As filed with the Securities and Exchange Commission on February 20, 1996
Registration No. 33-65471
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
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, the Trust Agreement related to the Preferred
Securities and the related Expense Agreement 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
<PAGE>
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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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
<PAGE>
Prospectus Supplement and prior to the termination of the offering of the
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 the following trustees, each appointed by USF&G as holder of
the Common 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
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<PAGE>
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.
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<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 $825 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 $11.5
billion (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 those 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
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<PAGE>
covenant requires that an interest payment on one series of Debentures may be
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 a proposed amendment to the Internal Revenue
Code of 1986, as amended, (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. A text of proposed statutory language published on January 23,
1996 provides that the Code amendment would not apply to issues filed with the
Commission before December 7, 1995. . Because the Registration Statement for the
Preferred Securities was filed with the Commission on December29, 1995, the
provisions of the proposed amendment would be applicable to the Preferred
Securities if such provisions are enacted with the currently proposed effective
date. Accordingly, if Debentures having a term in excess of 20 years are issued
and the proposal is subsequently enacted in its current form, the Debentures
would be subject to redemption, or the related Issuer could be liquidated by
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<PAGE>
distributing the Debentures to the holders of Preferred Securities, 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.
Special Event Redemption or Distribution
Upon the occurrence and continuation of a Special Event as further
described in "Description of the Preferred Securities--Redemption"and the
Prospectus Supplement, 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 in the event the Issuer 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") 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," "Description of Preferred
Securities--Liquidation Distribution 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," "United States Taxation--Receipt of Debentures Upon Liquidation of
an Issuer" and "United States Taxation--Sale or Other Disposition of the
Preferred Securities."
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
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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
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 Guarantee--Status 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
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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
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.
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.
<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)
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</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
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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.
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. See "United Stated Taxation"
for a description of certain tax matters relating to the Preferred Securities,
including a discussion of certain proposed legislation.
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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 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 (as
defined herein), 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.
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
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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.
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
Preferred Securities, upon not less than 20 nor more than 90 days' notice, at a
redemption price (the "Redemption Price") equal to the liquidation preference of
such Preferred Securities plus 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 upon the occurrence of certain Tax Events and Investment
Company Events (in either case, "Special Events") and exchange Debentures for
the Preferred Securities upon the occurrence of Special Events or Grantor Trust
Events, each as defined in the Trust Agreement and further described in the
Prospectus Supplement.
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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
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.
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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.
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
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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 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.
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.
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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
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.
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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. The foregoing is in addition to and
not in limitation of any direct rights provided to the holders of any series of
related Preferred Securities under the terms of the Indenture, including the
right, without any notice or other demand on the Property Trustee, to institute
suit for the enforcement of any payment of the principal of and any premium and
interest on Debentures relating to such Preferred Securities having a principal
amount equal to the aggregate liquidation preference of such Preferred
Securities, all as provided in the Indenture.
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."
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
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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.
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
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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.
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
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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
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
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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
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
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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
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
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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, 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.
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
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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 accrued 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, including all accrued and unpaid Distributions
to the date of Redemption, and any applicable premium in connection therewith,
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.
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 the Debentures, Indenture, the Trust Agreement, the
Guarantee Agreement and the Expense Agreement 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."
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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
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.
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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.
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
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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
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
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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,
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,
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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 will 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 will 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.
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.
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 payment default with respect to any Senior Indebtedness or other
payment resulting in the acceleration of the maturity thereof, or if any
judicial proceeding shall be pending with respect to any such default.
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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 paid
over and delivered forthwith to USF&G.
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, to the extent and as
described above and in the Indenture, 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
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
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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
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.
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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
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.
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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
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
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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.
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.
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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.
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.
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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 provide a full and unconditional 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
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
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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
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 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
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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 it is the opinion of Piper & Marbury L.L.P. 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 holders of Preferred
Securities, 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 a proposed 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. A text of proposed statutory language published
on January 23, 1996 provides that the Code amendment would not apply to issues
filed with the Commission before the December 7, 1995. 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 are enacted with the currently proposed
effective date. Accordingly, if Debentures having a term in excess of 20 years
are issued and the proposal is 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 holders of Preferred
Securities, 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 and its special
tax counsel 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.
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Income from Preferred Securities
Piper & Marbury L.L.P. is of the opinion 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.
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
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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 the 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.
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
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.
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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.
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
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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 officers under this provision with respect to any
act or omission which occurred prior to such amendment or
repeal.
<PAGE>
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 USF&G Capital I.
4.7.1 Form of Amended and Restated Trust Agreement for USF&G Capital
II
<PAGE>
4.8* Form of Preferred Security for USF&G Capital I (included in
Exhibit 4.7)
4.8.1 Form of Preferred Security for USF&G Capital II (included in
Exhibit 4.7.1)
4.9* Form of Guarantee for USF&G Capital I
4.9.1 Form of Guarantee for USF&G Capital II
5.1* Opinion of Richards, Layton & Finger, P.A. regarding USF&G
Capital I
5.1.1 Opinion of Richards, Layton & Finger, P.A. regarding USF&G
Capital II
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 and 5.1.1)
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)
<PAGE>
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
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
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,
<PAGE>
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;
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
<PAGE>
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 USF&G
Capital I.
4.7.1 Form of Amended and Restated Trust Agreement for USF&G
Capital II
4.8* Form of Preferred Security for USF&G Capital I (included in
Exhibit 4.7)
4.8.1 Form of Preferred Security for USF&G Capital II (included
in Exhibit 4.7.1)
4.9* Form of Guarantee for USF&G Capital I
4.9.1 Form of Guarantee for USF&G Capital II
<PAGE>
5.1* Opinion of Richards, Layton & Finger, P.A. regarding USF&G
Capital I
5.1.1 Opinion of Richards, Layton & Finger, P.A. regarding USF&G
Capital II
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 and 5.1.1)
23.3 Consent of Piper & Marbury L.L.P. (included in Exhibits 5.2,
and 8)
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
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.
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:
-4-
<PAGE>
(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
-5-
<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.
-6-
<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.
-7-
<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.
-8-
<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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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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"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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"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.
The ownership of Preferred Securities shall be proved by the Securities
Register.
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 this Trust
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. To the fullest extent
permitted by law, 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 including the right, without any notice or other demand
on the Property Trustee, to institute suit for the enforcement of any payment of
the principal of and any premium and interest on Debentures related to such
series Preferred Security as provided in Section 508 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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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.
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<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),
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<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
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<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.
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<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)
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Exhibit 4.7.1
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 II
<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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<PAGE>
(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
-5-
<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.
-6-
<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.
-8-
<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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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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"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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"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.
The ownership of Preferred Securities shall be provided by the Securities
Register.
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 this Trust
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. To the fullest extent
permitted by law, 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 including the right, without any notice or other demand
on the Property Trustee, to institute suit for the enforcement of any payment of
the principal of and any premium and interest on Debentures related to such
series Preferred Security as provided in Section 508 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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<PAGE>
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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<PAGE>
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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<PAGE>
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 II
[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 II
THIS CERTIFICATE OF TRUST of USF&G Capital II (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 II.
(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 II 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 II __% 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 II __% 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.
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<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 II
(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 II
__% Common Securities
(liquidation amount $25 per Common Security)
USF&G Capital II, 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 II
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 II, 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 II
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 II
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 II
____% Cumulative Quarterly Income Preferred Securities,
Series A
(liquidation amount $25 per Preferred Security)
USF&G Capital II, 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 II __% 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 II
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 II 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-
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
II, 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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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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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.
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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,
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institute a legal proceeding directly against the Guarantor to enforce its
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Issuer 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.
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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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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 II
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;
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(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:----------------------------
February 13, 1996
USF&G Capital II
c/o USF&G Corporation
100 Light Street
Baltimore, Maryland 21202
Re: USF&G Capital II
Ladies and Gentlemen:
We have acted as special Delaware counsel for USF&G Corporation, a Maryland
corporation (the "Company"), and USF&G Capital II, 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. 2 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
<PAGE>
USF&G Capital II
February 13, 1996
Page 2
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 15, 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
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 13, 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
<PAGE>
USF&G Capital II
February 13, 1996
Page 3
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 Securities 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.
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
<PAGE>
USF&G Capital II
February 13, 1996
Page 4
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 5.2
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3018 WASHINGTON
410-539-2530 NEW YORK
FAX: 410-539-0489 PHILADELPHIA
EASTON
LONDON
February 14, 1996
USF&G Corporation
100 Light Street
Baltimore, Maryland 21202
Re: Registration Statement
Registration No. 33-65471
Ladies and Gentlemen:
We have acted as Maryland counsel to USF&G Corporation (the
"Corporation") in connection with its Registration Statement on Form S-3
(Registration No. 33-65471) filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended, relating to the
proposed acquisition by USF&G Capital I and USF&G Capital II (the "Trusts") of
the Corporation's Deferrable Interest Subordinated Debentures (the "Debentures")
to be issued pursuant to the Subordinated Indenture between the Corporation and
The Bank of New York, as Trustee (the "Indenture"), and the delivery by the
Corporation of its guarantee for the benefit of the holders of any Cumulative
Quarterly Income Preferred Securities issued by the Trusts. In that capacity, we
have reviewed the Charter and By-Laws of the Corporation, the proposed form of
the Indenture and the Supplemental Indenture related thereto (the "Supplemental
Indenture"), the proposed form of Guarantee Agreement to be executed and
delivered by the Corporation (the "Guarantee Agreement"), the proceedings of the
Board of Directors of the Corporation relating to the issuance by the
Corporation of the Debentures and the execution and delivery of the Indenture,
the Supplemental Indenture and the Guarantee Agreement, and such other
documents, instruments and matters of law as we have deemed necessary to the
rendering of the opinion expressed below.
Based on the foregoing, we are of the opinion and advise you that the
execution and delivery by the Corporation of the Indenture, the Supplemental
Indenture and the Guarantee Agreement, and the issuance of the Debentures by the
<PAGE>
USF&G Corporation
February 14, 1996
Page 2
Corporation under the Indenture, have been duly and validly authorized by the
Corporation, and, upon due execution and delivery of the Indenture, Supplemental
Indenture and Guarantee Agreement, establishment of the terms of any Debentures
not previously established pursuant to the Indenture and the Supplemental
Indenture and due execution, authentication and delivery of, and payment for,
the Debentures in accordance with the Indenture and Supplemental Indenture, the
Debentures will be legally issued, and the Debentures, Indenture, Supplemental
Indenture and Guarantee Agreement will constitute binding obligations of the
Corporation.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to our firm in the Registration
Statement and the related Prospectus. In giving our consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act or the Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/ Piper & Marbury L.L.P.
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 15, 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.
