay) except that, if such
Business Day is in the next succeeding calendar year, payment of such
Distribution shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on the Distribution Date. A
"Business Day" shall mean any day other than a Saturday or a Sunday or a day on
which banking institutions in The City of New York are authorized or required by
law or executive order to remain closed or a day on which the principal
corporate trust office of the Property Trustee or the Debenture Trustee is
closed for business.
It is anticipated that the income of each Issuer available for distribution
to its holders of Preferred Securities will be limited to payments under the
corresponding series of Debentures in which the Issuer will invest the proceeds
from the issuance and sale of its Preferred Securities and its Common
Securities. See "Description of the Debentures." If USF&G does not make interest
payments on such Debentures, the Property Trustee will not have funds available
to pay Distributions on the corresponding Preferred Securities.
The Prospectus Supplement will include a description of the terms and
circumstances under which USF&G will have the right under the Indenture to
extend, from time to time, the interest payment period on each series of the
Debentures for up to 60 months, provided that such Extension Period may not
extend beyond the maturity or redemption date of the Debentures. Quarterly
Distributions on the corresponding Preferred Securities also will be deferred
(but will continue to accumulate) during any such Extension Period.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the securities register of such Issuer on the relevant
record dates, which, as long as the Preferred Securities remain in
book-entry-only form, will be one Business Day prior to the relevant
Distribution Date. Subject to any applicable laws and regulations and the
provisions of the applicable Trust Agreement, each such payment will be made as
described under "--Book-Entry-Only Issuance--The Depository Trust Company." In
the event any Preferred Securities are not in book-entry-only form, the relevant
record date for such Preferred Securities shall be the date 15 days prior to the
relevant Distribution Date.
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Redemption
Upon the repayment of any series of Debentures, whether at maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
repayment will be applied by the Property Trustee to redeem the corresponding
Trust Securities, upon not less than 20 nor more than 90 days' notice, at the
redemption price (the "Redemption Price") including all accrued and unpaid
Distributions to the redemption date (the "Redemption Date"), plus the amount of
premium, if any, paid by USF&G upon the concurrent redemption of a Like Amount
(as defined in the Trust Agreement) of Debentures. The redemption terms of a
particular series of Debentures and the related Preferred Securities will be set
forth in the accompanying Prospectus Supplement, and will include a right to
redeem the Preferred Securities or exchange Debentures for the Preferred
Securities upon the occurrence of certain Tax Events and Investment Company
Events (in either case, "Special Events") and Grantor Trust Events, each as
defined in the Trust Agreement and further described in the Prospectus
Supplement.
Redemption Procedures
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the proceeds from the contemporaneous redemption of
the corresponding series of Debentures. Redemptions of the Preferred Securities
shall be made and the Redemption Price shall be payable on each Redemption Date
only to the extent that the Issuer has funds on hand available for the payment
of such Redemption Price. See also "--Subordination of Common Securities."
If an Issuer gives a notice of redemption in respect of its Preferred
Securities, then, by 11:00 a.m., New York City time, on the Redemption Date, to
the extent funds are available and so long as the Preferred Securities are in
book-entry-only form, the Property Trustee will irrevocably deposit with The
Depository Trust Company ("DTC") funds sufficient to pay the applicable
Redemption Price for the Preferred Securities being redeemed and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
beneficial owners of such Preferred Securities. See "--Book Entry-Only
Issuance--The Depository Trust Company." If such Preferred Securities are no
longer in book-entry-only form, the Issuer, to the extent funds are available,
will irrevocably deposit with the paying agent for such Preferred Securities
funds sufficient to pay the applicable Redemption Price for the Preferred
Securities being redeemed and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption shall be
payable to the holders of such Preferred Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of the holders of such Preferred Securities so called for redemption will
cease, except the right of the holders of such Preferred Securities to receive
the Redemption Price, but without interest on such Redemption Price, and such
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Preferred Securities will cease to be outstanding. In the event that any date
fixed for redemption of Preferred Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not paid
either by the Issuer or by USF&G pursuant to the Guarantee as described under
"Description of the Guarantee," Distributions on such Preferred Securities will
continue to accrue at the then applicable rate, from the original Redemption
Date to the 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.
Subject to applicable law, USF&G or 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.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Debentures to holders of Preferred Securities shall be made to
the applicable recordholders thereof as they appear on the register for such
Preferred Securities on the relevant record date, which shall be one Business
Day prior to the relevant Redemption Date or liquidation date, as applicable;
provided, however, that in the event that any Preferred Securities are not in
book entry only form, the relevant record date for such Preferred Securities
shall be the date 15 days prior to the Redemption Date or liquidation date, as
applicable.
If less than all the securities issued by an Issuer are to be redeemed on a
Redemption Date, then the aggregate amount of such securities to be redeemed
shall be allocated 3% to the Common Securities of such Issuer and 97% to its
Preferred Securities. The particular Preferred Securities to be redeemed shall
be selected not more than 90 days prior to the Redemption Date by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or integral multiples thereof) of the liquidation preference of
Preferred Securities of a denomination larger than $25. The Property Trustee
shall promptly notify the securities registrar in writing of the Preferred
Securities selected for redemption and, in the case of any Preferred Securities
selected for partial redemption, the liquidation preference thereof to be
redeemed. For all purposes of each Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Preferred Securities
shall relate, in the case of any Preferred Securities redeemed or to be redeemed
only in part, to the portion of the aggregate liquidation preference of
Preferred Securities which has been or is to be redeemed.
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Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, each Issuer's
Trust Securities, as applicable, shall be made pro rata based on the liquidation
preference of such Trust Securities; provided, however, that if on any
Distribution Date or Redemption Date a Debenture Event of Default (as defined
above) shall have occurred and be continuing, no payment of any Distribution on,
or Redemption Price of, any of the Issuer's Common Securities, and no other
payment on account of the redemption, liquidation or other acquisition of such
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the Issuer's outstanding
Preferred Securities for all Distribution periods terminating on or prior
thereto, or in the case of payment of the Redemption Price the full amount of
such Redemption Price on all of the Issuer's outstanding Preferred Securities
shall have been made or provided for, and all funds available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions on, or Redemption Price of, the Issuer's Preferred Securities then
due and payable.
In the case of any Event of Default under any Trust Agreement resulting
from a 'Debenture Event of Default', the holder of such Issuer's Common
Securities will be deemed to have waived any right to act with respect to such
Event of Default under such Trust Agreement until the effect of such Event of
Default with respect to such Preferred Securities has been cured, waived or
otherwise eliminated. Until any such Event of Default under the applicable Trust
Agreement with respect to the Preferred Securities has been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of such Preferred Securities and not on behalf of the holder of the
Issuer's Common Securities, and only the holders of such Preferred Securities
will have the right to direct the Property Trustee to act on their behalf.
Liquidation Distribution Upon Termination
Pursuant to each Trust Agreement, each Issuer shall be terminated by USF&G
on the first to occur of: (i) December 31, 2045, the expiration of the term of
such Issuer; (ii) the bankruptcy, dissolution or liquidation of USF&G; (iii) the
distribution of a Like Amount (as defined in the Trust Agreement) of the
corresponding series of Debentures to the holders of its Preferred Securities
and Common Securities following the occurrence of a Special Event or in the
event the Issuer is not or will not be taxed as a grantor trust, but a Tax Event
has not occurred (a "Grantor Trust Event"); (iv) the redemption of all of the
Issuer's Preferred Securities; and (v) an order for the dissolution of the
Issuer shall have been entered by a court of competent jurisdiction.
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If an early termination occurs as described in clause (ii), (iii) or (v)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of such Issuer as provided by applicable law, to the
holders of such Preferred Securities and Common Securities a Like Amount of the
corresponding series of Debentures, unless such distribution is determined by
the Property Trustee not to be practical, in which event such holders will be
entitled to receive out of the assets of the Issuer available for distribution
to holders, after satisfaction of liabilities to creditors of such Issuer as
provided by applicable law, an amount equal to, in the case of holders of
Preferred Securities, the aggregate of the stated liquidation preference of $25
per Preferred Security plus accrued and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because such Issuer has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable by such Issuer on its Preferred
Securities shall be paid on a pro rata basis. The holder(s) of such Issuer's
Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of its Preferred Securities, except that
if a Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities.
Events of Default; Notice
Any one of the following events constitutes an "Event of Default" under
each Trust Agreement with respect to the Preferred Securities issued thereunder
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default; or
(ii) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a period
of 30 days (subject to the deferral of any due date in the case of an Extension
Period); or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Preferred Security or Common Security when it becomes due and
payable; or
(iv) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Issuer Trustees in such Trust Agreement (other than
a covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (ii) or (iii) above), and continuation of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the defaulting Issuer Trustee or Trustees by
the holders of at least 25% in aggregate liquidation preference of the
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outstanding Preferred Securities of the applicable Issuer, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" under such Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by USF&G to appoint a successor
Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's Preferred
Securities, the Administrative Trustees and USF&G, as Depositor, unless such
default shall have been cured or waived. USF&G, as Depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
In the event payment of any Distribution is not made when otherwise due and
payable because of the exercise of any right the Issuer may have to defer
payment of such Distribution as provided in the Trust Agreement or otherwise,
then such failure to make payment shall not be deemed an Event of Default as
long as such payment is deferred in accordance with the Trust Agreement or
otherwise.
Under each Trust Agreement, if the Property Trustee fails to enforce its
rights under the Trust Agreement or the Indenture, any holder of Preferred
Securities issued thereunder may, to the fullest extent permitted by law and
subject to the terms of the Trust Agreement and the Indenture, after such
holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against any person to enforce the Property
Trustee's rights under the Trust Agreement and the Indenture without first
instituting a legal proceeding against the Property Trustee or any other person.
In addition, to the fullest extent permitted by law, to the extent that any
action under the Indenture is entitled to be taken by the holders of a series of
Debentures and such holders fail to take such action, holders of the related
Preferred Securities may take such action.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities with
respect to Distributions as described above. See "--Liquidation Distribution
Upon Termination" and "--Subordination of Common Securities."
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Removal of Issuer Trustees
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in liquidation preference of the outstanding Preferred
Securities. In no event will the holders of the Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the holder of the Common Securities. No
resignation or removal of an Issuer Trustee and no appointment of a successor
trustee shall be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the Trust Agreement.
Co-Trustees and Separate Property Trustee
Unless a Debenture Event of Default under a Trust Agreement shall have
occurred and be continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any jurisdiction in which
any part of the Trust Property (as defined in each Trust Agreement) may at the
time be located, the holder of the applicable Common Securities and the
Administrative Trustees shall have the power to appoint one or more persons
either to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to act as separate trustee of any such property,
in either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default under
the Indenture has occurred and is continuing, the Property Trustee alone shall
have power to make such appointment.
Merger or Consolidation of Issuer Trustees
Any corporation or other entity into which the Property Trustee or the
Delaware Trustee may be merged or converted or with which it may be
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
corporation or other entity succeeding to all or substantially all the corporate
trust business of such Trustee, shall be the successor of such Trustee under the
Trust Agreements, provided such corporation or other entity shall be otherwise
qualified and eligible.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under "Description of the
Guarantee--Amendments and Assignment" and as otherwise required by law and each
Trust Agreement, the holders of the Preferred Securities will have no voting
rights.
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A Trust Agreement may be amended from time to time by the Depositor and the
Issuer Trustees, without the consent of the holders of the Preferred Securities,
(i) to cure any ambiguities, defects or inconsistencies or (ii) to make any
other change that does not adversely affect in any material respect the
interests of any holder of Preferred Securities. A Trust Agreement may be
amended by the Depositor and the Issuer Trustees in any other respect, with the
consent of the holders of a majority in liquidation preference of Preferred
Securities, except to change the amount, timing, currency or method of payment
of any Distribution or Liquidation Distribution, restrict the right of a holder
of a Preferred Security to institute suit for enforcement of any Distribution or
Liquidation Distribution change the purpose of the Issuer, authorize the
issuance of any additional interests in the Issuer, change the Redemption Price
or affect the limited liability of any holder of Preferred Securities.
Notwithstanding the foregoing, no amendment may be made without receipt by the
Issuer of an opinion of counsel experienced in such matters to the effect that
such amendment will not affect the Issuer's status as a grantor trust for United
States federal income tax purposes or its exemption from regulation as an
investment company under the Investment Company Act of 1940, as amended.
So long as any Debentures are held by the Property Trustee, the Issuer
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee (as hereinafter
defined), or executing any trust or power conferred on the Property Trustee with
respect to such Debentures, (ii) waive any past default that is waiveable under
Section 513 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable or
(iv) consent to any amendment, modification or termination of the Indenture or
the Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
liquidation preference of all outstanding Preferred Securities; provided,
however, that where a consent or approval under the Indenture would require the
consent or approval of each holder of Debentures affected thereby, no such
consent or approval shall be given without the prior consent of each holder of
the corresponding Preferred Securities. The Issuer Trustees shall not revoke any
action previously authorized or approved by a vote of the holders of Preferred
Securities except by subsequent vote of the holders of the Preferred Securities.
The Property Trustee shall notify all holders of the Preferred Securities of any
notice of default with respect to the Debentures. In addition to obtaining the
foregoing approvals of the holders of the Preferred Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Issuer will not be
classified as a corporation or partnership for United States federal income tax
purposes on account of such action and will continue to be classified as a
grantor trust for United States federal income tax purposes.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee 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 given
to each holder of record of Preferred Securities in the manner set forth in each
Trust Agreement.
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No vote or consent of the holders of Preferred Securities will be required
for each Issuer to redeem and cancel its Preferred Securities in accordance with
the applicable Trust Agreement.
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 USF&G, the Issuer Trustees or any affiliate of
USF&G or any Issuer Trustee, shall, for purposes of such vote or consent, be
treated as if they were not outstanding.
Payment and Paying Agency
Payments in respect of the Preferred Securities shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable Distribution Dates
or, if any Issuer's Preferred Securities are not held by DTC, such payments
shall be made by check mailed to the address of the holder entitled thereto as
such address shall appear on the Securities Register. The paying agent (the
"Paying Agent") shall initially be The Bank of New York and any co-paying agent
chosen by The Bank of New York, and acceptable to the Administrative Trustees
and USF&G. The Bank of New York shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Administrative Trustees, the Property
Trustee and USF&G, as Depositor. In the event that The Bank of New York shall no
longer be the Paying Agent, the Administrative Trustees shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company and
have a combined capital and surplus of U.S.$50,000,000).
Book-Entry-Only Issuance -- The Depository Trust Company
DTC will act as securities depositary for all of the Preferred Securities.
The Preferred Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates will be issued for the Preferred Securities
of each Issuer, representing in the aggregate the total number of such Issuer's
Preferred Securities, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc. (the "New York Stock Exchange"), the American Stock Exchange, Inc. and the
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National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain custodial relationships with Direct
Participants, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities of such Issuer is
discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the Preferred Securities. If less than all of an Issuer's Preferred Securities
are being redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the Property Trustee as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts such Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made by the
Property Trustee to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
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not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC, the
Property Trustee, the Issuer of the relevant Preferred Securities or USF&G,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of Distributions to DTC is the responsibility of the
Property Trustee, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursements of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities at any time by giving reasonable
notice to the Property Trustee and USF&G. In the event that a successor
securities depositary is not obtained, definitive Preferred Security
certificates representing such Preferred Securities are required to be printed
and delivered. The Depositor, at its option, may decide to discontinue use of
the system of book-entry transfers through DTC (or a successor depositary).
After a Debenture Event of Default, the holders of a majority in liquidation
preference of Preferred Securities may determine to discontinue the system of
book-entry transfers through DTC. In any such event, definitive certificates for
such Issuer's Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and USF&G believe to be
accurate, but the Issuers and USF&G assume no responsibility for the accuracy
thereof. Neither the Issuers nor USF&G has any responsibility for the
performance by DTC or its Participants of their respective obligations as
described herein or under the rules and procedures governing their respective
operations.
Registrar and Transfer Agent
The Bank of New York will initially act as registrar and transfer agent for
the Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange.
The Issuers will not be required to register or cause to be registered the
transfer of their Preferred Securities after such Preferred Securities have been
called for redemption.
Information Concerning the Property Trustee
The Property Trustee is the sole Trustee under the Trust Agreements for
purposes of the Trust Indenture Act and shall have and be subject to all of the
duties and responsibilities specified with respect to an indenture trustee under
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that Act. The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Trust Agreements and, after an Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative courses of action, construe ambiguous provisions in a
Trust Agreement or is unsure of the application of any provision of a Trust
Agreement, and the matter is not one on which holders of Preferred Securities
are entitled under the Trust Agreement to vote, then the Property Trustee shall
take such action as is directed by USF&G as Depositor and, if not so directed,
may take such action as it deems advisable and in the best interests of the
holders of the Preferred Securities and the Common Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuers in such a way that no Issuer will be
deemed to be an "investment company" required to be registered under the
Investment Company Act of 1940, as amended,r ed as a corporation or a
partnership for United States federal income tax purposes and so that the
Issuers will qualify as grantor trusts for United States federal income tax
purposes and the Debentures will be treated as indebtedness of USF&G for United
States federal income tax purposes. In this connection, USF&G and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the applicable certificate of trust of the Issuer or the
applicable Trust Agreement, that USF&G and the Administrative Trustees determine
in their discretion to be necessary or desirable for such purposes, as long as
such action does not materially adversely affect the interests of the holders of
the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
Neither Issuer may borrow money or issue debt or mortgages or pledge any of
its assets.
Except as otherwise provided in the Trust Agreements, any action requiring
the consent or vote of the Trustees shall be approved by not less than a
majority of the Administrative Trustees.
Governing Law
The Trust Agreements will be governed by and construed in accordance with
the laws of the State of Delaware.
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DESCRIPTION OF THE GUARANTEE
Each Guarantee will be executed and delivered by USF&G concurrently with
the issuance by each Issuer of its Preferred Securities for the benefit of the
holders from time to time of such Preferred Securities. The Bank of New York
will act as indenture trustee ("Guarantee Trustee") under each Guarantee for the
purposes of compliance with the Trust Indenture Act. This summary of certain
provisions of the Guarantees does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of each
Guarantee Agreement, including the definitions therein of certain terms, and the
Trust Indenture Act. The form of the Guarantee has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. Reference in
this summary to Preferred Securities means that Issuer's Preferred Securities to
which a Guarantee relates. The Guarantee Trustee will hold each Guarantee for
the benefit of the holders of the related Issuer's Preferred Securities.
General
USF&G will irrevocably and unconditionally agree on a subordinated basis,
to the extent set forth in each Guarantee, to pay in full, to the holders of the
related Issuer's Preferred Securities, the Guarantee Payments (as defined below)
(except to the extent paid by or on behalf of such Issuer), as and when due,
regardless of any defense, right of set-off or counterclaim which such Issuer
may have or assert. The following payments, to the extent not paid by an Issuer
(the "Guarantee Payments"), will be subject to the applicable Guarantee (without
duplication): (i) any accumulated and unpaid Distributions required to be paid
on such Preferred Securities, to the extent that such Issuer has funds on hand
available therefor, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption, to the extent that such Issuer has funds on
hand available therefor, or (iii) upon a voluntary or involuntary termination,
winding up or liquidation of such Issuer (unless the corresponding series of
Debentures are distributed to holders of such Preferred Securities), (a) the
aggregate liquidation preference of $25 per Preferred Security plus all accrued
and unpaid distributions on the Preferred Securities to the date of payment, to
the extent the Issuer has funds on hand available to make such a payment or, if
different, (b) the amount of assets of such Issuer remaining available for
distribution to holders of Preferred Securities in liquidation of the Issuer.
USF&G's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by USF&G to the holders of the applicable
Preferred Securities or by causing the Issuer to pay such amounts to such
holders. While the assets of USF&G will not be available for making
Distributions on any Preferred Securities if the Issuer does not have funds on
hand available therefor as described above, USF&G has agreed to pay the expenses
of the related Issuer. Accordingly, each Guarantee, together with the backup
undertakings, consisting of USF&G's obligations under such agreement to pay
expenses and related covenants contained in each Trust Agreement and USF&G's
obligations under the Indenture and the Debentures, provide for USF&G's full and
unconditional guarantee of the Preferred Securities to the extent set forth
above.
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No single document standing alone or operating in conjunction with fewer
than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Issuer's obligations under the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Debentures and the Guarantee."
Status of the Guarantee
Each Guarantee will constitute an unsecured obligation of USF&G and will
rank subordinate and junior in right of payment to all liabilities of USF&G
except those made pari passu or subordinate to such Guarantee expressly by their
terms. The Trust Agreements provide that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of the
related Guarantee.
Each Guarantee will rank pari passu with all other such Guarantees issued
by USF&G. Each Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against USF&G to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the related Preferred
Securities. Each Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer or upon
distribution to the holders of the Preferred Securities of the corresponding
series of Debentures.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Preferred Securities (in which case no
consent will be required), no Guarantee may be amended without the prior
approval of the holders of not less than a majority of the aggregate liquidation
preference of such outstanding Preferred Securities not held by USF&G or an
affiliate thereof. The manner of obtaining any such approval will be as set
forth under "Description of the Preferred Securities--Voting Rights; Amendment
of Trust Agreement." All guarantees and agreements contained in each Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
USF&G and shall inure to the benefit of the holders of the related Preferred
Securities then outstanding.
Events of Default
An event of default under each Guarantee will occur upon the failure of
USF&G to perform any of its payment or other obligations thereunder; provided,
however, that except with respect to a default in payment of any Guarantee
Payments, USF&G shall have received notice of such default and shall not have
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cured such default within 60 days after receipt of such notice. The holders of
not less than a majority in aggregate liquidation preference of the related
Preferred Securities not held by USF&G or an affiliate thereof have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of such Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under such
Guarantee.
If the Guarantee Trustee fails to enforce any Guarantee, any holder of the
related Preferred Securities may institute a legal proceeding directly against
USF&G to enforce its rights under such Guarantee without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other person
or entity.
USF&G, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not USF&G is in compliance with all the
conditions and covenants applicable to it under the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by USF&G in performance of any Guarantee, undertakes to perform only
such duties as are specifically set forth in each Guarantee and, after an event
of default with respect to any Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or her
own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
Termination of the Guarantee
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the amounts payable upon liquidation of the related Issuer or
upon distribution of Debentures to the holders of the related Preferred
Securities. Each Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the related Preferred
Securities must restore payment of any sums paid under such Preferred Securities
or such Guarantee.
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Governing Law
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
The Expense Agreement
Pursuant to the Expense Agreement entered into by USF&G under the Trust
Agreement (the "Expense Agreement"), USF&G will irrevocably and unconditionally
guarantee to each person or entity to whom the Issuer becomes indebted or
liable, the full payment of any indebtedness, expenses or liabilities of the
Issuer, other than obligations of the Issuer to pay to the holders of any Common
Securities being held by USF&G or Preferred Securities being issued pursuant to
the Prospectus Supplement the amounts due such holders pursuant to the terms of
such Trust Securities.
DESCRIPTION OF THE DEBENTURES
This summary of certain terms and provisions of the Debentures and the
Indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to the Debentures and the Indenture, the forms of
which are filed as exhibits to the Registration Statement of which this
Prospectus forms a part.
General
Concurrently with the issuance of each Issuer's Preferred Securities, the
Issuer will invest the proceeds thereof and the consideration paid by USF&G for
the Common Securities in a corresponding series of Debentures issued by USF&G to
the Issuer. The Debentures will be unsecured subordinated obligations of USF&G
issued under the Indenture. Each series of Debentures will be in the principal
amount equal to the aggregate stated liquidation preference of the related
Preferred Securities plus USF&G's concurrent investment in the Common Securities
and will rank pari passu with all other series of Debentures. USF&G may also
decide to sell the Debentures directly to the public. In such event, the terms
of such offering will be described in a Prospectus Supplement related to such
offering. The Indenture does not limit the aggregate principal amount of
Debentures which may be issued thereunder. The Bank of New York will act as
trustee (the "Debenture Trustee") under the Indenture.
Interest
The Debentures will bear interest at the rate per annum specified in the
Prospectus Supplement. Such interest will be payable quarterly in arrears on the
dates in each year specified in the Prospectus Supplement (each, an "Interest
Payment Date") to the person in whose name each Debenture is registered, subject
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to certain exceptions, at the close of business on the Business Day next
preceding such Interest Payment Date. It is anticipated that the Debentures will
be held in the name of the Property Trustee in trust for the benefit of the
holders of the Preferred Securities and the Common Securities.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the 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, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable.
The Prospectus Supplement will include a description of the terms and
circumstances under which USF&G will have the right under the Indenture to
extend, from time to time, the interest payment period on each series of the
Debentures for up to 60 months, provided that the Extension Period may not
extend beyond the maturity or redemption date of the Debentures. Quarterly
Distributions on the corresponding Preferred Securities also will be deferred
(but will continue to accumulate) during any such Extension Period.
Subordination
The Indenture provides that all payments by USF&G in respect of the
Debentures shall be subordinate to the prior payment in full of all amounts due
and payable in respect of all Senior Indebtedness. The term "Senior
Indebtedness" means the principal of, and premium, if any, and interest, if any
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to USF&G to the extent that such claim
for post-petition interest is allowed in such proceeding) payable on, and fees,
expenses, reimbursement obligations, indemnity obligations and other amounts due
on or in connection with, any Indebtedness incurred, assumed or guaranteed by
USF&G, whether on or prior to the date of the Indenture or thereafter incurred,
assumed or guaranteed, unless, in the instrument creating or evidencing the same
or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Debentures or to other
Indebtedness which is pari passu with the Debentures. Without limiting the
generality of the foregoing, Senior Indebtedness shall include (i) USF&G's Zero
Coupon Convertible Subordinated Notes due 2009 and (ii) Intercompany
Indebtedness.
"Indebtedness" means (without duplication and without regard to any portion
of principal amount that has not accrued and to any interest component thereof
(whether accrued or imputed) that is not due and payable) with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds, debentures,
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notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business), (v) every
capital lease obligation of such Person, (vi) every Hedging Obligation (as
defined in the Indenture), (vii) every obligation of others secured by a lien on
any asset of such Person, whether or not such obligation is assumed by such
Person, (viii) every obligation of the type referred to in clauses (i) through
(vii) of another Person and all dividends of another Person the payment of
which, in either case, such Person has guaranteed or is responsible or liable,
directly or indirectly, as obligor or otherwise, and (ix) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to any liability of the kind described in any of the preceding
clauses (i) through (viii).
"Intercompany Indebtedness" means indebtedness of USF&G to any of its
directly or indirectly owned subsidiaries.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, any assignment for the
benefit of creditors, marshaling of assets or any , bankruptcy, insolvency, debt
restructuring or other similar proceedings in connection with any insolvency or
bankruptcy proceeding of USF&G, the holders of Senior Indebtedness shall be
first entitled to receive payment in full of principal of, and premium, if any,
and interest, if any, on such Senior Indebtedness before the holders of the
Debentures or the Property Trustee on behalf of the holders shall be entitled to
receive or retain any payment in respect of principal of, premium, if any, or
interest on the Debentures or distributions of any assets or securities.
Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of USF&G, the holders of Senior Indebtedness will first be
entitled to receive payment in full of principal of, and premium, if any, and
interest, if any, on such Senior Indebtedness before the holders of the
Debentures will be entitled to receive or retain any payment in respect of the
principal of, and premium, if any, or interest, if any, on the Debentures.
By reason of such subordination, in the event of liquidation or insolvency,
creditors of USF&G who are not holders of Senior Indebtedness or Debentures may
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than the holders of the Debentures.
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In the event of the acceleration of the maturity of any Debenture, the
holders of all Senior Indebtedness outstanding at the time of such acceleration
will first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration before the holders of the
Debentures will be entitled to receive any payment upon the principal of,
premium, if any, or interest, if any, on the Debentures.
No payments on account of principal of, premium, if any, or interest in
respect of the Debentures may be made if there shall have occurred and be
continuing a default with respect to any Senior Indebtedness resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
If the Debenture Trustee or the Property Trustee, as holder of the
Debentures, shall have received any payment on account of the principal of,
premium, if any, or interest on the Debentures when such payment is prohibited
and before all amounts due and payable on Senior Indebtedness are paid in full
or payment thereof is provided for and such fact shall have been made known to
the Debenture Trustee or the Property Trustee, then such payment shall be
received and held in trust for the holders of Senior Indebtedness.
Nothing in the Indenture shall limit the right of the Debenture Trustee,
the Property Trustee or the holders of the Debentures to pursue any rights or
remedies under applicable law against USF&G; provided that all Senior
Indebtedness shall be paid before holders of the Debentures are entitled to
receive any payment from USF&G of principal of or interest on the Debentures.
Upon the payment in full of all Senior Indebtedness, the holders of the
Debentures shall be subrogated to any rights of the holders of such Senior
Indebtedness to receive payments or distributions of assets of USF&G in respect
of such Senior Indebtedness until the Debentures shall be paid in full.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which USF&G may incur.
Certain Covenants of USF&G
USF&G will covenant, as to each series of Debentures, that it will not, and
will not permit any subsidiary of USF&G to, declare or pay any dividend or
distribution on, or redeem, purchase, acquire, or make a liquidation or
guarantee payment (other than payments under a Guarantee) with respect to, any
shares of USF&G's capital stock or any other security of USF&G (including other
Debentures) ranking pari passu with or junior in interest to the Debentures
(except (x) for payments with securities junior in interest to the Debentures,
(y) for payments made on any series of Debentures upon the stated maturity of
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such Debentures or (z) for payments of accrued dividends (and cash in lieu of
fractional shares) upon the conversion into common stock of any convertible
preferred stock of USF&G of any series now or hereafter outstanding, in
accordance with the terms of such stock), if at such time (i) there shall have
occurred any event of which USF&G has actual knowledge that (a) with the giving
of notice or the lapse of time, or both, would constitute an Event of Default
with respect to Debentures of such series and (b) in respect of which USF&G
shall not have taken reasonable steps to cure, (ii) USF&G shall be in default
with respect to its payment of any obligations under the Guarantee relating to
the Preferred Securities of the Issuer to which Debentures of such series have
been issued or (iii) USF&G shall have given notice of its selection of an
Extension Period as provided in the Indenture with respect to Debentures of such
series and such Extension Period, or any extension thereof shall have commenced
and be continuing. USF&G will also covenant, as to each series of Debentures,
(i) to maintain directly or indirectly 100% ownership of the Common Securities
of each Issuer to which Debentures have been issued, provided that certain
successors which are permitted pursuant to the Indenture may succeed to USF&G's
ownership of the Common Securities, (ii) not to voluntarily terminate, wind-up
or liquidate any Issuer, except (A) in connection with the distribution of
Debentures to the holders of the Preferred Securities in liquidation of such
Issuer, (B) as permitted by the terms of the Debentures, or (C) in connection
with certain mergers, consolidations or amalgamations permitted by the related
Trust Agreement and (iii) to use its reasonable efforts, consistent with the
terms and provisions of the related Trust Agreement, to cause such Issuer to
remain a business trust and otherwise not to be classified as an association
taxable as a corporation for United States federal income tax purposes.
Modification of the Indenture
From time to time, USF&G and the Debenture Trustee may, without the consent
of the holders of any series of Debentures, amend, waive or supplement the
Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act, or making any
other change that does not adversely affect the rights of any holder of
Debentures in any material respect. The Indenture contains provisions permitting
USF&G and the Debenture Trustee, with the consent of the holders of not less
than a majority in principal amount of each outstanding series of Debentures
affected, to modify the Indenture in a manner affecting the rights of the
holders of such series of the Debentures; provided that no such modification
may, without the consent of the holder of each outstanding Debenture so
affected, (i) change the stated maturity of, or any installment of principal of
or interest on, any series of Debentures, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
reduce any premium payable upon redemption of the Debentures, or change any
place of payment where, or the coin or currency in which, any Debenture or any
premium or interest is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the stated maturity or redemption
date, or modify the provisions of the Indenture with respect to the
subordination of the Debentures in a manner adverse to the holders of the
Debentures, (ii) reduce the percentage of principal amount of Debentures of any
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series, the holders of which are required to consent to any such modification of
the Indenture or (iii) modify certain provisions of the Indenture relating to
the waiver of past defaults or compliance by USF&G with the covenants therein;
and provided, that no such modification may adversely affect the rights of any
holder of the Preferred Securities and any waiver of any Debenture Event of
Default or of compliance with any covenant under the Indenture shall require the
consent of the holders of at least a majority of the aggregate liquidation
preference amount of the related series of Preferred Securities then
outstanding.
In addition, USF&G and the Debenture Trustee may execute, without the
consent of any holder of Debentures, any supplemental Indenture for the purpose
of creating any new series of Debentures.
Events of Default
The Indenture provides that any one or more of the following described
events with respect to a series of Debentures that has occurred and is
continuing constitutes an "Event of Default" with respect to such series of
Debentures:
(a) failure for 30 days to pay any interest on such series of the
Debentures, including any Additional Interest (as defined in the Indenture) in
respect thereof, when due (subject to the deferral of any due date in the case
of an Extension Period); or
(b) failure to pay any principal on such series of Debentures when due
whether at maturity, upon redemption, by declaration or otherwise; or
(c) failure to pay any sinking fund payment when and as due by the terms of
such series of Debentures; or
(d) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to USF&G
from the Debenture Trustee or the holders of at least 25% in principal amount of
such series of outstanding Debentures or the holders of at least 25% in
liquidation preference of the related Preferred Securities then outstanding; or
(e) certain events in bankruptcy, insolvency or reorganization of USF&G.
The Debenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of such series of Debentures may declare the
principal due and payable immediately upon an Event of Default, and should the
Debenture Trustee or such holders of such Debentures fail to make such
declaration the holders of not less than 25% in aggregate liquidation preference
of the related Preferred Securities shall have such right. The holders of a
majority in aggregate outstanding principal amount of such series of Debentures
(or if such declaration has been made by the holders of the Preferred
Securities, the holders of a majority in aggregate liquidation preference of the
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related Preferred Securities) may annul such declaration and waive the default
if the default has been cured (or, in certain circumstances, even if the default
has not been cured) and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration and any Additional
Interest has been deposited with the Debenture Trustee. The holders of a
majority in outstanding principal amount of such series of Debentures (or in the
case of a proceeding instituted by a holder or holders of Preferred Securities,
the holders of a majority in liquidation preference of the related Preferred
Securities then outstanding) have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture Trustee.
The holders of a majority in outstanding principal amount of the Debentures
affected thereby may, on behalf of the holders of all the Debentures, waive any
past default, except a default in the payment of principal or interest (unless
such default has been cured and a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Debenture; provided that if any related Preferred
Security remains outstanding, no waiver of a default that adversely affects the
holders of such Preferred Securities shall be effective without the consent of a
majority of the aggregate liquidation preference of the related Preferred
Securities then outstanding. USF&G is required to file annually with the
Debenture Trustee a certificate as to whether or not USF&G is in compliance with
all the conditions and covenants applicable to it under the Indenture.
Notwithstanding any other provision in the Indenture, holders of Debentures
have an absolute and unconditional right to receive payment of the principal of
and any premium and interest on the Debentures on the respective stated
maturities expressed in such Debentures (or, in the case of redemption, on the
redemption date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such holder. Any
holder of Preferred Securities shall have the right to institute suit for the
enforcement of any such payment to such holder with respect to Debentures
relating to such Preferred Securities having a principal amount equal to the
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aggregate liquidation preference of such Preferred Securities held by such
holder.
Under the terms of the Trust Agreement, and for so long as the Debentures
are held by the Property Trustee, certain actions with respect to the
Debentures, including certain actions in respect of an Event of Default under
the Debentures, require the prior approval of the holders of the Preferred
Securities. See "Description of Preferred Securities - Voting Rights; Amendment
of Trust Agreement." In case an Event of Default shall occur and be continuing
as to a series of Debentures, the Property Trustee will have the right to
declare the principal of and the interest on such Debentures (including any
Additional Interest) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to such Debentures.
Consolidation, Merger, Sale or Conveyance
The Indenture provides that USF&G may not consolidate with or merge with or
into any other person or sell, convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any person, unless (i)
the successor person is a corporation, partnership, trust or other entity
organized and validly existing under the laws of the United States or any state
thereof or the District of Columbia, and expressly assumes by a supplemental
indenture all of the obligations of USF&G under the Debentures, the Indenture
and any Guarantees, (ii) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of USF&G or any subsidiary
as a result of such transaction as having been incurred by it at the time of the
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing, (iii) such transaction does not give rise to any breach or violation
of any Trust Agreement or any Guarantee and (iv) certain other conditions are
met.
Satisfaction and Discharge
Under the terms of the Indenture, USF&G will be discharged from any and all
obligations in respect of any series of Debentures (except in each case for
certain obligations to register the transfer or exchange of such Debentures,
replace stolen, lost or mutilated Debentures and hold moneys for payment in
trust) if (subject to certain conditions) USF&G deposits with the Debenture
Trustee, in trust, (i) cash and/or (ii) United States Government Obligations (as
defined in the Indenture), which through the payment of interest thereon and
principal thereof in accordance with their terms will provide cash in an amount
sufficient to pay all the principal of, and interest on, such series of
Debentures on the dates such payments are due in accordance with the terms of
such Debentures.
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Form, Exchange, and Transfer
The Debentures will be issuable only in registered form, without coupons
and only in denominations of $25 and integral multiples thereof.
Subject to the terms of the Indenture, Debentures may be presented for
registration of transfer or exchange (duly endorsed or accompanied by
satisfactory instruments of transfer) at the office of the Security Registrar
(as defined in the Indenture). No service charge will be made for any
registration of transfer or exchange of Debentures, but USF&G may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Such transfer or exchange will be effected upon
the Security Register of such transfer agent, as the case may be. USF&G has
appointed the Debenture Trustee as the initial Security Registrar. USF&G may at
any time designate additional transfer agents or rescind the designation of any
transfer agent or approve a change in the office through which any transfer
agent acts.
If the Debentures have been called for redemption, in whole or in part,
USF&G will not be required to issue, register the transfer of or exchange any
Debentures which have been called for redemption, except the unredeemed portion
of any such Debentures being redeemed in part.
Payment and Paying Agents
Payment of interest on a Debenture on any Interest Payment Date will be
made to the person in whose name such Debenture (or one or more predecessor
securities) is registered at the close of business on the Regular Record Date
(as defined in the Indenture) for such interest.
Principal or any interest on the Debentures will be payable at the office
of such Paying Agent (as defined in the Indenture) or Paying Agents as USF&G may
designate for such purpose from time to time, except that at the option of
USF&G, payment of any interest may be made by check mailed to the address of the
person entitled thereto as such address appears in the Security Register or by
wire transfer. The principal corporate trust office of the Debenture Trustee in
New York, New York is initially designated as USF&G's sole Paying Agent for
payments with respect to the Debentures. USF&G may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts.
Governing Law
The Indenture and the Debentures will be governed by and construed in
accordance with the laws of the State of New York.
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Information Concerning the Debenture Trustee
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provision, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Debenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its duties
if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
The Bank of New York has a course of regular dealings with USF&G in the
ordinary course of business and from time to time may also make short-term loans
and revolving credit and term loans to USF&G and its affiliates.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEES
As long as payments of interest and other payments are made when due on
each series of Debentures, such payments will be sufficient to cover
Distributions and other payments due on the corresponding Preferred Securities,
primarily because (i) the aggregate principal amount of each series of
Debentures will be equal to the sum of the aggregate stated liquidation amount
of the corresponding Preferred Securities and corresponding Common Securities;
(ii) the interest rate and interest and other payment dates on each series of
Debentures will match the Distribution rate and Distribution and other payment
dates for the corresponding Preferred Securities; (iii) each Expense Agreement
entered into by USF&G pursuant to each Trust Agreement provides that USF&G shall
pay for all and any costs, expenses and liabilities of such Issuer except the
Issuer's obligations to holders of its Preferred Securities under such Preferred
Securities; and (iv) each Trust Agreement further provides that the Issuer will
not engage in any activity that is not consistent with the limited purposes of
such Issuer. The combination of the foregoing provisions together with the
Guarantee from USF&G effectively provide a full and complete guarantee of the
Preferred Securities by USF&G.
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for such payments are guaranteed
by USF&G as and to the extent set forth under "Description of the Guarantee." If
and to the extent that USF&G does not make payments on any series of Debentures,
such Issuer will not pay Distributions or other amounts due on its Preferred
Securities although such amounts will continue to accumulate.
If the Guarantee Trustee fails to enforce any Guarantee, a holder of any
related Preferred Security may institute a legal proceeding directly against
USF&G to enforce its rights under such Guarantee without first instituting a
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legal proceeding against the Guarantee Trustee, the Issuer or any other person
or entity.
Each Issuer's Preferred Securities evidence the rights of the holders
thereof to the benefits of such Issuer, and each Issuer exists for the sole
purpose of issuing its Trust Securities and investing the proceeds thereof in a
corresponding series of Debentures, maintaining the status of such Issuer as a
grantor trust for United States federal income tax purposes and engaging only in
those other activities that are necessary and incidental thereto.
Upon any voluntary or involuntary termination, winding-up or liquidation of
any Issuer involving the liquidation of the corresponding series of Debentures,
the holders of Preferred Securities will be entitled to receive, out of assets
held by such Issuer, the Liquidation Distribution in cash. See "Description of
the Preferred Securities--Liquidation Distribution Upon Termination." Upon any
voluntary or involuntary liquidation or bankruptcy of USF&G, the Property
Trustee, as holder of the Debentures, would be a subordinated creditor of USF&G,
subordinated in right of payment to all Senior Indebtedness, but entitled to
receive payment in full of principal and interest, before any stockholders of
USF&G receive payments or distributions. Since USF&G is the guarantor under each
Guarantee and has agreed to pay for all costs, expenses and liabilities of each
Issuer (other than the Issuer's obligations to the holders of its Preferred
Securities), the positions of a holder of such Preferred Securities and a holder
of such Debentures relative to other creditors and to stockholders of USF&G in
the event of liquidation or bankruptcy of USF&G should be substantially the
same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Debentures. However, in the
event of payment defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Debentures provide that no payments may be made
in respect of the Debentures until such Senior Indebtedness has been paid in
full or any payment default thereunder has been cured or waived. Failure to make
required payments on any series of Debentures (subject to the right to extend
the payment date of any interest during an Extension Period) would constitute an
Event of Default under the Indenture.
UNITED STATES TAXATION
General
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Preferred
Securities and represents the opinion of Piper & Marbury L.L.P., special tax
counsel to USF&G and each Issuer, insofar as it relates to matters of law and
legal conclusions. Unless otherwise stated, this summary deals only with
Preferred Securities held as capital assets by holders who purchase the
Preferred Securities upon original issuance ("Initial Holders"). It does not
deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
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in securities or currencies, tax-exempt investors, or persons that will hold the
Preferred Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to United States Holders (as defined herein) whose
functional currency is not the United States dollar, or persons who are not
United States Holders or shareholders, partners or beneficiaries of a holder of
Preferred Securities. A "United States Holder" means a holder that is a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust the income of which is subject to
United States federal income taxation regardless of its source. Further, this
summary does not include any description of any alternative minimum tax
consequences or the tax laws of any state or local government or of any foreign
government that may be applicable to the Preferred Securities. Furthermore, the
discussion below is based upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked
or modified so as to result in federal income tax consequences different from
those discussed below. In this regard, it should be noted that, in connection
with current negotiations regarding the federal budget, the Administration has
made a proposal more fully described below that may have the effect that
interest payable by USF&G on the Debentures will not be fully deductible for
United States federal income tax purposes.
PROSPECTIVE PURCHASERS OF PREFERRED SECURITIES, INCLUDING PERSONS WHO ARE
NOT UNITED STATES HOLDERS AND PERSONS WHO PURCHASE PREFERRED SECURITIES IN THE
SECONDARY MARKET, ARE ADVISED TO CONSULT WITH THEIR TAX ADVISORS AS TO THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION
OF PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS
THE EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS.
While USF&G believes, based upon the advice of its counsel, that the
Debentures will be treated as indebtedness for United States federal income tax
purposes, holders of Preferred Securities should note that the Internal Revenue
Service (the "IRS") may attempt to treat the Debentures as equity rather than
indebtedness for tax purposes. If the IRS were successful in such attempt, the
Debentures would be subject to redemption, or the related Issuer could be
liquidated by distributing the Debentures to the Securityholders, at the option
of USF&G as described under "Description of the Preferred
Securities--Redemption" and "Description of Preferred Securities - Liquidation
Distribution Upon Termination."
On December 7, 1995, the U.S. Department of Treasury announced a Balanced
Budget Proposal which contained an amendment to the Code which would classify a
debt instrument issued on or after December 7, 1995 as equity if the instrument
had a term exceeding 20 years and was not classified as indebtedness on the
issuer's balance sheet. On December 19, 1995, the Treasury announced that it
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will recommend that Congress grandfather issues filed with the Commission before
December 7, 1995. A text of proposed statutory language published on January 23,
1996 embodies the December 7, 1995 effective date recommendation. Because the
registration statement for the Preferred Securities was filed with the
Commission on December 29, 1995, the provisions of the proposed amendment would
be applicable to the Preferred Securities if such provisions were enacted with
the currently proposed effective date. Accordingly, if Debentures having a term
in excess of 20 years were issued and the proposal were subsequently enacted in
its current form, the Debentures would be subject to redemption, or the related
Issuer could be liquidated by distributing the Debentures to the
Securityholders, at the option of USF&G as described under "Description of the
Preferred Securities--Redemption and "Description of Preferred Securities
Liquidation Distribution Upon Termination."' USF&G cannot predict whether this
proposed amendment may be modified or other legislation may be enacted which
might affect the character of the Debentures or otherwise affect the Preferred
Securities offered hereby.
Income from Preferred Securities
In connection with the issuance of the Debentures, Piper & Marbury L.L.P.
will render its opinion to the effect that, under then current law and assuming
full compliance with the terms of the Trust Agreement, each Issuer will be
classified as a grantor trust and not as an association taxable as a
corporation.
As a consequence, each holder of Preferred Securities will be considered
the owner of a pro rata portion of the Debentures held by the corresponding
Issuer. As a further consequence, each holder of Preferred Securities will be
required to include in gross income his or her pro rata share of the income
accrued on the Debentures held by the corresponding Issuer. Such income should
not exceed Distributions received by the holders of Preferred Securities on the
Preferred Securities except in the case where USF&G extends an interest payment
period as described in "Description of the Preferred Securities--Distributions."
No portion of such income will be eligible for the dividends received deduction.
Potential Extension of Interest Payment Period and Original Issue Discount
To the extent and as further provided in the Prospectus Supplement, USF&G
will have the option to extend from time to time the interest payment period on
the Debentures to a period not exceeding 60 months but not beyond the maturity
or redemption date of the Debentures. As a result of USF&G's option to extend
the interest payment period, the Debentures will be treated as issued with
"original issue discount" for United States federal income tax purposes.
Accordingly, a holder of Preferred Securities will accrue interest income (i.e.,
original issue discount) in accordance with a constant yield method over the
term of the Debentures (including any Extension Period), regardless of the
receipt of cash with respect to the period to which such income is attributable.
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As a result, holders of Preferred Securities during an Extension Period
will include interest in gross income in advance of the receipt of cash, and any
holders of Preferred Securities who dispose of Preferred Securities prior to the
record date for the payment of Distributions following such Extension Period
will include interest in gross income, but will not receive any cash from the
corresponding Issuer related thereto. A holder's tax basis in the pro rata share
of Debentures represented by his or her Preferred Securities will be increased
by the amount of any original issue discount that is included in income without
a receipt of cash, and will be decreased when and if such cash is subsequently
received by the holder of the Preferred Securities.
Market Discount or Premium
Holders of Preferred Securities other than Initial Holders may be
considered to have acquired their undivided interests in the Debentures with
market discount, acquisition premium or amortizable bond premium, as such terms
are defined for United States federal income tax purposes. Such holders are
advised to consult their tax advisors as to the income tax consequences of the
acquisition, ownership and disposition of the Preferred Securities.
Receipt of Debentures Upon Liquidation of an Issuer
Under certain circumstances described in "Description of the Preferred
Securities--Redemption," and "Description of Preferred Securities-Liquidation
Distribution Upon Termination." USF&G may cause an Issuer to be terminated and
cause the Debentures to be distributed to the holders of Preferred Securities in
liquidation of such holders' interests in the Issuer. Under current United
States federal income tax law and interpretation and assuming the Issuer is
treated as a grantor trust, such a distribution would not be treated as a
taxable event to holders of the Preferred Securities. Such a tax-free
transaction would result in the holder of Preferred Securities receiving a pro
rata share of the Debentures having an aggregate tax basis equal to the
aggregate tax basis that the holder had in such pro rata share immediately prior
to the distribution. A holder's holding period for such Debentures would include
the period for which the Preferred Securities were held by such holder. If an
Issuer were liquidated pursuant to the exercise by USF&G of its right to
liquidate upon the occurrence of a Grantor Trust Event, holders of Preferred
Securities could recognize gain or loss upon the exchange of their Preferred
Securities for a pro rata share of the Debentures. If an Issuer were liquidated
pursuant to the exercise by USF&G of its right to liquidate upon the occurrence
of a Grantor Trust Event, holders of Preferred Securities could recognize gain
or loss upon the exchange of their Preferred Securities for a pro rata share of
the Debentures.
Sale or Other Disposition of the Preferred Securities
Gain or loss will be recognized on a sale, including a redemption for cash,
of Preferred Securities in an amount equal to the difference between the amount
realized and the tax basis of a holder of Preferred Securities in his or her pro
rata share of Debentures represented by such Preferred Securities. Gain or loss
recognized by a holder of Preferred Securities on the sale or exchange of
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Preferred Securities held for more than one year generally will be taxable as
long-term capital gain or loss.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to amounts
received by noncorporate United States Holders as payments with respect to, or
proceeds of the sale within the United States of, the Preferred Securities and
"backup withholding" at a rate of 31% will apply to such amounts if the holder
fails to provide a correct taxpayer identification number. Any withheld amounts
generally will be allowed as a credit against the holder's federal income tax
liability, provided that the required return is timely filed with the IRS.
PLAN OF DISTRIBUTION
The Preferred Securities may be sold in a public offering to or through
underwriters or dealers designated from time to time. Each Issuer may sell its
Preferred Securities as soon as practicable after effectiveness of the
Registration Statement of which this Prospectus is a part. The names of any
underwriters or dealers involved in the sale of the Preferred Securities of any
particular Issuer in respect of which this Prospectus is delivered, the number
of Preferred Securities to be purchased by any such underwriters and any
applicable commissions or discounts will be set forth in the Prospectus
Supplement.
Underwriters may offer and sell Preferred Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. In connection with the sale of Preferred Securities,
underwriters may be deemed to have received compensation from USF&G and/or the
applicable Issuer in the form of underwriting discounts or commissions and may
also receive commissions. Underwriters may sell Preferred Securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters.
Any underwriting compensation paid by USF&G and/or the applicable Issuer to
underwriters in connection with the offering of Preferred Securities, and any
discounts, concessions or commissions allowed by such underwriters to
participating dealers, will be set forth in an applicable Prospectus Supplement.
Underwriters and dealers participating in the distribution of Preferred
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of such Preferred
Securities may be deemed to be underwriting discounts and commissions, under the
Act. Underwriters and dealers may be entitled, under agreement with USF&G and
the applicable Issuer, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Act, and to
reimbursement by USF&G for certain expenses.
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In connection with the offering of the Preferred Securities of any Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set forth
in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set forth
in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, USF&G and/or the applicable Issuer and/or any of their affiliates
in the ordinary course of business.
Each Issuer's Preferred Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom an Issuer's
Preferred Securities are sold by such Issuer for public offering and sale may
make a market in such Preferred Securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. Such Preferred Securities may or may not be listed on a national
securities exchange. No assurance can be given as to the liquidity of or the
existence of trading markets for any Preferred Securities.
EXPERTS
The consolidated financial statements of USF&G appearing or incorporated by
reference in USF&G's Annual Report, restated on Form 10-K/A, for the year ended
December 31, 1994 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated by
reference herein. Such consolidated financial statements are incorporated herein
by reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
With respect to the unaudited condensed consolidated interim financial
information for the three-month periods ended March 31, 1995 and 1994, the three
and six-month periods ended June 30, 1995 and 1994, and the three and nine-month
periods ended September 30, 1995 and 1994, incorporated by reference in the
Registration Statement, the independent auditors have reported that they have
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports included in USF&G's
quarterly report on Form 10-Q/A for the quarter ended March 31, 1995, and
quarterly reports on Form 10-Q for the quarters ended June 30, 1995 and
September 30, 1995, and incorporated herein by reference, state that they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. The auditors are not subject to the liability provisions of
Section 11 of the Securities Act for their reports on the unaudited interim
financial information because those reports are not "reports" or a "part" of the
Registration Statement prepared or certified by the auditors within the meaning
of Sections 7 and 11 of the Securities Act.
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LEGAL MATTERS
Certain legal matters will be passed upon for USF&G and the Issuers by
Piper & Marbury L.L.P., Baltimore, Maryland. Certain legal matters will be
passed on for the underwriters by Davis Polk & Wardwell, New York, New York who
may rely on the opinion of Piper & Marbury L.L.P. as to certain matters of
Maryland law. Certain matters of Delaware law relating to the validity of the
Preferred Securities will be passed upon by Richards, Layton and Finger, P.A.,
Wilmington, Delaware, special Delaware counsel to USF&G and the Issuers. L. P.
Scriggins, a Director of USF&G, is a partner of Piper & Marbury L.L.P. As of
December 27, 1995, lawyers in the firm of Piper & Marbury L.L.P. beneficially
owned in the aggregate approximately 20,000 shares of Common Stock or Common
Stock equivalents of USF&G.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities being registered, other
than underwriting discounts and commissions. All of the amounts shown are
estimates, except the registration fee.
SEC Registration Fee...........................$ 72,413.79
Legal Fees and Expenses........................$100,000.00
Blue Sky Fees and Expenses.....................$ 30,000.00
Accounting Fees and Expenses...................$ 17,500.00
Fees of Trustee................................$ 24,000.00
Miscellaneous..................................$ 10,086.21
TOTAL.....................$254,000.00
Item 15. Indemnification of Directors and Officers.
The Charter of the Registrant provides for indemnification and
limitation of liability of directors and officers of the Registrant as follows:
The Corporation shall indemnify (a) its directors to the full extent
provided by the General Laws of the State of Maryland now or hereafter in
force, including the advance of expenses under the procedures provided by
such laws; (b) its officers to the same extent it shall indemnify its
directors; and (c) its officers who are not directors to such further
extent as shall be authorized by the Board of Directors and be consistent
with law. The foregoing shall not limit the authority of the Corporation to
indemnify other employees and agents consistent with law.
To the fullest extent permitted by Maryland statutory or decisional law, as
amended or interpreted, no director or officer of this Corporation shall be
personally liable to the Corporation or its stockholders for money damages.
No amendment of the Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the benefits provided to directors and
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officers under this provision with respect to any act or omission which
occurred prior to such amendment or repeal.
The Maryland General Corporation Law provides that a corporation may
indemnify any director made a party to a proceeding by reason of service in that
capacity unless it is established that: (1) the act or omission of the director
was material to the matter giving rise to the proceeding and (a) was committed
in bad faith or (b) was the result of active and deliberate dishonesty, or (2)
the director actually received an improper personal benefit in money, property
or services, or (3) in the case of any criminal proceeding, the director had
reasonable cause to believe that the act or omission was unlawful. To the extent
that a director has been successful in defense of any proceeding, the Maryland
General Corporation Law provides that he shall be indemnified against reasonable
expenses incurred in connection therewith. A Maryland corporation may indemnify
its officers to the same extent as its directors and to such further extent as
is consistent with law.
Item 16. Exhibits
1.1 Form of Underwriting Agreement
3.1 Restated Charter of USF&G (incorporated herein by reference to
Exhibit 3(a) to USF&G's Annual Report on Form 10-K for the year
ended December 31, 1993, File No. 1-8233)
3.2 Amended Bylaws of USF&G (incorporated herein by reference to
Exhibit 3(b) to USF&G's Annual Report on Form 10-K/A for the year
ended December 31, 1994, filed November 14, 1995)
4.1 Description of Shareholder Rights Plan (incorporated herein by
reference to Form 8-A, filed September 21, 1987)
4.2 Form of Subordinated Indenture between USF&G and The Bank of New
York
4.3* Trust Agreement of USF&G Capital I
4.4* Certificate of Trust of USF&G Capital I
4.5* Trust Agreement of USF&G Capital II
4.6* Certificate of Trust of USF&G Capital II
4.7 Form of Amended and Restated Trust Agreement for each of USF&G
Capital I and USF&G Capital II.
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4.8 Form of Preferred Security (included in Exhibit 4.7)
4.9 Form of Guarantee
5.1 Opinion of Richards, Layton & Finger, P.A.
5.2** Opinion of Piper & Marbury L.L.P.
8 Opinion of Piper & Marbury L.L.P. as to certain tax matters.
12* Statement re: Computation of ratio of earnings to fixed charges
and ratio of earnings to combined fixed charges and preferred
stock dividends (such computations for the years ended December
31, 1994, 1993 and 1992 are incorporated by reference to Exhibit
12 to USF&G's 1994 Annual Report on Form 10-K/A; computations for
the years ended December 31, 1991 and 1990 are included as an
exhibit hereto).
15 Acknowledgment of Ernst & Young LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5.1)
23.3 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.2)
24.1*Powers of Attorney for USF&G (included on signature pages
hereto)
24.2*Powers of Attorney for J. Kendall Huber (included in Exhibits
4.3 and 4.5)
25.1*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, under the
Indenture
25.2*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, with respect to
the Amended and Restated Declaration of Trust of USF&G Capital I
<PAGE>
25.3*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, with respect to
the Amended and Restated Declaration of Trust of USF&G Capital II
25.4*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, under the
Preferred Securities Guarantee of USF&G with respect to the
Preferred Securities of USF&G Capital I
25.5*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, under the
Preferred Securities Guarantee of USF&G with respect to the
Preferred Securities of USF&G Capital II
28 Information from reports furnished to state regulatory
authorities (incorporated herein by reference to Exhibit 28 to
USF&G's Annual Report on Form 10-K/A for the year ended December
31, 1994, filed November 14, 1995)
* Previously filed
** To be filed by amendment.
Item 17. Undertakings.
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) under the Securities Act of
1933, if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration Statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrants undertake hereby that, for purposes of
determining liability under the Securities Act of 1933, each filing of the
Registrants' annual reports pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, USF&G
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Baltimore, State of
Maryland, on February __, 1996.
USF&G CORPORATION
By: /s/ Norman P. Blake, Jr.
------------------------
Norman P. Blake, Jr.
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities indicated on February 6, 1996.
Signature Title
Director, Chairman of the Board, President and Chief
* Executive Officer
- ------------------------
Norman P. Blake, Jr.
Executive Vice President, Chief Financial Officer and
* Principal Accounting Officer
- ------------------------
Dan L. Hale
* Director
- ------------------------
H. Furlong Baldwin
* Director
- ------------------------
Michael J. Birck
* Director
- ------------------------
George L. Bunting, Jr.
<PAGE>
* Director
- ------------------------
Robert E. Davis
* Director
- ------------------------
Dale F. Frey
* Director
- ------------------------
Robert E. Gregory, Jr.
*
- ------------------------
Robert J. Hurst
* Director
- ------------------------
Wilbur G. Lewellen
* Director
- ------------------------
Henry A. Rosenberg, Jr.
* Director
- ------------------------
Larry P. Scriggins
* Director
- ------------------------
Anne Marie Whittemore
* Director
- ------------------------
R. James Woolsey
*By:
- ------------------------
Norman P. Blake
Attorney in Fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, USF&G Capital I
and USF&G Capital II each certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Amendment No. 1 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Baltimore, State of
Maryland, on February 6 1996.
USF&G CAPITAL I
By: /s/ J. Kendall Huber
------------------------
J. Kendall Huber, as Trustee
USF&G CAPITAL II
By: /s/ J. Kendall Huber
------------------------
J. Kendall Huber, as Trustee
By: /s/ J. Kendall Huber
------------------------
J. Kendall Huber, in his individual
capacity as Trustee of USF&G
Capital I and II and as
attorney-in-fact
USF&G CORPORATION, as Depositor
By: /s/ J. Kendall Huber
------------------------
J. Kendall Huber, Vice President -
Deputy General Counsel
<PAGE>
EXHIBIT INDEX
Exhibit
Numbers
1.1 Form of Underwriting Agreement
3.1 Restated Charter of USF&G (incorporated herein by reference to
Exhibit 3(a) to USF&G's Annual Report on Form 10-K for the year
ended December 31, 1993, File No. 1-8233)
3.2 Amended Bylaws of USF&G (incorporated herein by reference to
Exhibit 3(b) to USF&G's Annual Report on Form 10-K/A for the year
ended December 31, 1994, filed November 14, 1995)
4.1 Description of Shareholder Rights Plan, incorporated herein by
reference to Form 8-A, filed September 21, 1987.
4.2 Form of Subordinated Indenture between USF&G and The Bank of New
York
4.3* Trust Agreement of USF&G Capital I
4.4* Certificate of Trust of USF&G Capital I
4.5* Trust Agreement of USF&G Capital II
4.6* Certificate of Trust of USF&G Capital II
4.7 Form of Amended and Restated Trust Agreement for each of USF&G
Capital I and USF&G Capital II.
4.8 Form of Preferred Security (included in Exhibit 4.9)
4.9 Form of Guarantee
5.1 Opinion of Richards, Layton & Finger, P.A.
5.2** Opinion of Piper & Marbury L.L.P.
8 Opinion of Piper & Marbury L.L.P. as to certain tax matters.
<PAGE>
12* Statement re: Computation of ratio of earnings to fixed charges
and ratio of earnings to combined fixed charges and preferred
stock dividends (such computations for the years ended December
31, 1994, 1993 and 1992 are incorporated by reference to Exhibit
12 to USF&G's 1994 Annual Report on Form 10-K/A; computations for
the years ended December 31, 1991 and 1990 are included as an
exhibit hereto).
15* Acknowledgment of Ernst & Young LLP
23.1* Consent of Ernst & Young LLP
23.2 Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5.1)
23.3 Consent of Piper & Marbury L.L.P. (included in Exhibit 5.3)
24.1*Powers of Attorney for USF&G (included on signature pages to the
Registration Statement)
24.2*Powers of Attorney for J. Kendall Huber (included in Exhibits
4.3 and 4.5)
25.1*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, under the
Indenture
25.2*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, with respect to
the Amended and Restated Declaration of Trust of USF&G Capital I
25.3*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, with respect to
the Amended and Restated Declaration of Trust of USF&G Capital II
25.4*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, under the
Preferred Securities Guarantee of USF&G with respect to the
Preferred Securities of USF&G Capital I
<PAGE>
25.5*Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee, under the
Preferred Securities Guarantee of USF&G with respect to the
Preferred Securities of USF&G Capital II
28 Information from reports furnished to state regulatory
authorities (incorporated herein by reference to Exhibit 28 to
USF&G's Annual Report on Form 10-K/A for the year ended December
31, 1994, filed November 14, 1995)
- -------------
* Previously filed.
** To be filed by amendment.
Exhibit 1.1
USF&G CORPORATION
USF&G CAPITAL
Preferred Securities
UNDERWRITING AGREEMENT
To the Underwriters named in Schedule I hereto.
Ladies and Gentlemen:
USF&G Corporation, a Maryland corporation (the "Company"), and USF&G
Capital , a statutory business trust formed under the laws of the State of
Delaware (the "Trust"), propose, subject to the terms and conditions started
herein, that the Trust issue and sell to the Underwriters named in Schedule I
(the "Underwriters") an aggregate of _______________ (the "Firm Securities") of
its ____ % Cumulative Quarterly Income Preferred Securities, Series (liquidation
amount $ _____ per preferred security) (the "Preferred Securities") and, at the
election of the Underwriters, up to an additional _______________ (the "Optional
Securities") of its Preferred Securities. The Firm Securities and the Optional
Securities that the Underwriters elect to purchase pursuant to paragraph 2 are
collectively referred to as the "Securities". The Preferred Securities, which
will have the specific terms set forth in Schedule II, represent undivided
beneficial interests in the assets of the Trust, guaranteed by the Company as to
the payment of distributions, and as to payments on liquidation or redemption,
to the extent the Trust has funds on hand therefor as set forth in a guarantee
agreement (the "Guarantee") between the Company and The Bank of New York, as
trustee (the "Guarantee Trustee"). The proceeds of the sale by the Trust of the
Securities and an aggregate of up to _________ (or assuming full exercise by the
Underwriters of the over-allotment option described herein) of its Common
Securities (liquidation amount $ per common security) (the "Common Securities")
are to be invested in ____ % Deferrable Interest Subordinated Debentures, Series
, Due ______ (the "Debentures") of the Company, to be issued pursuant to an
Indenture, as supplemented by the First Supplemental Indenture (as supplemented,
the "Indenture"), between the Company and The Bank of New York, as trustee (the
"Debenture Trustee").
1. Each of the Trust and the Company, jointly and severally, represents and
warrants to each of the Underwriters that:
(a) ______ A registration statement (as specified in Schedule II
hereto) on Form S-3 in respect of the Securities, the Debentures and the
Guarantee (collectively, the "Registered Securities") has been filed with
the Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto, each in
1
<PAGE>
the form heretofore delivered or to be delivered to the firms designated as
representatives of the Underwriters in Schedule II hereto (the
"Representatives", which term also refers to a single firm acting as sole
representative of the Underwriters and to Underwriters who act without any
firm being designated as their representative) and, excluding exhibits to
such registration statement, but including all documents incorporated by
reference in the prospectus contained therein, to the Representatives for
each of the other Underwriters have been declared effective by the
Commission in such form; no other document with respect to such
registration statement or document incorporated by reference therein has
heretofore been filed or transmitted for filing with the Commission (other
than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Act of 1933, as amended
(the "Act") each in the form heretofore delivered to the Representatives);
and no stop order suspending the effectiveness of such registration
statement has been issued and no proceeding for that purpose has been
initiated or, to the best of the Company's or the Trust's knowledge,
threatened by the Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant to Rule 424 of
the rules and regulations of the Commission under the Act , being
hereinafter called a "Preliminary Prospectus"; the various parts of such
registration statement, including all exhibits thereto and the documents
incorporated by reference in the prospectus contained in the registration
statement at the time such part of the registration statement became
effective but excluding the Forms T-1 of the trustees under the Indenture,
the Guarantee and the Trust Agreement (as hereinafter defined), each as
amended at the time such part of the registration statement became
effective, being hereinafter called the "Registration Statement"; the
prospectus as supplemented to specifically refer to the final terms and
conditions of the Securities, in the form in which it has most recently
been filed, or transmitted for filing, with the Commission on or prior to
the date of this Agreement, being hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement);
and any reference to the Preliminary Prospectus, Prospectus or Registration
Statement shall be deemed to mean such document after excluding any
statement in any such document which does not constitute a part thereof
pursuant to Rule 412 of Regulation C under the Act and after substituting
therefor any statement modifying or superseding such excluded statement.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
2
<PAGE>
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and 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 made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
the Representatives expressly for use therein.
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents 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; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder 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 this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein.
(d) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
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 this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through the Representatives expressly for use therein.
(e) None of the Trust, the Company or any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material loss
or interference with its business from fire, explosion, flood or other
3
<PAGE>
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been (i) any material addition, or any
development involving a prospective material addition, to either the
Company's consolidated reserve for property/casualty insurance claims and
claims expense or the consolidated reserve for life insurance policy
benefits, (ii) any change in the capital stock (other than shares of common
stock of the Company issued pursuant to employee benefit, dividend
reinvestment or similar plans or as the result of the conversion of an
outstanding security), short-term debt or long-term debt of the Company or
any of its subsidiaries, or (iii) any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
securityholders' equity or results of operations of the Trust or of the
Company and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Prospectus.
(f) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; each of
United States Fidelity and Guaranty Company and Fidelity and Guaranty Life
Insurance Company (each a "Principal Subsidiary" and, collectively, the
"Principal Subsidiaries") has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation.
(g) The Company has authorized capital stock as set forth in the
Prospectus and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable; all of the outstanding beneficial interests in the assets
of the Trust have been duly authorized and issued, are fully paid and
non-assessable, and conform to the descriptions thereof contained in the
Prospectus; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims.
(h) 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 financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(i) The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
4
<PAGE>
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries.
(j) Ernst & Young, who have certified certain financial statements of
the Company and its subsidiaries, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder.
(k) Each of the Principal Subsidiaries is duly licensed to conduct an
insurance business under the insurance laws of each jurisdiction in which
the conduct of its business requires such licensing and of each
jurisdiction in which the failure to be so licensed would have,
individually or in the aggregate, a material adverse effect on the business
operations, consolidated financial position, shareholders' equity or
results of operations of the Company and its subsidiaries, taken as a
whole; each of the Company and the Principal Subsidiaries has all consents,
approvals, authorizations, orders, registrations and qualifications of or
with, and is in compliance with, all statutes, orders, rules and
regulations of, all courts and governmental agencies and bodies having
jurisdiction over it and any of its properties, except where the failure to
have any such consent, approval, authorization, order, registration or
qualification, or so to comply, would not, individually or in the aggregate
with all other such failures, have a material adverse effect on the
business operations, consolidated financial position, shareholders' equity
or results of operations of the Company and its subsidiaries, taken as a
whole; and there is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or investigation that reasonably could
lead to the revocation, termination or suspension of, or render invalid or
otherwise ineffective, any such license, consent, approval, authorization,
order, registration or qualification, other than any such revocation,
termination, suspension, invalidity or ineffectiveness that would not,
individually or in the aggregate with all other such revocations,
terminations, suspensions, invalidity and ineffectiveness, have a material
adverse effect on the business operations, consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole.
(l) All property-casualty reinsurance treaties and arrangements to
which any of the Company and the Principal Subsidiaries is the ceding party
are in full force and effect, with such exceptions as would not
individually or in the aggregate have a material adverse effect on the
consolidated financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, and neither the Company nor
any of the Principal Subsidiaries is in violation of, or in default in the
performance, observance or fulfillment of, any obligation, agreement,
covenant or condition contained therein, except to the extent that any such
violation or default would not, individually or in the aggregate with all
such other violations and defaults, have a material adverse effect on the
consolidated financial position, shareholders' equity or results of
5
<PAGE>
operations of the Company and its subsidiaries; neither the Company nor any
of the Principal Subsidiaries has received any notice from any of the other
parties to such treaties, contracts and arrangements that such other party
intends not to perform in any material respect such treaty, contract or
arrangement, and the Company and the Principal Subsidiaries have no reason
to believe that any of the other parties to such treaties, contracts and
arrangements will be unable to perform in all material respects its
obligations under such treaties, contracts and arrangements.
(m) The statutory financial statements of the Principal Subsidiaries
required or permitted to be prepared in accordance with the insurance laws,
rules and regulations of any jurisdiction to which the Principal
Subsidiaries are subject, and from which certain ratios and other financial
and statistical data contained in the Registration Statement and the
Prospectus have been derived, have, for each relevant period, been prepared
in conformity in all material respects with the requirements of such
insurance laws, rules and regulations and present fairly the information
purported to be shown.
(n) The reserves carried on the books of the Principal Subsidiaries
for payment of all benefits, losses, claims and expenses under outstanding
insurance policies and programs are adequate, under presently accepted
actuarial principles applied on a consistent basis, to cover the total
amount of all reasonably anticipated liabilities under all issued and
outstanding insurance policies and programs under which the Principal
Subsidiaries may have any liability.
(o) None of the Company, the Trust nor any of their affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075 Florida Statutes.
(p) This Agreement has been duly authorized, executed and delivered on
behalf of the Company and the Trust.
(q) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act of
the State of Delaware (the "Delaware Business Trust Act") with the power
and authority to own its property and conduct its business as described in
the Prospectus, and has conducted and will conduct no business other than
the transactions contemplated by this Agreement and described in the
Prospectus; the Trust is not a party to or bound by any agreement or
instrument other than this Agreement, the Amended and Restated Declaration
of Trust (the "Trust Agreement") between the Company and the trustees named
therein (the "Trustees") and the agreements and instruments contemplated by
the Trust Agreement and described in the Prospectus; the Trust has no
liabilities or obligations other than those arising out of the transactions
contemplated by this Agreement and the Trust Agreement and described in the
Prospectus; based on expected operations and current law, the Trust is not
and will not be classified as an association taxable as a corporation for
United States federal income tax purposes; and there are no legal or
governmental proceedings pending to which the Trust is a party or of which
any property of the Trust is the subject and, to the best of the Company's
6
<PAGE>
and the Trust's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(r) The Securities have been duly and validly authorized by the Trust,
and, when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-assessable undivided
beneficial interests in the assets of the Trust and will conform to the
description thereof contained in the Prospectus; the issuance of the
Securities is not subject to preemptive or other similar rights; the
Securities will have the rights set forth in the Trust Agreement, and the
terms of the Securities are valid and binding on the Trust; the holders of
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.
(s) The Common Securities have been duly and validly authorized by the
Trust, and, when issued and delivered by the Trust to the Company against
payment therefor as described in the Prospectus, will be duly and validly
issued and fully paid and non-assessable undivided beneficial interests in
the assets of the Trust and will conform 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 each Time of Delivery
(as defined in paragraph 4 hereof), all of the issued and outstanding
Common Securities of the Trust will be directly owned by the Company free
and clear of any liens, encumbrances, claims or equities; and the Common
Securities and the Securities are the only interests authorized to be
issued by the Trust.
(t) The Guarantee, the Debentures, the Trust Agreement, the Agreement
as to Expenses and Liabilities between the Company and the Trust (the
"Expense Agreement") and the Indenture (the Guarantee, the Debentures, the
Trust Agreement, the Expense Agreement and the Indenture being collectively
referred to as the "Company Agreements") have each been duly authorized and
when validly executed and delivered by the Company and, in the case of the
Guarantee, by the Guarantee Trustee, and in the case of the Trust
Agreement, by the Trustees and, in the case of the Indenture, by the
Debenture Trustee, and, in the case of the Debentures, when validly
authenticated and delivered by the Debenture Trustee, will constitute valid
and legally binding obligations of the Company, enforceable in accordance
with their respective terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles; the
Debentures are entitled to the benefits of the Indenture; and the Company
Agreements, which will be substantially in the form filed as exhibits to
the Registration Statement, will conform to the descriptions thereof
contained in the Prospectus; and the Trust Agreement, the Indenture and the
Guarantee have been duly qualified under the Trust Indenture Act.
(u) The issue and sale of the Securities and the Common Securities by
the Trust and the Debentures by the Company, the issuance of the Guarantee
by the Company, the compliance by the Trust and the Company with all of
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their respective obligations under the provisions of this Agreement, the
Securities and the Company Agreements, the purchase of the Debentures by
the Trust, the distribution of the Debentures by the Trust in the
circumstances contemplated by the Trust Agreement and the consummation of
the transactions contemplated herein and therein will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement or other agreement or instrument to which the
Trust, the Company or any of its subsidiaries is a party or by which the
Trust, the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Trust, the Company or any of its subsidiaries
is subject, nor will such action result in any violation of the provisions
of the Trust Agreement or the Charter or By-laws of the Company or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Trust, the Company or the
Principal Subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the issue and
sale of the Securities and the Common Securities by the Trust and the
Debentures by the Company, the issuance of the Guarantee by the Company,
the compliance by the Trust and the Company with all of their respective
obligations under the provisions of this Agreement, the Securities and the
Company Agreements, the purchase of the Debentures by the Trust, the
distribution of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement or the consummation of the transactions
contemplated herein or therein except such as have been, or will have been
prior to the First Time of Delivery (as defined in paragraph 4 hereof),
obtained under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or blue sky laws in connection with the
purchase of the Securities and the distribution of the Securities by the
Underwriters.
(v) Neither the Trust nor the Company is, and after giving effect to
the offering and sale of the Securities, neither the Trust nor the Company
will be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act").
2. Subject to the terms and conditions of this Agreement, (a) the Trust and
the Company agree that the Trust shall issue and sell to each of the
Underwriters and each of the Underwriters agrees, severally and not jointly, to
purchase from the Trust, the number of Firm Securities set forth after the name
of such Underwriter in Schedule I hereto, at the purchase price set forth in
Schedule II hereto and (b) in the event and to the extent that the Underwriters
shall exercise the election to purchase Optional Securities as provided below,
the Trust and the Company agree that the Trust shall issue and sell to each of
the Underwriters and each of the Underwriters agrees, severally and not jointly,
to purchase, at the purchase price per Security set forth in clause (a) of this
paragraph 2, that portion of the number of Optional Securities as to which such
election shall have been exercised (to be adjusted by the Representatives so as
to eliminate fractional Securities) determined by multiplying such number of
Optional Securities by a fraction, the numerator of which is the maximum number
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<PAGE>
of Optional Securities which such Underwriter is entitled to purchase as set
forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the maximum number of Optional Securities that all of
the Underwriters are entitled to purchase hereunder.
The Trust and the Company hereby grant to the Underwriters the right to
purchase at their election up to ___________ Optional Securities, at the
purchase price per Security set forth in the paragraph above, for the sole
purpose of covering over-allotments in the sale of the Firm Securities. Any such
election to purchase Optional Securities may be exercised only by written notice
from the Representatives to the Company, given within a period of 30 calendar
days after the date of this Agreement, setting forth the aggregate number of
Optional Securities to be purchased and the date on which such Optional
Securities are to be delivered, as determined by the Representatives but in no
event earlier than the First Time of Delivery (as defined in paragraph 4 hereof)
or, unless the Representatives and the Company otherwise agree in writing,
earlier than two or later than ten business days after the date of such notice.
As compensation to the Underwriters for their commitments hereunder,
and in view of the fact that the proceeds of the sale of the Securities will be
used by the Trust to purchase the Debentures of the Company, the Company hereby
agrees to pay at each Time of Delivery to , for the accounts of the several
Underwriters, an amount equal to $. _____ per Security for the Securities to be
delivered at such Time of Delivery.
3. _______ Upon the authorization by the Representatives of the release
of the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale upon the terms and conditions set forth in the Prospectus.
4. _______ (a) The Securities to be purchased by each Underwriter
hereunder will be represented by one or more definitive global Securities in
book-entry form which will be deposited by or on behalf of the Trust with The
Depository Trust Company ("DTC") or its designated custodian. The Trust will
deliver the Securities to ____________________ , for the account of each
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor in next day funds, by causing DTC to credit the Securities to the
account of
at DTC. The Trust will cause the certificates representing the
Securities to be made available to the Representatives for checking at least
twenty-four hours prior to the Time of Delivery at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, with respect to the Firm Securities,
a.m., New York City time, on _____________ , 1996 or such other time and date
as the Representatives and the Company may agree upon in writing, and, with
respect to the Optional Securities, _______ a.m., New York City time, on the
date specified by the Representatives in the written notice given by the
Representatives of the Underwriters' election to purchase such Optional
Securities, or such other time and date as the Representatives and the Company
may agree upon in writing. Such time and date for delivery of the Firm
Securities is herein called the "First Time of Delivery", such time and date for
delivery of the Optional Securities, if not the First Time of Delivery, is
herein called the "Second Time of Delivery", and each such time and date for
delivery is herein called a "Time of Delivery".
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<PAGE>
At each Time of Delivery, the Company will pay, or cause to be paid,
the commission payable at such Time of Delivery to the Underwriters under
paragraph 2 hereof in next day funds.
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to paragraph 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by
the Underwriters pursuant to paragraph 7(n) hereof, and the check or checks
specified in subparagraph (a) above, will be delivered at the offices of
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017 (the
"Closing Location"), and the Securities will be delivered at the Designated
Office, all at such Time of Delivery. A meeting will be held at the Closing
Location at _______ p.m., New York City time, on the New York Business Day
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be
available for review by the parties hereto. "New York Business Day" shall
mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. Each of the Trust and the Company, jointly and severally, agree with
each of the Underwriters:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act 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 424(b) under the
Act; to make no further amendment or any supplement to the Registration
Statement or Prospectus prior to any Time of Delivery which shall be
disapproved by the Representatives promptly after reasonable notice
thereof; to advise the Representatives promptly of any such amendment or
supplement after any Time of Delivery and furnish the Representatives with
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Securities, and during such same period to
advise the Representatives, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed with the Commission, of the issuance by the
Commission of any stop order or of any order preventing or suspending the
use of any prospectus, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by
the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of
the issuance of any such stop order or of any such order preventing or
suspending the use of any prospectus relating to the Securities or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
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<PAGE>
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Registered
Securities, for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of the Securities, provided that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in New York in such
quantities as the Representatives may from time to time reasonably request,
and, if the delivery of a prospectus is required at any time in connection
with the offering or sale of the Securities and if at such time any event
shall have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act, the Exchange
Act or the Trust Indenture Act, to notify the Representatives and upon
their request to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies
as the Representatives may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance;
(d) In the case of the Company, to make generally available to its
security-holders as soon as practicable, but in any event not later than
eighteen months after the effective date of the Registration Statement (as
defined in Rule 158(c)), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including at the option of the Company Rule 158);
(e) During the period beginning on the date of this Agreement and
continuing to and including the earlier of (i) the date, after the First
Time of Delivery, on which the distribution of the Securities ceases, as
determined by the Underwriters and (ii) 30 days after the First Time of
Delivery for the Securities, not to offer, sell, contract to sell or
otherwise dispose of any Securities, any other beneficial interests in the
Trust, any Debentures or any preferred securities or other securities of
the Company, the Trust or any other similar trust that are substantially
similar to the Securities (including any guarantee of the Securities) or
the Debentures or any securities convertible into or exercisable or
exchangeable for, or that represent the right to receive, Securities
(including any guarantee of the Securities), Debentures, preferred
securities or such substantially similar securities of the Company, the
11
<PAGE>
Trust or any other similar trust, without the prior written consent of the
Representatives;
(f) During a period of five years from the date of this Agreement, to
furnish to the Underwriters (A) copies of all reports or other
communications (financial or other) generally furnished to stockholders of
the Company, and deliver to the Underwriters (i) as soon as they are
available, copies of any reports and financial statements furnished to or
filed by the Company with the Commission or any national securities
exchange on which the Securities or any class of securities of the Company
is listed and (ii) the documents specified in Section 704 of the Indenture
as in effect at the Time of Delivery; and (B) such additional information
concerning the business and financial condition of the Company and the
Trust as the Representatives may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Trust and the Company and its subsidiaries are consolidated
in reports furnished to its stockholders generally or to the Commission);
(g) To apply the net proceeds from the sale of the Securities, in the
case of the Trust, and the Debentures, in the case of the Company, for the
purposes set forth in the Prospectus;
(h) In the case of the Company, to issue the Guarantee concurrently
with the issue and sale of the Securities as contemplated herein; and
(i) To use its best efforts to list, subject to notice of issuance,
the Securities on the New York Stock Exchange.
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's and the Trust's counsel and accountants in
connection with the registration of the Registered Securities under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Company Agreements, any
Blue Sky and Legal Investment Memoranda and any other documents in connection
with the offering, purchase, sale and delivery of the Registered Securities;
(iii) all expenses in connection with the qualification of the Registered
Securities for offering and sale under state securities laws as provided in
paragraph 5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky and legal investment surveys; (iv) any fees charged by securities
rating services for rating the Securities; (v) any filing fees incident to any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities; (vi) all fees and expenses in connection
with listing the Securities on the New York Stock Exchange and the cost of
registering the Securities under Section 12 of the Exchange Act; (vii) the cost
of preparing certificates for the Securities and the Debentures; (viii) the fees
and expenses of the Trustees, the Debenture Trustee and the Guarantee Trustee
and any agent thereof and the fees and disbursements of their counsel; and (ix)
all other costs and expenses incident to the performance of its obligations
12
<PAGE>
hereunder which are not otherwise specifically provided for in this paragraph.
It is understood, however, that, except as provided in this paragraph, paragraph
8 and paragraph 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Securities by them, and any advertising expenses connected with any
offers they may make.
7. The obligations of the Underwriters hereunder, as to the Securities to
be delivered at each Time of Delivery, shall be subject in their discretion to
the condition that all representations and warranties and other statements of
the Company and the Trust herein, or made pursuant to this Agreement, at and as
of such Time of Delivery, are true and correct, the condition that the Company
and the Trust perform all their respective obligations hereunder theretofore to
be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with paragraph
5(a) hereof; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the Commission; and
all requests for additional information on the part of the Commission shall
have been complied with by the Company and the Trust to the
Representatives' reasonable satisfaction.
(b) Davis Polk & Wardwell, counsel for the Underwriters, shall have
furnished to the Representatives such opinion or opinions (a draft of such
opinion is attached as Annex II(a) hereto), dated such Time of Delivery,
with respect to the matters covered in paragraphs (i), (v), (vi), (x), (xi)
and (xiii) of subparagraph (c) below and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters; provided that in rendering such
opinion, Davis Polk & Wardwell may rely upon the opinion of Richards,
Layton & Finger delivered pursuant to subparagraph (e) hereof as to certain
matters of Delaware law and the opinion of Piper & Marbury delivered
pursuant to subparagraph (d) hereof as to certain matters of Maryland law.
(c) Piper & Marbury, L.L.P. counsel for the Company and the Trust, or
other counsel satisfactory to the Representatives, shall have furnished to
the Representatives their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form and
substance satisfactory to the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with corporate power and authority
to own its properties and conduct its business as described in the
Prospectus; each of the Principal Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation;
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<PAGE>
(ii) The Company has authorized capital stock as set forth in the
Prospectus and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; all of the issued and outstanding Common
Securities of the Trust are owned directly by the Company, free and
clear of any liens, encumbrances, equities or claims; (such counsel
being entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such counsel
shall state that they believe that both the Representatives and they
are justified in relying upon such opinions and certificates);
(iii) To the best of such counsel's knowledge and 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 financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(iv)The Trust is not a party to or bound by any agreement or
instrument other than the Trust Agreement, this Agreement and the
agreements and instruments contemplated by the Trust Agreement and
described in the Prospectus; and to the best of such counsel's
knowledge, there are no legal or governmental proceedings pending to
which the Trust is a party or of which any property of the Trust is
the subject and no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and duly executed and delivered by the Trust;
(vi) The Company Agreements have each been duly authorized,
executed and delivered by the Company and such Agreements constitute
valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; the Debentures are entitled to the benefits
of the Indenture; the Company Agreements conform in all material
respects to the descriptions thereof contained in the Prospectus; and
the Trust Agreement, the Indenture and the Guarantee have been duly
qualified under the Trust Indenture Act;
(vii) The issue and sale of the Securities and the Common
Securities by the Trust and the Debentures by the Company, the
issuance of the Guarantee by the Company, the compliance by the Trust
14
<PAGE>
and the Company with all of their respective obligations under the
provisions of this Agreement, the Securities and the Company
Agreements, the purchase of the Debentures by the Trust, the
distribution of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement and the consummation of the
transactions contemplated herein and therein will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust,
sale/leaseback agreement, loan agreement or other agreement or
instrument known to such counsel to which the Trust, the Company or
any of its subsidiaries is a party or by which the Trust, the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Trust, the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the Trust Agreement or the Charter or By-laws of the
Company or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Trust, the Company or the Principal Subsidiaries
or any of their properties;
(viii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Securities and the
Common Securities by the Trust and the Debentures by the Company, the
issuance of the Guarantee by the Company, the compliance by the Trust
and the Company with all of their respective obligations under the
provisions of this Agreement, the Securities and the Company
Agreements, the purchase of the Debentures by the Trust, the
distribution of the Debentures by the Trust in the circumstances
contemplated by the Trust Agreement or the consummation of the
transactions contemplated herein or therein except such as have been,
or will have been prior to the First Time of Delivery, obtained under
the Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or blue sky laws in connection with the
purchase of the Securities and the distribution of the Securities by
the Underwriters;
(ix) Neither the Trust nor the Company is an "investment company"
or an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act;
(x) The Securities and the Common Securities conform in all
material respects to the descriptions thereof contained in the
Prospectus;
(xi) The statements set forth in the Prospectus under the
captions "Description of the Preferred Securities", "Description of
the Guarantee", "Description of the Debentures" and "Relationship
Among the Preferred Securities, the Debentures and the Guarantee"
insofar as they purport to constitute a summary of the terms of the
securities, documents and instruments therein described, under the
15
<PAGE>
caption "Underwriting" in the Prospectus Supplement (other than
statements based on information furnished by an Underwriter expressly
for use therein), insofar as they purport to describe the provisions
of the laws and documents referred to therein, and under the caption
"United States Taxation", insofar as they purport to constitute a
summary of the laws referred to therein, are accurate, complete and
fair;
(xii) The documents incorporated by reference in the Prospectus
(other than the financial statements, related schedules and other
financial information therein, as to which such counsel need express
no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder; and
(xiii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Trust or the
Company prior to such Time of Delivery (other than the financial
statements, related schedules and other financial information therein,
as to which such counsel need express no opinion) comply as to form in
all material respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations thereunder; and they do
not know of any amendment to the Registration Statement required to be
filed or any contracts or other documents of a character required to
be filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be
described in the Registration Statement or the Prospectus which are
not filed or incorporated by reference or described as required.
(d) General Counsel of the Company or other counsel satisfactory to the
Representatives, shall have furnished the Representatives their written opinion
(a draft of such opinion is attached as Annex II(c) hereto), dated such Time of
Delivery, in form and substance satisfactory to the Representatives to the
effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described
in the Prospectus;
(ii) The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the
failure to be so qualified in any jurisdiction (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such counsel
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<PAGE>
shall state that they believe that both the Representatives and they
are justified in relying upon such opinions and certificates);
(iii) All of the issued shares of capital stock of the Principal
Subsidiaries have been duly and validly authorized and issued, are
fully paid and non-assessable, and are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims;
(iv) To the best of such counsel's knowledge and 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 financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others; and
(v) Each of the Principal Subsidiaries is duly licensed to
conduct an insurance business under the insurance laws of each
jurisdiction in which the conduct of its business requires such
licensing and of each jurisdiction in which the failure to be so
licensed would have, individually or in the aggregate, a material
adverse effect on the business operations, consolidated financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole; each of the Company and the
Principal Subsidiaries has all consents, approvals, authorizations,
orders, registrations and qualifications of or with, and is in
compliance with, all statutes, orders, rules and regulations of, all
courts and governmental agencies and bodies having jurisdiction over
it and any of its properties, except where the failure to have any
such consent, approval, authorization, order, registration or
qualification, or so to comply, would not, individually or in the
aggregate with all other such failures, have a material adverse effect
on the business operations, consolidated financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole; and, to the best of such counsel's
knowledge, there is no pending or threatened action, suit, proceeding
or investigation that reasonably could lead to the revocation,
termination or suspension of, or render invalid or otherwise
ineffective, any such license, consent, approval, authorization,
order, registration or qualification, other than any such revocation,
termination, suspension, invalidity or ineffectiveness that would not,
individually or in the aggregate with all other such revocations,
terminations, suspensions, invalidity and ineffectiveness, have a
material adverse effect on the business operations, consolidated
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole.
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In addition to the matters set forth above, the opinions
delivered pursuant to paragraphs (b), (c) and (d) above shall also
contain a statement to the effect that while such counsel are not
passing upon, and do not assume responsibility for, the accuracy,
completeness or fairness of the Registration Statement or the
Prospectus, or any further amendment or supplement thereto, including
the documents incorporated by reference therein, except as set forth
above, based upon the procedures referred to in such opinion nothing
has come to the attention of such counsel which leads them to believe
(i) that the Registration Statement as of its effective date or the
Prospectus as of its date or any further amendment or supplement
thereto made by the Company or the Trust prior to such Time of Delivery
(other than the financial statements, related schedules and other
financial information therein, as to which such counsel need express no
belief) 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 (ii) that as of such Time
of Delivery, either the Registration Statement or the Prospectus (or
any such further amendment or supplement thereto) contains an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or (iii) that any of the documents incorporated by
reference in the Prospectus which were effective or filed with the
Commission prior to such Time of Delivery (other than the financial
statements, related schedules and other financial information therein,
as to which such counsel need express no belief), as of the respective
dates when they became effective or were filed with the Commission, as
the case may be, in each case after excluding any statement in any such
document which does not constitute part of the Registration Statement
or the Prospectus pursuant to Rule 412 of Regulation C under the Act
and after substituting therefor any statement modifying or superseding
such excluded statement, contained, in the case of a registration
statement which became effective under the Act, 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, and in the case of other documents which were filed under
the Exchange Act with the Commission, an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading.
(e) Richards, Layton & Finger, special Delaware counsel for the Trust and
the Company, shall have furnished to the Representatives their written opinion
(a draft of such opinion is attached as Annex II(d) hereto), dated such Time of
Delivery, in form and substance satisfactory to the Representatives, 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 Business Trust
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 Business Trust Act and the Trust
Agreement, the Trust has the power and authority to own its property
and conduct its business as described in the Prospectus;
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<PAGE>
(iii) The Trust Agreement 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 (a) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and
other similar laws relating to or affecting the rights and remedies of
creditors generally, (b) 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 (c) the effect of
applicable public policy on the enforceability of provisions relating
to indemnification or contribution;
(iv) Under the Delaware Business Trust Act and the Trust
Agreement, the Trust has the power and authority to (a) execute and
deliver, and to perform its obligations under, this Agreement and (b)
issue and perform its obligations under the Securities and the Common
Securities;
(v) Under the Delaware Business Trust Act and the Trust
Agreement, the execution and delivery by the Trust of this Agreement,
and the performance by the Trust of its obligations thereunder, have
been duly authorized by all necessary action on the part of the Trust;
and this Agreement has been duly authorized by the Trust;
(vi) The Securities have been duly authorized by the Trust and
are duly and validly issued and, subject to the qualifications set
forth herein, fully paid and non-assessable undivided beneficial
interests in the assets of the Trust; the holders of 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; provided that such counsel may note that the
holders of Securities may be obligated, pursuant to the Trust
Agreement, to (a) provide indemnity and/or security in connection with
and pay taxes or governmental charges arising from transfers or
exchanges of Securities certificates and the issuance of replacement
Securities certificates and (b) provide security and indemnity in
connection with requests of or directions to the Property Trustee (as
defined in the Trust Agreement) to exercise its rights and remedies
under the Trust Agreement;
(vii) The Common Securities have been duly authorized by the
Trust and are duly and validly issued and fully paid and
non-assessable undivided beneficial interests in the assets of the
Trust;
(viii) Under the Delaware Business Trust Act and the Trust
Agreement, the issuance of the Securities is not subject to preemptive
rights;
(ix) The issuance and sale by the Trust of the Securities and the
Common Securities, the execution, delivery and performance by the
19
<PAGE>
Trust of this Agreement, the consummation by the Trust of the
transactions contemplated hereby and compliance by the Trust with its
obligations hereunder will not violate (a) any of the provisions of
the Certificate of Trust of the Trust or the Trust Agreement, or (b)
any applicable Delaware law or administrative regulation;
(x) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets,
activities (other than maintaining the Delaware trustee as required by
the Delaware Business Trust Act and the filing of documents with the
Secretary of State of the State of Delaware) or employees in the State
of Delaware, no authorization, approval, consent or order of any
Delaware court or governmental authority or agency is required to be
obtained by the Trust solely in connection with the issuance and sale
of the Securities and the Common Securities; provided that in
rendering the opinion expressed in this paragraph (x), such counsel
need express no opinion concerning the securities laws of the State of
Delaware; and
(xi) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets,
activities (other than maintaining the Delaware trustee as required by
the Delaware Business Trust Act and the filing of documents with the
Secretary of State of the State of Delaware) or employees in the State
of Delaware, the holders of the Securities (other than those holders
of the Securities who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State
of Delaware solely as a result of their participation in the Trust,
and the Trust will not be liable for any income tax imposed by the
State of Delaware.
(f) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 10:00 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and at each Time of Delivery, Ernst & Young shall have
furnished to the Representatives a letter or letters, dated the respective dates
of delivery thereof, to the effect set forth in Annex I hereto and as to such
other matters as the Representatives may reasonably request and in form and
substance satisfactory to the Representatives (a copy of the letter to be
delivered prior to the execution of this Agreement is attached as Annex I(a)
hereto and a draft form of letter to be delivered as of each effective date of
any post-effective amendment and each Time of Delivery is attached as Annex I(b)
hereto).
(g) The Company Agreements shall have been executed and delivered, in each
case in a form satisfactory to the Representatives.
(h) (i) None of the Trust, the Company or any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or interference
20
<PAGE>
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus there shall not have been (x) any addition, or any development
involving a prospective addition, to either the Company's consolidated reserve
for property/casualty insurance claims and claims expense or the consolidated
reserve for life insurance policy benefits, (y) any change in the capital stock
(other than shares of common stock of the Company issued pursuant to employee
benefit, dividend reinvestment or similar plans or as the result of the
conversion of an outstanding security), short-term debt or long-term debt of the
Company or any of its subsidiaries, or (z) any change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, securityholders' equity or results of operations of the
Trust or of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case described
in Clause (i) or (ii), is in the judgment of the Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus.
(i) On or after the date of this Agreement (i) no downgrading shall have
occurred in the rating accorded the Securities or any of the Company's debt
securities or preferred stock by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) under the Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of the Securities or any of the Company's debt
securities or preferred stock.
(j) On or after the date of this Agreement there shall not have occurred
any of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general moratorium
on commercial banking activities in New York declared by either Federal or New
York State authorities; (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war if the effect of any such event specified in this
Clause (iii) in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus; or (iv) the occurrence of any material
adverse change in the existing financial, political or economic conditions in
the United States or elsewhere which, in the judgment of the Representatives
would materially and adversely affect the financial markets or the market for
the Securities and other debt or equity securities.
(k) On or after the date of this Agreement, (i) no downgrading shall have
occurred in the ratings accorded the claims paying ability or financial strength
of either of the Principal Subsidiaries by Standard & Poor's Corporation,
Moody's Investors Service, Inc., Duff & Phelps Inc. or A.M. Best Company Inc.;
21
<PAGE>
and (ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any
of the claims paying ability of the Principal Subsidiaries.
(l) The Company and the Trust shall have complied with the provisions of
paragraph 5(c) hereof with respect to the furnishing of Prospectuses on the New
York Business Day next succeeding the date of this Agreement.
(m) The Securities to be sold by the Trust at such Time of Delivery shall
have been duly listed, subject to notice of issuance, on the New York Stock
Exchange.
(n) The Trust and the Company shall have furnished or caused to be
furnished to the Representatives at such Time of Delivery a certificate or
certificates of officers of the Company and the Trust satisfactory to the
Representatives as to the accuracy of the representations and warranties of the
Company and the Trust herein at and as of such Time of Delivery, as to the
performance by the Company and the Trust of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, as to the
matters set forth in subparagraphs (a) and (h) of this paragraph and as to such
other matters as the Representatives may reasonably request.
8. (a) The Company and the Trust, jointly and severally, will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus, or in any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company and the Trust will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus,
or in any amendment or supplement thereto, in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through the
Representatives expressly for use therein; and provided, further, that the
Company shall not be liable to any Underwriter under the indemnity agreement in
this subparagraph (a) with respect to any Preliminary Prospectus to the extent
that any such loss, claim, damage or liability of such Underwriter results from
the fact that such Underwriter sold Securities to a person as to whom it shall
be established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) in any case where such delivery
22
<PAGE>
is required by the Act if the Company has previously furnished copies thereof in
sufficient quantity to such Underwriter and the loss, claim, damage or liability
of such Underwriter results from an untrue statement or omission of a material
fact contained in the Preliminary Prospectus and corrected in the Prospectus
(excluding documents incorporated by reference) or in the Prospectus as then
amended or supplemented (excluding documents incorporated by reference).
(b) Each Underwriter will indemnify and hold harmless the Company and the
Trust against any losses, claims, damages or liabilities to which the Company or
the Trust may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus, or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus, or in any amendment or supplement thereto, in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use therein; and will
reimburse the Company and the Trust for any legal or other expenses reasonably
incurred by the Company and the Trust in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subparagraph (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subparagraph, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subparagraph. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subparagraph for any legal expenses
of other counsel or any other expenses, in each case subsequently incurred by
such indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
23
<PAGE>
liability arising out of such action or claim and (ii) does not include any
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this paragraph 8 is unavailable
to or insufficient to hold harmless an indemnified party under subparagraph (a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Trust on the one hand and the Underwriters on
the other from the offering of the Securities to which such loss, claim, damage
or liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subparagraph (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Trust on the one hand and the Underwriters of the
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Trust on the one hand and such
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from such offering (before deducting expenses) received by
the Company and the Trust bear to the total underwriting discounts and
commissions received by such Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Trust on
the one hand or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Trust and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this subparagraph
(d) were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this subparagraph (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subparagraph (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subparagraph (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Underwriters in this
subparagraph (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
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<PAGE>
(e) The obligations of the Company and the Trust under this paragraph 8
shall be in addition to any liability which the Company or the Trust may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this paragraph 8 shall be in addition
to any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company and the Trust and to each person, if any, who controls the Company or
the Trust within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder at a Time of Delivery, the
Representatives may in their discretion arrange for themselves or another party
or other parties to purchase such Securities on the terms contained herein. If
within thirty-six hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Underwriter's
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to the
Representatives to purchase such Securities on such terms. In the event that,
within the respective prescribed period, the Representatives notify the Company
that they have so arranged for the purchase of such Securities or the Company
notifies the Representatives that it has so arranged for the purchase of such
Securities the Representatives or the Company shall have the right to postpone
such Time of Delivery for such Securities for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents or
arrangements, and the Company and the Trust agree to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subparagraph (a) above, the
aggregate number of such Securities which remains unpurchased does not exceed
one-eleventh of the aggregate number of the Securities to be purchased at such
Time of Delivery, then the Company and the Trust shall have the right to require
each non-defaulting Underwriter to purchase the number of Securities which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Securities which such Underwriter agreed to
purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by the Representatives
and the Company as provided in subparagraph (a) above, the aggregate number of
Securities which remains unpurchased exceeds one-eleventh of the aggregate
number of all Securities to be purchased at such Time of Delivery or if the
Company shall not exercise the right described in subparagraph (b) above to
require non-defaulting Underwriters to purchase Securities of a defaulting
Underwriter or Underwriters then this Agreement shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter, the Company or
25
<PAGE>
the Trust, except for the expenses to be borne by the Company, the Trust and the
Underwriters as provided in paragraph 6 hereof and the indemnity and
contribution agreements in paragraph 8 hereof; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company, the Trust and the Underwriters, as set forth in
this Agreement, or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of any investigation
(or any statement as to the results thereof) made by or on behalf of any
Underwriter or any controlling person of any Underwriter, or the Company or the
Trust, or any of their officers, directors or controlling persons and shall
survive delivery of and payment for the Securities hereunder.
11. If this Agreement shall be terminated pursuant to paragraph 9 hereof,
neither the Company nor the Trust shall then be under any liability to any
Underwriter except as provided in paragraphs 6 and 8 hereof; but, if for any
other reason, any Securities are not delivered by or on behalf of the Company
and the Trust as provided herein, the Company and the Trust will reimburse the
Underwriters through the Representatives for all out-of-pocket expenses approved
in writing by the Representatives, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Securities, but the Company and the Trust shall then be
under no further liability to any Underwriter except as provided in paragraphs 6
and 8.
12. In all dealings hereunder, the Representatives of the Underwriters
shall act on behalf of each of such Underwriters, and the parties hereto shall
be entitled to act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by such Representatives jointly or by
such of the Representatives, if any, as may be designated for such purpose in
Schedule II.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the Representatives at the address specified in
Schedule II hereto, and, if to the Company or the Trust, shall be delivered or
sent to the Company or the Trust, attention of John F. Hoffen, Jr., Secretary,
at 100 Light Street, Baltimore, Maryland, 21202; provided, however, that any
notice to an Underwriter pursuant to paragraph 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Trust and, to the extent provided in
paragraphs 8 and 10 hereof, the officers or directors of the Company or the
Trust and each person who controls the Company, the Trust or any Underwriter,
and their respective heirs, executors, administrators, successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
26
<PAGE>
Agreement. No purchaser of any of the Securities from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein,
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties hereto
and thereto in any number of counterparts, each of which shall be deemed to be
an original, but all such respective counterparts shall together constitute one
and the same instrument.
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<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement between us by signing in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company,
the Trust and each of the Underwriters in accordance with its terms. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company and the Trust
for examination upon request, but without warranty on your part as to the
authority of the signers thereof.
Very truly yours,
USF&G CORPORATION
By_________________________
Name:
Title:
USF&G CAPITAL
By: USF&G, as Depositor
By________________________
Name:
Title:
Confirmed as of the date of this Agreement specified in Schedule II hereto:
By:
________________________
On behalf of themselves and as Representatives of the several Underwriters named
in Schedule I hereto.
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<PAGE>
SCHEDULE I
Maximum Number
Number of Firm of Optional
Securities to be Securities which
Underwriter Purchased may be Purchased
----------- --------- ----------------
Total
--------- ---------
========= =========
<PAGE>
SCHEDULE II
Preferred Securities
Title: % Cumulative Quarterly Income Preferred Securities,
Series (liquidation amount $ per preferred
security)
Distribution Rate: %, from and including the original date of issue.
Redemption Provisions:
Other Terms: The Securities shall have such other terms as are
stated in the Prospectus.
Purchase Price: $ per Security.
Date and Time of Closing: A.M., New York City time, on , 199 .
Names of Representatives:
(with address for notices)
Date of Underwriting
Agreement:
Registration Statement: Registration No.
<PAGE>
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Trust and the Company and its subsidiaries within the
meaning of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined
by them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been furnished to the Representatives and are attached hereto;
(iii)They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's quarterly
reports on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon copies of which are attached
hereto; and on the basis of specified procedures including inquiries
of officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the
related published rules and regulations, nothing came to their
attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
<PAGE>
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of the foregoing
procedures that caused them to believe that this information does not
conform in all material respects with the disclosure requirements of
items 301, 302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements
of cash flows included in the Prospectus and/or included or
incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus or included in the Company's Quarterly Reports on Form
10-Q incorporated by reference in the Prospectus, for them to be
in conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
2
<PAGE>
unaudited condensed financial statements referred to in clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with the
basis for the audited financial statements included or
incorporated by reference in the Company's Annual Report on Form
10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the
Prospectus do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except
in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are
described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the
Prospectus to the specified date referred to in Clause (E) there
were any decreases in consolidated net revenues or operating
profit or the total or per share amounts of consolidated net
income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each
case as compared with the comparable period of the preceding year
and with any other period of corresponding length specified by
the Representatives, except in each case for increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
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<PAGE>
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (vi) above, they have carried out
certain specified procedures, not constituting an examination in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus (excluding
documents incorporated by reference), or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives
or in documents incorporated by reference in the Prospectus specified by
the Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
All references in this Annex I to the Prospectus shall be deemed to refer
to the Prospectus (including the documents incorporated by reference therein) as
defined in the Underwriting Agreement as of the date of the letter delivered.
4
<PAGE>
Guarantee Agreement
between
USF&G CORPORATION
(as Guarantor)
and
THE BANK OF NEW YORK
(as Trustee)
Dated as of
_______________, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions......................................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.................... 4
SECTION 2.02. Lists of Holders.................................... 4
SECTION 2.03. Reports by the Guarantee Trustee.................... 5
SECTION 2.04. Periodic Reports to Guarantee Trustee............... 5
SECTION 2.05. Evidence of Compliance with Conditions Precedent.... 5
SECTION 2.06. Events of Default; Waiver........................... 5
SECTION 2.07. Event of Default; Notice............................ 5
SECTION 2.08. Conflicting Interests............................... 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee.......... 7
SECTION 3.02. Certain Rights of Guarantee Trustee................. 8
SECTION 3.03. Indemnity........................................... 10
<PAGE>
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01. Guarantee Trustee; Eligibility..................... 10
SECTION 4.02. Appointment, Removal and Resignation of the Guarantee
Trustee.......................................... 11
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee......................................... 11
SECTION 5.02. Waiver of Notice and Demand....................... 11
SECTION 5.03. Obligations Not Affected.......................... 12
SECTION 5.04. Rights of Holders................................. 12
SECTION 5.05. Guarantee of Payment.............................. 13
SECTION 5.06. Subrogation....................................... 13
SECTION 5.07. Independent Obligations........................... 13
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.01. Subordination..................................... 13
SECTION 6.02. Pari Passu Guarantees............................. 13
ARTICLE VII
TERMINATION
SECTION 7.01. Termination....................................... 14
<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns............................. 14
SECTION 8.02. Amendments......................................... 14
SECTION 8.03. Notices............................................ 14
SECTION 8.04. Benefit............................................ 15
SECTION 8.05. Interpretation..................................... 15
SECTION 8.06. Governing Law..................................... 16
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of _______________, 1996, is executed
and delivered by USF&G Corporation, a Maryland corporation (the "Guarantor"),
and The Bank of New York, a New York banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of USF&G Capital I,
a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (as amended
from time to time in accordance with its terms, the "Trust Agreement"), dated as
of _______________, 1996 among the Trustees named therein, the Guarantor, as
Depositor, and the Holders from time to time of undivided beneficial interests
in the assets of the Issuer, the Issuer is issuing up to $_________ aggregate
Liquidation Amount of its ___% Cumulative Quarterly Income Preferred Securities,
Series A (Liquidation Amount $25 per preferred security) (the "Preferred
Securities") (including up to $_____ aggregate Liquidation Amount of its
Preferred Securities subject to an over-allotment option) representing preferred
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof will be used to purchase the Debentures (as defined in the
Trust Agreement) of the Guarantor which will be deposited with The Bank of New
York, as Property Trustee under the Trust Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, 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.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees will benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Guarantee Agreement, the terms
set forth below shall, unless the context otherwise requires, have the following
meanings. Capitalized or otherwise defined terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Trust Agreement as
in effect on the date hereof.
<PAGE>
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common beneficial
interests in the assets of the Issuer.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions
required to be paid on the Preferred Securities, to the extent the Issuer shall
have funds on hand available therefor, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption (the "Redemption
Price"), with respect to the Preferred Securities called for redemption by the
Issuer, to the extent the Issuer shall have funds on hand available therefor,
and (iii) upon a voluntary or involuntary termination, winding-up or liquidation
of the Issuer, unless Debentures are distributed to the Holders, (a) the
aggregate of the Liquidation Amount of $25 per Preferred Security plus accrued
and unpaid Distributions on the Preferred Securities to the date of payment, to
the extent the Issuer shall have funds on hand available to make such payment
or, if different, (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").
"Guarantee Trustee" means The Bank of New York, until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Guarantee Agreement and thereafter means each such Successor
Guarantee Trustee.
"Holder" means a Person in whose name a Preferred Security or Securities is
registered in the Securities Register; 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.
"Indenture" means the Indenture dated as of _______________, 1996, as
supplemented and amended from time to time in accordance with its terms between
the Guarantor (the "Debenture Issuer") and The Bank of New York, as trustee.
"List of Holders" has the meaning specified in Section 2.02(a).
2
<PAGE>
"Majority in Liquidation Amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the Liquidation Amount of all then outstanding
Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by (i) any two of the following individuals: the Chairman of the Board,
the President, any Executive Vice President or any Vice President, or (ii) by
one of the foregoing individuals and by any other Vice President, the Treasurer,
an Assistant Treasurer, the Corporate Secretary or an Assistant Corporate
Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition 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 and upon which the statements contained therein are based;
(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.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer or any other officer of the corporate
trust department of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Senior Indebtedness" means Senior Indebtedness as defined in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.01.
3
<PAGE>
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended and
as in force at the date of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by any such amendment,
the Trust Indenture Act of 1939 as so amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Section 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.02. Lists of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (a) semiannually, on or before January 15 and July 15 of each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of a date not more than 15
days prior to the delivery thereof, and (b) at such other times as the Guarantee
Trustee may request in writing, within 30 days after the receipt by the
Guarantor of any such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished, in each case to the extent such
information is in the possession or control of the Guarantor and is not
identical to a previously supplied list of Holders or has not otherwise been
received by the Guarantee Trustee in its capacity as such and in each case
provided that no such list need be furnished if the Guarantee Trustee shall be
the registrar for the Preferred Securities. The Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Guarantee Trustee. Within 60 days after May 15
of each year, the Guarantee Trustee shall provide to the Holders such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
4
<PAGE>
SECTION 2.04. Periodic Reports to Guarantee Trustee. The Guarantor shall
provide to the Guarantee Trustee, the Securities and Exchange Commission and the
Holders such documents, reports and information, if any, as required by Section
314 of the Trust Indenture Act and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
Delivery of such reports, information and documents to the Trustee is for
inormational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with such conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.06. Events of Default; Waiver. The Holders of a Majority in
Liquidation Amount of the Preferred Securities may, by vote, on behalf of the
Holders, waive any past Event of Default and its consequences except with
respect to a default in payment of any Guarantee Payments. Upon such waiver, any
such Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent therefrom.
SECTION 2.07. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default known to the Guarantee Trustee, unless such
defaults have been cured before the giving of such notice, provided, that,
except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the Board of Directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of the Trust
Agreement shall have obtained written notice, of such Event of Default.
5
<PAGE>
SECTION 2.08. Conflicting Interests. The Trust Agreement shall be deemed to
be specifically described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.
6
<PAGE>
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.04(iv) or to a Successor Guarantee Trustee on acceptance
by such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee Agreement, and the
Guarantee Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
7
<PAGE>
certificates or opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof or of the Trust Indenture
Act are specifically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee Trustee,
unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of 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 Guarantee Trustee, or exercising any trust or
power conferred upon the Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.02. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.01:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate
unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting to take any action hereunder, the Guarantee
Trustee (unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee Trustee, shall be
promptly delivered by the Guarantor.
8
<PAGE>
(iv) The Guarantee Trustee may consult with legal counsel of its
selection, and the advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted to be taken by it hereunder in good faith
and in accordance with such advice or opinion. Such legal counsel may be legal
counsel to the Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Guarantee Agreement at the request
or direction of any Holder, unless such Holder shall have provided to the
Guarantee Trustee such adequate security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee against the costs,
expenses (including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee; provided that,
nothing contained in this Section 3.02(a)(v) shall be taken to relieve the
Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, and the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney appointed
with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action hereunder, the
Guarantee Trustee (A) may request instructions from the Holders, (B) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received from a majority in Liquidation Amount of the Preferred
Securities, and (C) shall be protected in acting in accordance with such
instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
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<PAGE>
SECTION 3.03. Indemnity. The Guarantor agrees to indemnify each of the
Guarantee Trustee and any successor Guarantee Trustee for, and to hold it
harmless against, any and all loss, damage, claim, liability or expense,
including taxes (other than taxes based on the income of the Guarantee Trustee),
incurred without negligence or bad faith on the part of the Guarantee Trustee,
arising out of or in connection with the acceptance or administration of this
Guarantee Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Guarantee Trustee will not claim or
exact any lien or charge on any Guarantee Payments as a result of any amount due
to it under this Guarantee Agreement. The provisions of this Section shall
survive the termination of this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and shall be a corporation meeting the requirements
of Section 310(a) of the Trust Indenture Act. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the supervising or examining authority, then, for the purposes of this
Section and to the extent permitted by the Trust Indenture Act, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.01(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.02(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
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<PAGE>
SECTION 4.02. Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) Subject to Section 4.02(b), the Guarantee Trustee may be (i) appointed
or removed without cause at any time by the Guarantor and (ii) removed at any
time by the Holders of a Majority in Liquidation Amount of the Preferred
Securities.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery of an instrument of resignation or removal, the Guarantee Trustee
resigning or being removed may petition, at the expense of the Guarantor, any
court of competent jurisdiction for appointment of a Successor Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due,
regardless of any defense, right of set-off or counterclaim which the Issuer may
have or assert. The Guarantor's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer to pay such amounts to the Holders.
SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of the Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Guarantee Trustee, 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.
11
<PAGE>
SECTION 5.03. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, 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;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the 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 5.03 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04. Rights of Holders. The Guarantor expressly acknowledges that:
(i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be
held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to
enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of
a Majority in Liquidation Amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of this Guarantee Agreement or
exercising any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and (iv) any Holder may enforce this Guarantee Agreement,
institute a legal proceeding directly against the Guarantor to enforce its
12
<PAGE>
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Issuer or any other Person.
SECTION 5.05. Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon distribution of
Debentures to Holders as provided in the Trust Agreement.
SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement and shall have the
right to waive payment by the Issuer pursuant to Section 5.01; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 5.07. 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 Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.01. Subordination. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank subordinate and junior in
right of payment to all liabilities of the Guarantor, including the Debentures,
except those made pari passu or subordinate to the Guarantee expressly by their
terms.
SECTION 6.02. Pari Passu Guarantees. This Guarantee Agreement shall rank
pari passu with any similar Guarantee Agreements issued by the Guarantor on
behalf of the holders of Preferred Securities issued by USF&G Capital II.
13
<PAGE>
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Guarantee Agreement shall terminate and be
of no further force and effect upon (i) full payment of the Redemption Price of
all Preferred Securities, (ii) the distribution of Debentures to the Holders in
exchange for all of the Preferred Securities in accordance with the Trust
Agreement or (iii) full payment of the amounts payable in accordance with the
Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing,
this Guarantee Agreement will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder must restore payment of any sums paid
with respect to Preferred Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
permitted under Article Eight of the Indenture and pursuant to which the
assignee agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder.
SECTION 8.02. Amendments. Except with respect to any changes which do not
adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Guarantee Agreement may
only be amended with the prior approval of the Holders of not less than a
Majority in Liquidation Amount of all the outstanding Preferred Securities. The
provisions of Article VI of the Trust Agreement concerning meetings of the
Holders shall apply to the giving of such approval.
SECTION 8.03. Notices. Any notice, request or other communication required
or permitted to be given hereunder shall be in writing, duly signed by the party
giving such notice, and delivered, telecopied or mailed by first class mail as
follows:
(a) if given to the Guarantor, to the address set forth below or such other
address as the Guarantor may give notice of to the Holders:
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<PAGE>
USF&G Corporation
100 Light Street
Baltimore, Maryland 21202
Facsimile No: (410) 547-____
Attention:
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such other
address as the Guarantee Trustee on behalf of the Issuer may give notice to the
Holders:
USF&G Capital I
c/o USF&G Corporation
100 Light Street
Baltimore, Maryland 21202
Facsimile No: (410) 547-_____
Attention:
with a copy to:
The Bank of New York
101 Barclay Street, 21W
New York, New York 10
Facsimile No: (212) 815-5915
Attention: Corporate Trust Trustee Administration
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 8.04. Benefit. This Guarantee Agreement is solely for the benefit
of the Holders and is not separately transferable from the Preferred Securities.
SECTION 8.05. Interpretation. In this Guarantee Agreement, unless the
context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not defined in
the preamble hereto have the respective meanings assigned to them in Section
1.01;
15
<PAGE>
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections are
to Articles and Sections of this Guarantee Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include the
masculine, feminine and neuter genders.
SECTION 8.06. GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
USF&G CORPORATION
By:
----------------------------
Name:
Title:
THE BANK OF NEW YORK, as Guarantee Trustee
By:
----------------------------
Name:
Title:
Exhibit 5.1
February 6, 1996
USF&G Capital I
c/o USF&G Corporation
100 Light Street
Baltimore, Maryland 21202
Re: USF&G Capital I
Ladies and Gentlemen:
We have acted as special Delaware counsel for USF&G Corporation, a
Maryland corporation (the "Company"), and USF&G Capital I, a Delaware business
trust (the "Trust"), in connection with the matters set forth herein. At your
request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of December 28,
1995 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on December 28, 1995;
(b) The Trust Agreement of the Trust, dated as of December 28,
1995, among the Company, as Depositor, and the trustees of the Trust named
therein;
(c) Amendment No. 1 to the Registration Statement (the
"Registration Statement") on Form S-3, including a preliminary prospectus (the
"Prospectus") relating to the ___% Cumulative Quarterly Income Preferred
Securities of the Trust representing preferred undivided beneficial interests in
the assets of the Trust (each, a "Preferred Security" and collectively, the
"Preferred Securities"), as proposed to be filed by the Company, the Trust and
others as set forth therein with the Securities and Exchange Commission on or
about February 6, 1996;
(d) A form of Amended and Restated Trust Agreement of the Trust, to
be entered into among the Company, as Depositor, the trustees of the Trust named
therein, and the holders, from time to time, of undivided beneficial interests
<PAGE>
USF&G Capital I
February 6, 1996
Page 2
in the assets of the Trust (including Exhibits A, C and E thereto) (the "Trust
Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated February 6,
1996, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined
are used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (e) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (e) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, the due
creation or due organization or due formation, as the case may be, and valid
existence in good standing of each party to the documents examined by us under
the laws of the jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Preferred Security is to be issued by the Trust
(collectively, the "Preferred Security Holders") of a Preferred Security
Certificate for such Preferred Security and the payment for the Preferred
Security acquired by it, in accordance with the Trust Agreement and the
Registration Statement, and (vii) that the Preferred Securities are issued and
sold to the Preferred Security Holders in accordance with the Trust Agreement
and the Registration Statement. We have not participated in the preparation of
the Registration Statement and assume no responsibility for its contents.
<PAGE>
USF&G Capital I
February 6, 1996
Page 3
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, 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. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
Exhibit 8
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018
410-539-2530 WASHINGTON
FAX: 410-539-0489 NEW YORK
PHILADELPHIA
EASTON
LONDON
February 6, 1996
USF&G Corporation
100 Light Street
Baltimore, Maryland 21201
USF&G Capital I
c/o USF&G Corporation
100 Light Street
Baltimore, Maryland 21201
Ladies and Gentlemen:
We have acted as your special tax counsel in connection with your
Registration Statement on Form S-3 under the Securities Act of 1933, as amended
(collectively, the "Registration Statement"), filed with Securities and Exchange
Commission, with respect to the public offering of Cumulative Quarterly Income
Preferred Securities of USF&G I and USF&G Capital II, each a Delaware business
trust, and the related Guarantees and Deferrable Interest Subordinated
Debentures of USF&G Corporation thereunder (the "Preferred Securities").
We hereby confirm, based on the assumptions and subject to the
qualifications and limitations set forth therein, that the statements in the
section of the Registration Statement captioned "United States Taxation," to the
extent that such statements constitute statements of law, reflect our opinion,
as of the date hereof, with respect to the matters set forth therein regarding
federal income tax consequences of the purchase, ownership, and disposition of
the Preferred Securities. No opinion is expressed on matters other than those
specifically referred to herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
Very truly yours,
/s/ Piper & Marbury L.L.P.
Exhibit 15
Acknowledgment of Independent Auditors
We are aware of the incorporation by reference in Amendment No. 1 to
the Registration Statement (Form S-3) of USF&G Corporation, USF&G Capital I and
USF&G Capital II, pertaining to the Cumulative Quarterly Income Preferred
Securities of our reports dated May 12, 1995, except for note 10 as to which the
date is May 22, 1995, August 9, 1995 and November 14, 1995 relating to the
unaudited condensed consolidated interim financial statements of USF&G
Corporation which are included in its Form 10-Q/A for the quarter ended March
31, 1995 and Forms 10-Q for the quarters ended June 30, 1995 and September 30,
1995, respectively.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are
not a part of the registration statement prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
Baltimore, Maryland
February 6, 1996
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement (Form S-3) of USF&G Corporation, USF&G Capital I and
USF&G Capital II, pertaining to the Cumulative Quarterly Income Preferred
Securities of our reports dated February 24, 1995, except for note 1.11 as to
which the date is May 22, 1995 with respect to the consolidated financial
statements and schedules of USF&G Corporation included or incorporated by
reference in its Annual Report, Restated (Form 10-K/A) for the year ended
December 31, 1994, and the related financial statement schedule included therein
filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Baltimore, Maryland
February 6, 1996
Exhibit 4.2
USF&G CORPORATION
To
THE BANK OF NEW YORK
Trustee
Indenture
Dated as of ______________, 1996
<PAGE>
TABLE OF CONTENTS
Recitals of the Company......................................... 1
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions................. 1
Act......................................................... 2
Additional Interest......................................... 2
Affiliate................................................... 2
Authenticating Agent........................................ 2
Board of Directors.......................................... 2
Board Resolution............................................ 2
Business Day................................................ 2
Commission.................................................. 2
Common Security............................................. 2
Company..................................................... 3
Company Request............................................. 3
Company Order............................................... 3
Corporate Trust Office...................................... 3
Corporation................................................. 3
Defaulted Interest.......................................... 3
Depositary.................................................. 3
Event of Default............................................ 3
Exchange Act................................................ 3
Extension Period............................................ 3
Global Security............................................. 3
Guarantee................................................... 4
Hedging Obligations......................................... 4
Indenture................................................... 4
interest.................................................... 4
Interest Payment Date....................................... 4
Maturity.................................................... 4
Notice of Default........................................... 5
Officers' Certificate....................................... 5
Opinion of Counsel.......................................... 5
Original Issue Discount Security............................ 5
Outstanding................................................. 5
Paying Agent................................................ 6
Person...................................................... 6
Place of Payment............................................ 6
Predecessor Security........................................ 6
Preferred Securities........................................ 6
Redemption Date............................................. 6
Redemption Price............................................ 6
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Regular Record Date......................................... 7
Responsible Officer......................................... 7
Securities.................................................. 7
Securities Act.............................................. 7
Security Register and Security Registrar.................... 7
Senior Indebtedness......................................... 7
Special Record Date......................................... 7
Stated Maturity............................................. 7
Subsidiary.................................................. 8
Trust Agreement............................................. 8
Trust Indenture Act......................................... 8
Trustee..................................................... 8
U.S. Government Obligations................................. 8
Vice President.............................................. 8
Section 102. Compliance Certificates and Opinions.............. 9
Section 103. Form of Documents Delivered to Trustee............ 9
Section 104. Acts of Holders; Record Dates..................... 10
Section 105. Notices, Etc., to Trustee and Company............. 11
Section 106. Notice to Holders; Waiver......................... 11
Section 107. Conflict with Trust Indenture Act................. 11
Section 108. Effect of Headings and Table of Contents.......... 12
Section 109. Successors and Assigns............................ 12
Section 110. Separability Clause............................... 12
Section 111. Benefits of Indenture............................. 12
Section 112. Governing Law..................................... 12
Section 113. Legal Holidays.................................... 12
Section 114. Personal Immunity from Liability for
Incorporators, Stockholders, Etc.................. 13
ARTICLE TWO
Security Forms
Section 201. Forms Generally................................... 13
Section 202. Form of Legend for Global Securities.............. 13
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Section 203. Form of Trustee's Certificate of Authentication... 14
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.............. 14
Section 302. Denominations..................................... 17
Section 303. Execution, Authentication, Delivery and Dating.... 17
Section 304. Temporary Securities.............................. 18
Section 305. Registration; Registration of Transfer and
Exchange.......................................... 19
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.. 21
Section 307. Payment of Interest; Interest Rights Preserved.... 22
Section 308. Persons Deemed Owners............................. 23
<PAGE>
Section 309. Cancellation..................................... 23
Section 310. Computation of Interest.......................... 23
24
Section 311. CUSIP Numbers....................................
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.......... 24
Section 402. Application of Trust Money....................... 25
ARTICLE FIVE
Remedies
Section 501. Events of Default................................ 26
Section 502. Acceleration of Maturity; Rescission and
Annulment......................................... 27
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee............................. 28
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<PAGE>
Section 504. Trustee May File Proofs of Claim................... 29
Section 505. Trustee May Enforce Claims Without Possession
of Securities...................................... 29
Section 506. Application of Money Collected..................... 30
Section 507. Limitation on Suits................................ 30
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.................... 31
Section 509. Restoration of Rights and Remedies................. 31
Section 510. Rights and Remedies Cumulative..................... 31
Section 511. Delay or Omission Not Waiver....................... 32
Section 512. Control by Holders................................. 32
Section 513. Waiver of Past Defaults............................ 32
Section 514. Undertaking for Costs.............................. 33
Section 515. Waiver of Stay or Extension Laws................... 33
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities................ 34
Section 602. Notice of Defaults................................. 34
Section 603. Certain Rights of Trustee.......................... 34
Section 604. Not Responsible for Recitals or Issuance of
Securities......................................... 36
Section 605. May Hold Securities................................ 36
Section 606. Money Held in Trust................................ 36
Section 607. Compensation and Reimbursement..................... 36
Section 608. Conflicting Interests.............................. 37
Section 609. Corporate Trustee Required; Eligibility............ 37
Section 610. Resignation and Removal; Appointment of Successor.. 37
Section 611. Acceptance of Appointment by Successor............. 39
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<PAGE>
Section 612. Merger, Conversion, Consolidation or Succession
to Business........................................ 40
Section 613. Preferential Collection of Claims Against Company.. 40
Section 614. Appointment of Authenticating Agent................ 40
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses
of Holders......................................... 42
Section 702. Preservation of Information; Communications to
Holders............................................ 42
Section 703. Reports by Trustee................................. 43
Section 704. Reports by Company................................. 43
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms. 43
Section 802. Successor Substituted................................ 44
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders... 45
Section 902. Supplemental Indentures With Consent of Holders...... 46
Section 903. Execution of Supplemental Indentures................. 47
Section 904. Effect of Supplemental Indentures.................... 48
Section 905. Conformity with Trust Indenture Act.................. 48
Section 906. Reference in Securities to Supplemental Indentures... 48
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<PAGE>
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest........... 48
Section 1002. Maintenance of Office or Agency...................... 48
Section 1003. Money for Securities Payments to Be Held in Trust.... 49
Section 1004. Statement by Officers as to Default.................. 50
Section 1005. Additional Covenants................................. 50
Section 1006. Waiver of Certain Covenants.......................... 51
<PAGE>
Section 1007. Calculation of Original Issue Discount............... 51
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article...... 51
Section 1102. Election to Redeem; Notice to Trustee................ 52
Section 1103. Selection by Trustee of Securities to Be Redeemed.... 52
Section 1104. Notice of Redemption................................. 53
Section 1105. Deposit of Redemption Price.......................... 53
Section 1106. Securities Payable on Redemption Date................ 53
Section 1107. Securities Redeemed in Part........................ 54
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article............................. 54
Section 1202. Satisfaction of Sinking Fund Payments with Securities. 55
Section 1203. Redemption of Securities for Sinking Fund............. 55
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<PAGE>
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Securities Subordinate to Senior Indebtedness......... 55
Section 1302. Payment over of Proceeds Upon Dissolution, Etc........ 56
Section 1303. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities............................ 57
Section 1304. No Payment When Senior Indebtedness in Default........ 57
Section 1305. Payment Permitted if No Default....................... 58
Section 1306. Subrogation to Rights of Holders of Indebtedness...... 58
Section 1307. Provisions Solely to Define Relative Rights........... 59
Section 1308. Trustee to Effectuate Subordination................... 60
Section 1309. No Waiver of Subordination Provisions................. 60
Section 1310. Notice to Trustee..................................... 60
Section 1311. Reliance on Judicial Order or Certificate of
Liquidating Agent..................................... 61
Section 1312. Trustee Not Fiduciary For Holders of Senior
Indebtedness.......................................... 61
Section 1313. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights...................... 62
Section 1314. Article Applicable to Paying Agents................... 62
Testimonium ........................................................ 63
Signatures and Seals................................................ 63
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<PAGE>
INDENTURE, dated as of __________, 1996, between USF&G CORPORATION, a
corporation duly organized and existing under the laws of the State of Maryland
(herein called the "Company"), having its principal office at 100 Light Street,
Baltimore, Maryland 21201, and THE BANK OF NEW YORK, a corporation duly
organized and existing under the laws of the State of New York, as Trustee
(herein called the "Trustee").
Recitals of the Company
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its junior
subordinated debentures (herein called the "Securities"), to be issued in one or
more series to evidence the loans to be made to the Company of the proceeds from
the issuance from time to time by one or more business trusts (each a "Trust"
and, collectively, the "Trusts") of preferred trust interests in such Trusts
(the "Preferred Securities") and common trust interests in such Trusts (the
"Common Securities").
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as
the case may be, of this Indenture; and
<PAGE>
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Interest" has the meaning specified in Section 301.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either (i) the board of directors of the
Company, the executive committee of such board of directors or any other duly
authorized committee of directors and/or officers appointed by such board of
directors or executive committee, or (ii) one or more duly authorized officers
of the Company to whom the board of directors of the Company or a committee
thereof has delegated the authority to act with respect to the matters
contemplated by this Indenture.
"Board Resolution" means (i) a copy of a resolution certified by the
Corporate Secretary or an Assistant Corporate Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification or (ii) a certificate signed by the authorized
officer or officers of the Company to whom the board of directors of the Company
or a committee thereof has delegated its authority (as described in the
definition of Board of Directors), and in each case, delivered to the Trustee.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in The City of New York are authorized or
obligated by law or executive order to remain closed, or (c) a day on which the
Corporate Trust Office is closed for business.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Security" has the meaning stated in the first recital of this
Indenture.
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<PAGE>
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by (i) any two of the following individuals:
the Chairman, the President, an Executive Vice President or a Vice President, or
(ii) by one of the foregoing individuals and by any other Vice President, the
Treasurer, an Assistant Treasurer, the Corporate Secretary or an Assistant
Corporate Secretary, or any other individual authorized by the Board of
Directors for such purpose, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee in
New York, New York at which at any particular time its corporate trust business
shall be administered, which at the date hereof is 101 Barclay Street, 21 West,
New York, New York 10286.
"Corporation" means a corporation, association, company, joint-stock
company or business trust or other similar entity.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to Securities of any series issuable
in whole or in part in the form of one or more Global Securities, a clearing
agency registered under the Exchange Act that is designated to act as Depositary
for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time.
"Extension Period" has the meaning specified in Section 301.
"Global Security" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 202 (or such
legend as may be specified as contemplated by Section 301 for such Securities).
"Guarantee" means any guarantee that the Company may enter into with a
Trust for the benefit of holders of Preferred Securities of such Trust.
"Hedging Obligations" means, with respect to any Person, all
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, (ii) foreign exchange
contracts, currency swap agreements or similar agreements, and (iii) other
agreements or arrangements designed to protect such Person against fluctuations,
or otherwise to establish financial hedges in respect of, exchange rates,
currency rates or interest rates.
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<PAGE>
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indebtedness" means (without duplication and without regard to any portion
of principal amount that has not accrued and to any interest component thereof
(whether accrued or imputed) that is not due and payable) with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person, (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business), (v) every
capital lease obligation of such Person, (vi) every Hedging Obligation, (vii)
every obligation of others secured by a lien on any asset of such Person,
whether or not such obligation is assumed by such Person, (viii) every
obligation of the type referred to in clauses (i) through (vii) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has guaranteed or is responsible or liable, directly or indirectly,
as obligor or otherwise, and (ix) any and all deferrals, renewals, extensions
and refundings of, or amendments, modifications or supplements to any liability
of the kind described in any of the preceding clauses (i) through (viii).
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 301.
"Intercompany Indebtedness" means Indebtedness of the Company to any
of its directly or indirectly owned Subsidiaries.
"Interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Junior Subordinated Payment" has the meaning specified in Section
1302.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
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<PAGE>
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 501(4).
"Officers' Certificate" means a certificate signed by (i) any two of
the following individuals: the Chairman, the President, an Executive Vice
President or a Vice President, or (ii) by one of the foregoing individuals and
by any other Vice President, the Treasurer, an Assistant Treasurer, the
Corporate Secretary or an Assistant Corporate Secretary, or any other individual
authorized by the Board of Directors for such purpose, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of legal counsel, who may
be legal counsel for the Company, and who shall be reasonably satisfactory to
the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(1) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Securities;
provided that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made; and
(3) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other
than any such Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount of
the principal thereof which would be due and payable as of such date upon
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<PAGE>
acceleration of the Maturity thereof to such date pursuant to Section 502, (B)
the principal amount of a Security denominated in one or more foreign currencies
or currency units which shall be deemed to be Outstanding shall be the U.S.
dollar equivalent, determined as of such date in the manner provided as
contemplated by Section 301, of the principal amount of such Security (or, in
the case of a Security described in Clause (A) above, of the amount determined
as provided in such Clause), and (C) Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor (other than a Trust to which such Securities have been issued)
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which the Trustee actually knows to be so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor (other than a Trust to which
such Securities have been issued).
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, Corporation, partnership, joint venture,
trust, limited liability company, unincorporated organization or government or
any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning stated in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 1302.
"Redemption Date",when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
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<PAGE>
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company to the
extent that such claim for post-petition interest is allowed in such proceeding)
payable on, and fees, expenses, reimbursement obligations, indemnity obligations
and other amounts due on or in connection with, any Indebtedness incurred,
assumed or guaranteed by the Company, whether on or prior to the date of the
Indenture or thereafter incurred, assumed or guaranteed, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not superior in right of
payment to the Securities or to other Indebtedness which is pari passu with the
Securities. Without limiting the generality of the foregoing, Senior
Indebtedness shall include (i) the Company's Zero Coupon Convertible
Subordinated Notes due 2009 and (ii) Intercompany Indebtedness.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
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<PAGE>
"Subsidiary" means, at any time, a Corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, at such time
by the Company or by one or more other Subsidiaries, or by the Company and one
or more other Subsidiaries. For the purposes of this definition, "voting stock"
means stock which ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.
"Trust Agreement" means any agreement establishing a Trust, as the same
may be amended, modified, supplemented or restated.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"U.S. Government Obligations", means securities that are (x) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of principal
of or interest on the U.S. Government Obligation evidenced by such depository
receipt.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
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<PAGE>
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
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<PAGE>
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The Company may, in the circumstances permitted by the Trust Indenture
Act, fix any day as the record date for the purpose of determining the Holders
entitled to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent lists of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
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<PAGE>
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
Section 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Trustee Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid,
to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee
by the Company.
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
If by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
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this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York without regard to the conflict
of law principles thereof.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities (other than a provision
of any Security which specifically states that such provision shall apply in
lieu of this Section)) payment of interest or principal (and premium, if any)
need not be made on such date, but may be made on the next succeeding Business
Day (except that, if such Business Day is in the next succeeding calendar year,
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be, shall be the immediately preceding Business Day) with the same force and
effect as though made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, and no interest shall accrue thereon for the period after such
Interest Payment Date, Redemption Date or Stated Maturity.
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Section 114. Personal Immunity from Liability for Incorporators, Stockholders,
Etc.
No recourse shall be had for the payment of the principal or premium,
of any, or interest, if any, on any Security, or for any claim based thereon, or
otherwise in respect of any Security, or based on or in respect of this
Indenture or any indenture supplemental hereto, against any incorporator, or
against any past, present or future stockholder, director or officer, as such,
of the Company or of any 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 expressly waived and released as
a condition of, and as consideration for, the execution of this Indenture and
the issue of Securities.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
The Securities of each series shall be in substantially the form
established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution thereof. If the form of Securities of any series
is established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
Section 202. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
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REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Section 203. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
As Trustee
By_____________________________
Authorized Signatory
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any
other series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of,
other Securities of the series pursuant to Section 304, 305, 306,
906 or 1107 and except for any Securities which, pursuant to
Section 303, are deemed never to have been authenticated and
delivered hereunder);
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(3) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of the
series is payable, and the circumstances under which such date or
dates may be extended;
(5) the rate or rates at which any Securities of the series shall
bear interest, if any, the extent to which additional interest
amounts ("Additional Interest"), if any, shall be payable in
respect of any Securities of such series, the date or dates from
which any such interest shall accrue, the Interest Payment Dates
on which any such interest shall be payable, the Regular Record
Date for any such interest payable on any Interest Payment Date
and the right, if any, of the Company to extend the interest
payment periods and the duration of such extension (an "Extension
Period");
(6) the place or places where the principal of, premium and interest
on any Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which any Securities of the
series may be redeemed, in whole or in part, at the option of the
Company and, if other than by a Board Resolution, the manner in
which any election by the Company to redeem the Securities shall
be evidenced;
(8) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of the Holder thereof and
the period or periods within which, the price or prices at which
and the terms and conditions upon which any Securities of the
series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(9) if other than denominations of $25.00 and any integral multiple
thereof, the denominations in which any Securities of the series
shall be issuable;
(10) if the amount of principal of, premium or interest on any
Securities of the series may be determined with reference to an
index or pursuant to a formula, the manner in which such amounts
shall be determined;
(11) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of
or premium or interest on any Securities of the series shall be
payable and the manner of determining the equivalent thereof in
the currency of the United States of America for any purpose,
including for purposes of the definition of "Outstanding" in
Section 101;
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(12) if the principal of or any premium or interest on any Securities
of the series is to be payable, at the election of the Company or
the Holder thereof, in one or more currencies or currency units
other than that or those in which such Securities are stated to
be payable, the currency, currencies or currency units in which
the principal of or any premium or interest on such Securities as
to which such election is made shall be payable, the periods
within which and the terms and conditions upon which such
election is to be made and the amount so payable (or the manner
in which such amount shall be determined);
(13) if other than the entire principal amount thereof, the portion of
the principal amount of any Securities of the series which shall
be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 502;
(14) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global
Securities and, in such case, the respective Depositaries for
such Global Securities, the form of any legend or legends which
shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 202 and any circumstances in
addition to or in lieu of those set forth in Clause (2) of the
last paragraph of Section 305 in which any such Global Security
may be exchanged in whole or in part for Securities registered,
and any transfer of such Global Security in whole or in part may
be registered, in the name or names of Persons other than the
Depositary for such Global Security or a nominee thereof;
(15) any addition to or change in the Events of Default which applies
to any Securities of the series and any change in the right of
the Trustee or the requisite Holders of such Securities to
declare the principal amount thereof due and payable pursuant to
Section 502;
(16) any addition to or change in the covenants set forth in Article
Ten which applies to Securities of the series; and
(17) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 303) set forth
in the Officers' Certificate referred to above or in any such indenture
supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
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The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Thirteen.
Section 302. Denominations.
The Securities of each series shall be issuable only in registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $25.00 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman, its President, any Executive Vice President, any Vice President, its
Treasurer or Assistant Treasurer, under its corporate seal reproduced thereon,
attested by its Corporate Secretary or one of its Assistant Corporate
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities. If the
form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 201 and 301,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that
such form has been established in conformity with the provisions
of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that
such terms have been established in conformity with the
provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to
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any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall entitle the Holder thereof to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
309, for all purposes of this Indenture such Security shall be deemed never to
have been authenticated and delivered hereunder and shall never be entitled to
the benefits of this Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
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temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series, the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series and tenor.
Section 305. Registration; Registration of Transfer and Exchange.
The Company shall maintain or cause to be maintained an office or
agency where the Securities may be presented for registration of transfer or for
exchange ("Security Registrar"). The Security Registrar shall keep a register
(the register maintained in such office and in any other office or agency of the
Company in a Place of Payment being herein sometimes collectively referred to as
the "Security Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
of transfers of Securities. The Security Register shall initially be kept at the
Corporate Trust Office of the Trustee in New York, New York, and the Trustee is
hereby appointed Security Registrar for the purpose of registering Securities
and transfers of Securities as herein provided. The Company shall give prompt
written notice to the Trustee of any change of location of such office or
agency. If at any time the Company shall fail to maintain or cause to be
maintained any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations may be made or served at
the Corporate Trust Office of the Trustee and the Trustee shall act as Security
Registrar and shall be entitled to appropriate compensation therefor. The
Company or any Affiliate of the Company may act as Security Registrar or
co-Registrar.
Upon surrender for registration of transfer of any Security of a series
at the office or agency of the Company in a Place of Payment for that series,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Securities
of the same series, of any authorized denominations and of like tenor and
aggregate principal amount.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount, upon surrender of the Securities to
be exchanged at the office or agency of the Company in a place of payment for
that series. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
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Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Company shall not be required (A) to issue,
register the transfer of or exchange any Securities of that series (or of that
series and specified tenor, as the case may be) during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of any such Securities selected for redemption under Section 1103 and
ending at the close of business on the day of such mailing, or (B) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such
Global Security or a nominee thereof and delivered to such
Depositary or a nominee thereof or custodian therefor, and each
such Global Security shall constitute a single Security for all
purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the
Depositary for such Global Security or a nominee thereof unless
(A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global
Security or (ii) has ceased to be a clearing agency registered
under the Exchange Act at a time when the Depositary is required
to be so registered to act as such Depositary, (B) there shall
have occurred and be continuing an Event of Default with respect
to such Global Security, (C) the Company in its sole discretion
determines that such Global Security shall be so exchangeable,
or (D) there shall exist such circumstances, if any, in addition
to or in lieu of the foregoing as have been specified for this
purpose as contemplated by Section 301.
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(3) Subject to Clause (2) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all
Securities issued in exchange for a Global Security or any
portion thereof shall be registered in such names as the
Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security
or any portion thereof, whether pursuant to this Section,
Section 304, 306, 906 or 1107 or otherwise, shall be
authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name
of a Person other than the Depositary for such Global Security
or a nominee thereof.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each
Security of such series and the date of the proposed payment,
and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior
to the date of the proposed payment, such money when deposited
to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as provided in this Clause. Thereupon
the Trustee shall fix a Special Record Date for the payment of
such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly
notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor to be given to each Holder of Securities of
such series in the manner set forth in Section 106, not less
than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to
the following Clause (2).
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(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may
be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid (including any Additional Interest), and to accrue, which were
carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 307) any interest (including any Additional Interest) on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a Company
Order; provided, however, that the Trustee may, but shall not be required to,
destroy such cancelled Securities.
Section 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
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Section 311. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost
or stolen and which have been replaced or paid as provided
in Section 306 and (ii) Securities for whose payment money
or U.S. Government Obligations has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,
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and the Company, in the case of (i), (ii) or (iii) of clause B above,
has deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose money or U.S. Government
Obligations, sufficient in the opinion of a nationally recognized
firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest to the date of such
deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Company to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 401 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Securities.
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ARTICLE FIVE
Remedies
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
Thirteen or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest (including any Additional
Interest) upon any Security of that series when it becomes due
and payable, and continuance of such default for a period of 30
days (subject to the deferral of any due date in the case of an
Extension Period); or
(2) default in the payment of the principal of or any premium on any
Security of that series whether due at its Maturity, upon
redemption, by declaration or otherwise; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of
that series; or
(4) default, in any material respect, in the performance, or breach,
of any covenant or warranty of the Company in this Indenture
(other than a covenant or warranty a default in whose performance
or whose breach is elsewhere in this Section specifically dealt
with or which has expressly been included in this Indenture
solely for the benefit of a series of Securities other than that
series), and continuance of such default or breach for a period
of 90 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series or by the holders of at
least 25% in aggregate liquidation preference amount of the
related series of Preferred Securities then outstanding a written
notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law
or (B) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
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respect of the Company under any applicable Federal or State
law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company
or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 90 consecutive
days; or
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief
in respect of the Company in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of
its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any
such action; or
(7) any other Event of Default provided with respect to Securities of
that series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series or if such Holders of such Securities and the Trustee
fail to make such declaration, the holders of not less than 25% in aggregate
liquidation preference amount of the related series of Preferred Securities then
outstanding, may declare the principal amount of all the Securities of that
series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms thereof) to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders or holders of
the related Preferred Securities) and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, or if such declaration has been made by
the holders of the related series of Preferred Securities, the holders of a
majority in aggregate liquidation preference amount of the related series of
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Preferred Securities then outstanding by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest (including any Additional Interest) on
all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such
declaration of acceleration and any interest thereon at the
rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that
series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section
513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest (including any
Additional Interest) on any Security when such interest becomes
due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest (including any Additional
Interest) and, to the extent that payment of such interest shall be legally
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enforceable, interest on any overdue principal, premium and any overdue
interest, at the rate or rates prescribed therefor in such Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
and the holders of the related Preferred Securities by such appropriate judicial
proceedings, including a proceeding to obtain a judgment in the Trustee's name
and as Trustee under the Indenture, as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
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provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest (including any Additional Interest), upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section 607;
and
Second: Subject to Article Thirteen, to the payment of the amounts then
due and unpaid for principal of and any premium and interest (including any
Additional Interest) on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal and any premium and interest (including any Additional Interest),
respectively.
Section 507. Limitation on Suits.
No Holder of any Security of any series or holder of any Preferred
Securities shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless
(1) such Holder or holder of a Preferred Security, as the case may
be, has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of
that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series or the holders of not less
than 25% in aggregate liquidation preference amount of the
related series of Preferred Securities then outstanding shall
have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holders or holders of such Preferred Securities have
offered to the Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance with such
request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
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(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Securities of
that series in the case of a proceeding instituted by a Holder
or Holders, or, by a holder or holders of a majority in
liquidation preference amount of the related series of Preferred
Securities then outstanding in the case of a proceeding
instituted by such holder or holders of Preferred Securities;
it being understood and intended that no one or more of such Holders or holders
of Preferred Securities shall have any right in any manner whatever by virtue
of, or by availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other of such Holders or holders of Preferred
Securities, or to obtain or to seek to obtain priority or preference over any
other of such Holders or holders of Preferred Securities or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section 307)
interest (including any Additional Interest) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder. Any holder of related Preferred Securities shall have the right to
institute suit for the enforcement of any such payment to such holder with
respect to Securities relating to such Preferred Securities having a principal
amount equal to the aggregate liquidation preference amount of the related
Preferred Securities held by such holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder or holder of Preferred Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder or such holder of
Preferred Securities, then and in every such case, subject to any determination
in such proceeding, the Company, the Trustee and the Holders and the holders of
the Preferred Securities shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall and the holders of the Preferred Securities continue as
though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
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Section 306, no right or remedy herein conferred upon or reserved to the
Trustee, the Holders or the holders of Preferred Securities is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Securities or
any holder of a Preferred Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee, the Holders or the
holders of Preferred Securities may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders or holders of
Preferred Securities, as the case may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
The holders of a majority in liquidation preference amount of any
series of Preferred Securities then outstanding shall have the right to direct
the time, method and place of conducting any proceeding instituted by any
holders of such series of Preferred Securities with respect to the Securities
related to such series of Preferred Securities, provided that such direction
shall not be in conflict with any rule of law or with this Indenture.
Section 513. Waiver of Past Defaults.
Subject to Section 902, the Holders of not less than a majority in
principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all the Securities of such series waive any past default
hereunder with respect to such series and its consequences, except a default
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(1) in the payment of the principal of or any premium or interest
(including any Additional Interest) on any Security of such
series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected;
provided, that, so long as any of the Preferred Securities remain outstanding,
no waiver of any Event of Default or compliance with any covenant under this
Indenture that adversely affects the holders of any related series of Preferred
Securities shall be effective without the prior consent of the holders of at
least a majority of the aggregate liquidation preference amount of the
outstanding Preferred Securities of that series unless and until the Securities
and all accrued and unpaid interest (including any Additional Interest) thereon
has been paid in full.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or the Trustee.
Section 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act and as specifically set forth in this Indenture.
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section. Nothing in this Indenture shall be
construed to release the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct.
Section 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series,
the Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution,
opinion of counsel, certificate, written representation of a
Holder or transferee, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice,
request, 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 or presented by the
proper party or parties;
(2) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order,
and any resolution of the Board of Directors shall be
sufficiently evidenced by a Board Resolution;
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(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely
upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection or other
experts and the advice of such counsel or any Opinion of Counsel
with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request
or direction of any of the Holders or any of the holders of
Preferred Securities pursuant to this Indenture, unless such
Holders or such holders of Preferred Securities shall have
offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, bond, debenture, note,
other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled upon prior reasonable notice
to examine during normal business hours the books, records and
premises of the Company, personally or by agent or attorney,
provided that prior to such examination the Trustee shall agree
in writing to be bound by such reasonable confidentiality
obligations as the Company shall require;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Indenture.
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Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder shall be segregated from
funds which the Trustee does not hold in trust but need not be segregated from
other funds held in trust except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as
shall be agreed in writing between the Company and the Trustee
for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of
its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify each of the Trustee or any predecessor Trustee for,
and to hold it harmless against, any and all loss, damage,
claims, liability, penalty or expense, including taxes other
than taxes based upon the income of the Trustee, incurred
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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 of
defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties
hereunder.
The Trustee shall have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 607, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 501(5) or Section 501(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
Section 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Securities of each series, which may be Trustee hereunder for
Securities of one or more other series. Each Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
and to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee with respect to the Securities of any series shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
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The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. The Trustee
may be removed at any time with respect to the Securities of any series by Act
of the Holders of a majority in principal amount of the Outstanding Securities
of such series, delivered to the Trustee and to the Company. If the instrument
of acceptance by a successor Trustee required by Section 611 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or
of its property shall be appointed or any public officer shall
take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (A) the Company may remove the Trustee with respect to
all Securities, or (B) subject to Section 514, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Securities and the appointment of
a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company shall promptly appoint a
successor Trustee or Trustees with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be appointed
with respect to the Securities of one or more or all of such series and that at
any time there shall be only one Trustee with respect to the Securities of any
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particular series) and shall comply with the applicable requirements of Section
611. If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 611, become the successor Trustee with
respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to the successor Trustee all property
and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
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hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to and
shall take all actions necessary in order to comply with the provisions of the
Trust Indenture Act regarding the collection of claims against the Company (or
any such other obligor).
Section 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
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or pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
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If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
As Trustee
By__________________________________
Authenticating Agent
By___________________________________
Authorized Officer
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) quarterly, not later than 10 days after a Regular Record Date, a
list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities of each series
as of the immediately preceding Regular Record Date, and
(2) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not
more than 10 days prior to the time such list is furnished;
in each case to the extent such information is in the possession or control of
the Company, or any of its Paying Agents, and is not identical to a previously
supplied list or has not otherwise been received by the Trustee in its capacity
as Security Registrar and in each case, provided that no such list need be
furnished if the Trustee shall be the Security Registrar.
Section 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
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list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
sixty days after each May 15 following the date of this Indenture deliver to
Holders a brief report, dated as of such May 15, which complies with the
provisions of such Section 313(a).
A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when any Securities are listed on any stock
exchange.
Section 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or sell, convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to any Person, and the Company shall not permit any
Person to consolidate with or merge into the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or sell, convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any
Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by sale,
conveyance or transfer, or which leases, the properties and
assets of the Company as an entirety or substantially as an
entirety shall be a corporation, partnership or trust, shall be
organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of
and any premium and interest (including any Additional Interest)
on all the Securities and the performance or observance of every
covenant of this Indenture and any Guarantees on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been
incurred by the Company or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing;
(3) such consolidation or merger or conveyance, transfer or lease of
properties or assets of the Company is permitted under each
Trust Agreement and each Guarantee and does not give rise to any
breach or violation of, any Trust Agreement or any Guarantee;
and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
sale consolidation, merger, conveyance, transfer or lease and,
if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
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Section 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company as an entirety or substantially as an entirety in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by an
officer pursuant to authority established by a Board Resolution, and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the
Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely
for the benefit of such series) or to surrender any right or
power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such
additional Events of Default are to be for the benefit of less
than all series of Securities, stating that such additional
Events of Default are expressly being included solely for the
benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the
issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest
coupons, or to permit or facilitate the issuance of Securities in
uncertificated form; or
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(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities,
provided that any such addition, change or elimination (A) shall
neither (i) apply to any Security of any series created prior to
the execution of such supplemental indenture and entitled to the
benefit of such provision nor (ii) modify the rights of the
Holder of any such Security with respect to such provision or (B)
shall become effective only when there is no such Security
Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities
of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 611; or
(9) to add to, change or eliminate any of the provisions of this
Indenture in order to maintain the qualification of the
Indenture under the Trust Indenture Act; or
(10) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect
to matters or questions arising under this Indenture, provided
that such action pursuant to this Clause (10) shall not
adversely affect the interests of the Holders of Securities of
any series in any material respect; or
(11) to conform to any mandatory provisions of law.
Section 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by an Officer, and the Trustee may enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of modifying in any manner the rights of the Holders of
Securities of such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest (including any
Additional Interest) on, any Security, or reduce the principal
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amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of
principal of an Original Issue Discount Security or other
Security which would be due and payable upon a declaration of
acceleration of the maturity thereof pursuant to Section 502, or
extend the time of payment of interest thereon (other than as
provided pursuant to Section 301(5)), or change any Place of
Payment where, or the coin or currency in which, any Security or
any premium or interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or modify the
provisions of this Indenture with respect to the subordination
of the Securities in a manner adverse to the Holders, or
(2) reduce the percentage of principal amount of the Outstanding
Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of
whose Holders is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section or Sections 513 or
1006, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding
Security affected thereby; provided, however, that this clause
shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and
concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 611 and
901(8),
provided, that, so long as any of the Preferred Securities remains outstanding,
no such amendment shall be made that adversely affects the holders of the
Preferred Securities and no waiver of any Event of Default or compliance with
any covenant under this Indenture shall be effective, without the prior consent
of the holders of at least a majority of the aggregate liquidation preference of
the outstanding Preferred Securities so affected unless and until the series of
Securities relating to such Preferred Securities and all accrued and unpaid
interest (including any Additional Interest) thereon have been paid in full.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
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Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest (including any Additional Interest) on the Securities of that
series in accordance with the terms of the Securities and this Indenture.
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Section 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands. The Company
or any Affiliate of the Company may act as Paying Agent or agent for service of
notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or before each due date of the principal of or
any premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
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continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in New York, New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
Section 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate (one of the signers of which shall be the principal executive
officer, principal financial officer or principal accounting officer of the
Company), stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
Section 1005. Additional Covenants.
The Company covenants and agrees, for the benefit of the Holders of
Securities of each series, that it will not, and will not permit any Subsidiary
of the Company to, declare or pay any dividend or distribution on, or redeem,
purchase, acquire or make a liquidation or guarantee payment (other than
payments under a Guarantee) with respect to, any shares of capital stock or any
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security of the Company (including other Securities) ranking pari passu with or
junior in interest to the Securities (except (x) for payments with securities
junior in interest to the Securities, (y) for payments made on any series of
Securities upon the Stated Maturity of such Securities, or (z) for payments of
accrued dividends (and cash in lieu of fractional shares) upon conversion into
common stock of any convertible preferred stock of the Company of any series now
or hereinafter outstanding, in accordance with the terms of the stock) if at
such time (i) there shall have occurred any event of which the Company has
actual knowledge that (a) with the giving of notice or the lapse of time or
both, would constitute an Event of Default hereunder with respect to Securities
of such series and (b) in respect of which the Company shall not have taken
reasonable steps to cure, (ii) the Company shall be in default with respect to
its payment of any obligations under the Guarantee relating to the Preferred
Securities of the Trust to which the Securities of such series have been issued
or (iii) the Company shall have given notice of its selection of an Extension
Period as provided herein with respect to Securities of such series and such
Extension Period, or any extension thereof, shall have commenced and be
continuing.
The Company also covenants, for the benefit of the Holders of
Securities of each series, (i) to maintain directly or indirectly 100% ownership
of the Common Securities of the Trust to which the Securities of such series
have been issued; provided, however, that any permitted successor of the Company
hereunder may succeed to the Company's ownership of such Common Securities, (ii)
not to voluntarily liquidate, wind-up or terminate such Trust, except (A) in
connection with a distribution of the Securities of such series to the holders
of Preferred Securities in liquidation of such Trust, (B) as otherwise permitted
by the terms specified pursuant to Section 301 for such Securities or (C) in
connection with certain mergers, consolidations or amalgamations permitted by
the Trust Agreement relating to such Trust and (iii) to use its reasonable
efforts, consistent with the terms and provisions of such Trust Agreement, to
cause such Trust to remain a business trust and not to be classified as an
association taxable as a corporation for United States federal income tax
purposes.
Section 1006. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1002 to 1005, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
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Section 1007. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly after the end of each
calendar year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on Outstanding Securities as
of the end of such year.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for such Securities) in
accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution or in another manner specified as contemplated by Section
301 for such Securities. In case of any redemption at the election of the
Company, the Company shall, not less than 20 days nor more than 90 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date, of the
principal amount of Securities of such series to be redeemed and, if applicable,
of the tenor of the Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed
(unless all the Securities of such series and of a specified tenor are to be
redeemed or unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 90 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security. If less than all the Securities of
such series and of a specified tenor are to be redeemed (unless such redemption
affects only a single Security), the particular Securities to be redeemed shall
be selected not more than 90 days prior to the Redemption Date by the Trustee,
from the Outstanding Securities of such series and specified tenor not
previously called for redemption in accordance with the preceding sentence.
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The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 20 nor more than 90 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall identify the Securities to be redeemed
(including CUSIP number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
consisting of more than a single Security are to be redeemed, the
identification (and, in the case of partial redemption of any
such Securities, the principal amounts) of the particular
Securities to be redeemed and, if less than all the Outstanding
Securities of any series consisting of a single Security are to
be redeemed, the principal amount of the particular Security to
be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and
after said date,
(5) the place or places where each such Security is to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
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Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
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ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the
terms of any Securities is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of such Securities is herein referred to as an "optional sinking fund
payment". If provided for by the terms of any Securities, the cash amount of any
sinking fund payment may be subject to reduction as provided in Section 1202.
Each sinking fund payment shall be applied to the redemption of Securities as
provided for by the terms of such Securities.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to any Securities of such series required to be made
pursuant to the terms of such Securities as and to the extent provided for by
the terms of such Securities; provided that the Securities to be so credited
have not been previously so credited. The Securities to be so credited shall be
received and credited for such purpose by the Trustee at the Redemption Price,
as specified in the Securities so to be redeemed, for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 1202 and will also deliver to the Trustee any Securities to be so
delivered. Not less than 30 days prior to each such sinking fund payment date,
the Trustee shall select the Securities to be redeemed upon such sinking fund
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payment date in the manner specified in Section 1103 and cause notice of the
redemption thereof to be given in the name of and at the expense of the Company
in the manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to the provisions of
Article Four), the payment of the principal of (and premium, if any) and
interest on each and all of the Securities are hereby expressly made subordinate
and subject in right of payment to the prior payment in full of all amounts then
due and payable in respect of all Senior Indebtedness.
Section 1302. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, arrangement, reorganization, debt restructuring
or other similar case or proceeding in connection therewith, relative to the
Company, or its creditors as such, or to its assets, or (b) any liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshalling of assets and liabilities of
the Company, then and in any such event specified in (a), (b) or (c) above (each
such event, if any, herein sometimes referred to as a "Proceeding") the holders
of Senior Indebtedness 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 Senior Indebtedness, before
the Holders of the Securities are entitled to receive any payment or
distribution of any kind or character, whether in cash, property or securities
(including any payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of the Company subordinated to
the payment of the Securities, such payment or distribution being hereinafter
referred to as "Junior Subordinated Payment"), on account of principal of (or
premium, if any) or interest on the Securities or on account of the purchase or
other acquisition of Securities by the Company or any Subsidiary and to that end
the holders of Senior Indebtedness shall be entitled to receive, for application
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to the payment thereof, any payment or distribution of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, which may be payable or deliverable in respect of the Securities in any
such Proceeding. In the event that, notwithstanding the foregoing provisions of
this Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, before all Senior Indebtedness is paid in full or payment thereof is
provided for in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Indebtedness, and if such fact shall, at or prior to
the time of such payment or distribution, have been made known to the Trustee
or, as the case may be, such Holder, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
Any taxes that have been withheld or deducted from any payment or distribution
in respect of the Securities, or any taxes that ought to have been withheld or
deducted from any such payment or distribution that have been remitted to the
relevant taxing authority, shall not be considered to be an amount that the
Trustee or the Holder of any Security receives for purposes of this Section. For
purposes of this Article only, the words "any payment or distribution of any
kind or character, whether in cash, property or securities" shall not be deemed
to include shares of stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment which securities are subordinated in right of
payment to all then outstanding Senior Indebtedness to substantially the same
extent as the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person upon the terms and conditions set forth in Article Eight shall not be
deemed a Proceeding for the purposes of this Section if the Person formed by
such consolidation or into which the Company is merged or the Person which
acquires by sale such properties and assets as an entirety, as the case may be,
shall, as a part of such consolidation, merger, or sale comply with the
conditions set forth in Article Eight.
Section 1303. Prior Payment to Senior Indebtedness Upon Acceleration of
Securities.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of the Senior
Indebtedness outstanding at the time such Securities so become due and payable
shall be entitled to receive payment in full of all amounts due on or in respect
of such Senior Indebtedness, or provision shall be made for such payment in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Indebtedness, before the Holders of the Securities are entitled to
receive any payment (including any payment which may be payable by reason of the
payment of any other indebtedness of the Company being subordinated to the
payment of the Securities) by the Company on account of the principal of (or
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premium, if any) or interest on the Securities or on account of the purchase or
other acquisition of Securities by the Company or any Subsidiary; provided,
however, that nothing in this Section shall prevent the satisfaction of any
sinking fund payment in accordance with Article Twelve by delivering and
crediting pursuant to Section 1202 Securities which have been acquired (upon
redemption or otherwise) prior to such declaration of acceleration. In the event
that, notwithstanding the foregoing, the Company shall make any payment to the
Trustee or the Holder of any Security prohibited by the foregoing provisions of
this Section, and if such fact shall, at or prior to the time of such payment,
have been made known to the Trustee or, as the case may be, such Holder, then
and in such event such payment shall be paid over and delivered forthwith to the
Company. The provisions of this Section shall not apply to any payment with
respect to which Section 1302 would be applicable.
Section 1304. No Payment When Senior Indebtedness in Default.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest or any other payment on
any Senior Indebtedness, or in the event that any event of default with respect
to any Senior Indebtedness shall have occurred and be continuing and shall have
resulted in such Senior Indebtedness becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist and such acceleration shall have been rescinded or
annulled, or (b) in the event any judicial proceeding shall be pending with
respect to any such default in payment or such event of default, then no payment
(including any payment which may be payable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities) shall be made by the Company on account of principal of (or premium,
if any) or interest on the Securities or on account of the purchase or other
acquisition of Securities by the Company or any Subsidiary; provided, however,
that nothing in this Section shall prevent the satisfaction of any sinking fund
payment in accordance with Article Twelve by delivering and crediting pursuant
to Section 1202 Securities which have been acquired (upon redemption or
otherwise) prior to such default in payment or event of default or which have
been converted pursuant to Article Twelve. In the event that, notwithstanding
the foregoing, the Company shall make any payment to the Trustee or the Holder
of any Security prohibited by the foregoing provisions of this Section, and if
such fact shall, at or prior to the time of such payment, have been made known
to the Trustee or, as the case may be, such Holder, then and in such event such
payment shall be paid over and delivered forthwith to the Company. The
provisions of this Section shall not apply to any payment with respect to which
Section 1302 would be applicable.
Section 1305. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any Proceeding referred to in Section 1302 or under the
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conditions described in Sections 1303 and 1304, from making payments at any time
of principal of (and premium, if any) or interest on the Securities, or (b) the
application by the Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of (and premium, if any) or interest
on the Securities or the retention of such payment by the Holders, if, at the
time of such application by the Trustee, it did not have knowledge that such
payment would have been prohibited by the provisions of this Article.
Section 1306. Subrogation to Rights of Holders of Indebtedness.
Subject to the payment in full of all Indebtedness, or the provision
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Indebtedness, the Holders of the Securities shall
be subrogated to the extent of the payments or distributions made to the holders
of such Indebtedness pursuant to the provisions of this Article (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to indebtedness of the Company to substantially the same
extent as the Securities are subordinated to the Indebtedness and is entitled to
like rights of subrogation by reason of any payments or distributions made to
holders of such Indebtedness) to the rights of the holders of such Indebtedness
to receive payments or distributions of cash, property and securities applicable
to the Indebtedness until the principal of (and premium, if any) and interest on
the Securities shall be paid in full. If the Trustee or the Holders of the
Securities are not for any reason entitled to be subrogated to the rights of
holders of Indebtedness in respect of such payment or distribution, then the
Trustee or the Holders of the Securities may require each holder of Indebtedness
to whom any such payment or distribution is made as a condition to such payment
or distribution to assign its Indebtedness to the extent of such payment or
distribution and all rights with respect thereto to the Trustee on behalf of the
Holders. Such assignment shall not be effective until such time as all Senior
Indebtedness has been paid in full or payment thereof provided for. For purposes
of such subrogation or assignment, no payments or distributions to the holders
of the Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Indebtedness,
and the Holders of the Securities, be deemed to be a payment or distribution by
the Company to or on account of the Indebtedness.
Section 1307. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
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intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness, and the Holders of the Securities, the
obligations of the Company, which are absolute and unconditional (and which,
subject to the rights under this Article of the holders of Senior Indebtedness
are intended to rank equally with all other general unsecured obligations of the
Company), to pay to the Holders of the Securities the principal of (and premium,
if any) and interest on the Securities as and when the same shall become due and
payable in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and creditors of the
Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture including, without
limitation, filing and voting claims in any Proceeding, subject to the rights,
if any, under this Article of the holders of Senior Indebtedness to receive
cash, property or securities otherwise payable or deliverable to the Trustee or
such Holder.
Section 1308. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof 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 provided
in this Article and appoints the Trustee his or her attorney-in-fact for any and
all such purposes.
Section 1309. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by (i) any amendment of or addition or supplement to any
Senior Indebtedness or any instrument or agreement relating thereto (unless
otherwise expressly provided therein) or (ii) any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof that any such
holder may have or be otherwise charged with. Without in any way limiting the
generality of the foregoing paragraph, the holders of Senior Indebtedness may,
at any time and from time to time, without the consent of or notice to the
Trustee or the Holders of the Securities, without incurring responsibility to
the Holders of the Securities, and without impairing or releasing the
subordination provided in this Article or the obligations hereunder of the
Holders of the Securities to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter or increase, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
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Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
Section 1310. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section 601, 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 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 (and premium, if any) or interest on any Security), 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
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within two Business Days
prior to such date. Subject to the provisions of Section 601, the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself or herself to be a holder of Senior Indebtedness (or a
trustee, agent or representative therefor) to establish that such notice has
been given by a holder of Senior Indebtedness (or a trustee, agent or
representative therefor). In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
Section 1311. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
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pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
Section 1312. Trustee Not Fiduciary For Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be liable to any such holders if it shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
Person cash, property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article or otherwise. With respect to the
holders of Senior Indebtedness, the Trustee undertakes to perform or to observe
only such of its covenants and obligations as are specifically set forth in this
Article Thirteen, and no implied covenants or obligations with respect to the
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee. Nothing in this Indenture shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 607.
Section 1313. Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.
Section 1314. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
USF&G CORPORATION
ATTEST: _______________________________
_______________________________
THE BANK OF NEW YORK, as Trustee
By:_______________________________
ATTEST:
_______________________________
Exhibit 4.7
Amended and Restated
Trust Agreement
among
USF&G CORPORATION
(as Depositor)
THE BANK OF NEW YORK
(as Property Trustee)
THE DELAWARE TRUSTEE NAMED HEREIN
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
Dated as of
__________ __, 1996
USF&G CAPITAL I
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Defined Terms
Section 1.01. Definitions................................................4
ARTICLE II
Continuation of the Trust
Section 2.01. Name.......................................................13
Section 2.02. Office of the Delaware Trustee; Principal Place of
Business...................................................13
Section 2.03. Initial Contribution of Trust Property; Organizational
Expenses...................................................13
Section 2.04. Issuance of the Preferred Securities.......................14
Section 2.05. Subscription and Purchase of Debentures;
Issuance of the Common Securities..........................14
Section 2.06. Declaration of Trust.......................................15
Section 2.07. Authorization to Enter into Certain Transactions...........15
Section 2.08. Assets of Trust............................................18
Section 2.09. Title to Trust Property....................................18
ARTICLE III
Payment Account
Section 3.01. Payment Account............................................19
ARTICLE IV
Distributions; Redemption
Section 4.01. Distributions..............................................19
Section 4.02. Redemption.................................................20
Section 4.03. Subordination of Common Securities.........................22
Section 4.04. Payment Procedures.........................................23
Section 4.05. Tax Returns and Reports....................................23
ARTICLE V
Trust Securities Certificates
Section 5.01. Initial Ownership..........................................23
Section 5.02. The Trust Securities Certificates..........................23
<PAGE>
Section 5.03. Delivery of Trust Securities Certificates..................24
Section 5.04. Registration of Transfer and Exchange of
Preferred Securities Certificates..........................24
Section 5.05. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates...............................................25
Section 5.06. Persons Deemed Securityholders.............................25
Section 5.07. Access to List of Securityholders' Names and Addresses.....25
Section 5.08. Maintenance of Office or Agency............................26
Section 5.09. Appointment of Paying Agent................................26
Section 5.10. Ownership of Common Securities by Depositor................27
Section 5.11. Book-Entry Preferred Securities Certificates;
Common Securities Certificate..............................27
Section 5.12. Notices to Clearing Agency.................................28
Section 5.13. Definitive Preferred Securities Certificates...............28
Section 5.14. Rights of Securityholders..................................29
ARTICLE VI
Acts of Securityholders; Meetings; Voting
Section 6.01. Limitations on Voting Rights...............................29
Section 6.02. Notice of Meetings.........................................30
Section 6.03. Meetings of Preferred Securityholders......................30
Section 6.04. Voting Rights..............................................31
Section 6.05. Proxies, etc...............................................31
Section 6.06. Securityholder Action by Written Consent...................31
Section 6.07. Record Date for Voting and Other Purposes..................31
Section 6.08. Acts of Securityholders....................................32
Section 6.09. Inspection of Records......................................33
ARTICLE VII
Representations and Warranties
Section 7.01. Representations and Warranties of the Trustees ............33
ARTICLE VIII
The Trustees
Section 8.01. Certain Duties and Responsibilities........................34
Section 8.02. Notice of Defaults; Direct Action by Securityholders.......35
Section 8.03. Certain Rights of Property Trustee.........................36
Section 8.04. Not Responsible for Recitals or Issuance of Securities.....37
Section 8.05. May Hold Securities........................................37
<PAGE>
Section 8.06. Compensation; Indemnity; Fees..............................37
Section 8.07. Corporate Property Trustee Required; Eligibility of
Trustees...................................................38
Section 8.08. Conflicting Interests......................................38
Section 8.09. Co-Trustees and Separate Trustee...........................38
Section 8.10. Resignation and Removal; Appointment of Successor..........40
Section 8.11. Acceptance of Appointment by Successor.....................41
Section 8.12. Merger, Conversion, Consolidation or Succession to
Business...................................................42
Section 8.13. Preferential Collection of Claims Against Depositor or
Trust......................................................42
Section 8.14. Reports by Property Trustee.................................43
Section 8.15. Reports to the Property Trustee.............................43
Section 8.16. Evidence of Compliance with Conditions Precedent............43
Section 8.17. Number of Trustees..........................................44
Section 8.18. Delegation of Power.........................................44
Section 8.19. Voting......................................................44
ARTICLE IX
Termination and Liquidation
Section 9.01. Termination Upon Expiration Date............................45
Section 9.02. Early Termination...........................................45
Section 9.03. Termination.................................................45
Section 9.04. Liquidation.................................................45
ARTICLE X
Miscellaneous Provisions
Section 10.01 Limitation of Rights of Securityholders.....................47
Section 10.02 Amendment...................................................47
Section 10.03 Separability................................................48
Section 10.04 Governing Law...............................................48
Section 10.05 Payments Due on Non-Business Day............................49
Section 10.06 Successors..................................................49
Section 10.07 Headings....................................................49
Section 10.08 Reports, Notices and Demands................................49
Section 10.09 Agreement Not to Petition...................................50
Section 10.10 Trust Indenture Act; Conflict with Trust Indenture Act......50
Section 10.11 Acceptance of Terms of Trust Agreement, Guarantee and
Indenture...................................................50
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ________ __, 1996,
among (i) USF&G Corporation, a Maryland corporation (the "Depositor"), (ii) The
Bank of New York, a New York banking corporation duly organized and existing
under the laws of the State of New York, as trustee (the "Property Trustee"),
(iii) The Bank of New York (Delaware), a Delaware corporation duly organized and
existing under the laws of the State of Delaware, as Delaware trustee (the
"Delaware Trustee"), (iv) J. Kendall Huber, an individual, ________, an
individual and _________, an individual, each of whose address is c/o USF&G
Corporation,, 100 Light Street, Baltimore, Maryland 21201 (each an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees are
referred to collectively as the "Trustees") and (v) the several Holders, as
hereinafter defined.
WITNESSETH:
WHEREAS, the Depositor, the Property Trustee, the Delaware Trustee and
J. Kendall Huber, as a trustee of the Trust have heretofore duly declared and
established a business trust pursuant to the Delaware Business Trust Act by the
entering into of that certain Trust Agreement, dated as of December 28, 1995
(the "Original Trust Agreement"), and by the execution and filing with the
Secretary of State of the State of Delaware of the Certificate of Trust, filed
on December 28, 1995, attached as Exhibit A; and
WHEREAS, the Depositor, the Property Trustee, the Delaware Trustee and
the Administrative Trustees desire to amend and restate the Original Trust
Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities by the Trust to the Depositor,
(ii) the issuance and sale of the Preferred Securities by the Trust pursuant to
the Underwriting Agreement and (iii) the acquisition by the Trust from the
Depositor of all of the right, title and interest in the Debentures;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other party and
for the benefit of the Securityholders, hereby amends and restates the Original
Trust Agreement in its entirety and agrees as follows:
ARTICLE I
Defined Terms
Section 1.01. Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
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(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the
singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the
case may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to
any particular Article, Section or other subdivision.
"Act " has the meaning specified in Section 6.08.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Administrative Trustee" means each of the individuals identified as an
"Administrative Trustee" in the preamble to this Trust Agreement, solely in his
capacity as Administrative Trustee of the Trust created and continued hereunder
and not in his individual capacity, or such Administrative Trustee's successor
in interest in such capacity, or any successor trustee appointed as herein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of such Person in an
involuntary case or proceeding under any applicable Bankruptcy Law or
(B) a decree or order adjudging such Person a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjudication or composition of or in respect of such
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<PAGE>
Person under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of such Person or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 90
consecutive days; or
(b) the commencement by such Person of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or of the consent
by it to the entry of a decree or order for relief in respect of such
Person in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under Federal or State law,
or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of such
Person or of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by such Person in furtherance of
any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.09.
"Board Resolution" means (i) a copy of a resolution certified by the
Corporate Secretary or an Assistant Corporate Secretary of the Depositor to have
been duly adopted by the Depositor's Board of Directors or a committee thereof
and to be in full force and effect on the date of such certification or (ii) a
certificate signed by the authorized officer or officers of the Depositor to
whom the board of directors of the Depositor or a committee thereof has
delegated its authority, and in each case, delivered to the Trustee.
"Book Entry Preferred Securities Certificates" means the Preferred
Securities Certificates, ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 5.11.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in The City of New York are authorized or
obligated by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Debenture Trustee's principal
corporate trust office is closed for business.
"Certificate Depository Agreement" means the agreement among the Trust,
the Property Trustee and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Preferred Securities
Certificates, substantially in the form attached as Exhibit B, as the same may
be amended and supplemented from time to time.
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<PAGE>
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the First Time of Delivery as defined in the
Underwriting Agreement, which date is also the date of execution and delivery of
this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Security" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit C.
"Corporate Trust Office" means the principal corporate trust office of
the Property Trustee located in New York, New York, which at the date hereof is
101 Barclay Street, Floor 21 W, New York, New York 10286.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means "Redemption Date" as defined in the
Indenture.
"Debenture Trustee" means The Bank of New York, a New York banking
corporation organized under the laws of the State of New York, as any successor
appointed in accordance with the terms and provisions of the Indenture.
"Debentures" means the $_______ aggregate principal amount (or up to
$______ aggregate principal amount if and to the extent the overallotment option
granted by the Trust to the Underwriters is exercised) of the Depositor's __%
Deferrable Interest Subordinated Debentures, Series A, Due 20__, issued pursuant
to the Indenture.
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<PAGE>
"Definitive Preferred Securities Certificates" means Preferred
Securities Certificates issued in certificated, fully registered form as
provided in Section 5.13.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ss. 3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the entity identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Trust created and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.01(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.01.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(c) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in this Trust Agreement (other
than a covenant or warranty, a default in whose performance or breach is
dealt with in clause (b) or (c) above) and continuation of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the defaulting Trustee or Trustees by the Holders of at
least 10% in Liquidation Amount of the Outstanding Preferred Securities a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and failure by the Depositor to appoint a successor Property
Trustee within 60 days thereof.
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<PAGE>
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.
"Grantor Trust Event" has the meaning specified in Section 9.02(b).
"Guarantee" means the Guarantee Agreement executed and delivered by the
Depositor and The Bank of New York, a New York banking corporation, as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the Holders of the Preferred Securities, as amended from time to
time.
"Indenture" means the Indenture, dated as of January __, 1996, as
supplemented by the First Supplemental Indenture, dated as of January __, 1996,
between the Depositor and the Debenture Trustee, as trustee, as amended or
supplemented from time to time.
"Investment Company Event" means 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") to the effect that the Trust is or will be considered
an "investment company" that 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.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture and the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, and (b) with respect to a distribution to Holders of
Trust Securities of Debentures in connection with a termination or liquidation
of the Trust, Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Trust Securities of the Holder to whom such Debentures
are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Debentures are to be
distributed to Holders of Trust Securities in connection with a termination and
liquidation of the Trust pursuant to Section 9.04(a).
"Liquidation Distribution" has the meaning specified in Section
9.04(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
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"Officers' Certificate" means a certificate signed by (i) any two of
the following individuals: the Chairman, the President, an Executive Vice
President or a Vice President of the Depositor, or (ii) by one of the foregoing
individuals and by any other Vice President, the Treasurer, an Assistant
Treasurer, the Corporate Secretary or an Assistant Corporate Secretary of the
Depositor, or any other individual authorized by the Depositor's Board of
Directors for such purpose, and delivered to the Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Depositor, but not an
employee of any thereof, and who shall be reasonably satisfactory to the
Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means,
as of the date of determination, all Preferred Securities theretofore executed
and delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore cancelled by the Administrative
Trustees or delivered
to the Administrative Trustees for cancellation;
(b) Preferred Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent for the Holders of such Preferred Securities; provided
that, if such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or in
lieu of which other Preferred Securities have been executed and delivered
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<PAGE>
pursuant to Section 5.05, other than any such Preferred Securities in
respect of which there shall have been presented to the Property Trustee
proof satisfactory to it that such Preferred Securities are held by a bona
fide purchaser in whose hands such Preferred Securities are valid
obligations of the Company;
provided, however that in determining whether the holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the
Depositor or any Trustee shall be disregarded and deemed not to be Outstanding,
except that (a) in determining whether any Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Preferred Securities which such Trustee actually knows to be so
owned shall be so disregarded and (b) the foregoing shall not apply at any time
when all of the Outstanding Preferred Securities are owned by the Depositor, one
or more of the Trustees and/or any such Affiliate. Preferred Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Administrative Trustees the
pledgee's right so to act with respect to such Preferred Securities and that the
pledgee is not the Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of a Book Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the beneficial owner, then as
reflected in the records of a Person maintaining an account with such Clearing
Agency (directly or indirectly, in accordance with the rules of such Clearing
Agency).
"Paying Agent" means the Property Trustee and any co-paying agent
appointed pursuant to Section 5.09.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee or any other Paying Agent in
its trust department for the benefit of the Securityholders in which all amounts
paid in respect of the Debentures will be held and from which the Property
Trustee or such other Paying Agent shall make payments to the Securityholders in
accordance with Section 4.01.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount of $25 and having rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
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<PAGE>
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as Exhibit
E.
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore created and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as herein
provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions thereon to the date of redemption, plus the amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.04.
"Securityholder" or "Holder" means a Person in whose name a Trust
Security or Securities is registered in the Securities Register; any such Person
shall be deemed to be a beneficial owner within the meaning of the Delaware
Business Trust Act.
"Special Event" has the meaning specified in Section 9.02(b).
"Tax Event" means that the Depositor shall have received an Opinion of
Counsel experienced in such matters to the effect that, as a result of 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 affecting taxation, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or 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, subject to United States
federal income tax with respect to income accrued or received on the Debentures,
(ii) interest payable by the Depositor on the Debentures is not, or will not be,
deductible by the Depositor for United States federal income tax purposes or
(iii) the Trust is, or will be, subject to more than a de minimis amount of
other taxes, duties, assessments or other governmental charges.
"Trust" means the Delaware business trust created and continued hereby
and identified on the cover page to this Trust Agreement.
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<PAGE>
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Underwriting Agreement" means the Underwriting Agreement, dated
_________, 1996, among the Trust, the Depositor and the Underwriters named
therein.
ARTICLE II
Continuation of the Trust
Section 2.01. Name.
The Trust created and continued hereby shall be known as "USF&G Capital
I," as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
other Trustees, in which name the Trustees may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
Section 2.02. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is 23
White Clay Center, Newark, Delaware 19711 or such other address in the State of
Delaware as the Delaware Trustee may designate by written notice to the
Securityholders and the Depositor. The principal place of business of the Trust
is c/o USF&G Corporation, 100 Light Street, Baltimore, Maryland 21201.
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Section 2.03. Initial Contribution of Trust Property;
Organizational Expenses.
The Property Trustee acknowledges receipt in trust from the Depositor
in connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Trust as they arise or shall, upon request of any Trustee,
promptly reimburse such Trustee for any such expenses paid by such Trustee. The
Depositor shall make no claim upon the Trust Property for the payment of such
expenses.
Section 2.04. Issuance of the Preferred Securities.
On _________, 1996 the Depositor, on behalf of the Trust and pursuant
to the Original Trust Agreement, executed and delivered the Underwriting
Agreement. Contemporaneously with the execution and delivery of this Trust
Agreement, at least one Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 5.02 and deliver to the Underwriters named
therein Preferred Securities Certificates, registered in the name of the nominee
of the initial Clearing Agency, in an aggregate amount of _________ Preferred
Securities having an aggregate Liquidation Amount of $_________, against receipt
of the aggregate purchase price of such Preferred Securities of $_________,
which amount the Administrative Trustees shall promptly deliver to the Property
Trustee. In the event and to the extent the overallotment option granted by the
Trust pursuant to the Underwriting Agreement is exercised by the Underwriters
named therein, at least one Administrative Trustee, on behalf of the Trust,
shall execute in accordance with Section 5.02 and deliver to the Underwriters
named therein Preferred Securities Certificates, registered in the name of the
nominee of the initial Clearing Agency, in an aggregate amount of up to
_________ Preferred Securities having an aggregate Liquidation Amount of up to
$_________, against receipt of the aggregate purchase price of such Preferred
Securities of up to $_________, which amount the Administrative Trustees shall
promptly deliver to the Property Trustee on the date specified pursuant to the
Underwriting Agreement.
Section 2.05. Subscription and Purchase of Debentures; Issuance of the
Common Securities.
Contemporaneously with the execution and delivery of this Trust
Agreement, the Administrative Trustees, on behalf of the Trust, shall subscribe
to and purchase from the Depositor Debentures, registered in the name of the
Trust and having an aggregate principal amount equal to $_________, and, in
satisfaction of the purchase price for such Debentures, the Property Trustee, on
behalf of the Trust, shall deliver to the Depositor the sum of $_________, and
contemporaneously therewith, at least one Administrative Trustee, on behalf of
the Trust, shall execute in accordance with Section 5.02 and deliver to the
Depositor Common Securities Certificates, registered in the name of the
Depositor, in an aggregate amount of _________ Common Securities having an
aggregate Liquidation Amount of $_________, and in satisfaction of the purchase
price of such Common Securities the Depositor shall deliver to the Trust the sum
of $___________. In the event and to the extent the over-allotment option
granted by the Trust pursuant to the Underwriting Agreement is exercised by the
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Underwriters named thereon, the Administrative Trustees, on behalf of the Trust,
shall subscribe to and purchase from the Depositor Debentures, registered in the
name of the Trust and having an aggregate principal amount of up to $_________,
and, in satisfaction of the purchase price for such Debentures, the Property
Trustee, on behalf of the Trust, shall deliver to the Depositor an amount equal
to 100% of the aggregate principal amount of the Debentures being purchased and
contemporaneously therewith, at least one Administrative Trustee, on behalf of
the Trust, shall execute in accordance with Section 5.02 and deliver to the
Depositor Common Securities Certificates, registered in the name of the
Depositor, in an aggregate amount (determined on a pro rata basis to the extent
the overallotment option is exercised) of up to _________ Common Securities
having an aggregate Liquidation Amount of up to $_________ and, in satisfaction
of the purchase price for such Common Securities, the Depositor shall deliver to
the Trust up to $_____________.
Section 2.06. Declaration of Trust.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Trust Securities and use the proceeds from such sale to acquire the
Debentures, (b) to maintain the status of the Trust as a grantor trust for
federal income tax purposes, and (c) except as otherwise limited herein, to
engage in only those activities necessary or incidental thereto. The Depositor
hereby appoints the Trustees as trustees of the Trust, to have all the rights,
powers and duties to the extent set forth herein, and the Trustees hereby accept
such appointment. The Property Trustee hereby declares that it will hold the
Trust Property in trust upon and subject to the conditions set forth herein for
the benefit of the Securityholders. The Administrative Trustees shall have all
rights, powers and duties set forth herein. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of
the Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Delaware Business Trust Act.
Section 2.07. Authorization to Enter into Certain Transactions.
(a) The Trustees shall conduct the affairs of the Trust in accordance
with the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section, and in accordance with the following provisions
(i) and (ii), the Trustees shall have the authority to enter into all
transactions and agreements determined by the Trustees to be appropriate in
exercising the authority, express or implied, otherwise granted to the Trustees
under this Trust Agreement, and to perform all acts in furtherance thereof,
including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall
have the power and authority to act on behalf of the Trust with respect to the
following matters:
.........(A) issuing and selling the Trust Securities;
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.........(B) causing the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Expense Agreement and
the Certificate Depository Agreement and such other agreements as may
be necessary or desirable in connection with the purposes and function
of the Trust, including the appointment of a successor depositary;
......... (C) assisting in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of this Trust
Agreement as a trust indenture under the Trust Indenture Act;
.........(D) assisting in the listing of the Preferred Securities
upon such securities exchange or exchanges as shall be determined by
the Depositor and the registration of the Preferred Securities under
the Securities Exchange Act of 1934, as amended, and the preparation
and filing of all periodic and other reports and other documents
pursuant to the foregoing;
.........(E) to the extent provided in this Trust Agreement,
winding up the affairs of and liquidating the Trust and preparing,
executing and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
.........(F) sending notices (other than notices of defaults) and
other information regarding the Trust Securities and the Debentures to
Securityholders in accordance with this Trust Agreement; and
.........(G) taking any action incidental to the foregoing as the
Administrative Trustees may from time to time determine is necessary
or advisable to give effect to the terms of this Trust Agreement for
the benefit of the Securityholders (without consideration of the
effect of any such action on any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with respect to the
following matters:
.........(A) establishing and maintaining the Payment Account and
appointing Paying Agents (subject to Section 5.09);
.........(B) receiving the Debentures;
.........(C) collecting interest, principal and any other
payments made in respect of the Debentures in the Payment Account;
.........(D) distributing amounts owed to the Securityholders in
respect of the Trust Securities;
.........(E) exercising all of the rights, powers and privileges
of a holder of the Debentures;
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.........(F) sending notices of defaults and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
.........(G) distributing the Trust Property in accordance with
the terms of this Trust Agreement;
.........(H) to the extent provided in this Trust Agreement,
winding up the affairs of and liquidation of the Trust and the
preparing, executing and filing of the certificate of cancellation
with the Secretary of State of the State of Delaware;
.........(I) after an Event of Default, taking any action
incidental to the foregoing as the Property Trustee may from time to
time determine is necessary or advisable to give effect to the terms
of this Trust Agreement and protect and conserve the Trust Property
for the benefit of the Securityholders (without consideration of the
effect of any such action on any particular Securityholder); and
.........(J) registering transfers of the Trust Securities in
accordance with this Trust Agreement (if at such time the Property
Trustee shall be the Securities Registrar).
(b) So long as this Trust Agreement remains in effect, the Trust (or
the Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees acting on behalf of the Trust shall not (i)
acquire any assets or investments (other than the Debentures as provided
herein), reinvest the proceeds derived from investments, possess any power or
otherwise act in such a way as to vary the Trust Property or engage in any
activities not authorized by this Trust Agreement, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust
Property or interests therein, including to Securityholders, except as expressly
provided herein, (iii) take any action that would cause the Trust to fail or
cease to qualify as a grantor trust for United States federal income tax
purposes, (iv) incur any indebtedness for borrowed money or issue any other
debt, (v) issue any securities or other evidences of beneficial ownership of, or
beneficial interests in, the Trust other than the Trust Securities, or (vi) take
or consent to any action that would result in the placement of a Lien on any of
the Trust Property. The Administrative Trustees shall defend all claims and
demands of all Persons at any time claiming any Lien on any of the Trust
Property adverse to the interest of the Trust or the Securityholders in their
capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):
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(i) preparing for filing by the Trust with the Commission and
executing on behalf of the Trust a registration statement on Form S-3 in
relation to the Preferred Securities, including any amendments thereto;
(ii) determining the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred Securities
and doing any and all such acts, other than actions which must be taken by or on
behalf of the Trust, and advising the Trustees of actions they must take on
behalf of the Trust, and prepare for execution and filing any documents to be
executed and filed by the Trust or on behalf of the Trust, as the Depositor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(iii) preparing for filing by the Trust and executing on
behalf of the Trust an application to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market for listing upon notice of
issuance of any Preferred Securities;
(iv) preparing for filing by the Trust with the Commission and
executing on behalf of the Trust a registration statement on Form 8-A relating
to the registration of the Preferred Securities under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934, as amended, including any amendments
thereto;
(v) negotiating the terms of, and executing and delivering,
the Underwriting Agreement providing for the sale of the Preferred
Securities; and
(vi) taking any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act, or taxed as a corporation
or a partnership for United States federal income tax purposes and so that the
Trust will qualify as a grantor trust for United States federal income tax
purposes and the Debentures will be treated as indebtedness of the Depositor for
United States federal income tax purposes. In this connection, the Depositor and
the Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the Certificate of Trust, as amended from time to time, or
this Trust Agreement, that each of the Depositor and the Administrative Trustees
determines in their discretion to be necessary or desirable for such purposes,
as long as such action does not materially adversely affect the interests of the
holders of the Preferred Securities.
Section 2.08. Assets of Trust.
The assets of the Trust shall consist of the Trust Property.
Section 2.09. Title to Trust Property.
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Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Securityholders in accordance with
this Trust Agreement.
ARTICLE III
Payment Account
Section 3.01. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits in and
withdrawals from the Payment Account in accordance with this Trust Agreement.
All monies and other property deposited or held from time to time in the Payment
Account shall be held in the Payment Account by the Property Trustee or other
applicable Paying Agent for the exclusive benefit of the Securityholders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal or interest on, and any other payments
or proceeds with respect to, the Debentures. Amounts held in the Payment Account
shall not be invested pending distribution thereof.
ARTICLE IV
Distributions; Redemption
Section 4.01. Distributions.
(a) Distributions on the Trust Securities shall be cumulative, and
will accumulate whether or not there are funds of the Trust available for the
payment of Distributions. Distributions shall accrue from _________, 1996 and,
except in the event that the Depositor exercises its right to extend the
interest payment period for the Debentures pursuant to the Indenture, shall be
payable quarterly in arrears on [March 31, June 30, September 30 and December
31] of each year, commencing on _________, 1996. If any date on which
Distributions are otherwise payable on the Trust Securities is not a Business
Day, then the payment of such Distribution shall be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, payment of such Distribution shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date (each date on which Distributions are payable in
accordance with this Section 4.01(a) a "Distribution Date").
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(b) The Trust Securities represent undivided beneficial interests in
the Trust Property, and, subject to Section 4.03 hereof, all Distributions will
be made pro rata on each of the Trust Securities. Distributions on the Trust
Securities shall be payable at a rate of ___% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for any full
quarterly period shall be computed on the basis of a 360-day year of twelve
30-day months and, for any period shorter than a full month, shall be computed
on the basis of the actual number of days elapsed in such period. If the
interest payment period for the Debentures is extended pursuant to the
Indenture, then the rate per annum at which Distributions on the Trust
Securities accumulate shall be increased by an amount such that the aggregate
amount of Distributions that accumulate on all Trust Securities during any such
extended interest payment period is equal to the aggregate amount of interest
(including interest payable on unpaid interest at the percentage rate per annum
set forth above, compounded quarterly) that accrues during any such extended
interest payment period on the Debentures. The amount of Distributions payable
for any period shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made from the
Payment Account by the Property Trustee or other applicable Paying Agent and
shall be payable on each Distribution Date only to the extent that the Trust has
funds then on hand and available in the Payment Account for the payment of such
Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be one Business Day prior to such Distribution Date; provided, however,
that in the event that the Preferred Securities do not remain in book-entry-only
form, the relevant record date shall be the date 15 days prior to the relevant
Distribution Date.
Section 4.02. Redemption.
(a) On each Debenture Redemption Date, the Trust will be required to
redeem a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 20 nor more than 90 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
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(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the total Liquidation Amount of the particular
Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will become
due and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accrue on and after such date; and
(vi) if the Preferred Securities are no longer in book-entry
only form, the place or places where Preferred Securities Certificates are to be
surrendered for payment of the Redemption Price.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the extent
that the Trust has funds then on hand and available in the Payment Account for
the payment of such Redemption Price.
(d) If the Trust, by action of the Property Trustee, gives a notice of
redemption in respect of any Preferred Securities, then, by 11:00 a.m., New York
time, on the Redemption Date, subject to Section 4.02(c), the Property Trustee
will, so long as the Preferred Securities are in book-entry-only form,
irrevocably deposit with the Clearing Agency for the Preferred Securities funds
sufficient to pay the Redemption Price for the Preferred Securities being
redeemed on such date and will give such Clearing Agency irrevocable
instructions and authority to pay the Redemption Price to the Holders of such
Preferred Securities. If the Preferred Securities are no longer in
book-entry-only form, the Property Trustee, by 11:00 a.m., New York time, on the
Redemption Date, subject to Section 4.02(c), will irrevocably deposit with the
Paying Agent funds sufficient to pay the Redemption Price for the Preferred
Securities being redeemed on such date and will give the Paying Agent
irrevocable instructions and authority to pay the Redemption Price to the Owners
of such Preferred Securities upon surrender of their Preferred Securities
Certificates. Notwithstanding the foregoing, Distributions payable on or prior
to the Redemption Date for any Trust Securities called for redemption shall be
payable to the Holders of such Trust Securities as they appear on the Securities
Register for the Trust Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of
Securityholders holding Trust Securities so called for redemption will cease,
except the right of such Securityholders to receive the Redemption Price, but
without interest, and such Trust Securities will cease to be Outstanding. In the
event that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day which 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. In the event that payment of the Redemption Price in respect of
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any Trust Securities called for redemption is improperly withheld or refused,
and not paid either by the Trust or by the Depositor pursuant to the Guarantee,
Distributions on such Trust Securities will continue to accrue, at the then
applicable rate, from the Redemption Date originally established by the Trust
for such Trust Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
(e) If less than all the Outstanding Trust Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust
Securities to be redeemed shall be allocated 3% to the Common Securities and 97%
to the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 90 days prior to the Redemption Date by the
Property Trustee from the Outstanding Preferred Securities not previously called
for redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple thereof) of the aggregate Liquidation
Amount of Preferred Securities of a denomination larger than $25. The Property
Trustee shall promptly notify the Securities Registrar in writing of the
Preferred Securities selected for redemption and, in the case of any Preferred
Securities selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of this Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Preferred Securities
shall relate, in the case of any Preferred Securities redeemed or to be redeemed
only in part, to the portion of the Liquidation Amount of Preferred Securities
which has been or is to be redeemed.
Section 4.03. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made pro rata based on the Liquidation Amount of the Trust
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution (including Additional Amounts, if applicable) on, or
Redemption Price of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions
(including Additional Amounts, if applicable) on all Outstanding Preferred
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all Outstanding Preferred Securities then being redeemed, shall have
been made or provided for, and all funds immediately available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on, or the
Redemption Price of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Debenture Event of Default,
the Holder of Common Securities will be deemed to have waived any right to act
with respect to any related Event of Default under this Trust Agreement until
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the effect of such related Event of Default has been cured, waived or otherwise
eliminated. Until any such Event of Default under this Trust Agreement has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the Holders of the Preferred Securities and not the Holder of the
Common Securities, and only the Holders of the Preferred Securities will have
the right to direct the Property Trustee to act on their behalf.
Section 4.04. Payment Procedures.
Subject to Section 4.02(d), payments in respect of the Preferred
Securities shall be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Securities Register or, if the
Preferred Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency in immediately available funds, which shall credit
the relevant Persons' accounts at such Clearing Agency on the applicable
distribution dates. Payments in respect of the Common Securities shall be made
in such manner as shall be mutually agreed between the Property Trustee and the
Common Securityholder.
Section 4.05. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared or filed) the appropriate Internal Revenue Service Form
required to be filed in respect of the Trust in each taxable year of the Trust
and (b) prepare and furnish (or cause to be prepared and furnished) to each
Securityholder the related Internal Revenue Service Form 1099 OID, or any
successor form or the information required to be provided on such form. The
Administrative Trustees shall provide the Depositor and the Property Trustee
with a copy of all such returns, reports and schedules promptly after such
filing or furnishing. The Trustees shall comply with United States federal
withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
ARTICLE V
Trust Securities Certificates
Section 5.01. Initial Ownership.
Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 2.03 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are outstanding, the Depositor shall
be the sole beneficial owner of the Trust.
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Section 5.02. The Trust Securities Certificates.
The Trust Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be executed on behalf of the Trust by manual
signature of at least one Administrative Trustee. Trust Securities Certificates
bearing the manual signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.04.
Section 5.03. Delivery of Trust Securities Certificates.
On the Closing Date and on any date on which Preferred Securities are
required to be delivered pursuant to the exercise of the overallotment option
provided for in the Underwriting Agreement, the Administrative Trustees shall
cause Trust Securities Certificates, in an aggregate Liquidation Amount as
provided in Sections 2.04 and 2.05, to be executed on behalf of the Trust as
provided in Section 5.02 and delivered to or upon a written order of the
Depositor signed by its Chairman of the Board, its President, any Executive Vice
President or any Vice President, without further corporate action by the
Depositor, in authorized denominations.
Section 5.04. Registration of Transfer and Exchange of Preferred Securities
Certificates.
A registrar appointed by the Depositor (the "Securities Registrar")
shall keep or cause to be kept, at the office or agency maintained pursuant to
Section 5.08, a register (the "Securities Register") in which, subject to such
reasonable regulations as it may prescribe, the Securities Registrar shall
provide for the registration of Trust Securities Certificates (subject to
Section 5.10 in the case of the Common Securities Certificates) and registration
of transfers and exchanges of Preferred Securities Certificates as herein
provided. The Property Trustee shall be the initial Securities Registrar; any
successor Security Registrar shall be appointed in accordance with Section 2.07.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.08, the
Administrative Trustees or any one of them shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like aggregate
Liquidation Amount dated the date of execution by such Administrative Trustee or
Trustees. At the option of a Holder, Preferred Securities Certificates may be
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exchanged for other Preferred Securities Certificates in authorized
denominations of the same class and of a like aggregate Liquidation Amount upon
surrender of the Preferred Securities Certificates to be exchanged at the office
or agency maintained pursuant to Section 5.08. The Securities Registrar shall
not be required to register the transfer of any Preferred Securities that have
been called for redemption, in whole or in part, except the unredeemed portion
of any Preferred Security being redeemed in part.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Administrative Trustees and
the Securities Registrar duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Preferred Securities Certificate surrendered
for registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Administrative Trustees in accordance with their customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
Section 5.05. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust shall execute and make available for delivery, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a
new Trust Securities Certificate of like class, tenor and denomination. In
connection with the issuance of any new Trust Securities Certificate under this
Section, the Administrative Trustees or the Securities Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Trust Securities
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an undivided beneficial interest in the assets of the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
Section 5.06. Persons Deemed Securityholders.
Prior to due presentation of a Trust Security Certificate for
registration of transfer, the Administrative Trustees or the Securities
Registrar shall treat the Person in whose name any Trust Securities Certificate
shall be registered in the Securities Register as the owner of such Trust
Securities Certificate for the purpose of receiving Distributions and for all
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other purposes whatsoever, and neither the Trustees nor the Securities Registrar
shall be bound by any notice to the contrary.
Section 5.07. Access to List of Securityholders' Names and Addresses.
In the event that the Property Trustee is no longer the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished (a) to the Property Trustee, quarterly not later than 10 days
prior to a Distribution Date, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Securityholders as of the
most recent record date and (b) to the Property Trustee, promptly after receipt
by any Administrative Trustee or the Depositor of a request therefor from the
Property Trustee in order to enable the Property Trustee to discharge its
obligations under this Trust Agreement (including, without limitation, its
obligation to pay Distributions in accordance with Section 4.01 hereof), in each
case to the extent such information is in the possession or control of the
Administrative Trustees or the Depositor and is not identical to a previously
supplied list or has not otherwise been received by the Property Trustee. The
rights of Securityholders to communicate with other Securityholders with respect
to their rights under this Trust Agreement or under the Trust Securities, and
the corresponding rights of the Property Trustee shall be as provided in the
Trust Indenture Act. Each Holder, by receiving and holding a Trust Securities
Certificate, and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee or the Administrative Trustees accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
Section 5.08. Maintenance of Office or Agency.
The Property Trustee shall maintain in New York, New York, an office or
offices or agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustees in respect of the Trust Securities Certificates
may be served. The Property Trustee shall give prompt written notice to the
Depositor and to the Securityholders of any change in the location of the
Securities Register or any such office or agency, which shall initially be at
the office of Corporate Trust Trustee Administration of the Property Trustee.
Section 5.09. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the Distributions referred to above. The Administrative Trustees may
revoke such power and remove the Paying Agent if such Trustees determine in
their sole discretion that the Paying Agent shall have failed to perform its
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obligations under this Trust Agreement in any material respect. The Paying Agent
shall initially be the Property Trustee, and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and the
Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees and the
Depositor, and, if applicable, the Property Trustee . In the event that the
Property Trustee shall no longer be the Paying Agent or a successor Paying Agent
shall resign or its authority to act be revoked, the Administrative Trustee
shall appoint a successor that is acceptable to the Property Trustee (in the
case of any other Paying Agent) and the Depositor to act as Paying Agent (which
shall be a bank or trust company and have a combined capital and surplus of at
least $50,000,000). The Administrative Trustees shall cause such successor
Paying Agent or any additional Paying Agent appointed by the Administrative
Trustees to execute and deliver to the Trustees an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the Trustees
that as Paying Agent, such successor Paying Agent or additional Paying Agent
will hold all sums, if any, held by it for payment to the Securityholders in
trust for the benefit of the Securityholders entitled thereto until such sums
shall be paid to such Securityholders. The Paying Agent shall return all
unclaimed funds to the Property Trustee and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the Property
Trustee. The provisions of Sections 8.01, 8.03 and 8.06 shall apply to the
Property Trustee also in its role as Paying Agent, for so long as the Property
Trustee shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Trust Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
Section 5.10. Ownership of Common Securities by Depositor.
On the Closing Date and on each other date provided for in Section
2.05, the Depositor shall acquire and retain beneficial and record ownership of
the Common Securities. To the fullest extent permitted by law, any attempted
transfer of the Common Securities shall be void. The Administrative Trustees
shall cause each Common Securities Certificate issued to the Depositor to
contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
Section 5.11. Book-Entry Preferred Securities Certificates; Common
Securities Certificate.
(a) The Preferred Securities Certificates, upon original issuance, will
not be engraved but will be issued in the form of a printed or typewritten
Preferred Securities Certificate or Certificates representing Book-Entry
Preferred Securities Certificates, to be delivered to The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of, the Trust. Such
Preferred Securities Certificate or Certificates shall initially be registered
on the Securities Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Owner will receive a Definitive Preferred Securities
Certificate representing such Owner's beneficial interest in such Preferred
Securities, except as provided in Section 5.13. Unless and until Definitive
Preferred Securities Certificates have been issued to the Owners thereof
pursuant to Section 5.13:
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(i) the provisions of this Section 5.11(a) shall be in full
force and effect;
(ii) the Securities Registrar, the Paying Agent and the
Trustees shall be entitled to deal with the Clearing Agency for all purposes of
this Trust Agreement relating to the Book-Entry Preferred Securities
Certificates (including the payment of the Redemption Price of and Distributions
on the Book-Entry Preferred Securities and the giving of instructions or
directions to Owners of Book-Entry Preferred Securities) as the sole Holder of
Book-Entry Preferred Securities and shall have no obligations to the Owners
thereof;
(iii) to the extent that the provisions of this Section 5.11
conflict with any other provisions of this Trust Agreement, the provisions of
this Section 5.11 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements between such Owners
and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive Preferred
Securities Certificates are issued pursuant to Section 5.13, the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments on the Preferred Securities to
such Clearing Agency Participants.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
Section 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Preferred
Securities Certificates shall have been issued to Owners pursuant to Section
5.13, the Trustees shall give all such notices and communications specified
herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
Section 5.13. Definitive Preferred Securities Certificates.
If (a) the Depositor advises the Trustees in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Preferred Securities Certificates, and the Depositor is
unable to locate a qualified successor, (b) the Depositor at its option advises
the Trustees in writing that it elects to terminate the book-entry system
through the Clearing Agency or (c) after the occurrence of a Debenture Event of
Default, Owners of Preferred Securities representing beneficial interests
aggregating at least a majority of the Liquidation Amount of the Outstanding
Preferred Securities advise the Clearing Agency in writing that the continuation
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of a book-entry system through the Clearing Agency is no longer in the best
interest of the Owners of Preferred Securities, then the Clearing Agency shall
notify all Owners of Preferred Securities and the Trustees of the occurrence of
any such event and of the availability of Definitive Preferred Securities
Certificates. Upon surrender to the Administrative Trustees of the Preferred
Securities Certificate or Certificates representing the Book Entry Preferred
Securities Certificates by the Clearing Agency, accompanied by registration
instructions, the Administrative Trustees, or any one of them, shall execute the
Definitive Preferred Securities Certificates in accordance with the instructions
of the Clearing Agency. Neither the Securities Registrar nor the Trustees shall
be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. The Definitive
Preferred Securities Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
Section 5.14. Rights of Securityholders.
The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.09, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust Securities
shall have no preemptive or similar rights and when issued and delivered to
Securityholders against payment of the purchase price therefor will be fully
paid and nonassessable by the Trust. The Holders of the Trust Securities, in
their capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
ARTICLE VI
Acts of Securityholders; Meetings; Voting
Section 6.01. Limitations on Voting Rights.
(a) Except as provided herein and in the Indenture and as otherwise
required by law, no Holder of Preferred Securities shall have any right to vote
or in any manner otherwise control the administration, operation and management
of the Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Debenture Trustee with respect to such
Debentures, (ii) waive any past default which is waivable under Section 513 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
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the principal of all the Debentures shall be due and payable or (iv) consent to
any amendment, modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the Holders of a majority in Liquidation Amount of all Outstanding
Preferred Securities; provided, however, that where such consent or approval
under the Indenture would require the consent or approval of each holder of
Debentures affected thereby, no such consent or approval shall be given by the
Property Trustee without the prior written consent of each Holder of Outstanding
Preferred Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of Preferred Securities, except
by a subsequent vote of the Holders of Preferred Securities. The Property
Trustee shall notify all Holders of the Preferred Securities of any notice of
default received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Trustees shall, at
the expense of the Depositor, obtain an Opinion of Counsel experienced in such
matters to the effect that the Trust will not be classified as an association
taxable as a corporation or partnership for United States federal income tax
purposes on account of such action and will continue to be classified as a
grantor trust for United States federal income tax purposes.
(c) Subject to Section 10.02(c) hereof, if any proposed amendment to
the Trust Agreement provides for, or the Trustees otherwise propose to effect,
(i) any action that would adversely affect in any material respect the powers,
preferences or special rights of the Preferred Securities, whether by way of
amendment to this Trust Agreement or otherwise, or (ii) the dissolution,
winding-up or termination of the Trust, other than pursuant to the terms of this
Trust Agreement, then the Holders of Outstanding Preferred Securities as a class
will be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of the Holders of a
majority in Liquidation Amount of the Outstanding Preferred Securities.
Section 6.02. Notice of Meetings.
Notice of all meetings of the Preferred Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 10.08 to each Preferred Securityholder of record, at his
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be so
considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.
Section 6.03. Meetings of Preferred Securityholders.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Holders of 25% of the
aggregate Liquidation Amount of the Outstanding Preferred Securities and the
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Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of Preferred Securityholders to vote on any matters
as to which the Preferred Securityholders are entitled to vote.
Holders of 50% of the aggregate Liquidation Amount of the Outstanding
Preferred Securities, present in person or by proxy, shall constitute a quorum
at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote of the Holders
of a majority of the aggregate Liquidation Amount of the Outstanding Preferred
Securities present, either in person or by proxy, at such meeting shall
constitute the action of the Securityholders, unless this Trust Agreement
requires a greater number of affirmative votes.
Section 6.04. Voting Rights.
Securityholders shall be entitled to one vote for each $25 of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.
Section 6.05. Proxies, etc.
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of the Property Trustee, proxies may be solicited in
the name of the Property Trustee or one or more officers of the Property
Trustee. Only Securityholders of record shall be entitled to vote. When Trust
Securities are held jointly by several Persons, any one of them may vote at any
meeting in person or by proxy in respect of such Trust Securities, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Trust Securities. A
proxy purporting to be executed by or on behalf of a Securityholder shall be
deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid more
than three years after its date of execution.
Section 6.06. Securityholder Action by Written Consent.
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting if Holders of the proportion of the Outstanding Trust
Securities, or class thereof required to approve such action shall consent to
the action in writing.
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Section 6.07. Record Date for Voting and Other Purposes.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees may from time to time fix a date, not
more than 90 days prior to the date of any meeting of Securityholders or the
payment of any Distribution or other action, as the case may be, as a record
date for the determination of the identity of the Securityholders for such
purposes.
Section 6.08. Acts of Securityholders.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Securityholders or Owners may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Securityholders
or Owners in person or by an agent duly appointed in writing; and, except as
otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders or
Owners signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 8.01) conclusive, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which any Trustee receiving the same deems sufficient.
In determining whether the Holders of the requisite Liquidation Amount
of outstanding Preferred Securities has acted in connection with any request,
demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Trust Agreement, then for purposes of such
determination, if the Preferred Securities are in the form of one or more
Book-Entry Preferred Securities Certificates, the Holders entitled to act
thereon shall mean the Owners of such Preferred Securities.
Any request, demand, authorization, direction, notice, consent, waiver
or other act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
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Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder or
Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
Section 6.09. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by Securityholders
during normal business hours for any purpose reasonably related to such
Securityholder's interest as a Securityholder.
ARTICLE VII
Representations and Warranties
Section 7.01. Representations and Warranties of the Trustee and the
Administrative Trustees.
The Property Trustee, the Delaware Trustee and the Administrative
Truetes, each severally on behalf of, and solely as to itself, hereby represents
and warrants for the benefit of the Depositor and the Securityholders that:
(a) the Property Trustee is a New York banking corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and the Delaware Trustee is a Delaware corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(b) each of the Property Trustee and the Delaware Trustee has full
corporate power, authority and legal right to execute, deliver and perform its
obligations under this Trust Agreement and has taken all necessary action to
authorize the execution, delivery and performance by it of this Trust Agreement;
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(c) this Trust Agreement has been duly authorized, executed and
delivered by the Property Trustee, the Delaware Trustee and the Administrative
Trustees in their capacity as such, and constitutes the valid and legally
binding agreement of the Property Trustee, the Delaware Trustee and the
Administrative Trustees in their capacity as such, enforceable against them in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Property Trustee
and the Delaware Trustee of this Trust Agreement and the issuance of the Trust
Securities pursuant to this Trust Agreement have been duly authorized by all
necessary corporate or other action on the part of the Property Trustee and the
Delaware Trustee and do not require any approval of stockholders of the Property
Trustee and such execution, delivery and performance will not (i) violate the
Property Trustee's or the Delaware Trustee's charter or by-laws, (ii) violate
any provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of, any Lien on any
properties included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or instrument
to which the Property Trustee or the Delaware Trustee is a party or by which it
is bound, or (iii) violate any law, governmental rule or regulation of the
United States or the State of Delaware, as the case may be, governing the
banking or trust powers of, the Property Trustee or the Delaware Trustee (as
appropriate in context) or any order, judgment or decree applicable to the
Property Trustee or the Delaware Trustee;
(e) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein pursuant to this Trust Agreement
require the consent or approval of, the giving of notice to, the registration
with or the taking of any other action with respect to any governmental
authority or agency under any existing federal law governing the banking or
trust powers of the Property Trustee or under the laws of the United States or
the State of Delaware;
(f) there are no proceedings pending or, to the best of the Property
Trustee's and the Delaware Trustee's knowledge, threatened against or affecting
the Property Trustee or the Delaware Trustee in any court or before any
governmental authority, agency or arbitration board or tribunal which,
individually or in the aggregate, would materially and adversely affect the
Trust or would question the right, power and authority of the Property Trustee
or the Delaware Trustee to enter into or perform its obligations as one of the
Trustees under this Trust Agreement.
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ARTICLE VIII
The Trustees
Section 8.01. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee, by
the Trust Indenture Act. The Property Trustee, other than during the occurrence
and continuance of an Event of Default, undertakes to perform only such duties
as are specifically set forth in this Trust Agreement and, after an Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. The Trustees
shall have all the privileges, rights, and immunities provided by the Delaware
Business Trust Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this Trust
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustees shall be subject to the provisions of this Section.
Nothing in this Trust Agreement shall be construed to release the Property
Trustee from liability for its own negligent action, its own failure to act, or
its own willful misconduct. To the extent that, at law or in equity, an
Administrative Trustee has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to the Securityholders, such Administrative
Trustee shall not be liable to the Trust or to any Securityholder for such
Trustee's good faith reliance on the provisions of this Trust Agreement. The
provisions of this Trust Agreement, to the extent that they restrict the duties
and liabilities of the Administrative Trustees otherwise existing at law or in
equity, are agreed by the Depositor and the Securityholders to replace such
other duties and liabilities of the Administrative Trustees.
(b) All payments made by the Property Trustee or any other Paying Agent
in respect of the Trust Securities shall be made only from the income and
proceeds from the Trust Property. Each Securityholder, by its acceptance of a
Trust Security, agrees that it will look solely to the income and proceeds from
the Trust Property to the extent legally available for distribution to it as
herein provided and that the Trustees are not personally liable to it for any
amount distributable in respect of any Trust Security or for any other liability
in respect of any Trust Security. This Section 8.01(b) does not limit the
liability of the Trustees expressly set forth elsewhere in this Trust Agreement
or, in the case of the Property Trustee, in the Trust Indenture Act.
Section 8.02. Notice of Defaults; Direct Action by Securityholders.
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Within [five] days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.08, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived. If the Property
Trustee fails to enforce its rights under this Trust Agreement or the Indenture,
to the fullest extent permitted by law and subject to the terms of thisTrust
Agreement , any Securityholder may, after such Securityholder's written request
to the Property Trustee to enforce such rights, institute a legal proceeding
directly against any Person to enforce the Property Trustee's rights under this
Trust Agreement or the Indenture without first instituting a legal proceeding
against the Property Trustee or any other Person. In addition, to the extent
that any action under the Indenture is entitled to be taken by the holders of a
specified percentage of the principal amount of the outstanding Debentures,
Holders of the same percentage of the Liquidation Amount of the Outstanding
Preferred Securities may also take such action if such action is not taken by
the Property Trustee after written notice from such Holders of a demand for such
action satisfying any requirements of the Indenture or this Trust Agreement,
including the requirements of Section 8.03(d) hereof. The foregoing shall be in
addition to and not in limitation of any direct rights provided to the holders
of the Preferred Securities under the terms of the Indenture.
Section 8.03. Certain Rights of Property Trustee. Subject to the provisions
of Section 8.01.
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if, other than during the occurrence and continuance of an Event
of Default, (i) in performing its duties under this Trust Agreement the Property
Trustee is required to decide between alternative courses of action or (ii) in
construing any of the provisions in this Trust Agreement the Property Trustee
finds the same ambiguous or inconsistent with any other provisions contained
herein or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as to which the
Preferred Securityholders are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken. The Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
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period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;
(c) the Property Trustee may consult with counsel or other experts of
its selection and the advice or opinion of such counsel or other experts with
respect to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(d) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(e) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit; and
(f) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys and the Property Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with due
care by it hereunder.
Section 8.04. Not Responsible for Recitals or Issuance of Securities.
Except as provided in Article VII, the recitals contained herein and in
the Trust Securities Certificates shall be taken as the statements of the Trust,
and the Trustees do not assume any responsibility for their correctness. The
Trustees shall not be accountable for the use or application by the Depositor of
the proceeds of the Debentures.
Section 8.05. May Hold Securities.
Except as provided in the definition of the term "Outstanding" in
Article I, any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 8.08 and 8.13, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
Section 8.06. Compensation; Indemnity; Fees.
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The Depositor agrees:
(a) to pay to the Trustees from time to time such compensation as
shall have been agreed in writing with the Depositor for all services rendered
by them hereunder (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify each of the Trustees or any predecessor Trustee for,
and to hold the Trustees harmless against, any and all loss, damage, claims,
liability, penalty or expense including taxes (other than taxes based on the
income of such Trustee) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Trust Agreement, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
No Trustee may claim any Lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 8.06.
The provisions of this Section 8.06 shall survive the termination of
this Trust Agreement.
Section 8.07. Corporate Property Trustee Required; Eligibility of Trustees.
(a) There shall at all times be a Property Trustee hereunder. The
Property Trustee shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder. Each Administrative Trustee shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
persons authorized to bind that entity.
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(c) There shall at all times be a Delaware Trustee. The Delaware
Trustee shall either be (i) a natural person who is at least 21 years of age and
a resident of the State of Delaware or (ii) a legal entity with its principal
place of business in the State of Delaware and that otherwise meets the
requirements of applicable Delaware law that shall act through one or more
persons authorized to bind such entity.
Section 8.08. Conflicting Interests.
If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
Section 8.09. Co-Trustees and Separate Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property may at the time be located, the Depositor and the
Administrative Trustees, by agreed action of the majority of such Trustees,
shall have power to appoint, and upon the written request of the Administrative
Trustees, the Depositor shall for such purpose join with the Administrative
Trustees in the execution, delivery, and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
Property Trustee either to act as co-trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to the extent required by law to
act as separate trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Depositor does not join in such appointment within 15 days after the receipt by
it of a request so to do, or in case a Debenture Event of Default has occurred
and is continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this
Section shall either be (i) a natural person who is at least 21 years of age and
a resident of the United States or (ii) a legal entity with its principal place
of business in the United States that shall act through one or more persons
authorized to bond such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged, and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
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(a) The Trust Securities shall be executed and delivered and all
rights, powers, duties, and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder, shall be exercised,
solely by such Trustees and not by such co-trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties, and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under this
Section, and, in case an Event of Default under the Indenture has occurred and
is continuing, the Property Trustee shall have power to accept the resignation
of, or remove, any such co-trustee or separate trustee without the concurrence
of the Depositor. Upon the written request of the Property Trustee, the
Depositor shall join with the Property Trustee in the execution, delivery, and
performance of all instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee, or any other
trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act
of a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
Section 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 8.11.
Any Trustee may resign at any time with respect to the Trust Securities
by giving written notice thereof to the Securityholders.
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Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time only by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Trustee (in its individual
capacity and on behalf of the Trust). An Administrative Trustee may be removed
by the Holder of Common Securities at any time.
If the instrument of acceptance by the successor Trustee required by
Section 8.11 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the Trustee may petition, at the
expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Trustee.
If any Trustee shall resign or become incapable of acting as Trustee,
or if a vacancy shall occur in the office of any Trustee for any cause, at a
time when no Debenture Event of Default shall have occurred and be continuing,
the Holder of Common Securities, by Act of the Holder of Common Securities
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees and the Trust, and the retiring Trustee shall comply with the
applicable requirements of Section 8.11. If the Property Trustee or the Delaware
Trustee shall resign or become incapable of continuing to act as the Property
Trustee or the Delaware Trustee, as the case may be, at a time when a Debenture
Event of Default is continuing, the Holder of Preferred Securities, by Act of
the Securityholders of a majority in Liquidation Amount of the Preferred
Securities then Outstanding delivered to the retiring Trustee, shall promptly
appoint a successor Trustee or Trustees, and such successor Trustee shall comply
with the applicable requirements of Section 8.11. If an Administrative Trustee
shall resign or become incapable of acting as Administrative Trustee, at a time
when a Debenture Event of Default shall have occurred and be continuing, the
Holder of Common Securities shall appoint a successor Administrative Trustee. If
no successor Trustee shall have been so appointed by the Holder of Common
Securities or the Holder Preferred Securitiues and accepted appointment in the
manner required by Section 8.11, any Securityholder who has been a
Securityholder of Trust Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.08 and shall give notice to
the Depositor. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office if it is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
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may be filled by (a) the unanimous act of the remaining Administrative Trustees
if there are at least two of them or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees set forth in Section 8.07).
Section 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee, the
retiring Trustee and each successor Trustee with respect to the Trust Securities
shall execute and deliver an amendment hereto wherein each successor Trustee
shall accept such appointment and which (a) shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee and (b) shall add to or change any of the provisions of this Trust
Agreement as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such amendment shall constitute such Trustees co-trustees
of the same trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee and upon the execution and delivery of
such amendment the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee and the Trust; but, on
request of the Trust or any successor Trustee such retiring Trustee shall duly
assign, transfer and deliver to such successor Trustee all Trust Property, all
proceeds thereof and money held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Trust shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Trustee shall be a party, or any Person succeeding
to all or substantially all the corporate trust business of such Trustee, shall
be the successor of such Trustee hereunder, provided such Person shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
Section 8.13. Preferential Collection of Claims Against Depositor or Trust.
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If and when the Property Trustee or the Delaware Trustee shall be or
become a creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
Section 8.14. Reports by Property Trustee.
(a) Within 60 days after December 31 of each year commencing with
December 31, 1996 the Property Trustee shall transmit to all Securityholders in
accordance with Section 10.08, and to the Depositor, a brief report dated as of
such December 31 with respect to:
(i) its eligibility under Section 8.07 or, in lieu thereof, if
to the best of its knowledge it has continued to be eligible under said Section,
a written statement to such effect;
(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the twelve-month period
(or, in the case of the initial report, the period since the Closing Date)
ending with such December 31 or, if the Property Trustee has not complied in any
material respect with such obligations, a description of such non-compliance;
and
(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action taken by
the Property Trustee in the performance of its duties hereunder which it has not
previously reported and which in its opinion materially affects the Trust
Securities.
(b) In addition the Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with each stock exchange upon which
the Trust Securities are listed, with the Commission and with the Depositor.
Section 8.15. Reports to the Property Trustee.
The Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act. Delivery of such reports, information and documents to the Property Trustee
is for informational purposes only and the Property Trustee's receipt of such
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shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Depositor's
compliance with any of its covenants hereunder (as to which the Property Trustee
is entitled to rely exclusively on Officers' Certificates).
Section 8.16. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
Section 8.17. Number of Trustees.
(a) The number of Trustees shall be five, provided that the Holder of
all of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
Section 8.18. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
2.07(a), including any registration statement or amendment thereto filed with
the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
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of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
Section 8.19. Voting.
Except as otherwise provided in this Trust Agreement, the consent or
vote of the Trustees shall be approved by not less than a majority of the
Administrative Trustees.
ARTICLE IX
Termination and Liquidation
Section 9.01. Termination Upon Expiration Date.
Unless earlier terminated, the Trust shall automatically terminate on
December 31, 2045 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 9.04.
Section 9.02. Early Termination.
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) the occurrence of a Tax Event or an Investment Company Event
(each, a "Special Event"), or the Trust is not or will not be taxed as a grantor
trust for United States federal income tax purposes but a Tax Event has not
occurred (a "Grantor Trust Event"), and written direction to the Property
Trustee from the Depositor within 90 days of such Special Event or Grantor Trust
Event (which direction is optional and wholly within the discretion of the
Depositor) to terminate the Trust and distribute Debentures to Securityholders
in accordance with Section 9.04;
(c) the redemption of all of the Preferred Securities; and
(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction.
Section 9.03. Termination.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 9.04, or upon the
redemption of all of the Trust Securities pursuant to Section 4.02, of all
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amounts required to be distributed hereunder upon the final payment of the Trust
Securities; (b) the payment of any expenses owed by the Trust; and (c) the
discharge of all administrative duties of the Administrative Trustees, including
the performance of any tax reporting obligations with respect to the Trust or
the Securityholders.
Section 9.04. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d)
of Section 9.02 occurs or upon the Expiration Date, the Trust shall be
liquidated by the Trustees as expeditiously as the Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, to each Securityholder a Like Amount of
Debentures, subject to Section 9.04(d). Notice of liquidation shall be given by
the Property Trustee by first-class mail, postage prepaid, mailed not later than
30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust
Securities at such Holder's address appearing in the Securities Register. All
notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be outstanding and any Trust Securities
Certificates not surrendered for exchange will be deemed to represent a Like
Amount of Debentures; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for certificates
evidencing Debentures, or, if Section 9.04(d) applies, receive a Liquidation
Distribution, as the Administrative Trustees or the Property Trustee shall deem
appropriate.
(b) Except where Section 9.02(c) or 9.04(d) applies, in order to effect
the liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Debentures in exchange for the
Outstanding Trust Securities Certificates.
(c) Except where Section 9.02(c) or 9.04(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures will be
issued to Holders of Trust Securities Certificates, upon surrender of such
certificates to the Administrative Trustees or their agent for exchange, (iii)
the Depositor shall use its reasonable efforts to have the Securities listed on
the New York Stock Exchange or such other exchange as the Preferred Securities
are then listed and shall take any reasonable action necessary to effect the
distribution of the Securities, (iv) any Trust Securities Certificates not so
surrendered for exchange will be deemed to represent a Like Amount of
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Debentures, accruing interest at the rate provided for in the Debentures from
the last Distribution Date on which a Distribution was made on such Trust
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments or interest or principal will be
made to Holders of Trust Securities Certificates with respect to such
Debentures) and (v) all rights of Securityholders holding Trust Securities will
cease, except the right of such Securityholders to receive Debentures upon
surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 9.04, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as the
Property Trustee determines. In such event, on the date of the dissolution,
winding-up or other termination of the Trust, Securityholders will be entitled
to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"). If, upon any such
dissolution, winding up or termination, 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, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be paid
on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if a Debenture Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities, and no Liquidation Distribution will be paid to the
Holders of the Common Securities unless and until receipt by the Holder of the
Preferred Securities of the entire Liquidation Distribution payable in respect
thereof.
ARTICLE X
Miscellaneous Provisions
Section 10.01. Limitation of Rights of Securityholders.
The death or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or any
Securityholder for such Person, to claim an accounting, take any action or bring
any proceeding in any court for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
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Section 10.02. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Trustees and the Depositor, without the consent of any Securityholders, to cure
any ambiguity, defect or inconsistency or make any other change which does not
adversely affect in any material respect the interests of any Holder of
Preferred Securities. Any amendments of this Trust Agreement pursuant to Section
10.02(a) shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 10.02(a) and 10.02(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor with the consent of Holders of a majority of the Liquidation Amount of
the Outstanding Preferred Securities.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 6.03 or 6.06 hereof), this
Trust Agreement may not be amended to (i) change the amount, timing, or currency
of any Distribution or Liquidation Distribution on the Trust Securities or
otherwise adversely affect the amount or method of payment of any Distribution
or Liquidation Distribution required to be made in respect of the Trust
Securities as of a specified date; (ii) restrict the right of a Securityholder
to institute suit for the enforcement of any such payment on or after such date;
(iii) modify the first sentence of Section 2.06 hereof; (iv) authorize or issue
any interest in the Trust other than as contemplated by this Trust Agreement as
of the date hereof; (v) change the Redemption Price; or (vi) affect the limited
liability of any Holder of Preferred Securities, and notwithstanding any other
provision herein without the unanimous consent of the Securityholders (such
consent being obtained in accordance with Section 6.03 or 6.06 hereof),
paragraphs (b) and (c) of this Section 10.02 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
amendment to this Trust Agreement shall be made without receipt by the Trust of
an Opinion of Counsel to the effect that such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax purposes
or its exemption from regulation as an "investment company" under the 1940 Act.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees shall promptly provide to the Depositor a copy of
such amendment.
(g) In executing any amendment to the Trust Agreement, the Property
Trustee shall be entitled to receive, and (subject to Section 8.01) shall be
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fully protected in relying upon an Opinion of Counsel stating that the execution
of such amendment is authorized or permitted by this Trust Agreement. The
Trustee may, but shall not be obligated to, enter into any amendment to this
Trust Agreement which affects the Trustee's own rights, duties or immunities
under this Trust Agreement or otherwise.
Section 10.03. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 10.04. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
Section 10.05. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
which is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day which is a Business Day (except as
otherwise provided therein, with the same force and effect as though made on the
date fixed for such payment, and no interest shall accrue thereon for the period
after such date.
Section 10.06. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Trust or successor Trustee or both, including
any successor by operation of law.
Section 10.07. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 10.08. Reports, Notices and Demands.
Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Securityholder or the Depositor may be given or served in writing
by deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case of
a Holder of a Preferred Security, to such Holder of a Preferred Security as such
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<PAGE>
Securityholder's name and address may appear on the Securities Register; and (b)
in the case of the Holder of a Common Security or the Depositor, to USF&G
Corporation, 100 Light Street, Baltimore, Maryland 21201, Attention:
[Treasurer], facsimile no.: (410) 547-____. Any notice to Holders of Preferred
Securities shall also be given to such Owners as have, within two years
preceding the giving of such notice, filed their names and addresses with the
Property Trustee for that purpose. Such notice, demand or other communication to
or upon a Securityholder shall be deemed to have been sufficiently given or
made, for all purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as follows:
(a) with respect to the Property Trustee to The Bank of New York, 101 Barclay
Street. 21W, New York, New York 10286, Attention: Corporate Trust Trustee
Administration; (b) with respect to the Delaware Trustee, to The Bank of New
York (Delaware), 23 White Clay Center, Newark, Delaware 19771; and (c) with
respect to the Administrative Trustees, to them at the address above for notices
to the Depositor, marked "Attention: Administrative Trustees of USF&G Capital I
[c/o Treasury Department.]" Such notice, demand or other communication to or
upon the Trust or the Property Trustee shall be deemed to have been sufficiently
given or made only upon actual receipt of the writing by the Trust or the
Property Trustee.
Section 10.09. Agreement Not to Petition.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy,
reorganization, arrangement, insolvency, liquidation or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor or any of the Trustees takes action in violation of this Section
10.09, the Property Trustee agrees, for the benefit of Securityholders, that at
the expense of the Depositor, it shall file an answer with the bankruptcy court
or otherwise properly contest the filing of such petition by the Depositor or
any of the Trustees, as applicable, against the Trust or the commencement of
such action and raise the defense that the Depositor has agreed in writing not
to take such action and should be stopped and precluded therefrom and such other
defenses, if any, as counsel for the Property Trustee or the Trust may assert.
The provisions of this Section 10.09 shall survive the termination of this Trust
Agreement.
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
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<PAGE>
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee
for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
USF&G CORPORATION
By:
---------------------------
Name:
Title:
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<PAGE>
THE BANK OF NEW YORK, as Property Trustee
By:
---------------------------
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:
---------------------------
Name:
Title:
---------------------------
J. Kendall Huber,
as Administrative Trustee
---------------------------
as Administrative Trustee
---------------------------
as Administrative Trustee
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<PAGE>
CERTIFICATE OF TRUST
OF
USF&G CAPITAL I
THIS CERTIFICATE OF TRUST of USF&G Capital I (the "Trust"), dated
December 28, 1995, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. (S) 3801 et seq.).
(i) Name.The name of the business trust being formed hereby is USF&G
Capital I.
(ii) Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware are The
Bank of New York (Delaware), 23 White Clay Center, Newark, Delaware 19711.
(iii) Counterparts. This Certificate of Trust may be executed in one or
more counterparts, all of which together shall constitute one and the same
instrument.
(iv) Effective Date. This Certificate of Trust shall be effective as of
its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
THE BANK OF NEW YORK,
as Trustee
___________________________ By__________________________________
J. Kendall Huber, as Trustee Name: _______________________
Title: _______________________
THE BANK OF NEW YORK (DELAWARE), as Trustee
By__________________________________
Name: _______________________
Title: _______________________
<PAGE>
__________, 1996
The Depository Trust Company,
55 Water Street,
49th Floor,
New York, New York 10041-0099.
Attention: John M. Drennan
General Counsel's Office
Re: USF&G Capital I Preferred Securities
------------------------------------
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to the
issuance and deposit with The Depository Trust Company ("DTC") of the USF&G
Capital I __% Cumulative Quarterly Income Preferred Securities, Series A (the
"Preferred Securities"), of USF&G Capital Trust I, a Delaware business trust
(the "Issuer"), created pursuant to a Trust Agreement between USF&G Corporation
("USF&G"), The Bank of New York, as Property Trustee, the Delaware Trustee and
the Administrative Trustees named therein. The payment of distributions on the
Preferred Securities to the extent the Issuer has funds available for the
payment thereof, and payments due upon liquidation of the Issuer or redemption
of the Preferred Securities are guaranteed by USF&G to the extent set forth in a
Guarantee Agreement dated ________, 1996 by USF&G with respect to the Preferred
Securities. USF&G and the Issuer propose to sell the Preferred Securities to
certain Underwriters (the "Underwriters") pursuant to an Underwriting Agreement
dated ________, 1996 by and among the Underwriters, the Issuer and USF&G and the
Underwriters wish to take delivery of the Preferred Securities through DTC. The
Bank of New York is acting as transfer agent and registrar with respect to the
Preferred Securities (the "Transfer Agent and Registrar").
To induce DTC to accept the Preferred Securities as eligible for deposit at
DTC, and to act in accordance with DTC's Rules with respect to the Preferred
Securities, the Issuer, the Transfer Agent and Registrar make the following
representations to DTC:
1. Prior to the closing of the sale of the Preferred Securities to the
Underwriters, which is expected to occur on or about ________, 1996, there shall
be deposited with DTC one or more global certificates (individually and
collectively, the "Global Certificate") registered in the name of DTC's nominee,
Cede & Co., representing an aggregate of ___________ Preferred Securities and
bearing the following legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Issuer or its agent for registration
<PAGE>
of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and
any payment 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 inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
2. The Amended and Restated Trust Agreement of the Issuer provides for the
voting by holders of the Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes and
shall, to the extent possible, give DTC notice of such record date not less than
15 calendar days in advance of such record date.
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice of such event at least 5
business days prior to the effective date of such event.
4. In the event of distribution on, or an offering or issuance of rights
with respect to, the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the amount
of and conditions, if any, applicable to the payment of any such distribution or
any such offering or issuance of rights; (b) any applicable expiration or
deadline date, or any date by which any action on the part of the holders of
Preferred Securities is required; and (c) the date any required notice is to be
mailed by or on behalf of the Issuer to holders of Preferred Securities or
published by or on behalf of the Issuer (whether by mail or publication, the
"Publication Date"). Such notice shall be sent to DTC by a secure means (e.g.,
legible telecopy, registered or certified mail, overnight delivery) in a timely
manner designed to assure that such notice is in DTC's possession no later than
the close of business on the business day before the Publication Date. The
Issuer or the Transfer Agent and Registrar will forward such notice either in a
separate secure transmission for each CUSIP number or in a secure transmission
of multiple CUSIP numbers (if applicable) that includes a manifest or list of
each CUSIP number submitted in that transmission. (The party sending such notice
shall have a method to verify subsequently the use of such means and the
timeliness of such notice.) The Publication Date shall be not less than 20
calendar days nor more than 90 calendar days prior to the payment of any such
distribution or any such offering or issuance of rights with respect to the
Preferred Securities. After establishing the amount of payment to be made on the
Preferred Securities, the Issuer or the Transfer Agent and Registrar will notify
DTC's Dividend Department of such payment 5 business days prior to payment date.
Notices to DTC's Dividend Department by telecopy shall be sent to (212)
709-1723. Such notices by mail or by any other means shall be sent to:
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<PAGE>
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm DTC's receipt
of such telecopy by telephoning the Dividend Department at (212) 709-1270.
5. In the event of a redemption by the Issuer of the Preferred Securities,
notice specifying the terms of the redemption and the Publication Date of such
notice shall be sent by the Issuer or the Transfer Agent and Registrar to DTC
not less than 20 calendar days prior to such event by a secure means in the
manner set forth in paragraph 4. Such redemption notice shall be sent to DTC's
Call Notification Department at (516) 227-4164 or (516) 227-4190, and receipt of
such notice shall be confirmed by telephoning (516) 227-4070. Notice by mail or
by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Preferred Securities,
notice specifying the terms of the tender and the Publication Date of such
notice shall be sent by the Issuer or the Transfer Agent and Registrar to DTC by
a secure means and in a timely manner as described in paragraph 4. Notices to
DTC pursuant to this paragraph and notices of other corporate actions (including
mandatory tenders, exchanges and capital changes), shall be sent, unless
notification to another department is expressly provided for herein, by telecopy
to DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094 and
receipt of such notice shall be confirmed by telephoning (212) 709-6884, or by
mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advances sent to DTC shall contain the CUSIP
number or numbers of the Preferred Securities and the accompanying designation
of the Preferred Securities, which, as of the date of this letter, is "USF&G
Capital I __% Cumulative Quarterly Income Preferred Securities, Series A".
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<PAGE>
8. Distribution payments or other cash payments with respect to the
Preferred Securities evidenced by the Global Certificate shall be received by
Cede & Co., as nominee of DTC, or its registered assigns in next day funds on
each payment date (or in accordance with existing arrangements between the
Issuer or the Transfer Agent and Registrar and DTC). Such payments shall be made
payable to the order of Cede & Co., and shall be addressed as follows:
NDFS Redemption Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
9. DTC may by prior written notice direct the Issuer and the Transfer Agent
and Registrar to use any other telecopy number or address of DTC as the number
or address to which notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or the
Transfer Agent and Registrar's invitation) necessitating a reduction in the
aggregate number of Preferred Securities outstanding evidenced by the Global
Certificate, DTC, in its discretion: (a) may request the Issuer or the Transfer
Agent and Registrar to issue and countersign a new Global certificate; or (b)
may make an appropriate notation on the Global Certificate indicating the date
and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Preferred Securities at any time by giving reasonable prior
written notice to the Issuer and the Transfer Agent and Registrar (at which time
DTC will confirm with the Issuer or the Transfer Agent and Registrar the
aggregate number of Preferred Securities deposited with it) and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Issuer may determine to make alternative arrangements for
book-entry settlement for the Preferred Securities, make available one or more
separate global certificates evidencing Preferred Securities to any Participant
having Preferred Securities credited to its DTC account, or issue definitive
Preferred Securities to the beneficial holders thereof, and in any such case,
DTC agrees to cooperate fully with the Issuer and the Transfer Agent and
Registrar and to return the Global certificate, duly endorsed for transfer as
directed by the Issuer or the Transfer Agent and Registrar, together with any
other documents of transfer reasonably requested by the Issuer or the Transfer
Agent and Registrar.
12. In the event that the Issuer determines that beneficial owners of
Preferred Securities shall be able to obtain definitive Preferred Securities,
the Issuer or the Transfer Agent and Registrar shall notify DTC of the
availability of certificates. In such event, the Issuer or the Transfer Agent
and Registrar shall issue, transfer and exchange certificates in appropriate
amounts, as required by DTC and others, and DTC agrees to cooperate fully with
the Issuer and the Transfer Agent and Registrar and to return the Global
Certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
-4-
<PAGE>
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Nothing herein shall be deemed to require the Transfer Agent and Registrar
to advance funds on behalf of the Issuer.
Very truly yours,
USF&G CAPITAL I
(As Issuer)
By
---------------------------
Name: J. Kendall Huber
Title: Administrative Trustee
THE BANK OF NEW YORK,
(As Transfer Agent and Registrar)
By
---------------------------
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By
---------------------------
Authorized Officer
<PAGE>
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number
C-1
Number of Common Securities
--------
Certificate Evidencing Common Securities
of
USF&G Capital I
__% Common Securities
(liquidation amount $25 per Common Security)
USF&G Capital I, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that USF&G Corporation (the
"Holder") is the registered owner of ____________________ (_______) common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust and designated the __% Common Securities (liquidation amount
$25 per Common Security) (the "Common Securities"). In accordance with Section
5.10 of the Trust Agreement (as defined below) the Common Securities are not
transferable and any attempted transfer hereof shall be void. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of __________, 1996, as the same may be amended from time to time
(the "Trust Agreement"). The Trust will furnish a copy of the Trust Agreement to
the Holder without charge upon written request to the Trust at its principal
place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, at least one of the Administrative Trustees of the
Trust has executed this certificate this __th day of ___________, 1996.
USF&G CAPITAL I
By: --------------------------
Name: J. Kendall Huber
Administrative Trustee
<PAGE>
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of ___________, 1996, between USF&G Corporation, a
Maryland Corporation ("USF&G"), and USF&G Capital I, a Delaware business trust
(the "Trust").
WHEREAS, the Trust intends to issue and sell ___% Cumulative Quarterly
Income Preferred Securities, Series A (the "Preferred Securities") with such
powers, preferences and special rights and restrictions as are set forth in the
Amended and Restated Trust Agreement of the Trust dated as of ___________, 1996
as the same may be amended from time to time (the "Trust Agreement") and
purchase debentures from USF&G (the "Debentures");
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, the proceeds from which shall be used to purchase the
Debentures, which purchase USF&G hereby agrees shall benefit USF&G and which
purchase USF&G acknowledges will be made in reliance upon the execution and
delivery of this Agreement, USF&G and the Trust hereby agree as follows:
ARTICLE I
Section 1.01. Guarantee by USF&G. Subject to the terms and conditions
hereof, USF&G hereby irrevocably and unconditionally guarantees to each person
or entity to whom the Trust is now or hereafter becomes indebted or liable (the
"Beneficiaries") the full payment, when and as due, of any and all Obligations
(as hereinafter defined) to such Beneficiaries. As used herein, "Obligations"
means any costs, expenses or liabilities of the Trust, other than obligations of
the Trust to pay to holders of any Preferred Securities the amounts due such
holders pursuant to the terms of the Preferred Securities. This Agreement is
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.
Section 1.02. Term of Agreement. This Agreement shall terminate and be of
no further force and effect upon the later of (a) the date on which full payment
has been made of all amounts payable to all holders of all the Preferred
Securities (whether upon redemption, liquidation, exchange or otherwise) and (b)
the date on which there are no Beneficiaries remaining; provided, however, that
this Agreement shall continue to be effective or shall be reinstated, as the
case may be, if at any time any holder of Preferred Securities or any
Beneficiary must restore payment of any sums paid under the Preferred
Securities, under any Obligation, under the Guarantee Agreement dated the date
hereof by USF&G and The Bank of New York as guarantee trustee or under this
Agreement for any reason whatsoever. This Agreement is continuing, irrevocable,
unconditional and absolute.
Section 1.03. Waiver of Notice. USF&G hereby waives notice of acceptance of
this Agreement and of any Obligation to which it applies or may apply, and USF&G
<PAGE>
hereby waives presentment, demand for payment, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.
Section 1.04. No Impairment. The obligations, covenants, agreements and
duties of USF&G under this Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation under,
arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Trust granting indulgence or extension of any kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, USF&G with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this Agreement
directly against USF&G and USF&G waives any right or remedy to require that any
action be brought against the Trust or any other person or entity before
proceeding against USF&G.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements contained in
this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of USF&G and shall inure to the benefit of the Beneficiaries.
Section 2.02. Amendment. So long as there remains any Beneficiary or any
Preferred Securities are outstanding, this Agreement shall not be modified or
amended in any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.
Section 2.03. Notices. Any notice, request or other communication required
or permitted to be given hereunder shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
-2-
<PAGE>
telex or by registered or certified mail, addressed as follows (and if so given,
shall be deemed given when mailed or upon receipt of an answer-back, if sent by
telex):
USF&G Capital I
c/o
Facsimile No.:
Attention: Corporate Trust Services Division
USF&G Corporation
100 Light Street
Baltimore, Maryland 21202
Facsimile No.: (410) _______
Attention:
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
THIS AGREEMENT is executed as of the day and year first above written.
USF&G CORPORATION
By:
---------------------------
Name:
Title:
USF&G CAPITAL I
By: ---------------------------
Name: J. Kendall Huber
Administrative Trustee
-3-
<PAGE>
Certificate Number
--
Number of Preferred Securities
CUSIP NO. __________
Certificate Evidencing Preferred Securities
of
USF&G Capital I
____% Cumulative Quarterly Income Preferred Securities,
Series A
(liquidation amount $25 per Preferred Security)
USF&G Capital I, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder")
is the registered owner of _____ million (__,000,000) preferred securities of
the Trust representing an undivided beneficial interest in the assets of the
Trust and designated the USF&G Capital I __% Cumulative Quarterly Income
Preferred Securities, Series A (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 as
provided in Section 5.04 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and this certificate
and the Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Trust dated as of __________, 1996, as the same may be
amended from time to time (the "Trust Agreement") including the designation of
the terms of Preferred Securities as set forth therein. The Holder is entitled
to the benefits of the Guarantee Agreement entered into by USF&G Corporation, a
Maryland corporation, and The Bank of New York as guarantee trustee, dated as of
__________, 1996 (the "Guarantee") to the extent provided therein. The Trust
will furnish a copy of the Trust Agreement and the Guarantee to the Holder
without charge upon written request to the Trust at its principal place of
business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
<PAGE>
IN WITNESS WHEREOF, at least one of the Administrative Trustees of the
Trust has executed this certificate this __th day of __________, 1996.
USF&G CAPITAL I
By:
---------------------------
Name: J. Kendall Huber
Administrative Trustee
This Preferred Security is a Book-Entry Preferred Securities Certificate within
the meaning of the Trust Agreement hereinafter referred to and is registered in
the name of The Depository Trust Company (the "Depository") or a nominee of the
Depository. This Preferred Security is exchangeable for Preferred Securities
registered in the name of a person other than the Depository or its nominee only
in the limited circumstances described in the Trust Agreement and no transfer of
this Preferred Security (other than a transfer of this Preferred Security as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative of
The Depository Trust Company, a New York corporation, (55 Water Street, New
York) to USF&G Capital I 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 The
Depository Trust Company and any payment hereon is made to Cede & Co. or to such
other entity as is requested by an authorized representative of The Depository
Trust Company, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY A PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
-2-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
<PAGE>
Signature:
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
-2-
