<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): OCTOBER 16, 1996
FRONTIER INSURANCE GROUP, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-15022 14-1681606
(State or other juris- (Commission (IRS Employer
diction of incorp- File Number) Identification No.)
oration)
195 LAKE LOUISE MARIE ROAD, ROCK HILL, NEW YORK 12775-8000
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (914) 796-2100
NOT APPLICABLE
(Former name or former address, if changed since last report)
Page 1 of 253 Pages
Exhibit Index Located on Page 5
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ITEM 5. OTHER EVENTS.
On October 16, 1996 and October 18, 1996, Frontier Financing Trust (the
"Trust"), a Delaware statutory business trust sponsored by Frontier Insurance
Group, Inc. (the "Registrant"), issued and sold an aggregate of 3,450,000 6 1/4%
Convertible Trust Originated Preferred Securities'SM' ("Preferred Securities"),
representing undivided preferred beneficial interests in the assets of the
Trust, at $50 per Preferred Security, or $172,500,000, to certain initial
purchasers (the "Initial Purchasers"), for whom Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette
Securities Corporation, Oppenheimer & Co., Inc. and Stephens Inc. acted as
representatives, which Preferred Securities were distributed by the Initial
Purchasers to certain institutional investors pursuant to Rule 144A, Regulation
S and Regulation D under the Securities Act of 1933, as amended (the "Securities
Act"). Concurrently, the Trust issued and sold to the Registrant 106,702 6 1/4%
Convertible Common Securities ("Common Securities" and, together with Preferred
Securities, "Trust Securities"), representing undivided common beneficial
interests in the assets of the Trust, at $50 per Common Security, or $5,335,100.
The Trust invested the $177,835,100 of proceeds from the sale of the Trust
Securities in $177,835,100 principal amount 6 1/4% Convertible Subordinated
Debentures Due 2026 issued by the Registrant (the "Debentures"), constituting
the sole assets of the Trust. Distributions on the Preferred Securities are
payable quarterly in arrears, commencing January 15, 1997, and each Preferred
Security is convertible, at the option of the holder thereof, into 1.0663 shares
of the Registrant's Common Stock, par value $.01 per share ("Registrant Common
Stock"), equivalent to $46.89 per share of Registrant Common Stock, subject to
adjustment for dilutive events, through the exchange of such Preferred Security
for Debentures having a principal amount equal to the liquidation amount of the
Preferred Security so exchanged and the subsequent conversion of the Debentures.
The interest rate, interest payment dates and other payment dates on the
Debentures correspond to the distribution rate, distribution payment dates and
other payment dates on the Preferred Securities.
Pursuant to the terms of a preferred securities guarantee agreement (the
"Preferred Securities Guarantee"), the Registrant has irrevocably and
unconditionally guaranteed payment in full by the Trust, but only to the extent
the Trust has funds available therefor, of (i) distributions on the Preferred
Securities, (ii) amounts payable upon redemption of the Preferred Securities,
and (iii) generally, the liquidation preference of the Preferred Securities.
Such guarantee is subject to the Registrant's right to defer interest payments
on the Debentures and, accordingly, distributions on the Preferred Securities.
The Preferred Securities Guarantee ranks senior to the Registrant Common Stock,
pari passu with the most senior preferred stock issued from time to time by the
Registrant and with any guarantee now or hereafter entered into by the
Registrant with respect to any preferred or preference stock of the Registrant
or its affiliates, and subordinate and junior to all other liabilities of the
Registrant, except any liabilities that may be pari passu by their terms.
2
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Pursuant to the terms of a registration rights agreement, the Registrant
and the Trust have agreed with the Initial Purchasers to file a registration
statement (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") by December 16, 1996 covering resales of the
Preferred Securities, the Preferred Securities Guarantee, the Debentures and the
Registrant Common Stock issuable upon conversion of the Debentures
(collectively, the "Registrable Securities"), to use their best efforts to cause
the Registration Statement to be declared effective by the Commission under the
Securities Act by March 17, 1997, and to use their best efforts to keep the
Registration Statement effective until October 16, 1999 or such earlier date as
all Registrable Securities shall have been disposed of or on which all
Registrable Securities held by persons who are not affiliates of the Registrant
or the Trust may be resold without registration pursuant to Rule 144(k) under
the Securities Act (the "Effectiveness Period"). In the event the Registration
Statement has not been filed with the Commission by December 16, 1996 or
declared effective by the Commission by March 17, 1997, additional interest will
accrue on the Debentures and, accordingly, additional distributions will accrue
on the Preferred Securities.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
4.1 Indenture dated as of October 16, 1996 between the
Registrant and The Bank of New York, as trustee, with form
of Debenture attached as Exhibit A thereto.
10.17 Amended and Restated Declaration of Trust dated as of
October 16, 1996 among Registrant, as sponsor, Walter A.
Rhulen and Peter H. Foley, as regular trustees, The Bank
of New York, as property trustee, and The Bank of New York
(Delaware), as Delaware trustee, with the terms of the
Preferred Securities attached as Annex I thereto, and the
form of Preferred Security attached as Exhibit A-1
thereto.
10.18 Preferred Securities Guarantee Agreement dated as of
October 16, 1996 between the Registrant and The Bank of
New York, as trustee for the benefit of the holders from
time to time of the Preferred Securities.
10.19 Registration Rights Agreement dated as of October 16, 1996
among Registrant, Frontier Financing Trust, and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Oppenheimer & Co., Inc. and Stephens Inc., as
representatives of the initial purchasers of the Preferred
Securities.
3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FRONTIER INSURANCE GROUP, INC.
(Registrant)
By: /s/ Walter A. Rhulen
---------------------------------------
Walter A. Rhulen
President and Chief Executive Officer
Dated: October 23, 1996
4
STATEMENT OF DIFFERENCES
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The section symbol shall be expressed as ........... ss.
The service mark shall be expressed as ............. 'SM'
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EXHIBIT INDEX
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EXHIBIT PAGE
<S> <C> <C>
4.1 Indenture dated as of October 16, 1996 between the Registrant 6
and The Bank of New York, as trustee, with form of Debenture
attached as Exhibit A thereto.
10.17 Amended and Restated Declaration of Trust dated as of October 107
16, 1996 among Registrant, as sponsor, Walter A. Rhulen and
Peter H. Foley, as regular trustees, The Bank of New York, as
property trustee, and The Bank of New York (Delaware), as
Delaware trustee, with the terms of the Preferred Securities
attached as Annex I thereto, and the form of Preferred Security
attached as Exhibit A-1 thereto.
10.18 Preferred Securities Guarantee Agreement dated as of October 211
16, 1996 between the Registrant and The Bank of New York, as
trustee for the benefit of the holders from time to time of the
Preferred Securities.
10.19 Registration Rights Agreement dated as of October 16, 1996 237
among Registrant, Frontier Financing Trust, and Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Oppenheimer & Co., Inc. and Stephens Inc., as representatives
of the initial purchasers of the Preferred Securities.
</TABLE>
5
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Exhibit 4.1
- --------------------------------------------------------------------------------
FRONTIER INSURANCE GROUP, INC.
AS ISSUER
TO
THE BANK OF NEW YORK,
AS TRUSTEE
----------------
INDENTURE
DATED AS OF OCTOBER 16, 1996
----------------
$154,639,200
(SUBJECT TO INCREASE TO UP TO $177,835,100 IN
THE EVENT AN OVER-ALLOTMENT OPTION IS EXERCISED)
6 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2026
- --------------------------------------------------------------------------------
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Frontier Insurance Group, Inc.
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
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Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
ss.310(a)(1) ................................................... 609
(a)(2) ................................................... 609
(a)(3) ................................................... Not Applicable
(a)(4) ................................................... Not Applicable
(b) ................................................... 608, 610
ss.311(a) ................................................... 613
(b) ................................................... 613
ss.312(a) ................................................... 701
................................................... 702(a)
(b) ................................................... 702(b)
(c) ................................................... 702(c)
ss.313(a) ................................................... 703(a)
(a)(4) ................................................... 101, 1004
(b) ................................................... 703(a)
(c) ................................................... 703(a)
(d) ................................................... 703(b)
ss.314(a) ................................................... 704
(b) ................................................... Not Applicable
(c)(1) ................................................... 102
(c)(2) ................................................... 102
(c)(3) ................................................... Not Applicable
(d) ................................................... Not Applicable
(e) ................................................... 102
ss.315(a) ................................................... 601
(b) ................................................... 602
(c) ................................................... 601
(d) ................................................... 601
(e) ................................................... 514
ss.316(a) ................................................... 101
(a)(1)(A) ................................................... 502
................................................... 512
(a)(1)(B) ................................................... 513
(a)(2) ................................................... Not Applicable
(b) ................................................... 508
(c) ................................................... 104(c)
ss.317(a)(1) ................................................... 503
</TABLE>
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Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
(a)(2) ................................................... 504
(b) ................................................... 1003
ss.318(a) ................................................... 107
</TABLE>
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Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
ii
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TABLE OF CONTENTS
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RECITALS OF THE COMPANY.................................................................... 1
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.......................................................... 2
SECTION 102. Compliance Certificates and Opinions................................. 10
SECTION 103. Form of Documents Delivered to Trustee............................... 10
SECTION 104. Acts of Holders; Record Dates........................................ 11
SECTION 105. Notices, Etc., to Trustee and the Company............................ 12
SECTION 106. Notice to Holders; Waiver............................................ 12
SECTION 107. Conflict with Trust Indenture Act.................................... 13
SECTION 108. Effect of Headings and Table of Contents............................. 13
SECTION 109. Successors and Assigns............................................... 13
SECTION 110. Separability Clause.................................................. 13
SECTION 111. Benefits of Indenture................................................ 13
SECTION 112. Governing Law........................................................ 14
SECTION 113. Legal Holidays....................................................... 14
ARTICLE TWO
Debenture Forms
SECTION 201. Forms Generally...................................................... 14
SECTION 202. Initial Issuance to Property Trustee................................. 15
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ARTICLE THREE
The Debentures
SECTION 301. Title and Terms...................................................... 16
SECTION 302. Denominations........................................................ 17
SECTION 303. Execution, Authentication, Delivery and Dating....................... 17
SECTION 304. Temporary Debentures................................................. 18
SECTION 305. Registration, Registration of Transfer and Exchange.................. 18
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debentures..................... 19
SECTION 307. Payment of Interest; Interest Rights Preserved....................... 20
SECTION 308. Persons Deemed Owners................................................ 22
SECTION 309. Cancellation......................................................... 22
SECTION 310. Right of Set Off..................................................... 22
SECTION 311. CUSIP Numbers........................................................ 22
SECTION 312. Option to Extend Interest Payment Period............................. 22
SECTION 313. Paying Agent, Registrar and Conversion Agent......................... 24
SECTION 314. Global Security...................................................... 24
SECTION 315. Calculation of Original Issue Discount............................... 25
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.............................. 25
SECTION 402. Application of Trust Money........................................... 26
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ARTICLE FIVE
Remedies
SECTION 501. Indenture Events of Default.......................................... 27
SECTION 502. Acceleration of Maturity; Rescission and Annulment................... 28
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee...... 29
SECTION 504. Trustee May File Proofs of Claim..................................... 30
SECTION 505. Trustee May Enforce Claims Without Possession of Debentures.......... 30
SECTION 506. Application of Money Collected....................................... 30
SECTION 507. Limitation on Suits.................................................. 31
SECTION 508. Unconditional Right of Holders to Receive Principal and Interest
and Convert.......................................................... 31
SECTION 509. Restoration of Rights and Remedies................................... 32
SECTION 510. Rights and Remedies Cumulative....................................... 32
SECTION 511. Delay or Omission Not Waiver......................................... 32
SECTION 512. Control by Holders................................................... 32
SECTION 513. Waiver of Past Defaults.............................................. 33
SECTION 514. Undertaking for Costs................................................ 33
SECTION 515. Waiver of Stay or Extension Laws..................................... 33
SECTION 516. Enforcement by Holders of Preferred Securities....................... 34
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ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.................................. 34
SECTION 602. Notice of Defaults................................................... 34
SECTION 603. Certain Rights of Trustee............................................ 35
SECTION 604. Not Responsible for Recitals or Issuance of Debentures............... 36
SECTION 605. May Hold Debentures.................................................. 36
SECTION 606. Money Held in Trust.................................................. 36
SECTION 607. Compensation and Reimbursement....................................... 36
SECTION 608. Disqualification; Conflicting Interests.............................. 37
SECTION 609. Corporate Trustee Required; Eligibility.............................. 37
SECTION 610. Resignation and Removal; Appointment of Successor.................... 37
SECTION 611. Acceptance of Appointment by Successor............................... 39
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.......... 39
SECTION 613. Preferential Collection of Claims Against Company.................... 39
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders............ 40
SECTION 702. Preservation of Information; Communications to Holders............... 40
SECTION 703. Reports by Trustee................................................... 40
SECTION 704. Reports by Company................................................... 41
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms................. 41
SECTION 802. Successor Substituted................................................ 42
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders................... 42
SECTION 902. Supplemental Indentures with Consent of Holders...................... 43
SECTION 903. Execution of Supplemental Indentures................................. 44
SECTION 904. Effect of Supplemental Indentures.................................... 45
SECTION 905. Conformity with Trust Indenture Act.................................. 45
SECTION 906. Reference in Debentures to Supplemental Indentures................... 45
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal and Interest.................................... 45
SECTION 1002. Maintenance of Office or Agency...................................... 45
SECTION 1003. Money for Debenture Payments to Be Held in Trust..................... 46
SECTION 1004. Statement by Officers as to Default.................................. 47
SECTION 1005. Limitation on Dividends; Transactions with Affiliates;
Covenants as to the Trust............................................ 47
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SECTION 1006. Payment of Expenses of the Trust.................................... 48
SECTION 1007. Registration Rights................................................. 48
ARTICLE ELEVEN
Redemption of Debentures
SECTION 1101. Right of Redemption.................................................. 49
SECTION 1102. Applicability of Article............................................. 50
SECTION 1103. Election to Redeem; Notice to Trustee................................ 50
SECTION 1104. Selection by Trustee of Debentures to Be Redeemed.................... 50
SECTION 1105. Notice of Redemption................................................. 51
SECTION 1106. Deposit of Redemption Price.......................................... 51
SECTION 1107. Debentures Payable on Redemption Date................................ 51
SECTION 1108. Debentures Redeemed in Part.......................................... 52
SECTION 1109. Optional Redemption.................................................. 52
SECTION 1110. Tax Event Redemption................................................. 53
SECTION 1111. No Sinking Fund...................................................... 54
ARTICLE TWELVE
Subordination of Debentures
SECTION 1201. Agreement to Subordinate............................................. 54
SECTION 1202. Default on Senior Indebtedness....................................... 54
SECTION 1203. Liquidation; Dissolution; Bankruptcy................................. 55
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SECTION 1204. Subrogation.......................................................... 56
SECTION 1205. Trustee to Effectuate Subordination.................................. 57
SECTION 1206. Notice by the Company................................................ 57
SECTION 1207. Rights of the Trustee; Holders of Senior Indebtedness................ 58
SECTION 1208. Subordination May Not Be Impaired.................................... 58
ARTICLE THIRTEEN
Conversion of Debentures
SECTION 1301. Conversion Rights.................................................... 59
SECTION 1302. Conversion Procedures................................................ 59
SECTION 1303. Conversion Price Adjustments - General............................... 61
SECTION 1304. Certain Fundamental Changes.......................................... 65
SECTION 1305. Adjustments in Case of Fundamental Changes........................... 66
SECTION 1306. Notice of Adjustments of Conversion Price............................ 68
SECTION 1307. Prior Notice of Certain Events....................................... 69
SECTION 1308. Dividend or Interest Reinvestment Plans.............................. 70
SECTION 1309. Certain Additional Rights............................................ 70
SECTION 1310. Restrictions on Common Stock Issuable Upon Conversion................ 71
SECTION 1311. Trustee Not Responsible for Determining Conversion Price or
Adjustments.......................................................... 71
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ARTICLE FOURTEEN
Immunity of Incorporators, Stockholders,
Officers and Directors
SECTION 1401. No Recourse.......................................................... 72
EXHIBIT A Form of Debenture
ANNEX A Form of Amended and Restated Declaration of Trust among
the Company, as Sponsor, The Bank of New York, as Property
Trustee, The Bank of New York (Delaware), as Delaware
Trustee, and Walter A. Rhulen and Peter H. Foley, as
regular trustees, dated as of October 16, 1996
</TABLE>
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Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
x
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INDENTURE, dated as of October 16, 1996, between Frontier
Insurance Group, Inc., a corporation duly organized and existing under the laws
of the State of Delaware (the "Company"), having its principal office at 195
Lake Louise Marie Road, Rock Hill, New York 12775, and The Bank of New York, a
New York banking corporation, as Trustee (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, Frontier Financing Trust, a Delaware business trust (the
"Trust") formed under the Amended and Restated Declaration of Trust dated as of
October 16, 1996 (the "Declaration") by and among the Company, as sponsor, The
Bank of New York, as property trustee (the "Property Trustee"), The Bank of New
York (Delaware), as Delaware trustee (the "Delaware Trustee"), and Walter A.
Rhulen and Peter H. Foley, as regular trustees, will issue and sell to certain
Initial Purchasers (as defined herein) 3,000,000 6 1/4% Convertible Preferred
Trust Originated Securities'SM' (the "Preferred Securities") representing
undivided beneficial interests in the Trust (3,450,000 Preferred Securities in
the event the Initial Purchasers' over-allotment option is exercised in full),
pursuant to the Purchase Agreement dated October 9, 1996 (the "Purchase
Agreement"), by and among the Company, the Trust and the Initial Purchasers (as
defined herein), with a liquidation amount of $50 per Preferred Security, or
$150,000,000 in the aggregate ($172,500,000 in the aggregate in the event the
Initial Purchasers' over-allotment option is exercised in full); and
WHEREAS, the Trust will issue and sell to the Company 92,784
convertible common securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") representing undivided beneficial
interests in the Trust (106,702 Common Securities in the event the Initial
Purchasers' over-allotment option is exercised in full) with a liquidation
amount of $50 per Common Security, or $4,639,200 in the aggregate ($5,335,100 in
the aggregate in the event the Initial Purchasers' over-allotment option is
exercised in full); and
WHEREAS, pursuant to the Declaration, the Trust will use the
proceeds from the sale of the Trust Securities to purchase from the Company the
6 1/4% Convertible Subordinated Debentures Due 2026 described in this Indenture
(the "Debentures") in an aggregate principal amount of $154,639,200
($177,835,100 in the event the Initial Purchasers' over-allotment option is
exercised in full); and
WHEREAS, in connection with the issuance and sale by the Trust of
the Preferred Securities to the Initial Purchasers and the issuance and sale of
the Debentures by the Company to the Trust, the Company has agreed to
irrevocably guarantee the payment in full of the distributions on the Preferred
Securities, the amount payable upon redemption of the Preferred Securities and,
generally, the liquidation preference of the Preferred Securities, to the extent
the
- ----------
'SM' "Convertible Trust Originated Preferred Securities" and "Convertible
TOPrS" are service marks of Merrill Lynch & Co., Inc.
<PAGE>
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Trust has funds available therefor, pursuant to the Preferred Securities
Guaranty Agreement of even date herewith (the "Guarantee") between the Company
and The Bank of New York, as guarantee trustee, for the benefit of the holders
of the Preferred Securities; and
WHEREAS, so long as the Trust is a Holder (as defined herein) of
Debentures, and any Preferred Securities remain outstanding, the Declaration
provides that the holders of Preferred Securities may cause the Conversion Agent
(i) to exchange such Preferred Securities for Debentures held by the Trust and
(b) immediately convert such Debentures into Common Stock (as defined herein);
and
WHEREAS, the Company has duly authorized the creation of the
Debentures, this Indenture sets forth the terms and conditions thereof, and all
things necessary to make this Indenture a valid agreement of the Company,
subject to execution and delivery of this Indenture by the Company and the
Trustee, have been done;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Debentures by the Holders as provided for herein, it is mutually agreed, for the
equal and proportionate benefit of the Holders, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles; and
(4) 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.
2
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"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Additional Interest" has the meaning specified in Section 301.
"Additional Payments" means Compounded Interest and Additional
Interest, if any.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a day on which banking
institutions in The City of New York or in Wilmington, Delaware are authorized
or required by law to close.
"Commission" means the Securities and Exchange Commission, as
created under the Securities Exchange Act of 1934, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in the recitals to
this Instrument.
"Common Securities Guarantee" means any guarantee that the
Company may enter into that operates directly or indirectly for the benefit of
holders of Common Securities of the Trust.
"Common Stock" includes any stock of any class of the Company
which has no preference with respect to dividends or to amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company. However,
subject to the provisions of Article Thirteen, shares issuable on conversion of
Debentures shall include only shares of the class designated as Common Stock of
the Company at the date of this instrument or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference with respect to dividends or to amounts payable in the event of
any voluntary or involuntary
3
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liquidation, dissolution or winding up of the Company and which are not subject
to redemption by the Company; provided that if at any time there shall be more
than one such resulting class, the shares of each such class then so issuable on
conversion shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Compounded Interest" has the meaning specified in Section 312.
"Conversion Agent" means the Person appointed to act on behalf of
the holders of Preferred Securities in effecting the conversion of Preferred
Securities as and in the manner set forth in the Declaration and Section 1302
hereof.
"Conversion Date" has the meaning specified in Section 1302.
"Corporate Trust Office" means the principal office of the
Trustee in New York, New York, at which at any particular time its corporate
trust business shall be administered and which at the date of this Indenture is
101 Barclay Street, New York, New York 10286.
"Debentures" has the meaning specified in the Recitals to this
instrument.
"Declaration" has the meaning specified in the Recitals to this
instrument.
"Declaration Event of Default" means a "Declaration Event of
Default" as defined in the Declaration.
"Defaulted Interest" has the meaning specified in Section 307.
"Delaware Trustee" has the meaning specified in the Recitals to
this instrument.
"Depositary" means, with respect to any Debentures issued in the
form of one or more Global Securities, a clearing agency registered under the
Exchange Act that is dedicated to act as Depositary for the Debentures.
"Direct Action" means a proceeding directly instituted by a
holder of Preferred Securities for enforcement of payment to such holder of the
principal of or interest on the Debentures having a principal amount equal to
the aggregate liquidation amount of the Preferred Securities of such holder on
or after the respective due date specified in the Debentures, if a
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Declaration Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date.)
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Debentures held by the Property Trustee are to be
distributed to the holders of Trust Securities pro rata in accordance with the
Declaration.
"Dissolution Tax Opinion" has the meaning specified in the
Declaration.
"Effectiveness Period" has the meaning specified in Section 1007.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Expiration Time" has the meaning specified in Section 1303(e).
"Extension Period" has the meaning specified in Section 312.
"Fundamental Change" has the meaning specified in Section 1305.
"Global Security" has the meaning specified in Section 314.
"Guarantee" has the meaning specified in the Recitals to this
instrument.
"Holder" means a Person in whose name a Debenture is registered
in the Register.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Indenture Event of Default" has the meaning specified in Section
501.
"Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, Oppenheimer &
Co., Inc. and Stephens Inc.
"Interest Payment Date" has the meaning specified in Section 301.
"Investment Company Event" has the meaning specified in the
Declaration.
"Liquidated Damages" has the meaning specified in Section 1007.
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"Maturity", when used with respect to any Debenture, means the
date on which the principal of such Debenture becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Ministerial Action" has the meaning specified in Section 1110.
"90-Day Period" has the meaning specified in Section 1110.
"No Recognition Opinion" has the meaning specified in the
Declaration.
"Non Book-Entry Preferred Securities" has the meaning specified
in Section 314.
"Notice of Conversion" means the notice to be given by a holder
of Preferred Securities to the Conversion Agent directing the Conversion Agent
to exchange such Preferred Securities for Debentures and to convert such
Debentures into Common Stock on behalf of such holder.
"NYSE" means The New York Stock Exchange, Inc.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 1004 shall
be the principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company, and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Debentures, means, as of
the date of determination, all Debentures theretofore authenticated and
delivered under this Indenture, except: (i) Debentures theretofore canceled by
the Trustee or delivered to the Trustee for cancellation; (ii) Debentures for
whose payment or redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Debentures; provided, that if such
Debentures are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the Trustee has
been made; and (iii) Debentures that have been paid pursuant to Section 306,
converted into Common Stock pursuant to Section 1301, or in exchange for or in
lieu of which other Debentures have been authenticated and delivered pursuant to
this Indenture, other than any such Debentures with respect to which there shall
have been presented to the Trustee proof satisfactory to it that such Debentures
are held by a bona fide purchaser in whose hands such Debentures are valid
obligations of the Company, provided, however, that in determining whether the
Holders of the requisite principal amount of the Outstanding Debentures have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Debentures owned by the Company or any other obligor upon the
Debentures or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be outstanding,
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except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Debentures which the Trustee knows to be so owned shall be so
disregarded. Debentures so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Debentures and that
the pledgee is not the Company or any other obligor upon the Debentures or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay
the principal of or interest on any Debentures on behalf of the Company.
"Person" means any individual, corporation, company, partnership,
joint venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Debenture" of any particular Debenture means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Debenture
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Debenture.
"Preferred Securities" has the meaning specified in the Recitals
to this instrument.
"pro rata", when used with respect to any payment, distribution
or treatment of the Debentures, shall mean pro rata to each Holder of Debentures
according to the aggregate principal amount of the Debentures Outstanding,
provided that in the event any Debentures are held by the Company or any
affiliate thereof and an Indenture Event of Default has occurred and is
continuing, any funds available for such payment shall first be paid to each
Holder of the Debentures (other than the Company or any affiliate thereof) pro
rata according to the aggregate principal amount of the Debentures held by each
such Holder relative to the aggregate principal amount of all Debentures
Outstanding and held by such Holders, and only after satisfaction of all amounts
owed to such Holders of the Debentures (other than the Company or any affiliate
thereof), any additional funds available for such payment shall be made to the
Company or any affiliate thereof pro rata according to the aggregate principal
amount of Debentures held by them.
"Property Trustee" has the meaning specified in the Recitals to
this instrument.
"Purchase Agreement" has the meaning specified in the Recitals to
this instrument.
"Purchased Shares" has the meaning specified in Section 1303(e).
"Purchaser Stock Price" has the meaning specified in Section
1304.
"Redemption Date", when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
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"Redemption Price", when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Redemption Tax Event" has the meaning specified in Section 1110.
"Redemption Tax Opinion" has the meaning set forth in the
Declaration.
"Reference Date" has the meaning specified in Section 1303(c).
"Register" and "Registrar" have the respective meanings specified
in Section 305.
"Registration Default" has the meaning specified in Section 1007.
"Registration Rights Agreement" has the meaning specified in
Section 1007.
"Regular Record Date" has the meaning specified in Section 301.
"Regular Trustees" means the trustees of the Trust other than the
Property Trustee and the Delaware Trustee, who shall initially be Water A.
Rhulen and Peter H. Foley.
"Responsible Officer", when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the chairman
or any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, any
assistant vice president, the treasurer, any assistant treasurer, any trust
officer or assistant trust officer, the controller or any assistant controller
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Securities Legend" has the meaning specified in
Section 202.
"Senior Indebtedness" means with respect to the Company (i) the
principal, premium, if any, and interest with respect to (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise, and
(vi) all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for (1) any
such indebtedness that is by its terms subordinated to or pari
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passu with the Debentures and (2) any indebtedness between or among such obligor
or its affiliates, including all other debt securities and guarantees in respect
of those debt securities issued to any other trust, or a trustee of such trust,
partnership, or other entity affiliated with the Company that is, directly or
indirectly, a financing vehicle of the Company (a "Financing Entity") in
connection with the issuance by such Financing Entity of preferred securities or
other securities which rank junior to or pari passu with, the Preferred
Securities. Such Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
"Shelf Registration Statement" has the meaning specified in
Section 1007.
"Special Event" has the meaning specified in the Declaration.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Debenture or any
installment of interest thereon, means the date specified in such Debenture as
the fixed date on which the principal, together with any accrued and unpaid
interest (including Compounded Interest), of such Debenture or such installment
of interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50%
of the outstanding Voting Stock of which is owned, directly or indirectly, by
such Person or by one or more other Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other than
a corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Tax Event" has the meaning specified in the Declaration.
"Trust" has the meaning specified in the Recitals to this
instrument.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Securities" has the meaning specified in the Recitals to
this instrument.
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"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" of any Person means capital stock of such Person
which ordinarily has voting power for the election of directors (or Persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act or reasonably requested by the Trustee in connection with such
application or request. Each such certificate or opinion shall be given in the
form of an Officers' Certificate, if to be given by an officer of the Company,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
applicable requirements of the Trust Indenture Act and any other applicable
requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
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Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee or the Company, as the case may be, deems
sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders of Outstanding Debentures entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or other action, or to
vote on any action, authorized or permitted to be given or taken by Holders. If
not set by the Company prior to the first solicitation of a Holder made by any
Person in respect of any such action, or, in the case of any such vote, prior to
such vote, the record date for any such action or vote shall be the 30th day
(or, if later, the date of the
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most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Debentures shall be proved by the Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Debenture shall bind every
future Holder of the same Debenture and the Holder of every Debenture issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Debenture.
(f) Without limiting the foregoing, a Holder entitled hereunder
to give or take any such action with regard to any particular Debenture may do
so with regard to all or any part of the principal amount of such Debenture or
by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and the Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Trustee Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at such Holder's address as it appears in the Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed,
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to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Any notice when mailed to a Holder in the aforesaid
manner shall be conclusively deemed to have been received by such Holder whether
or not actually received by such Holder. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Debentures
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Debentures, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the holders of Senior Indebtedness, the holders of
Preferred Securities (to the extent provided herein) and the Holders of
Debentures, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
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SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Debenture or the last date on which a Holder has the
right to convert his Debentures shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Debentures)
payment of interest or principal or conversion of the Debentures need not be
made on such date, but may be made on the next succeeding Business Day (except
that, if such Business Day is in the next succeeding calendar year, such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be,
shall be the immediately preceding Business Day) with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity or on such last day for conversion, provided, that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption Date
or Stated Maturity, as the case may be.
ARTICLE TWO
DEBENTURE FORMS
SECTION 201. Forms Generally.
The Debentures and the Trustee's certificates of authentication
shall be substantially in the form of Exhibit A which is hereby incorporated in
and expressly made a part of this Indenture. The Debentures may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company). The Company shall
furnish any such legend not contained in Exhibit A to the Trustee in writing.
Each Debenture shall be dated the date of its authentication. The terms and
provisions of the Debentures set forth in Exhibit A are part of the terms of
this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
The definitive Debentures shall be typewritten or printed,
lithographed or engraved or produced by any combination of these methods on
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Debentures may be listed, all as
determined by the officers executing such Debentures, as evidenced by their
execution of such Debentures.
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SECTION 202. Initial Issuance to Property Trustee.
The Debentures initially issued to the Property Trustee of the
Trust shall be in the form of one or more individual certificates in definitive,
fully registered form without distribution coupons and shall bear the following
legend (the "Restricted Securities Legend") unless the Company determines
otherwise in accordance with applicable law:
THIS DEBENTURE AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS DEBENTURE 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, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS DEBENTURE BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH DEBENTURE,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS DEBENTURE (OR ANY PREDECESSOR OF THIS DEBENTURE)
(THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE COMPANY, (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THE DEBENTURES ARE 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) PURSUANT
TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
DEBENTURE 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 (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS DEBENTURE IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRANSFER AGENT.
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THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
ARTICLE THREE
THE DEBENTURES
SECTION 301. Title and Terms.
The aggregate principal amount of Debentures that may be
authenticated and delivered under this Indenture is limited to the sum of (a)
$154,639,200 and (b) such aggregate principal amount (which may not exceed
$23,195,900 aggregate principal amount) of Debentures, if any, as shall be
purchased by the Trust pursuant to an over-allotment option in accordance with
the terms and provisions of the Purchase Agreement, except for Debentures
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Debentures pursuant to Section 304, 305, 306, 906,
1108 or 1301.
The Debentures shall be known and designated as the "6 1/4%
Convertible Subordinated Debentures Due 2026" of the Company. Their Stated
Maturity shall be October 16, 2026, and they shall bear interest at the rate of
6 1/4% per annum, from October 16, 1996 or from the most recent Interest Payment
Date (as defined below) to which interest has been paid or duly provided for, as
the case may be, payable quarterly (subject to deferral as set forth herein), in
arrears, on January 15, April 15, July 15 and October 15 (each an "Interest
Payment Date") of each year commencing January 15, 1997 until the principal
thereof is paid or made available for payment, and they shall be paid to the
Person in whose name the Debenture is registered at the close of business on the
regular record date for such interest installment, which shall be the close of
business on the date which is 15 days prior to each Interest Payment Date (the
"Regular Record Date"). Interest will compound quarterly and will accrue at the
rate of 6 1/4% per annum on any interest installment in arrears or during an
extension of an interest payment period as set forth in Section 312 hereof.
The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than a
full quarterly period for which interest is computed, will be computed on the
basis of the actual number of days elapsed. In the event that any date on which
interest is payable on the Debentures is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
If at any time while the Property Trustee is the Holder of any
Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any
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other taxing authority, then, in any such case, the Company will pay as
additional interest ("Additional Interest") on the Debentures held by the
Property Trustee, such amounts as shall be required so that the net amounts
received and retained by the Trust and the Property Trustee after paying any
such taxes, duties, assessments or other governmental charges will be not less
than the amounts the Trust and the Property Trustee would have received had no
such taxes, duties, assessments or other governmental charges been imposed.
The principal of and interest on the Debentures shall be payable
at the office or agency of the Company in the United States maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Register.
The Debentures shall be redeemable as provided in Article Eleven
hereof.
The Debentures shall be subordinated in right of payment to
Senior Indebtedness as provided in Article Twelve hereof.
The Debentures shall be convertible as provided in Article
Thirteen hereof.
SECTION 302. Denominations.
The Debentures shall be issuable only in registered form without
coupons and only in denominations of $50 and integral multiples thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Debentures shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Debentures or
did not hold such offices at the date of such Debentures.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Debentures; and the Trustee in accordance
with such Company Order shall authenticate and make available for delivery such
Debentures as in this Indenture provided and not otherwise.
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No Debenture shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Debenture a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder.
SECTION 304. Temporary Debentures.
Pending the preparation of definitive Debentures, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Debentures which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Debentures in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Debentures may determine, as evidenced by their
execution of such Debentures.
If temporary Debentures are issued, the Company will cause
definitive Debentures to be prepared without unreasonable delay. After the
preparation of definitive Debentures, the temporary Debentures shall be
exchangeable for definitive Debentures upon surrender of the temporary
Debentures at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Debentures the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Debentures of authorized denominations. Until so
exchanged the temporary Debentures shall in all respects be entitled to the same
benefits under this Indenture as definitive Debentures.
SECTION 305. Registration, Registration of Transfer and Exchange.
(a) General.
The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Debentures and of transfers of Debentures. The Trustee is hereby
appointed "Registrar" for the purpose of registering Debentures and transfers of
Debentures as herein provided.
Upon surrender for registration of transfer of any Debenture at
an office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Debentures of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Debentures may be exchanged for
other Debentures of any authorized denominations and of a like aggregate
principal amount, upon surrender of the
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Debentures to be exchanged at such office or agency. Whenever any Debentures are
so surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Debentures which the Holder
making the exchange is entitled to receive.
All Debentures issued upon any registration of transfer or
exchange of Debentures shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Debentures surrendered upon such registration of transfer or exchange.
Every Debenture presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Debentures, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Debentures, other
than exchanges pursuant to Section 304, 906, 1108 or 1301 not involving any
transfer.
The Company shall not be required (i) in the case of a partial
redemption of the Debentures, to issue, register the transfer of or exchange any
Debenture during a period beginning at the opening of business 15 days before
the day of the mailing of a notice of redemption of Debentures selected for
redemption under Section 1104 and ending at the close of business on the day of
such mailing, or (ii) to register the transfer of or exchange any Debenture so
selected for redemption in whole or in part, except the unredeemed portion of
any Debenture being redeemed in part.
(b) Transfer Procedures and Restrictions.
The Debentures may not be transferred except in compliance with
the Restricted Debentures Legend unless otherwise determined by the Company in
accordance with applicable law. Upon any distribution of the Debentures to the
holders of the Preferred Securities in accordance with the Declaration, the
Company and the Trustee shall enter into a supplemental indenture pursuant to
Section 901(6) to provide for transfer procedures and restrictions with respect
to the Debentures substantially similar to those contained in the Declaration to
the extent applicable in the circumstances existing at the time of such
distribution.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Debentures.
If any mutilated Debenture is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Debenture of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
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If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Debenture and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Debenture has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Debenture, a new Debenture of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Debenture issued pursuant to this Section in lieu of
any destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Debenture which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Debenture (or one or more Predecessor Debentures) is
registered at the close of business on the Regular Record Date.
Any interest on any Debenture which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Debentures (or their
respective Predecessor Debentures) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Debenture and the date of the
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proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to
be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his address as it
appears in the 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 so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Debentures (or their respective Predecessor Debentures) are registered
at the close of business on such Special Record Date and shall no longer
be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and, if so
listed, upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each
Debenture delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue (including in each such case
Compounded Interest), which were carried by such other Debenture.
In the case of any Debenture which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Debenture whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Debenture (or one or more Predecessor Debentures) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Debenture that is converted, interest whose Stated Maturity is after the
date of conversion of such Debenture shall not be payable, and the Company shall
not make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest (including Additional Interest,
Compounded Interest and Liquidated Damages) on the Debentures being converted,
which shall be deemed to be paid in full.
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SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Debenture for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Debenture is registered as the owner of
such Debenture for the purpose of receiving payment of principal of and (subject
to Section 307) interest (including Additional Interest, Compounded Interest and
Liquidated Damages) on such Debenture and for all other purposes whatsoever,
whether or not such Debenture be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 309. Cancellation.
All Debentures surrendered for payment, redemption, registration
of transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
Debentures previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Debentures so delivered
shall be promptly canceled by the Trustee. No Debentures shall be authenticated
in lieu of or in exchange for any Debentures canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Debentures held by the Trustee shall be disposed of as directed by a Company
Order; provided, however, that the Trustee shall not be required to destroy the
certificates representing such canceled Debentures.
SECTION 310. Right of Set Off.
Notwithstanding anything to the contrary in this Indenture, the
Company shall have the right to set off any payment it is otherwise required to
make hereunder to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee.
SECTION 311. CUSIP Numbers.
The Company in issuing the Debentures may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Debentures or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Debentures, and any such redemption shall not be affected
by any defect in or omission of such numbers.
SECTION 312. Option to Extend Interest Payment Period.
(a) The Company shall have the right at any time during the term
of the Debentures to defer interest payments from time to time by extending the
interest payment period ("Extension Period") for successive periods not
exceeding 20 consecutive quarters for each such period; provided, no Extension
Period may extend beyond the maturity date of the
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Debentures. At the end of each Extension Period, the Company shall pay all
interest then accrued and unpaid (including Additional Interest and Liquidated
Damages) together with interest thereon compounded quarterly at the rate
specified for the Debentures to the extent permitted by applicable law
("Compounded Interest"); provided, that during any Extension Period, the Company
(a) shall not declare or pay dividends on, make distributions with respect to,
or redeem, purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock (except for (i) dividends or distributions in shares of
Company Common Stock on Common Stock, (ii) purchases or acquisitions of shares
of Common Stock made in connection with any employee benefit plan of the Company
or its subsidiaries, purchases made from employees or officers pursuant to
employment agreements, or purchases made under option agreements (or upon the
exercise of options granted thereunder), provided the plan or agreement was in
existence on October 9, 1996, and provided, further, that repurchases by the
Company made from officers or employees of the Company or its subsidiaries
pursuant to employment or option agreements shall be made at a price not to
exceed the market value on the date of any such repurchase and shall not exceed
$5 million in the aggregate for all such employees and officers, (iii)
conversions or exchanges of any shares of one class of Common Stock class into
Common Stock of another class, and (iv) purchases of fractional interests of
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of any of the Company's securities being converted or exchanged), (b)
shall not make any payment of interest, principal or premium, if any, on, or
repay, repurchase or redeem, any debt securities issued by the Company that rank
pari passu with or junior to the Debentures (except by conversion into or
exchange for shares of Common Stock), and (c) shall not make any guarantee
payments with respect to the foregoing. Prior to the termination of any such
Extension Period, the Company may further extend such Extension Period; provided
that such Extension Period together with all previous and further extensions
thereof may not exceed 20 consecutive quarters and may not extend beyond the
maturity date of the Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, the Company may commence a new
Extension Period, subject to the above requirements. No interest during an
Extension Period, except at the end thereof, shall be due and payable.
(b) If the Property Trustee is the sole Holder of the Debentures
at the time the Company selects an Extension Period, the Company shall give
written notice to the Regular Trustees, the Property Trustee and the Trustee of
its selection of such Extension Period at least one Business Day prior to the
earlier of (i) the date the distributions on the Preferred Securities are
payable or (ii) if the Preferred Securities are listed on the NYSE or other
stock exchange or quotation system, the date the Trust is required to give
notice to the NYSE or other applicable self-regulatory organization or to
holders of the Preferred Securities of the record date or the date such
distributions are payable, but in any event not less than ten Business Days
prior to such record date.
(c) If the Property Trustee is not the sole Holder of the
Debentures at the time the Company selects an Extension Period, the Company
shall give the Holders of the Debentures and the Trustee written notice of its
selection of such Extension Period at least ten Business Days prior to the
earlier of (i) the next succeeding Interest Payment Date or (ii) if the
Preferred Securities are listed on the NYSE or other stock exchange or quotation
system, the date the Company is required to give notice to the NYSE or other
applicable self-regulatory organization or to
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Holders of the Debentures on the record or payment date of such related interest
payment, but in any event not less than two Business Days prior to such record
date.
(d) The quarter in which any notice is given pursuant to
paragraphs (b) and (c) hereof shall be counted as one of the 20 quarters
permitted in the maximum Extension Period permitted under paragraph (a) hereof.
SECTION 313. Paying Agent, Registrar and Conversion Agent.
The Trustee will initially act as Paying Agent, Registrar and
Conversion Agent. The Company may change any Paying Agent, Registrar,
co-registrar or Conversion Agent without prior notice. The Company or any of its
Affiliates may act in any such capacity.
SECTION 314. Global Security.
(a) In connection with a Dissolution Event,
(i) the Debentures in certificated form may be presented
to the Trustee by the Property Trustee in exchange for a global certificate
evidencing the Debenture in an aggregate principal amount equal to the aggregate
principal amount of all outstanding Debentures (a "Global Security"), to be
registered in the name of the Depositary, or its nominee, and delivered by the
Trustee to the Depositary for crediting to the accounts of its participants
pursuant to the instructions of the Regular Trustees. The Company upon any such
presentation shall execute a Global Security in such aggregate principal amount
and deliver the same to the Trustee for authentication and delivery in
accordance with this Indenture. Payments on the Debentures issued as a Global
Security will be made to the Depositary; and
(ii) if any Preferred Securities are held in non
book-entry certificated form, the Debentures in certificated form may be
presented to the Trustee by the Property Trustee and any Preferred Security
Certificate which represents Preferred Securities other than Preferred
Securities held by the Depositary or its nominee ("Non Book-Entry Preferred
Securities") will be deemed to represent beneficial interests in Debentures
presented to the Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security Certificates are presented to the
Registrar for transfer or reissuance at which time such Preferred Security
Certificates will be canceled and a Debenture, registered in the name of the
holder of the Preferred Security Certificate or the transferee of the holder of
such Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Security Certificate canceled, will be executed by the Company and delivered to
the Trustee for authentication and delivery in accordance with this Indenture.
On issue of such Debentures, Debentures with an equivalent aggregate principal
amount that were presented by the Property Trustee to the Trustee will be deemed
to have been canceled.
(b) A Global Security may be transferred, in whole but not in
part, only to another nominee of the Depositary, or to a nominee of such
successor Depositary.
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(c) If (i) the Depositary notifies the Company that it is
unwilling or unable to continue as a depositary for such Global Security and no
successor depositary shall have been appointed, (ii) the Depositary, at any
time, ceases to be a clearing agency registered under the Exchange Act at which
time the Depositary is required to be so registered to act as such depositary
and no successor depositary shall have been appointed, (iii) the Company, in its
sole discretion, determines that such Global Security shall be so exchangeable
or (iv) there shall have occurred an Indenture Event of Default, as the case may
be, the Company will execute, and, subject to Article Three of this Indenture,
the Trustee, upon written notice from the Company and receipt of a Company
Order, will authenticate and deliver the Debentures in definitive registered
form without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Security in exchange for such
Global Security. In addition, upon an Indenture Event of Default or if the
Company may at any time determine that the Debentures shall no longer be
represented by a Global Security, in such event the Company will execute, and
subject to Section 305 of this Indenture, the Trustee, upon receipt of an
Officers' Certificate evidencing such determination by the Company, will
authenticate and make available for delivery the Debentures in definitive
registered form without coupons, 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 Debentures in definitive registered form without coupons, in authorized
denominations, the Global Security shall be canceled by the Trustee. Such
Debentures in definitive registered form 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 Trustee. The Trustee shall deliver
such Debentures to the Depositary for delivery to the Persons in whose names
such Debentures are so registered.
SECTION 315. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of
each calendar year a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on Outstanding
Securities as of the end of such year.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to
any surviving rights of conversion, registration of transfer or exchange of
Debentures herein expressly provided for), and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
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(1) either
(A) all Debentures theretofore authenticated and delivered
(other than (i) Debentures which have been destroyed, lost or
stolen and which have been replaced or paid as provided in
Section 306 and (ii) Debentures for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Debentures not theretofore delivered to the
Trustee for cancellation have become due and payable, and the
Company has deposited or caused to be deposited with the Trustee
funds in trust for the purpose and in an amount sufficient to pay
and discharge the entire indebtedness on such Debentures not
theretofore delivered to the Trustee for cancellation, for
principal and interest (including Compounded Interest and
Liquidated Damages) to the date of such deposit (in the case of
Debentures which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for or relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Debentures and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee. All moneys
deposited with the Trustee pursuant to Section 401 (and held by it or any Paying
Agent) for the payment of Debentures subsequently converted shall be returned to
the Company upon Company Request.
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ARTICLE FIVE
REMEDIES
SECTION 501. Indenture Events of Default.
"Indenture Event of Default," wherever used herein, means any one
of the following events that has occurred and is continuing (whatever the reason
for such Indenture Event of Default and whether it shall be occasioned by the
provisions of Article Twelve or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) failure for 30 days to pay interest on the Debentures,
including any Additional Interest, Compounded Interest and
Liquidated Damages in respect thereof, when due; provided that a
valid extension of an interest payment period will not constitute
a default in the payment of interest (including any Additional
Interest, Compounded Interest or Liquidated Damages) for this
purpose;
(2) failure to pay principal of or premium, if any, on
the Debentures when due whether at maturity, upon redemption,
by declaration or otherwise;
(3) failure by the Company to deliver shares of its Common
Stock upon an election by a holder of Preferred Securities to
convert such Preferred Securities;
(4) failure to observe or perform any other covenant
contained in this Indenture for 90 days after notice to the
Company by the Trustee or by the Holders of not less than 25% in
aggregate outstanding principal amount of the Debentures;
(5) entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company in
an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law
or (B) a decree or order adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law,
or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or
of substantially all of the property of the Company, or ordering
the winding up or liquidation of its affairs, and the continuance
of any
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such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days;
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by the Company or to the entry of a decree or order
for relief in respect of itself in an involuntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding
against the Company, or the filing by the Company of a petition
or answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by the Company to
the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or
of substantially all of the property of the Company, or the
making by the Company of an assignment for the benefit of
creditors, or the admission by the Company in writing of its
inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any
such action; or
(7) the voluntary or involuntary dissolution, winding up
or termination of the Trust, except in connection with (i) the
distribution of Debentures to holders of Preferred Securities in
liquidation of the Trust upon the occurrence of a Dissolution
Event, or (ii) certain mergers, consolidations or amalgamations,
each as permitted by the Declaration.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Indenture Event of Default occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Debentures may declare the principal of all
the Debentures and any other amounts payable hereunder to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal and all accrued
interest shall become immediately due and payable.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as provided in this Article hereinafter, the Holders of
a majority in aggregate principal amount of the Outstanding Debentures, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:
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(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest (including any Additional
Interest, Compounded Interest and Liquidated Damages) on all
Debentures,
(B) the principal of any Debentures which have become due
otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Debentures, and
(C) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Debentures which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair
any right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
(1) default is made in the payment of any interest (including any
Additional Interest or Compounded Interest) on any Debenture when such
interest becomes due and payable and such default continues for a period
of 30 days, or
(2) default is made in the payment of the principal of any
Debenture at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Debentures, the whole amount then due and payable on such
Debentures for principal and interest (including any Additional Payments) and,
to the extent that payment thereof shall be legally enforceable, interest on any
overdue principal and on any overdue interest (including any Additional Interest
and Compounded Interest), at the rate borne by the Debentures, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If an Indenture Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders by such
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appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or
any other obligor upon the Debentures), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Debentures.
All rights of action and claims under this Indenture or the
Debentures may be prosecuted and enforced by the Trustee without the possession
of any of the Debentures or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to Article Twelve, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal or interest (including any Additional Payments), upon
presentation of the Debentures and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
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SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including any Additional Payments) on the
Debentures in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Debentures for
principal and interest (including any Compounded Interest),
respectively.
SECTION 507. Limitation on Suits.
No Holder of any Debenture shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Indenture Event of Default;
(2) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Debentures shall have made written request to
the Trustee to institute proceedings in respect of such Indenture Event
of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Debentures;
it being understood and intended that no one or more Holders 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 Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders. The
limitations specified in (1) through (5) above shall not apply to a suit
initiated by a Holder of a Debenture for enforcement of payment of interest,
principal or premium, if any, on such Debenture on or after the respective due
dates of such payments expressed in such Debenture.
SECTION 508. Unconditional Right of Holders to Receive Principal and Interest
and Convert.
Notwithstanding any other provision in this Indenture, the Holder
of any Debenture shall have the right, which is absolute and unconditional, to
receive payment of the
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principal of and (subject to Section 307) interest (including any Additional
Payments) on such Debenture on the respective Stated Maturities expressed in
such Debenture (or, in the case of redemption, on the Redemption Date) and to
convert such Debenture in accordance with Article Thirteen and to institute suit
for the enforcement of any such payment and right to convert, and such rights
shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Debenture to exercise any right or remedy accruing upon any Indenture Event of
Default shall impair any such right or remedy or constitute a waiver of any such
Indenture Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Debentures shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture; and
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(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
Subject to Section 902 hereof, the Holders of not less than a
majority in principal amount of the Outstanding Debentures may on behalf of the
Holders of all the Debentures waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of, premium, if any, or
interest (including any Additional Payments and Liquidated Damages) on
any Debenture (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise
than by acceleration has been deposited with the Trustee); or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Debenture affected; provided, however, that
if the Debentures are held by the Trust or a trustee of the Trust, such
waiver shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to such
waiver; provided, further, that if the consent of the Holder of each
outstanding Debenture 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, such default shall cease to exist, and any
Indenture Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or the Trustee or in
any suit for the enforcement of the right to receive the principal of and
interest (including any Additional Payments) on any Debenture or to convert any
Debenture in accordance with Article Thirteen.
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force,
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which may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 516. Enforcement by Holders of Preferred Securities.
Notwithstanding the foregoing, if a Declaration Event of Default
has occurred and is continuing and such event is attributable to the failure of
the Company to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable, the Company acknowledges that, in
such event, a holder of Preferred Securities may institute a Direct Action for
payment on or after the respective due date specified in the Debentures. The
Company may not amend the Indenture to remove the foregoing right to bring a
Direct Action without the prior written consent of all the holders of Preferred
Securities. Notwithstanding any payment made to such holder of Preferred
Securities by the Company in connection with a Direct Action, the Company shall
remain obligated to pay the principal of or interest on the Debentures held by
the Trust or the Property Trustee and the Company shall be subrogated to the
rights of the holder of such Preferred Securities with respect to payments on
the Preferred Securities to the extent of any payments made by the Company to
such holder in any Direct Action. The holders of Preferred Securities will not
be able to exercise directly any other remedy available to the Holders of the
Debentures.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision
of this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
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means any event which is, or after notice or lapse of time or both would become,
an Indenture Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to reasonable examination of the
books, records and premises of the Company, personally or by agent or
attorney;
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(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care by it hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without negligence
or willful misconduct, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
SECTION 604. Not Responsible for Recitals or Issuance of Debentures.
The recitals contained herein and in the Debentures, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Debentures. The Trustee shall not be accountable for the use
or application by the Company of the Debentures or the proceeds thereof.
SECTION 605. May Hold Debentures.
The Trustee, any Paying Agent, any Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Debentures and, subject to Sections 608 and 613, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Paying Agent, Registrar, or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such reasonable
compensation as the Company and the Trustee shall from time to time
agree in writing for all services rendered by it hereunder;
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, fees,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
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(3) to indemnify the Trustee and any predecessor Trustee for, and
to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
When the Trustee incurs expenses or renders services in
connection with an Indenture Event of Default specified in Section 501(6) or
Section 501(7), the expenses (including the reasonable charges and expenses of
its counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination of
this Indenture.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and has its Corporate
Trust Office in New York, New York. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of removal, the Trustee to be removed may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Debentures, delivered to
the Trustee and to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Debenture for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Debenture for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Debentures
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Debenture for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
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SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; provided, that on request of
the Company or the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments required to more
fully and certainly vest in and confirm to such successor Trustee all such
rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Debentures shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Debentures so authenticated with the same
effect as if such successor Trustee had itself authenticated such Debentures.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Debentures), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not later than May 15 and November 15 in each
year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of a date not more than 15 days
prior to the delivery thereof, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company 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;
excluding from any such list names and addresses received by the Trustee in its
capacity as Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Registrar.
The Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Debentures, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Debentures, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made pursuant
to the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) Within 60 days after November 15 of each year, commencing
November 15, 1996, the Trustee shall transmit by mail to Holders such reports
concerning the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act in the manner provided pursuant thereto.
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(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Debentures are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Debentures are listed on any stock
exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided, that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
The Company shall also provide to the Trustee on a timely basis
such information as the Trustee requires to enable the Trustee to prepare and
file any form required to be submitted by the Company with the Internal Revenue
Service and the Holders of the Debentures relating to original issue discount,
including, without limitation, Form 1099-OID or any successor form.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge with or into any
other Person or, directly or indirectly, convey, transfer or lease all or
substantially all of its properties and assets on a consolidated basis to any
Person, unless:
(1) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer
or lease, all or substantially all of the properties and assets of the
Company on a consolidated basis shall be a corporation, partnership or
trust, shall be organized and validly existing under the laws of the
United States of America, any State thereof or the District of Columbia
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, the due and punctual payment of the principal of (and
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premium, if any) and interest on all the Debentures and the performance
or observance of every covenant of this Indenture on the part of the
Company to be performed or observed and shall have provided for
conversion rights in accordance with Article Thirteen;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or
a Subsidiary as a result of such transaction as having been incurred by
the Company or such Subsidiary at the time of such transaction, no
Indenture Event of Default, and no event which, after notice or lapse of
time or both, would become an Indenture Event of Default, shall have
happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture, comply with this Article and that all
conditions precedent herein provided for relating to such transaction
have been complied with.
This Section shall only apply to a merger or consolidation in
which the Company is not the surviving corporation and to conveyances, leases
and transfers by the Company as transferor or lessor.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of all or
substantially all the properties and assets of the Company on a consolidated
basis in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Debentures.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
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(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Debentures;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company;
(3) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article Thirteen;
(4) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions
of this Indenture; provided, that such action pursuant to this clause
(4) shall not adversely affect the interests of the Holders of the
Debentures or, so long as any of the Preferred Securities shall remain
outstanding, the holders of the Preferred Securities;
(5) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(6) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if
any, to be placed on Debentures, and all other matters required pursuant
to Section 305(b) or otherwise necessary, desirable or appropriate in
connection with the issuance of Debentures to holders of Preferred
Securities in the event of a distribution of Debentures by the Trust
upon the occurrence of a Dissolution Event.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Debentures, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Debenture affected thereby,
(1) extend the Stated Maturity of the principal of, or any
installment of interest (including any Additional Payments) on, any
Debenture, or reduce the principal amount thereof, or reduce the rate or
extend the time for payment of interest thereon, or reduce any premium
payable upon the redemption thereof, or change the place of payment
where, or the coin or currency in which, any Debenture or interest
thereon is payable, or impair the right to institute suit for
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the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date), or adversely affect the right to convert any Debenture as
provided in Article Thirteen (except as permitted by Section 901(3)), or
modify the provisions of this Indenture with respect to the
subordination of the Debentures in a manner adverse to the Holders,
(2) reduce the percentage in principal amount of the Outstanding
Debentures, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Debenture affected thereby;
provided that if the Debentures are held by the Trust or a trustee of the Trust,
such supplemental indenture shall not be effective until the holders of a
majority in liquidation amount of Trust Securities shall have consented to such
supplemental indenture; provided, further, that if the consent of the Holder of
each Outstanding Debenture is required, such supplemental indenture shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such supplemental indenture.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Debentures theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby. No such supplemental indenture shall directly
or indirectly modify the provisions of Article Twelve in any manner which might
terminate or impair the rights of the Senior Indebtedness pursuant to such
subordination provisions.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Debentures to Supplemental Indentures.
Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Debentures so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Debentures.
ARTICLE TEN
COVENANTS; REPRESENTATIONS AND WARRANTIES
SECTION 1001. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and
interest on the Debentures in accordance with the terms of the Debentures and
this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the United States an office or
agency where Debentures may be presented or surrendered for payment, where
Debentures may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Debentures and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and
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the Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in the United States) where the Debentures may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the United States for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
SECTION 1003. Money for Debenture Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of or interest on any of the
Debentures, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of or interest on any Debentures,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Debentures) in the making
of any payment in respect of the Debentures, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or interest on
any Debenture and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of any such Debenture shall thereafter, as an
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unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the material terms, provisions and conditions of this Indenture (without
regard to any period of grace or requirement of notice provided hereunder) and,
if the Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
SECTION 1005. Limitation on Dividends; Transactions with Affiliates; Covenants
as to the Trust.
(a) The Company covenants that so long as the Debentures are
outstanding, if (i) there shall have occurred and be continuing any event that
with the giving of notice or the lapse of time or both, would constitute an
Indenture Event of Default, (ii) the Company shall be in default with respect to
its payment of any obligations under the Guarantee, or (iii) the Company has
exercised its option to defer interest payments on the Debentures by extending
the interest payment period and such period, or any extension thereof, shall be
continuing, then the Company (a) shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock, (except for
dividends or distributions in shares of (i) Common Stock on Common Stock, (ii)
purchases or other acquisitions of shares of Common Stock made in connection
with any employee benefit plan of the Company or its Subsidiaries, purchases
made from employees or officers pursuant to employment agreements, or purchases
made under option agreements (or upon the exercise of options granted
thereunder), provided the plans or agreements were in existence on October 9,
1996, and provided, further, that such repurchases by the Company made from
officers or employees of the Company or its Subsidiaries pursuant to employment
or option agreements shall be made at a price not to exceed market value on the
date of any such repurchase and shall not exceed $5 million in the aggregate for
all such employees and officers, (iii) conversions or exchanges of Common Stock
of one class into Common Stock of another class or (iv) purchases of fractional
interests in shares of the company's Capital stock pursuant to the conversion or
exchange provisions of any of the Company's securities being converted or
exchanged), (b) shall not make any payment of interest, principal or premium, if
any, on, or repay, repurchase or redeem any debt securities issued by the
Company that rank junior to or pari passu with the Debentures (except by
conversion into or exchange for shares of its Common Stock), and (c) shall not
make any guarantee payments with respect to the foregoing (other than such
payments made pursuant to the Guarantee).
(b) The Company also covenants and agrees (i) that it shall
directly or indirectly maintain 100% ownership of the Common Securities;
provided, however, that any permitted successor of the Company hereunder may
succeed to the Company's ownership of
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such Common Securities and (ii) that it shall use its reasonable efforts,
consistent with the terms and provisions of the Declaration, to cause the Trust
(x) to remain a statutory business trust, except in connection with the
distribution of the Debentures to the holders of Trust Securities in liquidation
of the Trust upon the occurrence of a Dissolution Event, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (y)
to otherwise continue to be classified as a grantor trust for United States
Federal income tax purposes.
SECTION 1006. Payment of Expenses of the Trust.
In connection with the offering, sale and issuance of the
Debentures to the Property Trustee in connection with the sale of the Trust
Securities by the Trust, the Company shall:
(a) pay for all costs, fees and expenses relating to the
offering, sale and issuance of the Debentures, including commissions to the
Initial Purchasers payable pursuant to the Purchase Agreement and compensation
of the Trustee under the Indenture in accordance with the provisions of Section
607 of this Indenture;
(b) be responsible for and pay for all debts and obligations
(other than with respect to the Trust Securities) of the Trust, pay for 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
Purchasers in connection therewith), the fees and expenses of the Property
Trustee and the Dela- ware 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
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets); and
(c) 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.
SECTION 1007. Registration Rights.
The holders of the Preferred Securities, the Debentures, the
Guarantee and the shares of Common Stock of the Company issuable upon conversion
of the Debentures (collectively, the "Registrable Securities") are entitled to
the benefits of a Registration Rights Agreement, dated as of October 16, 1996,
among the Company and the Initial Purchasers (the "Registration Rights
Agreement"). Pursuant to the Registration Rights Agreement, the Company has
agreed for the benefit of the holders of Registrable Securities that (i) it
will, at its cost, within 60 days after the date of issuance of the Registrable
Securities, file a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to the resales of the Registrable
Securities, (ii) it will use its best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission within 150 days after the
date of issuance of
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the Registrable Securities and (iii) it will use its best efforts to maintain
such Shelf Registration Statement continuously effective under the Securities
Act until the third anniversary of the effectiveness of the Shelf Registration
Statement or such earlier date as is provided in the Registration Rights
Agreement (the "Effectiveness Period").
If (i) on or prior to 60 days following the date of original
issuance of the Registrable Securities, a Shelf Registration Statement has not
been filed with the Commission, or (ii) on or prior to the 150th day following
the issuing of the Registrable Securities, such Shelf Registration Statement is
not declared effective (each, a "Registration Default"), additional interest
("Liquidated Damages") will accrue on the Debentures and, accordingly,
additional distributions will accrue on the Preferred Securities, in each case
from and including the day following such Registration Default. Liquidated
Damages will be paid quarterly in arrears, with the first quarterly payment due
on the first interest or distribution payment date, as applicable, following the
date on which such Liquidated Damages begin to accrue, and will accrue at a rate
per annum equal to an additional one-quarter of one percent (0.25%) of the
principal amount or liquidation amount, as applicable, to and including the 90th
day following such Registration Default and one-half of one percent (0.50%)
thereof from and after the 91st day following such Registration Default. Upon
the filing of the Shelf Registration Statement after the 60-day period described
in clause (i) above or the effectiveness of the Shelf Registration Statement
after the 150-day period described in clause (ii) above, the interest rate borne
by the Debentures and the distribution rate borne by the Preferred Securities
from the date of such filing or effectiveness, as the case may be, will be
reduced to the original interest rate. In the event that the Shelf Registration
Statement ceases to be effective during the Effectiveness Period for more than
60 days, whether or not consecutive, during any 12-month period, then the
interest rate borne by the Debentures and the distribution rate borne by the
Preferred Securities will each increase by an additional one-half of one percent
(0.50%) per annum from such 61st day, as applicable, until such time as the
Shelf Registration Statement again becomes effective.
ARTICLE ELEVEN
REDEMPTION OF DEBENTURES
SECTION 1101. Right of Redemption.
(a) The Debentures may be redeemed at the election of the
Company, in whole or from time to time in part, at the applicable Redemption
Price set forth in Section 1109 below, plus all accrued and unpaid interest on
the Debentures, if any, through the Redemption Date, (i) on or after October 16,
1999, provided the closing sale price of the Common Stock as reported on the
NYSE is at least 150% of the then applicable per share conversion price (as
determined in Accordance with Article 13 hereof) for a minimum of 20 trading
days within a period of 30 consecutive trading days ending on the fifth trading
day prior to the notice of redemption and (ii) on or after October 16, 2000.
(b) The Debentures may be redeemed, at the election of the
Company, in whole (but not in part), at any time, in cash at the Redemption
Price set forth in Section 1110
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below, plus all accrued and unpaid interest on the Debentures, if any, through
the Redemption Date, within 90 days following the occurrence of a Redemption Tax
Event; provided, however, that if at the time, there is available to the Company
or the Trust the opportunity to eliminate, within such 90 Day Period, the
Redemption Tax Event by taking some Ministerial Action, such as filing a form or
making an election, or pursuing some other similar reasonable measure, which in
the sole judgment of the Company has or will cause no adverse effect on the
Trust, the Holders of the Trust Securities or the Company or will involve no
material cost, then the Company or the Trust shall pursue such measure in lieu
of redemption.
SECTION 1102. Applicability of Article.
Redemption of Debentures at the election of the Company, as
permitted by Section 1101, shall be made in accordance with such provision and
this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem Debentures pursuant to
Section 1101 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company, the Company shall, at least 60 days and no more
than 90 days prior to the Redemption Date fixed by the Company, notify the
Trustee in writing of such Redemption Date and of the principal amount of
Debentures to be redeemed and provide a copy of the notice of redemption to be
given to Holders of Debentures to be redeemed pursuant to Section 1105.
SECTION 1104. Selection by Trustee of Debentures to Be Redeemed.
If less than all the Debentures are to be redeemed (unless such
redemption affects only a single Debenture), the particular Debentures to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Debentures not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to $50 or
any integral multiple thereof) of the principal amount of the Debentures,
provided, however, that following the distribution of the Debentures to the
Holders of Preferred Securities and the Common Securities, the Debentures shall
be redeemed on a pro rata basis.
The Trustee shall promptly notify the Company in writing of the
Debentures selected for redemption as aforesaid and, in case of any Debentures
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
The provisions of the two preceding paragraphs shall not apply
with respect to any redemption affecting only a single Debenture, whether such
Debenture is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Debenture shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Debenture.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Debentures shall relate,
in the case of any Debentures
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redeemed or to be redeemed only in part, to the portion of the principal amount
of such Debentures which has been or is to be redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Debentures to be redeemed, at such Holder's address
appearing in the Register.
All notices of redemption shall identify the Debentures to be
redeemed (including, if relevant, CUSIP or ISIN number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become
due and payable upon each such Debenture to be redeemed and that
interest thereon will cease to accrue on and after said date, and
(4) the place or places where such Debentures are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Debentures to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company.
SECTION 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Debentures
which are to be redeemed on that date.
If any Debenture called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Debenture shall (subject to any right of the
Holder of such Debenture or any Predecessor Debenture to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 1107. Debentures Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Debentures so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price
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therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Debentures shall cease to bear interest. Upon surrender of any such Debenture
for redemption in accordance with said notice, such Debenture shall be paid by
the Company at the Redemption Price, together with accrued interest (including
Additional Payments, if any) to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Debentures, or one or more
Predecessor Debentures, registered as such at the close of business on the
relevant Record Dates according to the terms and the provisions of Section 307.
If any Debenture called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by the Debenture.
SECTION 1108. Debentures Redeemed in Part.
In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Debenture during
a period beginning at the opening of business 15 days before any selection for
redemption of Debentures and ending at the close of business on the earliest
date in which the relevant notice of redemption is deemed to have been given to
all holders of Debentures to be so redeemed and (ii) register the transfer of or
exchange any Debentures so selected for redemption, in whole or in part, except
for the unredeemed portion of any Debentures being redeemed in part.
Any Debenture which is to be redeemed only in part shall be
surrendered at a place of payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and make available for delivery to the Holder of
such Debenture without service charge, a new Debenture or Debentures, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debenture so surrendered.
SECTION 1109. Optional Redemption.
(a) The Company shall have the right, at its option, to redeem the
Debentures, in whole or in part, at any time, and from time to time upon not
less than 30 nor more than 60 days' notice, in cash at the applicable Redemption
Price set forth below, (i) on or after October 16, 1999, provided the closing
sale price of the Common Stock as reported on the NYSE is at least 150% of the
per share conversion price (as determined in accordance with Article 13 hereof)
for a minimum of 20 trading days within a period of 30 consecutive trading days
ending on the fifth trading day prior to the notice of redemption and (ii) on or
after October 16, 2000. The applicable Redemption Price shall be as follows
(such Redemption Price being expressed as a percentage of the principal amount
of the Debentures, as applicable during the twelve-month period of the indicated
year):
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<TABLE>
<CAPTION>
Percentage of
Principal
Year Amount
---- -------------
<S> <C>
1999................................ 104.375%
2000................................ 103.750
2001................................ 103.125
2002................................ 102.500
2003................................ 101.875
2004................................ 101.250
2005................................ 100.625
2006 and thereafter................. 100.000
</TABLE>
plus, in each case, accrued and unpaid interest, including Additional Payments
and Liquidated Damages, if any, to the Redemption Date, provided, however, that
in the event the Debentures are redeemed in certain circumstances upon the
occurrence of a Redemption Tax Event, the Redemption Price shall be as set forth
in Section 1110. Any redemption pursuant to this Section 1109 shall be made
pursuant to the provisions of Sections 1101 through 1108 hereof.
(b) If a partial redemption of the Debentures would result in the
delisting of the Preferred Securities issued by the Trust from any national
securities exchange or other organization on which the Preferred Securities are
listed, the Company shall not be permitted to effect such partial redemption and
may only redeem the Debentures in whole.
SECTION 1110. Tax Event Redemption.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular
Trustees shall have been informed by tax counsel rendering the Dissolution Tax
Opinion that a No Recognition Opinion cannot be delivered to the Trust (each
such case, a "Redemption Tax Event"), then, notwithstanding Section 1109(a) but
subject to Section 1109(b), the Company shall have the right upon not less than
30 days nor more than 60 days' notice to the Holders of the Debentures to redeem
the Debentures in whole (but not in part) for cash within 90 days following the
occurrence of such Redemption Tax Event (the "90-Day Period") at a Redemption
Price equal to 100% of the principal amount of the Debentures so redeemed, plus
accrued and unpaid interest, including Additional Payments and Liquidated
Damages, if any, to the Redemption Date; provided, however, that if, at the time
there is available to the Company or the Trust the opportunity to eliminate
within the 90-Day Period, the Redemption Tax Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure which, in the sole judgment of the Company, has or
will cause no adverse effect on the Company, the Trust or the Holders of the
Trust Securities and will involve no material cost (a "Ministerial Action"), the
Company or the Trust shall pursue such Ministerial Action or other measure in
lieu of redemption, and provided, further, that the Company shall have no right
to
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redeem the Debentures while the Trust is pursuing any Ministerial Action or
other similar measure pursuant to its obligations under the Declaration. Payment
of the Redemption Price shall be made prior to 12:00 noon, New York time, on the
date of such redemption or such earlier time as the Company determines,
provided, that the Company shall deposit with the Trustee an amount sufficient
to make such redemption payment by 10:00 a.m. on the date such redemption
payment is to be made. Any redemption pursuant to this Section 1110 shall be
made pursuant to the provisions of Sections 1101 through 1108 hereof.
SECTION 1111. No Sinking Fund.
The Debentures are not entitled to the benefit of any sinking
fund.
ARTICLE TWELVE
SUBORDINATION OF DEBENTURES
SECTION 1201. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Debentures
by such Holder's acceptance thereof likewise covenants and agrees, that all
Debentures shall be issued subject to the provisions of this Article Twelve; and
each Holder of a Debenture, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions. The
payment by the Company of the principal of, premium, if any, and interest
(including Additional Payments) on all Debentures issued hereunder shall, to the
extent and in the manner hereinafter set forth, be subordinated and junior in
right of payment to the prior payment in full of all existing and future Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
incurred; provided however, that no provision of this Article Twelve shall
prevent the occurrence of any default or Indenture Event of Default hereunder.
SECTION 1202. Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment due
on any Senior Indebtedness continuing beyond the period of grace, if any,
specified in the instrument evidencing such Senior Indebtedness, unless and
until such default shall have been cured or waived or shall have ceased to
exist, and in the event that the maturity of any Senior Indebtedness has been
accelerated because of a default, then no payment shall be made by the Company
with respect to the principal of (including redemption payments, if any),
premium, if any, or interest on the Debentures.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section 1202, 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,
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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 Trustee in writing within 90 days of such payment of
the amounts then due and owing on the Senior Indebtedness and only the amounts
specified in such notice to the Trustee shall be paid to the holders of Senior
Indebtedness.
SECTION 1203. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization of
the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, and premium, if any, and
interest due or to become due on, all Senior Indebtedness must be paid in full
before any payment is made on account of the principal (and premium, if any) or
interest on the Debentures; and upon any such dissolution or winding up or
liquidation or reorganization, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Debentures or the Trustee would be
entitled, except for the provisions of this Article Twelve, shall be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or
other Person making such payment or distribution, or by the Holders of the
Debentures or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company) 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 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 Holders of Debentures or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Debentures 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 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, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay 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 holders of such Senior Indebtedness.
For purposes of this Article Twelve, the words, "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article
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Twelve with respect to the Debentures to the payment of all Senior Indebtedness
which 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 Company with, or
the merger of the Company with or into, another Person or the liquidation or
dissolution of the Company following the conveyance, transfer or lease of all or
substantially all its properties and assets on a consolidated basis to another
Person upon the terms and conditions provided for in Article Eight hereof shall
not be deemed a dissolution, winding up, liquidation or reorganization for the
purposes of this Section 1203 if such other Person shall, as a part of such
consolidation, merger, conveyance, transfer or lease, comply with the conditions
stated in Article Eight hereof. Nothing in Section 1202 or in this Section 1203
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 607 hereof.
SECTION 1204. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Holders of the Debentures 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 Company, as the case may be, applicable to
such Debentures until the principal of (and premium, if any), and interest on
the Senior Indebtedness shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Holders of the
Debentures or the Trustee would be entitled except for the provisions of this
Article Twelve, and no payment over pursuant to the provisions of this Article
Twelve, to or for the benefit of the holders of such Senior Indebtedness by
Holders of the Debentures or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Debentures, be deemed to be a payment by the Company to or on account of such
Debentures. It is understood that the provisions of this Article Twelve are and
are intended solely for the purposes of defining the relative rights of the
Holders of the Debentures, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Debentures the principal of (and
premium, if any) and interest on the Debentures as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders of the Debentures and creditors
of the Company, as the case may be, other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
Holder of any Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article Twelve of the holders of such Senior Indebtedness in respect
of cash, property or securities of the Company, as the case may be, received
upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Twelve, the Trustee, subject to the provisions of
Section 603, and the Holders of the
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Debentures, shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Debentures, for the purposes of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, 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 Twelve.
SECTION 1205. Trustee to Effectuate Subordination.
Each Holder of Debentures by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Twelve and appoints the Trustee as such Holder's attorney-in-fact
for any and all such purposes.
SECTION 1206. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company which would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article Twelve. Notwithstanding
the provisions of this Article Twelve or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment of monies to or by the Trustee in
respect of the Debentures pursuant to the provision of this Article Twelve,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office of the Trustee from the
Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Section 603 hereof, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 1206 at
least three Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (and premium, if any) or interest on any Debenture),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
The Trustee, subject to the provisions of Section 603, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) 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 Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
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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
right of such Person under this Article Twelve, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 1207. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article Twelve in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article Twelve,
and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Section 603, the Trustee
shall not be liable to any holder of such Senior Indebtedness if it shall pay
over or deliver to Holders of Debentures, the Company or any other Person money
or assets to which any holder of such Senior Indebtedness shall be entitled by
virtue of this Article Twelve or otherwise.
SECTION 1208. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof which 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 may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Debentures, without incurring responsibility to the holders of the Debentures
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Debentures to the
holders of Senior Indebtedness, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, such Senior Indebtedness, or otherwise amend or supplement in any
manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company and any other Person.
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ARTICLE THIRTEEN
CONVERSION OF DEBENTURES
SECTION 1301. Conversion Rights.
Subject to and upon compliance with the provisions of this
Article, the Debentures are convertible, at the option of the Holder, at any
time on or before the close of the Business Day (New York time) immediately
preceding the date of repayment of such Debentures, whether at maturity, upon
redemption or otherwise into fully paid and nonassessable shares of Common Stock
of the Company at an initial conversion rate of 1.0663 shares of Common Stock
for each $50 in aggregate principal amount of Debentures (equal to a conversion
price of $46.89 per share of Common Stock), subject to adjustment as described
in this Article Thirteen. A Holder of Debentures may convert any portion of the
principal amount of the Debentures into that number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/100th of a share) obtained by dividing the principal amount of the
Debentures to be converted by such conversion price. In case a Debenture or
portion thereof is called for redemption, such conversion right in respect of
the Debenture or portion so called shall expire at the close of business on the
corresponding Redemption Date, unless the Company defaults in making the payment
due upon redemption.
SECTION 1302. Conversion Procedures.
(a) In order to convert all or a portion of the Debentures, the
Holder thereof shall deliver to the Conversion Agent an irrevocable Notice of
Conversion setting forth the principal amount of Debentures to be converted,
together with the name or names, if other than the Holder, in which the shares
of Common Stock should be issued upon conversion and, if such Debentures are
definitive Debentures, surrender to the Conversion Agent the Debentures to be
converted, duly endorsed or assigned to the Company or in blank. In addition, a
holder of Preferred Securities may exercise its right under the Declaration to
convert such Preferred Securities into Common Stock by delivering to the
Conversion Agent an irrevocable Notice of Conversion setting forth the
information called for by the preceding sentence and directing the Conversion
Agent (i) to exchange such Preferred Security for a portion of the Debentures
held by the Trust (at an exchange rate of $50 principal amount of Debentures for
each Preferred Security) and (ii) to immediately convert such Debentures, on
behalf of such holder, into Common Stock of the Company pursuant to this Article
Thirteen and, if such Preferred Securities are in definitive form, surrendering
such Preferred Securities, duly endorsed or assigned to the Company or in blank.
So long as any Preferred Securities are outstanding, the Trust shall not convert
any Debentures except pursuant to a Notice of Conversion delivered to the
Conversion Agent by a holder of Preferred Securities and only with respect to
the Preferred Securities requested to be converted in such Notice of Conversion.
If a Notice of Conversion is delivered on or after the Regular
Record Date and prior to the subsequent Interest Payment Date, the Holder will
be entitled to receive the interest payable on the subsequent Interest Payment
Date on the portion of Debentures to be converted notwithstanding the conversion
thereof prior to such Interest Payment Date. Except as otherwise
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provided in the immediately preceding sentence, in the case of any Debenture
which is converted, interest whose Stated Maturity is after the Conversion Date
(as defined below) of such Debenture shall not be payable, and the Company shall
not make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest on the Debentures being converted, which
shall be deemed to be paid in full. Each conversion shall be deemed to have been
effected immediately prior to the close of business on the day on which the
Notice of Conversion was received (the "Conversion Date") by the Conversion
Agent from the Holder or from a holder of the Preferred Securities effecting a
conversion thereof pursuant to its conversion rights under the Declaration, as
the case may be. The Person or Persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock as of the Conversion Date. As promptly as
practicable on or after the Conversion Date, the Company shall issue and deliver
at the office of the Conversion Agent, unless otherwise directed by the Holder
in the Notice of Conversion, a certificate or certificates for the number of
full shares of Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the Person or
Persons entitled to receive the same. The Conversion Agent shall deliver such
certificate or certificates to such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Debentures are convertible (together with
the cash payment, if any, in lieu of fractional shares) shall be deemed to
satisfy the Company's obligation to pay the principal amount at Maturity of the
portion of Debentures so converted and any unpaid interest (including Compounded
Interest and Additional Interest) accrued on such Debentures at the time of such
conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the last reported sale price of such fractional interest on the date on which
the Debentures or Preferred Securities, as the case may be, were duly
surrendered to the Conversion Agent for conversion, or, if such day is not a
Trading Day, on the next Trading Day, and the Conversion Agent in turn will make
such payment, if any, to the Holder of the Debentures or the holder of the
Preferred Securities so converted.
(d) In the event of the conversion of any Debenture in part only,
a new Debenture or Debentures for the unconverted portion thereof will be issued
in the name of the Holder thereof upon the cancellation thereof in accordance
with Section 305.
(e) In effecting the conversion transactions described in this
Section, the Conversion Agent is acting as agent of the holders of Preferred
Securities (in the exchange of Preferred Securities for Debentures) and as agent
of the Holders of Debentures (in the conversion of Debentures into Common
Stock), as the case may be, directing it to effect such conversion transactions.
The Conversion Agent is hereby authorized (i) to exchange Debentures held by the
Trust from time to time for Preferred Securities in connection with the
conversion of such Preferred Securities in accordance with this Article Thirteen
and (ii) to convert all or a portion of the Debentures into Common Stock and
thereupon to deliver such shares of
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Common Stock in accordance with the provisions of this Article Thirteen and to
deliver to the Trust a new Debenture or Debentures for any resulting unconverted
principal amount.
(f) All shares of Common Stock delivered upon any conversion of
Debentures shall bear a restrictive legend substantially in the form of the
legend required to be set forth on such Debentures and shall be subject to the
restrictions on transfer provided in such legend and in Section 305(b) hereof.
Neither the Trustee nor the Conversion Agent shall have any responsibility for
the inclusion or content of any such restrictive legend on such Common Stock;
provided, however, that the Trustee or the Conversion Agent shall have provided
to the Company or to the Company's transfer agent for such Common Stock, prior
to or concurrently with a request to the Company to deliver to such Conversion
Agent certificates for such Common Stock, written notice that the Debentures
delivered for conversion are Restricted Debentures.
SECTION 1303. Conversion Price Adjustments - General.
The conversion price shall be subject to adjustment (without
duplication) from time to time as follows:
(a) In case the Company shall, while any of the Debentures are
outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Company (other than a
reclassification or recapitalization of shares of Common Stock subject to
Section 1304(a) hereof), the conversion privilege and the conversion price in
effect immediately prior to such action shall be adjusted so that the Holder of
any Debentures thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the Company which he would have
owned immediately following such action had such Debentures been converted
immediately prior thereto. An adjustment made pursuant to this subsection (a)
shall become effective immediately after the record date in the case of a
dividend or other distribution or a subdivision, combination or reclassification
(or immediately after the record date if a record date shall have been
established for such event). If, as a result of an adjustment made pursuant to
this subsection (a), the Holder of any Debenture thereafter surrendered for
conversion shall become entitled to receive shares of two or more classes or
series of capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a Board Resolution
filed with the Trustee) shall determine the allocation of the adjusted
conversion price between or among shares of such classes or series of capital
stock.
(b) In case the Company shall, while any of the Debentures are
outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share of Common Stock (as
determined pursuant to subsection (f) below) on the record date mentioned below,
the conversion price for the Debentures shall be adjusted so that the same shall
equal the price determined by multiplying the conversion price in effect
immediately prior to the date of issuance of such rights
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or warrants by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding on the date of issuance of such rights or warrants
plus the number of shares which the aggregate offering price of the total number
of shares so offered for subscription or purchase would purchase at such current
market price, and of which the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants plus
the number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive such rights or
warrants. For the purposes of this subsection, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not issue any rights or warrants in respect of
shares of Common Stock held in the treasury of the Company. In case any rights
or warrants referred to in this subsection in respect of which an adjustment
shall have been made shall expire unexercised within 45 days after the same
shall have been distributed or issued by the Company, the conversion price shall
be readjusted at the time of such expiration to the conversion price that would
have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(c) Subject to the last sentence of this subparagraph, in case
the Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (b), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in subparagraph
(a) of this Section 1303), the conversion price shall be reduced so that the
same shall equal the price determined by multiplying the conversion price in
effect immediately prior to the effectiveness of the conversion price reduction
contemplated by this subparagraph (c) by a fraction of which the numerator shall
be the current market price per share (determined as provided in subparagraph
(f)) of the Common Stock on the date fixed for the payment of such distribution
(the "Reference Date") less the fair market value (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and described
in a resolution of the Board of Directors), on the Reference Date, of the
portion of the evidences of indebtedness, shares of capital stock, cash and
assets so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the Reference Date. In the event that such dividend or
distribution is not so paid or made, the conversion price shall again be
adjusted to be the conversion price which would then be in effect if such
dividend or distribution had not occurred. If the Board of Directors determines
the fair market value of any distribution for purposes of this subparagraph (c)
by reference to the actual or when issued trading market for any securities
comprising such distribution, it must in doing so consider the prices in such
market over the same period used in computing the current market price per share
of Common Stock (determined as provided in subparagraph (f)). For purposes of
this subparagraph (c), any dividend or distribution that includes shares of
Common Stock or rights or warrants to subscribe for or purchase shares of Common
Stock shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, shares of capital stock, cash or assets other than
such shares of Common Stock or such rights or warrants (making any conversion
price reduction required by this subparagraph (c)) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (making any
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further conversion price reduction required by subparagraph (a) or (b)), except
(A) the Reference Date of such dividend or distribution as defined in this
subparagraph shall be substituted as (a) "the record date in the case of a
dividend or other distribution," and (b) "the record date for the determination
of stockholders entitled to receive such rights or warrants" and (c) "the date
fixed for such determination" within the meaning of subparagraphs (a) and (b)
and (B) any shares of Common Stock included in such dividend or distribution
shall not be deemed outstanding for purposes of computing any adjustment of the
conversion price in subparagraph (a).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash, excluding all regular cash
dividends if the annualized amount thereof per share of Common Stock does not
exceed 15% of the current market price per share determined as provided in
subparagraph (f) of the Common Stock on the Trading Day immediately preceding
the date of declaration of such dividend (such adjustment being limited to the
amount in excess of 15% of such Current Market Price), the conversion price
shall be reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by this
subparagraph by a fraction of which the numerator shall be the current market
price per share (determined as provided in subparagraph (f)) of the Common Stock
on the date fixed for the payment of such distribution less the amount of cash
so distributed and not excluded as provided applicable to one share of Common
Stock and the denominator shall be such current market price per share of the
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the date fixed for the payment of such
distribution; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the current market price per share (as defined in subparagraph (f)) of the
Common Stock on the record date mentioned above, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder of shares of
Debentures shall have the right to receive upon conversion the amount of cash
such Holder would have received had such Holder converted each share of the
Debentures immediately prior to the record date for the distribution of the
cash. In the event that such dividend or distribution is not so paid or made,
the conversion price shall again be adjusted to be the conversion price which
would then be in effect if such record date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot
offer) made by the Company or any Subsidiary of the Company for all or any
portion of the Company's Common Stock shall expire and such tender or exchange
offer shall involve the payment by the Company or such Subsidiary of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) at the last
time (the "Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it shall have been amended) that exceeds 110% of
the current market price per share (determined as provided in subparagraph (f))
of the Common Stock on the Trading Day next succeeding the Expiration Time, the
conversion price shall be reduced so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
the effectiveness of the conversion price reduction contemplated by this
subparagraph (e) by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding (including any tendered or exchanged shares)
at the Expiration Time multiplied by the current market price per share
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(determined as provided in subparagraph (f)) of the Common Stock on the Trading
Day next succeeding the Expiration Time and the denominator shall be the sum of
(x) the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock outstanding
(less any Purchased Shares) at the Expiration Time and the current market price
per share (determined as provided in subparagraph (f)) of the Common Stock on
the Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Time.
(f) For the purpose of any computation under subparagraphs (b),
(c), (d) or (e), the current market price per share of Common Stock on any date
in question shall be deemed to be the average of the daily Closing Prices for
the five consecutive Trading Days selected by the Company commencing not more
than 20 Trading Days before, and ending not later than, the earlier of the day
in question or, if applicable, the day before the "ex" date with respect to the
issuance or distribution requiring such computation; provided, however, that if
another event occurs that would require an adjustment pursuant to subparagraph
(a) through (e), inclusive, the Board of Directors may make such adjustments to
the Closing Prices during such five Trading Day period as it deems appropriate
to effectuate the intent of the adjustments in this Section 1303, in which case
any such determination by the Board of Directors shall be set forth in a Board
Resolution and shall be conclusive. For purposes of this paragraph, the term
"ex" date, (1) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the New York Stock
Exchange or on such successor securities exchange as the Common Stock may be
listed or in the relevant market from which the Closing Prices were obtained
without the right to receive such issuance or distribution, and (2) when used
with respect to any tender or exchange offer means the first date on which the
Common Stock trades regular way on such securities exchange or in such market
after the Expiration Time of such offer.
(g) The Company may make such reductions in the conversion price,
in addition to those required by subparagraphs (a) through (e), as it considers
to be advisable to avoid or diminish any income tax to holders of Common Stock
or rights to purchase Common Stock resulting from any dividend or distribution
of stock (or rights to acquire stock) or from any event treated as such for
income tax purposes. The Company from time to time may reduce the conversion
price by any amount for any period of time if the period is at least twenty (20)
days, the reduction is irrevocable during the period, and the Board of Directors
of the Company shall have made a determination that such reduction would be in
the best interest of the Company, which determination shall be conclusive.
Whenever the conversion price is reduced pursuant to the preceding sentence, the
Company shall mail to holders of record of the Debentures a notice of the
reduction at least fifteen (15) days prior to the date the reduced conversion
price takes effect, and such notice shall state the reduced conversion price and
the period it will be in effect.
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(h) No adjustment of the conversion price shall be required upon
the issuance of any shares of Common Stock pursuant to any present or future
plan providing for the reinvestment of dividends or interest payable on
securities of the Company and the investment of additional optional amounts in
shares of Common Stock under any such plan. No adjustment in the conversion
price shall be required unless such adjustment would require an increase or
decrease of at least 1% in the conversion price; provided, however, that any
adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in determining whether any
subsequent adjustment shall be required.
(i) If any action would require adjustment of the conversion
price pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the Holder of the Debentures.
SECTION 1304. Certain Fundamental Changes.
(a) In the event that the Company shall be a party to any
transaction (including without limitation (i) any recapitalization or
reclassification of the Common Stock, (ii) any consolidation of the Company
with, or merger of the Company into, any other Person, any merger of another
Person into the Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), (iii) any sale or transfer of all or substantially
all of the assets of the Company or (iv) any compulsory share exchange) pursuant
to which the Common Stock is converted into the right to receive other
securities, cash or other property, then lawful provision shall be made as part
of the terms of such transaction whereby the Holder of each Debenture then
outstanding shall have the right thereafter to convert such Debenture only into
(A) in the case of any such transaction other than a Common Stock Fundamental
Change, the kind and amount of securities, cash and other property receivable
upon consummation of such transaction by a holder of the number of shares of
Common Stock of the Company into which such Debenture could have been converted
immediately prior to such transaction, after giving effect, in the case of any
Non-Stock Fundamental Change, to any adjustment in the conversion price required
by the provision of Section 1305(a)(i), and (B) in the case of a Common Stock
Fundamental Change, common stock of the kind received by holders of Common Stock
as a result of such Common Stock Fundamental Change in an amount determined
pursuant to the provisions of Section 1305(a)(ii).
(b) The Company or the Person formed by such consolidation or
resulting from such merger or which acquired such assets or which acquires the
Company's shares, as the case may be, shall make provision in its certificate or
articles of incorporation or other constituent document to establish such right.
Such certificate or articles of incorporation or other constituent document
shall provide for adjustments which, for events subsequent to the effective date
of such certificate or articles of incorporation or other constituent document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article Thirteen. The above provisions shall similarly apply to
successive transactions of the foregoing type.
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SECTION 1305. Adjustments in Case of Fundamental Changes.
(a) Notwithstanding any other provision in this Article Thirteen
to the contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as described below. In addition, in the event of a Common Stock
Fundamental Change (as defined below), each Debenture shall be convertible
solely into common stock of the kind and amount received by holders of Common
Stock as the result of such Common Stock Fundamental Change as more specifically
provided in the following clauses (i) and (ii).
For purposes of calculating any adjustment to be made pursuant to
this Section 1307 in the event of a Fundamental Change, immediately after such
Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change, the
conversion price of the Debentures shall thereupon become the lower of
(A) the conversion price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to this Article Thirteen, and (B) the
result obtained by multiplying the greater of the Applicable Price or
the then applicable Reference Market Price by a fraction of which the
numerator shall be $50 and the denominator shall be the current
Redemption Price as set forth in Section 1109 or, prior to June 30 1999,
an amount per Debenture determined by the Company in its sole
discretion, after consultation with an investment banking firm, to be
the equivalent of the hypothetical Redemption Price that would have been
applicable if the if the Debentures had been redeemable during such
period; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Debentures in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to this Article Thirteen, shall
thereupon be adjusted by multiplying such conversion price by a fraction
of which the numerator shall be the Purchaser Stock Price and the
denominator shall be the Applicable Price; provided, however, that in
the event of a Common Stock Fundamental Change in which (A) 100% of the
value of the consideration received by a holder of Common Stock is
common stock of the successor, acquiror or other third party (and cash,
if any, is paid only with respect to any fractional interests in such
common stock resulting from such Common Stock Fundamental Change) and
(B) all of the Common Stock shall have been exchanged for, converted
into or acquired for common stock (and cash with respect to fractional
interests) of the successor, acquiror or other third party, the
conversion price of the Debentures in effect immediately prior to such
Common Stock Fundamental Change shall thereupon be adjusted by
multiplying such conversion price by a fraction of which the numerator
shall be one and the denominator shall be the number of shares of common
stock of the successor, acquiror, or other third party received by a
stockholder for one share of Common Stock as a result of such Common
Stock Fundamental Change.
(b) Definitions. The following definitions shall apply to terms
used in this Article Thirteen:
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(i) "Applicable Price" shall mean (A) in the event of a
Non-Stock Fundamental Change in which the holders of the Common Stock
receive only cash, the amount of cash received by a stockholder for one
share of Common Stock and (B) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change, the average
of the daily Closing Prices of the Common Stock for the ten (10)
consecutive Trading Days prior to and including the record date for the
determination of the holders of Common Stock entitled to receive
securities, cash or other property in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change, or, if there is
no such record date, the date upon which the holders of the Common Stock
shall have the right to receive such securities, cash or other property
(such record date or distribution date being hereinafter referred to as
the "Entitlement Date"), in each case, as adjusted in good faith by the
Company to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of Section 1303.
(ii) "Closing Price" of any common stock on any day shall
mean the last reported sale price regular way on such day or, in case no
such sale takes place on such day, the average of the reported closing
bid and asked prices regular way of such common stock, in each case on
the NYSE Composite Tape or, if the common stock is not listed or
admitted to trading on such exchange, on the principal national
securities exchange on which such common stock is listed or admitted to
trading, or, if not listed or admitted to trading on any national
securities exchange, the average of the closing bid and asked prices as
furnished by any New York Stock Exchange member firm selected from time
to time by the Board of Directors of the Company for that purpose or, if
not so available in such manner, as otherwise determined in good faith
by the Board of Directors.
(iii) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% of the value (as determined in
good faith by the Board of Directors) of the consideration received by
holders of Common Stock consists of common stock that for each of the
ten consecutive Trading Days prior to the Entitlement Date has been
admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the National
Market System of the National Association of Securities Dealers, Inc.;
provided, however, that a Fundamental Change shall not be a Common Stock
Fundamental Change unless the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding Preferred
Securities continue to exist as outstanding Preferred Securities.
(iv) "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to which all or
substantially all of the Common Stock shall be exchanged for, converted
into, acquired for or constitute solely the right to receive securities,
cash or other property (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided, however, in
the case of a plan involving more than one such transaction or event,
for purposes of adjustment of the conversion price, such Fundamental
Change shall be deemed to have occurred when
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substantially all of the Common Stock of the Company shall be exchanged
for, converted into, or acquired for or constitute solely the right to
receive securities, cash or other property, but the adjustment shall be
based upon the highest weighted average of consideration per share that
a holder of Common Stock could have received in such transactions or
events as a result of which more than 50% of the Common Stock of the
Company shall have been exchanged for, converted into, or acquired for
or constitute solely the right to receive securities, cash or other
property.
(v) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental Change.
(vi) "Purchaser Stock Price" shall mean, with respect to
any Common Stock Fundamental Change, the average of the daily Closing
Prices of the common stock received in such Common Stock Fundamental
Change for the ten consecutive Trading Days prior to and including the
Entitlement Date, as adjusted in good faith by the Board of Directors to
appropriately reflect any of the events referred to in subparagraphs
(i), (ii), (iii), (iv), (v) and (vi) of Section 1303.
(vii) "Reference Market Price" shall initially mean $25.83
(which is an amount equal to 66 2/3% of the last reported sale price for
the Common Stock on the New York Stock Exchange Composite Tape on
October 9, 1996 and in the event of any adjustment to the conversion
price other than as a result of a Non-Stock Fundamental Change, the
Reference Market Price shall also be adjusted so that the ratio of the
Reference Market Price to the conversion price after giving effect to
any such adjustment shall always be the same as the ratio of $25.83 to
the initial conversion price of $46.89 per Preferred Security.
(viii) "Trading Day" shall mean a day on which securities
are traded on the national securities exchange or quotation system used
to determine the Closing Price.
SECTION 1306. Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted conversion price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Trustee and the transfer agent
(and a copy forwarded to the Trustee) for the Preferred Securities and the
Debentures; and
(b) a notice stating the conversion price has been adjusted and
setting forth the adjusted conversion price shall as soon as practicable be
mailed by the Company to all record holders of Preferred Securities and the
Debentures at their last addresses as they appear upon the stock transfer books
of the Company and the Trust.
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SECTION 1307. Prior Notice of Certain Events.
In case:
(i) the Company shall (1) declare any dividend (or any
other distribution) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) a dividend payable in cash that
would not require an adjustment pursuant to Section 1303(c) or (d) or
(2) authorize a tender or exchange offer that would require an
adjustment pursuant to Section 1303(e);
(ii) the Company shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other
rights or warrants;
(iii) of any reclassification of Common Stock (other than
a subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par
value to par value), or of any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the
Company shall be required, or of the sale or transfer of all or
substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall (a) if any Preferred Securities are outstanding, cause to
be filed with the transfer agent (and a copy forwarded to the Trustee) for the
Preferred Securities, and shall cause to be mailed to the holders of record of
the Preferred Securities, at their last addresses as they shall appear upon the
stock transfer books the Trust or (b) shall cause to be mailed to all Holders at
their last addresses as they shall appear in the Register, at least fifteen days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
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SECTION 1308. Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of any
shares of Common Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan, and
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any employee benefit plan or program of the Company or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Debentures were first
issued, shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which any
of the adjustment provisions described above applies. There shall also be no
adjustment of the conversion price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the Company except as
specifically described in this Article Thirteen.
SECTION 1309. Certain Additional Rights.
In case the Company shall, by dividend or otherwise, declare or
make a distribution on its Common Stock referred to in Section 1303(c) or
1303(d) (including, without limitation, dividends or distributions referred to
in the last sentence of Section 1303(c), the Holder of the Debentures, upon the
conversion thereof subsequent to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution and prior to
the effectiveness of the conversion price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which the Debentures are converted, the portion of the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash and assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Company (whose election shall be
evidenced by a resolution of the Board of Directors) with respect to all Holders
so converting, the Company may, in lieu of distributing to such Holder any
portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors). If any conversion of Debentures described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the Holder of Debentures so converted is entitled
to receive in accordance with the immediately preceding sentence, the Company
may elect (such election to be evidenced by a resolution of the Board of
Directors) to distribute to such Holder a due bill for the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets to which such Holder is so entitled, provided, that such due bill
(i) meets any applicable requirements of the principal national securities
exchange or other market on which the Common Stock is then traded and (ii)
requires payment or delivery of such shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets no later than
the date of payment or delivery thereof to holders of shares of Common Stock
receiving such distribution.
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SECTION 1310. Restrictions on Common Stock Issuable Upon Conversion.
(a) Shares of Common Stock to be issued upon conversion of a
Debenture with respect to Restricted Preferred Securities (as defined in the
Declaration) shall bear such restrictive legends as the Company may provide in
accordance with applicable law.
(b) If shares of Common Stock to be issued upon conversion of a
Debenture in respect of Restricted Preferred Securities are to be registered in
a name other than that of the Holder of such Preferred Security, then the Person
in whose name such shares of Common Stock are to be registered must deliver to
the Conversion Agent a certificate satisfactory to the Company and signed by
such Person, as to compliance with the restrictions on transfer applicable to
such Preferred Security. Neither the Trustee nor any Conversion Agent or
Registrar shall be required to register in a name other than that of the Holder
shares of Common Stock or such Preferred Securities issued upon conversion of
any such Debenture in respect of such Preferred Securities not so accompanied by
a properly completed certificate.
SECTION 1311. Trustee Not Responsible for Determining Conversion Price or
Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Debenture to determine
whether any facts exist which may require any adjustment of the conversion
price, or with respect to the nature or extent of any such adjustment when made,
or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee nor
any Conversion Agent shall be accountable with respect to the validity or value
(or the kind of account) of any shares of Common Stock or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Debenture; and neither the Trustee nor any Conversion Agent makes any
representation with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property upon the surrender of any Debenture
for the purpose of conversion, or, except as expressly herein provided, to
comply with any of the covenants of the Company contained in Article Ten or this
Article Thirteen.
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ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 1401. No Recourse.
No recourse under or upon any obligation, covenant or agreement
of this Indenture, or of any Debenture, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, past, present or future as such, of the
Company or of any predecessor or successor corporation, either directly or
through the Company or any such predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors as such, of
the Company or of any predecessor or successor corporation, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Debentures or implied therefrom; and that any and all such
personal liability of every name and nature, either at common law or in equity
or by constitution or statute, of, and any and all such rights and claims
against, every such incorporator, stockholder, officer or director as such,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Debentures or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of such Debentures.
72
<PAGE>
<PAGE>
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
FRONTIER INSURANCE GROUP, INC.
By: /s/ Walter A. Rhulen
_______________________________________
Walter A. Rhulen
President and Chief Executive Officer
Attest:
/s/ Joseph P. Loughlin
__________________________________
Assistant Secretary
THE BANK OF NEW YORK, AS TRUSTEE
By: /s/ Stephen J. Giurlando
_______________________________________
Name: Stephen J. Giurlando
Title: Assistant Vice President
73
<PAGE>
<PAGE>
EXHIBIT A
FORM OF DEBENTURE
[FORM OF FACE OF DEBENTURE]
THIS DEBENTURE AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS DEBENTURE 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, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS DEBENTURE BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH DEBENTURE,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH FRONTIER INSURANCE GROUP, INC. (THE
"COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS DEBENTURE (OR
ANY PREDECESSOR OF THIS DEBENTURE) (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE DEBENTURES ARE 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) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE DEBENTURE 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 (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS DEBENTURE IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
<PAGE>
<PAGE>
FRONTIER INSURANCE GROUP, INC.
6 1/4% Convertible Subordinated Debenture Due 2026
No._________ $___________
FRONTIER INSURANCE GROUP, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called "the Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ________________, or
registered assigns, the principal sum [indicated on Schedule A hereof]1 [of
______ Dollars]2 ($ ) on October 16, 2026.
<TABLE>
<S> <C>
Interest Payment Dates: January 15, April 15, July 15 and October 15, commencing
January 15, 1997
Regular Record Dates: the close of business on the 15th day immediately preceding each
Interest Payment Date, commencing December 31, 1996
</TABLE>
Reference is hereby made to the further provisions of this
Debenture set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Debenture shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
Dated: _________, ____
FRONTIER INSURANCE GROUP, INC.
By:_________________________________
Name:
Title:
[Seal]
Attest:
_____________________________
- --------
1 Applicable to Global Securities only.
2 Applicable to certificated Securities only.
2
<PAGE>
<PAGE>
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
Dated: __________, ____ THE BANK OF NEW YORK,
as Trustee
By: _______________________________
Authorized Signatory
[FORM OF REVERSE OF DEBENTURE]
FRONTIER INSURANCE GROUP, INC.
6 1/4% Convertible Subordinated Debenture Due 2026*
(1) Interest. Frontier Insurance Group Inc., a Delaware
corporation (the "Company"), is the issuer of this 6 1/4% Convertible
Subordinated Debenture Due 2026 (the "Debenture") limited in aggregate principal
amount to $154,639,200 (or $177,835,100 if the over-allotment option is
exercised), issued under the Indenture hereinafter referred to. The Company
promises to pay interest on the Debentures in cash from October 16, 1996 or from
the most recent interest payment date to which interest has been paid or duly
provided for, quarterly (subject to deferral for up to 20 consecutive quarters
as described in Section 3 hereof) in arrears on January 15, April 15, July 15
and October 15 of each year (each day an "Interest Payment Date"), commencing
January 15, 1997, at the rate of 6 1/4% per annum (subject to increase as
provided in Section 13 hereto) plus Additional Interest, Compound Interest and
Liquidated Damages if any, until the principal hereof shall have become due and
payable.
The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. The amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed will be computed on the basis of the actual number of days elapsed.
In the event that any date on which interest is payable on the Debentures is not
a Business Day, then payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (without any interest or
other payment
- --------
*All terms used in this Security which are defined in the Indenture or in the
Declaration attached as Annex A thereto shall have the meanings assigned to them
in the Indenture or the Declaration, as the case may be.
3
<PAGE>
<PAGE>
in respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(2) Additional Interest. The Company shall pay to Frontier
Financing Trust (and its permitted successors or assigns under the Declaration)
(the "Trust") such amounts as shall be required so that the net amounts received
and retained by the Trust after paying any taxes, duties, assessments or other
governmental charges of whatever nature (other than withholding taxes) imposed
on the Trust by the United States or any other taxing authority ("Additional
Interest") will be not less than the amounts the Trust would have received had
no such taxes, duties, assessment or governmental charges been imposed.
(3) Option to Extend Interest Payment Period. The Company shall
have the right at any time during the term of the Debentures to defer interest
payments from time to time by extending the interest payment period for
successive periods not exceeding 20 consecutive quarters for each such period;
except that, no Extension Period may extend beyond the maturity date of the
Debentures. At the end of each Extension Period, the Company shall pay all
interest then accrued and unpaid (including Additional Interest and Liquidated
Damages) together with interest thereon compounded quarterly at the rate
specified for the Debentures to the extent permitted by applicable law
("Compounded Interest"); provided, that during any Extension Period, the Company
(a) shall not declare or pay dividends on, make distributions with respect to,
or redeem, purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock, (except for (i) dividends or distributions in shares
of Common Stock on Common Stock, (ii) purchases or acquisitions of shares of
Common Stock made in connection with any employee benefit plans, purchases made
from employees or officers pursuant to employment agreements, or purchases made
under option agreements (upon the exercise of options granted thereunder),
provided the plan or agreement was in existence on October 9, 1996, and provided
further, that such repurchases by the Company made from officers or employees of
the Company or its Subsidiaries pursuant to employment or option agreements
shall be made at a price not to exceed market value on the date of any such
repurchase and shall not exceed $5 million in the aggregate for all such
employees and officers, (iii) conversions or exchanges of any shares of one
Common Stock class into Common Stock of another class, and (iv) purchases of
fractional interests of shares of the Company's capital stock pursuant to the
conversion or exchange provisions of any of the Company's securities being
converted or exchanged), (b) shall not make any payment of interest, principal
or premium, if any, on, or repay, repurchase or redeem, any debt securities
issued by the Company that rank junior to or pari passu with the Debentures
(except by conversion into or exchange for shares of Common Stock and (c) shall
not make any guarantee payments with respect to the foregoing. Prior to the
termination of any such Extension Period, the Company may further extend such
Extension Period; provided that such Extension Period together with all previous
and further extensions thereof may not exceed 20 consecutive quarters and may
not extend beyond the maturity of the Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. No interest
during an Extension Period, except at the end thereof, shall be due and payable.
4
<PAGE>
<PAGE>
If the Property Trustee is the sole holder of the Debentures at
the time the Company selects an Extension Period, the Company shall give notice
to the Regular Trustees, the Property Trustee and the Trustee of its selection
of such Extension Period at least one Business Day prior to the earlier of (i)
the date the distributions on the Preferred Securities are payable or (ii) if
the Preferred Securities are listed on the New York Stock Exchange or other
stock exchange or quotation system, the date the Trust is required to give
notice to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Preferred Securities on the record date or the
date such distributions are payable, but in any event not less than ten Business
Days prior to such record date.
If the Property Trustee is not the sole holder of the Debentures
at the time the Company selects an Extension Period, the Company shall give the
Holders of these Debentures and the Trustee notice of its selection of an
Extension Period at least ten Business Days prior to the earlier of (i) the next
succeeding Interest Payment Date or (ii) if the Preferred Securities are listed
on the New York Stock Exchange or other stock exchange or quotation system, the
date the Company is required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization or to holders of the Debentures on
the record or payment date of such related interest payment, but in any event
not less than two Business Days prior to such record date.
The quarter in which any notice is given pursuant to the second
and third paragraphs of this Section 3 shall be counted as one of the 20
quarters permitted in the maximum Extension Period permitted under the first
paragraph of this Section 3.
(4) Method of Payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on the regular
record date for such interest installment, which shall be the close of business
on the 15th day immediately preceding each Interest Payment Date (the "Regular
Record Date"), commencing December 31, 1996. Any such interest not so punctually
paid or duly provided for shall forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Debentures
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.
Payment of the principal of and interest on this Debenture will
be made at the office or agency of the Company maintained for that purpose in
New York, New York, in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts;
provided, however, that, at the option of the Company, payment of interest may
be made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Register.
5
<PAGE>
<PAGE>
(5) Paying Agent and Registrar. The Trustee will act as Paying
Agent, Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar, co- registrar or Conversion Agent without prior notice. The Company
or any of its Affiliates may act in any such capacity.
(6) Indenture. The Company issued the Debentures under an
indenture, dated as of October 16, 1996 (the "Indenture"), between the Company
and The Bank of New York, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Debentures, and of the terms
upon which the Debentures are, and are to be, authenticated and delivered. The
terms of the Debentures include those stated in the Indenture and those made
part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) ("TIA") as in effect on the date of the Indenture. The Debentures
are subject to, and qualified by, all such terms, certain of which are
summarized hereon, and holders are referred to the Indenture and the TIA for a
statement of such terms. The Debentures are unsecured general obligations of the
Company limited to $154,639,200 in aggregate principal amount (or $177,835,100
if the over-allotment option is exercised) and subordinated in right of payment
to all existing and future Senior Indebtedness of the Company. No reference
herein to the Indenture and no provision of this Debenture or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this Debenture at the
times, place and rate, and in the coin or currency, herein prescribed or to
convert this Debenture as provided in the Indenture.
(7) Optional Redemption. The Company shall have the right, at its
option, to redeem the Debentures, in whole or in part, at any time and from time
to time upon not less than 30 nor more than 60 days' notice, in cash at the
applicable Redemption Price set forth below, (i) on or after October 16, 1999,
provided the closing sale price of the Common Stock as reported on the New York
Stock Exchange is at least 150% of the per share conversion price (as determined
in accordance with Article 13 of the Indenture) for a minimum of 20 trading days
within a period of 30 consecutive trading days ending on the fifth trading day
prior to the notice of redemption and (ii) on or after October 16, 2000. The
applicable Redemption Price shall be as follows (such Redemption Price being
expressed as a percentage of the principal amount of the Debentures, as
applicable during the twelve-month period beginning October 16 of the indicated
year):
6
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Principal
Year Amount
---- -------------
<S> <C>
1999................................ 104.375%
2000................................ 103.750
2001................................ 103.125
2002................................ 102.500
2003................................ 101.875
2004................................ 101.250
2005................................ 100.625
2006 and thereafter................. 100.000
</TABLE>
plus, in each case, accrued and unpaid interest, including Additional Interest,
Compounded Interest and Liquidated Damages if any, to the Redemption Date. On or
after the Redemption Date, interest will cease to accrue on the Debentures, or
portion thereof, called for redemption.
(8) Optional Redemption Upon Tax Event. The Debentures are subject to
redemption, at the election of the Company, in whole (but not in part) for cash
at a Redemption Principal equal to 100% of the principal amount of the
Debentures, at any time within 90 days following the occurrence and continuation
of a Redemption Tax Event (as defined in the Declaration). Any redemption
pursuant to this Section 8 will be made upon not less than 30 nor more than 60
days' notice.
(9) Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
the Debentures to be redeemed at his address of record. The Debentures in
denominations larger than $50 may be redeemed in part but only in integral
multiples of $50. In the event of a redemption of less than all of the
Debentures, the Debentures will be chosen for redemption by the Trustee in
accordance with the Indenture. On and after the Redemption Date, interest ceases
to accrue on the Debentures or portions of them called for redemption.
If this Debenture is redeemed subsequent to a Regular Record Date
with respect to any Interest Payment Date specified above and on or prior to
such Interest Payment Date, then any accrued interest will be paid to the person
in whose name this Debenture is registered at the close of business on such
record date.
(10) Redemption of Trust Securities. Upon the repayment of the
Debentures, whether at maturity, upon any acceleration, earlier redemption or
otherwise, the proceeds from such repayment or payment shall simultaneously be
applied to redeem Trust Securities having an aggregate liquidation amount equal
to the Debentures so repaid or redeemed at the applicable redemption price
together with accrued and unpaid distributions through the date of redemption;
provided, that holders of the Trust Securities shall be given not less than 30
nor more than 60 days notice of such redemption. There are no sinking fund
payments with respect to the Debentures.
7
<PAGE>
<PAGE>
(11) Subordination. The payment of the principal of, interest on
or any other amounts due on the Debentures is subordinated in right of payment
to all existing and future Senior Indebtedness (as defined below) of the
Company, as described in the Indenture. Each holder, by accepting a Debenture,
agrees to such subordination and authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and appoints the Trustee as its attorney-in-fact for
such purpose.
"Senior Indebtedness" shall mean with respect to the Company (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise, and
(vi) all obligations of the type referred to in clauses (i) through (v) above of
other persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for (1) any
such indebtedness that is by its terms subordinated to or pari passu with the
Debentures and (2) any indebtedness between or among such obligor or its
affiliates, including all other debt securities and guarantees in respect of
those debt securities issued to any other trust, or a trustee of such trust,
partnership, or other entity affiliated with the Company that is, directly or
indirectly, a financing vehicle of the Company (a "Financing Entity") in
connection with the issuance by such Financing Entity of preferred securities or
other securities which rank junior to, or pari passu with, the Preferred
Securities. Such Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the subordination provisions hereof irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
(12) Conversion. The Holder of any Debenture has the right,
exercisable at any time prior to the close of business (New York City time) on
the Business Day immediately preceding the date of repayment of such Debenture
whether at maturity or upon redemption (either at the option of the Company or
pursuant to a Tax Event), to convert the principal amount thereof (or any
portion thereof that is an integral multiple of $50) into shares of Common Stock
at the initial conversion price of 1.0663 shares of Common Stock for each
Debenture (equivalent to a conversion price of $46.89 per share of Common Stock
of the Company), subject to adjustment under certain circumstances, except that
if a Debenture is called for redemption, the conversion right will terminate at
the close of business on the Redemption Date.
To convert a Debenture, a Holder must (1) complete and sign a
conversion notice substantially in the form attached hereto, (2) surrender the
Debenture to a Conversion Agent, (3) furnish appropriate endorsements or
transfer documents if required by the Registrar or Conversion Agent and (4) pay
any transfer or similar tax, if required. Upon conversion, no adjustment or
payment will be made for interest or dividends, but if any Holder surrenders a
8
<PAGE>
<PAGE>
Debenture for conversion after the close of business on the Regular Record Date
for the payment of an installment of interest and prior to the opening of
business on the next Interest Payment Date, then, notwithstanding such
conversion, the interest payable on such Interest Payment Date will be paid to
the registered Holder of such Debenture on such Regular Record Date. In such
event, such Debenture, when surrendered for conversion, need not be accompanied
by payment of an amount equal to the interest payable on such Interest Payment
Date on the portion so converted. The number of shares issuable upon conversion
of a Debenture is determined by dividing the principal amount of the Debenture
converted by the conversion price in effect on the Conversion Date. No
fractional shares will be issued upon conversion but a cash adjustment will be
made for any fractional interest. The outstanding principal amount of any
Debenture shall be reduced by the portion of the principal amount thereof
converted into shares of Common Stock.
(13) Registration Rights.
The holders of the Preferred Securities, the Debentures, the
Guarantee and the shares of common stock of the Company issuable upon conversion
of the Debentures (collectively, the "Registrable Securities") are entitled to
the benefits of a Registration Rights Agreement, dated as of October 16, 1996,
among the Company and the Initial Purchasers (the "Registration Rights
Agreement"). Pursuant to the Registration Rights Agreement, the Company has
agreed for the benefit of the holders of Registrable Securities that (i) it
will, at its cost, within 60 days after the date of issuance of the Preferred
Securities, file a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to resales of the Registrable
Securities, (ii) it will use its best efforts to cause, such Shelf Registration
Statement to be declared effective by the Commission within 150 days after the
date of issuance of the Registrable Securities and (iii) the Sponsor will use
its best efforts to maintain such Shelf Registration Statement continuously
effective under the Securities Act until the third anniversary of the
effectiveness of the Shelf Registration Statement or such earlier date as is
provided in the Registration Rights Agreement.
If (i) on or prior to 60 days following the date of original
issuance of the Registrable Securities, a Shelf Registration Statement has not
been filed with the Commission, or (ii) on or prior to the 150th day following
the issuing of the Registrable Securities, such Shelf Registration Statement is
not declared effective (each, a "Registrable Default"), additional interest
("Liquidated Damages") will accrue on the Debentures and, accordingly,
additional distributions will accrue on the Preferred Securities, in each case
from and including the day following such Registration Default. Liquidated
Damages will be paid quarterly in arrears, with the first quarterly payment due
on the first interest or distribution payment date, as applicable, following the
date on which such Liquidated Damages begin to accrue, and will accrue at a rate
per annum equal to an additional one-quarter of one percent (0.25%) of the
principal amount or liquidation amount, as applicable, to and including the 90th
day following such Registration Default and one-half of the one percent (0.50%)
thereof from and after the 91st day following such Registration Default. In the
event that the Shelf Registration Statement ceases to be effective during the
Effectiveness Period for more than 60 days, whether or not consecutive, during
any 12-month period, then Liquidated Damages will accrue at a rate per annum
equal to an additional one-half of one percent (0.50%) of the principal amount
or liquidation amount, as
9
<PAGE>
<PAGE>
applicable, from such 61st day until such time as the Shelf Registration
Statement again becomes effective.
(14) Registration, Transfer, Exchange and Denominations. As
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Debenture is registrable in the Register, upon surrender of
this Debenture for registration of transfer at the office or agency of the
Company in New York, New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar
duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Debentures, of authorized denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.
The Debentures are issuable only in registered form without
coupons in denominations of $50 and integral multiples thereof. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Prior to due presentment of
this Debenture for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name this
Debenture is registered as the owner hereof for all purposes, whether or not
this Debenture be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary. In the event of redemption or
conversion of this Debenture in part only, a new Debenture or Debentures for the
unredeemed or unconverted portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
(15) Persons Deemed Owners. Except as provided in Section 4
hereof, the registered Holder of a Debenture may be treated as its owner for all
purposes.
(16) Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent shall
pay the money back to the Company at its written request. After that, holders of
Debentures entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
(17) Defaults and Remedies. The Debentures shall have the
Indenture Events of Default as set forth in Section 501 of the Indenture.
Subject to certain limitations in the Indenture, if an Event of Default occurs
and is continuing, the Trustee by notice to the Company or the holders of at
least 25% in aggregate principal amount of the then outstanding Debentures by
notice to the Company and the Trustee may declare all the Debentures to be due
and payable immediately.
The holders of a majority in principal amount of the Debentures
then outstanding by written notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration. Holders may not enforce the Indenture or the Debentures except
10
<PAGE>
<PAGE>
as provided in the Indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Debentures issued under the
Indenture may direct the Trustee in its exercise of any trust or power. The
Company must furnish annually compliance certificates to the Trustee. The above
description of Events of Default and remedies is qualified by reference to, and
subject in its entirety by, the more complete description thereof contained in
the Indenture.
(18) Amendments, Supplements and Waivers. The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Debentures under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in aggregate principal
amount of the Debentures at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Debentures at the time Outstanding, on behalf of the
Holders of all the Debentures, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debenture
shall be conclusive and binding upon such Holder and upon all future Holders of
this Debenture and of any Debenture issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Debenture.
(19) Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity may become the owner or pledgee of the
Debentures and may otherwise deal with the Company or an Affiliate with the same
rights it would have, as if it were not Trustee, subject to certain limitations
provided for in the Indenture and in the TIA. Any Agent may do the same with
like rights.
(20) No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Debentures or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Debentures by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Debentures.
(21) Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THE INDENTURE AND THE DEBENTURES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
(22) Authentication. The Debentures shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee or
an authenticating agent.
11
<PAGE>
<PAGE>
The Company will furnish to any Holder of the Debentures upon
written request and without charge a copy of the Indenture. Request may be made
to:
Frontier Insurance Group, Inc.
195 Lake Louise Marie Road
Rock Hill, New York 12775
Attention: Vice President-Investor Relations
12
<PAGE>
<PAGE>
ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
(I) or (we) assign and transfer this Debenture to
________________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
agent to transfer this Debenture on the books of the Company. The agent may
substitute another to act for him.
Your Signature: ________________________________________________________
(Sign exactly as your name appears on the other side of
this Debenture)
Date: _____________________________
Signature Guarantee:* __________________________________________________
[Include the following if the Debenture bears a Restricted Securities Legend --
In connection with any transfer of any of the Debentures evidenced by this
certificate, the undersigned confirms that such Debentures are being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without transfer; or
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
13
<PAGE>
<PAGE>
(2) [ ] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
(4) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) [ ] transferred pursuant to an effective Shelf Registration
Statement.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Debentures evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (3) or (4) is
checked, the Trustee may require, prior to registering any such transfer of the
Debentures such legal opinions, certifications and other information as the
Company has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act; provided, further, that after the date that
a Shelf Registration Statement has been filed and so long as such Shelf
Registration Statement continues to be effective, the Trustee may only permit
transfers for which box (5) has been checked.
______________________________
Signature
Signature Guarantee:*
__________________________________ ________________________________]
Signature must be guaranteed Signature
________________________________________________________________________________
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Debenture for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer"
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
14
<PAGE>
<PAGE>
within the meaning of Rule 144A under the Securities Act of 1933, and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: ______________________ _________________________________________
NOTICE: To be executed by an
executive officer]
15
<PAGE>
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The initial principal amount of this Global Security shall be
$__________. The following increases or decreases in the principal amount of
this Global Security have been made:
<TABLE>
<CAPTION>
=================================================================================================================================
Amount of increase in Amount of decrease in Principal Amount of this
Principal Amount of this Principal Amount of this Global Security follow- Signature of authorized
Global Security includ- Global Security ing such decrease or officer of Trustee or
ing upon exercise of increase Securities Custodian
Date Made over-allotment option
=================================================================================================================================
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
</TABLE>
16
<PAGE>
<PAGE>
ELECTION TO CONVERT
To: Frontier Insurance Group, Inc.
The undersigned owner of this Debenture hereby irrevocably
exercises the option to convert this Debenture, or the portion below designated,
into Common Stock of Frontier Insurance Group, Inc. in accordance with the terms
of the Indenture referred to in this Debenture, and directs that the shares
issuable and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Indenture and the Debenture, agrees to be bound
by the terms of the Registration Rights Agreement relating to the Common Stock
issuable upon conversion of the Debentures.
Date: ____________, ____
in whole __
Portions of Debenture to be
in part __ converted ($50 or integral multiples thereof):
$__________________
______________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number
______________________________________________
______________________________________________
______________________________________________
Signature Guarantee:*
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange, Inc.
17
<PAGE>
<PAGE>
Exhibit 10.17
================================================================================
AMENDED AND RESTATED DECLARATION
OF TRUST
FRONTIER FINANCING TRUST
Dated as of October 16, 1996
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I INTERPRETATION AND DEFINITIONS......................................... 2
SECTION 1.1 Definitions............................................................ 2
ARTICLE II TRUST INDENTURE ACT.................................................... 8
SECTION 2.1 Trust Indenture Act; Application....................................... 8
SECTION 2.2 Lists of Holders of Securities......................................... 9
SECTION 2.3 Reports by the Property Trustee........................................ 9
SECTION 2.4 Periodic Reports to Property Trustee................................... 9
SECTION 2.5 Evidence of Compliance with Conditions Precedent....................... 9
SECTION 2.6 Declaration Events of Default; Waiver.................................. 10
SECTION 2.7 Event of Default; Notice............................................... 11
ARTICLE III ORGANIZATION........................................................... 12
SECTION 3.1 Name................................................................... 12
SECTION 3.2 Office................................................................. 12
SECTION 3.3 Purpose................................................................ 12
SECTION 3.4 Authority.............................................................. 12
SECTION 3.5 Title to Property of the Trust......................................... 13
SECTION 3.6 Powers and Duties of the Regular Trustees.............................. 13
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees................... 16
SECTION 3.8 Powers and Duties of the Property Trustee.............................. 17
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee............ 19
SECTION 3.10 Certain Rights of Property Trustee..................................... 21
SECTION 3.11 Delaware Trustee....................................................... 23
SECTION 3.12 Not Responsible for Recitals or Issuance of Securities................. 23
SECTION 3.13 Duration of Trust...................................................... 23
SECTION 3.14 Mergers................................................................ 23
ARTICLE IV SPONSOR................................................................ 25
SECTION 4.1 Sponsor's Purchase of Common Securities................................ 25
SECTION 4.2 Responsibilities of the Sponsor........................................ 25
ARTICLE V TRUSTEES............................................................... 26
SECTION 5.1 Number of Trustees..................................................... 26
SECTION 5.2 Delaware Trustee....................................................... 26
SECTION 5.3 Property Trustee; Eligibility.......................................... 27
SECTION 5.4 Qualifications of Regular Trustees and Delaware
</TABLE>
i
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Trustee Generally...................................................... 27
SECTION 5.5 Initial Regular Trustees............................................... 28
SECTION 5.6 Appointment, Removal and Resignation of Trustees....................... 28
SECTION 5.7 Vacancies among Trustees............................................... 30
SECTION 5.8 Effect of Vacancies.................................................... 30
SECTION 5.9 Meetings............................................................... 30
SECTION 5.10 Delegation of Power.................................................... 31
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business............ 31
ARTICLE VI DISTRIBUTIONS.......................................................... 31
SECTION 6.1 Distributions.......................................................... 31
ARTICLE VII ISSUANCE OF SECURITIES................................................. 32
SECTION 7.1 General Provisions Regarding Securities................................ 32
SECTION 7.2 Execution and Authentication........................................... 32
SECTION 7.3 Form and Dating........................................................ 33
SECTION 7.4 Registrar, Paying Agent and Conversion Agent........................... 35
SECTION 7.5 Paying Agent to Hold Money in Trust.................................... 35
SECTION 7.6 Replacement Securities................................................. 35
SECTION 7.7 Outstanding Preferred Securities....................................... 36
SECTION 7.8 Preferred Securities in Treasury....................................... 36
SECTION 7.9 Temporary Securities................................................... 36
SECTION 7.10 Cancellation........................................................... 37
ARTICLE VIII TERMINATION OF TRUST................................................... 38
SECTION 8.1 Termination of Trust................................................... 38
ARTICLE IX TRANSFER AND EXCHANGE.................................................. 39
SECTION 9.1 General................................................................ 39
SECTION 9.2 Transfer Procedures and Restrictions................................... 39
SECTION 9.3 Deemed Security Holders................................................ 47
SECTION 9.4 Notices to Clearing Agency............................................. 48
SECTION 9.5 Appointment of Successor Clearing Agency............................... 48
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS..................................................... 48
SECTION 10.1 Liability.............................................................. 48
SECTION 10.2 Exculpation............................................................ 48
SECTION 10.3 Fiduciary Duty......................................................... 49
</TABLE>
ii
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<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 10.4 Indemnification........................................................ 50
SECTION 10.5 Outside Businesses..................................................... 53
ARTICLE XI ACCOUNTING............................................................. 53
SECTION 11.1 Fiscal Year............................................................ 53
SECTION 11.2 Certain Accounting Matters............................................. 53
SECTION 11.3 Banking................................................................ 54
SECTION 11.4 Withholding............................................................ 54
ARTICLE XII AMENDMENTS AND MEETINGS................................................ 55
SECTION 12.1 Amendments............................................................. 55
SECTION 12.2 Meetings of the Holders of Securities; Action by
Written Consent........................................................ 56
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE
TRUSTEE................................................................ 58
SECTION 13.1 Representations and Warranties of Property Trustee..................... 58
SECTION 13.2 Representations and Warranties of Delaware Trustee..................... 58
ARTICLE XIV REGISTRATION RIGHTS.................................................... 59
SECTION 14.1 Registration Rights.................................................... 59
ARTICLE XV MISCELLANEOUS.......................................................... 60
SECTION 15.1 Notices................................................................ 60
SECTION 15.2 Governing Law.......................................................... 61
SECTION 15.3 Intention of the Parties............................................... 62
SECTION 15.4 Headings............................................................... 62
SECTION 15.5 Successors and Assigns................................................. 62
SECTION 15.6 Partial Enforceability................................................. 62
SECTION 15.7 Counterparts........................................................... 63
</TABLE>
iii
<PAGE>
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C>
310(a)........................................................ 5.3(a)
310(c)........................................................ Inapplicable
311(c)........................................................ Inapplicable
312(a)........................................................ 2.2(a)
312(b)........................................................ 2.2(b)
313........................................................... 2.3
314(a)........................................................ 2.4
314(b)........................................................ Inapplicable
314(c)........................................................ 2.5
314(d)........................................................ Inapplicable
314(f)........................................................ Inapplicable
315(a)........................................................ 3.9(b)
315(c)........................................................ 3.9(a)
315(d)........................................................ 3.9(a)
316(a)........................................................ Annex I
316(c)........................................................ 3.6(e)
</TABLE>
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
iv
<PAGE>
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
FRONTIER FINANCING TRUST
October 16, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated
and effective as of October 16, 1996, by the undersigned trustees (together with
all other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Frontier
Insurance Group Inc., a Delaware corporation, as trust sponsor (the "Sponsor"),
and by the holders, from time to time, of undivided beneficial interests in the
Trust issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Frontier
Financing Trust (the "Trust"), a trust under the Business Trust Act (as defined
herein) pursuant to a Declaration of Trust dated as of October 1, 1996, (the
"Original Declaration") and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on October 1, 1996, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures (as defined herein) of the Debenture Issuer (as defined
herein);
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the Original
Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitutes the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE>
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections and Annexes and Exhibits
to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Additional Interest" means, if the Trust is required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other taxing
authority, such amounts as shall be required so that the net amounts received
and retained by the Trust after paying such taxes, duties, assessments and
governmental charges will not be less than the amounts the Trust would have
received had no such taxes, duties, assessments or governmental charges been
imposed.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Depositary as described in Section 9.4.
2
<PAGE>
<PAGE>
"Business Day" means any day other than a day on which banking
institutions in the City of New York or in Wilmington, Delaware are authorized
or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a certificate in global or definitive form
representing a Common Security or a Preferred Security.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act.
"Closing Date" means October 16, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated
as of October 16, 1996, of the Sponsor with respect to the Common Securities.
"Company Indemnified Person" means (a) any Regular Trustee; (b)
any Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Compounded Interest" means interest compounded quarterly at the
rate specified for the Debentures to the extent permitted by applicable law upon
interest accrued and unpaid (including Additional Interest and Liquidated
Damages) at the end of each Extension Period.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means the Sponsor in its capacity as issuer of
the Debentures.
"Debenture Trustee" means The Bank of New York, a New York
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by the
Debenture Issuer under the Indenture to be held by the Property Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
3
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"Declaration Event of Default" means, with respect to the
Securities, that an Indenture Event of Default has occurred and is continuing
with respect to the Debentures.
"Definitive Preferred Securities" means the Regulation S
Definitive Preferred Security, the Restricted Definitive Preferred Security and
any other Preferred Securities in definitive form issued by the Trust.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Depositary" means The Depository Trust Company, the initial
Clearing Agency.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"Effectiveness Period" has the meaning specified in Section 14.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Holder" means a Person in whose name a Certificate representing
a Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of October 16, 1996,
between the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means an "Indenture Event of
Default" as defined in the Indenture.
"Initial Purchasers" has the meaning set forth in the Purchase
Agreement.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in the terms
of the Securities as set forth in Annex I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
4
<PAGE>
<PAGE>
"Liquidated Damages" means the additional interest which shall
accrue on the Debentures and, accordingly, on the Preferred Securities, in
accordance with the provisions of Section 14.1 hereof.
"Majority in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the relevant
class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I hereto.
"Offering Memorandum" means the confidential offering memorandum
dated as of October 9, 1996 relating to the issuance by the Trust of the
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the
Certificate has read the covenant or condition and
the definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each
officer in rendering the Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's
opinion, is necessary to enable such officer to
express an informed opinion as to whether or not
such covenant or condition has been complied with;
and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been
complied with.
"Participants" has the meaning set forth in Section 7.3(b).
"Paying Agent" has the meaning specified in Section 3.8(h).
"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.
5
<PAGE>
<PAGE>
"Preferred Securities" has the meaning specified in Section
7.1(a).
"Preferred Securities Guarantee" means the guarantee agreement
dated as of October 16, 1996, of the Sponsor with respect to the Preferred
Securities.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Depositary, or on the books of a
Person maintaining an account with such Depositary (directly as a Participant or
as an indirect participant, in each case in accordance with the rules of such
Depositary).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Purchase Agreement" shall have the meaning set forth in Section
7.3(a).
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Registration Rights Agreement" means the Registration Rights
Agreement dated October 16, 1996, among the Sponsor, the Trust, and the Initial
Purchasers named in the Purchase Agreement.
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Regulation S Definitive Preferred Security" has the meaning set
forth in Section 7.3(c).
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any vice-president, any assistant vice-president, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any other
officer in the Corporate Trust Department of the Property 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.
"Restricted Definitive Preferred Security" has the meaning set
forth in Section 7.3(c).
6
<PAGE>
<PAGE>
"Restricted Period" means the one-year period following the last
issue date for the Preferred Securities (including Preferred Securities issued
to cover overallotments and Common Securities issued in connection with related
capital contributions). The Sponsor shall inform the Trustee as to the
termination of the restricted period and the Trustee may rely conclusively
thereon.
"Restricted Preferred Securities" shall include the Regulation S
Definitive Preferred Securities, the Restricted Definitive Preferred Securities
and the Rule 144A Global Preferred Securities (as defined in Article IX herein).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Securities Custodian" means the custodian with respect to the
Rule 144A Global Preferred Security and any other Preferred Security in global
form.
"Shelf Registration Statement" has the meaning specified in
Section 14.1.
"66-2/3% in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holders of outstanding Securities voting together as a single class or, as
the context may require, Holders of outstanding Preferred Securities or
Holder(s) of outstanding Common Securities voting separately as a class,
representing at least 66 2/3% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions, to the date upon which the voting percentages
are determined) of all outstanding Securities of the relevant class.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means Frontier Insurance Group, Inc., a Delaware
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
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amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Terms" has the meaning set forth in Section 7.1(a).
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Unrestricted Definitive Preferred Security" has the meaning set
forth in Section 9.2(c).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration, which are
incorporated by reference in and made part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
"trustee" for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by ss.ss. 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
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SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither the
Sponsor nor the Regular Trustees on behalf of the Trust shall 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 Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust 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 Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity) provided that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after November 15 of each year, commencing
November 15, 1997 the Property Trustee shall provide to the Holders of the
Preferred Securities such reports as are required by ss. 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by ss. 313 of the
Trust Indenture Act. The Property Trustee shall also comply with the
requirements of ss. 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as required by ss. 314 of the Trust Indenture Act (if any) and the
compliance certificate required by ss. 314 of the Trust Indenture Act in the
form, in the manner and at the times required by ss. 314 of the Trust Indenture
Act.
SECTION 2.5 Evidence of Compliance with Conditions
Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in ss. 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to ss.
314(c)(1) may be given in the form of an Officers' Certificate.
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SECTION 2.6 Declaration Events of Default; Waiver.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Declaration Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
(i) is not waivable under the Indenture, the Declaration
Event of Default shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Declaration Event of
Default may only be waived by the vote of the Holders of at least the
proportion in liquidation amount of the Preferred Securities that the
relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu
of ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Declaration Event of Default with respect
to the Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or a Declaration Event of Default with respect
to the Preferred Securities or impair any right consequent thereon. Any waiver
by the Holders of the Preferred Securities of a Declaration Event of Default
with respect to the Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Common Securities of any such Declaration Event of
Default with respect to the Common Securities for all purposes of this
Declaration without any further act, vote or consent of the Holders of the
Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Declaration Event of Default with respect to the
Common Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such
Declaration Event of Default as provided below in this Section 2.6(b),
the Declaration Event of Default shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Declaration Event of Default as provided below in this
Section 2.6(b), the Declaration Event of Default may only be waived by
the vote of the Holders of at least the proportion in liquidation amount
of the Common Securities that the
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relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Declaration Event of Default and all Declaration Events of
Default with respect to the Common Securities and its consequences until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated, and until such Declaration Events of
Default have been so cured, waived or otherwise eliminated, the Property Trustee
will be deemed to be acting solely on behalf of the Holders of the Preferred
Securities and only the Holders of the Preferred Securities will have the right
to direct the Property Trustee in accordance with the terms of the Securities.
The foregoing provisions of this Section 2.6(b) shall be in lieu of ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such default shall cease to exist and any Declaration Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Declaration Event of Default
with respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Indenture Event of Default by the Property
Trustee at the direction of the Holders of the Preferred Securities, constitutes
a waiver of the corresponding Declaration Event of Default. The foregoing
provisions of this Section 2.6(c) shall be in lieu of ss. 316(a)(1)(B) of the
Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust Indenture Act is
hereby expressly excluded from this Declaration and the Securities, as permitted
by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the
occurrence of a Declaration Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Securities, notices of all defaults with
respect to the Securities actually known to a Responsible Officer of the
Property Trustee, unless such defaults have been cured before the giving of such
notice (the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Indenture Event of Default, not including any periods of grace
provided for therein and irrespective of the giving of any notice provided
therein); provided that, except for a default in the payment of principal of (or
premium, if any) or interest on any of the Debentures or in the payment of any
sinking fund installment established for the Debentures, the Property 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 Property Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
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(i) a default under Sections 501(1) and 501(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of the Declaration
shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "Frontier Financing Trust," as such name may
be modified from time to time by the Regular Trustees following written notice
to the Holders of Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Frontier
Insurance Group, Inc., 195 Lake Louise Marie Road, Rock Hill, New York 12775,
Attention: Mr. Walter A. Rhulen. On 10 Business Days written notice to the
Holders of Securities, the Regular Trustees may designate another principal
office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, (b) to enter into and perform its obligations under the Purchase
Agreement and the Registration Rights Agreement, and (c) except as otherwise
limited herein, to engage in only those other activities necessary or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
(a) Subject to the limitations provided in this Declaration and
to the specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons
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dealing with the Trust are entitled to rely conclusively on the power and
authority of the Trustees as set forth in this Declaration.
(b) Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(c) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6(b)(i), provided, that the registration statement
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by a majority of the Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures
and the Property Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities, and, provided, further, that there shall be no
interests in the Trust other than the Securities, and the issuance of Securities
shall be limited to the simultaneous issuance of both the Preferred Securities
and the Common Securities on the Closing Date and any other date the Preferred
Securities and the Common Securities are sold pursuant to the over-allotment
option granted in the Purchase Agreement;
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an offering
memorandum (the "Offering Memorandum") in preliminary and final form
prepared by the
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Sponsor, in relation to the offering and sale of Preferred Securities to
qualified institutional buyers in reliance on Rule 144A under the
Securities Act, to institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and outside
the United States to non-U.S. persons in off-shore transactions in
reliance on Regulation S under the Securities Act and to execute and
file with the Commission, at such time as determined by the Sponsor, a
registration statement filed on Form S-3 prepared by the Sponsor
pursuant to the registration rights described in Article XIV hereof,
including any amendments thereto in relation to the Preferred
Securities;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in order
to qualify or register all or part of the Preferred Securities in any
State or foreign jurisdiction in which the Sponsor has determined to
qualify or register such Preferred Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the Private Offerings, Resale and Trading through Automated
Linkages ("PORTAL") Market and, at such time as determined by the
Sponsor, to the New York Stock Exchange or any other national stock
exchange or the Nasdaq Stock Market's National Market for listing or
quotation of the Preferred Securities;
(iv) to execute and deliver letters, documents, or
instruments with The Depository Trust Company relating to the Preferred
Securities;
(v) execute and file with the Commission, at such time as
determined by the Sponsor, a registration statement on Form 8-A,
including any amendments thereto, prepared by the Sponsor relating to
the registration of the Preferred Securities under Section 12(b) of the
Exchange Act; and
(vi) execute and enter into the Purchase Agreement,
Registration Rights Agreement and other related agreements in connection
with the sale of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of
the Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular Trustees
shall consult with the Sponsor and the Property Trustee before taking or
refraining from taking any Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of
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ss.316(c) of the Trust Indenture Act, Distributions, voting rights, redemptions
and exchanges, and to issue relevant notices to the Holders of the Preferred
Securities and the Holders of the Common Securities as to such actions and
applicable record dates;
(f) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may
be designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:
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(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes;
provided that such action does not adversely affect the interests of Holders;
and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of
the Trust.
The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none
of the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
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(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex I
hereto, (A) direct the time, method and place of exercising any trust or
power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of counsel to the effect that
such modification will not cause more than an insubstantial risk that
the Trust will be deemed an Investment Company required to be registered
under the Investment Company Act, or the Trust will not be classified as
a grantor trust for United States federal income tax purposes.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Property Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Property Trustee
to the Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.6. Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the Holders
of the Securities and, upon the receipt of payments of funds made in
respect of the Debentures held by the Property Trustee, deposit such
funds into the Property Trustee Account and make payments to the Holders
of the Preferred Securities and Holders of the Common Securities from
the Property Trustee Account in accordance with Section 6.1. Funds in
the Property Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Property Trustee Account shall be
an account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness is at least equal to the rating
assigned to the Preferred Securities by a "nationally recognized
statistical rating
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organization", as that term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(ii) engage in such ministerial activities as so directed and
as shall be necessary or appropriate to effect the redemption of the
Preferred Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities, engage
in such ministerial activities as so directed and as shall be necessary
or appropriate to effect the distribution of the Debentures to Holders
of Securities upon the occurrence of a Special Event arising from a
change in law or a change in legal interpretation or other specified
circumstances pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with a Declaration Event of Default of which a
Responsible Officer of the Property Trustee has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act.
(f) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if a Declaration Event of Default actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities.
(h) The Property Trustee will act as Paying Agent and Registrar
in both London and New York (each, a "Paying Agent") to pay Distributions,
redemption payments or liquidation payments on behalf of the Trust with respect
to all Securities and any such Paying Agent shall comply with ss. 317(b) of the
Trust Indenture Act. Any Paying Agent may be removed by the Property Trustee at
any time and a successor Paying Agent or additional Paying Agents may be
appointed at any time by the Property Trustee.
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(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any
Declaration Event of Default and after the curing of all Declaration Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Property Trustee. In case a Declaration
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and 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.
(b) No provision of this Declaration shall be construed to
relieve the Property 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 a Declaration Event of
Default and after the curing or waiving of all such Declaration Events
of Default that may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and the Property Trustee shall not be liable except
for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied
covenants or obligations shall be read into this Declaration
against the Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely, as
to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Declaration;
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(ii) the Property Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property 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 it 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
Declaration or indemnity reasonably satisfactory to the Property Trustee
against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Declaration and the Trust
Indenture Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of
the Debentures or the payment of any taxes or assessments levied thereon
or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree in
writing with the Sponsor. Money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law;
and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Property
Trustee be liable for any default or misconduct of the Regular Trustees
or the Sponsor.
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SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its
choice or other experts and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Sponsor or any of its Affiliates, and
may include any of its employees. The Property Trustee shall have the
right at any time to seek instructions concerning the administration of
this Declaration from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee adequate security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Property 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 Property
Trustee
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provided that, nothing contained in this Section 3.10(a)(vi) shall be
taken to relieve the Property Trustee, upon the occurrence of a
Declaration Event of Default, of its obligation to exercise the rights
and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, security, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Property
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Property 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 Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and
the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property Trustee
to so act or as to its compliance with any of the terms and provisions
of this Declaration, both of which shall be conclusively evidenced by
the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder the Property Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the Securities
as would be entitled to direct the Property Trustee under the terms of
the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Declaration.
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(b) No provision of this Declaration shall be deemed to impose
any duty or obligation on the Property 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 Property 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 Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Property Trustee described in
this Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall
be a Trustee for the sole and limited purpose of fulfilling the requirements of
ss. 3807 of the Business Trust Act.
SECTION 3.12 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.13 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall exist until October 11, 2031.
SECTION 3.14 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other entity or body, except
as described in Section 3.14(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the Property
Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any State of the United States; provided
that:
(i) if the Trust is not the survivor, such successor entity
(the "Successor Entity") either:
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(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Preferred Securities with respect
to Distributions, assets and payments upon liquidation,
redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of
the Successor Entity that possesses the same powers and duties as the
Property Trustee as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another
organization on which the Preferred Securities are then listed or
quoted;
(iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical
rating organization;
(v) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of the
Holders of the Preferred Securities (including any Successor Securities)
in any material respect;
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Preferred Securities Guarantee; and
(viii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust reasonably acceptable to the
Property Trustee experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement will not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new
entity);
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(B) following such merger, consolidation, amalgamation
or replacement, neither the Trust nor the Successor Entity will
be required to register as an Investment Company; and
(C) following such merger, consolidation, amalgamation
or replacement, the Trust (or the Successor Entity) will be
treated as a grantor trust for United States federal income tax
purposes.
(c) Notwithstanding Section 3.14(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Common
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date and on any other date the Preferred
Securities and the Common Securities are sold pursuant to the over-allotment
option granted in the Purchase Agreement, the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare the Offering Memorandum and to prepare for filing
by the Trust with the Commission the Shelf Registration Statement, including any
amendments thereto;
(b) to determine the States and foreign jurisdictions in which to
take appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than actions that
must be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States and foreign jurisdictions;
(c) to prepare for filing by the Trust an application to PORTAL
and to the New York Stock Exchange or any other national stock exchange or the
Nasdaq National Market for listing or quotation of the Preferred Securities;
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(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Purchase Agreement,
Registration Rights Agreement and other related agreements in connection with
the sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees shall be four (4), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities;
provided, however, that the number of Trustees shall in no event be less than
two; provided further that (1) the Delaware Trustee, in the case of a natural
person, shall be a person who is a resident of the State of Delaware or that, if
not a natural person, is an entity which has its principal place of business in
the State of Delaware; (2) at least one Regular Trustee is an employee or
officer of, or is affiliated with the Sponsor; and (3) one Trustee shall be the
Property Trustee for so long as this Declaration is required to qualify as an
indenture under the Trust Indenture Act, and such Trustee may also serve as
Delaware Trustee if it meets the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application. The Delaware Trustee shall accept service of process
on the Trust in the State of Delaware and execute any certificates filed under
the Business Trust Act.
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SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.3(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; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by means of Rule 3a-5 and to the extent Rule
3a-5 requires a trustee having certain qualifications to hold title to
the "eligible assets" of the trust, the Property Trustee shall possess
those qualifications.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of ss. 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in ss. 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of ss. 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be set forth in Section
5.5 hereof.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
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SECTION 5.5 Initial Regular Trustees.
(a) The initial Regular Trustees shall be:
Mr. Walter A. Rhulen
Frontier Insurance Group, Inc.
195 Lake Louise Marie Road
Rock Hill, New York 12775
Mr. Peter H. Foley
Frontier Insurance Group, Inc.
195 Lake Louise Marie Road
Rock Hill, New York 12775
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10019
Attn: Corporate Trust Trustee Administration
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of Common Securities voting
as a class at a meeting of the Holders of the Common Securities.
(b) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Regular Trustees and the
Sponsor; and
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(c) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(d) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the
Trust, the Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of
the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by written
instrument executed by such Successor Delaware Trustee and delivered to
the Trust, the Sponsor and the resigning Delaware Trustee.
(e) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation or is removed in accordance with this
Section 5.6.
(f) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery pursuant to this Section 5.6 of an
instrument of resignation or removal, the Property Trustee or Delaware Trustee
resigning or being removed, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
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(g) No Property Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number
of Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees
is increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of the
Regular Trustees or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The
presence (whether in person or by telephone) of a Regular Trustee at a meeting
shall constitute a waiver of notice of such meeting except where a Regular
Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been lawfully
called or convened. Unless provided otherwise in this Declaration, any action of
the Regular Trustees may be taken at a meeting by vote of a majority of the
Regular Trustees present (whether in person or by telephone) and eligible to
vote with respect to such matter, provided that a Quorum is present, or without
a meeting by the unanimous written consent of the Regular Trustees. In the event
there is only one Regular Trustee, any and all action of such Regular Trustee
shall be evidenced by a written consent of such Regular Trustee.
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SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time
to time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation
or Succession to Business.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest, Additional Interest and Liquidated
Damages), premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distribution") of the Payment Amount to
Holders.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall on behalf of the Trust issue one
class of convertible preferred securities, representing undivided beneficial
interests in the assets of the Trust (the "Preferred Securities"), having such
terms as are set forth in Annex I (the "Terms") and one class of convertible
common securities, representing undivided beneficial interests in the assets of
the Trust (the "Common Securities"), having such terms as are set forth in the
Terms. The Trust shall not issue any securities or other interests in the assets
of the Trust other than the Preferred Securities and the Common Securities. The
Trust shall not issue any Securities in bearer form.
(b) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and nonassessable.
(d) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
(e) The Securities shall have no preemptive rights.
SECTION 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust by a
Regular Trustee. In case any Regular Trustee of the Trust who shall have signed
any of the Securities shall cease to be such Regular Trustee before the
Securities so signed shall be delivered by the Trust, such Securities
nevertheless may be delivered as though the person who signed such Securities
had not ceased to be such Regular Trustee; and any Securities may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such a
Regular Trustee.
(b) One Regular Trustee shall sign the Preferred Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Preferred Security shall not be valid until authenticated by
the manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Preferred Security has been
authenticated under this Declaration.
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Upon a written order of the Trust signed by one Regular Trustee,
the Property Trustee shall authenticate and make available for delivery the
Preferred Securities. The aggregate number of Preferred Securities outstanding
at any time shall not exceed the number set forth in the Terms except as
provided in Section 7.6.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Securities. An authenticating
agent may authenticate Preferred Securities whenever the Property Trustee may do
so. Each reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
The Preferred Securities and the Property Trustee's certificate
of authentication shall be substantially in the form of Exhibit A-1 and the
Common Securities shall be substantially in the form of Exhibit A-2, each of
which is hereby incorporated in and expressly made a part of this Declaration.
Certificates may be printed, lithographed or engraved or may be produced in any
other manner as is reasonably acceptable to the Regular Trustees, as evidenced
by their execution thereof. The Securities may have letters, numbers, notations
or other marks of identification or designation and such legends or endorsements
required by law, stock exchange rule, agreements to which the Trust is subject,
if any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Trust). The Trust, at the direction of the Sponsor, shall
furnish any such legend not contained in Exhibit A-1 to the Property Trustee in
writing. Each Preferred Security shall be dated the date of its authentication.
The terms and provisions of the Securities set forth in Annex I and the forms of
Securities set forth in Exhibits A-1 and A-2 are part of the terms of this
Declaration and to the extent applicable, the Property Trustee and the Sponsor,
by their execution and delivery of this Declaration, expressly agree to such
terms and provisions and to be bound thereby.
(a) Global Securities. The Preferred Securities are being offered
and sold by the Trust pursuant to a Purchase Agreement relating to the Preferred
Securities, dated October 9, 1996, among the Trust, the Sponsor and the Initial
Purchasers named therein (the "Purchase Agreement").
Securities offered and sold to Qualified Institutional Buyers
("QIBs") in reliance on Rule 144A under the Securities Act ("Rule 144A") as
provided in the Purchase Agreement, shall be issued in the form of one or more
permanent global Securities in definitive, fully registered form without
distribution coupons with the appropriate global legends and Restricted
Securities Legend set forth in Exhibit A-1 hereto (each, a "Rule 144A Global
Preferred Security"), which shall be deposited on behalf of the purchasers of
the Preferred Securities represented thereby with the Property Trustee, at its
New York office, as custodian for the Depositary, and registered in the name of
the Depositary or a nominee of the Depositary, duly executed by the Trust and
authenticated by the Property Trustee as hereinafter provided. The number of
Preferred Securities represented by a Rule 144A Global Preferred Security may
from time to time be increased or decreased by adjustments made on the records
of the Property Trustee and the Depositary or its nominee as hereinafter
provided.
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(b) Book-Entry Provisions. This Section 7.3(b) shall apply only
to the Rule 144A Global Preferred Securities and such other Preferred Securities
in global form as may be authorized by the Trust to be deposited with or on
behalf of the Depositary, unless and until Preferred Securities Certificates
have been issued to Preferred Security Beneficiary Owners pursuant to Section
9.2.
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for delivery
initially one or more Rule 144A Global Preferred Securities that (a) shall be
registered in the name of Cede & Co. or other nominee of such Depositary and (b)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's written instructions or held by the Trustee as custodian for the
Depositary.
Members of, or participants in, the Depositary ("Participants")
shall have no rights under this Declaration with respect to any Rule 144A Global
Preferred Security held on their behalf by the Depositary or by the Property
Trustee as the custodian of the Depositary or under such Rule 144A Global
Preferred Security, and the Depositary may be treated by the Trust, the Property
Trustee and any agent of the Trust or the Property Trustee as the absolute owner
of such Rule 144A Global Preferred Security for all purposes whatsoever. The
Depositary will make book entry transfers among the Participants.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Participants, the
operation of customary practices of such Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Rule 144A Global
Preferred Security.
The rights of the Preferred Security Beneficial Owners shall be
exercised only through the Depositary and shall be limited to those established
by law and agreements between such Preferred Security Beneficial Owners and the
Depositary and/or the Participants and the right to receive and transmit
payments of Distributions on the Global Certificates to such Participants.
(c) Certificated Securities. Except as provided in Section 7.9,
owners of beneficial interests in the Rule 144A Global Preferred Security will
not be entitled to receive physical delivery of certificated Preferred
Securities. Preferred Securities offered and sold in reliance on Regulation S
under the Securities Act ("Regulation S") and purchasers of Securities who are
QIBs acting on behalf of institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) who did not purchase
Preferred Securities in reliance on Regulation S under the Securities Act as
provided in the Purchase Agreement, shall be issued initially in the form of
individual certificates in definitive, fully registered form without
distribution coupons and shall bear the Restricted Securities Legend set forth
in Exhibit A-1 hereto (the "Regulation S Definitive Preferred Securities");
provided, however, that upon transfer of such Restricted Definitive Preferred
Securities to a QIB, such Restricted Definitive Preferred Securities will,
unless the Rule 144A Global Preferred Security has previously been exchanged, be
exchanged for an interest in a Rule 144A Global Security pursuant to the
provisions of Section 9.2. Restricted Definitive Preferred Securities will bear
the Restricted Securities Legend set forth on Exhibit A-1 unless removed in
accordance with this Section 7.3 or Section 9.2.
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SECTION 7.4 Registrar, Paying Agent and Conversion Agent.
The Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York or in the city of London, England, as the case may be,
(i) an office or agency where Preferred Securities may be presented for
registration of transfer or exchange (the "Registrar"), (ii) an office or agency
where Preferred Securities may be presented for payment (the "Paying Agent") and
an office or agency where Preferred Securities may be presented for conversion
(the "Conversion Agent"). The Registrar shall keep a register of the Preferred
Securities and of their transfer and exchange. The Trust may appoint the
Registrar, the Paying Agent and the Conversion Agent and may appoint one or more
co-registrars, one or more additional paying agents and one or more additional
conversion agents in such other locations as it shall determine. The term
"Paying Agent" includes any additional paying agent and the term "Conversion
Agent" includes any additional conversion agent. The Trust may change any Paying
Agent, Registrar, co-registrar or Conversion Agent without prior notice to any
Holder. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Regular Trustees. The Trust shall notify the
Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Conversion Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Conversion Agent. The Trust shall act as Paying Agent, Registrar, co-registrar,
and Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar,
Paying Agent, and Conversion Agent for the Preferred Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of principal or distribution on the Securities, and will notify
the Property Trustee if there are insufficient funds. While any such
insufficiency continues, the Property Trustee may require a Paying Agent to pay
all money held by it to the Property Trustee. The Trust at any time may require
a Paying Agent to pay all money held by it to the Property Trustee and to
account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
SECTION 7.6 Replacement Securities.
If the holder of a Security claims that the Security has been
lost, destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Preferred Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall
authenticate and make available for delivery a replacement Security if the
Property Trustee's and the Trust's requirements, as the case may be, are met. If
required by the Property
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Trustee or the Trust, an indemnity bond must be sufficient in the judgment of
both to protect the Trustees, the Property Trustee, the Sponsor or any
authenticating agent from any loss which any of them may suffer if a Security is
replaced. The Company may charge for its expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, or is about to be purchased by
the Sponsor pursuant to Article III hereof, the Sponsor in its discretion may,
instead of issuing a new Security, pay or purchase such Security, as the case
may be.
Every replacement Security is an additional obligation of the
Trust.
SECTION 7.7 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the
Preferred Securities authenticated by the Property Trustee except for those
canceled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Preferred Security is replaced, paid or purchased pursuant
to Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Preferred
Security is held by a bona fide purchaser.
If Preferred Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and interest on them
ceases to accrue.
A Preferred Security does not cease to be outstanding because one
of the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Securities
which the Property Trustee knows are so owned shall be so disregarded.
SECTION 7.9 Temporary Securities.
(a) Until definitive Securities are ready for delivery, the Trust
may prepare and, in the case of the Preferred Securities, the Property Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Trust considers appropriate for temporary Securities. Without unreasonable
delay, the Trust shall prepare and, in the case of the Preferred Securities, the
Property Trustee shall authenticate definitive Securities in exchange for
temporary Securities.
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(b) A Global Preferred Security deposited with the Depositary or
with the Property Trustee as custodian for the Depositary pursuant to Section
7.3 shall be transferred to the beneficial owners thereof in the form of
certificated Preferred Securities only if such transfer complies with Section
9.2 and (i) the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such Global Preferred Security or if at any time
such Depositary ceases to be a "clearing agency" registered under the Exchange
Act and a successor depositary is not appointed by the Sponsor within 90 days of
such notice, or (ii) a Declaration Event of Default has occurred and is
continuing.
(c) Any Global Preferred Security that is transferable to the
beneficial owners thereof in the form of certificated Preferred Securities
pursuant to this Section 7.9 shall be surrendered by the Depositary to the
Property Trustee located in the Borough of Manhattan, The City of New York, to
be so transferred, in whole or from time to time in part, without charge, and
the Property Trustee shall authenticate and make available for delivery, upon
such transfer of each portion of such Global Preferred Security, an equal
aggregate liquidation amount of Preferred Securities of authorized denominations
in the form of certificated Preferred Securities. Any portion of a Global
Preferred Security transferred pursuant to this Section shall be registered in
such names as the Depositary shall direct. Any Preferred Security in the form of
certificated Preferred Securities delivered in exchange for an interest in the
Restricted Global Preferred Security shall, except as otherwise provided by
Sections 7.3 and 9.1 bear the Restricted Securities Legend set forth in Exhibit
A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the registered
holder of a Global Preferred Security may grant proxies and otherwise authorize
any person, including Participants and persons that may hold interests through
Participants, to take any action which a holder is entitled to take under this
Declaration or the Securities.
(e) In the event of the occurrence of either of the events
specified in Section 7.9(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Securities in definite,
fully registered form without interest coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Preferred Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and Conversion
Agent shall forward to the Property Trustee any Preferred Securities surrendered
to them for registration of transfer, redemption, conversion, exchange or
payment. The Property Trustee shall promptly cancel all Preferred Securities
surrendered for registration of transfer, redemption, conversion, exchange,
payment, replacement or cancellation and shall dispose of canceled Preferred
Securities as the Trust directs. The Property Trustee may, but shall not be
required to, destroy any such canceled Preferred Securities. The Trust may not
issue new Preferred Securities to replace the Preferred Securities that it has
paid or that have been delivered to the Property Trustee for cancellation or
that any holder has converted.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall dissolve:
(i) on October 16, 2031, the expiration date of the Trust;
(ii) upon the bankruptcy of the Sponsor;
(iii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, or the revocation of the charter
of the Sponsor and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iv) after having obtained the consent of at least a Majority
in liquidation amount of the Securities, voting together as a single
class, to dissolve;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof, including
any Additional Interest, Compounded Interest and Liquidated Damages,
shall have been paid to the Holders in accordance with the terms of the
Securities;
(vi) upon the entry of a decree of judicial dissolution of
the Sponsor or the Trust;
(vii) upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance with
the terms of the Securities and all of the Debentures endorsed thereon
shall have been distributed to the Holders of Securities in exchange for
all of the Securities; or
(viii) before the issuance of any Securities, with the
consent of all the Regular Trustees and the Sponsor.
(b) Subject to the Terms of the Securities and clause (vii) of
paragraph (a) above, following dissolution of the Trust, the Trustees shall
liquidate any remaining Trust property and pay or provide for all claims of
creditors of the Trust.
(c) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware and the Trust
shall terminate.
(d) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
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ARTICLE IX
TRANSFER AND EXCHANGE
SECTION 9.1 General.
(a) Where Preferred Securities are presented to the Registrar or
a co-registrar with a request to register a transfer or to exchange them for an
equal number of Preferred Securities represented by different certificates, the
Registrar shall register the transfer or make the exchange if its requirements
for such transactions are met. To permit registrations of transfers and
exchanges, the Trust shall issue and the Property Trustee shall authenticate
Preferred Securities at the Registrar's request.
(b) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
Subject to this Article IX, the Sponsor and any Related Party may
only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided that, any such transfer is subject to the condition precedent
that the transferor obtain the written opinion of nationally recognized
independent counsel experienced in such matters that such transfer would not
cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
(c) The Trust shall not be required to issue Preferred Securities
during a period beginning at the opening of business 15 days before the day of
any selection of Preferred Securities for redemption set forth in the Terms and
ending at the close of business on the day of selection.
SECTION 9.2 Transfer Procedures and Restrictions.
(a) General. Except in connection with the Shelf Registration
Statement contemplated by and in accordance with the terms of the Registration
Rights Agreement, if Preferred Securities are issued upon the transfer, exchange
or replacement of Preferred Securities bearing the Restricted Securities Legend
set forth in Exhibit A-1 hereto, or if a request is made to remove such
Restricted Securities Legend on Preferred Securities, the Preferred Securities
so issued shall bear the Restricted Securities Legend, or the Restricted
Securities Legend shall not be removed, as the case may be, unless there is
delivered to the Trust and the Property Trustee such satisfactory evidence,
which may include an opinion of counsel licensed to practice law in the State of
New York, as may be reasonably required by the Company, that neither the legend
nor the restrictions on transfer set forth therein are required to ensure that
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transfers thereof comply with the provisions of Rule 144A, Rule 144 or
Regulation S under the Securities Act or, with respect to Restricted Securities,
that such Securities are not "restricted" within the meaning of Rule 144 under
the Securities Act. Upon provision of such satisfactory evidence, the Property
Trustee, at the written direction of the Trust, shall authenticate and deliver
Preferred Securities that do not bear the legend.
(b) Transfers After Effectiveness of Shelf Registration
Statement. After the effectiveness of a Shelf Registration Statement for any
Preferred Securities, all requirements pertaining to legends on such Preferred
Security will cease to apply, and beneficial interests in a Preferred Security
in global form without legends will be available to transferees of such
Preferred Securities, upon exchange of the transferring holder's Restricted
Definitive Preferred Security or directions to transfer such Holder's beneficial
interest in the Rule 144A Global Preferred Security, as the case may be. No such
transfer or exchange of a Restricted Definitive Preferred Security or of an
interest in the Rule 144A Global Preferred Security shall be effective unless
the transferor delivers to the Trust a certificate in the form of Exhibit D
hereto as to compliance by such person with the provisions of the Registration
Rights Agreement applicable thereto. After the effectiveness of the Shelf
Registration Statement, the Trust shall issue and the Property Trustee, upon
instruction from the Trust, shall authenticate a Preferred Security in global
form without the Restricted Securities Legend (the "Exchanged Global Preferred
Security") to deposit with the Depositary to evidence transfers of (i)
beneficial interests from the Rule 144A Global Preferred Security, (ii)
Restricted Definitive Preferred Securities, and (iii) Unrestricted Definitive
Preferred Securities.
(c) Regulation S Definitive Preferred Security to Unrestricted
Definitive Preferred Security; Termination of Restricted Period. Following the
termination of the "restricted period" with respect to the issuance of the
Preferred Securities, Regulation S Definitive Preferred Securities may be
exchanged for an interest in a Preferred Security in definitive, fully
registered form without distribution coupons, but without the Restricted
Securities Legend (an "Unrestricted Definitive Preferred Security"), that is
free from any restriction on transfer (other than such as are solely
attributable to any holder's status). Unrestricted Definitive Preferred
Securities will bear a CUSIP number different from that of the Exchanged Global
Preferred Securities and transfers or exchanges from an Unrestricted Definitive
Preferred Security or Regulation S Definitive Preferred Security to an Exchanged
Preferred Security must be effected pursuant to Section 9.2 (b).
(d) Transfer and Exchange of Definitive Preferred Securities.
When Definitive Preferred Securities are presented to the Registrar or
co-Registrar
(i) to register the transfer of such Definitive Preferred
Securities; or
(ii) to exchange such Definitive Preferred Securities for an
equal number of Definitive Preferred Securities of another number,
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the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Preferred Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and
the Registrar or co- Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) in the case of Definitive Preferred Securities that are
Restricted Definitive Preferred Securities, are being transferred or
exchanged pursuant to an effective registration statement under the
Securities Act or, prior to the time of the effectiveness of such
registration statement, pursuant to clause (A) or (B) below, and are
accompanied by the following additional information and documents, as
applicable:
(A) if such Restricted Preferred Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from such
Holder to that effect (in the form set forth on the reverse of
the Preferred Security); or
(B) if such Restricted Preferred Securities are being
transferred pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act: (i) a certification to that effect (in the form set forth on
the reverse of the Preferred Security) and (ii) if the Trust or
Registrar so requests, evidence reasonably satisfactory to them
as to the compliance with the restrictions set forth in the
Restricted Securities Legend.
Definitive Preferred Securities that are transferred to QIBs in
accordance with Rule 144A under the Securities Act must take delivery of their
interests as the Preferred Securities in the form of a beneficial interest in
the Rule 144A Global Preferred Security in accordance with Section 9.2(e).
(e) Restrictions on Transfer of a Definitive Preferred Security
for a Beneficial Interest in a Global Preferred Security. A Definitive Preferred
Security may not be exchanged for a beneficial interest in a Global Preferred
Security except upon satisfaction of the requirements set forth below. Upon
receipt by the Property Trustee of a Definitive Preferred Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Property Trustee, together with:
(i) if such Definitive Preferred Security is a Restricted
Preferred Security, certification, in the form set forth on the reverse
of the Preferred Security, that such Definitive Preferred Security is
being transferred to a QIB in accordance with Rule 144A under the
Securities Act; and
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(ii) whether or not such Definitive Preferred Security is a
Restricted Preferred Security, written instructions directing the
Property Trustee to make, or to direct the Depositary to make, an
adjustment on its books and records with respect to such Global
Preferred Security to reflect an increase in the number of the Preferred
Securities represented by the Global Preferred Security,
then the Property Trustee shall cancel such Definitive Preferred Security and
cause, or direct the Depositary to cause, the aggregate number of Preferred
Securities represented by the Global Preferred Security to be increased
accordingly. If no Global Preferred Securities are then outstanding, the Trust
shall issue and the Property Trustee shall authenticate, upon written order of
any Regular Trustee, an appropriate number of Preferred Securities in global
form.
(f) Transfer and Exchange of Global Preferred Securities. The
transfer and exchange of Global Preferred Securities or beneficial interests
therein shall be effected through the Depositary, in accordance with this
Declaration (including applicable restrictions on transfer set forth herein, if
any) and the procedures of the Depositary therefor.
(g) Transfer of a Beneficial Interest in a Global Preferred
Security for a Definitive Preferred Security.
(i) Any person having a beneficial interest in a Global
Preferred Security that is being transferred or exchanged pursuant to
clause (A) or (B) below, and not pursuant to an effective registration
statement, may upon request, and if accompanied by the information
specified below, exchange such beneficial interest for a Definitive
Preferred Security representing the same number of Preferred Securities.
Upon receipt by the Property Trustee from the Depositary or its nominee
on behalf of any Person having a beneficial interest in a Global
Preferred Security of written instructions or such other form of
instructions as is customary for the Depositary or the person designated
by the Depositary as having such a beneficial interest in a Restricted
Preferred Security and the following additional information and
documents (all of which may submitted by facsimile):
(A) if such beneficial interest is being transferred
to the person designated by the Depositary as being the owner of
a beneficial interest in a Global Preferred Security, a
certification from such Person to that effect (in the form set
forth on the reverse of the Preferred Security); or
(B) if such beneficial interest is being transferred
pursuant to an exemption from registration in accordance with
Rule 144 or Regulation S under the Securities Act: (i) a
certification to that effect from the transferee or transferor
(in the form set forth on the reverse of the Preferred Security)
and (ii) if the Property Trustee or Registrar so requests,
evidence reasonably satisfactory to them as to the compliance
with the restrictions set forth in the legend set forth in
Section 9.2(j),
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then the Property Trustee or the Securities Custodian, at the direction
of the Property Trustee, will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Securities Custodian, the aggregate principal amount of the Global
Preferred Security to be reduced on its books and records and, following
such reduction, the Trust will execute and the Property Trustee will
authenticate and make available for delivery to the transferee a
Definitive Preferred Security.
(ii) Definitive Preferred Securities issued in exchange for a
beneficial interest in a Global Preferred Security pursuant to this
Section 9.2(g) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
Participants or indirect Participants or otherwise, shall instruct the
Property Trustee. The Property Trustee shall make available for delivery
such Preferred Securities to the persons in whose names such Preferred
Securities are so registered in accordance with the instructions of the
Depositary.
Beneficial interests in the Rule 144A Global Security may not be
exchanged for a Definitive Preferred Security except a Regulation S Definitive
Preferred Security and except as provided in Section 9.2(i).
(h) Restrictions on Transfer and Exchange of Global Preferred
Securities. Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in subsection (i) of this Section 9.2), a Global
Preferred Security may not be transferred as a whole except by the Depositary to
a nominee of the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
Definitive Preferred Securities that are transferred to QIBs in
accordance with Rule 144A under the Securities Act prior to the effectiveness of
a registration statement under the Securities Act must take delivery of their
interests as the Preferred Securities in the form of a beneficial interest in
the Rule 144A Global Preferred Security in accordance with Section 9.2(e).
(i) Authentication of Definitive Preferred Securities. If at any
time:
(i) the Depositary notifies the Trust that the Depositary is
unwilling or unable to continue as Depositary for the Global Preferred
Securities and a successor Depositary for the Global Preferred
Securities is not appointed by the Trust at the direction of the Sponsor
within 90 days after delivery of such notice; or
(ii) the Trust, in its sole discretion, notifies the Property
Trustee in writing that it elects to cause the issuance of Definitive
Preferred Securities under this Declaration,
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then the Trust will execute, and the Property Trustee, upon receipt of a written
order of the Trust signed by one Regular Trustee requesting the authentication
and delivery of Definitive Preferred Securities to the Persons designated by the
Trust, will authenticate and make available for delivery Definitive Preferred
Securities, in an aggregate principal amount equal to the principal amount of
Global Preferred Securities, in exchange for such Global Preferred Securities.
(j) Legend.
(i) Except as permitted by the following paragraph (ii),
each Preferred Security certificate evidencing the Global Preferred
Securities and the Definitive Preferred Securities (and all Preferred
Securities issued in exchange therefor or substitution thereof) shall
bear a legend (the "Restricted Securities Legend") in substantially the
following form:
THIS SECURITY, ANY CONVERTIBLE DEBENTURE ISSUED IN
EXCHANGE FOR THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION
THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. 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, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH FRONTIER INSURANCE GROUP, INC. (THE
"COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION
TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE 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) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2),
(3)
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OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
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 (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (i) PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR
TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
(ii) Upon any sale or transfer of a Restricted Preferred
Security (including any Restricted Preferred Security represented by a
Global Preferred Security) pursuant to an effective registration
statement under the Securities Act or pursuant to Rule 144 under the
Securities Act after such registration statement ceases to be effective:
(A) in the case of any Restricted Preferred Security
that is a Definitive Preferred Security, the Registrar shall
permit the Holder thereof to exchange such Restricted Preferred
Security for a Definitive Preferred Security that does not bear
the Restricted Securities Legend and rescind any restriction on
the transfer of such Restricted Preferred Security; and
(B) in the case of any Restricted Preferred Security
that is represented by a Global Preferred Security, the Registrar
shall permit the Holder thereof to exchange such Restricted
Preferred Security (in connection with the sale of a Preferred
Security pursuant to the Registration Rights Agreement) for
another Global Preferred Security that does not bear the
Restricted Securities Legend.
(k) Cancellation or Adjustment of Global Preferred Security. At
such time as all beneficial interests in a Global Preferred Security have either
been exchanged for Definitive Preferred Securities to the extent permitted by
the Declaration or redeemed, repurchased or canceled in accordance with the
terms of this Declaration, such Global Preferred Security shall be returned to
the Depositary for cancellation or retained and canceled by the Property
Trustee. At any time prior to such cancellation, if any beneficial interest in a
Global Preferred Security is exchanged for Definitive Preferred Securities,
Preferred Securities represented by
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such Global Preferred Security shall be reduced and an adjustment shall be made
on the books and records of the Property Trustee (if it is then the Securities
Custodian for such Global Preferred Security) with respect to such Global
Preferred Security, by the Property Trustee or the Securities Custodian, to
reflect such reduction.
(l) Obligations with Respect to Transfers and Exchanges of
Preferred Securities.
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate
Definitive Preferred Securities and Global Preferred Securities at the
Registrar's or co-Registrar's request.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
or the Sponsor may require) in respect of any tax or other governmental
charge that may be imposed in relation to it. Upon surrender for
registration of transfer of any Securities, the Regular Trustees shall
cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each
Security surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Security shall be entitled to
the rights and subject to the obligations of a Holder hereunder upon the
receipt by such transferee of a Security. By acceptance of a Security,
each transferee shall be deemed to have agreed to be bound by this
Declaration.
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Preferred
Security selected for redemption in whole or in part pursuant to Article
III, except the unredeemed portion of any Definitive Preferred Security
being redeemed in part, or (b) any Preferred Security for a period
beginning 15 Business Days before the mailing of a notice of an offer to
repurchase or redeem Preferred Securities or 15 Business Days before a
quarterly distribution date.
(iv) Prior to the due presentation for registrations of
transfer of any Preferred Security, the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar may deem and treat the
person in whose name a Preferred Security is registered as the absolute
owner of such Preferred Security for the purpose of receiving
Distributions on such Preferred Security and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
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(v) All Preferred Securities issued upon any transfer or
exchange pursuant to the terms of this Declaration shall evidence the
same security and shall be entitled to the same benefits under this
Declaration as the Preferred Securities surrendered upon such transfer
or exchange.
(m) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Preferred Security, a
Participant in the Depositary or other Person with respect to the
accuracy of the records of the Depositary or its nominee or of any
Participant thereof, with respect to any ownership interest in the
Preferred Securities or with respect to the delivery to any Participant,
beneficial owner or other Person (other than the Depositary) of any
notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Preferred Securities. All notices
and communications to be given to the Holders and all payments to be
made to Holders under the Preferred Securities shall be given or made
only to or upon the order of the registered Holders (which shall be the
Depositary or its nominee in the case of a Global Preferred Security).
The rights of beneficial owners in any Global Preferred Security shall
be exercised only through the Depositary subject to the applicable rules
and procedures of the Depositary. The Property Trustee may conclusively
rely and shall be fully protected in relying upon information furnished
by the Depositary or any agent thereof with respect to its Participants
and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Declaration or
under applicable law with respect to any transfer of any interest in any
Preferred Security (including any transfers between or among Depositary
Participants or beneficial owners in any Global Preferred Security)
other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by, the terms of this Declaration, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate
shall be registered on the books and records of the Trust as the sole holder of
such Certificate and of the Securities represented by such Certificate for
purposes of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
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SECTION 9.4 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, the Regular Trustees shall,
in the case of any Global Preferred Security, give all such notices and
communications specified herein to be given to the Preferred Security Holders to
the Depositary, and shall have no notice obligations to the Preferred Security
Beneficial Owners.
SECTION 9.5 Appointment of Successor Clearing Agency.
If the Depository elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Preferred Securities Guarantee, the Common Securities Guarantee and the Terms,
the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all
of the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust 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 on behalf of the Trust and in a
manner such Indemnified Person reasonably believed
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to be within the scope of the authority conferred on such Indemnified Person by
this Declaration 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 gross negligence (or, in the case of the Property Trustee, 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 Trust and upon such information, opinions,
reports or statements presented to the Trust 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 Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
an Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provides terms that are, fair and reasonable
to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
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(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right
of the Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that the Company Indemnified Person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and
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reasonably entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person is
proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (i) and (ii). Such determination
shall be made (1) by the Regular Trustees by a majority vote of a quorum
consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture
Issuer if a determination is reasonably and promptly made (i) by the
Regular Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Common
Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time such
determination is made, such Company Indemnified Person acted in bad
faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or
had reasonable cause to believe his conduct was unlawful. In no event
shall any advance be made in instances where the Regular Trustees,
independent legal counsel or Common Security Holder reasonably determine
that such person deliberately breached his duty to the Trust or its
Common or Preferred Security Holders.
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(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 10.4(a)
shall not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the
Debenture Issuer or Preferred Security Holders of the Trust or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 10.4(a) is in effect. Any repeal or modification of this Section
10.4(a) shall not affect any rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any person who is or was
a director, trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity as a
director, trustee, officer, employee or agent of another entity, shall
stand in the same position under the provisions of this Section 10.4(a)
with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit
of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability
or expense including taxes (other than taxes based on the income of such
Fiduciary Indemnified Person) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration or
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
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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
10.4(b) shall survive the satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year by a firm of independent certified public accountants selected by the
Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual
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financial statements of the Trust, including a balance sheet of the Trust as of
the end of such Fiscal Year, and the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Regular Trustees on behalf of the Trust with any state or local
taxing authority.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustee shall file required
forms with applicable jurisdictions and, unless an exemption from withholding is
properly established by a Holder, shall remit amounts withheld with respect to
the Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be deemed
to be a distribution in the amount of the withholding to the Holder. In the
event of any claimed overwithholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two
Regular Trustees a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee;
and
(iv) if the amendment affects the rights, powers, duties,
obligations or immunities of the Sponsor, the Sponsor.
(b) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate from
each of the Trust and the Sponsor that such amendment is permitted by,
and conforms to, the terms of this Declaration (including the terms of
the Securities); and if the proposed amendment affects the rights,
powers, duties, obligations or immunities of the Property Trustee, the
Property Trustee shall have first received an opinion of counsel (who
may be counsel to the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(ii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of
the Property Trustee in contravention of the Trust Indenture
Act; or
(C) cause the Trust to be deemed to be an Investment
Company that is required to be registered under the
Investment Company Act;
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(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 10.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a majority in liquidation amount of the Common Securities;
(f) the rights of the holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor; and
(iv) conform to any change in Rule 3a-5 or written change in
interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the rights, preferences or
privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities represented
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by the Certificates so specified shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7 days and
not more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange or
over the counter market on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given at a
meeting of the Holders of Securities. Any action that may be taken at a
meeting of the Holders of Securities may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by the
Holders of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of Securities having
a right to vote thereon were present and voting. Prompt notice of the
taking of action without a meeting shall be given to the Holders of
Securities entitled to vote who have not consented in writing. The
Regular Trustees may specify that any written ballot submitted to the
Security Holders for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders of the Securities were
stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing rules of
any stock exchange on which the Preferred Securities are then listed or
trading provide otherwise, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders of Securities, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders
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of Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise
of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
New York, with trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee, and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or By-laws of the Property Trustee.
(d) At the Closing Date, the Property Trustee will be the record
holder of the Debentures and the Property Trustee has not knowingly created any
liens or encumbrances on such Debentures.
(e) No consent, approval or authorization of, or registration
with or notice to, any New York State or Federal banking authority is required
for the execution, delivery or performance by the Property Trustee, of the
Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration and at
the time of Closing, and each Successor Delaware Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Delaware Trustee's
acceptance of its appointment as Delaware Trustee that:
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(a) The Delaware Trustee is a duly organized, validly existing
and in good standing under the laws of the State of Delaware, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration.
(b) The execution, delivery and performance by the Delaware
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. The Declaration has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or By-laws of the Delaware Trustee.
(d) No consent, approval or authorization of, or registration
with or notice to, any Delaware State or Federal banking authority is required
for the execution, delivery or performance by the Delaware Trustee, of this
Declaration.
(e) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
(f) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights.
The Holders of the Preferred Securities, the Debentures, the
Preferred Securities Guarantee and the shares of Common Stock of the Debenture
Issuer issuable upon conversion of the Debentures (collectively, the
"Registrable Securities") are entitled to the benefits of the Registration
Rights Agreement. Pursuant to the Registration Rights Agreement, the Sponsor has
agreed for the benefit of the Holders of Registrable Securities that (i) it
will, at its cost, within 60 days after the date of issuance of the Registrable
Securities, file a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to resales of the Registrable
Securities, (ii) it will use its best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission within 150 days after the
date of issuance of the Registrable Securities and (iii) the Sponsor will use
its best efforts to maintain such Shelf Registration Statement continuously
effective under the Securities Act until the third anniversary of the
effectiveness of the Shelf Registration Statement or such earlier date as is
provided in the Registration Rights Agreement (the "Effectiveness Period").
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If (i) on or prior to 60 days following the date of original
issuance of the Registrable Securities, a Shelf Registration Statement has not
been filed with the Commission, or (ii) on or prior to the 150th day following
the date of issuance of the Registrable Securities, such Shelf Registration
Statement is not declared effective (each, a "Registration Default"), Liquidated
Damages will accrue on the Debentures and, accordingly, additional distributions
will accrue on the Preferred Securities, in each case from and including the day
following such Registration Default. Liquidated Damages will be paid quarterly
in arrears, with the first quarterly payment due on the first interest or
distribution payment date, as applicable, following the date on which such
Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to
an additional one-quarter of one percent (0.25%) of the principal amount or
liquidation amount, as applicable, to and including the 90th day following such
Registration Default and one-half of one percent (0.50%) thereof from and after
the 91st day following such Registration Default. In the event that the Shelf
Registration Statement ceases to be effective during the Effectiveness Period
for more than 60 days, whether or not consecutive, during any 12-month period,
then Liquidated Damages will accrue at a rate per annum equal to an additional
one-half of one percent (0.50%) of the principal amount or liquidation amount,
as applicable, from such 61st day until such time as the Shelf Registration
Statement again becomes effective.
During the Effectiveness Period, the Trust and the Sponsor shall
notify DTC and the Paying Agent(s) with respect to the Securities then
outstanding within three business days after each Registration Default and each
lapse in effectiveness of the Shelf Registration Statement. Any Liquidated
Damages due and payable hereunder shall be paid in the same manner as payments
of interest on the Securities. Any Liquidated Damages due and payable hereunder
shall be payable on each payment date to the record Holder of Securities
entitled to receive the payment to be paid on such date, such date to be
deferred until the end of any interest payment deferral period permitted under
the terms of the Securities.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, sent by
facsimile or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
c/o Frontier Insurance Group, Inc.
195 Lake Louise Marie Road
Rock Hill, New York 12775
Attention: President
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(b) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of to
the Holders of the Securities):
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
(c) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders of the Securities):
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Trustee Administration
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
c/o Frontier Insurance Group, Inc.
195 Lake Louise Marie Road
Rock Hill, New York 12775
Attention: President
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust or the Registrar, as applicable.
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 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
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SECTION 15.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 15.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 15.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named
or referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
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SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
IN WITNESS WHEREOF, the undersigned has caused these presents to
be executed as of the day and year first above written.
WALTER A. RHULEN, as Regular Trustee
/s/ Walter A. Rhulen
__________________________________________
PETER H. FOLEY, as Regular Trustee
/s/ Peter H. Foley
__________________________________________
THE BANK OF NEW YORK (DELAWARE), as
Delaware Trustee
By: /s/ Joseph G. Ernst
_____________________________________
Name: Joseph G. Ernst
Title: Assistant Vice President
THE BANK OF NEW YORK, as Property Trustee
By: /s/ Stephen J. Giurlando
_____________________________________
Name: Stephen J. Giurlando
Title: Assistant Vice President
FRONTIER INSURANCE GROUP, INC., as Sponsor
By: /s/ Walter A. Rhulen
_____________________________________
Walter A. Rhulen
President and Chief Executive Officer
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ANNEX I
TERMS OF
6 1/4% CONVERTIBLE PREFERRED SECURITIES
6 1/4% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration
of Trust, dated as of October 16, 1996 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Offering Memorandum referred to below):
16. Designation and Number.
(a) "Preferred Securities." 3,000,000 Preferred Securities of the
Trust with an aggregate liquidation amount with respect to the
assets of the Trust of One Hundred Fifty Million Dollars
($150,000,000), plus up to an additional 450,000 Preferred
Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of Twenty-Two Million Five
Hundred Thousand Dollars ($22,500,000) solely to cover
over-allotments, as provided for in the Purchase Agreement (the
"Additional Preferred Securities"), and a liquidation amount with
respect to the assets of the Trust of $50 per Preferred Security,
are hereby designated for the purposes of identification only as
"6 1/4% Convertible Preferred Securities (liquidation amount $50
per Convertible Preferred Security)" (the "Preferred
Securities"). The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form of
Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary
usage, custom or practice or to conform to the rules of any stock
exchange or other organization on which the Preferred Securities
are listed.
(b) "Common Securities." 92,784 Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the
Trust of Four Million Six Hundred Thirty Nine Thousand Two
Hundred Dollars ($4,639,200) plus up to an additional 13,918
Common Securities of the Trust with an aggregate liquidation
amount with respect to the assets of the Trust of Six Hundred
Ninety-Five Thousand Nine Hundred Dollars ($695,900) to meet the
capital requirements of the Trust in the event of an issuance of
Additional Preferred Securities, and a liquidation amount with
respect to the assets of the Trust of $50 per Common Security,
are hereby designated for the purposes of identification only as
"6 1/4% Convertible Common Securities (liquidation amount $50 per
Convertible Common Secu-
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rity)" (the "Common Securities"). The Common Security
Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with
such changes and additions thereto or deletions therefrom as may
be required by ordinary usage, custom or practice.
17. Distributions.
(a) Distributions payable on each Security will be fixed at a rate
per annum of 6 1/4% (the "Coupon Rate") of the stated liquidation
amount of $50 per Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee.
Distributions in arrears will bear interest thereon compounded
quarterly at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions" as used herein includes
any such interest including any Additional Interest, Compounded
Interest and Liquidated Damages payable unless otherwise stated.
A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds available
therefor. The amount of Distributions payable for any period will
be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be computed
on the basis of the actual number of days elapsed.
(b) Distributions on the Securities will be cumulative, will accrue
from the date of initial issuance and will be payable quarterly
and in arrears, on the following dates, which dates correspond to
the interest payment dates on the Debentures: January 15, April
15, July 15, and October 15 of each year, commencing on January
15, 1997, when, as and if available for payment by the Property
Trustee, except as otherwise described below. The Debenture
Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to
time on the Debentures for successive periods not exceeding 20
consecutive quarters (each an "Extension Period"), during which
Extension Period no interest shall be due and payable on the
Debentures; provided, that no Extension Period shall last beyond
the date of maturity of the Debentures. As a consequence of such
extension, Distributions will also be deferred. Despite such
deferral, quarterly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during any such Extension
Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further extend such Extension Period;
provided, that such Extension Period together with all such
previous and further extensions thereof may not exceed 20
consecutive quarters and that such Extension Period may not
extend beyond the maturity date of the Debentures. Payments of
accrued Distributions will be payable to Holders as they appear
on the books and records of the Trust on the first record date
after the end of the Extension Period. Upon the termination of
any Extension Period and the payment of all amounts then due,
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the Debenture Issuer may commence a new Extension Period, subject
to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on
the relevant record dates. The relevant record dates shall be 15
days prior to the relevant payment dates, except as otherwise
described in this Annex I to the Declaration. Subject to any
applicable laws and regulations and the provisions of the
Declaration, each such payment in respect of the Preferred
Securities being held in book-entry form through The Depository
Trust Company (the "Depositary") will be made as described under
the heading "Description of the Preferred Securities --
Book-Entry Only Issuance -- The Depository Trust Company" in the
Offering Memorandum. The relevant record dates for the Common
Securities shall be the same record dates as for the Preferred
Securities. Distributions payable on any Securities that are not
punctually paid on any Distribution payment date, as a result of
the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name
such Securities are registered on the relevant record date, and
such defaulted Distribution will instead be payable to the Person
in whose name such Securities are registered on the special
record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on
the Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any
distribution or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on such date.
(d) In the event of an election by the Holder to convert its
Securities through the Conversion Agent into Common Stock of the
Debenture Issuer pursuant to the terms of the Securities as forth
in this Annex I to the Declaration, no payment, allowance or
adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made;
provided that Holders of Securities at the close of business on
any record date for the payment of Distributions will be entitled
to receive the Distributions payable on such Securities on the
corresponding payment date notwithstanding the conversion of such
Securities into Common Stock of the Debenture Issuer following
such record date.
(e) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property
shall be distributed Pro Rata (as defined herein) among the
Holders of the Securities.
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18. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust (each a "Liquidation") the then Holders
of the Securities on the date of the Liquidation will be entitled to receive out
of the assets of the Trust available for distribution to Holders of Securities
after satisfaction of liabilities of creditors, distributions in an amount equal
to the aggregate of the stated liquidation amount of $50 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with a Liquidation
related to a Special Event, Debentures in an aggregate principal amount equal to
the aggregate stated liquidation amount of such Securities, with an interest
rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities.
If, upon any such Liquidation (other than a Liquidation related
to a Special Event), the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Securities shall be paid on a Pro Rata basis in accordance with paragraph 10
below.
19. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part, whether
at maturity, upon acceleration, earlier redemption or otherwise,
the proceeds from such repayment or payment shall be
simultaneously applied to redeem, in cash, Securities having an
aggregate liquidation amount equal to the aggregate principal
amount of the Debentures so repaid or redeemed at a redemption
price equal to the redemption price of such repaid or redeemed
Debentures (as specified in the Indenture and the Offering
Memorandum), together with accrued and unpaid Distributions
thereon through the date of the redemption (the "Redemption
Price"). Holders will be given not less than 30 nor more than 60
days' notice of such redemption.
(b) If fewer than all of the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will
be redeemed Pro Rata and the Preferred Securities to be redeemed
will be as described in paragraph 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as defined below and each a "Special Event") shall occur and be
continuing the Regular Trustees shall, unless the Debentures are
redeemed in the limited circumstances involving a Redemption Tax
Event (as defined below), dissolve the Trust and, after
satisfaction of creditors of the Trust, if any, cause Debentures
held by the Property Trustee, having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with
an interest rate identical to the Coupon Rate of,
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and accrued and unpaid Distributions on equal to, and having the
same record date for payment as, the Securities, to be
distributed to the Holders of the Securities in liquidation of
such Holders' interest in the Trust on a Pro Rata basis, within
90 days following the occurrence of such Special Event (the "90
Day Period"); provided, however, that in the case of a Tax Event,
such dissolution and distribution shall be conditioned on the
Regular Trustees' receipt of an opinion of a nationally
recognized independent tax counsel experienced in such matters (a
"No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service, to the effect
that the Holders of the Preferred Securities will not recognize
any income, gain or loss for United States federal income tax
purposes as a result of such dissolution and distribution of
Debentures, and provided, further, that if at the time there is
available to the Trust the opportunity to eliminate, within the
90 Day Period, the Special Event by taking some ministerial
action, such as filing a form or making an election, or pursuing
some other similar reasonable measure which in the sole judgment
of the Sponsor, has or will cause no adverse effect on the Trust,
the Sponsor or the Holders of the Securities and will involve no
material cost ("Ministerial Action"), the Trust will pursue such
Ministerial Action in lieu of dissolution.
If in the event of a Tax Event, (i) the Regular Trustees have
received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters
that, as a result of a Tax Event, there is more than an
insubstantial risk that the Debenture Issuer would be precluded
from deducting the interest on the Debentures for United States
federal income tax purposes even if the Debentures were
distributed to the Holders of Securities in liquidation of such
Holders' interest in the Trust as described in this paragraph
4(c), or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion cannot be
delivered to the Trust (each such case, a "Redemption Tax
Event"), the Debenture Issuer shall have the right, upon not less
than 30 nor more than 60 days' notice, to redeem the Debentures
in whole (but not in part) for cash within 90 days following the
occurrence of such Redemption Tax Event at a Redemption Price
equal to 100% of the principal amount of the Debentures so
redeemed, plus any accrued and unpaid interest thereon to the
date fixed for redemption, and promptly following such
redemption, the Securities shall be redeemed at the Redemption
Price on a Pro Rata basis at $50 per Security plus accrued and
unpaid distributions thereon to the date fixed for redemption;
provided, however, that if at the time there is available to the
Debenture Issuer or the Trust the opportunity to eliminate,
within such 90 Day Period, the Redemption Tax Event by taking
some Ministerial Action which has no adverse effect on the Trust,
the Holders of Securities or the Debenture Issuer, the Trust or
the Debenture Issuer will pursue such Ministerial Action in lieu
of redemption.
"Tax Event" means that the Regular Trustees shall have received
an opinion of a nationally recognized independent tax counsel
experienced in such matters (a
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"Dissolution Tax Opinion") to the effect that, as a result of (a)
any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority
thereof or therein, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by
any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that
provides for a position with respect to such laws or regulations
that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated,
issued or announced or which interpretation or pronouncement is
issued or announced or which action is taken, in each case after
the date of the Offering Memorandum (collectively, a "Change in
Tax Law"), there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date thereof, subject
to United States federal income tax with respect to interest
accrued or received on the Debentures, (ii) the Trust is, or will
be within 90 days of the date thereof, subject to more than a de
minimis amount of other taxes, duties or other governmental
charges, or (iii) interest payable by the Debenture Issuer to the
Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible by the Debenture Issuer for
United States federal income tax purposes. Notwithstanding
anything in the previous sentence to the contrary, a Tax Event
shall not include any Change in Tax Law that requires the
Debenture Issuer for United States federal income tax purposes to
defer taking a deduction for any original issue discount ("OID")
that accrues with respect to the Debentures until the interest
payment related to such OID is paid by the Debenture Issuer in
money; provided, that such Change in Tax Law does not create more
than an insubstantial risk that the Debenture Issuer will be
prevented from taking a deduction for OID accruing with respect
to the Debentures at a date that is no later than the date the
interest payment related to such OID is actually paid by the
Debenture Issuer in money.
"Investment Company Event" means that the Regular Trustees shall
have received an opinion of a nationally recognized independent
counsel experienced in practice under the Investment Company Act
(an "Investment Company Event Opinion") that, as a result
occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an
Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes
effective on or after the date of the Offering Memorandum.
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On the date fixed for any distribution of Debentures, upon
dissolution of the Trust: (i) the Securities will no longer be
deemed to be outstanding and (ii) certificates representing
Securities will be deemed to represent beneficial interests in
Debentures having an aggregate principal amount equal to the
stated liquidation amount, and bearing accrued and unpaid
interest equal to accrued and unpaid Distributions, on such
Securities until such certificates are presented to the Debenture
Issuer or its agent for transfer or reissuance.
(d) The Trust may not redeem fewer than all of the outstanding
Securities unless all accrued and unpaid Distributions have been
paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Debentures are distributed to the Holders of the
Securities, pursuant to the terms of the Indenture, the Debenture
Issuer will use its best efforts to have the Debentures listed on
the New York Stock Exchange or on such other exchange as the
Preferred Securities were listed immediately prior to the
distribution of the Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of distribution
of Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the
Trust by mail to each Holder of Securities to be
redeemed or exchanged not fewer than 30 nor more than 60
days before the date fixed for redemption or exchange
thereof which, in the case of a redemption, will be the
date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given
pursuant to this paragraph 4(f)(i), a Redemption/
Distribution Notice shall be deemed to be given on the
day such notice is first mailed by first-class mail,
postage pre-paid, to Holders of Securities. Each
Redemption/Distribution Notice shall be addressed to the
Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No
defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder
shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be
redeemed shall be redeemed Pro Rata from each Holder of
Preferred Securities, it being understood that, in
respect of Preferred Securities registered in the name
of and held of record by the Depositary or its nominee
(or any successor Clearing Agency or its nominee), the
distribution of the proceeds of such redemption will be
made to each Clearing Agency Participant (or Person on
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whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or
nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be
issued if the Debentures are redeemed as set out in this
Section 4 (which notice will be irrevocable), then (A)
with respect to Preferred Securities held in book-entry
form, by 12:00 noon, New York City time, on the
redemption date, provided that the Debenture Issuer has
paid the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity of
the Debentures, the Trust will deposit irrevocably with
the Depositary or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to such
Preferred Securities and will give the Depositary
irrevocable instructions and authority to pay the
applicable Redemption Price to the Holders of such
Preferred Securities represented by the Global
Certificates, and (B) with respect to Preferred
Securities issued in certificated form and Common
Securities, provided that the Debenture Issuer has paid
the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity or
otherwise of the Debentures, the Trust will irrevocably
deposit with the Paying Agent funds sufficient to pay
the amount payable on redemption or maturity or
otherwise to the Holders of such Securities upon
surrender of their certificates. If a
Redemption/Distribution Notice shall have been given and
funds deposited as required, then on the date of such
deposit, all rights of Holders of such Securities so
called for redemption will cease, except the right of
the Holders of such Securities to receive the Redemption
Price, but without interest on such Redemption Price.
Neither the Regular Trustees nor the Trust shall be
required to register or cause to be registered the
transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of the
amount payable on such date will be made on the next
succeeding day that is a Business Day (without any
interest or other payment in respect of any such delay)
except that, if such Business Day falls in the next
calendar year, such payment will be made on the
immediately preceding Business Day, in each case with
the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or
refused and not paid either by the Trust or by the Spon-
sor as guarantor pursuant to the Preferred Securities
Guarantee or the Common Securities Guarantee, as
applicable, Distributions on such Securities will
continue to accrue at the then applicable rate, from the
original redemption date to the date of payment, in
which case the actual payment date will be considered
the date fixed for redemption for pur-
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poses of calculating the amount payable upon redemption
(other than for purposes of calculating any premium).
(iv) In the event of any redemption in part, the Trust shall
not be required to (i) issue, register the transfer of
or exchange of any Preferred Security during a period
beginning at the opening of business 15 days before any
selection for redemption of Preferred Securities and
ending at the close of business on the earliest date in
which the relevant notice of redemption is deemed to
have been given to all holders of Preferred Securities
to be so redeemed or (ii) register the transfer of or
exchange of any Preferred Securities so selected for
redemption, in whole or in part, except for the
unredeemed portion of any Preferred Securities being
redeemed in part.
(v) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to (A) in the
case of Preferred Securities held in book-entry form,
the Depositary and, in the case of Securities held in
certificated form, the Holders of such certificates and
(B) in respect of the Common Securities, the Holder
thereof.
(vi) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities
laws), the Sponsor or any of its subsidiaries may at any
time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by
private agreement.
20. Conversion Rights.
The Holders of Securities shall have the right at any time prior
to the Business Day immediately preceding the date of repayment of such
Securities, whether at maturity, upon acceleration, earlier redemption or
otherwise, at their option, to cause the Conversion Agent to convert Securities,
on behalf of the converting Holders, into shares of Common Stock of the
Debenture Issuer in the manner described herein on and subject to the following
terms and conditions:
(a) The Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares of
Common Stock of the Debenture Issuer pursuant to the Holder's
direction to the Conversion Agent to exchange such Securities for
a portion of the Debentures theretofore held by the Trust on the
basis of one Security per $50 principal amount of Debentures, and
immediately convert such amount of Debentures into fully paid and
nonassessable shares of Common Stock of the Debenture Issuer at
an initial conversion rate of 1.0663 shares of Common Stock of
the Debenture Issuer per $50 principal amount of Debentures
(which is equivalent to a conversion price of $46.89 per share of
Common Stock of the
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Debenture Issuer, subject to certain adjustments set forth in the
terms of the Debentures (as so adjusted, the "Conversion
Price")).
(b) In order to convert Securities into Common Stock of the Debenture
Issuer the Holder shall submit to the Conversion Agent at the
office referred to above an irrevocable request to convert
Securities on behalf of such Holder (the "Conversion Request"),
together, if the Securities are in certificated form, with such
certificates. The Conversion Request shall (i) set forth the
number of Securities to be converted and the name or names, if
other than the Holder, in which the shares of Common Stock of the
Debenture Issuer should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the
Debentures held by the Trust (at the rate of exchange specified
in the preceding paragraph) and (b) to immediately convert such
Debentures on behalf of such Holder, into Common Stock of the
Debenture Issuer (at the conversion rate specified in the
preceding paragraph). The Conversion Agent shall notify the Trust
of the Holder's election to exchange Securities for a portion of
the Debentures held by the Trust and the Trust shall, upon
receipt of such notice, deliver to the Conversion Agent the
appropriate principal amount of Debentures for exchange in
accordance with this Section. The Conversion Agent shall
thereupon notify the Debenture Issuer of the Holder's election to
convert such Debentures into shares of Common Stock of the
Debenture Issuer. Holders of Securities at the close of business
on a Distribution record date will be entitled to receive the
Distribution payable on such securities on the corresponding
Distribution payment date notwithstanding the conversion of such
Securities following such record date but prior to such
distribution payment date. Except as provided above, neither the
Trust nor the Sponsor will make, or be required to make, any
payment, allowance or adjustment upon any conversion on account
of any accumulated and unpaid Distributions accrued on the
Securities (including any Additional Interest, Compounded
Interest and Liquidation Damages accrued thereon) surrendered for
conversion, or on account of any accumulated and unpaid dividends
on the shares of Common Stock of the Debenture Issuer issued upon
such conversion. The Debenture Issuer shall make no payment or
allowance for distributions on the shares of Common Stock of the
Debenture Issuer issued upon such conversion, except to the
extent that such shares of Common Stock of the Debenture Issuer
are held of record on the record date for any such distributions
and except as provided in Section 1309 of the Indenture.
Securities shall be deemed to have been converted immediately
prior to the close of business on the day on which a Notice of
Conversion relating to such Securities is received the Trust in
accordance with the foregoing provision (the "Conversion Date").
The Person or Persons entitled to receive the Common Stock of the
Debenture Issuer issuable upon conversion of the Debentures shall
be treated for all purposes as the record holder or holders of
such Common Stock of the Debenture Issuer at such time. As
promptly as practicable on or after the Conversion Date, the
Debenture Issuer shall issue and deliver at the office of the
Conversion Agent a certificate or
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certificates for the number of full shares of Common Stock of the
Debenture Issuer issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the
Person or Persons entitled to receive the same, unless otherwise
directed by the Holder in the notice of conversion and the
Conversion Agent shall distribute such certificate or
certificates to such Person or Persons.
(c) Each Holder of a Security by his acceptance thereof appoints The
Bank of New York "Conversion Agent" for the purpose of effecting
the conversion of Securities in accordance with this Section. In
effecting the conversion and transactions described in this
Section, the Conversion Agent shall be acting as agent of the
Holders of Securities directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to
exchange Securities from time to time for Debentures held by the
Trust in connection with the conversion of such Securities in
accordance with this Section and (ii) to convert all or a portion
of the Debentures into Common Stock of the Debenture Issuer and
thereupon to deliver such shares of Common Stock of the Debenture
Issuer in accordance with the provisions of this Section and to
deliver to the Trust a new Debenture or Debentures for any
resulting unconverted principal amount.
(d) No fractional shares of Common Stock of the Debenture Issuer will
be issued as a result of conversion, but in lieu thereof, such
fractional interest will be payable in cash (based on the last
reported sale price of the Common Stock of the Debenture Issuer
on the date such Securities are surrendered for conversion) by
the Debenture Issuer to the Trust, which in turn will make such
payment to the Holder or Holders of Securities so converted.
(e) The Debenture Issuer shall at all times reserve and keep
available out of its authorized and unissued Common Stock of the
Debenture Issuer, solely for issuance upon the conversion of the
Debentures, free from any preemptive or other similar rights,
such number of shares of Common Stock of the Debenture Issuer as
shall from time to time be issuable upon the conversion of all
the Debentures then outstanding. Notwithstanding the foregoing,
the Debenture Issuer shall be entitled to deliver upon conversion
of Debentures, shares of Common Stock of the Debenture Issuer
reacquired and held in the treasury of the Debenture Issuer (in
lieu of the issuance of authorized and unissued shares of Common
Stock of the Debenture Issuer), so long as any such treasury
shares are free and clear of all liens, charges, security
interests or encumbrances. Any shares of Common Stock of the
Debenture Issuer issued upon conversion of the Debentures shall
be duly authorized, validly issued and fully paid and
nonassessable. The Trust shall deliver the shares of Common Stock
of the Debenture Issuer received upon conversion of the
Debentures to the converting Holder free and clear of all liens,
charges, security interests and encumbrances, except for United
States withholding taxes. Each of the Debenture Issuer and the
Trust shall prepare and
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shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorizations as may
be required by law, and shall comply with all applicable
requirements as to registration or qualification of the Common
Stock of the Debenture Issuer (and all requirements to list the
Common Stock of the Debenture Issuer issuable upon conversion of
the Debentures that are at the time applicable), in order to
enable the Debenture Issuer to lawfully issue Common Stock of the
Debenture Issuer to the Trust upon conversion of the Debentures
and the Trust to lawfully deliver the Common Stock of the
Debenture Issuer to each Holder upon conversion of the
Securities.
(f) The Debenture Issuer will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Common
Stock of the Debenture Issuer on conversion of Debentures and the
delivery of the shares of Common Stock of the Debenture Issuer by
the Trust upon conversion of the Securities. The Debenture Issuer
shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock of the Debenture Issuer in a
name other than that in which the Securities so converted were
registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Trust
the amount of any such tax, or has established to the
satisfaction of the Trust that such tax has been paid.
(g) Nothing in the preceding Paragraph (f) shall limit the
requirement of the Trust to withhold taxes pursuant to the terms
of the Securities or set forth in this Annex I to the Declaration
or to the Declaration itself or otherwise require the Property
Trustee or the Trust to pay any amounts on account of such
withholdings.
21. Voting Rights - Preferred Securities.
(a) Except as provided under paragraphs 6(b) and 7, in the Business
Trust Act and as otherwise required by law and the Declaration,
the Holders of the Preferred Securities will have no voting
rights.
Subject to the requirements set forth in this paragraph, the
Holders of a majority in liquidation amount of the Preferred
Securities, voting separately as a class may direct the time,
method, and place of conducting any proceeding for any remedy
available to the Property Trustee, or direct the exercise of any
trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee,
as holder of the Debentures, to (i) exercise the remedies
available to it under the Indenture as a holder of the
Debentures, (ii) waive any past default and its consequences that
is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the
Debentures shall be due and payable, or (iv) consent to any
amendment, modification, or termination of the Indenture or the
Debentures where such
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consent shall be required; provided, however, that where a
consent or action under the Indenture would require the consent
or act of the Holders of greater than a majority of the Holders
in principal amount of Debentures affected thereby (a "Super
Majority"), the Property Trustee may only give such consent or
take such action at the written direction of the Holders of at
least the proportion in liquidation amount of the Preferred
Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. The
Property Trustee shall be under no obligation to revoke any
action previously authorized or approved by a vote of the Holders
of the Preferred Securities. Other than with respect to directing
the time, method and place of conducting any remedy available to
the Property Trustee or the Debenture Trustee as set forth above,
the Property Trustee shall be under no obligation to take any
action in accordance with the directions of the Holders of the
Preferred Securities under clauses (i), (ii) or (iii) above
unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that for the purposes of
United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action and each
Holder will be treated as owning an undivided beneficial interest
in the Debentures. If the Property Trustee fails to enforce its
rights under the Debentures after a Holder of Preferred
Securities has made a written request, such Holder of Preferred
Securities may institute a legal proceeding against the Debenture
Issuer to enforce the Property Trustee's rights under the
Debentures without first instituting any legal proceeding against
the Property Trustee or any other Person. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is
continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures
on the date such interest or principal is otherwise payable (or
in the case of redemption on the redemption date), then a holder
of Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder (a "Direct Action") of the
principal of or interest on the Debenture having a principal
amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date
specified in the Debentures. Except as provided in the preceding
sentence, the holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of
the Debentures. In connection with such Direct Action, the
Debenture Issuer will be subrogated to the rights of such holder
of Preferred Securities under the Declaration to the extent of
any payment made by the Debenture Issuer to such holder of
Preferred Securities in such Direct Action.
Any required approval or direction of Holders of Preferred
Securities may be given at a separate meeting of Holders of
Preferred Securities convened for such purpose, at a meeting of
all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to
vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be mailed to
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each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth the following information
(i) the date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to
vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to redeem and cancel Preferred
Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described
above, any of the Preferred Securities that are owned by the
Sponsor or any Affiliate of the Sponsor shall not be entitled to
vote or consent and shall, for purposes of such vote or consent,
be treated as if such Preferred Securities were not outstanding.
22. Voting Rights - Common Securities.
(a) Except as provided under paragraphs 7(b), (c) and 8, in the
Business Trust Act and as otherwise required by law and the
Declaration, the Holders of the Common Securities will have no
voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of
Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the
Declaration Event of Default with respect to the Preferred
Securities has been cured, waived, or otherwise eliminated and
subject to the requirements of the second to last sentence of
this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding
for any remedy available to the Property Trustee, or exercising
any trust or power conferred upon the Property Trustee under the
Declaration, including (i) directing the time, method, place of
conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on
the Debenture Trustee with respect to the Debentures, (ii) waive
any past default and its consequences that is waivable under
Section 606 of the Indenture, (iii) exercise any right to rescind
or annul a declaration that the principal of all the Debentures
shall be due and payable, or (iv) consent to any amendment,
modification, or termination of the Indenture or the Debentures
where such consent shall be required; provided that, where a
consent or action under the Indenture would require the consent
or act of the Holders of greater than a majority in principal
amount of Debentures affected thereby (a "Super
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Majority"), the Property Trustee may only give such consent or
take such action at the written direction of the Holders of at
least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
Pursuant to this paragraph 7(c), the Property Trustee shall not
revoke any action previously authorized or approved by a vote of
the Holders of the Preferred Securities. Other than with respect
to directing the time, method and place of conducting any remedy
available to the Property Trustee or the Debenture Trustee as set
forth above, the Property Trustee shall be under no obligation to
take any action in accordance with the directions of the Holders
of the Common Securities under this paragraph unless the Property
Trustee has obtained an opinion of independent tax counsel to the
effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on
account of such action and each Holder will be treated as owning
an undivided beneficial interest in the Debentures. If the
Property Trustee fails to enforce its rights under the Debentures
after a Holder of Common Securities has made a written request,
such Holder of Common Securities may, to the extent permitted by
law, institute a legal proceeding directly against the Debenture
Issuer or any other Person to enforce the Property Trustee's
rights under the Debentures, without first instituting any legal
proceeding against the Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities
convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The
Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to
be taken, to be mailed to each Holder of record of Common
Securities. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is
sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities will
be required for the Trust to redeem and cancel Common Securities
or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
23. Registration Rights.
The Holders of the Preferred Securities, the Debentures, the
Preferred Securities Guarantee and the shares of Common Stock of the Debenture
Issuer issuable upon conversion of the Debentures (collectively, the
"Registrable Securities") are entitled to the benefits of the Registration
Rights Agreement. Pursuant to the Registration Rights Agreement, the Sponsor has
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agreed for the benefit of the Holders of Registrable Securities that (i) it
will, at its cost, within 60 days after the date of issuance of the Registrable
Securities, file a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to resales of the Registrable
Securities, (ii) it will use its best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission within 150 days after the
date of issuance of the Registrable Securities and (iii) it will use its best
efforts to maintain such Shelf Registration Statement continuously effective
under the Securities Act until the third anniversary of the effectiveness of the
Shelf Registration Statement or such earlier date as is provided in the
Registration Rights Agreement (the "Effectiveness Period").
If (i) on or prior to 60 days following the date of original
issuance of the Registrable Securities, a Shelf Registration Statement has not
been filed with the Commission, or (ii) on or prior to the 150th day following
the issuing of the Registrable Securities, such Shelf Registration Statement is
not declared effective (each, a "Registration Default"), additional interest
("Liquidated Damages") will accrue on the Debentures and, accordingly,
additional distributions will accrue on the Preferred Securities, in each case
from and including the day following such Registration Default. Liquidated
Damages will be paid quarterly in arrears, with the first quarterly payment due
on the first interest or distribution payment date, as applicable, following the
date on which such Liquidated Damages begin to accrue, and will accrue at a rate
per annum equal to an additional one-quarter of one percent (0.25%) of the
principal amount or liquidation amount, as applicable, to and including the 90th
day following such Registration Default and one-half of one percent (0.50%)
thereof from and after the 91st day following such Registration Default. Upon
the filing of the Shelf Registration Statement after the 60-day period described
in clause (i) above or the effectiveness of the Shelf Registration Statement
after the 150-day period described in clause (ii) above, the interest rate borne
by the Debentures and the distribution rate borne by the Preferred Securities
from the date of such filing or effectiveness, as the case may be, will be
reduced to the original interest rate. In the event that the Shelf Registration
Statement ceases to be effective during the Effectiveness Period for more than
60 days, whether or not consecutive, during any 12-month period, then Liquidated
Damages will accrue at a rate per annum equal to an additional one-half of one
percent (0.50%) of the principal or liquidation amount, as applicable, from such
61st day until such time as the Shelf Registration Statement again becomes
effective.
24. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration
provides for, or the Regular Trustees otherwise propose to
effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Securities, whether by way
of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than
as described in Section 8.1 of the Declaration, then the Holders
of Securities as a class, will be entitled to vote on such
amendment or proposal (but not on any other amendment or
proposal) and such amendment or proposal shall not be effective
except with the approval of the Holders of at least
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a Majority in liquidation amount of the Securities affected
thereby, voting together as a single class; provided, however, if
any amendment or proposal referred to in clause (i) above would
adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote
on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in
liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Debentures is required under the Indenture with respect to
any amendment, modification or termination of the Indenture or
the Debentures, the Property Trustee shall request the written
direction of the Holders of the Securities with respect to such
amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities
voting together as a single class; provided, however, that where
a consent under the Indenture would require the consent of the
holders of greater than a majority in aggregate principal amount
of the Debentures (a "Super Majority"), the Property Trustee may
only give such consent at the written direction of the Holders of
at least the same proportion in aggregate stated liquidation
preference of the Securities; provided, further, that the
Property Trustee shall not take any action in accordance with the
directions of the Holders of the Securities under this Section
9(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than
a grantor trust on account of such action.
25. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, a Declaration Event
of Default has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each Holder of the Preferred Securities
pro rata according to the aggregate liquidation amount of Preferred Securities
held by the relevant Holder relative to the aggregate liquidation amount of all
Preferred Securities outstanding, and only after satisfaction of all amounts
owed to the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding.
I-17
<PAGE>
<PAGE>
26. Ranking.
The Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an
Indenture Event of Default occurs and is continuing with respect to the
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to receive payments of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights of the Holders of the
Preferred Securities.
27. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein, and to the provisions of the Indenture.
28. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
29. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-18
<PAGE>
<PAGE>
EXHIBIT A-1
FORM OF PREFERRED SECURITY
[FORM OF FACE OF SECURITY]
[Include if Preferred Security is in global form and the
Depository Trust Company is the U. S. Depositary -- UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[Include if Preferred Security is in global form -- TRANSFERS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO
NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO
BELOW.]
THIS SECURITY, ANY CONVERTIBLE DEBENTURE ISSUED IN EXCHANGE FOR
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION THEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. 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, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH FRONTIER INSURANCE GROUP, INC. (THE
"COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
A1-1
<PAGE>
<PAGE>
("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) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE 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 (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO
REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
Certificate Number Number of Preferred Securities
[CUSIP NO. ]*
[ISIN NO. ]
Preferred Securities
of
Frontier Financing Trust
6 1/4% Convertible Preferred Securities
(liquidation amount $50 per Convertible Preferred Security)
- --------
* 144A Global: 39507U103
Regulation S: U31439109
Accredited Investors: 35907U202
A1-2
<PAGE>
<PAGE>
Frontier Financing Trust, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that
________________________________ (the "Holder") is the registered owner of
preferred securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 6 1/4% Convertible Preferred Securities
(liquidation amount $50 per Convertible Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of October 16, 1996, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the
Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Reference is hereby made to select provisions of the Preferred
Securities set forth on the reverse hereof, which select provisions shall for
all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
A1-3
<PAGE>
<PAGE>
Unless the Property Trustee's Certificate of Authentication
hereon has been properly executed, these Preferred Securities shall not be
entitled to any benefit under the Declaration or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Trust has executed this certificate this
_______ day of ____________, 199_.
Frontier Financing Trust
By:
______________________________________
Name:
Title:
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
Dated: _______________, ____
The Bank of New York
as Property Trustee
By:
______________________________________
Authorized Signatory
A1-4
<PAGE>
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at
a rate per annum of 6 1/4% (the "Coupon Rate") of the stated liquidation amount
of $50 per Preferred Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears for
more than one quarter will bear interest thereon compounded quarterly at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Debentures held by the Property
Trustee and to the extent the Property Trustee has funds available therefor. The
amount of Distributions payable for any period will be computed for any full
quarterly Distribution period on the basis of a 360-day year of twelve 30-day
months, and for any period shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be computed on the basis of
the actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly and in arrears, on January 15, April 15,
July 15 and October 15 of each year, commencing on January 15, 1997, to Holders
of record fifteen (15) days prior to such payment dates, which payment dates
shall correspond to the interest payment dates on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for
successive periods not exceeding 20 consecutive quarters (each an "Extension
Period") during which Extension Period no interest shall be due and payable on
the Debentures; provided, that no Extension Period shall extend beyond the date
of maturity of the Debentures. As a consequence of such extension, Distributions
will also be deferred. Despite such extension, quarterly Distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at the Coupon Rate compounded quarterly during any such Extension Period.
Prior to the termination of any such Extension Period, the Debenture Issuer may
further extend such Extension Period; provided, that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarters. Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first record
date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration.
The Preferred Securities shall be convertible into shares of
Common Stock of Frontier Insurance Group, Inc., through (i) the exchange of
Preferred Securities for a portion of the Debentures and (ii) the immediate
conversion of such Debentures into Common Stock of Frontier Insurance Group,
Inc., in the manner and according to the terms set forth in the Declaration.
A1-5
<PAGE>
<PAGE>
CONVERSION REQUEST
To: The Bank of New York
as Property Trustee of
Frontier Financing Trust
The undersigned owner of these Preferred Securities hereby
irrevocably exercises the option to convert these Preferred Securities, or the
portion below designated, into Common Stock of FRONTIER INSURANCE GROUP, INC.
(the "Frontier Insurance Common Stock") in accordance with the terms of the
Amended and Restated Declaration of Trust (the "Declaration"), dated as of
October 16, 1996, by Walter A. Rhulen and Peter H. Foley, as Regular Trustees,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Property Trustee, Frontier Insurance Group, Inc., as Sponsor, and by the
Holders, from time to time, of individual beneficial interests in the Trust to
be issued pursuant to the Declaration. Pursuant to the aforementioned exercise
of the option to convert these Preferred Securities, the undersigned hereby
directs the Conversion Agent (as that term is defined in the Declaration) to (i)
exchange such Preferred Securities for a portion of the Debentures (as that term
is defined in the Declaration) held by the Trust (at the rate of exchange
specified in the terms of the Preferred Securities set forth as Annex I to the
Declaration) and (ii) immediately convert such Debentures on behalf of the
undersigned, into Frontier Insurance Common Stock (at the conversion rate
specified in the terms of the Preferred Securities set forth as Annex I to the
Declaration).
The undersigned does also hereby direct the Conversion Agent that
the shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Declaration and the Preferred Securities,
agrees to be bound by the terms of the
A1-6
<PAGE>
<PAGE>
Registration Rights Agreement relating to the Frontier Insurance Common Stock
issuable upon conversion of the Preferred Securities.
Date: ____________, ____
in whole __ in part __
Number of Preferred Securities to be converted:
_____________________
If a name or names other than the undersigned,
please indicate in the spaces below the name or
names in which the shares of Frontier Insurance
Common Stock are to be issued, along with the
address or addresses of such person or persons
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number
_______________________________________________
_______________________________________________
_______________________________________________
Signature Guarantee:** _________________________
- --------
** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee
(continued...)
A1-7
<PAGE>
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ____________________________
Signature: _______________________
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)
Signature Guarantee:***
- --------
**(...continued)
program" as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.)
*** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.)
A1-8
<PAGE>
<PAGE>
CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OR REGISTRATION OF RESTRICTED PREFERRED SECURITIES
This certificate relates to ___________________ Preferred Securities held in
(check applicable space) _____ book-entry or _____ definitive form by the
undersigned.
(A) The undersigned (check one box below):
[ ] has requested the Property Trustee by written order to deliver in
exchange for its beneficial interest in the Rule 144A Global
Preferred Security held by the Depositary a Preferred Security or
Preferred Securities in definitive, registered form in such
number equal to its beneficial interest in such Rule 144A Global
Preferred Security (or the number thereof indicated above); or
[ ] has requested the Property Trustee by written order to exchange
its Preferred Security in definitive registered form for an
interest in the Rule 144A Global Preferred Security held by the
Depositary in such number equal to number of Preferred Securities
in definitive registered form so held; or
[ ] has requested the Property Trustee by written order to exchange
or register the transfer of a Preferred Security or Preferred
Securities.
(B) The undersigned confirms that such Securities are being (check one box
below):
(1) [ ] acquired for the undersigned's own account, without
transfer (in satisfaction of Section 9.2(d)(ii)(A)); or
(2) [ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with Regulation
S under the Securities Act of 1933; or
(4) [ ] transferred pursuant to another available exemption from
the registration requirements of the Securities Act of
1933; or
(5) [ ] transferred pursuant to an effective Shelf Registration
Statement (as defined in Section 14.1 of the Declaration).
Unless one of the boxes in (B) above is checked, the Property Trustee will
refuse to register any of the Preferred Securities evidenced by this certificate
in the name of any person other than the registered Holder thereof; provided,
however, that if box (3) or (4) is checked, the Property Trustee may require,
prior to registering any such transfer of the Preferred Securities such legal
opinions, certifications and other information as the Trust has reasonably
requested to confirm
A1-9
<PAGE>
<PAGE>
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, such as the exemption provided by Rule 144 under such Act; provided,
further, that after the date that a Shelf Registration Statement becomes
effective and so long as such Shelf Registration Statement continues to be
effective, the Property Trustee may only permit transfers for which box (5) has
been checked.
_________________________________________
Signature
Signature Guarantee:****
__________________________________ _________________________________________
Signature must be guaranteed Signature
________________________________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing these
Preferred Securities for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Trust as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:____________________________ _________________________________________
NOTICE: To be executed by
an executive officer
- --------
****(Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
A1-10
<PAGE>
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY
[FORM OF FACE OF SECURITY]
[THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE
REGISTRATION STATEMENT.]
[OTHER THAN AS PROVIDED IN THE DECLARATION (AS DEFINED HEREIN), THIS
SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A
RELATED PARTY (AS DEFINED IN THE DECLARATION) OF FRONTIER INSURANCE GROUP, INC.]
Certificate Number Number of Common Securities
Common Securities
of
Frontier Financing Trust
6 1/4% Convertible Common Securities
(liquidation amount $50 per Convertible Common Security)
Frontier Financing Trust, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that
________________________________________________________________________________
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 6 1/4% Convertible Common Securities (liquidation amount $50 per
Convertible Common Security) (the "Common Securities"). The Common Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and
A2-1
<PAGE>
<PAGE>
provisions of the Common Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of October 16, 1996, as the same may
be amended from time to time (the "Declaration"), including the designation of
the terms of the Common Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Common
Securities Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration, the Common Securities Guarantee and the Indenture to a
Holder without charge upon written request to the Sponsor at its principal place
of business.
Reference is hereby made to select provisions of the Common
Securities set forth on the reverse hereof, which select provisions shall for
all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat for United States
federal income tax purposes the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
day of ________________, 199_.
Frontier Financing Trust
By:
______________________________________
Name:
Title:
A2-2
<PAGE>
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a
rate per annum of 6 1/4% (the "Coupon Rate") of the stated liquidation amount of
$50 per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarter will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). The term "Distributions" as
used herein includes such cash distributions and any such interest payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee and
to the extent the Property Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly and in arrears, on January 15, April 15, July 15
and October 15 of each year, commencing on January 15, 1997, to Holders of
record fifteen (15) days prior to such payment dates, which payment dates shall
correspond to the interest payment dates on the Debentures. The Debenture Issuer
has the right under the Indenture to defer payments of interest by extending the
interest payment period from time to time on the Debentures for successive
periods not exceeding 20 consecutive quarters (each an "Extension Period")
during which Extension Period no interest shall be due and payable on the
Debentures; provided, that no Extension Period shall last beyond the date of
maturity of the Debentures. As a consequence of such extension, Distributions
will also be deferred. Despite such extension, quarterly Distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at the Coupon Rate compounded quarterly during any such Extension Period.
Prior to the termination of any such Extension Period, the Debenture Issuer may
further extend such Extension Period; provided, that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarters. Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first record
date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of Common
Stock of Frontier Insurance Group, Inc., through (i) the exchange of Common
Securities for a portion of the Debentures and (ii) the immediate conversion of
such Debentures into Common Stock of Frontier Insurance Group, Inc., in the
manner and according to the terms set forth in the Declaration.
A2-3
<PAGE>
<PAGE>
CONVERSION REQUEST
To: The Bank of New York
as Property Trustee of
Frontier Financing Trust
The undersigned owner of these Common Securities hereby
irrevocably exercises the option to convert these Common Securities, or the
portion below designated, into Common Stock of FRONTIER INSURANCE GROUP, INC.
(the "Frontier Insurance Common Stock") in accordance with the terms of the
Amended and Restated Declaration of Trust (the "Declaration"), dated as of
October 16, 1996, by Walter A. Rhulen and Peter H. Foley, as Regular Trustees,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Property Trustee, Frontier Insurance Group, Inc., as Sponsor, and by the
Holders, from time to time, of individual beneficial interests in the Trust to
be issued pursuant to the Declaration. Pursuant to the aforementioned exercise
of the option to convert these Common Securities, the undersigned hereby directs
the Conversion Agent (as that term is defined in the Declaration) to (i)
exchange such Common Securities for a portion of the Debentures (as that term is
defined in the Declaration) held by the Trust (at the rate of exchange specified
in the terms of the Common Securities set forth as Annex I to the Declaration)
and (ii) immediately convert such Debentures on behalf of the undersigned, into
Frontier Insurance Common Stock (at the conversion rate specified in the terms
of the Common Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent that
the shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
A2-4
<PAGE>
<PAGE>
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Declaration and the Common Securities, agrees
to be bound by the terms of the Registration Rights Agreement relating to the
Frontier Insurance Common Stock issuable upon conversion of the Common
Securities.
Date: ____________, ____
in whole __ in part __
Number of Common Securities to be converted:
_____________________
If a name or names other than the undersigned,
please indicate in the spaces below the name or
names in which the shares of Frontier Insurance
Common Stock are to be issued, along with the
address or addresses of such person or persons
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number
_______________________________________________
_______________________________________________
_______________________________________________
Signature Guarantee:* _________________________
- --------
* (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the
(continued...)
A2-5
<PAGE>
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints _______________________________________________________
________________________________________________________________________________
_________________________________ agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee**: ________________________________________________________
- --------
*(...continued)
Registrar, which requirements include membership or participation in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
** (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in substitution
for, STAMP, all in accordance with the Securities Exchange Act of 1934,
as amended.)
A2-6
<PAGE>
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
See Exhibit A of Indenture
B-1
<PAGE>
<PAGE>
EXHIBIT C
PURCHASE AGREEMENT
Not included herewith.
C-1
<PAGE>
<PAGE>
EXHIBIT D
FORM OF TRANSFEROR CERTIFICATE FOR TRANSFER DURING THE
EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10019
Attention: Corporate Trust Trustee Administration
Re: Frontier Financing Trust
----------------------------
Reference is hereby made to the Amended and Restated Declaration
of Trust dated as of October 16, 1996 (the "Declaration") by Walter A. Rhulen
and Peter H. Foley, as Regular Trustees, The Bank of New York (Delaware), as
Delaware Trustee, The Bank of New York, as Property Trustee and Frontier
Insurance Group, Inc., as Sponsor. Capitalized terms used but not defined herein
shall have the meanings given them in the Declaration.
This letter relates to Preferred Securities which are held in
the form of [the Rule 144A Global Preferred Security with the Depositary (CUSIP
No. )[a Restricted Definitive Preferred Security (CUSIP No. )] in the name
of [name of transferor] (the "Transferor") to effect the transfer of the
Preferred Securities in exchange for an equivalent beneficial interest in
the Exchanged Global Preferred Security.
In connection with such request, and in respect of such Preferred
Securities, the Transferor does hereby certify that (i) such Preferred
Securities are being transferred in accordance with and pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
and in accordance with any applicable securities laws of any state of the United
States and (ii) the Transferor has complied with its obligations to provide
information to the Issuer, as required by the Registration Rights Agreement, and
with its obligations, if any, under the Act with regard to the delivery of a
prospectus.
[Name of Transferor]
By:________________________________
Name:
Title:
Dated: ________________
cc: Frontier Financing Trust
D-1
<PAGE>
<PAGE>
Exhibit 10.18
==================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
Frontier Insurance Group, Inc.
Dated as of October 16, 1996
==================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
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<TABLE>
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation................................. 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application............................... 5
SECTION 2.2 Lists of Holders of Securities................................. 6
SECTION 2.3 Reports by the Preferred Guarantee Trustee..................... 6
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee................ 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent............... 6
SECTION 2.6 Events of Default; Waiver...................................... 7
SECTION 2.7 Event of Default; Notice....................................... 7
SECTION 2.8 Conflicting Interests........................................... 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee........... 8
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee.................. 9
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.......... 12
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility....................... 12
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees............................................. 13
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee...................................................... 13
SECTION 5.2 Subordination.................................................. 14
SECTION 5.3 Waiver of Notice and Demand.................................... 14
SECTION 5.4 Obligations Not Affected....................................... 14
SECTION 5.5 Rights of Holders.............................................. 15
SECTION 5.6 Guarantee of Payment........................................... 16
i
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<TABLE>
<CAPTION>
<S> <C> <C>
Page
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SECTION 5.7 Subrogation.................................................... 16
SECTION 5.8 Independent Obligations........................................ 16
SECTION 5.9 Conversion..................................................... 16
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions..................................... 16
SECTION 6.2 Ranking........................................................ 17
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........................................................ 19
SECTION 9.4 Benefit........................................................ 20
SECTION 9.5 Governing Law.................................................. 21
</TABLE>
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Page
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CROSS-REFERENCE TABLE*
Section of Section of
Trust Indenture Act Guarantee Agreement
of 1939, as amended -------------------
- -------------------
Agreement
- ---------
310(a)....................................................................4.1(a)
310(b)...............................................................4.1(c), 2.8
310(c)..............................................................Inapplicable
311(a)....................................................................2.2(b)
311(b)....................................................................2.2(b)
311(c)..............................................................Inapplicable
312(a)....................................................................2.2(a)
312(b)....................................................................2.2(b)
313..........................................................................2.3
314(a).......................................................................2.4
314(b)..............................................................Inapplicable
314(c).......................................................................2.5
314(d)..............................................................Inapplicable
314(e).............................................................1.1, 2.5, 3.2
314(f)..................................................................2.1, 3.2
315(a)....................................................................3.1(d)
315(b).......................................................................2.7
315(c).......................................................................3.1
315(d)....................................................................3.1(d)
316(a)...............................................................5.5(a), 2.6
316(b).......................................................................5.4
316(c).......................................................................2.2
317(a)..............................................................Inapplicable
317(b)..............................................................Inapplicable
318(a)....................................................................2.1(b)
318(b).......................................................................2.1
318(c)....................................................................2.1(a)
- --------
*This Cross-Reference Table does not constitute part of the Preferred Securities
Guarantee Agreement and shall not affect the interpretation of any of its terms
or provisions.
<PAGE>
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Preferred
Securities Guarantee"), dated as of October 16, 1996, is executed and delivered
by FRONTIER INSURANCE GROUP, INC., a Delaware corporation (the "Guarantor"), and
The Bank of New York, as trustee (the "Preferred Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Frontier Financing Trust, a Delaware statutory
business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
dated as of October 16, 1996 (the "Declaration"), among the trustees of the
Trust named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, the Trust is
issuing on the date hereof 3,000,000 preferred securities, having an aggregate
liquidation amount of $150,000,000 (plus up to an additional 450,000 preferred
securities, having an aggregate liquidation amount of $22,500,000, to cover
over-allotments), designated the 6 1/4% Convertible Trust Originated Preferred
Securities'SM' (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to guarantee the
obligations of the Trust to the Holders of Preferred Securities on the terms and
conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an
Indenture Event of Default (as defined herein) has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments (as
defined in the Common Securities Guarantee) under the Common Securities
Guarantee shall be subordinated to the rights of Holders of Preferred Securities
to receive Guarantee Payments (as defined herein) under this Preferred
Securities Guarantee;
NOW, THEREFORE, in consideration of the purchase by each Holder
of Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
<PAGE>
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) capitalized terms used in this Preferred Securities
Guarantee but not defined in the preamble above have
the respective meanings assigned to them in this
Section 1.1;
(b) terms defined in the Declaration as at the date
hereof have the same meaning when used in this
Preferred Securities Guarantee unless otherwise
defined in the Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Preferred Securities
Guarantee" or "this Preferred Securities Guarantee"
are to this Preferred Securities Guarantee as
modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee
to Articles and Sections are to Articles and Sections
of this Preferred Securities Guarantee, unless
otherwise specified;
(f) a term defined in the Trust Indenture Act has the
same meaning when used in this Preferred Securities
Guarantee, unless otherwise defined in this Preferred
Securities Guarantee or unless the context otherwise
requires;
(g) a reference to the singular includes the plural and
vice versa;
(h) a reference to any Person shall include its
successors and assigns;
(i) a reference to any agreement or instrument shall mean
such agreement or instrument, as supplemented,
modified, amended, or amended and restated, and in
effect from time to time; and
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(j) a reference to any statute, law, rule or regulation,
shall include any amendments thereto applicable to
the relevant Person, and any successor statute, law,
rule or regulation.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in Wilmington, Delaware are authorized or
required by any applicable law or executive order to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Trust.
"Common Stock" means the common stock, par value $.01 per share,
of the Guarantor.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at 101
Barclay Street, 21 West, New York, New York 10286, Attention: Corporate Trust
Trustee Administration.
"Covered Person" means any Holder or beneficial owner of
Preferred Securities.
"Debentures" means the 6 1/4% Convertible Subordinated Debentures
due October 16, 2026 of the Guarantor held by the Property Trustee (as defined
in the Declaration).
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Trust: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Trust shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price"), with respect
to any Preferred Securities called for redemption by the Trust to the extent the
Trust has funds available therefor, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with a distribution of the Debentures to the Holders in exchange for Preferred
Securities or the redemption of all of the Preferred Securities as provided in
the Declaration), the lesser of (a) the aggregate of the liquidation amount and
all accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust shall have funds available therefor, and (b)
the amount of assets of the Trust remaining available for distribution to
Holders upon
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liquidation of the Trust (in either case, the "Liquidation Distribution"). If an
Indenture Event of Default has occurred and is continuing, the rights of holders
of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinate to the rights of Holders of Preferred
Securities to receive Guarantee Payments under the Preferred Securities
Guarantee.
"Holder" shall mean any holder, as registered on the books and
records of the Trust, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of October 16, 1996,
among the Guarantor and The Bank of New York, a New York banking corporation, as
trustee, pursuant to which the Debentures are to be issued to the Property
Trustee of the Trust.
"Indenture Event of Default" means an "Indenture Event of
Default" as defined in the Indenture.
"Indenture Trustee" means the Person acting as trustee under the
Indenture, initially The Bank of New York.
"Majority in liquidation amount of the Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Preferred Securities, voting separately as a class, of more than 50% of the
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condition and
the definition relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers' Certificate;
4
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(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion,
is necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied
with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee Trustee" means The Bank of New York, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice president, any assistant vice
president, any assistant secretary, the treasurer, any assistant treasurer or
other officer of the Corporate Trust Office of the Preferred Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
5
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(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred Securities
("List of Holders") as of such date, (i) within one Business Day after May 15
and November 15, 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 15 days before such List of Holders is given to the Preferred
Guarantee Trustee, provided that the Guarantor shall not be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Preferred Guarantee Trustee by the
Guarantor or the Preferred Securities are represented by one or more Global
Securities (as defined in the Indenture). The Preferred Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
Within 60 days after November 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities
6
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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 Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, 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
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
(a) The Preferred Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default of which the Preferred Guarantee Trustee is deemed to have knowledge (as
defined in Section 2.7(b)), unless such defaults have been cured before the
giving of such notice; provided that the Preferred Guarantee Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer of
the Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall be deemed to have
knowledge of an Event of Default if (i) the Preferred Guarantee Trustee shall
have received written notice of such Event of Default or (ii) a Responsible
Officer of the Preferred Guarantee Trustee 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 Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
7
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.5(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default of which the Preferred Guarantee
Trustee is deemed to have knowledge (as defined in Section 2.7(b)) has occurred
and is continuing, the Preferred Guarantee Trustee shall enforce this Preferred
Securities Guarantee for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
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 Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and of which the Preferred Guarantee Trustee is
deemed to have knowledge (as defined in Section 2.7(b)), the Preferred Guarantee
Trustee shall exercise such of the rights and powers vested in it by this
Preferred Securities Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of
this Preferred Securities Guarantee, and the Preferred Guarantee
Trustee shall not be liable except for the
8
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performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no implied
covenants or obligations shall be read into this Preferred
Securities Guarantee against the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such certificates or
opinions that by any provision hereof are specifically required
to be furnished to the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee, or exercising any trust or
power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if
the Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Preferred Securities
Guarantee or indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting
upon, any resolution,
9
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certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by
the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently
evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem
it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Preferred
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument
(or any rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel of its selection, and the written advice or opinion of
such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include
any of its employees. The Preferred Guarantee Trustee shall have
the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any
court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it
by this Preferred Securities Guarantee at the request or
direction of any Holder, unless such Holder shall have provided
to the Preferred Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee,
against the costs, expenses (including attorneys' fees and
expenses) and liabilities that might be incurred by it in
complying with such request or direction, including such
reasonable advances as may be requested by the Preferred
Guarantee Trustee; provided that nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Preferred
Guarantee Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by
this Preferred Securities Guarantee.
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(vii) The Preferred Guarantee Trustee shall not be bound
to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document,
but the Preferred Guarantee Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters
as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee
or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as
to the authority of the Preferred Guarantee Trustee to so act or
as to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be
conclusively evidenced by the Preferred Guarantee Trustee's or
its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem
it desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Preferred Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right
or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting
in accordance with such instructions.
(xi) The Preferred Guarantee Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it in
good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by
this Preferred Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Preferred Guarantee
Trustee does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
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SECTION 4.2 Appointment, Removal and Resignation
of Preferred Guarantee Trustees
(a) Subject to Section 4.2(c), the Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor.
(b) Subject to Section 4.2(c), the Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor.
(c) The Preferred Guarantee Trustee shall hold office and shall
not be removed in accordance with Section 4.2(a) or resign in accordance with
Section 4.2(b) unless and until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor and,
in the case of a resignation in accordance with Section 4.2(b), the resigning
Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of removal or resignation,
the resigning or removed Preferred Guarantee Trustee may petition any court of
competent jurisdiction for appointment of a Successor Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts
or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts accrued to the date of such termination, removal or resignation.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Trust), as and when due, regardless of any defense,
right of set-off or counterclaim that the Trust 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 Trust to pay such amounts to the Holders.
SECTION 5.2 Subordination
If an Indenture Event of Default has occurred and is continuing,
the rights of holders of Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinate to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
SECTION 5.3 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.4 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Preferred 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 Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable
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under the terms of the Preferred Securities or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum payable
that results from the extension of any interest payment period on the Debentures
or any extension of the maturity date of 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 Preferred
Securities, or any action on the part of the Trust 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 Trust or any of the
assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.4 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.5 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of the
conducting of any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may institute a legal
proceeding against the Guarantor to enforce the obligations of the Guarantor
under this Preferred Securities Guarantee without first instituting a legal
proceeding against the Trust, the Preferred Guarantee Trustee or any other
Person.
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(c) If an Indenture Event of Default constituting the failure to
pay interest, principal or premium, if any, on the Debentures on the date such
interest, principal or premium, if any, is otherwise payable has occurred and is
continuing, then a Holder of Preferred Securities may directly, at any time on
or after the respective due date specified in the Debentures for such payment,
institute a proceeding for enforcement of payment to such Holder of the
interest, principal or premium, if any, on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such Holder. The Holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Debentures unless the
Property Trustee (as defined in the Indenture) fails to do so.
SECTION 5.6 Guarantee of Payment
This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.7 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Trust in respect of any amounts paid
to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.8 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.4 hereof.
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SECTION 5.9 Conversion
The Guarantor acknowledges its obligation to issue and deliver
common stock of the Guarantor upon the conversion of the Preferred Securities.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Preferred Securities remain outstanding, if (i)
the Guarantor has exercised its option to defer interest payments on the
Debentures by extending the interest payment period and such extension shall be
continuing, (ii) there shall have occurred any Event of Default or (iii) there
shall have occurred and be continuing any event that, with the giving of notice
or the lapse of time or both, would constitute an Indenture Event of Default,
then the Guarantor (a) shall not declare or pay dividends on, make distributions
with respect to, redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock (except for (i) dividends or distributions
in shares of Common Stock on Common Stock, (ii) purchases or acquisitions of
shares of Common Stock made in connection with any employee benefit plan of the
Guarantor or its subsidiaries, purchases made from employees or officers
pursuant to employment agreements, or purchases made under option agreements (or
upon the exercise of options granted thereunder), provided the plan or agreement
was in existence on October 9, 1996 with officers or employees of the Guarantor
or its subsidiaries, and provided further that such repurchases by the Guarantor
made from officers or employees of the Guarantor or its subsidiaries pursuant to
employment or option agreements shall be made at a price not to exceed market
value on the date of any such repurchase and shall not exceed $5 million in the
aggregate for all such employees and officers, (iii) conversions or exchanges of
any class of common stock into another class of common stock or (iv) purchases
of fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of any of the Company's securities being
converted or exchanged), (b) shall not make any payment of interest, principal
or premium, if any, or repay, repurchase or redeem any debt securities issued by
the Guarantor that rank junior to or pari passu with the Convertible Debentures
(except by conversion into or exchange of shares of Common Stock), and (c) shall
not make any guarantee payments with respect to the foregoing (other than such
payments made pursuant to the Common Securities Guarantee or this Preferred
Securities Guarantee).
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SECTION 6.2 Ranking
(a) This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) senior to the
Guarantor's common stock, (ii) pari passu with the most senior preferred or
preference securities now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor with respect to any
preferred or preference securities of the Guarantor or any Affiliate of the
Guarantor, and (iii) junior and subordinate in right of payment to all other
liabilities of the Guarantor except any liabilities that may be pari passu
expressly by their terms.
(b) The holders of any obligations of the Guarantor that are
senior in priority to the obligations under this Preferred Securities Guarantee
will be entitled to all of the rights inuring to the holders of "Senior
Indebtedness" under Article 12 of the Indenture, and the Holders of the
Preferred Securities will be subject to all of the terms and conditions of such
Article 12 with respect to any claims or rights hereunder with the same effect
as though fully set forth herein.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Preferred Securities Guarantee shall terminate as to each
Holder of Preferred Securities upon (i) full payment of the applicable
Redemption Price (as defined in the Declaration) with respect to all Preferred
Securities, (ii) the distribution of the Debentures held by the Trust to the
Holders of all of the Preferred Securities of the Trust, (iii) liquidation of
the Trust, or (iv) the distribution of Guarantor's common stock to such Holder
in respect of the conversion of such Holder's Preferred Securities into common
stock of the Guarantor and will terminate completely upon full payment of the
amounts payable in accordance with the Declaration of the Trust. Notwithstanding
the foregoing, this Preferred Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any Holder of
Preferred Securities must restore payment of any sums paid under the Preferred
Securities or under this Preferred Securities Guarantee.
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ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding. Except in connection with any
merger or consolidation of the Guarantor with or into another entity or any
sale, transfer or lease of the Guarantor's assets to another entity, each as
permitted by the Indenture, the Guarantor may not assign its rights or delegate
its obligations under this Preferred Securities Guarantee without the prior
approval of the Holders of at least a Majority in liquidation amount of the
Preferred Securities.
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 Preferred Securities Guarantee may be amended only with the
prior approval of the Holders of at least a Majority in liquidation amount of
the Preferred Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Preferred Securities apply to the giving
of such approval.
SECTION 9.3 Notices
All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, sent by facsimile or mailed by registered or certified mail, as
follows:
(a) if given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
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(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 of the Preferred Securities):
Frontier Insurance Group, Inc.
195 Lake Louise Marie Road
Rock Hill, New York 12775
Attention: Mr. Walter A. Rhulen
(c) If given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
This Preferred Securities Guarantee is solely for the benefit of
the Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
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SECTION 9.5 Governing Law
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS.
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
FRONTIER INSURANCE GROUP, INC.
By: /s/ Walter A. Rhulen
-------------------------------------
Walter A. Rhulen
President and Chief Executive Officer
THE BANK OF NEW YORK,
as Preferred Guarantee Trustee
By: /s/ Stephen J. Giurlando
-------------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
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Exhibit 10.19
FRONTIER FINANCING TRUST
6 1/4% Convertible Trust Originated Preferred Securities'SM'
("Convertible TOPrS'SM'")
guaranteed by and convertible into shares of
Common Stock of Frontier Insurance Group, Inc.
REGISTRATION RIGHTS AGREEMENT
October 16, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
OPPENHEIMER & CO., INC.
STEPHENS INC.
As Representatives of the several Initial Purchasers
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
Frontier Financing Trust, a statutory business trust formed under
the laws of the State of Delaware (the "Trust") by Frontier Insurance Group,
Inc., a Delaware corporation ("the Company"), as sponsor, proposes to issue and
sell to the Initial Purchasers named in the Purchase Agreement referred to below
(the "Initial Purchasers"), for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Donaldson, Lufkin & Jenrette Securities
Corporation, Oppenheimer & Co., Inc. and Stephens Inc. are acting as
representatives (the "Representatives"), upon the terms set forth in a purchase
agreement dated October 9, 1996 (the "Purchase Agreement"), among the Initial
Purchasers, the Company and the Trust, 6 1/4% Convertible Trust Originated
Preferred Securities'SM' (liquidation amount $50
- --------
'SM' "Convertible Trust Originated Preferred Securities'SM'" and "Convertible
TOPrS'SM'" are service marks of Merrill Lynch & Co., Inc.
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2
per Convertible Trust Originated Preferred Security'SM'), (the "Preferred
Securities") (the "Initial Placement"). As an inducement to the Initial
Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to the obligations of the Initial Purchasers thereunder, the Trust and
the Company agree with you, (i) for the benefit of the Initial Purchasers and
(ii) for the benefit of the holders from time to time of the Preferred
Securities, the 6 1/4% Convertible Subordinated Debentures Due 2016 (the
"Debentures") and the Common Stock, par value $.01 per share (the "Common
Stock"), of the Company initially issuable upon conversion of the Preferred
Securities or the Debentures (collectively, together with the Guarantee of the
Company of the Preferred Securities, the "Registrable Securities"), including
the Initial Purchasers (each of the foregoing, a "Holder" and, together, the
"Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without definition
shall have their respective meanings set forth in or pursuant to the Purchase
Agreement or the Offering Memorandum dated October 9, 1996, in respect of the
Preferred Securities, as applicable. All references to Sections herein are to
Sections of this Agreement unless otherwise indicated. As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:
"Act" or "Securities Act" means the Securities Act of 1933, as
amended.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with such specified person. For purposes of this
definition, control of a person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such
person whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
"Company Offering" means the sale of Common Stock pursuant to a
registration statement filed by the Company under the Act (other than (i)
a registration statement filed on Form S-4 or any successor form or (ii) a
registration statement filed on Form S-8 or any successor form) respecting
an underwritten offering, whether primary or secondary, that is declared
effective by the Commission.
"Declaration" means the amended and restated declaration of trust
of even date herewith executed by the Company, as sponsor of the Trust,
and the initial trustees of the Trust (the "Issuer Trustees"), as the same
will be amended and restated in its entirety by the Company, the Issuer
Trustees, The Bank of New York, as property trustee, and The Bank of New
York (Delaware), as Delaware trustee, providing for the issuance of the
Trust Securities.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in Section 2(b).
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3
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Indenture" means the Indenture of even date herewith between the
Company and The Bank of New York, as trustee, providing for the issuance
of the Debentures.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten
offering, if any, as set forth in Section 6.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part
of an effective registration statement in reliance upon Rule 430A under
the Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities.
"Shelf Registration" means a registration effected pursuant to
Section 2.
"Shelf Registration Statement" means a "shelf" registration
statement of the Trust and the Company pursuant to the provisions of
Section 2 filed with the Commission which covers some or all of the
Registrable Securities, as applicable, on an appropriate form under Rule
415 under the Act, or any similar rule that may be adopted by the
Commission, amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf Registration Statement.
2. SHELF REGISTRATION. (a) The Trust and the Company shall,
within 60 days following the date of original issuance (the "Issue Date") of the
Preferred Securities, file with the Commission a Shelf Registration Statement
relating to the offer and sale of the Registrable Securities by the Holders from
time to time in accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement and, thereafter,
shall each use their best efforts to cause such Shelf Registration Statement to
be declared effective under the Act within 150 calendar days following the Issue
Date; provided, however, that no Holder shall be entitled to have the
Registrable Securities held by it covered by such Shelf Registration unless such
Holder is in compliance with Section 3(m).
(b) The Trust and the Company shall each use its best efforts to
keep the Shelf Registration Statement continuously effective in order to permit
the Prospectus forming
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4
part thereof to be usable by Holders for a period of three years from the date
the Shelf Registration Statement is declared effective or such shorter period
that will terminate upon the earliest of the following: (A) when all the
Preferred Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement, (B) when all Debentures issued to
Holders in respect of Preferred Securities that had not been sold pursuant to
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement, (C) when all shares of Common Stock issued upon
conversion of any such Preferred Securities or any such Debentures that had not
been sold pursuant to the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement and (D) when, in the written opinion of
counsel to the Trust and the Company, all outstanding Registrable Securities
held by persons that are not affiliates of the Trust or the Company may be
resold without registration under the Act pursuant to Rule 144(k) under the Act
or any successor provision thereto or any successor provision thereto or any
other applicable law, rule or regulation, whether now in effect or hereinafter
promulgated, adopted or issued (in any such case, such period being called the
"Effectiveness Period").
(c) In the event that a Shelf Registration Statement with respect
to the Registrable Securities is not (i) filed on or prior to the 60th calendar
day following the Issue Date and (ii) declared effective on or prior to the
150th calendar day following the Issue Date (each, a "Registration Default"),
the interest rate borne by the Debentures and, accordingly, the distribution
rate borne by the Preferred Securities shall be increased by one-quarter of one
percent (0.25%) per annum, from and including the day following the Registration
Default to and including the 90th day following such Registration Default and by
one-half of one percent (0.50%) thereof from and after the 91st day following
such Registration Default. Upon (x) the filing of the Shelf Registration
Statement after the 60-day period described in clause (i) above or (y) the
effectiveness of the Shelf Registration Statement after the 150-day period
described in clause (ii) above, the interest rate borne by the Debentures and
the distribution rate borne by the Preferred Securities from the date of such
filing or effectiveness, as the case may be, will be reduced to the original
interest rate in respect of all periods thereafter. In the event that the Shelf
Registration Statement ceases to be effective during the Effectiveness Period
for more than 60 days, whether or not consecutive, during any 12-month period,
then the interest rate borne by the Debentures and the distribution rate borne
by the Preferred Securities will each increase by one-half of one percent
(0.50%) per annum from the 61st, until such time as the Shelf Registration
Statement again becomes effective. Any interest payments contemplated to this
Section 2(c) shall be made pursuant to the terms of the Indenture and the
Declaration.
(d) The Trust and the Company shall be deemed not to have used
their best efforts to keep the Shelf Registration Statement effective during the
requisite period if either the Trust or the Company voluntarily takes any action
that would result in Holders of Registrable Securities covered thereby not being
able to offer and sell any such Registrable Securities during that period,
unless (i) such action is required by applicable law or (ii) upon the occurrence
of any event contemplated by paragraph 3(c)(2)(iii) below, and such action is
taken by the Trust or the Company in good faith and for valid business reasons;
provided that, in the case of clause (ii) above, the Trust and the Company
thereafter promptly comply with the requirements of Section 3(i) below.
<PAGE>
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5
3. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) The Trust and the Company shall furnish to the Initial
Purchasers and their counsel, prior to the filing thereof with the
Commission, a copy of any Shelf Registration Statement, and each amendment
thereof and each amendment or supplement, if any, to the Prospectus
included therein and shall each use its best efforts to reflect in each
such document, when so filed with the Commission, such comments as the
Initial Purchasers and such counsel reasonably may propose.
(b) The Trust and the Company shall take such action as may be
necessary so that (i) any Shelf Registration Statement, and any amendment
thereto, and any Prospectus forming part thereof, and any amendment or
supplement thereto (and each report or other document incorporated therein
by reference in each case) complies in all material respects with the
Securities Act and the Exchange Act and the respective rules and
regulations thereunder, (ii) any Shelf Registration Statement, and any
amendment thereto, does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf Registration
Statement, and any amendment or supplement to such Prospectus, does not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Company shall advise the Initial Purchasers and, in
the case of clause (i) of this Section 3(c), the Holders and, if requested
by the Initial Purchasers or any such Holder, confirm such advice in
writing:
(i) when a Shelf Registration Statement, and any amendment
thereto, has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto
has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information.
(2) The Company shall advise the Initial Purchasers and the
Holders and, if requested by the Initial Purchasers or any such Holder,
confirm such advice in writing of:
(i) the issuance by the Commission of any stop order
suspending effectiveness of the Shelf Registration Statement or
the initiation of any proceedings for that purpose;
(ii) the receipt by the Trust or the Company of any
notification with respect to the suspension of the qualification
of the securities included therein
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6
for sale in any jurisdiction or the initiation of any proceeding
for such purpose; and
(iii) the happening of any event that requires the making
of any changes in the Shelf Registration Statement or the
Prospectus so that, as of such date, the Shelf Registration
Statement and the Prospectus do not contain an untrue statement
of a material fact and do not omit to state a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading (which
advice shall be accompanied by an instruction to suspend the use
of the Prospectus until the requisite changes have been made).
(d) The Company shall use its best efforts to prevent the
issuance, and, if issued, to obtain the withdrawal, of any order
suspending the effectiveness of any Shelf Registration Statement at the
earliest possible time.
(e) The Trust and the Company shall furnish to each Holder of
Registrable Securities included within the coverage of any Shelf
Registration Statement, without charge, at least one copy of such Shelf
Registration Statement and any post-effective amendments thereto,
including financial statements and schedules, and, if the Holder so
requests in writing, all reports and other documents incorporated by
reference in the Shelf Registration Statement and exhibits (including
those incorporated by reference).
(f) The Trust and the Company shall, during the Effectiveness
Period, deliver to each Holder of Registrable Securities included within
the coverage of any Shelf Registration Statement, without charge, as many
copies of the Prospectus (including each preliminary prospectus) included
in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and each of the Trust and
the Company consents (except upon and during the continuance of any event
described in paragraphs 2(d) or 3(c)(2)(iii) above) to the use of the
Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale
of the Registrable Securities covered by the Prospectus or any amendment
or supplement thereto during the Effectiveness Period.
(g) Prior to any offering of Registrable Securities pursuant to
any Shelf Registration Statement, the Trust and the Company shall register
or qualify or cooperate with the Holders of Registrable Securities
included therein and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions in the
United States as any such Holders reasonably request in writing and do any
and all other acts or things necessary or advisable to enable the offer
and sale in such jurisdictions of the Registrable Securities covered by
such Shelf Registration Statement; provided, however, that in no event
shall the Trust or the Company be obligated to (i) qualify generally to do
business or as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise
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<PAGE>
7
be required to so qualify but for this Section 3(g), (ii) file any general
consent to service of process in any jurisdiction where it is not as of
the date hereof then so subject or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject.
(h) Unless any Registrable Securities shall be in book-entry only
form, the Trust and the Company shall cooperate with the Holders of
Registrable Securities to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold pursuant to
any Shelf Registration Statement free of any restrictive legends and in
such permitted denominations and registered in such names as Holders may
request in connection with the sale of Registrable Securities pursuant to
such Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by paragraph
3(c)(2)(iii) above, the Trust and the Company shall promptly prepare a
post-effective amendment to any Shelf Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of the
Registrable Securities included therein, the Prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except, in each
case, for an untrue statement of a material fact or omission of a material
fact made in reliance on and in conformity with written information
furnished to the Company or the Trust by or on behalf of Holders
specifically for use therein). The Trust and the Company agree to notify
the Holders to suspend use of the Prospectus, and the Holders shall
suspend use of the Prospectus, and not communicate such material
non-public information to any third party, and not sell or purchase, or
offer to sell or purchase, any securities of the Trust or the Company,
until the Trust or the Company has amended or supplemented the Prospectus
so it does not contain any such misstatement or omission. Subject to
Section 2(d), at such time as such public disclosure is otherwise made or
the Trust and the Company determine in good faith that such disclosure is
not necessary, the Trust and the Company agree to notify the Holders of
such determination and to amend or supplement the Prospectus if necessary,
so it does not contain any such untrue statement or omission therein and
to furnish the Holders such numbers of copies of the Prospectus as so
amended or supplemented as the Holders may reasonably request.
(j) Not later than the effective date of any Shelf Registration
Statement hereunder, the Trust and the Company shall provide a CUSIP
number for the Preferred Securities registered under such Shelf
Registration Statement; in the event of and at the time of any
distribution of the Debentures to Holders, the Company shall provide a
CUSIP number for the Debentures and provide the applicable trustee with
certificates for such Registrable Securities, in a form eligible for
deposit with DTC (to the extent that such Registrable Securities are so
eligible).
(k) The Trust and the Company shall use their best efforts to
comply with all applicable rules and regulations of the Commission and
shall make generally available to their security holders or otherwise
provide in accordance with Section 11(a) of the
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<PAGE>
8
Securities Act as soon as practicable after the effective date of the
applicable Shelf Registration Statement an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act.
(l) The Trust and the Company shall use their reasonable best
efforts to cause the Indenture, the Declaration and the Preferred
Securities Guarantee Agreement to be qualified under the Trust Indenture
Act in a timely manner.
(m) The Trust and the Company may require each Holder of
Registrable Securities to be sold pursuant to any Shelf Registration
Statement to furnish to the Trust and the Company such information
regarding the Holder and the distribution of such Registrable Securities
as the Trust and the Company may from time to time reasonably require for
inclusion in such Shelf Registration Statement and the Company and the
Trust may exclude from such registration the Registrable Securities of any
Holder that fails to furnish such information within a reasonable time
after receiving such request.
(n) The Trust and the Company will each use their reasonable best
efforts to cause the Preferred Securities and the Common Stock issuable
upon conversion thereof to be listed on the New York Stock Exchange on or
prior to the effective date of any Shelf Registration Statement hereunder.
(o) The Trust and the Company shall use their reasonable best
efforts to take all other steps necessary to effect the registration,
offering and sale of the Registrable Securities covered by the Shelf
Registration Statement contemplated hereby.
4. REGISTRATION EXPENSES. Except as otherwise provided in Section
6, the Company shall bear all fees and expenses incurred in connection with the
performance of its obligations under Sections 2 and 3 and shall bear or
reimburse the Holders for the reasonable fees and disbursements of one firm of
counsel designated by the Initial Purchasers on behalf of the Holders and
reasonably acceptable to the Company to act as counsel for the Holders in
connection therewith.
5. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with any
Shelf Registration Statement, the Company and the Trust, jointly and severally,
shall indemnify and hold harmless the Initial Purchasers, each Holder, each
underwriter who participates in an offering of Registrable Securities, each
person, if any, who controls any of such parties within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act and each of their
respective directors, officers, employees, trustees and agents, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Shelf
Registration Statement (or any amendment thereto) covering Registrable
Securities, including all documents incorporated therein by reference, or
the omission or alleged omission therefrom of a
<PAGE>
<PAGE>
9
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement
or alleged untrue statement of a material fact contained in any Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by the
Holders, such Holder or any underwriter (except to the extent otherwise
expressive provided in Section 5(c) hereof)), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under subparagraph (i) or
(ii) of this Section 5(a);
provided that this indemnity shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or omission
or alleged untrue statement or omission (i) made in reliance upon and in
conformity with written information furnished to the Trust or the Company by the
Initial Purchasers through Merrill Lynch, such Holder or any underwriter
participating in an offering of Registrable Securities in writing expressly for
use in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) or (ii) contained in any
preliminary prospectus if the Initial Purchasers, such Holder or such
underwriter failed to send or deliver a copy of the Prospectus (or any amendment
or supplement thereto) to the Person asserting such losses, claims, damages or
liabilities on or prior to the delivery of written confirmation of any sale of
securities covered thereby to such Person in any case where such Prospectus (or
any amendment or supplement thereto) would have cured the defect giving rise to
such loss, claim, damage or liability. Any amounts advanced by the Company or
the Trust to an indemnified party pursuant to this Section 5 as a result of such
losses shall be returned to the Company or the Trust, as appropriate, if it
shall be finally determined by such a court in a judgment not subject to appeal
or final review that such indemnified party was not entitled to indemnification
by the Company or the Trust, as the case may be.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Trust, the Company, the Initial Purchasers, each
underwriter who participates in an offering of Registrable Securities and the
other selling Holders and each of their respective directors, officers
(including each officer of the Company and the Trust who signed the Shelf
Registration Statement), employees, trustees and agents and each Person, if any,
who controls
<PAGE>
<PAGE>
10
the Trust, the Company, the Initial Purchasers, any such underwriter or any
other selling Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all loss, liability,
claim, damage and expense whatsoever described in the indemnity contained in
Section 5(a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such selling Holder expressly for use in
the Shelf Registration Statement (or any amendment thereto) or any Prospectus
(or any amendment or supplement thereto); provided, however, that no such Holder
shall be liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to the
Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers served on such
indemnified party, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability which it may have other than
on account of this indemnity agreement. An indemnifying party may participate at
its own expense in the defense of any such action. If an indemnifying party so
elects within a reasonable time after receipt of such notice, such indemnifying
party, jointly with any other indemnifying party, may assume the defense of such
action with counsel chosen by it and approved by the indemnified party or
parties defendant in such action; provided that if any such indemnified party
reasonably determines that there may be legal defenses available to such
indemnified party which are different from or in addition to those available to
such indemnifying party or that representation of such indemnifying party and
any indemnified party by the same counsel would present a conflict of interest,
then such indemnifying party or parties shall not be entitled to assume such
defense. If an indemnifying party is not entitled to assume the defense of such
action as a result of the proviso to the preceding sentence, counsel for such
indemnifying party shall be entitled to conduct the defense of such indemnifying
party and counsel for each indemnified party or parties shall be entitled to
conduct the defense of such indemnified party or parties. If an indemnifying
party assumes the defense of an action in accordance with and as permitted by
the provisions of this paragraph, such indemnifying party shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from its own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity provision agreement provided for in this
Section 5 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Trust, the
Initial Purchasers and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company, the Trust, the Initial Purchasers
and the Holders, as incurred; provided that no Person guilty of fraudulent
misrepresentation (within
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<PAGE>
11
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person that was not guilty of such fraudulent
misrepresentation. As between the Company, the Trust, the Initial Purchasers and
the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Company and the Trust on the one hand, and the Initial
Purchasers and the Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or expense, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative fault of the Company and the Trust on the one hand,
and of the Initial Purchasers and the Holders, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Trust, on
the one hand, or by or on behalf of the Initial Purchasers or the Holders, on
the other, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Trust, the Initial Purchasers and the Holders of the Registrable Securities
agree that it would not be just and equitable if contributions pursuant to this
Section 5 were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the relevant equitable
considerations. For purposes of this Section 5(d), each director, officer,
employee, trustee, agent and Person, if any, who controls an Initial Purchaser
or Holder within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act shall have the same rights to contribution as such Initial
Purchaser or Holder, and each director, officer, employee, trustee and agent of
the Company and the Trust, and each Person, if any, who controls the Company or
the Trust within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act shall have the same rights to contribution as the Company
and the Trust. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written consent.
6. UNDERWRITTEN OFFERING.
(a) The Holders of Registrable Securities covered by the Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an underwritten offering in accordance with the conditions set forth below.
In any such underwritten offering, the investment banker or bankers and manager
or managers that will administer the offering will be selected by, and the
underwriting arrangements with respect thereto will be approved by, the Holders
of a majority of the Registrable Securities to be included in such offering;
provided, however, that (i) such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the Company and the
Trust and (ii) neither the Company nor the Trust shall be obligated to arrange
for more than one underwritten offering during the Effectiveness Period. No
Holder may participate in any underwritten offering contemplated hereby unless
(i) such Holder agrees to sell such Holder's Registrable Securities in
accordance with any approved underwriting arrangements, (ii) such Holder
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such approved underwriting arrangements and (iii) at
least 30% of the Registrable Securities outstanding as of the Closing Time
(giving affect to antidilution adjustments, if applicable)
<PAGE>
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12
are included in such underwritten offering (including for the purposes of this
clause (iii) any Additional Preferred Securities actually issued and sold under
the Purchase Agreement). The Holders participating in any underwritten offering
shall be responsible for any expenses customarily borne by selling
securityholders, including underwriting discounts and commissions, fees and
expenses of counsel to the selling securityholders and transfer taxes, if any,
and shall reimburse the Trust and the Company for the fees and disbursements of
their counsel, their independent public accountants and any printing expenses
incurred in connection with such underwritten offering. Notwithstanding the
foregoing, upon receipt of a request from the Managing Underwriter or a
representative of Holders of a majority of the Registrable Securities
outstanding to prepare and file an amendment or supplement to the Shelf
Registration Statement and Prospectus in connection with an underwritten
offering, the Company may delay the filing of any such amendment or supplement
for up to 90 days if the Company in good faith has a valid business reason for
such delay.
(b) The Trust and the Company shall enter into such customary
agreements (including underwriting agreements in customary form) which are
reasonably acceptable to the Trust and the Company, and take all other
reasonably requested actions in order to expedite or facilitate the registration
or the disposition of the Registrable Securities (subject to the last sentence
of Section 6(a) above), and in connection therewith, if an underwriting
agreement is entered into, cause the same to contain indemnification provisions
and procedures substantially identical to those set forth in Section 5 (or such
other customary provisions and procedures acceptable to the Managing
Underwriters, if any, the Company and the Trust) with respect to all parties to
be indemnified pursuant to Section 5 hereof.
(c) The Trust and the Company shall (i) make available for
inspection by the Holders of Registrable Securities to be registered thereunder,
any underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and any attorney, accountant or other agent retained by
such Holders or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Trust and the Company and
its subsidiaries; (ii) cause the Company's officers, directors and employees and
the Regular Trustees to make reasonably available for inspection all relevant
information reasonably requested by such Holders or any such underwriter,
attorney, accountant or agent in connection with any such Shelf Registration
Statement, in each case as is customary for similar due diligence examinations;
provided, however, that any information that is designated in writing by the
Trust and the Company, in good faith, as confidential at the time of delivery of
such information shall be kept confidential by such Holders or any such
underwriter, attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such information
becomes available to the public generally or through a third party without an
accompanying obligation of confidentiality; and provided further that the
foregoing inspection and information gathering shall, to the greatest extent
possible, be coordinated on behalf of the Holders and the other parties entitled
thereto by one counsel designated by and on behalf of such Holders and other
parties reasonably acceptable to the Company and the Trust; (iii) make such
representations and warranties to the Holders of Registrable Securities
registered thereunder and the underwriters, if any, in form, substance and scope
as are customarily made by the Company and the Trust to underwriters in primary
underwritten offerings and covering matters including, but not limited to, those
set forth in the
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13
Purchase Agreement; (iv) obtain opinions of counsel to the Trust and the Company
(who may be the general counsel of the Company) and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriters, if any) in customary form addressed
to each selling Holder and the underwriters, if any, covering such matters as
are customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Holders and underwriters
(it being agreed that the matters to be covered by such opinion or a written
statement by such counsel delivered in connection with such opinions shall
include, without limitation, as of the date of the opinion and as of the
effective date of the Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, the absence from such Shelf Registration
Statement and the Prospectus included therein, as then amended or supplemented,
including the documents incorporated by reference therein, of an untrue
statement of a material fact or the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading); (v) obtain "comfort letters" and updates thereof from the
independent public accountants of the Company (and, if necessary, any other
independent public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Shelf Registration Statement),
addressed to each such Holder of Registrable Securities registered thereunder
and the underwriters, if any, in customary form and covering matters of the type
customarily covered in "comfort letters" in connection with primary underwritten
offerings; and (vi) deliver such other customary documents and certificates as
may be reasonably requested by any such Holders and the Managing Underwriters,
if any, including those to evidence compliance with Section 3(i) and with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Trust and the Company. The foregoing actions set forth in
clauses (iii), (iv), (v) and (vi) of this Section 3(p) shall be performed at
each closing under any underwritten offering to the extent required thereunder.
(d) Upon the request of the Company, the Holders agree not to
effect any public sale or distribution (including sales pursuant to Rule 144) of
Registrable Securities during the 10-trading day period prior to the date that
the Company has notified the Holders that it intends to commence a Company
Offering through the 180-day period immediately following the closing date of
such Company Offering (or such lesser period as may be required by the
underwriters of such Company Offering); provided, however, that (i) the Holders
shall not be obligated to comply with this Section 6(d) until the first
anniversary of the date of this Agreement and (ii) the Holders shall not be
obligated to comply with this Section 6(d) on more than one occasion in any
12-month period.
(e) Notwithstanding any other provision of this Section 6, if the
Managing Underwriters advise the Holders in writing that marketing factors
require a limitation on the number of shares to be underwritten, the number of
shares included in the underwriting by each Holder shall be reduced on a pro
rata basis (based on the number of shares originally proposed to be so included
by such Holder) by such minimum number of shares as is necessary to comply with
such request. If any Holder who has requested inclusion in such underwriting as
provided above disapproves of the terms of the underwriting, such Holder
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14
may elect to withdraw therefrom by written notice to the Company and the
Managing Underwriters.
7. MISCELLANEOUS.
(a) OTHER REGISTRATION RIGHTS. The Company may grant registration
rights that would permit any Person that is a third party the right to piggyback
on any Shelf Registration Statement; provided that if the Managing Underwriter,
if any, of such offering delivers an opinion to the selling Holders that the
total amount of securities which they and the holders of such piggyback rights
intend to include in any Shelf Registration Statement is so large as to
materially adversely affect the success of such offering (including the price at
which such securities can be sold), then only the amount, number or kind of
securities to be offered for the account of holders of such piggyback rights
will be reduced to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount, number or kind recommended by the
Managing Underwriter prior to any reduction in the amount of Registrable
Securities to be included.
(b) AMENDMENTS AND WAIVERS. The provision of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Trust and the Company have
obtained the written consent of the Initial Purchasers on behalf of the Holders
from time to time.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
1. if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
7(c);
2. if to the Initial Purchasers, initially at the address set
forth in the Purchase Agreement; and
3. if to the Trust or the Company, initially at its address set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received, if delivered in person or by fax; five days after
mailing, if sent by mail; or the day following transmission, if sent by
overnight courier.
The Initial Purchasers or the Trust and the Company by notice to
the other may designate additional or different addresses for subsequent notices
or communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
and the Holders, including, without the need for an express assignment or any
consent by the Trust or the
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15
Company thereto, subsequent Holders of Registrable Securities. The Trust and the
Company hereby agree to extend the benefits of this Agreement to any Holder of
Registrable Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) COUNTERPARTS. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. This agreement shall be governed by the laws
of the State of New York.
(h) SEVERABILITY. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
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Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Trust and you.
Very truly yours.
FRONTIER FINANCING TRUST
By /s/ Peter H. Foley
-----------------------------------
Name: Peter H. Foley
Title: Regular Trustee
FRONTIER INSURANCE GROUP, INC.
By /s/ Walter A. Rhulen
-----------------------------------
Name: Walter A. Rhulen
Title: President and Chief
Executive Officer
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
OPPENHEIMER & CO., INC.
STEPHENS INC.
By MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By /s/ Anthony Ursano, Jr.
----------------------------------
Name: Anthony Ursano, Jr.
Title: Vice President
