UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
EAGLE FINANCIAL CORP.
OF THE SECURITIES EXCHANGE ACT OF 1934
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 06-1194047
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
222 MAIN STREET, BRISTOL, CT 06010
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(860) 314-6400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, ADDRESS AND FISCAL YEAR IF CHANGED SINCE LAST REPORT)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS TO BE
FILED BY SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
INDICATE THE NUMBER OF SHARES OUTSTANDING FOR THE ISSUER'S CLASSES OF COMMON
STOCK, AS OF THE LATEST PRACTICABLE DATA.
COMMON STOCK (PAR VALUE $0.01) 4,560,851
- --------------------------------------------------------------------------------
(CLASS) (APPROXIMATE NUMBER OF SHARES
OUTSTANDING AT MAY 9, 1997)
(EXCLUDING TREASURY STOCK)
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS AT MARCH 31, 1997 (UNAUDITED)
AND SEPTEMBER 30, 1996 2
CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX
MONTHS ENDED MARCH 31, 1997 AND 1996 (UNAUDITED) 3
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED MARCH 31, 1997 AND 1996 (UNAUDITED) 4-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6-8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9-15
PART II - OTHER INFORMATION 16
SIGNATURES 17
1
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
ASSETS 1997 1996
- ----------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Cash and amounts due from depository institutions $ 24,370 $ 20,288
Interest-bearing deposits 14,146 27,989
------------- -------------
Cash and cash equivalents 38,516 48,277
Investment securities available for sale (amortized cost:
$14,309 at March 31, 1997 and $13,458 at September 30, 1996) 14,147 13,453
Investment securities held to maturity (market value: $1,029
at March 31, 1997 and $1,036 at September 30, 1996) 990 987
Mortgage-backed securities available for sale (amortized cost:
$454,954 at March 31, 1997 and $375,010 at September 30, 1996) 450,796 372,018
Mortgage-backed securities held to maturity (market value
$77,253 at March 31, 1997 and $77,973 at September 30, 1996) 77,674 78,102
Loans held for sale 464 705
Loans receivable, net of allowance for loan losses of $8,748
at March 31, 1997 and $8,592 at September 30, 1996 852,832 814,488
Accrued interest receivable:
Loans 4,930 5,046
Investment securities 431 563
Mortgage-backed securities 3,439 3,280
Real estate owned, net 2,877 3,050
Stock in Federal Home Loan Bank of Boston, at cost 14,150 10,448
Premises and equipment, net 9,659 9,796
Intangible assets 25,792 26,990
Prepaid expenses and other assets 15,339 15,606
============= =============
Total Assets $ 1,512,036 $ 1,402,809
============= =============
Liabilities and Shareholders' Equity
------------------------------------
Liabilities:
- ------------
Deposits $ 1,083,930 $ 1,059,355
Federal Home Loan Bank advances 283,004 207,008
Repurchase agreements and other borrowed money 1,147 14,670
Advance payments by borrowers for taxes and insurance 5,504 4,973
Accrued expenses and other liabilities 34,139 15,655
------------- -------------
Total Liabilities 1,407,724 1,301,661
------------- -------------
Shareholders' Equity:
- ---------------------
Serial preferred stock, $.01 par value
2,000,000 shares authorized and unissued -- --
Common stock, $.01 par value 8,000,000 shares
authorized; 4,601,174 shares issued at March 31, 1997
and 4,581,440 shares issued at September 30, 1996,
including 47,373 shares held in treasury 46 46
Additional paid-in capital 60,938 60,635
Retained earnings 46,244 42,598
Cost of common stock in treasury (362) (362)
Net unrealized loss on available for sale securities (2,554) (1,769)
------------- -------------
Total Shareholders' Equity 104,312 101,148
------------- -------------
Total Liabilities and Shareholders' Equity $ 1,512,036 $ 1,402,809
============= =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------- --------------------------
3/31/97 3/31/96 3/31/97 3/31/96
----------- ----------- ----------- -----------
Interest Income:
<S> <C> <C> <C> <C>
Interest and fees on loans $ 16,376 $ 15,059 $ 32,469 $ 29,548
Interest on mortgage-backed securities 8,284 6,901 16,314 12,922
Interest on investment securities 145 458 353 1,190
Interest on overnight investments 304 1,333 677 1,874
Dividends on investment securities 277 269 452 635
----------- ----------- ----------- -----------
Total interest income 25,386 24,020 50,265 46,169
----------- ----------- ----------- -----------
Interest expense:
Interest on deposits 11,021 11,761 22,120 22,025
Interest on Federal Home Loan Bank advances 3,568 1,884 6,689 3,087
Interest on repurchase agreements and other
borrowed money 62 934 271 2,215
----------- ----------- ----------- -----------
Total interest expense 14,651 14,579 29,080 27,327
----------- ----------- ----------- -----------
Net interest income 10,735 9,441 21,185 18,842
Provision for loan losses 525 1,366 1,050 1,591
----------- ----------- ----------- -----------
Net interest income after provision for
loan losses 10,210 8,075 20,135 17,251
----------- ----------- ----------- -----------
Non-interest income:
Net loss on sale of securities -- (1,163) -- (532)
Gain (loss) from mortgage banking activities 16 (1,740) 36 (1,734)
Gain on sale of deposits -- 15,904 -- 15,904
NOW account service fees 735 617 1,479 1,234
Other customer service fees 180 225 363 436
Other income 442 321 790 759
----------- ----------- ----------- -----------
Total non-interest income 1,373 14,164 2,668 16,067
----------- ----------- ----------- -----------
Non-interest expense:
Compensation, payroll taxes and benefits 3,198 3,417 5,981 6,138
Office occupancy 1,042 891 2,085 1,570
Advertising 225 674 507 941
Net cost of real estate owned operations 232 576 424 798
Federal deposit insurance premium 106 375 358 811
Service bureau processing fees 414 455 797 860
Amortization of intangible assets 636 646 1,271 993
Other expense 953 1,875 1,733 2,780
----------- ----------- ----------- -----------
Total non-interest expense 6,806 8,909 13,156 14,891
----------- ----------- ----------- -----------
Income before income taxes 4,777 13,330 9,647 18,427
Income taxes 1,938 5,290 3,912 7,463
----------- ----------- ----------- -----------
Net income $ 2,839 $ 8,040 $ 5,735 $ 10,964
=========== =========== =========== ===========
Net income per share:
Primary $ 0.60 $ 1.72 $ 1.21 $ 2.35
=========== =========== =========== ===========
Fully Diluted $ 0.60 $ 1.72 $ 1.21 $ 2.35
=========== =========== =========== ===========
Average number of shares and equivalent shares:
Primary 4,758,033 4,673,496 4,747,724 4,670,698
Fully Diluted 4,759,218 4,674,790 4,752,951 4,674,288
Dividends per share $ 0.23 $ 0.23 $ 0.46 $ 0.46
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Net Income $ 5,735 $ 10,964
OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided (used)
by operating activities
Provision for loan losses 1,050 1,591
Provision for losses on real estate owned -- 409
Provision for depreciation and amortization 671 474
Amortization of premiums (accretion of discounts) on loans 35 (235)
Amortization of premiums (accretion of discounts) on investment
and mortgage-backed securities 782 481
Amortization of core deposit and other intangibles 1,271 993
Gain on sale of deposits -- (15,904)
Loss on trading securities -- 24
Realized loss (gain) on sale of real estate owned, net 16 (54)
Realized loss on sale of securities, net -- 532
Loss (gain) from mortgage banking activities (36) 1,734
Origination of loans held for sale (5,341) (40,227)
Proceeds from sales of loans held for sale 5,618 9,417
Decrease (increase) in accrued interest receivable 89 (469)
Decrease (increase) in prepaid expenses and other assets 732 (3,693)
Loan origination fees (353) 692
Increase (decrease) in accrued expenses and other liabilities (1,479) 3,111
------------- -------------
Net cash provided (used) by operating activities 8,790 (30,160)
------------- -------------
INVESTING ACTIVITIES:
Proceeds from maturities of investment securities available for sale 5,000 13,500
Proceeds from sales of investment securities available for sale -- 19,808
Principal payments on investment securities available for sale 628 2,360
Purchases of investment securities available for sale (6,448) (15,017)
Proceeds from sales of mortgage-backed securities available for
sale -- 144,483
Principal payments on mortgage-backed securities available for
sale 32,239 52,315
Principal payments on mortgage-backed securities held to maturity 3,230 4,835
Purchases of mortgage-backed securities available for sale (92,972) (268,929)
Purchases of mortgage-backed securities held to maturity (2,866) (48,445)
Principal payments on loans receivable 58,923 59,188
Loan originations (99,597) (81,309)
Proceeds from sales of loans -- 999
Proceeds from sales of real estate owned 1,755 1,485
Purchases of premises and equipment (534) (939)
Proceeds from sales of premises and equipment -- 713
Increase in investment in Federal Home Loan Bank stock (3,702) (1,116)
Acquisition of loans and other assets -- (39,109)
------------- -------------
Net cash used by investing activities (104,344) (155,178)
------------- -------------
</TABLE>
4
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------------------
1997 1996
------------- -------------
FINANCING ACTIVITIES
<S> <C> <C>
Net increase (decrease) in Passbook, NOW and Money Market accounts $ 2,337 $ (24,342)
Net increase in certificate accounts 22,238 61,869
Assumption of deposits and liabilities of acquired branches -- 235,893
Sales of deposits -- (168,506)
Borrowings under Federal Home Loan Bank advances 333,295 300,535
Repayment of Federal Home Loan Bank advances (257,299) (196,305)
Net decrease in borrowed money (13,523) (34,633)
Net increase in advance payments by borrowers for taxes and
insurance 531 1,210
Proceeds from exercise of stock options and dividends reinvested 303 448
Cash dividends (2,089) (2,059)
------------- -------------
Net cash provided by financing activities 85,793 174,110
------------- -------------
Decrease in cash and cash equivalents (9,761) (11,228)
Cash and cash equivalents at beginning of period 48,277 63,307
------------- -------------
Cash and cash equivalents at end of period $ 38,516 $ 52,079
============= =============
NON-CASH INVESTING ACTIVITIES:
Transfer of mortgage-backed securities held to maturity to
mortgage-
backed securities available for sale -- 90,603
Securitization of loans held for sale into trading securities -- 3,669
Transfer of loans held for sale to loans held for portfolio -- 15,941
Securities purchased not yet settled 19,963 20,681
Transfer of loans to real estate owned 1,598 2,372
============= =============
SUPPLEMENTAL DISCLOSURES:
Income taxes paid $ 1,530 $ 6,400
Interest paid 29,185 27,462
============= =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
- -------------------------
Eagle Financial Corp. (the "Holding Company") is a unitary savings bank holding
company and parent of Eagle Bank (the "Bank") (collectively known as the
"Company"). The Bank is a federally chartered savings bank headquartered in
Bristol, Connecticut and conducts business from nineteen traditional branch
offices and four in-store supermarket branch offices located in Hartford and
eastern Litchfield counties.
The accompanying unaudited, consolidated financial statements include all
adjustments of a normal, recurring nature which are, in the opinion of
management, necessary for a fair presentation. The results of operations for the
three and six month periods ended March 31, 1997 and 1996 are not necessarily
indicative of the results which may be expected for the entire fiscal year. The
accompanying unaudited, consolidated financial statements should be read in
conjunction with the consolidated financial statements contained in the
Company's 1996 Annual Report on Form 10-K.
(2) Accounting Pronouncements
- ------------------------------
Effective October 1, 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed of." SFAS No. 121 requires that long-lived
assets be reviewed for impairment whenever events or changes in circumstances
indicate the carrying amount of an asset may not be recoverable. The Company has
made no adjustments to the carrying value of any long-lived assets during the
six months ended March 31, 1997.
Effective October 1, 1996, the Company adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights." SFAS No. 122 requires the capitalization of mortgage
servicing rights acquired through either purchase of mortgage loan servicing or
origination and sale or securitization of mortgage loans with retention of
servicing. SFAS No. 122 also requires the analysis of capitalized mortgage
servicing rights for potential impairment to be based on the fair value of the
rights. Effective January 1, 1997, the Company adopted SFAS No. 125 "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" which supercedes SFAS No. 122. SFAS No. 125 provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities based on consistent application of a financial
components approach that focuses on control of the underlying assets or
liabilities transferred. It distinguishes transfers of financial assets that are
sales from transfers that are secured borrowings. During the six months ended
March 31, 1997, the Company capitalized approximately $45,000 of servicing
rights related to the origination and sale of mortgage loans.
SFAS No. 123 "Accounting for Stock-Based Compensation" became effective October
1, 1996. SFAS No. 123 establishes a fair value based method of accounting for
stock-based compensation plans. This statement also establishes fair value as
the measurement basis for transactions in which an entity acquires goods or
services from non-employees in exchange for equity instruments. The Company will
continue to follow the accounting requirements of APB Opinion No. 25 and will
provide the pro forma financial disclosure required by SFAS No. 123 in the 1997
Annual Report.
The Financial Accounting Standards Board has recently issued SFAS No. 128,
"Earnings per Share." This statement simplifies the computation of earnings per
share (EPS) by replacing the presentation of primary EPS with basic EPS. Under
the new statement, dual presentation of basic and diluted EPS is required on the
face of the income statement for the entities with complex capital structures. A
reconciliation of the numerator and denominator used in the basic EPS
computation to the diluted EPS computation's numerator and denominator is also
required. SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods. The Company believes
that the effect of the adoption of SFAS No. 128 will not be material to its
disclosure of earnings per share.
6
<PAGE>
(3) Allowance for Loan Losses
- ------------------------------
The following is a summary of the activity in the allowance for loan losses for
the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------ ----------------------------
1997 1996 1997 1996
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Balance, beginning of period $ 8,435 $ 7,223 $ 8,592 $ 7,457
Provisions charged to operations 525 1,366 1,050 1,591
Charge-offs (264) (790) (946) (1,249)
Recoveries 52 3 52 3
Additions to allowance for purchased
loans -- 1,871 -- 1,871
--------- --------- ---------- ---------
Balance, end of period $ 8,748 $ 9,673 $ 8,748 $ 9,673
========= ========= ========== =========
</TABLE>
(4) Net Cost of Real Estate Owned Operations
- ---------------------------------------------
The net cost of real estate owned operations is summarized as follows for the
periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
----------------------------- -----------------------------
-- ----
1997 1996 1997 1996
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Net (gain) loss on sales of real estate owned $ 14 $ (1) $ 16 $ (54)
Provision for losses charged to operations -- 356 -- 409
Expenses of holding real estate owned,
net of rental income 218 221 408 443
---------- --------- ---------- ----------
$ 232 $ 576 $ 424 $ 798
========== ========= ========== ==========
</TABLE>
(5) Merger Activity
- --------------------
On January 28, 1997, the Company announced the signing of a definitive merger
agreement with MidConn Bank. The transaction would result in the acquisition of
MidConn Bank through a stock-for-stock tax free exchange. MidConn Bank common
stock shareholders would receive .86 shares of the Company's common stock for
each share of MidConn Bank common stock that they own. Based on the closing
price of the Company's common stock on March 31,1997, the value of the exchange
would be approximately $49.5 million. As a result, MidConn Bank would be merged
into the Bank with the transaction being accounted for as a
pooling-of-interests.
The Company is progressing towards completion of all required regulatory
approvals and anticipates receipt of such approvals within the expected time
frame. Separate shareholder meetings are scheduled for the Company and MidConn
Bank on May 29, 1997 to vote on the merger. The expected closing date is May 31,
1997.
7
<PAGE>
(6) Subsequent Events
- ----------------------
On April 1, 1997 the Company completed a $50 million private placement of 10%
capital securities due March 15, 2027. The securities were issued by the Holding
Company's recently formed subsidiary, Eagle Financial Capital Trust I, and are
fully and unconditionally guaranteed by the Holding Company. Proceeds from the
issue were invested by Eagle Financial Capital Trust I in Junior Subordinated
Debentures issued by the Holding Company. Net proceeds from the sale of the
debentures will be used for general corporate purposes, including capital
contributions to the Bank.
On April 22, 1997 the Company signed a purchase and assumption agreement with
Liberty Bank to sell one of the branch offices to be acquired from MidConn Bank.
The expected closing date is June 28, 1997, pending regulatory approval. Liberty
Bank will pay a deposit premium of approximately 6%, or approximately $600,000,
for the deposits assumed.
8
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL - The Bank conducts business from nineteen traditional banking offices
and four in-store supermarket branch offices located in the Hartford and
Litchfield Counties. The Bank primarily invests its funds in first mortgage
loans on one-to-four family residential real estate in Connecticut or, when loan
demand is low, mortgage-backed securities with similar characteristics. The
Bank's major source of funds is deposits from the communities in which its
banking offices are located.
The Bank's earnings depend largely on its net interest income, which is the
difference between interest earned on its loans and investments versus the
interest paid on its deposits and borrowed funds. Additional earnings are
derived from a variety of financial services provided to customers, mainly
deposit and loan products.
At March 31, 1997, the Company had total assets of $1.51 billion compared to
$1.40 billion at September 30, 1996, an increase of $109 million, or 7.8%. Total
outstanding loans, which includes loans receivable, net, and loans held for
sale, increased $38.1 million to $853.3 million at March 31, 1997 from $815.2
million at September 30, 1996. Total securities, including mortgage-backed
securities, were $543.6 million at March 31, 1997 compared to $464.6 million at
September 30, 1996, an increase of $79.0 million, or 17.0%. Total deposits
increased $24.6 million, from $1.06 billion at September 30, 1996 to $1.08
billion at March 31, 1997. Total borrowings were $284.2 million at March 31,
1997, an increase of $62.5 million, or 28.2%, from the September 30, 1996 total
of $221.8 million. At March 31, 1997 shareholders' equity represented 6.90% of
total assets compared to 7.21% at September 30, 1996.
LIQUIDITY - The Holding Company's liquidity and ability to pay dividends to its
shareholders is primarily derived from and dependent on the ability of its Bank
subsidiary to pay dividends to the Holding Company. Under current OTS
regulations, because the Bank meets the OTS capital requirements, it may pay out
the higher of 100% of net income to date over the calendar year and 50% of
surplus capital existing at the beginning of the calendar year, or 75% of its
net income over the most recent four-quarter period, without regulatory
supervisory approval. In general, the Bank pays dividends to the Holding Company
only to the extent that funds are needed to cover operating expenses and
dividends paid to shareholders. At March 31, 1997, the Bank had approximately
$35 million in excess capital over the OTS risk-based requirement, one half of
which would be available for declaration of dividends to the Holding Company.
The OTS regulations permit the OTS to prohibit capital distribution under
certain circumstances.
As a member of the Federal Home Loan Bank ("FHLB") system, the Bank is required
to maintain liquid assets at 5% of its net withdrawable deposits plus short-term
borrowings. At March 31, 1997, the Bank was in compliance with the applicable
liquidity requirements having an average liquidity ratio of 6.24% for the three
months ended March 31, 1997.
The Bank's principal sources of funds include deposits, loan payments (including
interest, amortization of principal and prepayments), interest and principal
amortization on investment and mortgage-backed securities, maturing investments,
Federal Home Loan Bank advances and other borrowings. Principal uses of funds
include loan originations, investment purchases, payments of interest on
deposits and borrowed money and payments to meet operating expenses. At March
31, 1997, the Bank had approximately $69.6 million of loan commitments
outstanding, including $41.5 million in available lines of credit. It is
expected that these and future loans will be funded by deposits, investment
maturities and amortization, loan repayments and borrowings. The Bank has the
capacity to borrow an additional $682 million in advances from the Federal Home
Loan Bank of Boston and will continue to consider this source of funds for
lending and investment purchases.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
During the six months ended March 31, 1997 the Bank originated loans totaling
$104.9 million compared to $121.5 million for the same period in 1996. Principal
repayments on loans totaled $58.9 million and $59.2 million for the six months
ended March 31, 1997 and 1996, respectively. The Bank purchased $121.5 million
and $332.3 million of securities during the six months ended March 31, 1997 and
1996, respectively. The security purchases were offset by sales, maturities and
principal payments of $41.1 million and $237.3 million for the six months ended
March 31, 1997 and 1996, respectively.
It has been the Company's general policy to purchase debt securities (including
mortgage-backed securities) for purposes of earning interest income and meeting
regulatory liquidity requirements. At date of purchase, a decision is made to
classify debt securities as either held to maturity or available for sale.
Various factors are considered when determining whether debt securities are
classified as either available for sale or held to maturity, including:
repricing characteristics, liquidity needs, expected security life, yield and
overall asset/liability strategies. Events which may be reasonably anticipated
are considered when determining the Company's ability to hold debt securities to
maturity. For those debt securities for which the Company has determined it has
both the intent and ability to hold to maturity, a classification of held to
maturity is made.
Other debt securities are classified as available for sale. When an available
for sale security is sold, the proceeds are generally used to fund loans when
either deposit inflows have not been adequate, the rates offered on Federal Home
Loan Bank advances are not favorable, or liquidity ratios support such sales.
The Bank may also occasionally sell securities available for sale to restructure
an asset/liability mismatch. There were no securities sold during the six months
ended March 31, 1997 compared to $164.3 million for the same period in 1996.
The significant level of security sales during the six months ended March 31,
1996 can be attributed to two initiatives designed to restructure the balance
sheet. The first initiative is represented by the sale of $58.8 million of fixed
rate mortgage-backed securities created from the securitization in August 1995
of certain mortgage loans within the Bank's loan portfolio. The sales
represented the final step of a balance sheet restructuring which converted
approximately $150 million of fixed rate mortgage loans into adjustable rate
mortgage-backed securities. The sales resulted in a realized gain of $631,000.
The second initiative involved the sale of approximately $100 million of the
Bank's lowest yielding securities resulting in a loss of $1.2 million. The
proceeds from the sale were reinvested in securities that, on average,
represented an improvement in yield of approximately 150 basis points.
REGULATORY CAPITAL REQUIREMENTS - The Bank is required by the Office of Thrift
Supervision ("OTS") to meet minimum capital requirements, which include tangible
capital, core capital and risk-based capital requirements. The Bank's actual
capital as reported to the OTS at March 31, 1997 exceeded the currently
applicable tangible, core and risk-based capital requirements as the following
chart indicates (dollars in thousands):
<TABLE>
<CAPTION>
Required Actual Excess
------------------------ ------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Tangible Capital $ 22,305 1.5% $ 79,578 5.35% $ 57,273 3.85%
Core Capital $ 44,619 3.0% $ 79,578 5.35% $ 34,959 2.35%
Risk-based Capital $ 53,661 8.0% $ 87,826 13.09% $ 34,165 5.09%
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
ASSET/LIABILITY MANAGEMENT - The primary component of the Company's earnings is
net interest income. The Company's asset/liability management strategy is to
maximize net interest income over time by reducing the impact of fluctuating
interest rates. This is accomplished by matching the mix and maturities of its
assets and liabilities. At the same time the Company's asset/liability
strategies for managing interest rate risk must also accommodate customer
demands for particular types of deposit and loan products. The Company uses
various asset/liability management techniques in an attempt to maintain a
profitable mix of financial assets and liabilities, provide deposit and loan
products that meet the needs of its market area, and maintain control over
interest rate risk resulting from changes in interest rates.
Strategies employed by the Company to manage the rate sensitivity of its assets
include origination of adjustable rate mortgage and consumer loans and purchase
of adjustable rate and short average life fixed rate investments. The Company
also attempts to reduce the rate sensitivity of its liabilities by emphasizing
core deposits, which are less sensitive to changes in interest rates, attracting
longer term certificates of deposits when the market permits, and using long
term Federal Home Loan Bank advances when such rates are competitive. Management
will continue to monitor the impact of its borrowings and lending policies on
the Company's sensitivity to interest rate fluctuations.
NON-PERFORMING ASSETS - At March 31, 1997, the Company had total non-performing
assets of $13.9 million, or 0.9% of total assets, including $11.0 million in
non-performing loans and $2.9 million in real estate owned. The allowance for
loan losses totaled $8.7 million, or 79% of total non-performing loans, at March
31, 1997. Information regarding non-performing assets and other asset quality
data for March 31, 1997 and September 30, 1996 is as follows (dollars in
thousands):
<TABLE>
<CAPTION>
March 31, 1997 September 30, 1996
----------------------- -----------------------
<S> <C> <C>
Non-performing loans $ 11,026 $ 9,279
Real estate owned, net 2,877 3,050
================== ==================
Non-performing assets $ 13,903 $ 12,329
================== ==================
Impaired loans:
Non-performing (1) $ 2,573 $ 1,984
Performing 4,452 4,799
================== ==================
Non-performing assets/total assets 0.92% 0.88%
Non-performing loans/gross loans receivable 1.29% 1.13%
Allowance for loan losses/non-performing loans 79.3% 92.6%
</TABLE>
(1) Non-performing impaired loans are included in total non-performing loans.
The Company's non-performing assets are predominately residential in nature.
Assets secured by residential property account for approximately 94% of the
non-performing assets at March 31, 1997. All non-performing assets and
restructured loans are reviewed quarterly as part of the internal review
process.
Non-performing loans increased $1.7 million from $9.3 million at September 30,
1996 to $11.0 million at March 31, 1997. The change can be entirely attributed
to an increase in residential non-performing loans which totaled $9.3 million at
March 31, 1997 compared to $6.9 million at September 30, 1996. This increase is
a result of the migration of loans less than 90 days delinquent into the
non-performing category.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Loans delinquent between 30 and 90 days totaled $4.4 million at March 31, 1997
compared to $6.9 million at September 30, 1996. The decline is primarily
attributable to a $2.0 million decrease in loans delinquent between 30-60 days.
The following table represents a breakdown of non-performing assets as of March
31, 1997 (dollars in thousands):
<TABLE>
<CAPTION>
Total
Non-performing Real estate non-performing % of
loans owned, net assets Total
--------------- --------------- --------------- ----------
Mortgage loans:
<S> <C> <C> <C> <C>
One to four family residential $ 7,385 2,539 9,924 71.4%
Multi-family residential 1,947 313 2,260 16.2%
Land 56 25 81 0.6%
Commercial 610 - 610 4.4%
Non-mortgage loans:
Commercial 252 - 252 1.8%
Consumer 22 - 22 0.2%
Home Equity 754 - 754 5.4%
=============== =============== =============== ==========
Total $ 11,026 2,877 13,903 100%
=============== =============== =============== ==========
</TABLE>
The allowance for loan losses increased slightly to $8.7 million at March 31,
1997 from $8.6 million at September 30, 1996. The loan loss provision of
$1,050,000 for the six months ended March 31, 1997 decreased $541,000 when
compared to the six months ended March 31, 1996. The $1,591,000 of loan loss
provision during the six months ended March 31, 1996 was principally the result
of an increase in the percentages used to allocate loan loss allowance to two
specific loan categories. This allocation percentage change was precipitated by
the evidence of higher charge-off trends for these loan categories.
Management monitors the adequacy of the allowances for loan and real estate
owned losses on a continual basis. While management uses available information
to recognize losses on loans and real estate owned, future additions to the
allowances may be necessary based on changes in economic conditions,
particularly here in Connecticut. In connection with the determination of the
allowances for losses on loans and real estate owned, management reviews and
grades all adversely classified assets as part of its internal loan review
process. Each loan is reviewed to determine loss exposure and the borrower's
ability to pay. Management obtains independent appraisals for significant
properties.
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowances for losses on
loans and real estate owned. Such agencies may require the Bank to recognize
additions to the allowances based on their judgments of information available to
them at the time of the examination.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
RESULTS OF OPERATIONS
- ---------------------
Comparison of the Three and Six Month Periods Ended March 31, 1997 and 1996.
GENERAL
- -------
Net income for the three months ended March 31, 1997 was $2.8 million, down
substantially from the net income of $8.0 million reported for the three months
ended March 31, 1996. Fully diluted earnings per share were $0.60 for the
quarter ended March 31, 1997 compared to $1.72 for the quarter ended March 31,
1996. The three months ended March 31, 1996 included several non-recurring items
that significantly impacted net income. Non-recurring items impacting net income
in 1996 were a $15.9 million gain on sale of deposits, $1.2 million loss on sale
of securities, $1.7 million loss from mortgage banking activities and $1.2
million in one time expenses. Net interest income increased $1.3 million to
$10.7 million for the three months ended March 31, 1997 versus $9.4 million a
year earlier.
Net income was $5.7 million for the six months ended March 31, 1997, a decrease
of $5.3 million from the $11.0 million reported for the six months ended March
31, 1996. The decline is the result of the non-recurring items that occurred in
the second quarter of fiscal 1996. Results from recurring, or "core", operations
displayed improvement with respect to net interest income, which increased $2.3
million, or 12.4%, to $21.2 million for the six months ended March 31, 1997, and
non-interest income, which increased $203,000, or 8.4%, to $2.6 million for the
six months ended March 31, 1997.
NET INTEREST INCOME
- -------------------
Net interest income increased to $10.7 million for the quarter ended March 31,
1997 representing a $1.3 million or 13.7%, increase from the $9.4 million of net
interest income in the quarter ended March 31, 1996. The increase can be
primarily attributed to an improvement on the yield on interest-earning assets
to 7.34% for the three months ended March 31, 1997 from 7.12% in the prior
year's quarter. Two factors contributed to this improvement, first, a higher
general level of market interest rates between the March 1996 quarterly period
and the March 1997 quarterly period and, second, the investment of the funds
received in the Fleet/Shawmut transaction for approximately 40 days during the
quarter ended March 31, 1996 in lower yielding liquid investments in order to
fund the sale of the deposits later in the same quarter, which lowered the 1996
results. Also contributing to the increase in net interest income was growth in
interest-earning assets of approximately $33 million, with comparable growth in
interest-bearing liabilities. The impact of these factors caused an increase in
the net interest rate spread to 2.88% for the three months ended March 31, 1997
from 2.65% for the comparable period in 1996.
Net interest income was $21.2 million for the six months ended March 31, 1997
compared to $18.8 million for the six months ended March 31, 1996, an increase
of $2.3 million. Substantial growth in both interest-earning assets and
interest-bearing liabilities of approximately $100 million was the principal
force in driving the increase in net interest income. In addition, a seven basis
point decline in the cost of interest-bearing liabilities to 4.44% for the six
months ended March 31, 1997 in combination with a yield on interest-earning
assets that increased by six basis points to 7.37% contributed to the increased
net interest income. Overall the net interest rate spread improved to 2.80% for
the six months ended March 31, 1997 from 2.80% for the six months ended March
31, 1996.
13
<PAGE>
PROVISION FOR LOAN LOSSES
- -------------------------
The provision for loan losses was $525,000 for the three months ended March 31,
1997, a decrease of $841,000 from the $1.4 million reported during the three
months ended March 31, 1996. The provision for loan losses was $1.05 million for
the six months ended March 31, 1997 compared to $1.59 million for the six months
ended March 31, 1996, a decrease of $541,000. The increased provision for the
three and six months ended March 31, 1996 was principally the result of a change
in the allocation percentage used to determine the general loan loss allowance
caused by an increase in the level of charge-offs for two specific loan
categories.
NON-INTEREST INCOME
- -------------------
Non-interest income decreased $12.8 million from $14.2 million for the quarter
ended March 31, 1996 to $1.4 million for the quarter ended March 31, 1997. The
March 1996 quarter included a gain on the sale of deposits of $15.9 million
partially offset by losses from sales of securities and mortgage banking
activities of $1.2 million and $1.7 million, respectively.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Non-interest income decreased $13.4 million from $16.1 million for the six
months ended March 31, 1996 to $2.7 million for the six months ended March 31,
1997. Non-recurring items accounted for $13.6 million of the $16.1 million
reported in 1996. The gain on sale of deposits of $15.9 million was reduced by a
$532,000 loss on sale of securities and a $1.7 million loss from mortgage
banking activities during the six months ended March 31, 1996.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense decreased $2.1 million to $6.8 million for the quarter
ended March 31, 1997 compared to $8.9 million for the quarter ended March 31,
1996. The principal reason for the decline was the inclusion of $1.2 million of
non-recurring charges during the three months ended March 31, 1996 which
included a special marketing promotion following the Fleet/Shawmut transaction
and certain consulting charges. Decreases in compensation and benefits,
$219,000, net cost of real estate owned operations, $344,000, and Federal
deposit insurance premiums, $269,000, also contributed to the overall decrease
in non-interest expense. Compensation declined due to the operation of an
expanded branch network throughout most of the quarter ended March 1996 as
compared to the quarter ended March 1997. The decrease in net cost of real
estate owned operations is almost entirely attributable to provisions for loss
on real estate owned of $356,000 during the quarter ended March 31, 1996
compared to zero during the March 1997 quarter. Federal deposit insurance
premiums declined as a result of the recapitalization of the Savings Association
Insurance Fund in September 1996 which lowered the premium rate. The above
mentioned decreases were offset by a $151,000 increase in office occupancy
expenses due to the operation of higher cost, predominately leased versus owned,
branches, including the supermarket branches.
Non-interest expense was $13.2 million for the six months ended March 31, 1997
compared to $14.9 million for the six months ended March 31, 1996, a decreased
of $1.7 million. Declines in the net cost of real estate owned operations due to
larger loss provisions in fiscal 1996 versus fiscal 1997 and Federal deposit
insurance premiums, as well as the $1.2 million in non-recurring expenses from
the March 1996 quarter, caused the overall decrease. These above mentioned
decreases were partially offset by an increase in office occupancy expenses of
$515,000 resulting from the changing composition of the branch network in each
respective period and an increase of $278,000 in amortization of intangible
assets due to the goodwill recorded as part of the Fleet/Shawmut transaction.
INCOME TAXES
- ------------
Income tax expense was $1.9 million for the three months ended March 31, 1997
compared to $5.3 million for the three months ended March 31, 1996, a decrease
of $3.4 million. The decrease is due to lower pre-tax income despite an increase
in the effective tax rate from 39.7% for the three months ended March 31, 1996
to 40.6% for the quarter ended March 31, 1997.
Income tax expense totaled $3.9 million for the six months ended March 31, 1997
compared to $7.5 million in the prior year. The decrease was the result of lower
pre-tax income in the respective periods.
15
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
PART II
Item 1 - Legal Proceedings
- --------------------------
Not applicable
Item 2 - Changes in Securities
- ------------------------------
Not applicable
Item - 3 Defaults upon Senior Securities
- ----------------------------------------
Not applicable
Item - 4 Submission of Matter to a Vote of Securities Holders
- -------------------------------------------------------------
The annual meeting of shareholders of Eagle Financial Corp. was held on January
28, 1997, at which time the following proposals were considered and voted upon;
(1) the election of three directors each for a three-year term: (2) the approval
of an amendment to the Company's 1991 Stock Option Plan to eliminate automatic
grants of options to non-employee directors and permit discretionary grants of
stock option awards of up to 2,000 shares per year to each non-employee
director; and (3) the ratification of the appointment by the Board of Directors
of the firm of KPMG Peat Marwick LLP as independent auditors of the Company for
the fiscal year ending September 30,1997.
With respect to Proposal One, the following votes were cast in the election of
directors:
Withhold Authority
Nominees For To Vote
- --------------------------------------------------------------------------------
Theodore M. Donovan 3,579,515 256,194
Ralph T. Linsley 3,574,429 261,281
John F. McCarthy 3,579,717 255,992
With respect to Proposal Two, 3,291,069 votes were cast FOR approval of the
amendment to the Company's 1991 Stock Option Plan, 479,087 votes were against
such approval, 60,554 votes were abstention and 5,000 votes were broker
non-votes.
With respect to Proposal Three, 3,781,967 votes were cast FOR ratification of
the appointment of the firm of KPMG Peat Marwick LLP as independent auditors of
the Company, 32,791 votes were against such ratification, and 20,952 votes were
abstention.
Item - 5 Other Information
- --------------------------
Not applicable
Item - 6 Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
10.1 Indenture, dated as of April 1, 1997, between the Company
and Wilmington Trust Company, as Debenture Trustee.
10.2 Common Securities Guarantee Agreement, dated as of April 1,
1997, by the Company.
10.3 Series A Capital Securities Guarantee Agreement, dated as of
April 1, 1997, by the Company and Wilmington Trust Company,
as trustee.
27 Financial Data Schedule
(b) Reports on Form 8-K
On February 5, 1997 the Company filed a report on Form 8-K which reported under
Item 5 - Other Events, an announcement that the Company had signed a definitive
merger agreement among MidConn Bank, the Company and Eagle Bank. As a result of
the agreement, the Company would acquire MidConn Bank in a tax-free stock for
stock exchange and merge MidConn Bank into Eagle Bank using the
pooling-of-interests method of accounting.
16
<PAGE>
EAGLE FINANCIAL CORP. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of The Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EAGLE FINANCIAL CORP.
Date: May 15, 1997 By: /s/ Mark J. Blum
---------------------------------------
Mark J. Blum
Vice President, Chief Financial Officer
Date: May 15, 1997 By: /s/ Barbara S. Mills
---------------------------------------
Barbara S. Mills
Vice President, Treasurer
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Exhibit Page
- ----------- ------- --------------
<S> <C>
10.1 Indenture, dated as of April 1, 1997, between the Company
and Wilmington Trust Company, as Debenture Trustee.
10.2 Common Securities Guarantee Agreement, dated as of April 1,
1997, by the Company.
10.3 Series A Capital Securities Guarantee Agreement, dated as of
April 1, 1997, by the Company and Wilmington Trust Company,
as trustee.
27 Financial Data Schedule
</TABLE>
================================================================================
EAGLE FINANCIAL CORP.
------------------------------
------------------------------
INDENTURE
Dated as of April 1, 1997
------------------------------
WILMINGTON TRUST COMPANY
as Debenture Trustee
------------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
================================================================================
<PAGE>
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
April 1, 1997 between Eagle Financial Corp. and Wilmington Trust Company, as
Debenture Trustee:
ACT SECTION INDENTURE SECTION
310(a)(1).................................................................6.09
(a)(2) ................................................................6.09
310(a)(3)..................................................................N/A
(a)(4)..................................................................N/A
310(a)(5)...........................................................6.10, 6.11
310(b).....................................................................N/A
310(c)....................................................................6.13
311(a) and (b).............................................................N/A
311(c)...........................................................4.01, 4.02(a)
312(a)....................................................................4.02
312(b) and (c)............................................................4.04
313(a)....................................................................4.04
313(b)(1).................................................................4.04
313(b)(2).................................................................4.04
313(c)....................................................................4.04
313(d)....................................................................4.04
314(a)....................................................................4.03
314(b).....................................................................N/A
314(c)(1) and (2).........................................................6.07
314(c)(3)..................................................................N/A
314(d) ....................................................................N/A
314(e)....................................................................6.07
314(f) ....................................................................N/A
315(a)(c) and (d).........................................................6.01
315(b) ...................................................................5.08
315(e) ...................................................................5.09
316(a)(1) ................................................................5.07
316(a)(2) .................................................................N/A
316(a) last sentence .....................................................2.09
316(b) ...................................................................9.02
317(a) ...................................................................5.05
317(b) ...................................................................6.05
318(a) ..................................................................13.08
- ---------------------------
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
TABLE OF CONTENTS*
Page
ARTICLE I DEFINITIONS........................................ 1
SECTION 1.01. Definitions............................. 1
Additional Sums ................................................... 1
Adjusted Treasury Rate............................................. 2
Affiliate ................................................... 2
Authenticating Agent............................................... 2
Bankruptcy Law ................................................... 2
Board of Directors................................................. 2
Board Resolution................................................... 2
Business Day ................................................... 2
Capital Securities................................................. 2
Capital Securities Guarantee....................................... 2
Commission ................................................... 3
Common Securities.................................................. 3
Common Securities Guarantee........................................ 3
Common Stock ................................................... 3
Comparable Treasury Issue.......................................... 3
Comparable Treasury Price.......................................... 3
Compounded Interest................................................ 3
Corporation ................................................... 4
Corporation Request................................................ 4
Custodian ................................................... 4
Debenture Trustee.................................................. 4
Declaration ................................................... 4
Default ................................................... 4
Defaulted Interest................................................. 4
Deferred Interest.................................................. 4
Definitive Securities.............................................. 4
Depositary ................................................... 4
Dissolution Event.................................................. 4
Eagle Financial Capital Trust...................................... 5
Event of Default................................................... 5
Exchange Act ................................................... 5
Exchange Offer ................................................... 5
Extended Interest Payment Period................................... 5
Federal Reserve ................................................... 5
Global Security ................................................... 5
Indebtedness ................................................... 5
Indebtedness Ranking on a Parity with the Securities............... 5
Indebtedness Ranking Junior to the Securities...................... 6
Indenture ................................................... 6
Initial Optional Prepayment Date................................... 7
- ------------------
* This Table of Contents shall not, for any purpose, be deemed to
be a part of the Indenture.
i
<PAGE>
Page
Interest Payment Date.............................................. 7
Like Amount ................................................... 7
Liquidated Damages................................................. 7
Make Whole Amount.................................................. 7
Maturity Date ................................................... 7
Mortgage ................................................... 7
Non Book-Entry Capital Securities.................................. 7
Officers ................................................... 7
Officers' Certificate.............................................. 7
Opinion of Counsel................................................. 7
Optional Prepayment Price.......................................... 7
Other Debentures................................................... 8
Other Guarantees................................................... 8
outstanding ................................................... 8
Person ................................................... 8
Predecessor Security............................................... 8
Prepayment Price................................................... 9
Principal Office of the Debenture Trustee.......................... 9
Property Trustee................................................... 9
Purchase Agreement................................................. 9
Quotation Agent ................................................... 9
Reference Treasury Dealer.......................................... 9
Reference Treasury Dealer Quotations............................... 9
Registration Rights Agreement...................................... 9
Regulatory Capital Event........................................... 9
Responsible Officer................................................ 9
Restricted Security................................................ 9
Rule 144A ................................................... 9
Securities ................................................... 9
Securities Act ................................................... 9
Securityholder ................................................... 9
holder of Securities............................................... 9
Security Register.................................................. 9
Senior Indebtedness................................................ 10
Series A Securities................................................ 10
Series B Securities................................................ 10
Special Event ................................................... 10
Special Event Prepayment Price..................................... 10
Subsidiary ................................................... 10
Tax Event ................................................... 10
Trust Indenture Act.................................................12
Trust Securities................................................... 12
U.S. Government Obligations........................................ 12
ARTICLE II SECURITIES......................................... 12
SECTION 2.01. Forms Generally................................... 12
SECTION 2.02. Execution and Authentication...................... 12
SECTION 2.03. Form and Payment.................................. 13
SECTION 2.04. Legends........................................... 13
SECTION 2.05. Global Security................................... 13
ii
<PAGE>
Page
SECTION 2.06 Interest........................................... 15
SECTION 2.07. Transfer and Exchange.............................. 16
SECTION 2.08. Replacement Securities............................. 18
SECTION 2.09. Temporary Securities............................... 19
SECTION 2.10. Cancellation....................................... 19
SECTION 2.11. Defaulted Interest................................. 19
SECTION 2.12. CUSIP Numbers...................................... 21
ARTICLE III PARTICULAR COVENANTS OF THE CORPORATION.................... 21
SECTION 3.01. Payment of Principal, Premium and Inter-
est................................................ 21
SECTION 3.02. Offices for Notices and Payments, etc.............. 21
SECTION 3.03. Appointments to Fill Vacancies in Deben-
ture Trustee's Office.............................. 22
SECTION 3.04. Provision as to Paying Agent....................... 22
SECTION 3.05. Certificate to Debenture Trustee................... 23
SECTION 3.06. Compliance with Consolidation
Provisions......................................... 24
SECTION 3.07. Limitation on Dividends............................ 24
SECTION 3.08. Covenants as to Eagle Financial Capital
Trust.............................................. 25
SECTION 3.09. Payment of Expenses................................ 25
SECTION 3.10. Payment Upon Resignation or Removal................ 26
ARTICLE IV SECURITYHOLDERS' LISTS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE
SECTION 4.01. Securityholders' Lists............................. 26
SECTION 4.02. Preservation and Disclosure of Lists............... 27
SECTION 4.03. Reports by the Corporation......................... 29
SECTION 4.04. Reports by the Debenture Trustee................... 30
ARTICLE V REMEDIES OF THE DEBENTURE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.................................. 30
SECTION 5.02. Payment of Securities on Default; Suit
Therefor........................................... 33
SECTION 5.03. Application of Moneys Collected by De-
benture Trustee.................................... 35
SECTION 5.04. Proceedings by Securityholders..................... 35
SECTION 5.05. Proceedings by Debenture Trustee................... 36
SECTION 5.06. Remedies Cumulative and Continuing................. 37
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders............ 37
SECTION 5.08. Notice of Defaults................................. 38
SECTION 5.09. Undertaking to Pay Costs........................... 39
ARTICLE VI CONCERNING THE DEBENTURE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Debenture
Trustee............................................ 39
SECTION 6.02. Reliance on Documents, Opinions, etc............... 41
iii
<PAGE>
Page
SECTION 6.03. No Responsibility for Recitals, etc................ 43
SECTION 6.04. Debenture Trustee, Authenticating Agent,
Paying Agents, Transfer Agents or Regis-
trar May Own Securities............................ 43
SECTION 6.05. Moneys to be Held in Trust......................... 43
SECTION 6.06. Compensation and Expenses of Debenture
Trustee............................................ 43
SECTION 6.07. Officers' Certificate as Evidence.................. 44
SECTION 6.08. Conflicting Interest of Debenture Trust-
ee................................................. 45
SECTION 6.09. Eligibility of Debenture Trustee................... 45
SECTION 6.10. Resignation or Removal of Debenture
Trustee............................................ 45
SECTION 6.11. Acceptance by Successor Debenture Trust-
ee................................................. 47
SECTION 6.12. Succession by Merger, etc.......................... 48
SECTION 6.13. Limitation on Rights of Debenture Trust-
ee as a Creditor................................... 48
SECTION 6.14. Authenticating Agents.............................. 48
ARTICLE VII CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.......................... 50
SECTION 7.02. Proof of Execution by Securityholders.............. 51
SECTION 7.03. Who Are Deemed Absolute Owners..................... 51
SECTION 7.04. Securities Owned by Corporation Deemed
Not Outstanding.................................... 51
SECTION 7.05. Revocation of Consents; Future Holders
Bound.............................................. 52
ARTICLE VIII SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings............................... 52
SECTION 8.02. Call of Meetings by Debenture Trustee.............. 53
SECTION 8.03. Call of Meetings by Corporation or
Securityholders.................................... 53
SECTION 8.04. Qualifications for Voting.......................... 53
SECTION 8.05. Regulations........................................ 54
SECTION 8.06. Voting............................................. 54
ARTICLE IX AMENDMENTS
SECTION 9.01. Without Consent of Securityholders................. 55
SECTION 9.02. With Consent of Securityholders.................... 57
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures.................. 58
SECTION 9.04. Notation on Securities............................. 58
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished to Debenture
Trustee............................................ 58
iv
<PAGE>
Page
ARTICLE X CONSOLIDATION, MERGER, SALE, CONVEYANCE AND
LEASE
SECTION 10.01. Corporation May Consolidate, etc., on
Certain Terms..................................... 59
SECTION 10.02. Successor Corporation to be Substituted
for Corporation................................... 59
SECTION 10.03. Opinion of Counsel to be Given Debenture
Trustee........................................... 60
ARTICLE XI SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture............................. 60
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by De-
benture Trustee.................................... 61
SECTION 11.03. Paying Agent to Repay Moneys Held.................. 61
SECTION 11.04. Return of Unclaimed Moneys......................... 62
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations........................ 62
ARTICLE XII IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS..................................... 64
SECTION 12.01. Indenture and Securities Solely Corpo-
rate Obligations................................... 64
ARTICLE XIII MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors......................................... 64
SECTION 13.02. Official Acts by Successor Corporation............. 64
SECTION 13.03. Surrender of Corporation Powers.................... 65
SECTION 13.04. Addresses for Notices, etc......................... 65
SECTION 13.05. Governing Law...................................... 65
SECTION 13.06. Evidence of Compliance with Conditions
Precedent.......................................... 65
SECTION 13.07. Business Days...................................... 66
SECTION 13.08. Trust Indenture Act to Control..................... 66
SECTION 13.09. Table of Contents, Headings, etc................... 66
SECTION 13.10. Execution in Counterparts.......................... 66
SECTION 13.11. Separability....................................... 67
SECTION 13.12. Assignment......................................... 67
SECTION 13.13. Acknowledgement of Rights.......................... 67
ARTICLE XIV PREPAYMENT OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Prepayment........................... 68
SECTION 14.02. Optional Prepayment by Corporation................. 68
SECTION 14.03. No Sinking Fund.................................... 69
SECTION 14.04. Notice of Prepayment; Selection of Secu-
rities............................................. 69
SECTION 14.05. Payment of Securities Called for Prepay-
ment............................................... 70
v
<PAGE>
Page
ARTICLE XV SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate........................... 71
SECTION 15.02. Default on Senior Indebtedness..................... 72
SECTION 15.03. Liquidation; Dissolution; Bankruptcy............... 72
SECTION 15.04. Subrogation........................................ 74
SECTION 15.05. Debenture Trustee to Effectuate Subordi-
nation............................................. 75
SECTION 15.06. Notice by the Corporation.......................... 75
SECTION 15.07. Rights of the Debenture Trustee; Holders
of Senior Indebtedness............................. 77
SECTION 15.08. Subordination May Not Be Impaired.................. 77
ARTICLE XVI EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period............... 78
SECTION 16.02. Notice of Extension................................ 79
TESTIMONIUM..................................................................81
SIGNATURES...................................................................81
EXHIBIT A...................................................................A-1
vi
<PAGE>
THIS INDENTURE, dated as of April 1, 1997, between Eagle
Financial Corp., a Delaware corporation (hereinafter sometimes called the
"Corporation"), and Wilmington Trust Company, a Delaware banking corporation, as
debenture trustee (hereinafter sometimes called the "Debenture Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the
Securities by the holders thereof, the Corporation covenants and agrees with the
Debenture Trustee for the equal and proportionate benefit of the respective
holders from time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which
are by reference therein defined in the Securities Act, shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture as originally executed.
The following terms have the meanings given to them in the Declaration: (i)
Clearing Agency; (ii) Delaware Trustee; (iii) Property Trustee; (iv)
Administrative Trustees; (v) Series A Capital Securities; (vi) Series B Capital
Securities; (vii) Direct Action; and (viii) Distributions. All accounting terms
used herein and not expressly defined shall have the meanings assigned to such
terms in accordance with generally accepted accounting principles, and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted at the time of any computation. The words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision. Headings are used for convenience of reference only and do not
affect interpretation. The singular includes the plural and vice versa.
"Additional Sums" shall have the meaning set forth in Section
2.06(c).
<PAGE>
"Adjusted Treasury Rate" means, with respect to any prepayment
date pursuant to Section 14.01, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such prepayment date plus (i)
2.90% if such prepayment date occurs on or prior to April 1, 1998 and (ii) 2.38%
in all other cases.
"Affiliate" shall have the meaning given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"Authenticating Agent" shall mean any agent or agents of the
Debenture Trustee which at the time shall be appointed and acting pursuant to
Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors
of the Corporation or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Corporation to have been duly
adopted by the Board of Directors and to be in full force and effect on the date
of such certification, and delivered to the Debenture Trustee.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a Saturday or a Sunday or a day on which banking
institutions in New York, New York, Wilmington, Delaware or Bristol, Connecticut
are authorized or required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests
in the assets of the Trust which are designated as "Capital Securities" and rank
pari passu with the Common Securities issued by the Trust; provided, however,
that if an Event of Default has occurred and is continuing, no payments in
respect of Distributions on, or payments upon liquidation, prepayment or
otherwise with respect to, the Common Securities shall be made until the holders
of the Capital Securities shall be paid in full the Distributions and the
liquidation, prepayment and other payments to which they are entitled.
References to "Capital Securities" shall include collectively any Series A
Capital Securities and Series B Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee that
the Corporation may enter into with Wilmington Trust Company or other Persons
that operates directly or indirectly for the
2
<PAGE>
benefit of holders of Capital Securities and shall include a Series A Capital
Securities Guarantee and a Series B Capital Securities Guarantee with respect to
the Series A Capital Securities and the Series B Capital Securities,
respectively.
"Commission" shall mean the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act, or
if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests
in the assets of the Trust which are designated as "Common Securities" and rank
pari passu with Capital Securities issued by the Trust; provided, however, that
if an Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, prepayment or otherwise with
respect to, the Common Securities shall be made until the holders of the Capital
Securities shall be paid in full the Distributions and the liquidation,
prepayment and other payments to which they are then entitled.
"Common Securities Guarantee" shall mean any guarantee that
the Corporation may enter into with any Person or Persons that operates directly
or indirectly for the benefit of holders of Common Securities.
"Common Stock" shall mean the Common Stock, par value $1.00
per share, of the Corporation or any other class of stock resulting from changes
or reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Securities to be prepaid that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Securities.
"Comparable Treasury Price" means, with respect to any
prepayment date pursuant to Section 14.01, (i) the average of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) on the third Business Day preceding such prepayment
date, as set forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
Business Day, (A)
3
<PAGE>
the average of the Reference Treasury Dealer Quotations for such prepayment
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Debenture Trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such Quotations.
"Corporation" shall mean Eagle Financial Corp., a Dela- ware
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
"Corporation Request" or "Corporation Order" shall mean a
written request or order signed in the name of the Corporation by the Chairman,
the Chief Executive Officer, the President, a Vice Chairman, a Vice President,
the Comptroller, the Secretary or an Assistant Secretary of the Corporation, and
delivered to the Debenture Trustee.
"Compounded Interest" shall have the meaning set forth in
Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Debenture Trustee" shall mean the Person identified as
"Debenture Trustee" in the first paragraph hereof, and, subject to the
provisions of Article VI hereof, shall also include its successors and assigns
as Debenture Trustee hereunder. The term "Debenture Trustee" as used with
respect to a particular series of the Securities shall mean the trustee with
respect to that series.
"Declaration" means the Amended and Restated Declaration of
Trust of the Trust, dated as of April 1, 1997, as amended from time to time.
"Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the same meaning set forth in
Section 2.11.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Securities" shall mean those securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to the Securities, for
which the Corporation shall determine that such Securities will be issued as a
Global Security, The Depository Trust
4
<PAGE>
Company, New York, New York, another clearing agency, or any successor
registered as a clearing agency under the Exchange Act or other applicable
statute or regulation, which, in each case, shall be designated by the
Corporation pursuant to Section 2.05(d).
"Dissolution Event" means the liquidation of the Trust
pursuant to the Declaration, and the distribution of the Securities held by the
Property Trustee to the holders of the Trust Securities issued by the Trust pro
rata in accordance with the Declaration.
"Eagle Financial Capital Trust" or the "Trust" shall mean
Eagle Financial Capital Trust I, a Delaware business trust created for the
purpose of issuing its undivided beneficial interests in connection with the
issuance of Securities under this Indenture.
"Event of Default" shall mean any event specified in Section
5.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Offer" means the offer that may be made pursuant to
the Registration Rights Agreement (i) by the Corporation to exchange Series B
Securities for Series A Securities and to exchange a Series B Capital Securities
Guarantee for a Series A Capital Securities Guarantee and (ii) by the Trust to
exchange Series B Capital Securities for Series A Capital Securities.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 16.01.
"Federal Reserve" shall mean the Board of Governors of the
Federal Reserve System.
"Global Security" means, with respect to the Securities, a
Security executed by the Corporation and delivered by the Debenture Trustee to
the Depositary or pursuant to the Depositary's instruction, all in accordance
with the Indenture, which shall be registered in the name of the Depositary or
its nominee.
"Indebtedness" shall mean (i) every obligation of the
Corporation for money borrowed; (ii) every obligation of the Corporation
evidenced by bonds, debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property, assets or
businesses; (iii) every reimbursement obligation of the Corporation with respect
to letters of credit, banker's acceptances or similar facilities
5
<PAGE>
issued for the account of the Corporation; (iv) every obligation of the
Corporation issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising in
the ordinary course of business); (v) every capital lease obligation of the
Corporation; (vi) all indebtedness of the Corporation whether incurred on or
prior to the date of the Indenture or thereafter incurred, for claims in respect
of derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps and similar arrangements; and
(vii) every obligation of the type referred to in clauses (i) through (vi) of
another Person and all dividends of another Person the payment of which, in
either case, the Corporation has guaranteed or is responsible or liable for,
directly or indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Securities" shall
mean (i) Indebtedness, whether outstanding on the date of execution of this
Indenture or hereafter created, assumed or incurred, to the extent such
Indebtedness by its terms ranks equally with and not prior to the Securities in
the right of payment upon the happening of the dissolution or winding-up or
liquidation or reorganization of the Corporation, and (ii) all other debt
securities, and guarantees in respect of those debt securities, issued to any
trust other than the Trust, or a trustee of such trust, partnership or other
entity affiliated with the Corporation that is a financing vehicle of the
Corporation (a "financing entity") in connection with the issuance by such
financing entity of equity securities or other securities guaranteed by the
Corporation pursuant to an instrument that ranks pari passu with or junior in
right of payment to the Capital Securities Guarantee. The securing of any
Indebtedness, otherwise constituting Indebtedness Ranking on a Parity with the
Securities, shall not be deemed to prevent such Indebtedness from constituting
Indebtedness Ranking on a Parity with the Securities.
"Indebtedness Ranking Junior to the Securities" shall mean any
Indebtedness, whether outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, to the extent such Indebtedness by its
terms ranks junior to and not equally with or prior to the Securities (and any
other Indebtedness Ranking on a Parity with the Securities) in right of payment
upon the happening of the dissolution or winding-up or liquidation or
reorganization of the Corporation. The securing of any Indebtedness, otherwise
constituting Indebtedness Ranking Junior to the Securities, shall not be deemed
to prevent such Indebtedness from constituting Indebtedness Ranking Junior to
the Securities.
"Indenture" shall mean this instrument as originally executed
or, if amended as herein provided, as so amended.
6
<PAGE>
"Initial Optional Prepayment Date" means April 1, 2007.
"Interest Payment Date" shall have the meaning set forth in
Section 2.06(a).
"Like Amount" means (i) with respect to a redemption of the
Trust Securities, Trust Securities having a liquidation amount equal to the
principal amount of Securities to be paid in accordance with their terms and
(ii) with respect to a distribution of Securities upon the liquidation of the
Trust, Securities having a principal amount equal to the liquidation amount of
the Trust Securities of the holder to whom Securities are distributed.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Make Whole Amount" shall mean an amount equal to the greater
of (x) 100% of the principal amount of Securities to be prepaid or (y) the sum,
as determined by a Quotation Agent, of the present values of the remaining
scheduled payments of principal and interest on such Securities, discounted to
the prepayment date on a semi-annual basis (assuming a 360-day year consisting
of 12 30-day months) at the Adjusted Treasury Rate, plus, in the case of each of
clauses (x) and (y), accrued and unpaid interest thereon, including Compounded
Interest and Additional Sums, if any, to the date of such prepayment.
"Maturity Date" shall mean April 1, 2027.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.05(a)(ii).
"Officers" shall mean any of the Chairman, the Chief Executive
Officer, the President, a Vice President, the Chief Financial Officer, the
Secretary or an Assistant Secretary of the
Corporation.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Debenture Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Corporation, and who shall be reasonably
acceptable to the Debenture Trustee.
"Optional Prepayment Price" shall have the meaning set forth
in Section 14.02(a).
7
<PAGE>
"Other Debentures" means all junior subordinated debentures
issued by the Corporation from time to time and sold to trusts to be established
by the Corporation (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees to be issued by the
Corporation with respect to capital securities (if any) and issued to other
trusts to be established by the Corporation (if any), in each case similar to
the Trust.
The term "outstanding" when used with reference to the
Securities, shall mean, subject to the provisions of Section 7.04, as of any
particular time, all Securities authenticated and delivered by the Debenture
Trustee or the Authenticating Agent under this Indenture, except
(a) Securities theretofore cancelled by the Debenture
Trustee or the Authenticating Agent or delivered to
the Debenture Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
prepayment of which moneys in the necessary amount
shall have been deposited in trust with the Debenture
Trustee or with any paying agent (other than the
Corporation) or shall have been set aside and
segregated in trust by the Corporation (if the
Corporation shall act as its own paying agent);
provided that, if such Securities, or portions
thereof, are to be prepaid prior to maturity thereof,
notice of such prepayment shall have been given as
set forth in Article XIV or provision satisfactory to
the Debenture Trustee shall have been made for giving
such notice; and
(c) Securities in lieu of or in substitution for which
other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Corporation and the
Debenture Trustee is presented that any such
Securities are held by bona fide holders in due
course.
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and
8
<PAGE>
delivered under Section 2.08 in lieu of a lost, destroyed or stolen Security
shall be deemed to evidence the same debt as the lost, destroyed or stolen
Security.
"Prepayment Price" means the Special Event Prepayment Price or
the Optional Prepayment Price, as the context requires.
"Principal Office of the Debenture Trustee", or other similar
term, shall mean the office of the Debenture Trustee, at which at any particular
time its corporate trust business shall be administered.
"Property Trustee" shall have the same meaning as set forth in
the Declaration.
"Purchase Agreement" shall mean the Purchase Agreement dated
March 26, 1997 among the Corporation, the Trust and the initial purchaser named
therein.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Corporation.
"Reference Treasury Dealer" means a nationally recog- nized
U.S. Government securities dealer in New York, New York selected by the
Corporation.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any prepayment date pursuant to Section
14.01, the average, as determined by the Debenture Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Debenture Trustee by such
Reference Treasury Dealer at 5:00 p.m. New York, New York time, on the third
Business Day preceding such prepayment date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 1, 1997, by and among the Corporation, the Trust
and the initial purchaser named therein, as such agreement may be amended,
modified or supplemented from time to time.
"Regulatory Capital Event" means that the Corporation shall
have received an opinion of bank regulatory counsel experienced in such matters
to the effect that, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any rules, guidelines or policies of an applicable
regulatory agency or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on or after
the date of original issuance of the Securities, the Capital Securities do
9
<PAGE>
not constitute, or within 90 days of the date thereof, would not constitute,
Tier 1 Capital (or its then equivalent if the Corporation were subject to such
Capital Requirement); provided, however, that the distribution of the Securities
in connection with the liquidation of the Trust by the Corporation, as sponsor,
shall not in and of itself constitute a Regulatory Capital Event unless such
liquidation shall have occurred in connection with a Tax Event.
"Responsible Officer" shall mean any officer of the Debenture
Trustee's Corporate Trust Administration department with direct responsibility
for the administration of the Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Security" shall mean Securities that bear or are
required to bear the legends relating to transfer restrictions under the
Securities Act set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"Securities" means, collectively, the Series A Securities and
the Series B Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securityholder", "holder of Securities", or other similar
terms, shall mean any Person in whose name at the time a particular Security is
registered on the register kept by the Corporation or the Debenture Trustee for
that purpose in accordance with the terms hereof.
"Security Register" shall mean (i) prior to a Dissolution
Event, the list of holders provided to the Debenture Trustee pursuant to Section
4.01, and (ii) following a Dissolution Event, any security register maintained
by a security registrar for the Securities appointed by the Corporation
following the execution of a supplemental indenture providing for transfer
procedures as provided for in Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness, whether
outstanding on the date of execution of this Indenture or hereafter created,
assumed or incurred, except Indebtedness Ranking on a Parity with the Securities
or Indebtedness Ranking Junior to the Securities, and any deferrals, renewals or
extensions of such Senior Indebtedness.
10
<PAGE>
"Series A Securities" means the Corporation's Series A 10%
Junior Subordinated Deferrable Interest Debentures due April 1, 2027, as
authenticated and issued under this Indenture.
"Series B Securities" means the Corporation's Series B 10%
Junior Subordinated Deferrable Interest Debentures due April 1, 2027, as
authenticated and issued under this Indenture.
"Special Event" means either a Regulatory Capital Event or a
Tax Event.
"Special Event Prepayment Price" shall mean, with respect to
any prepayment of the Securities following a Special Event, an amount in cash
equal to the Make Whole Amount.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by the Trust and the
Corporation of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after April 1,
1997, there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the Securities, (ii)
interest payable by the Corporation on the Securities is not, or within 90 days
of the date of such opinion will not be, deductible by the Corporation, in whole
or in part, for United States federal income tax purposes or (iii) the Trust is,
or will be within 90 days of the date of such
11
<PAGE>
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939 as in force at the date of execution of this Indenture, except as provided
in Section 9.03; provided, however, that, in the event the Trust Indenture Act
is amended after such date, "Trust Indenture Act" shall mean, to the extent
required by any such amendment, the Trust Indenture Act as so amended.
"Trust Securities" shall mean the Capital Securities and the
Common Securities, collectively.
"U.S. Government Obligations" shall mean securities that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case
under clauses (i) or (ii) are not callable or prepayable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
SECTION 1.02. Business Day Certificate.
On the date of execution and delivery of this Indenture (with
respect to the remainder of calendar year 1997) and thereafter, within 15 days
prior to the end of each calendar year while this Indenture remains in effect
(with respect to the succeeding calendar years), the Corporation shall deliver
to the Debenture Trustee an Officers' Certificate specifying the days on which
banking institutions or trust companies in Bristol, Con- necticut are authorized
or obligated by law or executive order to be closed.
12
<PAGE>
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Debenture Trustee's certificate of
authentication shall be substantially in the form of Exhibit A, the terms of
which are incorporated in and made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Corporation is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Corporation by
manual or facsimile signature. If an Officer whose signature is on a Security no
longer holds that office at the time the Security is authenticated, the Security
shall nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of the Debenture Trustee. The signature of the Debenture
Trustee shall be conclusive evidence that the Security has been authenticated
under this Indenture. The form of Debenture Trustee's certificate of
authentication to be borne by the Securities shall be substantially as set forth
in Exhibit A hereto.
The Debenture Trustee shall, upon a Corporation Order,
authenticate for original issue up to, and the aggregate principal amount of
Securities outstanding at any time may not exceed, $51,547,000 aggregate
principal amount of the Securities, except as provided in Sections 2.07, 2.08,
2.09 and 14.05. The series of Securities to be initially issued hereunder shall
be the Series A Securities.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be
issued in fully registered certificated form without interest coupons. Principal
of, premium, if any, and interest on the Securities issued in certificated form
will be payable, the transfer of such Securities will be registrable and such
Securities will be exchangeable for Securities bearing identical terms and
provisions at the office or agency of the Corporation maintained for such
purpose under Section 3.02; provided, however, that payment of interest with
respect to Securities (other than a Global Security) may be made at the option
of the Corporation (i) by check mailed to the holder at such address as shall
appear in
13
<PAGE>
the Security Register or (ii) by transfer to an account maintained by the Person
entitled thereto, provided that proper transfer instructions have been received
in writing by the relevant record date. Notwithstanding the foregoing, so long
as the holder of any Securities is the Property Trustee, the payment of the
principal of, premium, if any, and interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, on such Securities held
by the Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section 2.04
or as otherwise determined by the Corporation in accordance with applicable law,
each Security shall bear the applicable legends relating to restrictions on
transfer pursuant to the Securities Act and any other applicable securities laws
in substantially the form set forth on Exhibit A hereto.
(b) In the event of an Exchange Offer, the Corporation shall
issue and the Debenture Trustee, upon Corporation Order, shall authenticate
Series B Securities in exchange for Series A Securities accepted for exchange in
the Exchange Offer, which Series B Securities shall not bear the legends
required by subsection (a) above, in each case unless the holder of such Series
A Securities is either (A) a broker-dealer who purchased such Series A
Securities directly from the Corporation for resale pursuant to Rule 144A or any
other available exemption under the Securities Act, (B) a Person participating
in the distribution of the Series A Securities or (C) a Person who is an
Affiliate of the Corporation.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry
form, a Like Amount of Definitive Securities shall be presented to the
Debenture Trustee (if an arrangement with the Depositary has been
maintained) by the Property Trustee in exchange for one or more Global
Securities (as may be required pursuant to Section 2.07), to be
registered in the name of the Depositary, or its nominee, and delivered
by the Debenture Trustee to the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the
Administrative Trustees; the Corporation upon any such presentation
shall execute one or more Global Securities in such aggregate principal
amount and deliver the same to the Debenture Trustee for authentication
and delivery in accordance with this Indenture; and payments on the
Securities
14
<PAGE>
issued as a Global Security will be made to the Depositary; and
(ii) if any Capital Securities are held in
certificated form, the related Definitive Securities may be presented
to the Debenture Trustee by the Property Trustee and any Capital
Security certificate which represents Capital Securities other than
Capital Securities in book-entry form ("Non Book-Entry Capital
Securities") will be deemed to represent beneficial interests in
Securities presented to the Debenture Trustee by the Property Trustee
having an aggregate principal amount equal to the aggregate liquidation
amount of the Non Book-Entry Capital Securities until such Capital
Security certificates are presented to the security registrar for the
Securities for transfer or reis- suance, at which time such Capital
Security certificates will be cancelled and a Security, registered in
the name of the holder of the Capital Security certificate or the
trans- feree of the holder of such Capital Security certificate, as the
case may be, with an aggregate principal amount equal to the aggregate
liquidation amount of the Capital Security certificate cancelled, will
be executed by the Corporation and delivered to the Debenture Trustee
for authentication and delivery in accordance with this Indenture. Upon
the issuance of such Securities, Securities with an equivalent
aggregate principal amount that were presented by the Property Trustee
to the Debenture Trustee will be cancelled.
(b) The Global Securities shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon; provided, that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and prepay-
ments. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Debenture Trustee, in accordance with instructions given by
the Corporation as required by this Section 2.05.
(c) The Global Securities may be transferred, in whole but not
in part, only to the Depositary, another nominee of the Depositary, or to a
successor Depositary selected or approved by the Corporation or to a nominee of
such successor Depositary.
(d) If at any time the Depositary notifies the Corporation
that it is unwilling or unable to continue as Depositary or the Depositary has
ceased to be a clearing agency registered under the Exchange Act, and a
successor Depositary is not appointed by the Corporation within 90 days after
the Corporation receives such notice or becomes aware of such condition, as the
case may be, the Corporation will execute, and the Debenture Trustee, upon
receipt of a Corporation Order, will authenticate
15
<PAGE>
and make available for delivery the Definitive Securities, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security, in exchange for such Global Security. If there is
an Event of Default, the Depositary shall have the right to exchange the Global
Securities for Definitive Securities. In addition, the Corporation may at any
time determine that the Securities shall no longer be represented by a Global
Security. In the event of such an Event of Default or such a determination, the
Corporation shall execute, and subject to Section 2.07, the Debenture Trustee,
upon receipt of an Officers' Certificate evidencing such determination by the
Corporation and a Corporation Order, will authenticate and make available for
delivery the Definitive Securities, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security
in exchange for such Global Security. Upon the exchange of the Global Security
for such Definitive Securities, in authorized denominations, the Global Security
shall be cancelled by the Debenture Trustee. Such Definitive Securities issued
in exchange for the Global Security shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Debenture
Trustee. The Debenture Trustee shall deliver such Definitive Securities to the
Depositary for delivery to the Persons in whose names such Definitive Securities
are so registered.
SECTION 2.06 Interest.
(a) Each Security will bear interest at the rate of 10% per
annum (the "Coupon Rate") from the most recent date to which interest has been
paid or duly provided for or, if no interest has been paid or duly provided for,
from April 1, 1997, until the principal thereof becomes due and payable, and at
the Coupon Rate on any overdue principal (and premium, if any) and (to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest, compounded semi-annually, payable (subject to
the provisions of Article XVI) semi-annually in arrears on April 1 and October 1
of each year (each, an "Interest Payment Date") commencing on October 1, 1997,
to the Person in whose name such Security or any predecessor Security is
registered, at the close of business on the regular record date for such
interest installment, which shall be the fifteenth day of the month immediately
preceding the month in which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full calendar
month, the number of days elapsed in such month. In the event that any Interest
Payment Date falls on a day that is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding
16
<PAGE>
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that if such next succeeding Business Day
falls in the next succeeding calendar year, then such payment shall be made on
the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
(c) During such time as the Property Trustee is the holder of
any Securities, the Corporation shall pay any additional amounts on the
Securities as may be necessary in order that the amount of Distributions then
due and payable by the Trust on the outstanding Trust Securities shall not be
reduced as a result of any additional taxes, duties and other governmental
charges to which the Trust has become subject as a result of a Tax Event
("Additional Sums").
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. (i) The Series A Securities, and
those Series B Securities with respect to which any Person described in Section
2.04(b)(A), (B) or (C) is the beneficial owner, may not be transferred except in
compliance with the legend contained in Exhibit A unless otherwise determined by
the Corporation in accordance with applicable law. Upon any distribution of the
Securities following a Dissolution Event, the Corporation and the Debenture
Trustee shall enter into a supplemental indenture pursuant to Section 9.01 to
provide for the transfer restrictions and procedures with respect to the
Securities substantially similar to those contained in the Declaration to the
extent applicable in the circumstances existing at such time.
(ii) The Securities will be issued and may be
transferred only in blocks having an aggregate principal amount of not less than
$100,000 and in multiples of $1,000 in excess thereof. Any such transfer of the
Securities in a block having an aggregate principal amount of less than $100,000
shall be deemed to be voided and of no legal effect whatsoever. Any such
transferee shall be deemed not to be a holder of such Securities for any
purpose, including, but not limited to the receipt of payments on such
Securities, and such transferee shall be deemed to have no interest whatsoever
in such Securities.
(b) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Corporation shall execute
and the Debenture Trustee shall authenticate Definitive Securities and Global
Securities at the request of the security registrar for the Securities. All
Definitive Securities and Global Securities issued upon any registration of
transfer or exchange of Definitive Securities or Global Securities shall be the
valid obligations of the Corporation, evidencing the same debt, and entitled to
the same benefits under this
17
<PAGE>
Indenture, as the Definitive Securities or Global Securities surrendered upon
such registration of transfer or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Corporation may require payment of
a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith.
The Corporation shall not be required to (i) issue, register
the transfer of or exchange Securities during a period beginning at the opening
of business 15 days before the day of mailing of a notice of prepayment or any
notice of selection of Securities for prepayment under Article XIV hereof and
ending at the close of business on the day of such mailing; or (ii) register the
transfer of or exchange any Security so selected for prepayment in whole or in
part, except the unredeemed portion of any Security being prepaid in part.
Prior to due presentment for the registration of a transfer of
any Security, the Debenture Trustee, the Corporation and any agent of the
Debenture Trustee or the Corporation may deem and treat the Person in whose name
any Security is registered as the absolute owner of such Security for the
purpose of receiving payment of principal of and premium, if any, and interest
on such Securities, and none of the Debenture Trustee, the Corporation and any
agents of the Debenture Trustee or the Corporation shall be affected by notice
to the contrary.
(c) Exchange of Series A Securities for Series B Securities.
The Series A Securities may be exchanged for Series B Securities pursuant to the
terms of the Exchange Offer. The Debenture Trustee shall make the exchange as
follows:
The Corporation shall present the Debenture Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Securities, the
transactions contemplated by the Exchange Offer have
been consummated; and
(B) the principal amount of Series A Securities prop-
erly tendered in the Exchange Offer that are rep-
resented by a Global Security, the principal amount
of Series A Securities properly tendered in the
Exchange Offer that are represented by Defin- itive
Securities, the name of each holder of such
Definitive Securities, the principal amount prop-
erly tendered in the Exchange Offer by each such
holder and the name and address to which Defini- tive
Securities for Series B Securities shall be
registered and sent for each such holder.
18
<PAGE>
The Debenture Trustee, upon receipt of (i) such Offi- cers'
Certificate, (ii) an Opinion of Counsel (x) to the effect that the Series B
Securities have been registered under Section 5 of the Securities Act and the
Indenture has been qualified under the Trust Indenture Act and (y) with respect
to the matters set forth in Section 3(p) of the Registration Rights Agreement
and (iii) a Corporation Order, shall authenticate (A) a Global Security
representing Series B Securities in aggregate principal amount equal to the
aggregate principal amount of Series A Securities represented by a Global
Security indicated in such Officers' Certificate as having been properly
tendered and (B) Definitive Securities representing Series B Securities
registered in the names of, and in the principal amounts indicated in, such
Officers' Certificate.
If the principal amount of the Global Security for the Series
B Securities is less than the principal amount of the Global Security for the
Series A Securities, the Debenture Trustee shall make an endorsement on such
Global Security for Series A Securities indicating a reduction in the principal
amount represented thereby.
The Debenture Trustee shall deliver such Definitive Securities
representing Series B Securities to the holders thereof as indicated in such
Officers' Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Debenture
Trustee, or the Corporation and the Debenture Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security, the Corporation
shall issue and the Debenture Trustee shall authenticate a replacement Security
if the Debenture Trustee's requirements for replacements of Securities are met.
An indemnity bond must be supplied by the holder that is sufficient in the
judgment of the Debenture Trustee and the Corporation to protect the
Corporation, the Debenture Trustee, any agent thereof or any authenticating
agent from any loss that any of them may suffer if a Security is replaced. The
Corporation or the Debenture Trustee may charge for its expenses in replacing a
Security.
Every replacement Security is an obligation of the Corporation
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
SECTION 2.09. Temporary Securities.
Pending the preparation of Definitive Securities, the
Corporation may execute, and upon Corporation Order the Debenture Trustee shall
authenticate and make available for delivery,
19
<PAGE>
temporary Securities that are printed, lithographed, typewritten, mimeographed
or otherwise reproduced, in any authorized denomination, substantially of the
tenor of the Definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as conclusively evidenced
by their execution of such Securities.
If temporary Securities are issued, the Corporation shall
cause Definitive Securities to be prepared without unreasonable delay. The
Definitive Securities shall be printed, lithographed or engraved, or provided by
any combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the office
or agency maintained by the Corporation for such purpose pursuant to Section
3.02 hereof, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities, the Corporation shall execute, and the
Debenture Trustee shall authenticate and make available for delivery, in
exchange therefor the same aggregate principal amount of Definitive Securities
of authorized denominations. Until so exchanged, the temporary Securities shall
in all respects be entitled to the same benefits under this Indenture as
Definitive Securities.
SECTION 2.10. Cancellation.
The Corporation at any time may deliver Securities to the
Debenture Trustee for cancellation. The Debenture Trustee and no one else shall
cancel all Securities surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall retain or destroy cancelled
Securities in accordance with its normal practices (subject to the record
retention requirement of the Exchange Act) unless the Corporation directs them
to be returned to it. The Corporation may not issue new Securities to replace
Securities that have been prepaid or paid or that have been delivered to the
Debenture Trustee for cancellation.
SECTION 2.11. Defaulted Interest.
Any interest on any Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the holder
on the relevant regular record date by virtue of having been such holder; and
such Defaulted Interest shall be paid by the Corporation, at its election, as
provided in clause (a) or clause (b) below:
20
<PAGE>
(a) The Corporation may make payment of any Defaulted Interest
on Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Corporation
shall notify the Debenture Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each such Security and the
date of the proposed payment, and at the same time the Corporation
shall deposit with the Debenture Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Debenture
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Debenture Trustee shall fix a special record date for the
payment of such Defaulted Interest which shall not be more than 15 nor
less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Debenture Trustee of the
notice of the proposed payment. The Debenture Trustee shall promptly
notify the Corporation of such special record date and, in the name and
at the expense of the Corporation, shall cause notice of the proposed
payment of such Defaulted Interest and the special record date therefor
to be mailed, first class postage prepaid, to each Securityholder at
his or her address as it appears in the Security Register, not less
than 10 days prior to such special record date. Notice of the proposed
payment of such Defaulted Interest and the special record date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid
to the Persons in whose names such Securities (or their respective
Predecessor Securities) are registered on such special record date and
shall be no longer payable pursuant to the following clause (b).
(b) The Corporation may make payment of any Defaulted Interest
on any Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Corporation to the Debenture Trustee of the
proposed payment pursuant to this clause, such manner of payment shall
be deemed practicable by the Debenture Trustee.
SECTION 2.12. CUSIP Numbers.
The Corporation in issuing the Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Debenture Trustee shall use
"CUSIP" numbers in notices of prepay-
21
<PAGE>
ment as a convenience to Securityholders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
prepayment and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such prepayment shall not be affected
by any defect in or omission of such numbers. The Corporation will promptly
notify the Debenture Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE CORPORATION
SECTION 3.01. Payment of Principal, Premium and
Interest.
The Corporation covenants and agrees for the benefit of the
holders of the Securities that it will duly and punctually pay or cause to be
paid the principal of and premium, if any, and interest on the Securities at the
place, at the respective times and in the manner provided herein. Except as
provided in Section 2.03, each installment of interest on the Securities may be
paid by mailing checks for such interest payable to the order of the holder of
Security entitled thereto as they appear in the Security Register. The
Corporation further covenants to pay any and all amounts, including, without
limitation, Additional Sums, as may be required pursuant to Section 2.06(c),
Liquidated Damages, if any, on the dates and in the manner required under the
Registration Rights Agreement and Compounded Interest, as may be required
pursuant to Section 16.01.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the
Corporation will maintain in New York, New York or Wilmington, Delaware, an
office or agency where the Securities may be presented for payment, an office or
agency where the Securities may be presented for registration of transfer and
for exchange as in this Indenture provided and an office or agency where notices
and demands to or upon the Corporation in respect of the Securities or of this
Indenture may be served. The Corporation will give to the Debenture Trustee
written notice of the location of any such office or agency and of any change of
location thereof. Until otherwise designated from time to time by the
Corporation in a notice to the Debenture Trustee, any such office or agency for
all of the above purposes shall be the Principal Office of the Debenture
Trustee. In case the Corporation shall fail to maintain any such office or
agency in New York, New York or Wilmington, Delaware, or shall fail to give such
notice of the location or of any change in the location
22
<PAGE>
thereof, presentations and demands may be made and notices may be served at the
Principal Office of the Debenture Trustee.
In addition to any such office or agency, the Corporation may
from time to time designate one or more offices or agencies outside New York,
New York, where the Securities may be presented for payment, registration of
transfer and for exchange in the manner provided in this Indenture, and the
Corporation may from time to time rescind such designation, as the Corporation
may deem desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Corporation of its obligation to
maintain any such office or agency in New York, New York, for the purposes above
mentioned. The Corporation will give to the Debenture Trustee prompt written
notice of any such designation or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Deben-
ture Trustee's Office.
The Corporation, whenever necessary to avoid or fill a vacancy
in the office of Debenture Trustee, will appoint, in the manner provided in
Section 6.10, a Debenture Trustee, so that there shall at all times be a
Debenture Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Corporation shall appoint a paying agent other
than the Debenture Trustee with respect to the
Securities, it will cause such paying agent to
execute and deliver to the Debenture Trustee an
instrument in which such agent shall agree with the
Debenture Trustee, subject to the provision of this
Section 3.04,
(1) that it will hold all sums held by it as
such agent for the payment of the principal
of and premium, if any, or interest on the
Securities (whether such sums have been paid
to it by the Corporation or by any other
obligor on the Securities) in trust for the
benefit of the holders of the Securities;
and
(2) that it will give the Debenture Trustee
notice of any failure by the Corporation (or
by any other obligor on the Securities) to
make any payment of the principal of and
premium or interest (including Additional
Sums and Compounded Interest, if any) and
Liquidated Damages, if any, on the
Securities when the same shall be due and
payable.
23
<PAGE>
(b) If the Corporation shall act as its own paying agent,
it will, on or before each due date of the principal
of and premium, if any, or interest on the
Securities, set aside, segregate and hold in trust
for the benefit of the holders of the Secu- rities a
sum sufficient to pay such principal, premium or
interest so becoming due and will noti- fy the
Debenture Trustee of any failure to take such action
and of any failure by the Corporation (or by any
other obligor under the Securities) to make any
payment of the principal of and premium, if any, or
interest on the Securities when the same shall become
due and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Corporation may, at any time,
for the purpose of obtaining a satisfaction and
discharge with respect to the Securities hereun- der,
or for any other reason, pay or cause to be paid to
the Debenture Trustee all sums held in trust for such
Securities by the Debenture Trustee or any paying
agent hereunder, as required by this Section 3.04,
such sums to be held by the Deben- ture Trustee upon
the trusts herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust
as provided in this Section 3.04 is subject to
Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Debenture Trustee.
The Corporation will deliver to the Debenture Trustee on or
before 120 days after the end of each fiscal year in each year, commencing with
the first fiscal year ending after the date hereof, so long as Securities are
outstanding hereunder, an Officers' Certificate, one of the signers of which
shall be the principal executive, principal financial or principal accounting
officer of the Corporation, stating that in the course of the performance by the
signers of their duties as officers of the Corporation they would normally have
knowledge of any default by the Corporation in the performance of any covenants
contained herein, stating whether or not they have knowledge of any such default
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof. For purposes of this Section 3.05, default shall be
determined without regard to any period of grace or requirement of notice
provided for herein.
24
<PAGE>
SECTION 3.06. Compliance with Consolidation
Provisions.
The Corporation will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other Person unless the
provisions of Article X hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Corporation will not (i) declare or pay any dividends or
distributions on, or prepay, purchase, acquire, or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal, of premium, if any, or interest on or repay, repurchase or redeem
any debt securities of the Corporation (including Other Debentures) that rank
pari passu with or junior in right of payment to the Securities or (iii) make
any guarantee payments with respect to any guarantee by the Corporation of the
debt securities of any Subsidiary of the Corporation (including Other
Guarantees) if such guarantee ranks pari passu with or junior in right of
payment to the Securities (other than (a) dividends or distributions in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Common Stock, (b) any declaration of a dividend in connection with the
implementation of a stockholder's rights plan, or the issuance of stock under
any such plan in the future, or the prepayment or repurchase of any such rights
pursuant thereto, (c) payments under the Capital Securities Guarantee, (d) the
purchase of fractional shares resulting from a reclassification of the
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
and (f) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Corporation's benefit plans for its directors, officers
or employees or any of the Corporation's dividend reinvestment plans), if at
such time (1) there shall have occurred any event of which the Corporation has
actual knowledge that (a) is an Event of Default and (b) in respect of which the
Corporation shall not have taken reasonable steps to cure, (2) if such
Securities are held by the Property Trustee, the Corporation shall be in default
with respect to its payment obligations under the Capital Securities Guarantee
or (3) the Corporation shall have given notice of its election of the exercise
of its right to extend the interest payment period pursuant to Section 16.01 and
any such extension shall be continuing.
25
<PAGE>
SECTION 3.08. Covenants as to Eagle Financial Capital
Trust
In the event Securities are issued to the Trust or a trustee
of such trust in connection with the issuance of Trust Securities by the Trust,
for so long as such Trust Securities remain outstanding, the Corporation (i)
will maintain 100% direct or indirect ownership of the Common Securities of the
Trust; provided, however, that any successor of the Corporation, permitted
pursuant to Article X, may succeed to the Corporation's ownership of such Common
Securities, (ii) will use commercially reasonable efforts to cause the Trust (a)
to remain a business trust, except in connection with a distribution of
Securities to the holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities of the Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (b)
to otherwise continue to be classified as a grantor trust and not an association
taxable as a corporation for United States federal income tax purposes and (iii)
will not cause, as sponsor of the Trust, or permit, as holder of the Common
Securities, the dissolution, winding-up or termination of the Trust, except in
connection with a distribution of the Securities as provided in the Declaration
and in connection with certain mergers, consolidations or amalgamations.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the
Securities to the Trust and in connection with the sale of the Trust Securities
by the Trust, the Corporation, in its capacity as borrower with respect to the
Securities, shall:
(a) pay all costs and expenses relating to the offering, sale
and issuance of the Securities, including commissions to the initial purchaser
payable pursuant to the Purchase Agreement, fees and expenses in connection with
any exchange offer, filing of a shelf registration statement or other action to
be taken pursuant to the Registration Rights Agreement and compensation of the
Debenture Trustee in accordance with the provisions of Section 6.06;
(b) pay all costs and expenses of the Trust (including, but
not limited to, costs and expenses relating to the organization of the Trust,
the offering, sale and issuance of the Trust Securities (including commissions
to the initial purchaser in connection therewith), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses relating to
the operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
26
<PAGE>
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of assets of the Trust;
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obligations (other
than in respect of the Trust Securities) related to the Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or
resignation of the Debenture Trustee, unless otherwise stated, the Corporation
shall pay to the Debenture Trustee all amounts accrued and owing to the date of
such termination, removal or resignation. Upon termination of the Declaration or
the removal or resignation of the Delaware Trustee or the Property Trustee, as
the case may be, pursuant to Section 5.7 of the Declaration, the Corporation
shall pay to the Delaware Trustee or the Property Trustee, as the case may be,
all amounts accrued and owing to the date of such termination, removal or
resignation.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Corporation covenants and agrees that it will furnish or
cause to be furnished to the Debenture Trustee:
(a) on a semi-annual basis on each regular record date
for the Securities, a list, in such form as the
Debenture Trustee may reasonably require, of the
names and addresses of the Securityholders as of such
record date; and
(b) at such other times as the Debenture Trustee may
request in writing, within 30 days after the receipt
by the Corporation, of any such request, a list of
similar form and content as of a date not more than
15 days prior to the time such list is furnished,
27
<PAGE>
except that, no such lists need be furnished so long
as the Debenture Trustee is in possession thereof by
reason of its acting as security registrar for the
Securities.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Debenture Trustee shall preserve, in as cur- rent
a form as is reasonably practicable, all information
as to the names and addresses of the holders of the
Securities (1) contained in the most recent list
furnished to it as provided in Section 4.01 or (2)
received by it in the capacity of Securities
registrar (if so acting) hereunder. The Debenture
Trustee may destroy any list fur- nished to it as
provided in Section 4.01 upon receipt of a new list
so furnished.
(b) In case three or more holders of Securities (here-
inafter referred to as "applicants") apply in writing
to the Debenture Trustee and furnish to the Debenture
Trustee reasonable proof that each such applicant has
owned a Security for a period of at least six months
preceding the date of such application, and such
application states that the applicants desire to
communicate with other hold- ers of Securities or
with holders of all Securi- ties with respect to
their rights under this In- denture and is
accompanied by a copy of the form of proxy or other
communication which such appli- cants propose to
transmit, then the Debenture Trustee shall within 5
Business Days after the receipt of such application,
at its election, either:
(1) afford such applicants access to the
information preserved at the time by
the Debenture Trustee in accordance
with the provisions of subsection
(a) of this Section 4.02, or
(2) inform such applicants as to the
approximate number of holders of all
Securities, whose names and
addresses appear in the information
preserved at the time by the
Debenture Trustee in accordance with
the provisions of subsection (a) of
this Section 4.02, and as to the
approximate cost of mailing to such
Securityholders the form of proxy or
other communication, if any,
specified in such application.
28
<PAGE>
If the Debenture Trustee shall elect not to
afford such applicants access to such information,
the Debenture Trustee shall, upon the written request
of such applicants, mail to each Securityholder whose
name and address appear in the information preserved
at the time by the Debenture Trustee in accordance
with the provisions of subsection (a) of this Section
4.02 a copy of the form of proxy or other
communication which is specified in such request with
reasonable promptness after a tender to the Debenture
Trustee of the material to be mailed and of payment,
or provision for the payment, of the reasonable
expenses of mailing, unless within five Business Days
after such tender, the Debenture Trustee shall mail
to such applicants and file with the Commission,
together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion
of the Debenture Trustee, such mailing would be
contrary to the best interests of the holders of
Securities of such series or all Securities, as the
case may be, or would be in violation of applicable
law. Such written statement shall specify the basis
of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the
written statement so filed, shall enter an order
refusing to sustain any of such objections or if,
after the entry of an order sustaining one or more of
such objections, the Commission shall find, after
notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter
an order so declaring, the Debenture Trustee shall
mail copies of such material to all such
Securityholders with reasonable promptness after the
entry of such order and the renewal of such tender;
otherwise the Debenture Trustee shall be relieved of
any obligation or duty to such applicants respecting
their application.
(c) Each and every holder of Securities, by receiving and
holding the same, agrees with the Corporation and the
Debenture Trustee that neither the Corpo- ration nor
the Debenture Trustee nor any paying agent shall be
held accountable by reason of the disclosure of any
such information as to the names and addresses of the
holders of Securities in accordance with the
provisions of subsection (b) of this Section 4.02,
regardless of the source from which such information
was derived, and that the Debenture Trustee shall not
be held account-
29
<PAGE>
able by reason of mailing any material pursuant to a
request made under said subsection (b).
SECTION 4.03. Reports by the Corporation.
(a) The Corporation covenants and agrees to file with the
Debenture Trustee, within 15 days after the date on
which the Corporation is required to file the same
with the Commission, copies of the annual reports and
of the information, documents and other reports (or
copies of such portions of any of the foregoing as
said Commission may from time to time by rules and
regulations prescribe) which the Corporation may be
required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or,
if the Corporation is not required to file
information, documents or reports pursuant to either
of such sections, then to pro- vide to the Debenture
Trustee, such of the sup- plementary and periodic
information, documents and reports which would have
been required pursuant to Section 13 of the Exchange
Act in respect of a security listed and registered on
a national secu- rities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Corporation covenants and agrees to file with the
Debenture Trustee and the Commission, in ac- cordance
with the rules and regulations prescribed from time
to time by said Commission, such addi- tional
information, documents and reports with respect to
compliance by the Corporation with the conditions and
covenants provided for in this Indenture as may be
required from time to time by such rules and
regulations.
(c) The Corporation covenants and agrees to transmit by
mail to all holders of Securities, as the names and
addresses of such holders appear upon the Security
Register, within 30 days after the filing thereof
with the Debenture Trustee, such summaries of any
information, documents and reports required to be
filed by the Corporation pursuant to subsec- tions
(a) and (b) of this Section 4.03 as may be required
by rules and regulations prescribed from time to time
by the Commission.
(d) Delivery of such reports, information and documents
to the Debenture Trustee is for informational
purposes only and the Debenture Trustee's receipt of
such shall not constitute constructive notice of any
information contained therein or
30
<PAGE>
determinable from information contained therein,
including the Corporation's compliance with any of
its covenants hereunder (as to which the Debenture
Trustee is entitled to rely exclusively on Officers'
Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule
144A under the Securities Act, the Corporation shall,
upon request, provide the information re- quired by
clause (d)(4) thereunder to each Securityholder and
to each beneficial owner and prospective purchaser of
Securities identified by each Securityholder of
Restricted Securities, unless such information is
furnished to the Com- mission pursuant to Section 13
or 15(d) of the Exchange Act.
SECTION 4.04. Reports by the Debenture Trustee.
(a) The Debenture Trustee shall transmit to
Securityholders such reports concerning the Deben-
ture Trustee and its actions under this Indenture as
may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursu- ant
thereto. If required by Section 313(a) of the Trust
Indenture Act, the Debenture Trustee shall, within
sixty days after each December 15 following the date
of this Indenture, commencing December 15, 1997,
deliver to Securityholders a brief re- port, dated as
of such December 15, which complies with the
provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the
Debenture Trustee with each stock exchange, if any,
upon which the Securities are listed, with the
Commission and with the Corporation. The Corporation
will promptly notify the Debenture Trustee when the
Securities are listed on any stock exchange.
31
<PAGE>
ARTICLE V
REMEDIES OF THE DEBENTURE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall
constitute an Event of Default hereunder (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) default in the payment of any interest (including
Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on the Securities or any
Other Debentures when due, and continuance of such
default for a period of 30 days; provided, however,
that a valid extension of an interest payment period
by the Corporation in accordance with the terms
hereof shall not constitute a de- fault in the
payment of interest for this purpose; or
(b) default in the payment of any principal of (or
premium, if any, on) the Securities or any Other
Debentures when due whether at maturity, upon
pre-payment, by declaration of acceleration of
maturity or otherwise; or
(c) default in the performance, or breach, of any
covenant or warranty of the Corporation in this
Indenture (other than a covenant or warranty a
default in whose performance or whose breach is
elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a
period of 90 days after there has been giv- en, by
registered or certified mail, to the Corpo- ration by
the Debenture Trustee or to the Corpora- tion and the
Debenture Trustee by the holders of at least 25% in
aggregate principal amount of the outstanding
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
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the
Corporation in an involuntary case under any
applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a
32
<PAGE>
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Corporation
or for any substantial part of its property, or
ordering the winding-up or liquidation of its affairs
and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or
(e) the Corporation shall commence a voluntary case under
any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall consent
to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the
appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the
Corporation or of any substantial part of its
property, or shall make any general assignment for
the benefit of creditors, or shall fail generally to
pay its debts as they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Debenture
Trustee or the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding may declare the principal amount of all Securities
to be due and payable immediately, by a notice in writing to the Corporation
(and to the Debenture Trustee if given by the holders of the outstanding
Securities), and upon any such declaration the same shall become immediately due
and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Securities shall have
been so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Corporation shall pay or shall deposit with the Debenture
Trustee a sum sufficient to pay (A) all matured installments of interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, upon all the Securities and the principal of and premium, if
any, on any and all Securities which shall have become due otherwise than by
acceleration (with interest upon such principal and premium, if any, and, to the
extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest, at the same rate as the rate of interest
specified in the Securities to the date of such payment or deposit) and (B) such
amount as shall be sufficient to cover compensation due to the Debenture Trustee
and each predecessor Debenture Trustee, their respective agents, attorneys and
counsel, pursuant to Section 6.06, and (ii) any and all Events of Default under
the Indenture, other than the non-
33
<PAGE>
payment of the principal of the Securities which shall have become due solely by
such declaration of acceleration, shall have been cured, waived or otherwise
remedied as provided herein, then, in every such case, the holders of a majority
in aggregate principal amount of the Securities then outstanding, by written
notice to the Corporation and to the Debenture Trustee, may rescind and annul
such declaration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall impair
any right consequent thereon.
In case the Debenture Trustee shall have proceeded to enforce
any right under this Indenture and such proceedings shall have been discontinued
or abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Debenture Trustee, then and in every
such case the Corporation, the Debenture Trustee and the holders of the
Securities shall be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Corporation, the Debenture
Trustee and the holders of the Securities shall continue as though no such
proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit
Therefor.
The Corporation covenants that (a) in case default shall be
made in the payment of any installment of interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, upon any
of the Securities as and when the same shall become due and payable, and such
default shall have continued for a period of 30 days, or (b) in case default
shall be made in the payment of the principal of or premium, if any, on any of
the Securities as and when the same shall have become due and payable, whether
at maturity of the Securities or upon prepayment or by declaration or otherwise,
then, upon demand of the Debenture Trustee, the Corporation will pay to the
Debenture Trustee, for the benefit of the holders of the Securities, the whole
amount that then shall have become due and payable on all such Securities for
principal and premium, if any, or interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, or both, as the case
may be, with interest upon the overdue principal and premium, if any, and (to
the extent that payment of such interest is enforceable under applicable law
and, if the Securities are held by the Trust or a trustee of such trust, without
duplication of any other amounts paid by the Trust or a trustee in respect
thereof) upon the overdue installments of interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, at the
rate borne by the Securities; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including a
reason-
34
<PAGE>
able compensation to the Debenture Trustee, its agents, attorneys and counsel,
and any other amount due to the Debenture Trustee pursuant to Section 6.06.
In case the Corporation shall fail forthwith to pay such
amounts upon such demand, the Debenture Trustee, in its own name and as trustee
of an express trust, shall be entitled and empowered to institute any actions or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the
Corporation or any other obligor on the Securities and collect in the manner
provided by law out of the property of the Corporation or any other obligor on
the Securities, wherever situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Corporation or any other obligor on the
Securities under Title 11, United States Code, or any other applicable law, or
in case a receiver or trustee shall have been appointed for the property of the
Corporation or such other obligor, or in the case of any other similar judicial
proceedings relative to the Corporation or other obligor upon the Securities, or
to the creditors or property of the Corporation or such other obligor, the
Debenture Trustee, irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Debenture Trustee shall have made any demand
pursuant to the provisions of this Section 5.02, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal and interest owing and unpaid
in respect of the Securities and, in case of any judicial proceedings, to file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Debenture Trustee (including any
claim for amounts due to the Debenture Trustee pursuant to 6.06) and of the
Securityholders allowed in such judicial proceedings relative to the Corporation
or any other obligor on the Securities, or to the creditors or property of the
Corporation or such other obligor, unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Securities in any election
of a trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings, and to collect and receive any moneys or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Debenture Trustee, and, in the
event that the Debenture Trustee shall consent to the making of such payments
directly to the
35
<PAGE>
Securityholders, to pay to the Debenture Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Debenture Trustee, each
predecessor Debenture Trustee and their respective agents, attorneys and
counsel, and all other amounts due to the Debenture Trustee pursuant to Section
6.06.
Nothing herein contained shall be construed to authorize the
Debenture Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Debenture Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Debenture
Trustee without the possession of any of the Securities, or the production
thereof on any trial or other proceeding relative thereto, and any such suit or
proceeding instituted by the Debenture Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall be for the
ratable benefit of the holders of the Securities.
In any proceedings brought by the Debenture Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Debenture Trustee shall be a party) the Debenture Trustee shall be
held to represent all the holders of the Securities, and it shall not be
necessary to make any holders of the Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by De-
benture Trustee.
Any moneys collected by the Debenture Trustee shall be applied
in the following order, at the date or dates fixed by the Debenture Trustee for
the distribution of such moneys, upon presentation of the Securities in respect
of which moneys have been collected, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and all other amounts due to the Debenture Trustee
under Section 6.06;
Second: To the payment of all Senior Indebtedness of the
Corporation if and to the extent required by Article XV;
Third: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and be
unpaid, to the payment of the amounts then due and unpaid upon Securities for
principal of (and premi-
36
<PAGE>
um, if any) and interest (including Compounded Interest and Additional Sums, if
any) and Liquidated Damages, if any, on the Securities, in respect of which or
for the benefit of which money has been collected, ratably, without preference
of priority of any kind, according to the amounts due on such Securities for
principal (and premium, if any) and interest, respectively; and
Fourth: To the Corporation.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Debenture
Trustee written notice of an Event of Default and of the continuance thereof
with respect to the Securities specifying such Event of Default, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding shall have made written
request upon the Debenture Trustee to institute such action, suit or proceeding
in its own name as Debenture Trustee hereunder and shall have offered to the
Debenture Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Debenture
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action, suit or proceeding, it
being understood and intended, and being expressly covenanted by the taker and
holder of every Security with every other taker and holder and the Debenture
Trustee, that no one or more holders of Securities shall have any right in any
manner whatever by virtue of or by availing of any provision of this Indenture
to affect, disturb or prejudice the rights of any other holder of Securities, or
to obtain or seek to obtain priority over or preference to any other such
holder, or to enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of all holders of
Securities.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Security to receive payment of the
principal of (and premium, if any) and interest on (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on such
Security, on or after the same shall have become due and payable, or to
institute suit for the enforcement of any such payment, shall not be impaired or
affected without the consent of such holder and by accepting a Security
hereunder it is expressly understood, intended and covenanted by the taker and
holder of every Security with every other such taker and holder and the
Debenture Trustee, that no
37
<PAGE>
one or more holders of Securities shall have any right in any manner whatsoever
by virtue or by availing of any provision of this Indenture to affect, disturb
or prejudice the rights of the holders of any other Securities, or to obtain or
seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Securities. For the
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Debenture Trustee shall be entitled to such relief as can
be given either at law or in equity.
The Corporation and the Debenture Trustee acknowledge that
pursuant to the Declaration, the holders of Capital Securities are entitled, in
the circumstances and subject to the limitations set forth therein, to commence
a Direct Action with respect to any Event of Default under this Indenture and
the Securities.
SECTION 5.05. Proceedings by Debenture Trustee.
In case an Event of Default occurs with respect to Securities
and is continuing, the Debenture Trustee may in its discretion proceed to
protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Debenture Trustee shall deem most
effectual to protect and enforce any of such rights, either by suit in equity or
by action at law or by proceeding in bankruptcy or otherwise, whether for the
specific enforcement of any covenant or agreement contained in this Indenture or
in aid of the exercise of any power granted in this Indenture, or to enforce any
other legal or equitable right vested in the Debenture Trustee by this Indenture
or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the
Debenture Trustee or to the Securityholders shall, to the extent permitted by
law, be deemed cumulative and not exclusive of any other powers and remedies
available to the Debenture Trustee or the holders of the Securities, by judicial
proceedings or otherwise, to enforce the performance or observance of the
covenants and agreements contained in this Indenture or otherwise established
with respect to the Securities, and no delay or omission of the Debenture
Trustee or of any holder of any of the Securities to exercise any right or power
accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such
default or an acquiescence therein; and, subject to the provisions of Section
5.04, every power and remedy given by this Article V or by law to the Debenture
Trustee or to the Securityholders may be exercised from time to time, and as
often
38
<PAGE>
as shall be deemed expedient, by the Debenture Trustee or by the
Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee; provided, however, that (subject to the provisions of Section 6.01) the
Debenture Trustee shall have the right to decline to follow any such direction
if the Debenture Trustee shall determine that the action so directed would be
unjustly prejudicial to the holders not taking part in such direction or if the
Debenture Trustee being advised by counsel determines that the action or
proceeding so directed may not lawfully be taken or if the Debenture Trustee in
good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or Responsible Officers shall
determine that the action or proceedings so directed would involve the Debenture
Trustee in personal liability. Prior to any declaration accelerating the
maturity of the Securities, the holders of a majority in aggregate principal
amount of the Securities at the time outstanding may on behalf of the holders of
all of the Securities waive any past default or Event of Default and its
consequences except a default (a) in the payment of principal of (or premium, if
any, on) or interest on (including Compounded Interest and Additional Sums, if
any) or Liquidated Damages, if any, on any of the Securities (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest (including Compounded Interest and Additional Sums, if any) (and
premium, if any) and principal due otherwise than by acceleration has been
deposited with the Debenture Trustee) or (b) in respect of covenants or
provisions hereof which cannot be modified or amended without the consent of the
holder of each Security affected; provided, however, that if the Securities are
held by the Property Trustee, such waiver or modification to such waiver shall
not be effective until the holders of a majority in aggregate liquidation amount
of Trust Securities shall have consented to such waiver or modification to such
waiver; provided further, that if the consent of the holder of each outstanding
Security is required, such waiver shall not be effective until each holder of
the Trust Securities shall have consented to such waiver. Upon any such waiver,
the default covered thereby shall be deemed to be cured for all purposes of this
Indenture and the Corporation, the Debenture Trustee and the holders of the
Securities shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other default
or impair any right consequent thereon. Whenever any default or Event of Default
hereunder shall have been waived as permitted by this
39
<PAGE>
Section 5.07, said default or Event of Default shall for all purposes of the
Securities and this Indenture be deemed to have been cured and to be not
continuing.
SECTION 5.08. Notice of Defaults.
(a) The Debenture Trustee shall, within 90 days after the
occurrence of a Default with respect to the Securities actually known to a
Responsible Officer of the Debenture Trustee, mail to all Securityholders, as
the names and addresses of such holders appear upon the Security Register,
notice of all Defaults known to the Debenture Trustee, unless such Default shall
have been cured before the giving of such notice (the term "Default" for the
purpose of this Section 5.08 being hereby defined to be any of the events
specified in clauses (a), (b), (c), (d) and (e) of Section 5.01, not including
periods of grace, if any, provided for therein, and irrespective of the giving
of written notice specified in clause (c) of Section 5.01); and provided that,
except in the case of default in the payment of the principal of (or premium, if
any, on) or interest (including Compounded Interest or Additional Sums, if any)
or Liquidated Damages, if any, on any of the Securities, the Debenture 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 Debenture Trustee in good faith determines that the
withholding of such notice is in the interests of the Securityholders; and
provided further, that in the case of any default of the character specified in
Section 5.01(c), no such notice to Securityholders shall be given until at least
60 days after the occurrence thereof, but shall be given within 90 days after
such occurrence.
(b) Within five Business Days after the occurrence of any
Event of Default actually known to a Responsible Officer of the Debenture
Trustee, the Debenture Trustee shall transmit notice of such Event of Default to
all Securityholders as their names and addresses appear on the Security
Register, unless such Event of Default shall have been cured or waived.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Debenture
Trustee for any action taken or omitted by it as Debenture Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party
40
<PAGE>
litigant; but the provisions of this Section 5.09 shall not apply to any suit
instituted by the Debenture Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more than
10% in aggregate principal amount of the Securities outstanding, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of (or premium, if any) or interest (including Compounded Interest and
Additional Sums, if any) or Liquidated Damages, if any, on any Security against
the Corporation on or after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE DEBENTURE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Debenture
Trustee.
With respect to the holders of the Securities issued
hereunder, the Debenture Trustee, prior to the occurrence of an Event of Default
and after the curing or waiving of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. In case an Event of Default has
occurred (which has not been cured or waived), the Debenture Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
No provision of this Indenture shall be construed to relieve
the Debenture Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of De-
fault which may have occurred,
(1) the duties and obligations of the Debenture
Trustee shall be determined solely by the
express provisions of this Indenture, and
the Debenture Trustee shall not be liable
except for the performance of such duties
and obligations as are specifically set
forth in this Indenture, and no implied
covenants or obligations shall be read into
this Indenture against the Debenture
Trustee; and
(2) in the absence of bad faith on the part of
the Debenture Trustee, the Debenture Trustee
41
<PAGE>
may conclusively rely, as to the truth of
the statements and the correctness of the
opin- ions expressed therein, upon any
certificates or opinions furnished to the
Debenture Trust- ee and conforming to the
requirements of this Indenture; but, in the
case of any such cer- tificates or opinions
which by any provision hereof are
specifically required to be fur- nished to
the Debenture Trustee, the Deben- ture
Trustee shall be under a duty to examine the
same to determine whether or not they
conform to the requirements of this Inden-
ture;
(b) the Debenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible
Officer or Responsible Officers, unless it shall be
proved that the Debenture Trustee was negligent in
ascertaining the pertinent facts; and
(c) the Debenture 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 direc- tion
of the Securityholders pursuant to Section 5.07,
relating to the time, method and place of conducting
any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power
conferred upon the Debenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall
require the Debenture 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 there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or adequate indemnity against
such risk is not reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Debenture Trustee may rely and shall be pro-
tected in acting or refraining from acting upon any
resolution, certificate, statement, instru- ment,
opinion, report, notice, request, consent, order,
bond, note, debenture or other paper or document
believed by it to be genuine and to have been signed
or presented by the proper party or parties;
42
<PAGE>
(b) any request, direction, order or demand of the
Corporation mentioned herein may be sufficiently
evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein spe- cifically
prescribed); and any Board Resolution may be
evidenced to the Debenture Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary
of the Corporation;
(c) the Debenture Trustee may consult with counsel of its
selection and any advice or Opinion of Counsel shall
be full and complete authorization and protection in
respect of any action taken or suffered omitted by it
hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(d) the Debenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Indenture at the request, order or direction of
any of the Securityholders, pursuant to the
provisions of this Indenture, unless such
Securityholders shall have offered to the Deben- ture
Trustee reasonable and sufficient security or
indemnity against the costs, expenses and liabili-
ties which may be incurred therein or thereby;
(e) the Debenture Trustee shall not be liable for any
action taken or omitted by it in good faith and
believed by it to be authorized or within the
discretion or rights or powers conferred upon it by
this Indenture; nothing contained herein shall,
however, relieve the Debenture Trustee of the
obligation, upon the occurrence of an Event of De-
fault (that has not been cured or waived), to
exercise such of the rights and powers vested in it
by this Indenture, and to use the same degree of care
and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the
conduct of his own affairs;
(f) the Debenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instru- ment,
opinion, report, notice, request, consent, order,
approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the
holders of a majority in aggregate principal amount
of the outstanding Securities; provided, however,
that if the payment within a reasonable time to the
Debenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making
of such investigation
43
<PAGE>
is, in the opinion of the Debenture Trustee, not
reasonably assured to the Debenture Trustee by the
security afforded to it by the terms of this
Indenture, the Debenture Trustee may require
reasonable indemnity against such expense or
liability as a condition to so proceeding;
(g) the Debenture Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder
either directly or by or through agents (including
any Authenticating Agent) or attorneys, and the
Debenture Trustee shall not be responsible for any
misconduct or negligence on the part of any such
agent or attorney appointed by it with due care;
(h) the Debenture Trustee shall not be charged with
knowledge of any Default or Event of Default with
respect to the Securities unless (1) such default is
a default under Sections 5.01(a) (other than a
default with respect to the payment of Compounded
Interest, Liquidated Damages or Additional Sums) and
5.01(b) of the Indenture, (2) a Responsible Officer
shall have actual knowledge of such Default or Event
of Default or (3) written notice of such Default or
Event of Default shall have been given to the
Debenture Trustee by the Corporation or any other
obligor on the Securities or by any holder of the
Securities; and
(i) the Debenture Trustee shall not be liable for any
action taken, suffered or omitted by it in good
faith, without negligence or willful misconduct and
believed by it to be authorized or within the
discretion or rights or powers conferred upon it by
this Indenture.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Debenture Trustee or the Authenticating
Agent) shall be taken as the statements of the Corporation, and the Debenture
Trustee and the Authenticating Agent assume no responsibility for the
correctness of the same. The Debenture Trustee and the Authenticating Agent make
no representations as to the validity or sufficiency of this Indenture or of the
Securities. The Debenture Trustee and the Authenticating Agent shall not be
accountable for the use or application by the Corporation of any Securities or
the proceeds of any Securities authenticated and delivered by the Debenture
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.
44
<PAGE>
SECTION 6.04. Debenture Trustee, Authenticating Agent,
Paying Agents, Transfer Agents or Regis-
trar May Own Securities.
The Debenture Trustee or any Authenticating Agent or any
paying agent or any transfer agent or any security registrar for the Securities,
in its individual or any other capacity, may become the owner or pledgee of
Securities with the same rights it would have if it were not Debenture Trustee,
Authenticating Agent, paying agent, transfer agent or security registrar for the
Securities.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys
received by the Debenture Trustee or any paying agent shall, until used or
applied as herein provided, be held in trust for the purpose for which they were
received, but need not be segregated from other funds except to the extent
required by law. The Debenture Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Corporation. So long as no Event of Default shall
have occurred and be continuing, all interest allowed on any such moneys shall
be paid from time to time upon the written order of the Corporation, signed by
the Chairman of the Board of Directors, the President or a Vice President or the
Treasurer or an Assistant Treasurer of the Corporation.
SECTION 6.06. Compensation and Expenses of Debenture
Trustee.
The Corporation, as issuer of Securities under this Indenture,
covenants and agrees to pay to the Debenture Trustee from time to time, and the
Debenture Trustee shall be entitled to, such compensation as shall be agreed to
in writing between the Corporation and the Debenture Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Corporation will pay or reimburse the Debenture Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Debenture Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Corporation also covenants to indemnify each of
the Debenture Trustee or any predecessor Debenture Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any and
all loss, damage, claim, liability or expense including taxes (other than taxes
based on the income of the Debenture Trustee) incurred without negligence or bad
faith on
45
<PAGE>
the part of the Debenture Trustee and arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses of
defending itself against any claim of liability in the premises. The obligations
of the Corporation under this Section 6.06 to compensate and indemnify the
Debenture Trustee and to pay or reimburse the Debenture Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Debenture
Trustee as such, except funds held in trust for the benefit of the holders of
particular Securities.
When the Debenture Trustee incurs expenses or renders services
in connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation
or removal of the Debenture Trustee and the defea- sance or other termination of
this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this Indenture the Debenture
Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or omitting any action hereunder, such matter
(unless other evidence in respect thereof is herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Debenture
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Debenture Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Debenture Trustee, shall
be full warrant to the Debenture Trustee for any action taken or omitted by it
under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Debenture Trustee.
If the Debenture Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Debenture Trustee and the Corporation shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
46
<PAGE>
SECTION 6.09. Eligibility of Debenture Trustee.
The Debenture Trustee hereunder shall at all times be a
corporation organized and doing business under the laws of the United States of
America or any state or territory thereof or of the District of Columbia, or a
corporation or other Person permitted to act as trustee by the Commission
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000) and
subject to supervision or examination by federal, state, territorial, or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 6.09 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.
The Corporation may not, nor may any Person directly or
indirectly controlling, controlled by, or under common control with the
Corporation, serve as Debenture Trustee.
In case at any time the Debenture Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.09, the Debenture
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.10.
SECTION 6.10. Resignation or Removal of Debenture
Trustee.
(a) The Debenture Trustee, or any trustee or trustees
hereafter appointed, may at any time resign by giving
written notice of such resignation to the Corporation
and by mailing notice thereof to the holders of the
Securities at their addresses as they shall appear on
the Security register. Upon receiving such notice of
resignation, the Corpora- tion shall promptly appoint
a successor trustee or trustees by written
instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning
Debenture Trustee and one copy to the successor
trustee. If no successor trustee shall have been so
appointed and have accepted appoint- ment within 60
days after the mailing of such notice of resignation
to the affected Securityholders, the resigning
Debenture Trustee may petition any court of competent
jurisdiction for the appointment of a successor
trustee, or any Securityholder who has been a bona
fide holder of a Security for at least six months
may, subject to the provisions of Section 5.09, on
behalf of him- self and all others similarly
situated, petition
47
<PAGE>
any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint
a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Debenture Trustee shall fail to comply
with the provisions of Section 6.08 after
written request therefor by the Corporation
or by any Securityholder who has been a bona
fide holder of a Security or Securities for
at least six months, or
(2) the Debenture Trustee shall cease to be
eligible in accordance with the provisions
of Section 6.09 and shall fail to resign
after written request therefor by the
Corporation or by any such Securityholder,
or
(3) the Debenture Trustee shall become incapable
of acting, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Debenture
Trustee or of its property shall be
appointed, or any public officer shall take
charge or control of the Debenture Trustee
or of its property or affairs for the
purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Corporation may remove
the Debenture Trustee and appoint a successor trustee
by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Debenture
Trustee so removed and one copy to the successor
trustee, or, subject to the provisions of Section
5.09, any Securityholder who has been a bona fide
holder of a Security for at least six months may, on
behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the
removal of the Debenture Trustee and the appointment
of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and
prescribe, remove the Debenture Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Securities at the time outstanding may
at any time remove the Debenture Trustee and nominate
a successor trustee, which shall be deemed appointed
as successor trustee unless with-
48
<PAGE>
in 10 days after such nomination the Corporation
objects thereto, or if no successor trustee shall
have been so appointed and shall have accepted
appointment within 30 days after such removal, in
which case the Debenture Trustee so removed or any
Securityholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.10
provided, may petition any court of competent
jurisdiction for an appointment of a successor
trustee.
(d) Any resignation or removal of the Debenture Trustee
and appointment of a successor trustee pursuant to
any of the provisions of this Section 6.10 shall
become effective upon acceptance of appointment by
the successor trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Debenture Trustee.
Any successor trustee appointed as provided in Section 6.10
shall execute, acknowledge and deliver to the Corporation and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Corporation or of the successor
trustee, the trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of Section 6.06, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring trustee thereunder. Upon
request of any such successor trustee, the Corporation shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.
No successor trustee shall accept appointment as provided in
this Section 6.11 unless at the time of such acceptance such successor trustee
shall be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
49
<PAGE>
Upon acceptance of appointment by a successor trustee as
provided in this Section 6.11, the Corporation shall mail notice of the
succession of such trustee hereunder to the holders of Securities at their
addresses as they shall appear on the Security register. If the Corporation
fails to mail such notice within 10 days after the acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
mailed at the expense of the Corporation.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Debenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Debenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Debenture Trustee, shall be the successor of
the Debenture Trustee hereunder without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
In case at the time such successor to the Debenture Trustee
shall succeed to the trusts created by this Indenture any Securities shall have
been authenticated but not delivered, any such successor to the Debenture
Trustee may adopt the certificate of authentication of any predecessor trustee,
and deliver such Securities so authenticated; and in case at that time any of
the Securities shall not have been authenticated, any successor to the Debenture
Trustee may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor trustee; and in all such cases such
certificates shall have the full force which the Securities or this Indenture
elsewhere provides that the certificate of the Debenture Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Debenture Trustee or authenticate Securities in the name of any
predecessor Debenture Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Debenture Trustee
as a Creditor.
The Debenture Trustee shall comply with Section 311(a) of the
Trust Indenture Act, excluding any creditor relationship described in Section
311(b) of the Trust Indenture Act. A Debenture Trustee who has resigned or been
removed shall be subject to Section 311(a) of the Trust Indenture Act to the
extent included therein.
50
<PAGE>
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by
the Debenture Trustee upon the request of the Corporation with power to act on
its behalf and subject to its direction in the authentication and delivery of
Securities issued upon exchange or transfer thereof as fully to all intents and
purposes as though any such Authenticating Agent had been expressly authorized
to authenticate and deliver Securities; provided, that the Debenture Trustee
shall have no liability to the Corporation for any acts or omissions of the
Authenticating Agent with respect to the authentication and delivery of
Securities. Any such Authenticating Agent shall at all times be a corporation
organized and doing business under the laws of the United States or of any state
or territory thereof or of the District of Colum- bia authorized under such laws
to act as Authenticating Agent, having a combined capital and surplus of at
least $5,000,000 and being subject to supervision or examination by federal,
state, territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually pursuant to law or the
requirements of such authority, then for the purposes of this Section 6.14 the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section 6.14 without the execution or filing of any paper or
any further act on the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Debenture Trustee and to the Corporation.
The Debenture Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
to the Corporation. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.14, the Debenture Trustee may, and upon the
request of the Corporation shall, promptly appoint a successor Authenticating
Agent eligible under this Section 6.14, shall give written notice of such
appointment to the Corporation and shall mail notice of such
51
<PAGE>
appointment to all Securityholders as the names and addresses of such holders
appear on the Security Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent herein.
The Corporation, as borrower, agrees to pay to any
Authenticating Agent from time to time reasonable compensation for its services.
Any Authenticating Agent shall have no responsibility or liability for any
action taken by it as such in accordance with the directions of the Debenture
Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action), the fact that at
the time of taking any such action the holders of such specified percentage have
joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders duly
called and held in accordance with the provisions of Article VIII, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of such Securityholders.
If the Corporation shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Corporation may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Securityholders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other action, but the Corporation shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the outstanding Securities
52
<PAGE>
shall be computed as of the record date; provided, however, that no such
authorization, agreement or consent by such Securityholders on the record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Securityholder or his agent or
proxy shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Debenture Trustee or in such manner as
shall be satisfactory to the Debenture Trustee. The ownership of Securities
shall be proved by the Security Register or by a certificate of the security
registrar for the Securities. The Debenture Trustee may require such additional
proof of any matter referred to in this Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in
the manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Corporation, the Debenture Trustee, any Authenticating Agent, any
paying agent, any transfer agent and any security registrar for the Securities
may deem the person in whose name such Security shall be registered upon the
Security Register to be, and may treat him as, the absolute owner of such
Security (whether or not such Security shall be overdue) for the purpose of
receiving payment of or on account of the principal of and premium, if any, and
(subject to Section 2.06) interest on such Security and for all other purposes;
and neither the Corporation nor the Debenture Trustee nor any Authenticating
Agent nor any paying agent nor any transfer agent nor any security registrar for
the Securities shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Security.
SECTION 7.04. Securities Owned by Corporation Deemed
Not Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Corporation or
any other obligor on the Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Corporation or any other obligor on the Securities shall be
53
<PAGE>
disregarded and deemed not to be outstanding for the purpose of any such
determination; provided that for the purposes of determining whether the
Debenture Trustee shall be protected in relying on any such direction, consent
or waiver, only Securities which a Responsible Officer of the Debenture Trustee
actually knows are so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as outstanding for the purposes
of this Section 7.04 if the pledgee shall establish to the satisfaction of the
Debenture Trustee the pledgee's right to vote such Securities and that the
pledgee is not the Corporation or any such other obligor or Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Corporation or any such other obligor. In the case of a dispute
as to such right, any decision by the Debenture Trustee taken upon the advice of
counsel shall be full protection to the Debenture Trustee.
SECTION 7.05. Revocation of Consents; Future Holders
Bound.
At any time prior to (but not after) the evidencing to the
Debenture Trustee, as provided in Section 7.01, of the taking of any action by
the holders of the percentage in aggregate principal amount of the Securities
specified in this Indenture in connection with such action, any holder of a
Security (or any Security issued in whole or in part in exchange or substitution
therefor), subject to Section 7.01, the serial number of which is shown by the
evidence to be included in the group of Securities the holders of which have
consented to such action may, by filing written notice with the Debenture
Trustee at its principal office and upon proof of holding as provided in Section
7.02, revoke such action so far as concerns such Security (or so far as concerns
the principal amount represented by any exchanged or substituted Security).
Except as aforesaid any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security, and of any Security issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Security or any Security issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article VIII for any of the
following purposes:
54
<PAGE>
(a) to give any notice to the Corporation or to the
Debenture Trustee, or to give any directions to the
Debenture Trustee, or to consent to the waiving of
any default hereunder and its consequences, or to
take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of
Article V;
(b) to remove the Debenture Trustee and nominate a
successor trustee pursuant to the provisions of
Article VI;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate
principal amount of such Securities under any other
provision of this Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Debenture Trustee.
The Debenture Trustee may at any time call a meeting of
Securityholders to take any action specified in Section 8.01, to be held at such
time and at such place in New York, New York, as the Debenture Trustee shall
determine. Notice of every meeting of the Securityholders, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be mailed to holders of Securities at their
addresses as they shall appear on the Securities Register. Such notice shall be
mailed not less than 20 nor more than 180 days prior to the date fixed for the
meeting.
SECTION 8.03. Call of Meetings by Corporation or
Securityholders.
In case at any time the Corporation, pursuant to a resolution
of the Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities then outstanding, shall have requested the Debenture
Trustee to call a meeting of Securityholders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Debenture Trustee shall not have mailed the notice of such meeting within 20
days after receipt of such request, then the Corporation or such Securityholders
may determine the time and the place in New York, New York for such meeting and
may call such meeting to take any action authorized in Section 8.01, by mailing
notice thereof as provided in Section 8.02.
55
<PAGE>
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a
Person shall (a) be a holder of one or more Securities or (b) a Person appointed
by an instrument in writing as proxy by a holder of one or more Securities. The
only Persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Debenture Trustee and its counsel and any
representatives of the Corporation and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Debenture Trustee may make such reasonable regulations as it may deem advisable
for any meeting of Securityholders, in regard to proof of the holding of
Securities and of the appointment of proxies, and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Debenture Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the meeting shall have been
called by the Corporation or by Securityholders as provided in Section 8.03, in
which case the Corporation or the Securityholders calling the meeting, as the
case may be, shall in like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be elected by majority
vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each
holder of Securities or proxy therefor shall be entitled to one vote for each
$1,000 principal amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not outstanding and ruled by the chairman of the meeting
to be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Securities held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Securityholders. Any meeting of Securityholders duly called pursuant to the
provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, and the meeting may be held as so adjourned without
further notice.
56
<PAGE>
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of
holders of Securities shall be by written ballots on which shall be subscribed
the signatures of such holders or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record in duplicate of
the proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Corporation and
the other to the Debenture Trustee to be preserved by the Debenture Trustee, the
latter to have attached thereto the ballots voted at the meeting. The holders of
the Series A Capital Securities and the Series B Capital Securities shall vote
for all purposes as a single class.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Corporation and the Debenture Trustee may from time to
time and at any time amend the Indenture, without the consent of the
Securityholders, for one or more of the following purposes:
(a) to evidence the succession of another Person to the
Corporation, or successive successions, and the
assumption by the successor Person of the covenants,
agreements and obligations of the Corporation
pursuant to Article X hereof;
(b) to add to the covenants of the Corporation such
further covenants, restrictions or conditions for
57
<PAGE>
the protection of the Securityholders as the Board of
Directors and the Debenture Trustee shall consider to
be for the protection of the Securityholders, and to
make the occurrence, or the occurrence and
continuance, of a default in any of such additional
covenants, restrictions or conditions a default or an
Event of Default permitting the enforcement of all or
any of the remedies provided in this Indenture as
herein set forth; provided, however, that in respect
of any such additional covenant, restriction or
condition such amendment may provide for a particular
period of grace after default (which period may be
shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate
enforcement upon such default or may limit the
remedies available to the Debenture Trustee upon such
default;
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities
registrable as to principal only) and to provide for
exchangeability of such Securities with the
Securities issued hereunder in fully registered form
and to make all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental
indenture which may be defective or inconsistent with
any other provision contained herein or in any
supplemental indenture, or to make such other
provisions in regard to matters or questions arising
under this Indenture; provided that any such action
shall not materially adversely affect the interests
of the holders of the Securities;
(e) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Securities;
(f) to make provision for transfer procedures, certif-
ication, book-entry provisions, the form of re-
stricted securities legends, if any, to be placed on
Securities, and all other matters required pursuant
to Section 2.07 or otherwise necessary, desirable or
appropriate in connection with the issuance of
Securities to holders of Capital Securities in the
event of a distribution of Securities by the Trust
following a Dissolution Event; provided that any such
action shall not materially
58
<PAGE>
adversely affect the interests of the holders of the
Securities;
(g) to qualify or maintain qualification of this In-
denture under the Trust Indenture Act; or
(h) to make any change that does not adversely affect the
rights of any Securityholder in any material respect.
The Debenture Trustee is hereby authorized to join with the
Corporation in the execution of any supplemental indenture to effect such
amendment, to make any further appropriate agreements and stipulations which may
be therein contained and to accept the conveyance, transfer and assignment of
any property thereunder, but the Debenture Trustee shall not be obligated to,
but may in its discretion, enter into any such supplemental indenture which
affects the Debenture Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of
this Section 9.01 may be executed by the Corporation and the Debenture Trustee
without the consent of the holders of any of the Securities at the time
outstanding, notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of
the holders of a majority in aggregate principal amount of the Securities at the
time outstanding, the Corporation, when authorized by a Board Resolution, and
the Debenture Trustee may from time to time and at any time amend the Indenture
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the holders of the Securities; provided, however, that no
such amendment shall, without the consent of the holders of each Security then
outstanding and affected thereby (i) change the Maturity Date of any Security,
or reduce the rate or extend the time of payment of interest thereon (except as
contemplated by Article XVI), or reduce the principal amount thereof, or reduce
any amount payable on prepayment thereof, or make the principal thereof or any
interest or premium thereon payable in any coin or currency other than that
provided in the Securities, or impair or affect the right of any Securityholder
to institute suit for payment thereof, or (ii) reduce the aforesaid percentage
of Securities, the holders of which are required to consent to any such
amendment to the Indenture, provided, however, that if the Securities are held
by the Trust, such amendment shall not be effective until the holders of a
majority in liquidation amount of Trust Securities shall have consented to such
amendment; provided, further, that if the
59
<PAGE>
consent of the holder of each outstanding Security is required, such amendment
shall not be effective until each holder of the Trust Securities shall have
consented to such amendment.
Upon the request of the Corporation accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Debenture Trustee of evidence of the
consent of Securityholders as aforesaid, the Debenture Trustee shall join with
the Corporation in the execution of such supplemental indenture unless such
supplemental indenture affects the Debenture Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Debenture
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
Promptly after the execution by the Corporation and the
Debenture Trustee of any supplemental indenture pursuant to the provisions of
this Section, the Debenture Trustee shall transmit by mail, first class postage
prepaid, a notice, prepared by the Corporation, setting forth in general terms
the substance of such supplemental indenture, to the Securityholders as their
names and addresses appear upon the Security Register. Any failure of the
Debenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
It shall not be necessary for the consent of the
Securityholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions
of this Article IX shall comply with the Trust Indenture Act. Upon the execution
of any supplemental indenture pursuant to the provisions of this Article IX,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Debenture Trustee, the Corporation
and the holders of Securities shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
60
<PAGE>
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the execution of
any supplemental indenture affecting such series pursuant to the provisions of
this Article IX may bear a notation in form approved by the Debenture Trustee as
to any matter provided for in such supplemental indenture. If the Corporation or
the Debenture Trustee shall so determine, new Securities so modified as to
conform, in the opinion of the Debenture Trustee and the Board of Directors, to
any modification of this Indenture contained in any such supplemental indenture
may be prepared and executed by the Corporation, authenticated by the Debenture
Trustee or the Authenticating Agent and delivered in exchange for the Securities
then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished to Debenture
Trustee.
The Debenture Trustee, subject to the provisions of Sections
6.01 and 6.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article IX.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Corporation May Consolidate, etc., on
Certain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the Corporation with or
into any other Person (whether or not affiliated with the Corporation, as the
case may be), or successive consolidations or mergers in which the Corporation
or its successor or successors, as the case may be, shall be a party or parties,
or shall prevent any sale, conveyance, transfer or lease of the property of the
Corporation, or its successor or successors as the case may be, as an entirety,
or substantially as an entirety, to any other Person (whether or not affiliated
with the Corporation, or its successor or successors, as the case may be)
authorized to acquire and operate the same; provided, that (a) the Corporation
is the surviving Person, or the Person formed by or surviving any such
consolidation or merger (if other than the Corporation) or to which such sale,
conveyance, transfer or lease of property is made is a Person organized and
existing under the laws of the United States or any State thereof or the
District of Columbia, and (b) upon any such consolidation, merger, sale,
conveyance, transfer or lease, the due and punctual payment of
61
<PAGE>
the principal of (and premium, if any) and interest on the Securities according
to their tenor and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be kept or performed by the
Corporation shall be expressly assumed, by supplemental indenture (which shall
conform to the provisions of the Trust Indenture Act as then in effect)
satisfactory in form to the Debenture Trustee executed and delivered to the
Debenture Trustee by the Person formed by such consolidation, or into which the
Corporation shall have been merged, or by the Person which shall have acquired
such property, as the case may be, and (c) after giving effect to such
consolidation, merger, sale, conveyance, transfer or lease, no Default or Event
of Default shall have occurred and be continuing.
SECTION 10.02. Successor Corporation to be Substituted
for Corporation.
In case of any such consolidation, merger, conveyance or
transfer and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Debenture Trustee and satisfactory in
form to the Debenture Trustee, of the obligation of due and punctual payment of
the principal of (and premium, if any, on) and interest on all of the Securities
and the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Corporation,
such successor Person shall succeed to and be substituted for the Corporation,
with the same effect as if it had been named herein as the party of the first
part, and the Corporation thereupon shall be relieved of any further liability
or obligation hereunder or upon the Securities. Such successor Person thereupon
may cause to be signed, and may issue either in its own name or in the name of
Eagle Financial Corp., any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Corporation and delivered to the
Debenture Trustee or the Authenticating Agent; and, upon the order of such
successor Person instead of the Corporation and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Debenture Trustee
or the Authenticating Agent shall authenticate and deliver any Securities which
previously shall have been signed and delivered by the officers of the
Corporation to the Debenture Trustee or the Authenticating Agent for
authentication, and any Securities which such successor Person thereafter shall
cause to be signed and delivered to the Debenture Trustee or the Authenticating
Agent for that purpose. All the Securities so issued shall in all respects have
the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Indentures had been issued at the date of the execution
hereof.
SECTION 10.03. Opinion of Counsel to be Given Debenture
Trustee.
62
<PAGE>
The Debenture Trustee, subject to the provisions of Sections
6.01 and 6.02, may receive an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or lease, and any assumption,
permitted or required by the terms of this Article X complies with the
provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Corporation shall deliver to the Debenture
Trustee for cancellation all Securities theretofore authenticated (other than
any Securities which shall have been destroyed, lost or stolen and which shall
have been replaced as provided in Section 2.08) and not theretofore cancelled,
or (b) all the Securities not theretofore cancelled or delivered to the
Debenture Trustee for cancellation shall have become due and payable, or are by
their terms to become due and payable within one year or are to be called for
prepayment within one year under arrangements satisfactory to the Debenture
Trustee for the giving of notice of prepayment, and the Corporation shall
deposit with the Debenture Trustee, in trust, funds sufficient to pay on the
Maturity Date or upon prepayment all of the Securities (other than any
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced as provided in Section 2.08) not theretofore cancelled or
delivered to the Debenture Trustee for cancellation, including principal (and
premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, due or to become due to the
Maturity Date or prepayment date, as the case may be, but excluding, however,
the amount of any moneys for the payment of principal of (or premium, if any) or
interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on the Securities (1) theretofore repaid to the
Corporation in accordance with the provisions of Section 11.04, or (2) paid to
any State or to the District of Columbia pursuant to its unclaimed property or
similar laws, and if in either case the Corporation shall also pay or cause to
be paid all other sums payable hereunder by the Corporation, then this Indenture
shall cease to be of further effect except for the provisions of Sections 2.02,
2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof, which shall survive
until such Securities shall mature and be paid. Thereafter, Sections 6.06, 6.10
and 11.04 shall survive, and the Debenture Trustee, on demand of the Corporation
accompanied by any Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Corporation, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Corporation,
however, hereby
63
<PAGE>
agrees to reimburse the Debenture Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Debenture Trustee in connection with
this Indenture or the Securities.
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by De-
benture Trustee.
Subject to the provisions of Section 11.04, all moneys and
U.S. Government Obligations deposited with the Debenture Trustee pursuant to
Sections 11.01 or 11.05 shall be held in trust and applied by it to the payment,
either directly or through any paying agent (including the Corporation if acting
as its own paying agent), to the holders of the particular Securities for the
payment of which such moneys or U.S. Government Obligations have been deposited
with the Debenture Trustee, of all sums due and to become due thereon for
principal, premium, if any, and interest.
The Corporation shall pay and indemnify the Debenture Trustee
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 11.05 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all
moneys then held by any paying agent of the Securities (other than the Debenture
Trustee) shall, upon written demand of the Corporation, be repaid to it or paid
to the Debenture Trustee, and thereupon such paying agent shall be released from
all further liability with respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Debenture Trustee or
any paying agent for payment of the principal of (or premium, if any) or
interest on Securities and not applied but remaining unclaimed by the holders of
Securities for two years after the date upon which the principal of (or premium,
if any) or interest (including Compounded Interest and Additional Sums, if any)
or Liquidated Damages, if any, on such Securities, as the case may be, shall
have become due and payable, shall be repaid to the Corporation by the Debenture
Trustee or such paying agent on written demand; and the holder of any of the
Securities shall thereafter look only to the Corporation for any payment which
such holder may be entitled to collect and all liability of the
64
<PAGE>
Debenture Trustee or such paying agent with respect to such moneys shall
thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations.
The Corporation shall be deemed to have been Discharged (as
defined below) from its obligations with respect to the Securities on the 91st
day after the applicable conditions set forth below have been satisfied:
(1) the Corporation shall have deposited or caused to be
deposited irrevocably with the Debenture Trustee or
the Defeasance Agent (as defined below) as trust
funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the holders
of the Securities (i) money in an amount, or (ii)
U.S. Government Obligations which through the payment
of interest and principal in respect thereof in
accordance with their terms will provide, not later
than one day before the due date of any payment,
money in an amount, or (iii) a combination of (i) and
(ii), sufficient, in the opinion (with respect to
(ii) and (iii)) of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Debenture
Trustee and the Defeasance Agent, if any, to pay and
discharge each installment of principal of and
interest and premium, if any, on the outstanding
Securities on the dates such installments of
principal, interest or premium are due;
(2) if the Securities are then listed on any national
securities exchange, the Corporation shall have
delivered to the Debenture Trustee and the Defea-
sance Agent, if any, an Opinion of Counsel to the
effect that the exercise of the option under this
Section 11.05 would not cause such Securities to be
delisted from such exchange;
(3) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on
the date of such deposit; and
(4) the Corporation shall have delivered to the Debenture
Trustee and the Defeasance Agent, if any, an Opinion
of Counsel to the effect that holders of the
Securities will not recognize income, gain or loss
for United States federal income tax purposes as a
result of the exercise of the option under this
Section 11.05 and will be subject to United
65
<PAGE>
States federal income tax on the same amount and in
the same manner and at the same times as would have
been the case if such option had not been exercised.
"Discharged" means that the Corporation shall be deemed to
have paid and discharged the entire indebtedness represented by, and obligations
under, the Securities and to have satisfied all the obligations under this
Indenture relating to the Securities (and the Debenture Trustee, at the expense
of the Corporation, shall execute proper instruments acknowledging the same),
except (A) the rights of holders of Securities to receive, from the trust fund
described in clause (1) above, payment of the principal of and the interest and
premium, if any, on the Securities when such payments are due; (B) the
Corporation's obligations with respect to the Securities under Sections 2.07,
2.08, 5.02 and 11.04; and (C) the rights, powers, trusts, duties and immunities
of the Debenture Trustee hereunder.
"Defeasance Agent" means another financial institution which
is eligible to act as Debenture Trustee hereunder and which assumes all of the
obligations of the Debenture Trustee necessary to enable the Debenture Trustee
to act hereunder. In the event such a Defeasance Agent is appointed pursuant to
this Section, the following conditions shall apply:
(1) The Debenture Trustee shall have approval rights over
the document appointing such Defeasance Agent and the
document setting forth such Defeasance Agent's rights
and responsibilities;
(2) The Defeasance Agent shall provide verification to
the Debenture Trustee acknowledging receipt of
sufficient money and/or U. S. Government Obliga-
tions to meet the applicable conditions set forth in
this Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corpo-
rate Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest on any Security, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Corporation in this Indenture, or in any Security, or because
of the creation of any indebtedness represented thereby, shall be
66
<PAGE>
had against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Corporation or of any successor Person to the
Corporation, either directly or through the Corporation or any successor Person
to the Corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in
this Indenture contained by the Corporation shall bind its successors and
assigns whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Corporation shall and may be done and performed with like force
and effect by the like board, committee or officer of any corporation that shall
at the time be the lawful sole successor of the Corporation.
SECTION 13.03. Surrender of Corporation Powers.
The Corporation by instrument in writing executed by authority
of 2/3 (two-thirds) of its Board of Directors and delivered to the Debenture
Trustee may surrender any of the powers reserved to the Corporation, and
thereupon such power so surrendered shall terminate both as to the Corporation,
as the case may be, and as to any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Debenture Trustee or by
the holders of Securities on the Corporation may be given or served by being
deposited postage prepaid by first class mail, registered or certified mail,
overnight courier service or conformed telecopy addressed (until another address
is filed by the Corporation with the Debenture Trustee for the purpose) to the
Corporation at 222 Main Street, Bristol, Connecticut, 06010, Attention: Vice
President, Secretary and Chief
67
<PAGE>
Financial Officer. Any notice, direction, request or demand by any
Securityholder to or upon the Debenture Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
office of the Debenture Trustee, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration
Department (unless another address is provided by the Debenture Trustee to the
Corporation for such purpose). Any notice or communication to a Securityholder
shall be mailed by first class mail to his or her address shown on the register
kept by the security registrar for the Securities.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be governed by and construed in accordance with the laws of said State,
without regard to conflicts of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions
Precedent.
Upon any application or demand by the Corporation to the
Debenture Trustee to take any action under any of the provisions of this
Indenture, the Corporation shall furnish to the Debenture Trustee an Officers'
Certificate stating that in the opinion of the signers all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Debenture Trustee with respect to compliance with a condition
or covenant provided for in this Indenture (except certificates delivered
pursuant to Section 3.05) shall include (1) a statement that the Person making
such certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
68
<PAGE>
SECTION 13.07. Business Days.
In any case where the date of payment of principal of (or
premium, if any) or interest on the Securities will not be a Business Day, the
payment of such principal of (or premium, if any) or interest on the Securities
need not be made on such date but may be made on the next succeeding Business
Day, with the same force and effect as if made on the date of payment and no
interest shall accrue for the period from and after such date, except that if
such next succeeding Business Day falls in the next succeeding calendar year,
then such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to 318,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Securities, but this Indenture and the Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
SECTION 13.12. Assignment.
The Corporation will have the right at all times to assign any
of its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Corporation, provided that, in the event
of any such assignment,
69
<PAGE>
the Corporation will remain liable for all such obligations. Subject to the
foregoing, the Indenture is binding upon and inures to the benefit of the
parties thereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties thereto.
SECTION 13.13. Acknowledgement of Rights.
The Corporation acknowledges that, with respect to any
Securities held by Eagle Financial Capital Trust or a trustee of such trust, if
the Property Trustee of such Trust fails to enforce its rights under this
Indenture as the holder of the Securities held as the assets of Eagle Financial
Capital Trust, any holder of Capital Securities may institute legal proceedings
directly against the Corporation to enforce such Property Trustee's rights under
this Indenture without first instituting any legal proceedings against such
Property Trustee or any other person or entity. Notwithstanding the foregoing,
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Corporation to pay principal of (or premium,
if any) or interest on the Securities when due, the Corporation acknowledges
that a holder of Capital Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of (or premium, if any)
or interest on the Securities having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder on or after the
respective due date specified in the Securities.
ARTICLE XIV
PREPAYMENT OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Prepayment.
If, prior to the Initial Optional Prepayment Date, a Special
Event has occurred and is continuing, then notwithstanding Section 14.02(a) but
subject to Section 14.02(c), the Corporation shall have the right, at any time
within 90 days following the occurrence of such Special Event, upon (i) not less
than 45 days written notice to the Debenture Trustee and (ii) not less than 30
days nor more than 60 days written notice to the Securityholders, to prepay the
Securities, in whole (but not in part), at the Special Event Prepayment Price.
Following a Special Event, the Corporation shall take such action as is
necessary to promptly determine the Special Event Prepayment Price, including
without limitation the appointment by the Corporation of a Quotation Agent. The
Special Event Prepayment Price shall be paid prior to 12:00 noon, New York, New
York time, on the date of such prepayment or such earlier time as the
Corporation determines, provided that the Corporation shall
70
<PAGE>
deposit with the Debenture Trustee an amount sufficient to pay the Special Event
Prepayment Price by 10:00 a.m., New York time, on the date such Special Event
Prepayment Price is to be paid.
SECTION 14.02. Optional Prepayment by Corporation.
(a) Subject to the provisions of this Article XIV, the
Corporation shall have the right to prepay the Securities, in whole or in part,
at any time on or after the Initial Optional Prepayment Date, upon not less than
30 days and not more than 60 days' notice, at the prepayment prices set forth
below plus, in each case, accrued and unpaid interest thereon (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
to the applicable date of prepayment (the "Optional Prepayment Price") if
prepaid during the 12-month period beginning April 1 of the years indicated
below.
Percentage
Year of Principal
2007 105.0%
2008 104.5%
2009 104.0%
2010 103.5%
2011 103.0%
2012 102.5%
2013 102.0%
2014 101.5%
2015 101.0%
2016 100.5%
2017 and thereafter 100.0%
-----
If the Securities are only partially prepaid pursuant to this
Section 14.02, the Securities to be prepaid shall be selected on a pro rata
basis not more than 60 days prior to the date fixed for prepayment from the
outstanding Securities not previously called for prepayment, provided, however,
that with respect to Securityholders that would be required to hold Securities
with an aggregate principal amount of less than $100,000 but more than an
aggregate principal amount of zero as a result of such pro rata prepayment, the
Corporation shall prepay Securities of each such Securityholder so that after
such prepayment such Securityholder shall hold Securities either with an
aggregate principal amount of at least $100,000 or such Securityholder no longer
holds any Securities, and shall use such method (includ- ing, without
limitation, by lot) as the Corporation shall deem fair and appropriate,
provided, further, that any such proration may be made on the basis of the
aggregate principal amount of Securities held by each Securityholder and may be
made by making such adjustments as the Corporation deems fair and appropriate in
order that only Securities in denominations of $1,000 or integral multiples
thereof shall be prepaid. The Optional Prepayment
71
<PAGE>
Price shall be paid prior to 12:00 noon, New York time, on the date of such
prepayment or at such earlier time as the Corporation determines, provided that
the Corporation shall deposit with the Debenture Trustee an amount sufficient to
pay the Optional Prepayment Price by 10:00 a.m., New York time, on the date such
Optional Prepayment Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02(a),
upon the entry of an order for dissolution of the Trust by a court of competent
jurisdiction, the Securities thereafter will be subject to optional prepayment,
in whole only, but not in part, on or after April 1, 2007, at the optional
prepayment prices set forth in Section 14.02 and otherwise in accordance with
this Article XIV.
(c) Any prepayment of Securities pursuant to Section 14.01 or
Section 14.02 shall be subject to the Corporation obtaining the prior approval
of the Federal Reserve, if such approval is then required under applicable
capital guidelines or policies of the Federal Reserve, and any other required
regulatory approvals.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking
fund.
SECTION 14.04. Notice of Prepayment; Selection of Secu-
rities.
In case the Corporation shall desire to exercise the right to
prepay all, or, as the case may be, any part of the Securities in accordance
with their terms, it shall fix a date for prepayment and shall mail a notice of
such prepayment at least 30 and not more than 60 days prior to the date fixed
for prepayment to the holders of Securities to be so prepaid as a whole or in
part at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security designated for
prepayment as a whole or in part shall not affect the validity of the
proceedings for the prepayment of any other Security.
Each such notice of prepayment shall specify the CUSIP number
of the Securities to be prepaid, the date fixed for prepayment, the prepayment
price at which the Securities are to be prepaid (or the method by which such
prepayment price is to be calculated), the place or places of payment that
payment will be made upon presentation and surrender of the Securities, that
72
<PAGE>
interest accrued to the date fixed for prepayment will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be prepaid will cease to accrue. If less than all the Securities are
to be prepaid, the notice of prepayment shall specify the numbers of the
Securities to be prepaid. In case any Security is to be prepaid in part only,
the notice of prepayment shall state the portion of the principal amount thereof
to be prepaid and shall state that on and after the date fixed for prepayment,
upon surrender of such Security, a new Security or Securities in principal
amount equal to the portion thereof that has not been prepaid will be issued.
By 10:00 a.m. New York time on the prepayment date specified
in the notice of prepayment given as provided in this Section, the Corporation
will deposit with the Debenture Trustee or with one or more paying agents an
amount of money sufficient to prepay on the prepayment date all the Securities
so called for prepayment at the appropriate Prepayment Price, together with
accrued interest to the date fixed for prepayment.
The Corporation will give the Debenture Trustee notice not
less than 45 days prior to the prepayment date as to the aggregate principal
amount of Securities to be prepaid and the Debenture Trustee shall select, in
such manner as in its sole discretion it shall deem appropriate and fair, the
Securities or portions thereof (in integral multiples of $1,000, except as
otherwise set forth in the applicable form of Security) to be prepaid.
SECTION 14.05. Payment of Securities Called for Prepay-
ment.
If notice of prepayment has been given as provided in Section
14.04, the Securities or portions of Securities with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable Prepayment Price, together
with interest accrued to the date fixed for prepayment (subject to the rights of
holders of Securities at the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the prepayment
date), and on and after said date (unless the Corporation shall default in the
payment of such Securities at the Prepayment Price, together with interest
accrued to said date) interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on the Securities or portions of
Securities so called for prepayment shall cease to accrue. On presentation and
surrender of such Securities at a place of payment specified in said notice, the
said Securities or the specified portions thereof shall be paid and prepaid by
the Corporation at the applicable Prepayment Price, together with interest
(including Compounded Interest and
73
<PAGE>
Additional Sums, if any) and Liquidated Damages, if any, accrued thereon to the
date fixed for prepayment (subject to the rights of holders of Securities on the
close of business on a regular record date in respect of an Interest Payment
Date occurring on or prior to the prepayment date).
Upon presentation of any Security prepaid in part only, the
Corporation shall execute and the Debenture Trustee shall authenticate and make
available for delivery to the holder thereof, at the expense of the Corporation,
a new Security or Securities of authorized denominations, in principal amount
equal to the portion of the Security so presented that has not been prepaid.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Corporation covenants and agrees, and each holder of
Securities issued hereunder likewise covenants and agrees, that the Securities
shall be issued subject to the provisions of this Article XV; and each holder of
a Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Corporation of the principal of, premium,
if any, and interest (including Compounded Interest and Additional Sums, if any)
and Liquidated Damages, if any, on all Securities issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and junior in
right of payment to all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence
of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Corporation in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case, no
payment shall be made by the Corporation with respect to the principal
(including prepayment payments) of (or premium, if any) or interest on the
Securities (including Compounded Interest and Additional Sums (if any) and
Liquidated Damages, if any, or any other amounts which may be due on the
Securities pursuant to the terms hereof or otherwise).
74
<PAGE>
In the event of the acceleration of the maturity of the
Securities, then no payment shall be made by the Corporation with respect to the
principal (including prepayment payments) of (or premium, if any) or interest on
the Securities (including Compounded Interest and Additional Sums (if any) and
Liquidated Damages, if any, or any other amounts which may be due on the
Securities pursuant to the terms hereof or otherwise) until the holders of all
Senior Indebtedness outstanding at the time of such acceleration shall receive
payment in full of such Senior Indebtedness (including any amounts due upon
acceleration).
In the event that, notwithstanding the foregoing, any payment
shall be received by the Debenture Trustee when such payment is prohibited by
the preceding paragraphs of this Section 15.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Debenture Trustee in writing within 90
days of such payment of the amounts then due and owing on such Senior
Indebtedness, and only the amounts specified in such notice to the Debenture
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Corporation or distribution of assets
of the Corporation of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution, winding-up, liquidation or
reorganization of the Corporation, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all Senior
Indebtedness of the Corporation shall first be paid in full, or payment thereof
provided for in money in accordance with its terms, before any payment is made
by the Corporation on account of the principal of (or premium, if any) or
interest on the Securities (including Compounded Interest and Additional Sums
(if any) and Liquidated Damages, if any, or any other amounts which may be due
on the Securities pursuant to the terms hereof or otherwise); and upon any such
dissolution or winding-up or liquidation or reorganization, any payment by the
Corporation, or distribution of assets of the Corporation of any kind or
character, whether in cash, property or securities, which the Securityholders or
the Debenture Trustee would be entitled to receive from the Corporation, except
for the provisions of this Article XV, shall be paid by the Corporation or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Securityholders or by the
Debenture Trustee under the Indenture if received by them or it, directly
75
<PAGE>
to the holders of Senior Indebtedness of the Corporation (pro rata to such
holders on the basis of the respective amounts of Senior Indebtedness held by
such holders, as calculated by the Corporation) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay all
such Senior Indebtedness in full, in money or money's worth, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Debenture Trustee.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Corporation of any kind or character prohibited
by the foregoing, whether in cash, property or securities, shall be received by
the Debenture Trustee before all Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Corporation, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all such Senior Indebtedness in
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Corporation as
reorganized or readjusted, or securities of the Corporation or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article
XV with respect to the Securities to the payment of Senior Indebtedness that may
at the time be outstanding, provided that (i) such Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such reorganization
or readjustment, and (ii) the rights of the holders of such Senior Indebtedness
are not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Corporation with, or the merger of the
Corporation into, another Person or the liquidation or dissolution of the
Corporation following the sale, conveyance, transfer or lease of its property as
an entirety, or substantially as an entirety, to another Person upon the terms
and conditions provided for in Article X of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 15.03 if such other
76
<PAGE>
Person shall, as a part of such consolidation, merger, sale, conveyance,
transfer or lease, comply with the conditions stated in Article X of this
Indenture. Nothing in Section 15.02 or in this Section 15.03 shall apply to
claims of, or payments to, the Debenture Trustee under or pursuant to Section
6.06 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Securityholders shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Corporation, as the case may be, applicable to
such Senior Indebtedness until the principal of (and premium, if any) and
interest on the Securities shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders or
the Debenture Trustee would be entitled except for the provisions of this
Article XV, and no payment over pursuant to the provisions of this Article XV to
or for the benefit of the holders of such Senior Indebtedness by Securityholders
or the Debenture Trustee, shall, as between the Corporation, its creditors other
than holders of Senior Indebtedness of the Corporation, and the holders of the
Securities, be deemed to be a payment by the Corporation to or on account of
such Senior Indebtedness. It is understood that the provisions of this Article
XV are and are intended solely for the purposes of defining the relative rights
of the holders of the Securities, on the one hand, and the holders of such
Senior Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Corporation, its creditors other than the holders of Senior Indebtedness of the
Corporation, and the holders of the Securities, the obligation of the
Corporation, which is absolute and unconditional, to pay to the holders of the
Securities the principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Securities and creditors of the Corporation, as the
case may be, other than the holders of Senior Indebtedness of the Corporation,
as the case may be, nor shall anything herein or therein prevent the Debenture
Trustee or the holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under the Indenture, subject to the
rights, if any, under this Article XV of the holders of such Senior Indebtedness
in respect of cash, property or securities of
77
<PAGE>
the Corporation, as the case may be, received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Corporation
referred to in this Article XV, the Debenture Trustee, subject to the provisions
of Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Debenture Trustee or to the
Securityholders, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Corporation, as the case may be, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XV.
SECTION 15.05. Debenture Trustee to Effectuate Subordi-
nation.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Debenture Trustee on such Securityholder's
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Debenture Trustee
such Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Corporation.
The Corporation shall give prompt written notice to a
Responsible Officer of the Debenture Trustee of any fact known to the
Corporation that would prohibit the making of any payment of monies to or by the
Debenture Trustee in respect of the Securities pursuant to the provisions of
this Article XV. Notwithstanding the provisions of this Article XV or any other
provision of this Indenture, the Debenture Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of monies to or by the Debenture Trustee in respect of the Securities
pursuant to the provisions of this Article XV, unless and until a Responsible
Officer of the Debenture Trustee shall have received written notice thereof from
the Corporation or a holder or holders of Senior Indebtedness or from any
trustee therefor; and before the receipt of any such written notice, the
Debenture Trustee, subject to the provisions of Article VI of this Indenture,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Debenture Trustee shall not have received the notice
provided for in this Section 15.06 at least two Business Days prior to the date
upon which by the terms hereof any money may
78
<PAGE>
become payable for any purpose (including, without limitation, the payment of
the principal of (or premium, if any) or interest (including Compounded Interest
and Additional Sums, if any) and Liquidated Damages, if any, on any Security),
then, anything herein contained to the contrary notwithstanding, the Debenture
Trustee shall have full power and authority to receive such money and to apply
the same to the purposes for which they were received, and shall not be affected
by any notice to the contrary that may be received by it within two Business
Days prior to such date.
The Debenture Trustee, subject to the provisions of Article VI
of this Indenture, shall be entitled to conclusively rely on a written notice
delivered to it by a Person representing himself to be a holder of Senior
Indebtedness of the Corporation (or a trustee on behalf of such holder), as the
case may be, to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee on behalf of any such holder or holders. In the
event that the Debenture Trustee determines in good faith that further evidence
is required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article XV, the Debenture Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Debenture Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XV, and, if such
evidence is not furnished, the Debenture Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
Upon any payment or distribution of assets of the Corporation
referred to in this Article XV, the Debenture Trustee and the Securityholders
shall be entitled to rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding-up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered to the
Debenture Trustee or to the Securityholders, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
Senior Indebtedness and other indebtedness of the Corporation, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XV.
79
<PAGE>
SECTION 15.07. Rights of the Debenture Trustee; Holders
of Senior Indebtedness.
The Debenture Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Debenture
Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Corporation, the Debenture Trustee undertakes to perform or to observe only such
of its covenants and obligations as are specifically set forth in this Article
XV, and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Debenture
Trustee. The Debenture Trustee shall not be deemed to owe any fiduciary duty to
the holders of such Senior Indebtedness and, subject to the provisions of
Article VI of this Indenture, the Debenture Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to
Securityholders, the Corporation or any other Person money or assets to which
any holder of such Senior Indebtedness shall be entitled by virtue of this
Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Debenture Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Corporation to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Corporation, as the case may be, or by any act or failure
to act, in good faith, by any such holder, or by any noncompliance by the
Corporation, as the case may be, with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Corporation may, at any
time and from time to time, without the consent of or notice to the Debenture
Trustee or the Securityholders, without incurring responsibility to the
Securityholders and without impairing or releasing the subordination provided in
this Article XV or the obligations hereunder of the holders of the Securities to
the holders of such Senior Indebtedness, do any one or more of the following:
(i) change the manner, place or terms of payment or extend the time of payment
of, or renew or alter, such Senior Indebtedness, or
80
<PAGE>
otherwise amend or supplement in any manner such Senior Indebtedness or any
instrument evidencing the same or any agreement under which such Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior Indebtedness;
(iii) release any Person liable in any manner for the collection of such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Corporation, as the case may be, and any other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing,
the Corporation shall have the right, at any time and from time to time during
the term of the Securities, to defer payments of interest by extending the
interest payment period of such Securities for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such extension period (the "Extended Interest Payment Period"), during
which Extended Interest Payment Period no interest shall be due and payable;
provided that no Extended Interest Payment Period shall end on a date other than
an Interest Payment Date or extend beyond the Maturity Date. To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this Section
16.01, will bear interest thereon at the Coupon Rate compounded semi-annually
for each semi-annual period of the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended Interest Payment Period, the Corporation
shall pay all interest accrued and unpaid on the Securities, including any
Additional Sums and Compounded Interest (together, "Deferred Interest") that
shall be payable to the holders of the Securities in whose names the Securities
are registered in the Security Register on the first record date preceding the
end of the Extended Interest Payment Period. Before the termination of any
Extended Interest Payment Period, the Corporation may further defer payments of
interest by further extending such period, provided that such period, together
with all such previous and further extensions within such Extended Interest
Payment Period, shall not exceed 10 consecutive semi-annual periods, including
the first such semi-annual period during such Extended Interest Payment Period,
end on a date other than an Interest Payment Date or extend beyond the Maturity
Date of the Securities. Upon the termination of any Extended Interest Payment
Period and the payment of all Deferred Interest then due, the Corporation may
commence a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall
81
<PAGE>
be due and payable during an Extended Interest Payment Period, except at the end
thereof, but the Corporation may prepay at any time all or any portion of the
interest accrued during an Extended Interest Payment Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of
the Securities at the time the Corporation selects an Extended Interest Payment
Period, the Corporation shall give written notice to the Administrative
Trustees, the Property Trustee and the Debenture Trustee of its selection of
such Extended Interest Payment Period five Business Days before the earlier of
(i) the next succeeding date on which Distributions on the Trust Securities
issued by the Trust are payable, or (ii) the date the Trust is required to give
notice of the record date, or the date such Distributions are payable, to any
national securities exchange or to holders of the Capital Securities issued by
the Trust, but in any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Corporation selects an Extended Interest Payment
Period, the Corporation shall give the holders of the Securities and the
Debenture Trustee written notice of its selection of such Extended Interest
Payment Period at least 10 Business Days before the earlier of (i) the next
succeeding Interest Payment Date, or (ii) the date the Corporation is required
to give notice of the record or payment date of such interest payment to any
national securities exchange.
(c) The semi-annual period in which any notice is given
pursuant to paragraphs (a) or (b) of this Section 16.02 shall be counted as one
of the 10 semi-annual periods permitted in the maximum Extended Interest Payment
Period permitted under Section 16.01.
82
<PAGE>
Wilmington Trust Company hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
EAGLE FINANCIAL CORP.
By _________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Debenture Trustee
By _________________________
Name:
Title:
83
<PAGE>
EXHIBIT A
(FORM OF FACE OF SECURITY)
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: THIS SECURITY
IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC")
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE CORPORATION OR ANY
"AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE CORPORATION, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
A-1
<PAGE>
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO THE CORPORATION, AND (ii) PURSUANT TO CLAUSE
(D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
REVERSE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE
CORPORATION. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 (100
SECURITIES). ANY SUCH TRANSFER OF SECURITIES IN A BLOCK HAVING AN AGGREGATE
PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE
RECEIPT OF PRINCIPAL, PREMIUM (IF ANY) OR INTEREST OF SUCH SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND
WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR (ii)
THE ACQUISITION AND HOLDING OF THIS SECURITY BY IT IS NOT PROHIBITED BY EITHER
SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986,
AS AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.
No. CUSIP No. o
EAGLE FINANCIAL CORP.
SERIES A 10% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE APRIL 1, 2027
Eagle Financial Corp., a Delaware corporation (the
"Corporation", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
______________________________ or registered assigns, the principal sum of
$___________ Dollars on April 1, 2027 (the "Maturity Date"), unless previously
prepaid, and to pay interest on the outstanding principal amount hereof from
April 1, 1997, or from the most recent interest payment date (each such date, an
A-2
<PAGE>
"Interest Payment Date") to which interest has been paid or duly provided for,
semi-annually (subject to deferral as set forth herein) in arrears on April 1
and October 10 of each year, commencing October 15, 1997, at the rate of 10% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded
semi-annually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months and, for any
period less than a full calendar month, the number of days elapsed in such
month. In the event that any date on which the principal of (or premium, if any)
or interest on this Security is payable is not a Business Day, then the payment
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that if such next succeeding Business Day falls in the next calendar
year, then such payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date. Pursuant to
the Indenture, in certain circumstances the Corporation will be required to pay
Additional Sums and Compounded Interest (each as defined in the Indenture) with
respect to this Security. Pursuant to the Registration Rights Agreement, in
certain limited circumstances the Corporation will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to this
Security.
The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, which
shall be at the close of business on the 15th day of the month preceding the
month in which the relevant interest payment date falls. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the holders on such regular record date and may be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a special record date to be fixed by the
Debenture Trustee for the payment of such defaulted interest, notice whereof
shall be given to the holders of Securities not less than 10 days prior to such
special record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on this Security shall be payable at
A-3
<PAGE>
the office or agency of the Debenture Trustee maintained for that purpose in any
coin or currency of the United States of America that at the time of payment is
legal tender for payment of public and private debts; provided, however, that,
payment of interest may be made at the option of the Corporation by (i) check
mailed to the holder at such address as shall appear in the Security Register or
(ii) by transfer to an account maintained by the Person entitled thereto,
provided that proper written transfer instructions have been received by the
relevant record date. Notwithstanding the foregoing, so long as the Holder of
this Security is the Property Trustee, the payment of the principal of (and
premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on this Security will be made at
such place and to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Debenture Trustee on his or her
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Debenture Trustee
his or her attorney-in-fact for any and all such purposes. Each holder hereof,
by his or her acceptance hereof, hereby waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Debenture Trustee.
A-4
<PAGE>
The provisions of this Security are continued on the reverse
side hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Corporation has caused this instrument
to be duly executed and sealed this 1st day of April, 1997.
EAGLE FINANCIAL CORP.
By: ____________________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Debenture Trustee
By____________________
Authorized Signatory
A-5
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Corporation
(herein sometimes referred to as the "Securities"), specified in the Indenture,
all issued or to be issued under and pursuant to an Indenture, dated as of April
1, 1997 (the "Indenture"), duly executed and delivered between the Corporation
and Wilmington Trust Company, as Debenture Trustee (the "Debenture Trustee"), to
which Indenture reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities there- under of the
Debenture Trustee, the Corporation and the holders of the Securities.
Upon the occurrence and continuation of a Special Event prior
to March 15, 2007 (the "Initial Optional Prepayment Date"), the Corporation
shall have the right, at any time within 90 days following the occurrence of
such Special Event, to prepay this Security in whole (but not in part) at the
Special Event Prepayment Price. "Special Event Prepayment Price" shall mean,
with respect to any prepayment of the Securities following a Special Event, an
amount in cash equal to the Make Whole Amount. The "Make Whole Amount" shall
mean an amount equal to the greater of (i) 100% of the principal amount to be
prepaid or (ii) the sum, as determined by a Quotation Agent, of the present
values of remaining scheduled payments of principal and interest on the
Securities, discounted to the prepayment date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus, in the case of each of clauses (i) and (ii), any accrued and unpaid
interest thereon (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, to the date of such prepayment.
In addition, the Corporation shall have the right to prepay
this Security, in whole or in part, at any time on or after the Initial Optional
Prepayment Date (an "Optional Prepayment"), upon not less than 30 days and not
more than 60 days' notice, at the prepayment prices set forth below plus, in
each case, accrued and unpaid interest thereon (including Additional Sums and
Compounded Interest, if any) and Liquidated Damages, if any, to the applicable
date of prepayment (the "Optional Prepayment Price") if prepaid during the
12-month period beginning April 1 of the years indicated below.
A-6
<PAGE>
Percentage
Year of Principal
---- ------------
2007 105.0%
2008 104.5%
2009 104.0%
2010 103.5%
2011 103.0%
2012 102.5%
2013 102.0%
2014 101.5%
2015 101.0%
2016 100.5%
2017 and thereafter 100.0%
The Optional Prepayment Price or the Special Event Prepayment
Price, as the case requires, shall be paid prior to 12:00 noon, New York time,
on the date of such prepayment or at such earlier time as the Corporation
determines, provided, that the Corporation shall deposit with the Debenture
Trustee an amount sufficient to pay the applicable Prepayment Price by 10:00
a.m. New York time on the date such Prepayment Price is to be paid. Any
prepayment pursuant to this paragraph will be made upon not less than 30 days
nor more than 60 days notice. If the Securities are only partially prepaid by
the Corporation pursuant to an Optional Prepayment, the particular Securities to
be prepaid shall be selected on a pro rata basis not more than 60 days prior to
the date fixed for prepayment from the outstanding Securities not previously
called for prepayment, provided, however, that with respect to Securityholders
that would be required to hold Securities with an aggregate principal amount of
less than $100,000 but more than an aggregate principal amount of zero as a
result of such pro rata prepayment, the Corporation shall prepay Securities of
each such Securityholder so that after such prepayment such Securityholder shall
hold Securities either with an aggregate principal amount of at least $100,000
or such Securityholder no longer holds any Securities and shall use such method
(including, without limitation, by lot) as the Corporation shall deem fair and
appropriate, provided, further, that any such proration may be made on the basis
of the aggregate principal amount of Securities held by each Securityholder
thereof and may be made by making such adjustments as the Corporation deems fair
and appropriate in order that only Securities in denominations of $1,000 or
integral multiples thereof shall be prepaid.
In the event of prepayment of this Security in part only, a
new Security or Securities for the portion hereof that has not been prepaid will
be issued in the name of the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any prepayment of Securities by
the Corporation shall be subject to the prior
A-7
<PAGE>
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve"), if such approval is then required under applicable capital guidelines
or policies of the Federal Reserve, and the receipt of any other required
regulatory approvals.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Securities
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Corporation
and the Debenture Trustee, with the consent of the holders of a majority in
aggregate principal amount of the Securities at the time outstanding, as defined
in the Indenture, to execute supplemental indentures for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of modifying in any manner the rights of the holders of the
Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and affected
thereby, (i) change the Maturity Date of any Security, or reduce the rate or
extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or reduce the principal amount thereof, or reduce any amount payable
on prepayment thereof, or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the
Securities, or impair or affect the right of any holder of Securities to
institute suit for payment thereof, or (ii) reduce the aforesaid percentage of
Securities, the holders of which are required to consent to any such
supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding affected thereby, on behalf of all of the holders of the
Securities, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any of the Securities or a default in respect of any
covenant or provision under which the Indenture cannot be modified or amended
without the consent of each holder of Securities then outstanding. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Security and of any Security issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Corporation, which is absolute and unconditional,
A-8
<PAGE>
to pay the principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on this
Security at the time and place and at the rate and in the money herein
prescribed.
So long as no Event of Default shall have occurred and be
continuing, the Corporation shall have the right, at any time and from time to
time during the term of the Securities, to defer payments of interest by
extending the interest payment period of such Securities for a period not
exceeding 10 consecutive semi-annual periods, including the first such
semi-annual period during such extension period, and not extending beyond the
Maturity Date of the Securities (an "Extended Interest Payment Period") or
ending on a date other than an Interest Payment Date, at the end of which period
the Corporation shall pay all interest then accrued and unpaid (together with
interest thereon at the rate specified for the Securities to the extent that
payment of such interest is enforceable under applicable law). Before the
termination of any such Extended Interest Payment Period, the Corporation may
further defer payments of interest by further extending such Extended Interest
Payment Period, provided that such Extended Interest Payment Period, together
with all such previous and further extensions within such Extended Interest
Payment Period, (i) shall not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extended Interest Payment
Period, (ii) shall not end on any date other than an Interest Payment Date, and
(iii) shall not extend beyond the Maturity Date of the Securities. Upon the
termination of any such Extended Interest Payment Period and the payment of all
accrued and unpaid interest and any additional amounts then due, the Corporation
may commence a new Extended Interest Payment Period, subject to the foregoing
requirements.
The Corporation has agreed that it will not (i) declare or pay
any dividends or distributions on, or prepay, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Corporation that rank pari passu
with or junior in right of payment to the Securities or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt securities
of any Subsidiary of the Corporation (including Other Guarantees) if such
guarantee ranks pari passu with or junior in right of payment to the Securities
(other than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the prepayment or repurchase of any such rights pursuant thereto, (c)
payments under the Capital Securities Guarantee, (d) the purchase of fractional
shares resulting from a reclassification of the
A-9
<PAGE>
Corporation's capital stock, (e) the purchase of fractional interests in shares
of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, and (f)
purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans), if at such
time (1) there shall have occurred any event of which the Corporation has actual
knowledge that (a) is, or with the giving of notice or the lapse of time, or
both, would constitute, an Event of Default and (b) in respect of which the
Corporation shall not have taken reasonable steps to cure, (2) if such
Securities are held by the Property Trustee, the Corporation shall be in default
with respect to its payment obligations under the Capital Securities Guarantee
or (3) the Corporation shall have given notice of its election of the exercise
of its right to extend the interest payment period and any such extension shall
be continuing.
Subject to (i) the receipt of any required regulatory
approval, and (ii) the receipt by the Corporation of an opinion of counsel to
the effect that such distribution will not be a taxable event to holders of
Capital Securities, the Corporation will have the right at any time to liquidate
the Trust and cause the Securities to be distributed to the holders of the Trust
Securities in liquidation of the Trust.
The Securities are issuable only in registered form without
coupons in minimum denominations of $100,000 and multiples of $1,000 in excess
thereof. As provided in the Indenture and subject to the transfer restrictions
limitations as may be contained herein and therein from time to time, this
Security is transferable by the holder hereof on the Security Register of the
Corporation, upon surrender of this Security for registration of transfer at the
office or agency of the Corporation in New York, New York accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Corporation or the Debenture Trustee duly executed by the holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such registration of transfer, but the Corporation may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Corporation, the Debenture Trustee, any authenticating agent, any
paying agent, any transfer agent and the registrar may deem and treat the holder
hereof as the absolute owner hereof (whether or not this Security shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
A-10
<PAGE>
anyone other than the security registrar for the Securities) for the purpose of
receiving payment of or on account of the principal hereof and premium, if any,
and (subject to the Indenture) interest due hereon and for all other purposes,
and neither the Corporation nor the Debenture Trustee nor any authenticating
agent nor any paying agent nor any transfer agent nor any registrar shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this Security, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Corporation or of any predecessor or successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issuance
hereof, expressly waived and released.
All terms used in this Security that are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
A-11
====================================
COMMON SECURITIES GUARANTEE AGREEMENT
EAGLE FINANCIAL CORP.
Dated as of April 1, 1997
====================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
<S> <C> <C>
SECTION 1.1. Definitions and Interpretation.................................................. 1
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee....................................................................... 3
SECTION 2.2. Waiver of Notice and Demand..................................................... 3
SECTION 2.3. Obligations Not Affected........................................................ 3
SECTION 2.4. Rights of Holders............................................................... 4
SECTION 2.5. Guarantee of Payment............................................................ 4
SECTION 2.6. Subrogation..................................................................... 5
SECTION 2.7. Independent Obligations......................................................... 5
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions...................................................... 5
SECTION 3.2. Ranking......................................................................... 6
ARTICLE IV
TERMINATION
SECTION 4.1. Termination..................................................................... 7
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns.......................................................... 7
SECTION 5.2. Amendments...................................................................... 7
SECTION 5.3. Notices......................................................................... 7
SECTION 5.4. Benefit......................................................................... 8
SECTION 5.5. Governing Law................................................................... 8
</TABLE>
<PAGE>
COMMON SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Common Securities Guarantee"),
dated as of April 1, 1997, is executed and delivered by EAGLE FINANCIAL CORP., a
Delaware corporation (the "Guarantor"), for the benefit of the Holders (as
defined herein) from time to time of the Common Securities (as defined herein)
of EAGLE FINANCIAL CAPITAL TRUST I, a Delaware business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of April 1, 1997, among the trustees of the
Issuer named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Issuer, the Issuer
is issuing on the date hereof 1,547 common securities designated the 10% Common
Securities (the "Common Securities"), having an aggregate stated liquidation
amount of $1,547,000;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Series A Capital Securities Guarantee") for the
benefit of the holders of the Series A Capital Securities (as defined in the
Declaration) and upon consummation of the Exchange Offer (as defined in the
Declaration) will execute and deliver a guarantee agreement (the "Series B
Capital Securities Guarantee") for the benefit of the holders of the Series B
Capital Securities (as defined in the Declaration), each in substantially
identical terms to this Common Securities Guarantee, except that if an Event of
Default (as defined in the Declaration) has occurred and is continuing, the
rights of Holders to receive Guarantee Payments under this Common Securities
Guarantee are subordinated to the rights of holders of Capital Securities to
receive Guarantee Payments under the Series A Capital Securities Guarantee and
the Series B Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by each
Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Common Securities Guarantee
for the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation
In this Common Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Common Securities Guarantee
but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of
execution of this Common Securities Guarantee have the same meaning
when used in this Common Securities Guarantee unless otherwise defined
in this Common Securities Guarantee;
(c) a term defined anywhere in this Common Securities
Guarantee has the same meaning throughout;
(d) all references to "the Common Securities Guarantee" or
"this Common Securities Guarantee" are to this Common Securities
Guarantee as modified, supplemented or amended from time to time;
(e) all references in this Common Securities Guarantee to
Articles and Sections are to Articles and Sections of this Common
Securities Guarantee unless otherwise specified; and
(f) a reference to the singular includes the plural and vice
versa.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions that are required to be paid on such Common Securities to the
extent the Issuer has funds on hand legally available therefor at such time,
(ii) the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price") to the extent the Issuer has funds
on hand legally available therefor at such time, with respect to any Common
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination and liquidation of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Common
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accumulated and unpaid Distributions on the
Common Securities to the date of payment, to the extent the Issuer has funds on
hand legally available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the
2
<PAGE>
Issuer (in either case, the "Liquidation Distribution"). If an Event of Default
has occurred and is continuing, no Guarantee Payments with respect to the Common
Securities shall be made until holders of Capital Securities shall be paid in
full the Guarantee Payments to which they are entitled under the Series A
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Holder" means any holder, as registered on the books and
records of the Issuer, of any Common Securities.
"Other Guarantees" means all guarantees to be issued by the
Guarantor with respect to common securities (if any) similar to the Common
Securities issued by any other trust, partnership or other entity affiliated
with the Guarantor that is a financing vehicle of the Guarantor (if any), in
each case similar to the Issuer.
ARTICLE II
GUARANTEE
SECTION 2.1. Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 2.2. Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Common Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.3. Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Common Securities Guarantee 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
3
<PAGE>
any express or implied agreement, covenant, term or condi- tion
relating to the Common 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 Common
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Common 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 Common
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 2.3 that the obligations of the
Guarantor with respect to the Guarantee Payments shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent
of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 2.4. Rights of Holders
The Guarantor expressly acknowledges that any Holder may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Common Securities Guarantee,
4
<PAGE>
without first instituting a legal proceeding against the Issuer or any other
Person.
SECTION 2.5. Guarantee of Payment
This Common Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 2.6. Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Common Securities Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Common Securities Guarantee, if, at the
time of any such payment, any amounts are due and unpaid under this Common
Securities Guarantee. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
SECTION 2.7. Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.3 hereof.
ARTICLE III
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 3.1. Limitation of Transactions
So long as any Common Securities remain outstanding, the
Guarantor will not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Guarantor's capital stock (which includes common stock and preferred stock),
(ii) make any payment of principal of, premium, if any, or interest on or repay,
repurchase or redeem any debt securities of the Guarantor (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guaran-
5
<PAGE>
tor (including Other Guarantees) if such guarantee ranks pari passu with or
junior in right of payment to the Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, common stock of the Guarantor, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Capital
Securities Guarantee, (d) the purchase of fractional interests in shares
resulting from a reclassification of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged and (f) purchases of common stock of the
Guarantor related to the issuance of such common stock or rights under any of
the Guarantor's benefit plans for its directors, officers or employees or any of
the Guarantor's dividend reinvestment plans), if at such time (1) there shall
have occurred any event of which the Guarantor has actual knowledge that (a) is
an Event of Default and (b) in respect of which the Guarantor shall not have
taken reasonable steps to cure, (2) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment
obligations under the Capital Securities Guarantee or (3) the Guarantor shall
have given notice of its election of its right to extend the interest payment
period pursuant to Section 16.01 of the Indenture and such extended period, or
any extension thereof, shall have commenced and be continuing.
SECTION 3.2. Ranking
This Common Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to the Senior Indebtedness (as defined in the Indenture), to the same
extent and in the same manner that the Debentures are subordinated to Senior
Indebtedness pursuant to the Indenture (except as indicated below), it being
understood that the terms of Article XV of the Indenture shall apply to the
obligations of the Guarantor under this Common Securities Guarantee as if (x)
such Article XV were set forth herein in full and (y) such obligations were
substituted for the term "Securities" appearing in such Article XV, except that
with respect to Section 15.03 of the Indenture only, the term "Senior
Indebtedness" shall mean all liabilities of the Guarantor, whether or not for
money borrowed (other than obligations in respect to Other Guarantees), (ii)
pari passu with the most senior preferred or preference stock now or hereafter
issued by the Guarantor and with any Other Guarantee and any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any "affiliate" of the Guarantor, and (iii) senior to the
Guarantor's capital stock.
6
<PAGE>
ARTICLE IV
TERMINATION
SECTION 4.1. Termination
This Common Securities Guarantee shall terminate (i) upon full
payment of the Redemption Price of all Common Securities, (ii) upon the
distribution of the Debentures to all the Holders or (iii) upon full payment of
the amounts payable in accordance with the Declaration upon liquidation of the
Issuer. Notwithstanding the foregoing, this Common Securities Guarantee 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 under the Common
Securities or under this Common Securities Guarantee.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Successors and Assigns
All guarantees and agreements contained in this Common
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
SECTION 5.2. Amendments
Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Common Securities Guarantee may only be amended with the prior
approval of the Holders of at least a majority in liquidation amount of all the
outstanding Common Securities. The provisions of Section 12.2 of the Declaration
with respect to meetings of Holders apply to the giving of such approval.
SECTION 5.3. Notices
All notices provided for in this Common Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) if given to the Issuer, in care of the Administrative
Trustee at the Issuer's mailing address set forth below (or such other
address as the Issuer may give notice of to the Holders):
Eagle Financial Capital Trust I
7
<PAGE>
c/o Eagle Financial Corp.
222 Main Street
Bristol, CT 06010
Attention: Robert J. Britton
Administrative Trustee
Telecopy: (860) 314-6404
(b) if given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may
give notice of to the Holders):
Eagle Financial Corp.
222 Main Street
Bristol, CT 06010
Attention: Robert J. Britton
President & CEO
Telecopy: (860) 314-6404
(c) if given to any Holder, at the address set forth on the
books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 5.4. Benefit
This Common Securities Guarantee is solely for the benefit of
the Holders and is not separately transferable from the Common Securities.
SECTION 5.5. Governing Law
THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
8
<PAGE>
THIS COMMON SECURITIES GUARANTEE is executed as of the day and
year first above written.
EAGLE FINANCIAL CORP.
By:
---------------------------------------
Name:
Title:
====================================
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
Eagle Financial Corp.
Dated as of April 1, 1997
====================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
<S> <C> <C>
SECTION 1.1 Definitions and Interpretation.................................................. 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................................ 6
SECTION 2.2 Lists of Holders of Securities.................................................. 6
SECTION 2.3 Reports by the Capital Securities Guar-
antee Trustee................................................................... 6
SECTION 2.4 Periodic Reports to Capital Securities
Guarantee Trustee............................................................... 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent....................................................................... 7
SECTION 2.6 Events of Default; Waiver....................................................... 7
SECTION 2.7 Event of Default; Notice........................................................ 7
SECTION 2.8 Conflicting Interests........................................................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securi-
ties Guarantee Trustee.......................................................... 8
SECTION 3.2 Certain Rights of Capital Securities
Guarantee Trustee............................................................... 10
SECTION 3.3 Not Responsible for Recitals or Issuance
of Series A Capital Securities Guarantee........................................ 12
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee;
Eligibility..................................................................... 13
SECTION 4.2 Appointment, Removal and Resignation of
Capital Securities Guarantee Trustee............................................ 13
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee....................................................................... 14
SECTION 5.2 Waiver of Notice and Demand..................................................... 15
SECTION 5.3 Obligations Not Affected........................................................ 15
SECTION 5.4 Rights of Holders............................................................... 16
SECTION 5.5 Guarantee of Payment............................................................ 16
<PAGE>
Page
SECTION 5.6 Subrogation..................................................................... 16
SECTION 5.7 Independent Obligations......................................................... 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions...................................................... 17
SECTION 6.2 Ranking......................................................................... 18
ARTICLE VII
TERMINATION
SECTION 7.1 Termination..................................................................... 18
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation..................................................................... 18
SECTION 8.2 Indemnification................................................................. 19
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.......................................................... 19
SECTION 9.2 Amendments...................................................................... 19
SECTION 9.3 Notices......................................................................... 20
SECTION 9.4 Exchange Offer.................................................................. 21
SECTION 9.5 Benefit......................................................................... 21
SECTION 9.6 Governing Law................................................................... 21
</TABLE>
ii
<PAGE>
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series A Capital Securities
Guarantee"), dated as of April 1, 1997, is executed and delivered by EAGLE
FINANCIAL CORP., a Delaware corporation (the "Guarantor"), and Wilmington Trust
Company, a Delaware banking corporation, as trustee (the "Capital Securities
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Series A Capital Securities (as defined herein) of EAGLE
FINANCIAL CAPITAL TRUST I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of April 1, 1997, among the trustees of the
Issuer, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof 50,000 capital securities, having an aggregate
liquidation amount of $50,000,000, such capital securities being designated the
Series A 10% Capital Securities (collectively the "Series A Capital Securities")
and, in connection with an Exchange Offer (as defined in the Declaration), has
agreed to execute and deliver the Series B Capital Securities Guarantee (as
defined in the Declaration) for the benefit of holders of the Series B Capital
Securities (as defined in the Declaration).
WHEREAS, as incentive for the Holders to purchase the Series A
Capital Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Series A Capital Securities Guarantee, to
pay to the Holders the Guarantee Payments (as defined below). The Guarantor
agrees to make certain other payments on the terms and conditions set forth
herein.
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Series A Capital Securities Guarantee, for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event of
Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated, to the extent and in the
manner set forth in the Common Securities Guarantee, to the rights of holders of
Series A Capital Securities and the Series B Capital Securities to receive
Guarantee Payments under this Series A Capital Securities Guarantee and the
Series B Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by each
Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers
<PAGE>
this Series A Capital Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series A Capital Securities Guarantee, unless the
context otherwise requires:
(a) Capitalized terms used in this Series A Capital Securities
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of
execution of this Series A Capital Securities Guarantee have the same meaning
when used in this Series A Capital Securities Guarantee unless otherwise defined
in this Series A Capital Securities Guarantee;
(c) a term defined anywhere in this Series A Capital
Securities Guarantee has the same meaning throughout;
(d) all references to "the Series A Capital Securities
Guarantee" or "this Series A Capital Securities Guarantee" are to this Series A
Capital Securities Guarantee as modified, supplemented or amended from time to
time;
(e) all references in this Series A Capital Securities
Guarantee to Articles and Sections are to Articles and Sections of this Series A
Capital Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Series A Capital Securities Guarantee, unless
otherwise defined in this Series A Capital Securities Guarantee or unless the
context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Business Day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in New York, New York,
Wilmington, Delaware or Bristol, Connecticut are authorized or required by law
or executive order to close.
2
<PAGE>
"Capital Securities Guarantee Trustee" means Wilmington Trust
Company, a Delaware banking corporation, until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Series A Capital Securities Guarantee and thereafter means
each such Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital
Securities Guarantee Trustee at which the corporate trust business of the
Capital Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001.
"Covered Person" means any Holder or beneficial owner of
Series A Capital Securities.
"Debentures" means the series of subordinated debt securities
of the Guarantor designated the Series A 10% Junior Subordinated Debentures due
April 1, 2027 held by the Property Trustee (as defined in the Declaration) of
the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Series A Capital Securities
Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Series A Capital
Securities, to the extent not paid or made by the Issuer: (i) any accumulated
and unpaid Distributions (as defined in the Declaration) that are required to be
paid on such Series A Capital Securities to the extent the Issuer has funds on
hand legally available therefor at such time, (ii) the redemption price,
including all accumulated and unpaid Distributions to the date of redemption
(the "Redemption Price") to the extent the Issuer has funds on hand legally
available therefor at such time, with respect to any Series A Capital Securities
called for redemption by the Issuer, and (iii) upon a voluntary or involuntary
dissolution, winding up or termination of the Issuer (other than in connection
with the distribution of Debentures to the Holders in exchange for Series A
Capital Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accumulated and unpaid Distributions
on the Series A Capital Securities to the date of payment, to the extent the
Issuer has funds on hand legally available therefor, and (b) the amount of
assets of the Issuer remaining available for distribution to Holders in
liquidation of the Issuer. If an
3
<PAGE>
Event of Default has occurred and is continuing, no Guarantee Payments under the
Common Securities Guarantee with respect to the Common Securities or any
guarantee payment under any Other Common Securities Guarantees shall be made
until the Holders shall be paid in full the Guarantee Payments to which they are
entitled under this Series A Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Series A Capital Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Series A
Capital Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Person actually known to a
Responsible Officer of the Capital Securities Guarantee Trustee to be an
Affiliate of the Guarantor.
"Indemnified Person" means the Capital Securities Guarantee
Trustee, any Affiliate of the Capital Securities Guarantee Trustee, or any
officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Securities
Guarantee Trustee.
"Indenture" means the Indenture dated as of April 1, 1997,
among the Guarantor (the "Debenture Issuer") and Wilmington Trust Company, as
trustee (the "Indenture Trustee"), pursuant to which the Debentures are to be
issued to the Property Trustee of the Issuer.
"Indenture Event of Default" shall mean any event specified in
Section 5.01 of the Indenture.
"Majority in liquidation amount of the Series A Capital
Securities" means, except as provided by the Declaration or by the Trust
Indenture Act, a vote by Holder(s), voting separately as a class, of more than
50% of the aggregate liquidation amount (including the stated amount that would
be paid upon redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined) of
all Series A Capital Securities.
"Officers' Certificate" means, with respect to any person, a
certificate signed by the Chairman, the Chief Executive Officer, the President,
a Vice President, the Chief Financial Officer, the Secretary or an Assistant
Secretary of the Guarantor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Series A Capital
Securities Guarantee (other than pursuant to Section 314(a)(4) of the Trust
Indenture Act) shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
4
<PAGE>
(b) 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
(c) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same
meaning as "Other Guarantees" as defined in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures
issued by the Guarantor from time to time and sold to any other trust,
partnership or other entity affiliated with the Guarantor that is a financing
vehicle of the Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the
Guarantor with respect to capital securities (if any) similar to the Series A
Capital Securities issued by other trusts to be established by the Guarantor (if
any), in each case similar to the Issuer.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 1, 1997, by and among the Guarantor, the Issuer and
the initial purchaser named therein as such agreement may be amended, modified
or supplemented from time to time.
"Responsible Officer" means any officer within the Corporate
Trust Office of the Capital Securities Guarantee Trustee, including any Vice
President, any Assistant Vice President, any Assistant Secretary, the Treasurer,
any Assistant Treasurer or other officer the Corporate Trust Office of the
Capital Securities Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Capital Securities Guarantee Trustee" means a
successor Capital Securities Guarantee Trustee possessing the
5
<PAGE>
qualifications to act as Capital Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trust Securities" means the Common Securities and the Series
A Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series A Capital Securities Guarantee is subject to
the provisions of the Trust Indenture Act that are required to be part of this
Series A Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) if and to the extent that any provision of this Series A
Capital Securities Guarantee 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 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities
Guarantee Trustee (unless the Capital Securities Guarantee Trustee is otherwise
the registrar of the Capital Securities) with a list, in such form as the
Capital Securities Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such date, (i) within one
Business Day after April 1 and October 1 of each year, and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Capital Securities Guarantee Trustee, provided, that the Guarantor
shall not be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Capital Securities Guarantee Trustee by the Guarantor. The Capital Securities
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
6
<PAGE>
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after December 15 of each year, commencing
December 15, 1997, the Capital Securities 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 Capital Securities Guarantee Trustee shall also comply with
the other requirements of Section 313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee
Trustee
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such documents, reports and information as are required by
Section 314 (if any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act provided that such compliance certificate
shall be delivered on or before 120 days after the end of each fiscal year of
the Guarantor. Delivery of such reports, information and documents to the
Capital Securities Guarantee Trustee is for informational purposes only and the
Capital Securities Guarantee Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Guarantor's compliance with any of
its covenants hereunder (as to which the Capital Securities Guarantee Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities
Guarantee Trustee such evidence of compliance with the conditions precedent, if
any, provided for in this Series A Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series A
Capital Securities may, by vote, on behalf of all Holders, waive any past Event
of Default and its consequences. 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 Series A Capital Securities
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
7
<PAGE>
SECTION 2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90
days after the occurrence of an Event of Default hereunder, transmit by mail,
first class postage prepaid, to all Holders, notices of all Events of Default
actually known to a Responsible Officer, unless such defaults have been cured
before the giving of such notice, provided, that, except in the case of default
in the payment of any Guarantee Payment, the Capital Securities Guarantee
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer in good faith determines that the withholding of such notice
is in the interests of the Holders.
(b) The Capital Securities Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the Capital Securities
Guarantee Trustee shall have received written notice from the Guarantor, or a
Responsible Officer charged with the administration of the Declaration shall
have obtained actual knowledge, of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Series A Capital Securities Guarantee for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guar-
antee Trustee
(a) This Series A Capital Securities Guarantee shall be held
by the Capital Securities Guarantee Trustee for the benefit of the Holders, and
the Capital Securities Guarantee Trustee shall not transfer this Series A
Capital Securities Guarantee to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee
Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of
its appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such vesting and succession of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Securities Guarantee Trustee.
8
<PAGE>
(b) If an Event of Default actually known to a Responsible
Officer has occurred and is continuing, the Capital Securities Guarantee Trustee
shall enforce this Series A Capital Securities Guarantee for the benefit of the
Holders.
(c) The Capital Securities 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 Series A Capital Securities Guarantee, and no
implied covenants or obligations shall be read into this Series A Capital
Securities Guarantee against the Series A Capital Securities Guarantee Trustee.
In case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer, the
Capital Securities Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Series A Capital Securities Guarantee, and use the
same degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Series A Capital Securities Guarantee
shall be construed to relieve the Capital Securities 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 De- fault that may have
occurred:
(A) the duties and obligations of the Capital
Securities Guarantee Trustee shall be determined solely by the
express provisions of this Series A Capital Securities
Guarantee, and the Capital Securities Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Series A
Capital Securities Guarantee, and no implied covenants or
obligations shall be read into this Series A Capital
Securities Guarantee against the Capital Securities Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Capital Securities Guarantee Trustee, the Capital Securities
Guarantee Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Capital Securities Guarantee Trustee and conforming to the
requirements of this Series A Capital Securities Guarantee;
but in the case of any such certificates or opinions that by
any pro-
9
<PAGE>
vision hereof are specifically required to be furnished to the
Capital Securities Guarantee Trustee, the Capital Securities
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of
this Series A Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Capital Securities
Guarantee Trustee was negligent in ascertaining the pertinent facts
upon which such judgment was made;
(iii) the Capital Securities 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 Series A Capital Securities
relating to the time, method and place of conducting any proceeding for
any remedy available to the Capital Securities Guarantee Trustee, or
exercising any trust or power conferred upon the Capital Securities
Guarantee Trustee under this Series A Capital Securities Guarantee; and
(iv) no provision of this Series A Capital Securities
Guarantee shall require the Capital Securities 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 Capital Securities 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 Series A Capital Securities Guarantee or indemnity,
reasonably satisfactory to the Capital Securities Guarantee Trustee,
against such risk or liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee
Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
10
<PAGE>
(ii) Any direction or act of the Guarantor contemplated by
this Series A Capital Securities Guarantee may be sufficiently
evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Series A Capital
Securities Guarantee, the Capital Securities Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have no
duty to see to any recording, filing or registration of any instrument
(or any rerecording, refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel
with respect to legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Capital Securities
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Series A Capital Securities
Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by
this Series A Capital Securities Guarantee at the request or direction
of any Holder, unless such Holder shall have provided to the Capital
Securities Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Capital Securities Guarantee Trustee's agents, nominees
or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Capital Securities Guarantee
Trustee; provided that, nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Capital Securities Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Series A Capital
Securities Guarantee.
11
<PAGE>
(vii) The Capital Securities 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
Capital Securities Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Capital Securities Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Capital Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Capital Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the
signature of the Capital Securities Guarantee Trustee or its agents
alone shall be sufficient and effective to perform any such action. No
third party shall be required to inquire as to the authority of the
Capital Securities Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Series A Capital
Securities Guarantee, both of which shall be conclusively evidenced by
the Capital Securities Guarantee Trust- ee's or its agent's taking such
action.
(x) Whenever in the administration of this Series A Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the Capital
Securities Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Series A Capital
Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) the Capital Securities Guarantee Trustee may execute any
of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys and the Capital
Securities Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(xii) The Capital Securities Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to
12
<PAGE>
be taken by it in good faith, without negligence, and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Series A Capital Securities Guarantee.
(b) No provision of this Series A Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Securities
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 Capital Securities 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 Capital Securities Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Series
A Capital Securities Guarantee
The recitals contained in this Series A Capital Securities
Guarantee shall be taken as the statements of the Guarantor, and the Capital
Securities Guarantee Trustee does not assume any responsibility for their
correctness. The Capital Securities Guarantee Trustee makes no representation as
to the validity or sufficiency of this Series A Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation or other Person organized and doing
business under the laws of the United States of Ameri- ca or any state
or territory thereof or of the District of Columbia, or a corporation
or other Person permitted by the Securities and Exchange Commission to
act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by federal,
state, territorial or District of Colum- bia authority. If such
corporation or other Person publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
13
<PAGE>
Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Capital
Securities Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Capital Securities Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital
Securities Guarantee Trustee
(a) Subject to Section 4.2(b), the Capital Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Securities Guarantee
Trustee and delivered to
the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been appointed
or until its removal or resignation. The Capital Securities Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Capital Securities Guarantee Trustee resigning or being removed may petition any
court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon,
14
<PAGE>
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Capital Securities Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Series A Capital Securities
Guarantee or removal or resignation of the Capital Securities Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Capital Securities
Guarantee Trustee all amounts due to the Capital Securities Guarantee Trustee
accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Capital Securities Guarantee Trustee for the benefit of the Holders
the Guarantee Payments (without duplication of amounts theretofore paid by the
Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Series A Capital Securities Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Series A Capital Securities Guarantee 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 Series A Capital
Securities to be performed or observed by the Issuer;
15
<PAGE>
(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 Series A Capital Securities or
the extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Series A Capital Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Series A Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, 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 Series
A Capital Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Series A Capital Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series A Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities
16
<PAGE>
Guarantee Trustee under this Series A Capital Securities Guarantee.
(b) If the Capital Securities Guarantee Trustee fails to
enforce such Series A Capital Securities Guarantee, any Holder may institute a
legal proceeding directly against the Guarantor to enforce the Capital
Securities Guarantee Trustee's rights under this Series A Capital Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Capital Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought first
against the Issuer or any other person or entity before proceeding directly
against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Series A Capital Securities Guarantee creates a guarantee
of payment and not of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders against the Issuer in respect of any amounts paid to such Holders by
the Guarantor under this Series A Capital Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Series A Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series A Capital Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series A
Capital Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this Series
A Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.
17
<PAGE>
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Series A Capital Securities remain outstanding,
the Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock (which includes common and preferred stock), (ii)
make any payment of principal of, premium, if any, or interest on, or repay,
repurchase or redeem any debt securities of the Guarantor (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Debentures (other than (a) dividends or distributions
in shares of, or options, warrants or rights to subscribe for or purchase shares
of, common stock of the Guarantor, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under this Series A
Capital Securities Guarantee, (d) the purchase of fractional interests in shares
resulting from a reclassification of the Guarantor's capital stock, (e) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged and (f) purchases of common stock of the
Guarantor related to the issuance of such common stock or rights under any of
the Guarantor's benefit plans for its directors, officers or employees or any of
the Guarantor's dividend reinvestment plans), if at such time (1) there shall
have occurred any event of which the Guarantor has actual knowledge that (a) is
an Indenture Event of Default and (b) in respect of which the Guarantor shall
not have taken reasonable steps to cure, (2) if such Debentures are held by the
Property Trustee, the Guarantor shall be in default with respect to its payment
of any obligations under this Series A Capital Securities Guarantee or (3) the
Guarantor shall have given notice of its election of its right to extend the
interest payment period pursuant to Section 16.01 of the Indenture and such
extension period, or any such extension thereof, shall have commenced and shall
be continuing.
SECTION 6.2 Ranking
This Series A Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to the
same extent and in
18
<PAGE>
the same manner that the Debentures are subordinated to Senior Indebtedness
pursuant to the Indenture (except as indicated below), it being understood that
the terms of Article XV of the Indenture shall apply to the obligations of the
Guarantor under this Capital Securities Guarantee as if (x) such Article XV were
set forth herein in full and (y) such obligations were substituted for the term
"Securities" appearing in such Article XV, except that with respect to Section
15.03 of the Indenture only, the term "Senior Indebtedness" shall mean all
liabilities of the Guarantor, whether or not for money borrowed (other than
obligations in respect of Other Guarantees), (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor,
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, any other
Guarantee and any Other Capital Securities Guarantee, and (iii) senior to the
Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series A Capital Securities Guarantee shall terminate (i)
upon full payment of the Redemption Price (as defined in the Declaration) of all
Series A Capital Securities, (ii) upon liquidation of the Issuer, following the
full payment of the amounts payable in accordance with the Declaration or the
distribution of the Debentures to the Holders or (iii) upon exchange of all the
Series A Capital Securities for the Series B Capital Securities in the Exchange
Offer and the execution and delivery of the Series B Capital Securities
Guarantee. Notwithstanding the foregoing, this Series A Capital Securities
Guarantee 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 under the
Series A Capital Securities or under this Series A Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Series
A Capital Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority con-
19
<PAGE>
ferred on such Indemnified Person by this Series A Capital Securities Guarantee
or by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Series A Capital Securities Guarantee and shall survive the resignation or
removal of the Capital Securities Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Series A
Capital Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Series A Capital Securities Guarantee may only be amended
with the prior approval
20
<PAGE>
of the Holders of a Majority in liquidation amount of the Securities (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined). The provisions of the Declaration with respect to
consents to amendments thereof (whether at a meeting or otherwise) shall apply
to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Series A Capital Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative
Trustee at the Issuer's mailing address set forth below (or such other address
as the Issuer may give notice of to the Holders and the Capital Securities
Guarantee Trustee):
Eagle Financial Capital Trust I
222 Main Street
Bristol, CT 06010
Attention: Robert J. Britton
Administrative Trustee
Telecopy: (860) 314-6404
(b) If given to the Capital Securities Guarantee Trustee, at
the Capital Securities Guarantee Trustee's mailing address set forth below (or
such other address as the Capital Securities Guarantee Trustee may give notice
of to the Holders and the Issuer):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trustee
Administration Department
Telecopy: (302) 651-8882
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders and the Capital Securities Guarantee Trustee):
Eagle Financial Corp.
222 Main Street
Bristol, CT 06010
Attention: Robert J. Britton
President and CEO
Telecopy: (860) 314-6404
21
<PAGE>
(d) If given to any Holder, at the address set forth on the
books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Exchange Offer
In the event an Exchange Offer Registration Statement (as
defined in the Registration Rights Agreement) becomes effective and the Issuer
issues any Series B Capital Securities in the Exchange Offer, the Guarantor will
enter into a new capital securities guarantee agreement, in substantially the
same form as this Series A Capital Securities Guarantee, with respect to the
Series B Capital Securities.
SECTION 9.5 Benefit
This Series A Capital Securities Guarantee is solely for the
benefit of the Holders and, subject to Section 3.1(a), is not separately
transferable from the Series A Capital Securities.
SECTION 9.6 Governing Law
THIS SERIES A CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
22
<PAGE>
THIS SERIES A CAPITAL SECURITIES GUARANTEE is executed as of
the day and year first above written.
EAGLE FINANCIAL CORP., as Guarantor
By:
--------------------------------------
Name:
Title:
Wilmington Trust Company, as
Capital Securities Guarantee Trustee
By:
--------------------------------------
Name:
Title:
23
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 24,370
<INT-BEARING-DEPOSITS> 14,146
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 464,943
<INVESTMENTS-CARRYING> 78,664
<INVESTMENTS-MARKET> 78,282
<LOANS> 854,296
<ALLOWANCE> 8,748
<TOTAL-ASSETS> 1,512,036
<DEPOSITS> 1,083,930
<SHORT-TERM> 147,722
<LIABILITIES-OTHER> 39,643
<LONG-TERM> 136,429
0
0
<COMMON> 46
<OTHER-SE> 104,266
<TOTAL-LIABILITIES-AND-EQUITY> 1,512,036
<INTEREST-LOAN> 16,376
<INTEREST-INVEST> 8,706
<INTEREST-OTHER> 304
<INTEREST-TOTAL> 25,386
<INTEREST-DEPOSIT> 11,021
<INTEREST-EXPENSE> 14,651
<INTEREST-INCOME-NET> 10,735
<LOAN-LOSSES> 525
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,806
<INCOME-PRETAX> 4,777
<INCOME-PRE-EXTRAORDINARY> 4,777
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,839
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.61
<YIELD-ACTUAL> 7.34
<LOANS-NON> 11,206
<LOANS-PAST> 0
<LOANS-TROUBLED> 4,229
<LOANS-PROBLEM> 4,229
<ALLOWANCE-OPEN> 8,435
<CHARGE-OFFS> 264
<RECOVERIES> 52
<ALLOWANCE-CLOSE> 8,748
<ALLOWANCE-DOMESTIC> 8,748
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
