<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1999
REGISTRATION NOS. 333-
333- -01
333- -02
------------------------------------------------------------------------
------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LITCHFIELD FINANCIAL CORPORATION
LITCHFIELD CAPITAL TRUST I
LITCHFIELD CAPITAL TRUST II
(Exact name of registrant as specified in its charter or trust
agreement)
<TABLE>
<S> <C>
MASSACHUSETTS 04-3023928
DELAWARE (TO BE APPLIED FOR)
DELAWARE (TO BE APPLIED FOR)
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
</TABLE>
430 MAIN STREET, WILLIAMSTOWN, MA 01267, (413)458-1000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
RICHARD A. STRATTON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LITCHFIELD FINANCIAL CORPORATION
430 MAIN STREET, WILLIAMSTOWN, MASSACHUSETTS 01267
(413)458-1000
(Name, address, including zip code, and telephone number,
Including area code, of agent for service)
COPIES TO:
<TABLE>
<S> <C>
JAMES WESTRA, ESQ. BOB F. THOMPSON, ESQ.
HUTCHINS, WHEELER & DITTMAR BASS, BERRY & SIMS PLC
A PROFESSIONAL CORPORATION 2700 FIRST AMERICAN CENTER
101 FEDERAL STREET NASHVILLE, TENNESSEE 37238
BOSTON, MASSACHUSETTS 02110 (615)742-6200
(617)951-6600
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1)(2)(3) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Junior subordinated debt securities of Litchfield Financial
Corporation ("debt securities").............................
- --------------------------------------------------------------------------------------------------------------
Trust preferred securities of Litchfield Capital Trust I and
Litchfield Capital Trust II ("preferred securities")........
- --------------------------------------------------------------------------------------------------------------
Guarantee of preferred securities of Litchfield Capital
Trust I and Litchfield Capital Trust II by Litchfield
Financial Corporation ("guarantee").........................
- --------------------------------------------------------------------------------------------------------------
Total....................................................... $100,000,000 $27,800
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest and distributions,
if any. In no event will the aggregate initial offering price of all
securities issued from time to time pursuant to this Registration Statement
exceed $100,000,000 or the equivalent thereof in foreign currencies, foreign
currency units or composite currencies. Any securities registered hereunder
may be sold separately or as units with other securities registered
hereunder.
(2) There are being registered hereunder such indeterminate number or amount of
debt securities of Litchfield Financial Corporation and preferred securities
of Litchfield Capital Trust I and Litchfield Capital Trust II, as may from
time to time be issued at indeterminate prices. Debt securities may be
issued and sold to Litchfield Capital Trust I and Litchfield Capital Trust
II, in which event such debt securities may later be distributed to the
holders of preferred securities upon a dissolution of Litchfield Capital
Trust I and Litchfield Capital Trust II and the distribution of assets
thereof.
(3) Litchfield Financial Corporation is also registering under this Registration
Statement all other obligations that it may have with respect to preferred
securities issued by Litchfield Capital Trust I and Litchfield Capital Trust
II. No separate consideration will be received for the guarantee or any
other such obligations.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
SUBJECT TO COMPLETION, DATED [ ], 1999
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED [ ], 1999)
[ ] PREFERRED SECURITIES
LITCHFIELD CAPITAL TRUST I
[ ]% SERIES A TRUST PREFERRED SECURITIES
GUARANTEED BY
[LITCHFIELD FINANCIAL CORPORATION LOGO]
- --------------------------------------------------------------------------------
THE TRUST: Litchfield Capital Trust I is a subsidiary of Litchfield
Financial Corporation, and a statutory business trust created under Delaware
law.
THE OFFERING: In connection with this offering, the trust will:
- sell preferred securities to the public and common securities to
Litchfield;
- use the proceeds from these sales to buy an equivalent principal amount
of [ ]% Series A Junior Subordinated Debentures due [ ] issued by
Litchfield; and
- distribute the cash payments it receives on the junior subordinated
debentures to the holders of the preferred and common securities.
The preferred securities represent undivided preferred beneficial interests
in the assets of the trust.
If you purchase preferred securities, you will be entitled to receive
cumulative cash distributions at an annual rate of [ ]% of the $10 liquidation
amount of each preferred security. Distributions will begin to accumulate on
[ ], 1999 and will be payable quarterly, in arrears, on June 30,
September 30, December 31 and March 31, of each year, beginning June 30, 1999.
Litchfield can, on one or more occasions, defer interest payments on the
junior subordinated debentures for up to 20 consecutive quarterly periods. If
Litchfield defers interest payments, the trust will also defer payment of
distributions on the preferred and common securities. During a deferral period,
distributions will continue to accumulate on the preferred and common
securities. Also, additional cash distributions will accumulate on any deferred
distributions at an annual rate of [ ]%, to the extent permitted by law.
Litchfield will fully and unconditionally guarantee the trust's payment
obligations with respect to the preferred securities only to the extent
described in this prospectus supplement and the accompanying prospectus.
The trust has applied to have the preferred securities listed on the Nasdaq
National Market under the symbol "LTCHP". If approved for listing, we expect
trading to commence within 30 days after the preferred securities are first
issued.
The preferred securities will be ready for delivery in book-entry form only
through The Depository Trust Company on or about [ ], 1999.
Litchfield has granted the underwriters a 30-day option to purchase up to
[ ] additional preferred securities to cover over-allotments, if any.
INVESTING IN THE PREFERRED SECURITIES INVOLVES CERTAIN RISKS WHICH ARE
DESCRIBED IN THE "RISK FACTORS" SECTION BEGINNING ON PAGE S-8 OF THIS PROSPECTUS
SUPPLEMENT. YOU SHOULD READ THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS CAREFULLY BEFORE YOU INVEST IN THE PREFERRED SECURITIES.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PER TRUST PREFERRED SECURITY TOTAL
------------------------------ -------------
<S> <C> <C>
Public Offering Price..................................... $ 10.00 $[ ]
Underwriting Commissions.................................. $ [] $[ ]
Proceeds to the trust..................................... $ $[ ]
</TABLE>
The trust will use all proceeds to purchase the junior subordinated
debentures. Litchfield will pay all underwriting discounts and commissions.
TUCKER ANTHONY CLEARY GULL
The date of this prospectus is [ ] , 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 3
ABOUT THIS PROSPECTUS SUPPLEMENT
You should rely only on the information contained or incorporated by
reference in this prospectus supplement or the accompanying prospectus. We have
not, and the underwriter has not, authorized anyone to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not, and the underwriter is not,
making an offer to sell these securities in any jurisdiction where the offer or
sale is not permitted. You should assume that the information contained in this
prospectus supplement or the accompanying prospectus as well as the information
we previously filed with the SEC and incorporated by reference herein, is
accurate only as of its respective date. Our business, financial condition,
results of operations and prospects may have changed since that date. Unless
otherwise noted, capitalized terms used in this prospectus supplement have the
same meanings as used in the accompanying prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
About This Prospectus Supplement............................ S-2
Summary Information Regarding This Offering................. S-3
Risk Factors................................................ S-8
Use of Proceeds............................................. S-14
Accounting Treatment........................................ S-14
Litchfield Financial Corporation............................ S-15
Capitalization.............................................. S-25
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. S-26
Litchfield Capital Trust I.................................. S-33
Description of the Preferred Securities..................... S-33
Description of the Preferred Securities Guarantee........... S-47
Description of the Junior Subordinated Debentures........... S-47
Relationship Between the Preferred Securities, the Junior
Subordinated Debentures and the Preferred Securities
Guarantee................................................. S-53
Certain Federal Income Tax Consequences..................... S-54
Underwriting................................................ S-59
PROSPECTUS
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Disclosure Regarding Forward-looking Statements............. 4
Litchfield Financial Corporation............................ 5
Use of Proceeds............................................. 5
The Trusts.................................................. 6
Description of the Preferred Securities..................... 10
Descriptions of the Preferred Securities Guarantees......... 11
Description of the Junior Subordinated Debt Securities...... 15
Plan of Distribution........................................ 22
Legal Matters............................................... 23
Experts..................................................... 23
</TABLE>
S-2
<PAGE> 4
SUMMARY INFORMATION REGARDING THIS OFFERING
The following information supplements, and should be read together with,
the information contained in other parts of this prospectus supplement and in
the accompanying prospectus. This summary highlights selected information
included elsewhere in this prospectus supplement and the accompanying prospectus
to help you understand the terms of the preferred securities. You should
carefully read this prospectus supplement and the accompanying prospectus,
including "Risk Factors" and the financial statements and notes to those
statements included or incorporated by reference, to fully understand the terms
of the preferred securities, as well as the tax and other considerations that
are important to you in making a decision about whether to invest in the
preferred securities.
THE TRUST
Litchfield Capital Trust I is a subsidiary of Litchfield and a statutory
business trust recently created under Delaware law. In connection with this
offering, the trust will sell its preferred securities to the public and its
common securities to Litchfield. The trust will use the proceeds from these
sales to buy an equivalent principal amount of [ ]% Series A Junior
Subordinated Debentures due June 30, 2019 issued by Litchfield. The preferred
securities and the junior subordinated debentures will have essentially the same
terms.
LITCHFIELD FINANCIAL CORPORATION
Litchfield is a diversified finance company that provides financing to
creditworthy borrowers for assets not typically financed by banks. Litchfield
provides this financing by making loans to businesses secured by consumer
receivables or other assets and by purchasing consumer loans.
Litchfield provides financing to rural land dealers, timeshare resort
developers and other finance companies secured by receivables. Litchfield also
purchases consumer loans consisting primarily of loans to purchasers of rural
and vacation properties and vacation ownership interests popularly known as
timeshare interests, and provides loans to dealers and developers for the
acquisition and development of rural land and timeshare resorts. In addition,
Litchfield purchases other loans, such as consumer home equity loans, mortgages
and construction loans and tax lien certificates, and provides financing to
other businesses secured by receivables or other assets.
The principal sources of Litchfield's revenues are:
- interest and fees on loans,
- gains on sales of loans and
- servicing and other income.
Gains on sales of loans are based on the difference between the allocated
cost basis of the assets sold and the proceeds received, which includes the fair
value of any assets or liabilities that are newly created as a result of the
transaction. Because a significant portion of Litchfield's revenues is comprised
of gains realized upon sales of loans, the timing of these sales has a
significant effect on Litchfield's results of operations.
TERMS OF THE PREFERRED SECURITIES
Distributions
If you purchase preferred securities, you will be entitled to receive
cumulative cash distributions at an annual rate of [ ]% of the $10
liquidation amount of each preferred security. Distributions will begin to
accumulate on and will be payable quarterly, in arrears, on June 30,
September 30, December 31 and March 31 of each year beginning June 30, 1999.
S-3
<PAGE> 5
Deferral of Distribution
Litchfield can defer interest payments on the junior subordinated
debentures for up to 20 consecutive quarterly periods unless an event of default
under the junior subordinated debentures has occurred and is continuing.
Litchfield cannot, however, defer interest payments beyond the maturity date of
the junior subordinated debentures, which is June 30, 2019. Additional interest
will accrue on any deferred interest payments at an annual rate of [ ]%, to
the extent permitted by law.
If Litchfield defers interest payments on the junior subordinated
debentures, the trust will also defer payment of distributions on the common and
preferred securities. During a deferral period, distributions will continue to
accumulate on the common and preferred securities at an annual rate of [ ]%
of the liquidation amount of $10 per common or preferred security. Also,
additional cash distributions will accumulate on any deferred distributions at
an annual rate of [ ]%, to the extent permitted by law.
Once Litchfield makes all interest payments due on the junior subordinated
debentures, including any additional interest, it can elect to defer interest
payments on the junior subordinated debentures again if no event of default
under the junior subordinated debentures has occurred and is continuing. This
deferral period, together with all previous and further extensions, may not
exceed 20 consecutive quarters.
During any period in which Litchfield defers interest payments on the
junior subordinated debentures, Litchfield will not be permitted, subject to
exceptions described on page S-50, to:
- pay a dividend or make any other payment or distribution on its capital
stock,
- redeem, purchase or acquire any of its capital stock,
- make an interest, principal or premium payment, or repurchase or redeem,
any of its debt securities that rank equal with or junior to the junior
subordinated debentures, or
- make any guarantee payments with respect to any guarantee of the debt
securities of any subsidiary that ranks equal with or junior to the
junior subordinated debentures.
Should Litchfield exercise its rights to defer payments of interest on the
junior subordinated debentures, you will be required to include accumulated
distributions in your gross income for United States federal income tax purposes
before you actually receive the related cash distributions.
Redemption
The trust will redeem all of the outstanding preferred securities when the
junior subordinated debentures are paid at maturity on June 30, 2019 or
otherwise become due. In addition, if Litchfield redeems any junior subordinated
debentures before their maturity, the trust will use the cash it receives on the
redemption of the junior subordinated debentures to redeem, on a pro rata basis,
preferred securities and common securities having an aggregate liquidation
amount equal to the aggregate principal amount of the junior subordinated
debentures redeemed.
Litchfield will have the right to redeem some or all of the junior
subordinated debentures before their maturity at 100% of their principal amount
plus accrued and unpaid interest to, but excluding, the date of redemption, on
one or more occasions any time on or after June 30, 2004.
Litchfield will also have the right to redeem the junior subordinated
debentures, in whole but not in part, at any time at 100% of their principal
amount, plus accrued and unpaid interest to, but excluding, the date of
redemption, if:
- certain changes in tax or investment company law occur each of which is a
"special event" and is more fully described on page S-36, and
- the junior subordinated debentures are redeemed within 90 days of the
occurrence of the special event.
S-4
<PAGE> 6
Preferred Securities Guarantee
Litchfield will fully and unconditionally guarantee the trust's payment
obligations with respect to the preferred securities to the extent described in
this prospectus supplement and the accompanying prospectus. Under the preferred
securities guarantee, Litchfield will guarantee the trust's payment obligations
only to the extent the trust has sufficient funds to make payments on the
preferred securities. If Litchfield does not make payments on the junior
subordinated debentures, the trust will not have sufficient funds to make
payments on the preferred securities. Litchfield's obligations under the
preferred securities guarantee are junior to its obligations to make payments on
all of its other liabilities, except as discussed elsewhere in this prospectus
supplement.
Distribution of Junior Subordinated Debentures
Litchfield has the right to dissolve the trust at any time. If Litchfield
decides to exercise its right to dissolve the trust, the trust will redeem the
preferred securities by distributing the junior subordinated debentures to you
and to Litchfield, as holder of the common securities, on a pro rata basis. If
the trust distributes the junior subordinated debentures, Litchfield will use
its best efforts to have the junior subordinated debentures listed on the Nasdaq
National Market or on such other exchange or automated quotation system as the
preferred securities are then listed.
Liquidation Amount
In the event the trust is liquidated and the junior subordinated debentures
are not distributed to you, you will generally be entitled to receive $10 per
preferred security plus an amount equal to any accumulated and unpaid
distributions on each preferred security to the date of payment.
Form of Preferred Securities
The preferred securities will be represented by one or more global
securities that will be deposited with and registered in the name of Cede & Co.,
as nominee for The Depository Trust Company. This means that you will not
receive a certificate for your preferred securities. Your beneficial interest in
the preferred securities will be evidenced by, and transfers thereof will be
effected only through, records maintained by the participants in The Depository
Trust Company. The preferred securities will be ready for delivery through The
Depository Trust Company on or about [ ], 1999.
Listing on the Nasdaq National Market
The trust has applied to have the preferred securities listed on the Nasdaq
National Market under the symbol "LTCHP". If approved for listing, we expect
trading to commence within 30 days after the preferred securities are first
issued. You should be aware that the listing of the preferred securities will
not necessarily ensure that a liquid trading market will develop or remain for
the preferred securities.
S-5
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Certain amounts in the 1994 through 1996 financial information have been
restated to conform to the 1997 and 1998 presentation.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
Interest and fees on loans......... $ 5,669 $ 11,392 $ 14,789 $ 19,374 $ 25,736
Gain on sale of loans.............. 4,847 5,161 7,331 8,564 10,691
Servicing and other income......... 459 908 1,576 1,753 2,379
---------- ---------- ---------- ---------- ----------
Total revenues.................. 10,975 17,461 23,696 29,691 38,806
---------- ---------- ---------- ---------- ----------
Expenses:
Interest expense................... 3,158 6,138 7,197 10,675 14,265
Salaries and employee benefits..... 1,776 2,798 2,824 3,399 4,806
Other operating expenses........... 1,164 2,120 3,147 3,480 3,834
Provision for loan losses.......... 559 890 1,954 1,400 1,532
---------- ---------- ---------- ---------- ----------
Total expenses.................. 6,657 11,946 15,122 18,954 24,437
---------- ---------- ---------- ---------- ----------
Income before income taxes and
extraordinary item................. 4,318 5,515 8,574 10,737 14,369
Provision for income taxes........... 1,619 2,066 3,301 4,134 5,537
---------- ---------- ---------- ---------- ----------
Income before extraordinary item..... 2,699 3,449 5,273 6,603 8,832
Extraordinary item................... (126) -- -- (220) (77)
---------- ---------- ---------- ---------- ----------
Net income......................... $ 2,573 $ 3,449 $ 5,273 $ 6,383 $ 8,755
========== ========== ========== ========== ==========
Basic per common share amounts:
Income before extraordinary item... $ .66 $ .80 $ .97 $ 1.19 $ 1.41
Extraordinary item................. (.03) -- -- (.04) (.01)
---------- ---------- ---------- ---------- ----------
Net income per share............... $ .63 $ .80 $ .97 $ 1.15 $ 1.40
========== ========== ========== ========== ==========
Basic weighted average number of
shares outstanding................. 4,116,684 4,315,469 5,441,636 5,572,465 6,273,638
Diluted per common share amounts:
Income before extraordinary item... $ .63 $ .76 $ .93 $ 1.12 $ 1.34
Extraordinary item................. (.03) -- -- (.04) (.01)
---------- ---------- ---------- ---------- ----------
Net income per share............... $ .60 $ .76 $ .93 $ 1.08 $ 1.33
========== ========== ========== ========== ==========
Diluted weighted average number of
shares outstanding................. 4,282,884 4,524,607 5,682,152 5,909,432 6,604,367
Cash dividends declared per common
share.............................. $ .03 $ .04 $ .05 $ .06 $ .07
OTHER STATEMENT OF INCOME DATA:
Income before extraordinary item as a
percentage of revenues............. 24.6% 19.8% 22.3% 22.3% 22.8%
Ratio of EBITDA to interest
expense............................ 3.31 2.44 2.90 2.17 2.13
Ratio of earnings to fixed charges... 2.37 1.90 2.19 2.01 2.01
Return on average assets (before
extraordinary item)................ 4.6% 3.7% 4.0% 3.8% 3.7%
Return on average equity (before
extraordinary item)................ 17.2% 16.6% 13.3% 14.1% 13.2%
</TABLE>
S-6
<PAGE> 8
SUMMARY CONSOLIDATED FINANCIAL INFORMATION -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................ $ 63,487 $112,459 $152,689 $186,790 $293,882
Loans held for sale (net of
allowance)........................ 11,094 14,380 12,260 16,366 19,750
Other loans (net of allowance)...... 15,790 33,613 79,996 86,307 191,292
Retained interests in loan sales
(net of recourse obligation)...... 11,996 22,594 28,912 30,299 28,883
Secured debt........................ 5,823 9,836 43,727 5,387 50,521
Unsecured debt...................... 29,896 47,401 46,995 105,347 134,588
Stockholders' equity................ 16,610 37,396 42,448 52,071 82,094
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Loans purchased and originated...... $ 59,798 $121,046 $133,750 $184,660 $375,292
Loans sold.......................... 40,116 65,115 54,936 98,747 144,762
Loans participated.................. -- -- -- 6,936 3,569
Serviced Portfolio.................. 105,013 176,650 242,445 304,102 466,912
Loans serviced for others........... 72,731 111,117 129,619 179,790 238,132
Dealer/developer reserves........... 6,575 9,644 10,628 10,655 9,979
Allowance for loan losses (includes
estimated recourse obligation for
loans sold)....................... 1,264 3,715 4,528 5,877 6,707
Allowance ratio..................... 1.20% 2.10% 1.87% 1.93% 1.44%
Delinquency ratio................... .93% 1.73% 1.34% 1.20% 0.95%
Net charge-off ratio................ .38% .67% .94% .74% .58%
Non-performing asset ratio.......... 1.02% 1.35% 1.57% 1.03% 0.84%
</TABLE>
- ---------------
The information shown above is explained further by the following:
- The ratio of EBITDA to interest expense is required to be calculated for
the twelve month period immediately preceding each calculation date,
pursuant to the terms of the indentures to which Litchfield is subject.
EBITDA is defined as earnings before deduction of taxes, depreciation,
amortization, and interest expense, but after deduction for any
extraordinary item.
- For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before income taxes and extraordinary items
and fixed charges. Fixed charges consist of interest charges and the
amortization of debt expense.
- The Serviced Portfolio consists of the principal amount of loans serviced
by or on behalf of Litchfield, except loans participated without recourse
to Litchfield.
- The allowance ratio is the allowances for loan losses divided by the
amount of the Serviced Portfolio.
- The delinquency ratio is the amount of delinquent loans divided by the
amount of the Serviced Portfolio. Delinquent loans are those which are 31
days or more past due which are not covered by dealer/developer reserves
or guarantees and not included in other real estate owned.
- The net charge-off ratio is determined by dividing the amount of net
charge-offs for the period by the average Serviced Portfolio for the
period.
- The non-performing asset ratio is determined by dividing the sum of the
amount of those loans which are 91 days or more past due and other real
estate owned by the amount of the Serviced Portfolio.
S-7
<PAGE> 9
RISK FACTORS
Your investment in the preferred securities will involve some risks. You
should carefully consider the following discussion of risks and the other
information included or incorporated by reference in this prospectus supplement
and the accompanying prospectus before deciding whether an investment in the
preferred securities is appropriate for you.
RISK FACTORS RELATING TO THE PREFERRED SECURITIES
LITCHFIELD'S OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBENTURES ARE
SUBORDINATED TO ITS OTHER OBLIGATIONS.
Litchfield's obligations under the junior subordinated debentures are
unsecured and will rank junior in priority of payment to its senior debt, as
more fully described on pages 17, 18 and 19 of the accompanying prospectus. This
means that Litchfield cannot make any payments of principal, including
redemption payments, or interest on the junior subordinated debentures if it
defaults on a payment on its senior debt. In the event of the bankruptcy,
liquidation or dissolution of Litchfield, its assets would be available to pay
obligations under the junior subordinated debentures only after all payments had
been made on its senior debt. As of December 31, 1998, Litchfield had
approximately $185,109,000 of senior debt. Also, the junior subordinated
debentures will be effectively subordinated to all indebtedness and other
obligations, including trade payables of Litchfield. As of December 31, 1998,
the indebtedness and other obligations of Litchfield totaled approximately
$211,788,000.
The preferred securities, the preferred securities guarantee and the junior
subordinated debentures do not limit the ability of Litchfield and its
subsidiaries to incur additional indebtedness, including indebtedness that ranks
senior in priority of payment to the junior subordinated debentures and the
preferred securities guarantee.
THE PREFERRED SECURITIES GUARANTEE ONLY GUARANTEES PAYMENTS IF THE TRUST HAS
CASH AVAILABLE.
The ability of the trust to pay distributions on the preferred securities,
to pay the redemption price of the preferred securities and to pay the
liquidation amount of each preferred security depends upon Litchfield making the
related payments on the junior subordinated debentures when due.
If Litchfield defaults on its obligations to pay principal or interest on
the junior subordinated debentures, the trust will not have sufficient funds to
pay distributions, the redemption price or the liquidation amount of each
preferred security. In those circumstances, you will not be able to rely upon
the preferred securities guarantee for payment of these amounts. Instead, you
may:
- directly sue Litchfield or seek other remedies to collect your pro rata
share of payments owed; or
- rely on the Property Trustee to enforce the trust's rights under the
junior subordinated debentures.
LITCHFIELD'S ABILITY TO DEFER INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED
DEBENTURES HAS TAX CONSEQUENCES FOR YOU AND MAY AFFECT THE MARKET PRICE OF THE
PREFERRED SECURITIES.
Litchfield can, on one or more occasions, defer interest payments on the
junior subordinated debentures for up to 20 consecutive quarterly periods unless
an event of default under the junior subordinated debentures has occurred and is
continuing. Litchfield, however, cannot defer interest payments beyond the
maturity date of the junior subordinated debentures, which is June 30, 2019. If
Litchfield defers interest payments on the junior subordinated debentures, the
trust will also defer payment of distributions on the preferred and common
securities. During a deferral period, distributions will continue to accumulate
on the preferred and common securities. Also, additional distributions will
accumulate on any deferred distributions at an annual rate of [ ]%, to the
extent permitted by law.
If Litchfield exercises its right to defer payments of interest on the
junior subordinated debentures, you will be required to accrue interest income,
as original issue discount, the deferred stated interest allocable to your share
of preferred securities for United States federal income tax purposes. As a
result,
S-8
<PAGE> 10
you will include this income in gross income for United States federal income
tax purposes before you receive any cash distributions. In addition, you will
not receive cash from the trust related to this income if you dispose of your
preferred securities prior to the record date on which distributions of these
amounts are made. You should also consult with your own tax advisor about the
tax consequences of an investment in the preferred securities.
Litchfield does not currently intend to defer interest payments on the
junior subordinated debentures. However, if Litchfield exercises its right to
defer interest payments in the future, the market price of the preferred
securities may not fully reflect the value of accrued but unpaid interest on the
junior subordinated debentures. If you sell preferred securities during an
interest deferral period, you may not receive the same return on investment as
someone who continues to hold preferred securities. In addition, the existence
of Litchfield's right to defer interest payments on the junior subordinated
debentures could make the market price for the preferred securities more
volatile than other securities that are not subject to these rights.
THE TRUST MAY REDEEM THE PREFERRED SECURITIES IF CERTAIN TAX CHANGES OCCUR OR IF
THE TRUST IS REQUIRED TO REGISTER AS AN "INVESTMENT COMPANY."
If a special event, as more fully described on page S-36, occurs and is
continuing, Litchfield has the right to redeem all of the junior subordinated
debentures at a redemption price equal to 100% of the principal amount plus
accrued and unpaid interest to, but excluding, the redemption date. If
Litchfield redeems the junior subordinated debentures when a special event
occurs, the trust will use the cash it receives from the redemption of the
junior subordinated debentures to redeem the preferred and common securities.
THE PREFERRED SECURITIES MAY BE REDEEMED ON OR AFTER JUNE 30, 2004 AT
LITCHFIELD'S OPTION.
Litchfield may redeem the junior subordinated debentures at its option, in
whole or in part, at any time on or after June 30, 2004. The redemption price
will equal 100% of the principal amount to be redeemed plus any accrued and
unpaid interest to, but excluding, the redemption date. You should assume that
Litchfield will exercise its redemption option if it is able to refinance the
junior subordinated debentures at a lower interest rate or if it is otherwise in
Litchfield's interest to redeem the junior subordinated debentures. If this
redemption occurs, the trust will use the cash it receives from the redemption
of the junior subordinated debentures to redeem an equivalent amount of
preferred and common securities on a pro rata basis.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES MAY BE A TAXABLE EVENT.
Litchfield has the right to terminate the trust at any time. If Litchfield
decides to exercise its right to terminate the trust, the trust will redeem the
preferred and common securities by distributing the junior subordinated
debentures to you and Litchfield, as holder of the common securities, on a pro
rata basis.
Under current United States federal income tax laws, a distribution of
junior subordinated debentures on the dissolution of the trust would not be a
taxable event to you. Nevertheless, if the trust is classified for United States
federal income tax purposes as an association taxable as a corporation at the
time it is dissolved, the distribution of the junior subordinated debentures
would be a taxable event to you. If there is a change in law, a distribution of
junior subordinated debentures on the dissolution of the trust could also be a
taxable event to you.
Litchfield does not currently intend to terminate the trust and distribute
the junior subordinated debentures. However, there are no restrictions on its
ability to do so at any time. Litchfield anticipates that it would consider
exercising this right if expenses associated with maintaining the trust were
substantially greater than currently expected, such as if a special event
occurred. Litchfield cannot predict other circumstances under which this right
would be exercised.
S-9
<PAGE> 11
Litchfield cannot predict the market prices for the junior subordinated
debentures that may be distributed. Accordingly, the junior subordinated
debentures that you receive on a distribution, or the preferred securities you
hold pending a distribution, may trade at a discount to the price that you paid
to purchase the preferred securities.
Because you may receive junior subordinated debentures, you should make an
investment decision with regard to the junior subordinated debentures in
addition to the preferred securities. You should carefully review all the
information regarding the junior subordinated debentures contained in this
prospectus supplement and the accompanying prospectus.
TRADING PRICES OF THE PREFERRED SECURITIES MAY NOT REFLECT THE VALUE OF ACCRUED
BUT UNPAID INTEREST.
The preferred securities constitute a new issue of securities with no
established trading market. The preferred securities may trade at a price that
does not fully reflect the value of accrued but unpaid interest with respect to
the underlying junior subordinated debentures. If you dispose of your preferred
securities between record dates for payments of distributions, you will be
required to include accrued but unpaid interest on the junior subordinated
debentures through the date of disposition in income as ordinary income. You
also must add that amount to your adjusted tax basis in your pro rata share of
the underlying junior subordinated debentures deemed disposed of. Accordingly,
you will recognize a capital loss to the extent the selling price, which may not
fully reflect the value of accrued but unpaid interest, is less than your
adjusted tax basis, which will include accrued but unpaid interest. Subject to
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
AN ACTIVE MARKET FOR THE PREFERRED SECURITIES MAY NOT DEVELOP.
Prior to this offering, there has been no public market for the preferred
securities. The underwriter currently plans to make a market in the preferred
securities. However, Litchfield cannot assure you the underwriter will engage in
these activities or that an active trading market for the preferred securities
will develop or be sustained. If this market develops, the preferred securities
could trade at prices that may be higher or lower than their offering price
depending upon many factors, including prevailing interest rates, Litchfield's
operating results and the markets for similar securities.
YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of preferred securities, you will have limited voting rights
relating only to the modification of the preferred securities and, in some
circumstances, the exercise of the trust's rights as holder of the junior
subordinated debentures and the preferred securities guarantee. Only Litchfield
can replace or remove any of the trustees or increase or decrease the number of
trustees.
RISK FACTORS RELATING TO LITCHFIELD
LITCHFIELD'S BUSINESS IS SUBJECT TO VARIOUS BUSINESS RISKS.
The level of Litchfield's revenues depends on demand for the type of loans
originated, purchased, sold and serviced by Litchfield from both potential
borrowers and investors. Future declines in real estate values, changes in
prevailing interest rates and changes in the availability of attractive returns
on alternative investments each could make loans of the type originated,
purchased, sold and serviced by Litchfield less attractive to borrowers and
investors.
LITCHFIELD HAS A CONTINUOUS NEED TO RAISE CAPITAL TO FINANCE GROWTH.
Litchfield has a constant need for working capital to fund the growth of
its business and, as a result, generally has experienced negative cash flows
from operations. Historically, Litchfield has funded any negative cash flows
from operations by borrowing under secured lines of credit and issuing long-term
debt and equity securities. There can be no assurance that Litchfield will
continue to be able to obtain financing or raise capital on terms satisfactory
to Litchfield. Litchfield's ability to raise capital could be harmed by
S-10
<PAGE> 12
adverse conditions in the capital and credit markets, as well as by Litchfield's
performance. To the extent Litchfield cannot raise additional funds, it could
materially harm its operations and its ability to repay the junior subordinated
debentures.
A GENERAL ECONOMIC SLOWDOWN COULD ADVERSELY EFFECT LITCHFIELD'S BUSINESS.
The business risks associated with Litchfield's business become more acute
in an economic slowdown. That environment is generally characterized by
decreased demand for rural and vacation real estate and timeshare interests and
declining real estate values in many areas of the country. Delinquencies,
foreclosures and loan losses generally increase during economic slowdowns or
recessions, and any future slowdowns could harm the future operations of
Litchfield.
INCREASES IN INTEREST RATES COULD CAUSE LITCHFIELD'S VARIABLE RATE LIABILITIES
TO EXCEED ITS VARIABLE RATE ASSETS.
Litchfield's interest and fees on loans, gain on sale of loans and interest
expense are affected by changes in interest rates. Litchfield could be harmed by
interest rate increases if its variable rate liabilities exceed its variable
rate assets or if the rates on its variable rate liabilities increase sooner or
to a greater extent than the rates on its variable rate assets.
LITCHFIELD'S LOANS ARE SUBJECT TO DELINQUENCY AND DEFAULT RISK.
General downturns in the economy and other factors beyond Litchfield's
control may increase Litchfield's delinquency and default rates. Litchfield's
acquisition and development loans and, to a lesser extent, its hypothecation
loans have a greater concentration of credit risk due to their larger size and,
in the case of acquisition and development loans, their development and
marketing risk.
Litchfield's timeshare interest business is subject to some risks
associated with timeshare interest ownership. Although individual timeshare
interest owners are obligated to make payments under their notes irrespective of
any defect in, damage to, or change in conditions of the vacation resort, or of
any breach of contract by the property owners association to provide certain
services to the timeshare interest borrowers, or of any other loss of benefits
of ownership of their unit weeks, any of this type of material defect, damage,
change, breach of contract, or loss of benefits is likely to result in a delay
in payment or default by a substantial number of the borrowers whose timeshare
interests are affected. The amounts realized on foreclosure and resale or
liquidation of timeshare interests are generally significantly less than the
amounts realized on other types of defaulted loans.
PREPAYMENTS AND DEFAULTS IN EXCESS OF PROJECTED AMOUNTS COULD REDUCE EARNINGS.
A significant portion of Litchfield's revenues historically has been
comprised of gains on sales of loans. The gains are recorded in Litchfield's
revenues and on its balance sheet as retained interests on loan sales at the
time of sale, and the amount of gains recorded is based in part on management's
estimates of future prepayment and default rates and other considerations in
light of then-current conditions. If actual prepayments occur more quickly than
was projected at the time loans were sold, as can occur when interest rates
decline, interest would be less than expected and earnings would be charged in
the current period. If actual defaults are greater than estimated, charge-offs
would exceed previously estimated amounts and earnings would be charged in the
current period.
LITCHFIELD IS MAKING LARGER LOANS OF TYPES THAT ENTAIL A GREATER CONCENTRATION
OF CREDIT RISK.
Litchfield has increased the number and average principal amount of its
hypothecation and acquisition and development loans. Acquisition and development
loans are larger commercial loans to land dealers and resort developers and,
consequently, have a greater concentration of credit risk than Litchfield's
purchased loans. Acquisition and development loans for timeshare resorts are
also subject to greater risk because their repayment depends on the successful
completion of the development of the resort and the subsequent successful sale
of a substantial portion of the resort's timeshare interests.
S-11
<PAGE> 13
Litchfield has historically made hypothecation loans to land dealers and
resort developers secured by land loans and timeshare loans, respectively.
Hypothecation loans are commercial loans that have significantly larger balances
than Litchfield's purchased loans and, consequently, have a greater
concentration of credit risk which is only partially offset by the lesser
concentration of credit risk of the underlying collateral. Litchfield's five
largest hypothecation loans range from $10.8 million to $21.5 million.
In addition, Litchfield has expanded its marketing of hypothecation loans
to include loans to other finance companies secured by other types of
collateral. These loans may be subject to additional risk because Litchfield has
relatively less experience with these other types of collateral.
LITCHFIELD'S RESULTS MAY FLUCTUATE SIGNIFICANTLY FROM ONE QUARTER TO THE NEXT.
Since gains on sales of loans are a significant portion of Litchfield's
revenues, the timing of loan sales has a significant effect on Litchfield's
quarterly results of operations, and the results of one quarter are not
necessarily indicative of results for the next quarter.
LITCHFIELD HAS COMMITTED TO GUARANTEE OR REPURCHASE SOME OF THE LOANS IT SELLS
TO INVESTORS.
In connection with some of Litchfield's whole loan sales to investors,
Litchfield has committed to repurchase loans that become 90 days past due. These
contingent obligations are subject to various terms and conditions, including
limitations on the amounts of loans which must be repurchased. Litchfield has
also guaranteed payment of mortgage loans included in some of its mortgage
securitization programs. As of December 31, 1998, Litchfield had outstanding
contingent repurchase obligations in the aggregate amount of approximately $12.8
million. In addition, when Litchfield sells mortgage loans through mortgage
securitization programs, Litchfield commits to replace any loans that do not
conform to representations and warranties included in the operative loan sale
documents.
LITCHFIELD'S COMPETITORS MAY HAVE GREATER FINANCIAL RESOURCES THAN LITCHFIELD.
Some of Litchfield's competitors may have greater financial resources than
Litchfield.
CHANGES IN GOVERNMENTAL REGULATIONS MAY RESTRICT LITCHFIELD'S ABILITY TO
ORIGINATE OR SELL LOANS, AND MAY FURTHER LIMIT OR RESTRICT THE AMOUNT OF
INTEREST AND OTHER CHARGES EARNED UNDER LITCHFIELD'S LOANS.
The operations of Litchfield are subject to extensive regulation by
federal, state and local government authorities and are subject to various laws
and judicial and administrative decisions imposing various requirements and
restrictions, including among other things:
- regulating credit granting activities;
- establishing maximum interest rates and finance charges;
- requiring disclosures to customers;
- governing secured transactions and setting collection;
- repossession and claims handling procedures and;
- other trade practices.
In addition, some states have enacted legislation which restricts the
subdivision of rural land, and numerous states have enacted regulations in
connection with time share interests.
S-12
<PAGE> 14
More restrictive laws, rules and regulations or interpretations thereof may be
adopted in the future which could:
- make compliance much more difficult or expensive;
- restrict Litchfield's ability to originate or sell loans;
- further limit or restrict the amount of interest and other charges earned
under loans originated or purchased by Litchfield; or
- otherwise adversely affect the business or prospects of Litchfield.
LITCHFIELD MAY INCUR SIGNIFICANT LIABILITY FOR THE REMOVAL OF HAZARDOUS
SUBSTANCES OR WASTE THAT COULD BE DISCOVERED ON PROPERTIES LITCHFIELD ACQUIRES
BY FORECLOSURE.
In the course of its business, Litchfield has acquired, and may in the
future acquire, properties securing defaulted loans. Although substantially all
of Litchfield's land loans are secured by mortgages on rural land, there is a
risk that hazardous substances or waste could be discovered on these properties
after foreclosure by Litchfield. In that event, Litchfield might be required to
remove these substances from the affected properties at its sole cost and
expense. Litchfield cannot assure you that the cost of the removal would not
substantially exceed the value of the affected properties or the loans secured
by the properties, that it would have adequate remedies against the prior owner
or other responsible parties, or that it could sell the affected properties
either before or after any removal.
LITCHFIELD DEPENDS ON ITS SENIOR MANAGEMENT.
Litchfield's success depends upon the continued contributions of its senior
management. The loss of services of some of Litchfield's executive officers
could harm Litchfield's business. Litchfield maintains key man insurance on the
life of one member of its senior management, Chief Executive Officer and
President, Richard A. Stratton.
LITCHFIELD'S SYSTEMS MAY NOT BE YEAR 2000 COMPLIANT.
Litchfield uses and depends on a significant number of computer software
programs and operating systems to conduct its business. Litchfield believes that
substantially all of its operating systems are year 2000 compliant. To the
extent that Litchfield relies on outside software vendors, year 2000 compliance
matters will not be within Litchfield's direct control. In addition, Litchfield
has relationships with vendors, customers and other third parties that rely on
computer software that may not be year 2000 compliant. There can be no assurance
that year 2000 compliance failures by Litchfield and such third parties will not
harm Litchfield's performance.
S-13
<PAGE> 15
USE OF PROCEEDS
The trust will invest all of the proceeds from the sale of the preferred
securities in junior subordinated debentures issued by Litchfield. Litchfield
anticipates that the net proceeds from the sale of the junior subordinated
debentures will be used to support its business activities, as capital to
support senior indebtedness and for other general corporate purposes.
ACCOUNTING TREATMENT
For financial reporting purposes, the trust will be treated as a subsidiary
of Litchfield and, accordingly, the accounts of the trust will be included in
the financial statements of Litchfield. The preferred securities will be
reflected in the consolidated balance sheets of Litchfield as "Litchfield
Obligated Mandatorily Redeemable Preferred Securities of Trust Subsidiaries
Holding Solely Debentures of Litchfield" and appropriate disclosures about the
preferred securities, the preferred securities guarantee and the junior
subordinated debentures will be included in Litchfield's notes to consolidated
financial statements.
S-14
<PAGE> 16
LITCHFIELD FINANCIAL CORPORATION
OVERVIEW
Litchfield purchases consumer loans (the "Purchased Loans") consisting
primarily of loans to purchasers of rural and vacation properties ("Land Loans")
and vacation ownership interests popularly known as timeshare interests ("VOI
Loans"). Litchfield also provides financing to rural land dealers, timeshare
resort developers and other finance companies secured by receivables
("Hypothecation Loans") and to dealers and developers for the acquisition and
development of rural land and timeshare resorts ("A&D Loans"). In addition,
Litchfield purchases other loans, such as consumer home equity loans, mortgages
and construction loans and tax lien certificates, and provides financing to
other businesses secured by receivables or other assets ("Other Loans").
BUSINESS STRATEGY
Litchfield was founded in November 1988. Litchfield's strategy has been to
build its serviced portfolio (the "Serviced Portfolio") consisting of the
principal amount of loans serviced by or on behalf of Litchfield (except loans
participated without recourse to Litchfield) by acquiring loan portfolios from
rural land dealers, resort developers and financial institutions and by
providing loans to such dealers and developers and other businesses secured by
consumer receivables. Litchfield also provides A&D Loans in order to have the
opportunity to finance additional receivables generated by these A&D Loans. As
part of its business and financing strategy, Litchfield seeks niche markets
where its underwriting expertise and ability to provide value-added services
enable it to distinguish itself from its competitors and earn an attractive rate
of return on its invested capital. Initially, Litchfield pursued this strategy
by financing consumer Land Loans through a land dealer network and portfolio
acquisitions. Subsequently, Litchfield extended its strategy to financing
consumer VOI Loans and providing Hypothecation Loans to land dealers and resort
developers. In 1995, Litchfield significantly expanded its financing of VOI
Loans when it acquired approximately $41.5 million of VOI related loans and
assets as part of its purchase of the Government Employees Financial Corporation
("GEFCO") portfolio. In 1997, Litchfield expanded its financing of Hypothecation
Loans to other finance companies ("Financial Services Loans") secured by other
types of collateral. Litchfield expects to continue to expand its Financial
Services lending. These loans may be larger than Litchfield's average
Hypothecation Loans and may provide Litchfield an option to take an equity
position in the borrower. Litchfield's objective is to identify other lending
opportunities or lines of business to diversify its portfolio as it did with VOI
Loans and Hypothecation Loans.
Management believes that the marketing and operating strategies implemented
by Litchfield have enabled it to provide financing to parties whose needs have
been historically underserved in a highly fragmented and inefficient market. In
doing so, Litchfield has increased its earnings per share during each of its
full years of operations.
CHARACTERISTICS OF THE SERVICED PORTFOLIO, LOAN PURCHASES AND ORIGINATIONS
The following table shows the growth in the diversity of the Serviced
Portfolio from primarily Purchased Loans to a mix of Purchased Loans,
Hypothecation Loans, A&D Loans and Other Loans:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1994 1995 1996 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Purchased Loans............................ 85.3% 81.6% 67.1% 56.6% 38.4%
Hypothecation Loans........................ 9.0 12.5 20.7 26.9 35.2
A&D Loans.................................. 3.3 3.1 8.7 13.7 11.2
Other Loans................................ 2.4 2.8 3.5 2.8 15.2
----- ----- ----- ----- -----
Total............................ 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
S-15
<PAGE> 17
The following table shows the growth in the diversity of Litchfield's
originations from primarily Purchased Loans to a mix of Purchased Loans,
Hypothecation Loans, A&D Loans and Other Loans:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1994 1995 1996 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Purchased Loans............................ 67.6% 71.4% 49.9% 30.3% 14.9%
Hypothecation Loans........................ 22.2 20.9 29.6 37.1 48.6
A&D Loans.................................. 6.0 3.1 14.4 24.0 10.2
Other Loans................................ 4.2 4.6 6.1 8.6 26.3
----- ----- ----- ----- -----
Total............................ 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>
(1) Purchased Loans
Litchfield provides indirect financing to consumers through a large number
of experienced land dealers and resort developers from which it regularly
purchases Land and VOI Loans. The land dealers and resort developers make loans
to consumers generally using Litchfield's standard forms and subject to
Litchfield's underwriting criteria. Litchfield then purchases such loans from
the land dealer or resort developer on an individually approved basis in
accordance with its credit guidelines.
Each land dealer and resort developer from whom Litchfield purchases loans
is interviewed by Litchfield and approved by its credit committee. Management
evaluates each land dealer's and resort developer's experience, financial
statements and credit references and inspects a substantial portion of the land
dealer's and resort developer's inventory of land or VOIs prior to approval of
loan purchases.
In order to enhance the creditworthiness of loans purchased from land
dealers and resort developers, Litchfield typically requires land dealers and
resort developers to guarantee payment of the loans and typically retains a
portion of the amount payable by Litchfield to each land dealer and resort
developer on the purchase of the loan. The retained portion, or reserve, is
released to the land dealer or resort developer as the related loan is repaid.
Prior to purchasing Land or VOI Loans, Litchfield evaluates the credit and
payment history of each borrower in accordance with its underwriting guidelines,
performs borrower interviews on a sample of loans, reviews the documentation
supporting the loans for completeness and obtains an appropriate opinion from
local legal counsel. Litchfield purchases only those loans which meet its credit
standards.
Litchfield also purchases portfolios of seasoned loans primarily from land
dealers and resort developers. The land dealers or resort developers generally
guarantee the loans sold and Litchfield generally withholds a reserve as
described above. Management believes that the portfolio acquisition program is
attractive to land dealers and resort developers because it provides them with
liquidity to purchase additional inventory. Litchfield also purchases portfolios
of seasoned loans from financial institutions and others. Sellers generally do
not guarantee such loans, but estimated loan losses are considered in
establishing the purchase price.
In evaluating such seasoned portfolios, Litchfield conducts its normal
review of the borrower's documentation, payment history and underlying
collateral. However, Litchfield may not always be able to reject individual
loans.
Litchfield's portfolio of Purchased Loans is secured by property located in
39 states.
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<PAGE> 18
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF LOANS
------------------------------------
DECEMBER 31,
------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Southwest......................................... 19% 16% 26% 30% 32%
South............................................. 37 31 31 31 30
West.............................................. 3 20 20 17 19
Mid-Atlantic...................................... 16 16 10 10 8
Northeast......................................... 25 17 13 12 11
--- --- --- --- ---
Total................................... 100% 100% 100% 100% 100%
=== === === === ===
</TABLE>
a. Land Loans
Dealers from whom Litchfield purchases Land Loans are typically
closely-held firms with annual revenues of less than $3.0 million. Dealers
generally purchase large rural tracts (generally 100 or more acres) from farmers
or other owners and subdivide the property into one to twenty acre parcels for
resale to consumers. Generally, the subdivided property is not developed
significantly beyond the provision of graded access roads. In recreational
areas, sales are made primarily to urban consumers who wish to use the property
for a vacation or retirement home or for recreational purposes such as fishing,
hunting or camping. In other rural areas, sales are more commonly made to
persons who will locate a manufactured home on the parcel. During the year ended
December 31, 1998, Litchfield acquired approximately $53.7 million of Land
Loans. The aggregate principal amount of Land Loans purchased from individual
dealers during the year ended December 31, 1998 varied from a low of
approximately $9,000 to a high of approximately $4.7 million. As of December 31,
1998, the five largest dealers accounted for approximately 20.6% of the
principal amount of the Land Loans in the Serviced Portfolio, and no single
dealer accounted for more than 5.4%.
As of December 31, 1998, 34.3% of the Serviced Portfolio consisted of Land
Loans with an average principal balance of approximately $13,100. The following
table sets forth as of December 31, 1998, the distribution of Land Loans in
Litchfield's Serviced Portfolio:
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
PRINCIPAL PRINCIPAL NUMBER OF NUMBER OF
PRINCIPAL BALANCE AMOUNT AMOUNT LOANS LOANS
- ----------------- ------------ ------------- --------- -------------
<S> <C> <C> <C> <C>
Less than $10,000................ $ 28,936,000 18.1% 5,581 45.7%
$10,000-$19,999.................. 61,138,000 38.2 4,287 35.1
$20,000 and greater.............. 70,024,000 43.7 2,343 19.2
------------ ----- ------ -----
Total.................. $160,098,000 100.0% 12,211 100.0%
============ ===== ====== =====
</TABLE>
As of December 31, 1998, the weighted average interest rate of the Land
Loans included in Litchfield's Serviced Portfolio was 12.0% and the weighted
average remaining maturity was 12.0 years. The following table sets forth as of
December 31, 1998 the distribution of interest rates payable on the Land Loans:
<TABLE>
<CAPTION>
PERCENTAGE OF
PRINCIPAL PRINCIPAL
INTEREST RATE AMOUNT AMOUNT
- ------------- ------------ -------------
<S> <C> <C>
Less than 12.0%.......................................... $ 55,332,000 34.6%
12.0% - 13.9%............................................ 81,256,000 50.7
14.0% and greater........................................ 23,510,000 14.7
------------ -----
Total.......................................... $160,098,000 100.0%
============ =====
</TABLE>
As of December 31, 1998, Litchfield's Land Loan borrowers resided in 50
states, the District of Columbia and ten territories or foreign countries.
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<PAGE> 19
b. VOI Loans
Litchfield purchases VOI Loans from various resort developers. Litchfield
generally targets small to medium size resorts with completed amenities and
established property owners associations. These resorts participate in programs
that permit purchasers of VOIs to exchange their timeshare intervals for
timeshare intervals in other resorts around the world. During the year ended
December 31, 1998, Litchfield acquired approximately $2.4 million of VOI Loans.
As of December 31, 1998, the five largest developers accounted for approximately
35.1% of the principal amount of the VOI Loans in the Serviced Portfolio, and no
single developer accounted for more than 9.4%.
As of December 31, 1998, 4.1% of the Serviced Portfolio consisted of VOI
Loans, with an average principal balance of approximately $3,400. The following
table sets forth as of December 31, 1998 the distribution of VOI Loans:
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
PRINCIPAL PRINCIPAL NUMBER OF NUMBER OF
PRINCIPAL BALANCE AMOUNT AMOUNT LOANS LOANS
----------------- ----------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Less than $4,000.................. $ 7,519,000 39.3% 3,615 64.8%
$4,000 - $5,999................... 6,530,000 34.2 1,316 23.6
$6,000 and greater................ 5,070,000 26.5 649 11.6
----------- ----- ----- ------
Total................... $19,119,000 100.0% 5,580 100.0%
=========== ===== ===== ======
</TABLE>
As of December 31, 1998, the weighted average interest rate of the VOI
Loans included in Litchfield's Serviced Portfolio was 14.6% and the weighted
average remaining maturity was 3.7 years. The following table sets forth as of
December 31, 1998 the distribution of interest rates payable on the VOI Loans:
<TABLE>
<CAPTION>
PERCENTAGE OF
PRINCIPAL PRINCIPAL
INTEREST RATE AMOUNT AMOUNT
- ------------- ----------- -------------
<S> <C> <C>
Less than 14.0%........................................... $ 8,147,000 42.6%
14.0% - 15.9%............................................. 4,482,000 23.4
16.0% and greater......................................... 6,490,000 34.0
----------- -----
Total........................................... $19,119,000 100.0%
=========== =====
</TABLE>
As of December 31, 1998, Litchfield's VOI borrowers resided in 50 states,
the District of Columbia and four territories or foreign countries.
(2) Hypothecation Loans
Litchfield extends Hypothecation Loans to land dealers and resort
developers and other businesses secured by receivables. Litchfield has expanded
its marketing of Hypothecation Loans to include loans to other finance companies
secured by other types of collateral. These loans may be larger than
Litchfield's average Hypothecation Loans and may provide Litchfield with an
option to take an equity position in the borrower. During the year ended
December 31, 1998, Litchfield extended or acquired approximately $182.2 million
of Hypothecation Loans, of which $26.5 million, or 14.5%, were secured by Land
Loans, $84.2 million, or 46.2%, were secured by VOI Loans and $71.5 million, or
39.3%, were secured by other types of collateral such as tax lien certificates,
accounts receivable and mortgages.
Litchfield typically extends Hypothecation Loans based on advance rates of
75% to 90% of the eligible receivables which serve as collateral. Litchfield's
Hypothecation Loans are typically made at variable rates based on the prime rate
of interest plus 2% to 4%. As of December 31, 1998, Litchfield had $164.5
million of Hypothecation Loans outstanding, none of which were 31 days or more
past due. During the three months ended March 31, 1998, Litchfield acquired a
$17.0 million participation interest in a Hypothecation Loan from another
financial institution. As planned, in May of 1998, the Company
S-18
<PAGE> 20
purchased the underlying receivables, which Litchfield reclassified as Other
Loans. The proceeds of the receivables purchased were applied to pay off
Litchfield's participation interest. At December 31, 1998, Hypothecation Loans
ranged in size from less than $500 to $21.5 million with an average principal
balance of $1,678,000. The five largest Hypothecation Loans represented 15.5% of
the Serviced Portfolio.
(3) A&D Loans
Litchfield also makes A&D Loans to dealers and developers for the
acquisition and development of rural and timeshare resorts in order to finance
additional receivables generated by the A&D Loans. During the year ended
December 31, 1998, Litchfield made $38.2 million of A&D Loans to land dealers
and resort developers, of which $13.3 million, or 34.9%, were secured by land
and $24.9 million, or 65.1%, were secured by timeshare resorts under
development.
Litchfield generally makes A&D Loans to land dealers and resort developers
based on loan to value ratios of 60% to 80% at variable rates based on the prime
rate plus 2% to 4%. As of December 31, 1998, Litchfield had $52.3 million of A&D
Loans outstanding, none of which were 31 days or more past due. A&D Loans are
secured by timeshare resort developments and rural land subdivisions in 16
states and one territory. A&D Loans range in size from $1,700 to $9.5 million
with an average principal balance of $780,000. The five largest A&D Loans
represent 4.7% of the Serviced Portfolio.
(4) Other Loans
At December 31, 1998, Other Loans consisted primarily of consumer home
equity loans, mortgage and construction loans, other secured commercial loans
and tax lien certificates. Historically, Litchfield has made or acquired certain
other secured and unsecured loans to identify additional lending opportunities
or lines of business for possible future expansion as it did with VOI Loans and
Hypothecation Loans. In May of 1998, Litchfield purchased 232 builder
construction loans totaling $32.7 million, a portion of which had previously
been collateral for the Hypothecation Loan in which Litchfield owned a
participation interest. As of December 31, 1998, Litchfield had 176 of the
builder construction loans totaling $33.9 million. In October 1998, Litchfield
began purchasing tax lien certificates and held $21.2 million of such
certificates at December 31, 1998. Litchfield had $71.0 million of Other Loans,
1.94% of which were 91 days or more past due. Other Loans range in size from
less than $500 to $875,000 with an average principal balance of $23,200. The
five largest Other Loans represent 0.8% of the Serviced Portfolio.
LOAN UNDERWRITING
Litchfield has established loan underwriting criteria and procedures
designed to reduce credit losses on its Serviced Portfolio. The loan
underwriting process includes reviewing each borrower's credit history. In
addition, Litchfield's underwriting staff routinely conduct telephone interviews
with a sample of borrowers. The primary focus of Litchfield's underwriting is to
assess the likelihood that the borrower will repay the loan as agreed by
examining the borrower's credit history through credit reporting bureaus.
Litchfield's loan policy is to purchase Land and VOI Loans from $3,000 to
$50,000. On a case by case basis, Litchfield will also consider purchasing such
loans in excess of $50,000. As of December 31, 1998, Litchfield had 154 Land
Loans exceeding $50,000 representing 2.3% of the number of such loans in the
Serviced Portfolio, for a total of $10.9 million. There were no VOI Loans
exceeding $50,000 as of December 31, 1998. Litchfield will originate
Hypothecation Loans up to $15 million and A&D Loans up to $10 million. From time
to time, Litchfield may have an opportunity to originate larger Hypothecation
Loans or A&D Loans in which case Litchfield would seek to participate such loans
with other financial institutions. Construction loans greater than $200,000 and
any other loans greater than $100,000 must be approved by the Credit Committee
which is comprised of the Chief Executive Officer, three Executive Vice
Presidents and a Senior Vice President.
S-19
<PAGE> 21
COLLECTIONS AND DELINQUENCIES
Management believes that the relatively low delinquency rate for the
Serviced Portfolio is attributable primarily to the application of its
underwriting criteria, as well as to dealer guarantees and reserves withheld
from dealers and developers. No assurance can be given that these delinquency
rates can be maintained in the future.
Collection efforts are managed and delinquency information is analyzed at
Litchfield's headquarters. Unless circumstances otherwise dictate, collections
are generally made by mail and telephone. Collection efforts begin when an
account is seven days past due, at which time Litchfield sends out a late
notice. When an account is fifteen days past due, Litchfield attempts to contact
the borrower to determine the reason for the delinquency and to attempt to cause
the account to become current. If the status of the account continues to
deteriorate, an analysis of the account is performed by the collection manager
to determine the appropriate action. When the loan is 90 days past due in
accordance with its original terms and it is determined that the amounts cannot
be collected from the dealer or developer guarantees or reserves, the loan is
generally placed on a non-accrual status and the collection manager determines
the action to be taken. The determination of how to work out a delinquent loan
is based upon many factors, including the borrower's payment history and the
reason for the current inability to make timely payments. When a guaranteed loan
becomes 60 days (90 days in some cases) past due, in addition to Litchfield's
collection procedures, Litchfield generally obtains the assistance of the dealer
or developer in collecting the loan.
Litchfield extends a limited number of its loans for reasons Litchfield
considers acceptable such as temporary loss of employment or serious illness. In
order to qualify for a one to three month extension, the customer must make
three timely payments without any intervention from Litchfield. For extensions
of four to six months, the customer must make four to six timely payments,
respectively, without any intervention from Litchfield. Litchfield will not
extend a loan more than two times for an aggregate of six months over the life
of the loan. Litchfield has extended approximately 0.9% of its loans through
December 31, 1998. Litchfield does not generally modify any other loan terms
such as interest rates or payment amounts.
Regulations and practices regarding the rights of the mortgagor in default
vary greatly from state to state. To the extent permitted by applicable law,
Litchfield collects late charges and return-check fees and records these items
as additional revenue. Only if a delinquency cannot otherwise be cured will
Litchfield decide that foreclosure is the appropriate course of action. If
Litchfield determines that purchasing a property securing a mortgage loan will
minimize the loss associated with such defaulted loan, Litchfield may accept a
deed in lieu of foreclosure, take legal action to collect on the underlying note
or bid at the foreclosure sale for such property.
Serviced Portfolio
The following table shows Litchfield's delinquencies and delinquency rates,
net of dealer/developer reserves and guarantees, for the Serviced Portfolio:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1994 1995 1996 1997 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Serviced Portfolio... $105,013,000 $176,650,000 $242,445,000 $304,102,000 $466,912,000
Delinquent
loans(1)........... 981,000 3,062,000 3,255,000 3,642,000 4,456,000
Delinquency as a
Percentage of
Serviced
Portfolio.......... .93% 1.73% 1.34% 1.20% 0.95%
</TABLE>
- ---------------
(1) Delinquent loans are those which are 31 days or more past due which are not
covered by dealer/ developer reserves or guarantees and not included in
other real estate owned.
S-20
<PAGE> 22
Land Loans
The following table shows Litchfield's delinquencies and delinquency rates,
net of dealer/developer reserves and guarantees, for Land Loans in the Serviced
Portfolio:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Land Loans in Serviced
Portfolio........... $90,502,000 $97,266,000 $119,370,000 $142,828,000 $160,098,000
Delinquent Land
Loans(1)............ 981,000 1,059,000 1,920,000 2,453,000 2,728,000
Delinquency as a
Percentage of Land
Loans in Serviced
Portfolio........... 1.08% 1.09% 1.61% 1.72% 1.70%
</TABLE>
- ---------------
(1) Delinquent loans are those which are 31 days or more past due which are not
covered by dealer/ developer reserves or guarantees and not included in
other real estate owned.
VOI Loans
The following table shows Litchfield's delinquencies and delinquency rates,
net of dealer/developer reserves and guarantees, for VOI Loans in the Serviced
Portfolio:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
VOI Loans in Serviced
Portfolio............... $2,851,000 $46,700,000 $43,284,000 $29,232,000 $19,119,000
Delinquent VOI Loans(1)... -- 1,958,000 1,316,000 739,000 350,000
Delinquency as a
Percentage of VOI Loans
in Serviced Portfolio... -- 4.19% 3.04% 2.53% 1.83%
</TABLE>
- ---------------
(1) Delinquent loans are those which are 31 days or more past due which are not
covered by dealer/developer reserves or guarantees and not included in other
real estate owned.
Hypothecation, A&D and Other Loans
Litchfield did not have any delinquent Hypothecation Loans or A&D Loans for
the years ended December 31, 1993 through December 31, 1998. Litchfield did not
have significant amounts of delinquent Other Loans for the years ended December
31, 1993 through December 31, 1996. At December 31, 1997, there were $8.5
million of Other Loans of which $450,000 or 5.3% were 31 days or more past due
and not covered by dealer/developer reserves or guarantees and not included in
other real estate owned. At December 31, 1998, there were $71.0 million of Other
Loans of which $1,378,000 or 1.94% were 31 days or more past due and not covered
by dealer/developer reserves or guarantees and not included in other real estate
owned.
S-21
<PAGE> 23
ALLOWANCE FOR LOAN LOSSES AND ESTIMATED RECOURSE OBLIGATIONS, NET CHARGE-OFFS
AND DEALER RESERVES
The following is an analysis of the total allowances for all loan losses:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Allowance, beginning of year..... $ 1,064,000 $ 1,264,000 $ 3,715,000 $ 4,528,000 $5,877,000
Net charge-offs of Uncollectible
accounts....................... (359,000) (946,000) (1,965,000) (2,010,000) (2,239,000)
Provision for loan losses........ 559,000 890,000 1,954,000 1,400,000 1,532,000
Allocation of purchase
Adjustment(1).................. -- 2,507,000 824,000 1,959,000 1,537,000
----------- ----------- ----------- ----------- ----------
Allowance, end of year........... $ 1,264,000 $ 3,715,000 $ 4,528,000 $ 5,877,000 $6,707,000
=========== =========== =========== =========== ==========
</TABLE>
- ---------------
(1) Represents allocation of purchase adjustment related to purchase of certain
non-guaranteed loans.
The following is an analysis of net charge-offs by major loan and
collateral types experienced by Litchfield:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Land Loans............... $ 359,000 $ 546,000 $ 669,000 $ 986,000 $1,358,000
VOI Loans................ -- 45,000 1,284,000 939,000 556,000
Hypothecation Loans...... -- -- -- -- --
A&D Loans................ -- 352,000 (8,000) (2,000) --
Other Loans.............. -- 3,000 20,000 87,000 325,000
---------- ---------- ---------- ---------- ----------
Total net charge-offs.... $ 359,000 $ 946,000 $1,965,000 $2,010,000 $2,239,000
========== ========== ========== ========== ==========
Net charge-offs as a
percentage of the
average Serviced
Portfolio.............. .38% .67% .94% .74% .58%
</TABLE>
As part of Litchfield's financing of Land and VOI Loans, Litchfield enters
into arrangements with most land dealers and resort developers whereby
Litchfield retains a portion of the amount payable to a dealer when purchasing a
Land or a VOI Loan to protect Litchfield from potential losses associated with
such loans and uses the amount retained to absorb loan losses. Litchfield
negotiates the amount of the reserves with the land dealers and resort
developers based upon various criteria, two of which are the financial strength
of the land dealer or resort developer and the credit risk associated with the
loans being purchased. Dealer reserves for Land Loans were $8,219,000,
$8,321,000 and $7,555,000 at December 31, 1998, 1997 and 1996, respectively.
Developer reserves for VOI Loans were $1,760,000, $2,299,000 and $3,072,000 at
December 31, 1998, 1997 and 1996, respectively. Most dealers and developers
provide personal and, when relevant, corporate guarantees to further protect
Litchfield from loss.
LOAN SERVICING AND SALES
Litchfield retains the right to service all loans it purchases or
originates. Servicing includes collecting payments from borrowers, remitting
payments to investors who have purchased the loans, accounting for principal and
interest, contacting delinquent borrowers and supervising foreclosure and
bankruptcies in the event of unremedied defaults. Substantially all servicing
results from the origination and purchase of loans by Litchfield, and Litchfield
has not historically purchased loan servicing rights except in connection with
the purchase of loans. Servicing rates generally approximate .5% to 2% of the
principal balance of a loan.
Historically, Litchfield subcontracted the servicing of its loans to an
unaffiliated third party. In July 1998, Litchfield resumed certain customer
service and collection functions. The unaffiliated third
S-22
<PAGE> 24
party continues to provide certain data processing and payment processing
functions. Litchfield retains responsibility for servicing all loans as a master
servicer.
In 1990, Litchfield began privately placing issues of pass-through
certificates evidencing an undivided beneficial ownership interest in pools of
mortgage loans which have been transferred to trusts. The principal and a
portion of the interest payments on the loans transferred to the trust are
collected by Litchfield as the servicer of the loans remitted to the trust for
the benefit of the investors, and then distributed by the trust to the investors
in the pass-through certificates.
As of December 31, 1998, Litchfield sold or securitized a total of
approximately $493.0 million of loans at face value. In certain of Litchfield's
issues of pass-through certificates, credit enhancement was achieved by dividing
the issue into a senior portion which was sold to the investors and a
subordinated portion which was retained by Litchfield. In certain other of
Litchfield's private placements, credit enhancement was achieved through cash
collateral.
If borrowers default in the payment of principal or interest on the loans
underlying these issues of pass-through certificates, losses would be absorbed
first by the subordinated portion or cash collateral account retained by
Litchfield and might, therefore, have to be charged against the estimated
recourse obligations to the extent dealer guarantees and reserves are not
available.
Litchfield also has a $150.0 million revolving line of credit and sale
facility for its Land Loans as part of an asset backed commercial paper facility
with a multi-seller commercial paper conduit. The facility expires in June 2001.
As of December 31, 1998, the outstanding balance of the sold or pledged loans
securing this facility was $137.5 million. Litchfield has an additional
revolving line of credit and sale facility for its VOI Loans of $25.0 million
with another multi-seller commercial paper conduit. The facility expires in
March 2000. As of December 31, 1998, the outstanding aggregate balance of the
sold loans under the facility was $10.6 million.
MARKETING AND ADVERTISING
Litchfield markets its program to rural land dealers and resort developers
through brokers, referrals, dealer and developer solicitation, and targeted
direct mail. Litchfield employs three marketing executives based in Lakewood,
Colorado, five marketing executives based in Williamstown, Massachusetts and two
marketing executives based in Hoover, Alabama. In the last five years Litchfield
has closed loans with over 325 different dealers and developers.
Management believes that Litchfield benefits from name recognition as a
result of its referral, advertising and other marketing efforts. Referrals have
been the strongest source of new business for Litchfield and are generated in
the states in which Litchfield operates by dealers, brokers, attorneys and
financial institutions. Management and marketing representatives also conduct
seminars for dealers and brokers and attend trade shows to improve awareness and
understanding of Litchfield's programs.
REGULATION
Litchfield is licensed as a lender, mortgage banker or mortgage broker in
23 of the states in which it operates, and in those states its operations are
subject to supervision by state authorities (typically state banking or consumer
credit authorities). Expansion into other states may be dependent upon a finding
of financial responsibility, character and fitness of Litchfield and various
other matters. Litchfield is generally subject to state regulations, examination
and reporting requirements, and licenses are revocable for cause. Litchfield is
subject to state usury laws in all of the states in which it operates.
The consumer loans purchased or financed by Litchfield are subject to the
Truth-in-Lending Act. The Truth-in-Lending Act contains disclosure requirements
designed to provide consumers with uniform, understandable information with
respect to the terms and conditions of loans and credit transactions in order to
give them the ability to compare credit terms. Failure to comply with the
requirements of the Truth-in-Lending Act may give rise to a limited right of
rescission on the part of the borrower. Litchfield
S-23
<PAGE> 25
believes that its purchase or financing activities are in substantial compliance
in all material respects with the Truth-in-Lending Act.
Origination of the loans also requires compliance with the Equal Credit
Opportunity Act of 1974, as amended ("ECOA"), which prohibits creditors from
discriminating against applicants on the basis of race, color, sex, age or
marital status. Regulation B promulgated under ECOA restricts creditors from
obtaining certain types of information from loan applicants. It also requires
certain disclosures by the lender regarding consumer rights and requires lenders
to advise applicants of the reasons for any credit denial. In instances where
the applicant is denied credit or the interest rate charged increases as a
result of information obtained from a consumer credit agency, another statute,
the Fair Credit Reporting Act of 1970, as amended, requires the lenders to
supply the applicant with a name and address of the reporting agency.
COMPETITION
The finance business is highly competitive, with competition occurring
primarily on the basis of customer service and the term and interest rate of the
loans. Traditional competitors in the finance business include commercial banks,
credit unions, thrift institutions, industrial banks and other finance
companies, many of which have considerably greater financial, technical and
marketing resources than Litchfield. There can be no assurance that Litchfield
will not face increased competition from existing or new financial institutions
or finance companies. In addition, Litchfield may enter new lines of business
that may be highly competitive and may have competitors with greater financial
resources than Litchfield.
Litchfield believes that it competes on the basis of providing competitive
rates and prompt, efficient and complete service, and by emphasizing customer
service on a timely basis to attract borrowers whose needs are not met by
traditional financial institutions.
EMPLOYEES
As of December 31, 1998, Litchfield had 102 full-time equivalent employees.
None of Litchfield's employees are covered by a collective bargaining agreement.
Litchfield considers its relations with its employees to be good.
S-24
<PAGE> 26
CAPITALIZATION
The following table sets forth the capitalization of Litchfield as of
December 31, 1998, and as adjusted to reflect the sale of the trust securities
by the trust and the issuance of the junior subordinated debentures by
Litchfield:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------
ACTUAL AS ADJUSTED
------------ ------------
<S> <C> <C>
Long-term notes............................................. $134,588,000 $134,588,000
Litchfield Obligated Mandatorily Redeemable Preferred
Securities of Trust Subsidiaries Holding Solely Debentures
of Litchfield............................................. 0 $ 20,000,000
Stockholders' equity:
Preferred stock, $.01 par value; authorized 1,000,000
shares, none issued and outstanding.................... 0 0
Common stock, $.01 par value; authorized 12,000,000
shares, 6,886,329 issued and outstanding (6,886,329
shares issued and outstanding, as adjusted)(1)......... 69,000 69,000
Additional paid in capital................................ 58,040,000 58,040,000
Accumulated other comprehensive income.................... 1,250,000 1,250,000
Retained earnings......................................... 22,735,000 22,735,000
------------ ------------
Total stockholders' equity........................ 82,094,000 82,094,000
------------ ------------
Total capitalization(2)........................... $216,682,000 $236,682,000
============ ============
</TABLE>
- ---------------
(1) Does not include 1,422,319 shares reserved for issuance pursuant to
Litchfield's 1990 Stock Option Plan and 18,864 shares reserved for issuance
pursuant to Litchfield's 1995 Stock Option Plan for Non-Employee Directors,
of which 853,850 are issuable upon exercise of options currently outstanding
as of December 31, 1998.
(2) Total capitalization includes total stockholders' equity, long-term notes
and Litchfield Obligated Mandatorily Redeemable Preferred Securities of
Trust Subsidiaries Holding Solely Debentures of Litchfield.
S-25
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to revenues,
unless otherwise indicated, of certain items included in Litchfield's statements
of income.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997 1998
----- ----- -----
<S> <C> <C> <C>
Revenues
Interest and fees on loans................................ 62.4% 65.3% 66.3%
Gain on sale of loans..................................... 30.9 28.8 27.6
Servicing and other income................................ 6.7 5.9 6.1
----- ----- -----
100.0 100.0 100.0
----- ----- -----
Expenses
Interest expense.......................................... 30.4 36.0 36.8
Salaries and employee benefits............................ 11.9 11.4 12.4
Other operating expenses.................................. 13.3 11.7 9.9
Provision for loan losses................................. 8.2 4.7 3.9
----- ----- -----
63.8 63.8 63.0
----- ----- -----
Income before income taxes and extraordinary item........... 36.2 36.2 37.0
Provision for income taxes.................................. 13.9 13.9 14.2
----- ----- -----
Income before extraordinary item............................ 22.3 22.3 22.8
Extraordinary item, net..................................... -- (0.8) (0.2)
----- ----- -----
Net income.................................................. 22.3% 21.5% 22.6%
===== ===== =====
</TABLE>
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Revenues increased 30.7% to $38,806,000 for the year ended December 31,
1998, from $29,691,000 for the year ended December 31, 1997. Net income for the
year ended December 31, 1998 increased 37.2% to $8,755,000 compared to
$6,383,000 in 1997. Net income as a percentage of revenues was 22.6% for the
year ended December 31, 1998 compared to 21.5% for the year ended December 31,
1997. Loan purchases and originations grew 103.2% to $375,292,000 in 1998 from
$184,660,000 in 1997. The Serviced Portfolio increased 53.5% to $466,912,000 at
December 31, 1998 from $304,102,000 at December 31, 1997.
Interest and fees on loans increased 32.8% to $25,736,000 in 1998 from
$19,374,000 in 1997, primarily as the result of the higher average balance of
other loans during the 1998 period. The average rate earned on the Serviced
Portfolio decreased to 11.7% at December 31, 1998 from 12.2% at December 31,
1997, primarily due to the effect of the growth in Hypothecation Loans as a
percentage of the portfolio and a decline in interest rates. Hypothecation Loan
yields are usually less than Land Loan or VOI Loan yields, but servicing costs
and loan losses are generally less as well.
Gain on the sale of loans increased 24.8% to $10,691,000 in 1998 from
$8,564,000 in 1997. The volume of loans sold increased 46.6% to $144,762,000 for
the year ended December 31, 1998 from $98,747,000 for the same period in 1997.
Gain on sale of loans increased less than the volume of loans sold for the year
ended December 31, 1998 primarily due to the increase in Hypothecation Loans
sold. The yield on the sale of Hypothecation Loans is significantly less than
the typical yield on sales of consumer receivables primarily due to shorter
average maturities and the nature of the underlying collateral.
S-26
<PAGE> 28
Servicing and other income increased 35.7% to $2,379,000 for the year ended
December 31, 1998, from $1,753,000 for the year ended December 31, 1997 largely
due to the increase in the other fee income including certain processing fees,
prepayment penalties and income from an affiliate. Loans serviced for others
increased 32.5% to $238,132,000 as of December 31, 1998 from $179,790,000 at
December 31, 1997.
Interest expense increased 33.6% to $14,265,000 in 1998 from $10,675,000 in
1997. The increase in interest expense primarily reflects an increase in average
borrowings which was only partially offset by lower rates. During the year ended
December 31, 1998, the weighted average borrowings were $150,483,000 at an
average rate of 8.7% compared to $107,900,000 at an average rate of 9.1% during
the year ended December 31, 1997. Interest expense includes the amortization of
deferred debt issuance costs.
Salaries and employee benefits increased 41.4% to $4,806,000 for the year
ended December 31, 1998 from $3,399,000 for the year ended December 31, 1997
because of an increase in the number of employees in 1998 and, to a lesser
extent, an increase in salaries. Personnel costs as a percentage of revenues
increased slightly to 12.4% in 1998 compared to 11.4% in 1997. However, as a
percentage of the Serviced Portfolio, personnel costs decreased to 1.0% for the
year ended December 31, 1998 from 1.1% for the year ended December 31, 1997. The
increase in salaries and employee benefits was due in part to bringing customer
service and collections in-house during 1998. This resulted in a decrease in
third party servicing expenses included in other operating expenses. Total
salaries and employee benefits plus other operating expenses as a percentage of
revenues decreased in 1998 to 22.3% from 23.2% in 1997.
Other operating expenses increased 10.2% to $3,834,000 for the year ended
December 31, 1998 from $3,480,000 for the year ended December 31, 1997. Other
operating expenses increased due to the growth in the Serviced Portfolio that
was only partially offset by the decrease in third party servicing expenses
related to bringing customer service and collections in-house. As a percentage
of revenues, other operating expenses decreased to 9.9% in 1998 from 11.7% in
1997. As a percentage of the Serviced Portfolio, other operating expenses
decreased to 0.8% for the year ended December 31, 1998 compared to 1.1% for the
year ended December 31, 1997.
During the year ended December 31, 1998, the provision for loan losses
increased 9.4% to $1,532,000 from $1,400,000 for the year ended December 31,
1997 primarily due to the growth of the Serviced Portfolio.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Revenues increased 25.3% to $29,691,000 for the year ended December 31,
1997, from $23,696,000 for the year ended December 31, 1996. Net income for 1997
increased 21.1% to $6,383,000 compared to $5,273,000 in 1996. Net income as a
percentage of revenues was 21.5% for the year ended December 31, 1997 compared
to 22.3% for the year ended December 31, 1996. Loan purchases and originations
grew 38.1% to $184,660,000 in 1997 from $133,750,000 in 1996. The Serviced
Portfolio increased 25.4% to $304,102,000 at December 31, 1997 from $242,445,000
at December 31, 1996.
Interest and fees on loans increased 31.0% to $19,374,000 in 1997 from
$14,789,000 in 1996, primarily as the result of the higher average balance of
loans held for sale and other loans during 1997. The average rate earned on
loans owned and retained interests in loan sales decreased to 12.2% for the year
ended December 31, 1997 from 12.5% for the year ended December 31, 1996,
primarily due to the effect of the growth in Hypothecation Loans and A&D Loans
as a percentage of the Serviced Portfolio. Hypothecation Loan and A&D Loan
yields are usually less than Land Loan or VOI Loan yields, but servicing costs
and loan losses are generally less as well.
Gain on the sale of loans increased 16.8% to $8,564,000 in 1997 from
$7,331,000 in 1996. The volume of loans sold increased 79.7% to $98,747,000 for
the year ended 1997 from $54,936,000 for the same period in 1996. Gain on sale
of loans increased less than the volume of loans sold for the year ended
December 31, 1997 primarily due to the lower yield on the sale of Hypothecation
Loans in 1997 and, to a lesser extent, the lower amount of discount relating to
loans sold.
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<PAGE> 29
Servicing and other fee income increased 11.2% to $1,753,000 for the year
ended December 31, 1997, from $1,576,000 for the year ended December 31, 1996
mostly due to the increase in other fee income resulting from the collection of
significant prepayment penalties from a Hypothecation Loan and an A&D Loan in
1997. Although loans serviced for others increased 38.7% to $179,790,000 at
December 31, 1997 from $129,619,000 at December 31, 1996, servicing income
remained relatively constant due to a decrease in the average servicing fee per
loan primarily as the result of the decrease in the number of purchased VOI
Loans in the Serviced Portfolio.
Interest expense increased 48.3% to $10,675,000 for 1997, from $7,197,000
in 1996. The increase in interest expense primarily reflects an increase in
average borrowings that were only partially offset by a decrease in average
rates. During the year ended December 31, 1997, borrowings averaged $107,900,000
at an average rate of 9.1% compared to $71,800,000 and 9.3%, respectively,
during 1996. Interest expense includes the amortization of deferred debt
issuance costs.
Salaries and employee benefits increased 20.4% to $3,399,000 for the year
ended December 31, 1997 from $2,824,000 for the year ended December 31, 1996
because of an increase in the number of employees and, to a lesser extent, an
increase in salaries. Personnel costs as a percentage of revenues decreased
slightly to 11.4% for the year ended December 31, 1997 compared to 11.9% in
1996. As a percentage of the Serviced Portfolio, personnel costs decreased to
1.12% for the year ended December 31, 1997 from 1.16% for the same period in
1996.
Other operating expenses increased 10.6% to $3,480,000 for the year ended
December 31, 1997 from $3,147,000 for the same period in 1996 primarily as the
result of the growth in the Serviced Portfolio. As a percentage of revenues,
other operating expenses decreased to 11.7% in 1997 compared to 13.3% in 1996.
As a percentage of the Serviced Portfolio, other operating expenses decreased to
1.14% for 1997 from 1.30% for 1996.
During 1997, the provision for loan losses decreased 28.4% to $1,400,000
from $1,954,000 in 1996. The provision for loan losses decreased despite the
increase in loans owned and retained interests in loans sold because of the
growth in Hypothecation Loans as a percentage of the Serviced Portfolio.
Hypothecation Loans have experienced significantly lower delinquency and default
rates than Purchased Loans.
LIQUIDITY AND CAPITAL RESOURCES
Litchfield's business requires continued access to short and long-term
sources of debt financing and equity capital. Litchfield's principal cash
requirements arise from loan originations, repayment of debt on maturity and
payments of operating and interest expenses. Litchfield's primary sources of
liquidity are loan sales, short-term borrowings under secured lines of credit
and long-term debt and equity offerings.
Since its inception, Litchfield has sold $492,960,000 of loans at face
value ($348,198,000 through December 31, 1997). The principal amount remaining
on the loans sold was $238,132,000 at December 31, 1998 and $179,790,000 at
December 31, 1997. In connection with certain loan sales, Litchfield commits to
repurchase from investors any loans that become 90 days or more past due. This
obligation is subject to various terms and conditions, including, in some
instances, a limitation on the amount of loans that may be required to be
repurchased. There were approximately $12,750,000 of loans at December 31, 1998
which Litchfield could be required to repurchase in the future should such loans
become 90 days or more past due. Litchfield repurchased $491,000, $740,000 and
$991,000 of such loans under the recourse provisions of loan sales 1998, 1997
and 1996, respectively. As of December 31, 1998, $25,685,000 of Litchfield's
cash was restricted as credit enhancement for certain securitization programs.
To date, Litchfield has participated $10,505,000 of A&D and Other Loans without
recourse to Litchfield ($6,936,000 through December 31, 1997).
Litchfield funds its loan purchases in part with borrowings under various
lines of credit. Lines are paid down when Litchfield receives the proceeds from
the sale of the loans or when cash is otherwise available. These lines of credit
totaled $116,000,000 at December 31, 1998 and 117,500,000 at December 31, 1997.
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<PAGE> 30
Outstanding borrowings on these lines of credit were $49,021,000 at December 31,
1998. Interest rates on these lines of credit range from the Eurodollar or LIBOR
rate plus 2% to the prime rate plus 1.25%. Litchfield is not required to
maintain compensating balances or forward sales commitments under the terms of
these lines of credit.
Litchfield also finances its loan purchases with two revolving line of
credit and sale facilities as part of asset backed commercial paper facilities
with multi-seller commercial paper issuers. Such facilities totaled $175,000,000
at December 31, 1998 and $150,000,000 at December 31, 1997. As of December 31,
1998 and December 31, 1997, the outstanding balances of loans sold or pledged
under these facilities were $148,164,000 and $121,142,000, respectively. There
were no outstanding borrowings under these lines of credit at December 31, 1998.
Outstanding borrowings under these lines of credit were $169,000 at December 31,
1997. Interest is payable on these lines of credit based on certain commercial
paper rates.
In June 1998, Litchfield issued 1,000,000 shares of common stock at $19 per
share. The net proceeds of the offering were $17,717,000 and were used to pay
down certain lines of credit. In connection with the underwriters' option to
purchase additional shares to cover over-allotments, Litchfield issued an
additional 166,500 shares in July 1998. Net proceeds of these shares totaled
$2,990,000 and were also used to pay down certain lines of credit.
Litchfield also finances its liquidity needs with long-term debt. Long-term
debt totaled $134,588,000 at December 31, 1998 and $105,347,000 at December 31,
1997.
In September of 1998, Litchfield redeemed a term note of $3,265,000
resulting in an extraordinary loss of $77,000, net of applicable tax benefit of
$48,000. The note was collateralized by certain of Litchfield's retained
interests in loan sales and cash. The balance outstanding on the note was
$5,210,000 at December 31, 1997.
In June 1997, Litchfield entered into two interest rate swap agreements.
The swap agreements involve the payment of interest to the counterparty at the
prime rate on a notional amount of $110,000,000 and the receipt of interest at
the commercial paper rate plus a spread and the LIBOR rate plus a spread on
notional amounts of $80,000,000 and $30,000,000, respectively. The swap
agreements expire in June 2000. There is no exchange of the notional amounts
upon which interest payments are based.
In June, 1994, Litchfield entered into an interest rate cap agreement with
a bank in order to manage its exposure to certain increases in interest rates.
The interest rate cap entitles Litchfield to receive an amount, based on an
amortizing notional amount, which at December 31, 1998 was $3,670,000, when
commercial paper rates exceed 8%. If payments were to be received as a result of
the cap agreement, they would be accrued as a reduction of interest expense.
This agreement expires in July 2003.
Historically, Litchfield has not required major capital expenditures to
support its operations.
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<PAGE> 31
CREDIT QUALITY AND ALLOWANCES FOR LOAN LOSSES
Litchfield maintains allowances for loan losses and recourse obligations on
retained interests in loan sales at levels which, in the opinion of management,
provide adequately for current and estimated future losses on such assets.
Past-due loans (loans 31 days or more past due which are not covered by dealer/
developer reserves and guarantees) as a percentage of the Serviced Portfolio as
of December 31, 1998, decreased to 0.95% from 1.20% at December 31, 1997.
NET DELINQUENCIES
<TABLE>
<CAPTION>
Year Percent
<S> <C>
12/92 0.94
12/93 0.61
12/94 0.93
12/95 1.73
12/96 1.34
12/97 1.20
12/98 0.95
</TABLE>
Loans 30 days or more contractually past due
NET CHARGE-OFF RATIO
<TABLE>
<CAPTION>
Year Percent
<S> <C>
12/92 0.37
12/93 0.69
12/94 0.38
12/95 0.67
12/96 0.94
12/97 0.74
12/98 0.58
</TABLE>
Management evaluates the adequacy of the allowances on a quarterly basis by
examining current delinquencies, the characteristics of the accounts, the value
of the underlying collateral, and general economic conditions and trends.
Management also evaluates the extent to which dealer/developer reserves and
guarantees can be expected to absorb loan losses. When Litchfield does not
receive guarantees on loan portfolios purchased, it adjusts its purchase price
to reflect anticipated losses and its required yield. This purchase adjustment
is recorded as an increase in the allowance for loan losses and is used only for
the respective portfolio. A provision for loan losses is recorded in an amount
deemed sufficient by management to maintain the allowances at adequate levels.
Total allowances for loan losses and recourse obligations on retained interests
in loan sales increased to $6,707,000 at December 31, 1998 compared to
$5,877,000 at December 31, 1997. The allowance ratio (the allowances for loan
losses divided by the amount of the Serviced Portfolio) at December 31, 1998
decreased to 1.44% from 1.93% at December 31, 1997 primarily as a result of the
increase in Hypothecation Loans as a percentage of the Serviced Portfolio.
[PERFORMANCE/ALLOWANCE BAR GRAPH]
<TABLE>
<CAPTION>
ALLOWANCE CHARGE-OFFS
--------- -----------
<S> <C> <C>
Land................................................... 2.15 0.90
VOI.................................................... 4.05 2.30
Hypo................................................... 0.50 0.00
A&D.................................................... 1.30 0.00
Other.................................................. 1.40 0.82
</TABLE>
As part of Litchfield's financing of Purchased Loans, arrangements are
entered into with dealers and resort developers, whereby reserves are
established to protect Litchfield from potential losses associated with such
loans. As part of Litchfield's agreement with the dealers and resort developers,
a portion of the amount payable to each dealer and resort developer for a
Purchased Loan is retained by Litchfield and is available to Litchfield to
absorb loan losses for those loans. Litchfield negotiates the amount of the
reserves with the dealers and developers based upon various criteria, two of
which are the financial
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<PAGE> 32
strength of the dealer or developer and credit risk associated with the loans
being purchased. Dealer/developer reserves amounted to $9,979,000 and
$10,655,000 at December 31, 1998 and December 31, 1997, respectively. Litchfield
generally returns any excess reserves to the dealer/developer on a quarterly
basis as the related loans are repaid by borrowers.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two-digit entries in the date code field and cannot distinguish
21st century dates from 20th century dates. As a result, many companies'
software and computer systems may need to be upgraded or replaced in order to
comply with "Year 2000" requirements.
State of Readiness. The year 2000 readiness process consists of the
following phases: (i) identification of all IT Systems and non-IT Systems; (ii)
assessment of repair or replacement requirements; (iii) repair or replacement;
(iv) testing; (v) implementation; and (vi) creation of contingency plans in the
event of year 2000 failures. Litchfield has evaluated the year 2000 readiness of
the information technology systems used in its operations ("IT Systems") and its
non-IT Systems, such as building security, voice mail and other systems.
Non-compliant IT Systems and non-IT Systems are expected to be remediated by the
end of the second quarter of 1999.
Litchfield's current financial and accounting software was installed in
October 1998, and the supplier has informed Litchfield that such software is
year 2000 compliant. Litchfield uses a third party servicer to perform certain
functions, such as receipt and posting of loan payments and other loan related
activity. The third party servicer has represented to Litchfield that its
systems are year 2000 compliant. In addition, Litchfield relies upon various
vendors, governmental agencies, utility companies, telecommunication service
companies, delivery service companies and other service providers who are
outside of its control. There is no assurance that such parties will not suffer
a year 2000 business disruption, which could have a material adverse effect on
Litchfield's financial condition and results of operations.
During 1998, Litchfield circulated a questionnaire to vendors and customers
with whom Litchfield has material relationships to obtain information about year
2000 compliance. Litchfield is still receiving and evaluating this information
to identify any significant risks. We plan to require all our business partners
to address any significant risks by July 1, 1999. We plan to replace any
material non-compliant business partners by October 1, 1999.
Costs. To date, Litchfield has not incurred any material expenditures in
connection with identifying or evaluating year 2000 compliance issues. Most of
its expenses have related to the opportunity cost of time spent by employees of
Litchfield evaluating year 2000 compliance matters generally. Litchfield
believes that internally generated funds or available cash should be sufficient
to cover the projected costs associated with any modifications to existing
software to make it year 2000 compliant. However, no assurances can be given
that such modifications can be made in a timely and cost effective manner.
Failure to make timely modifications could, in a worse case scenario, result in
the inability to process loans and loan related data and could have a material
adverse effect on Litchfield. At this time, Litchfield does not possess the
information necessary to estimate the potential impact of year 2000 compliance
issues relating to its other IT-Systems, non-IT Systems, its vendors, its
customers, and other parties. Such impact, including the effect of a year 2000
business disruption, could have a material adverse effect on Litchfield's
financial condition and results of operations.
Contingency Plan. Litchfield has not yet developed a year 2000-specific
contingency plan. If further year 2000 compliance issues are discovered,
Litchfield then will evaluate the need for one or more contingency plans
relating to such issues.
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<PAGE> 33
INFLATION
Inflation has not had a significant effect on Litchfield's operating
results to date.
EXPOSURE TO MARKET RISK
Litchfield performs an interest rate sensitivity analysis to identify the
potential interest rate exposures. Specific interest rate risks analyzed include
asset/liability mismatches, basis risk, risk caused by floors and caps, duration
mismatches and re-pricing lag in response to changes in a base index.
A simulated earnings model is used to identify the impact of specific
interest rate movements on earnings per share for the next 12 months. The model
incorporates management's expectations about future origination levels,
origination mix, amortization rates, prepayment speeds, timing of loan sales,
timing of capital issues, extensions and/or increases in lines of credit,
pricing of originations and cost of debt and lines of credit.
Litchfield's objective in managing the interest rate exposures is to
maintain, at a reasonable level, the impact on earnings per share of an
immediate and sustained change of 100 basis points in interest rates in either
direction. Litchfield periodically reviews the interest rate risk and various
options such as capital structuring, product pricing, hedging and spread
analysis to manage the interest rate risk at reasonable levels.
As of December 31, 1998, Litchfield had the following estimated sensitivity
profile:
<TABLE>
<S> <C> <C>
Interest rate changes (in basis points)............... 100 (100)
Impact on earnings per share.......................... ($ 0.02) $ 0.06
Impact on interest income and pre-tax earnings........ ($136,000) $425,000
</TABLE>
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<PAGE> 34
LITCHFIELD CAPITAL TRUST I
Litchfield Capital Trust I is a statutory business trust created on April
12, 1999 under the Delaware Business Trust Act pursuant to a declaration of
trust among the trustees and Litchfield and the filing of a certificate of trust
with the Secretary of State of the State of Delaware. This declaration will be
amended and restated in its entirety, as so amended and restated, the
"Declaration" as of the date the trust initially issues the preferred
securities. The Declaration will be qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
The trust will initially have five trustees. Three of the trustees will be
officers or employees of Litchfield. The Bank of New York will act as the
Property Trustee of the trust (the "Property Trustee") and The Bank of New York
(Delaware) will act as the Delaware Trustee of the trust.
Upon the issuance of the preferred securities, the holders thereof will own
all of the issued and outstanding preferred securities of the trust. Litchfield
will, directly or indirectly, acquire common securities representing common
undivided beneficial interests in the assets of the trust in an amount equal to
at least 3% of the total capital of the trust and will own, directly or
indirectly, all of the issued and outstanding common securities of the trust.
The trust exists for the purposes of:
- issuing the preferred securities,
- issuing the common securities to Litchfield,
- investing the gross proceeds from the sale of the trust securities in
junior subordinated debentures of Litchfield and
- engaging in only such other activities as are necessary, convenient or
incidental thereto or are specifically authorized in the Declaration.
The rights of the holders of the trust securities, including economic
rights, rights to information and voting rights, are as set forth in the
Declaration, the Delaware Business Trust Act and the Trust Indenture Act. In the
Declaration, Litchfield has agreed to pay for all debts and obligations (other
than with respect to the trust securities) and all costs and expenses of the
trust, including the fees and expenses of the trustees and any taxes to which
the trust may become subject, except for United States withholding taxes, and
all related costs and expenses.
DESCRIPTION OF THE PREFERRED SECURITIES
The preferred securities will be issued under the terms of the Declaration,
which is qualified under the Trust Indenture Act. The Property Trustee, but not
the other trustees of the trust, will act as the indenture trustee under the
Declaration for purposes of the Trust Indenture Act. The terms of the preferred
securities and the Declaration include those stated in the Declaration and those
made part of the Declaration by the Trust Indenture Act and the Delaware
Business Trust Act. The following summarizes the material terms and provisions
of the preferred securities and is qualified in its entirety by reference to the
Declaration, the Delaware Business Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the trust to issue the preferred securities,
which represent preferred undivided beneficial interests in the assets of the
trust, and the common securities, which represent common undivided beneficial
interests in the assets of the trust. All of the common securities will be
owned, directly or indirectly, by Litchfield. The common securities and the
preferred securities rank pari passu with each other and will have equivalent
terms except that (i) if a Declaration Event of Default (as hereinafter defined)
occurs and is continuing, the rights of the holders of the common securities to
payment in respect of periodic distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of the
preferred securities and (ii) holders of common
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<PAGE> 35
securities will have the exclusive right to appoint, remove or replace the
trustees and to increase or decrease the number of trustees.
The declaration does not permit:
- the issuance by the trust of any securities or other evidences of
beneficial ownership of, or beneficial interests in, the trust other than
the preferred securities and the common securities;
- the incurrence of any indebtedness for borrowed money by the trust; or
- the making of any investment other than in the junior subordinated
debentures.
Pursuant to the Declaration, the Property Trustee will own and hold the
junior subordinated debentures as trust assets for the benefit of the holders of
the preferred securities and the common securities. The payment of distributions
out of moneys held by the Property Trustee and payments on redemption of the
preferred securities or liquidation of the trust are guaranteed by Litchfield on
a subordinated basis as and to the extent described in this prospectus
supplement under "Description of the Preferred Securities Guarantee" and in the
accompanying prospectus under "Description of the Preferred Securities
Guarantees." The Property Trustee will hold the preferred securities guarantee
for the benefit of holders of the preferred securities. The preferred securities
guarantee is a full and unconditional guarantee from the time of issuance of the
preferred securities, but the preferred securities guarantee covers
distributions and other payments on the preferred securities only if and to the
extent that Litchfield has made a payment to the Property Trustee of interest or
principal on the junior subordinated debentures.
DISTRIBUTIONS
Distributions on the preferred securities will be fixed at an annual rate
of [ ]% of the $10 liquidation amount of each preferred security.
Distributions in arrears for more than one calendar quarter will accumulate
additional distributions at the rate per annum of [ ]%, to the extent
permitted by law compounded quarterly. The term "distributions" as used herein
means such periodic cash distributions and any additional distributions unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly distribution period for which distributions
are computed, distributions will be computed on the basis of the actual number
of days elapsed per 90-day quarter.
Distributions on the preferred securities will accumulate from
[ ], 1999, and, except as otherwise described below, will be payable
quarterly in arrears on June 30, September 30, December 31 and March 31 of each
year, commencing on June 30, 1999, but only if, and to the extent that, interest
payments are made on the junior subordinated debentures held by the Property
Trustee.
OPTION TO DEFER DISTRIBUTIONS
As long as it is not in default in the payment of interest on the junior
subordinated debentures, Litchfield has the right under the Indenture to defer
payments of interest on the junior subordinated debentures by extending the
interest payment period at any time and from time to time on the junior
subordinated debentures for a period not exceeding 20 consecutive quarterly
interest periods. During any Extension Period (as hereinafter defined) no
interest will be due and payable on the junior subordinated debentures. As a
consequence, distributions will also be deferred. Despite such deferral,
distributions will continue to accumulate with additional distributions thereon
(to the extent permitted by applicable law but not at a rate greater than the
rate at which interest is then accruing on the junior subordinated debentures)
at the rate of [ ]% per annum, compounded quarterly during any such Extension
Period; provided that no such Extension Period may extend beyond the stated
maturity of the junior subordinated debentures. For a description of capital
stock dividends and other restrictions that will be placed upon Litchfield
during an Extension Period, see "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period."
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<PAGE> 36
Prior to the termination of any Extension Period, Litchfield may further
extend it; provided that such Extension Period together with all such previous
and further extensions thereof may not exceed 20 consecutive quarterly interest
periods. Upon the termination of any Extension Period and the payment of all
amounts then due, Litchfield may commence a new Extension Period, subject to the
above requirements. Litchfield may also prepay at any time all or any portion of
the interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths throughout the term of the junior
subordinated debentures, not to exceed 20 consecutive quarters or to cause any
extension beyond the maturity of the junior subordinated debentures. See "Risk
Factors -- Litchfield's ability to defer interest payments on the junior
subordinated debentures has tax consequences for you and may affect the market
price of the preferred securities," "Description of the Junior Subordinated
Debentures -- Interest" and "-- Option to Extend Interest Payment Period" in
this prospectus supplement. Payments of accumulated distributions will be
payable to holders of preferred securities as they appear on the books and
records of the trust on the first record date after the end of an Extension
Period.
PAYMENT OF DISTRIBUTIONS
Distributions on the preferred securities will be paid on the dates payable
to the extent that the Property Trustee has cash on hand in a segregated
non-interest bearing banking account (the "Property Account") to permit such
payment. The funds available for distribution to the holders of the preferred
securities will be limited to payments received by the Property Trustee for the
junior subordinated debentures. If Litchfield does not make interest payments on
the junior subordinated debentures, the Property Trustee will not make
distributions on the preferred securities. Under the Declaration, if and to the
extent Litchfield does make interest payments on the junior subordinated
debentures deposited in the trust as trust assets, the Property Trustee is
obligated to make distributions on the trust securities on a pro rata basis. The
payment of distributions on the preferred securities is guaranteed by Litchfield
on a subordinated basis as and to the extent described in this prospectus
supplement under "Description of the Preferred Securities Guarantee" and in the
accompanying prospectus under "Description of the Preferred Securities
Guarantees." The preferred securities guarantee is a full and unconditional
guarantee from the time of issuance of the preferred securities, but the
preferred securities guarantee covers distributions and other payments on the
preferred securities only if and to the extent that Litchfield has made a
payment to the Property Trustee of interest or principal on the junior
subordinated debentures.
METHOD OF PAYMENT OF DISTRIBUTIONS
Distributions on the preferred securities will be made to the holders of
the securities as they appear on the books and records of the trust on the
relevant record dates, which, as long as the preferred securities remain in
book-entry form, will be one business day prior to the relevant distribution
payment date. Distributions payable on any preferred securities that are not
punctually paid on any distribution payment date as a result of Litchfield's
failure to make the corresponding interest payment on the junior subordinated
debentures will forthwith cease to be payable to the person in whose name such
preferred security is registered on the relevant record date, and such defaulted
distribution will instead be payable to the person in whose name such preferred
security is registered on the special record date established by the Regular
Trustees, which record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture; provided, however,
that distributions will not be considered payable on any distribution payment
date falling within an Extension Period unless Litchfield has elected to make a
full or partial payment of interest accrued on the junior subordinated
debentures on the distribution payment date. Distributions on the preferred
securities will be paid through the Property Trustee who will hold amounts
received in respect of the junior subordinated debentures in the Property
Account for the benefit of the holders of the preferred securities and the
common securities. Subject to any applicable laws and regulations and the
provisions of the Declaration, each payment will be made as described under
"--Book-Entry Only Issuance--The Depository Trust Company" below. If the
preferred securities do not continue to remain in book-entry form, the relevant
record dates will be the fifteenth day of the month prior to the relevant
distribution payment date. The Declaration provides that the payment
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<PAGE> 37
dates or record dates for the preferred securities will be the same as the
payment dates and record dates for the junior subordinated debentures. All
distributions paid on the trust securities will be paid on a pro rata basis to
the entitled holders thereof. If any date on which distributions are to be made
is not a Business Day, then payment of the distribution to be made on that date
will be made on the next succeeding day that is a business day, and without any
interest or other payment in respect of any such delay, except that, if that
business day is in the next succeeding calendar year, the payment shall be made
on the immediately preceding business day, in each case with the same force and
effect as if made on the date the payment was originally payable. "Business Day"
means any day other than a Saturday or Sunday or a day on which banking
institutions in the borough of Manhattan, the City and State of New York, New
York or Boston, Massachusetts are authorized or required by law to close.
SPECIAL EVENT REDEMPTION
If a tax event or an investment company event (each, a "Special Event") has
occurred and is continuing, Litchfield will have the right to redeem the junior
subordinated debentures, in whole but not in part, and therefore cause a
mandatory redemption of the trust securities, in whole but not in part, at the
Redemption Price, the liquidation amount plus accumulated and unpaid
distributions, within 90 days following the occurrence of the Special Event.
"Tax Event" means that Litchfield and the Regular Trustees have received an
opinion of counsel experienced in these matters to the effect that on or after
the date of this prospectus supplement as a result of:
- any amendment to, or change, including any announced prospective change,
in, the laws, or any regulations thereunder, of the United States or any
political subdivision or taxing authority thereof or therein;
- any amendment to, or change in, an interpretation or application of any
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;
- any interpretation or pronouncement by any legislative body, court,
governmental agency or regulatory authority that provides for a position
with respect to these laws or regulations that differs from the
theretofore generally accepted position; or
- 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 on or after the date of this prospectus supplement, there is more
than an insubstantial risk that:
- the trust is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to income accrued or
received on the junior subordinated debentures;
- the trust is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of taxes, duties or other governmental
charges; or
- interest payable by Litchfield to the trust on the junior subordinated
debentures is not, or within 90 days of the date thereof will not be,
deductible by Litchfield for United States federal income tax purposes.
"Investment Company Event" means that Litchfield and the Regular Trustees
shall have received an opinion of counsel experienced in practice under the
Investment Company Act of 1940, as amended, that as a result of the occurrence
of a change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, 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 Investment Company Act law
becomes effective on or after the date of this prospectus supplement.
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DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
At any time, Litchfield, as the holder of the common securities, may, in
its sole discretion, dissolve the trust and, after satisfaction of liabilities
to creditors of the trust as provided by applicable law, cause the junior
subordinated debentures to be distributed to the holders of the trust
securities.
If junior subordinated debentures are distributed to the holders of the
trust securities upon the dissolution and liquidation of the trust, the junior
subordinated debentures will be issued in denominations of $10 and integral
multiples of $10. If distributed to holders of the trust securities, it is
anticipated that the junior subordinated debentures would be distributed in the
form of one or more global securities and DTC, or any successor depositary for
the preferred securities, would act as depositary for the junior subordinated
debentures. The depositary arrangements for the junior subordinated debentures
would be substantially similar to those in effect for the preferred securities.
None of Litchfield, the indenture trustee, any paying agent or any other agent
of Litchfield or the indenture trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a global security for such junior subordinated
debentures or for maintaining, supervising or reviewing any records relating to
these beneficial ownership interests.
For a description of the depository and the terms of the depository
arrangements relating to payments, transfers, voting rights, redemption and
other notices and other matters relating to the junior subordinated debentures,
see "Description of the Junior Subordinated Debentures--Book-Entry and
Settlement."
On the date fixed for any distribution of junior subordinated debentures,
upon dissolution of the trust, (i) the preferred securities, the preferred
securities guarantee and the common securities will no longer be deemed to be
outstanding and (ii) any certificates representing preferred securities will be
deemed to represent beneficial interests in the junior subordinated debentures
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, and bearing accrued and unpaid interest equal to accumulated and
unpaid distributions on, the preferred securities, until certificates are
presented to Litchfield or its agent for transfer or reissuance.
Litchfield cannot assure you about the market price for the junior
subordinated debentures which may be distributed in exchange for preferred
securities if a dissolution and liquidation of the trust occurs. Accordingly,
the junior subordinated debentures which a holder of preferred securities may
subsequently receive on dissolution and liquidation of the trust, may trade at a
discount to the price of the preferred securities exchanged. If the junior
subordinated debentures are distributed to the holders of preferred securities
upon the dissolution of the trust, Litchfield will use its best efforts to list
the junior subordinated debentures on the Nasdaq National Market or on another
exchange or automated quotation system on which the preferred securities are
then listed.
MANDATORY REDEMPTION
Upon the repayment of the junior subordinated debentures, in whole or in
part, whether at maturity, upon redemption or otherwise, the proceeds from the
repayment will be promptly applied to redeem on a pro rata basis preferred
securities and common securities having an aggregate liquidation amount equal to
the aggregate principal amount of the junior subordinated debentures so repaid
or redeemed, upon not less than 30 nor more than 60 days' notice, at the
Redemption Price. The common securities will be entitled to be redeemed on a pro
rata basis with the preferred securities, except that if an Event of Default
under the Declaration has occurred and is continuing, the preferred securities
will have a priority over the common securities with respect to payment of the
Redemption Price. Subject to the foregoing, if fewer than all outstanding
preferred securities and common securities are to be redeemed, the preferred
securities and common securities will be redeemed on a pro rata basis.
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REDEMPTION PROCEDURES
The trust may not redeem fewer than all outstanding preferred securities
unless all accumulated and unpaid Distributions have been paid on all preferred
securities for all quarterly Distribution periods terminating on or before the
date of redemption.
If the trust gives a notice of redemption for preferred securities, which
notice will be irrevocable, then, while the preferred securities are still in
book-entry only form, by 10:00 a.m., New York City time, on the Redemption Date
and provided that Litchfield has paid to the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
junior subordinated debentures, the Property Trustee will irrevocably deposit
with the depositary funds sufficient to pay the applicable Redemption Price and
will give the Depositary irrevocable instructions and authority to pay the
Redemption Price to the holders of the preferred securities. See "--Book-Entry
Only Issuance--The Depository Trust Company." If notice of redemption is given
and funds deposited as required, then, immediately prior to the close of
business on the Redemption Date, Distributions will cease to accumulate on the
preferred securities called for redemption, the preferred securities will no
longer be deemed to be outstanding and all rights of holders of the preferred
securities so called for redemption will cease, except the right of the holders
of the preferred securities to receive the Redemption Price, but without
interest on the Redemption Price. Neither the trustees nor the trust shall be
required to register or cause to be registered the transfer of any preferred
securities which have been so called for redemption. If any date fixed for
redemption of preferred securities is not a Business Day, then payment of the
Redemption Price payable on that date will be made on the next succeeding day
that is a Business Day, and without any interest or other payment in respect of
any such delay, except that, if the Business Day falls in the next calendar
year, that payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on that date fixed for
redemption. If payment of the Redemption Price in respect of preferred
securities is improperly withheld or refused and not paid by the Property
Trustee or by Litchfield pursuant to the preferred securities guarantee,
Distributions on such preferred securities will continue to accumulate, from the
original redemption date of the preferred securities to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding preferred securities
are to be redeemed, the preferred securities will be redeemed as described below
under "--Book-Entry Only Issuance--The Depository Trust Company."
If a partial redemption of the preferred securities would result in the
delisting of the preferred securities by any national securities exchange or
other organization on which the preferred securities are then listed or traded,
Litchfield will redeem junior subordinated debentures only in whole and, as a
result, under these circumstances the trust may redeem the preferred securities
only in whole. Subject to the foregoing and applicable law, including, without
limitation, United States federal securities laws, Litchfield or any of its
subsidiaries may at any time purchase outstanding preferred securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Holders of the preferred securities and the common securities at the date
of any voluntary or involuntary dissolution, winding-up or termination of the
trust, as the case may be, are entitled to receive an amount equal to the
aggregate of the stated liquidation amount of $10 per trust security plus
accumulated and unpaid Distributions thereon to the date of payment. This amount
is paid on a pro rata basis solely out of the assets of the trust legally
available for distribution to holders of preferred securities and common
securities after satisfaction of liabilities to the creditors of the trust,
unless, in connection with the dissolution, winding-up or termination, and after
satisfaction of liabilities to the creditors of the trust, junior subordinated
debentures, in an aggregate principal amount equal to the aggregate stated
liquidation amount of such trust securities and bearing accrued and unpaid
interest in an amount equal to
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the accumulated and unpaid Distributions on such trust securities, shall be
distributed on a pro rata basis to the holders of the preferred securities and
the common securities in exchange therefor.
If, upon any such dissolution, winding-up or termination, the Liquidation
Distribution can be paid only in part because the trust has insufficient assets
on hand legally available to pay in full the aggregate Liquidation Distribution,
then the amounts payable directly by the trust on the preferred securities and
the common securities shall be paid on a pro rata basis. The holders of the
common securities will be entitled to receive Liquidation Distributions upon any
such dissolution, winding-up or termination on a pro rata basis with the holders
of the preferred securities, except that if an Event of Default under the
Declaration has occurred and is continuing, the preferred securities shall have
a priority over the common securities with respect to the payment of the
Liquidation Distribution.
Pursuant to the Declaration, the trust will dissolve:
- on June 30, 2019, the expiration of the term of the trust;
- when all of the trust securities have been called for redemption and the
amounts necessary for redemption thereof have been paid to the holders of
trust securities in accordance with the terms of the trust securities;
- when all of the junior subordinated debentures have been distributed to
the holders of trust securities in exchange for all of the trust
securities in accordance with the terms of the trust securities; or
- upon a decree of judicial dissolution.
MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The trust may not consolidate, convert into, 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 body, except as
described below, or as described in "Liquidation Distribution Upon Dissolution."
The trust may, at the request of Litchfield, with the consent of the Regular
Trustees and without the consent of the holders of the trust securities, the
Delaware Trustee or the Property Trustee, consolidate, convert into, amalgamate,
merge with or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, a trust organized as such
under the laws of any State; provided, that such successor entity either:
- expressly assumes all of the obligations of the trust under the trust
securities and the Declaration; or
- substitutes for the trust securities other securities having
substantially the same terms as the trust securities (the "Successor
Securities"), so long as the Successor Securities rank the same as the
trust securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise; and
- Litchfield expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as the
holder of the junior subordinated debentures;
- the preferred 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;
- such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust securities
(including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new
entity);
- such successor entity has purposes substantially identical to those of
the trust;
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- prior to such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, Litchfield has received an
opinion of counsel experienced in such matters to the effect that:
- such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust securities
(including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the
new entity);
- following such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the trust nor
such successor entity will be required to register as an investment
company under the Investment Company Act;
- following such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the trust or such
successor entity will continue to be classified as a grantor trust
for United States federal income tax purposes;
- Litchfield or any other permitted successor or assignee owns all of
the common securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at
least to the extent provided by the preferred securities guarantee;
and
- there shall have been furnished to the Property Trustee an officers'
certificate and an opinion of counsel relating to the satisfaction of
all conditions precedent in the Declaration.
Notwithstanding the foregoing, the trust will not, except with the consent
of holders of 100% in liquidation amount of the trust securities, consolidate,
amalgamate, merge with or into, convert into, or be replaced by or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger, conversion, replacement, conveyance, transfer or lease
would cause the trust or the Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes or would cause the
holders of the trust securities not to be treated as owning an undivided
interest in the junior subordinated debentures.
DECLARATION EVENTS OF DEFAULT
An Indenture Event of Default will constitute an event of default under the
Declaration with respect to the trust securities (a "Declaration Event of
Default"); provided that pursuant to the Declaration, the holder of the common
securities will be deemed to have waived any such Declaration Event of Default
with respect to the common securities until all Declaration Events of Default
with respect to the preferred securities have been cured, waived or otherwise
eliminated. Until all such Declaration Events of Default with respect to the
preferred securities 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 with respect to certain matters
under the Declaration and consequently under the Indenture. In the event that
any Declaration Event of Default with respect to the preferred securities is
waived by the holders of the preferred securities as provided in the
Declaration, the holders of common securities pursuant to the Declaration have
agreed that such waiver also constitutes a waiver of such Declaration Event of
Default with respect to the common securities for all purposes under the
Declaration without any further act, vote or consent of the holders of the
common securities.
Upon the occurrence of a Declaration Event of Default, the Property
Trustee, subject to the limitations described below under "--Voting Rights," as
the holder of all of the junior subordinated debentures will have the right
under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. In addition, the
Property Trustee will, subject to the limitations described below under
"--Voting Rights," have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the indenture trustee.
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VOTING RIGHTS
Except as provided below, under "--Modification and Amendment of the
Declaration" and "Description of the Preferred Securities Guarantees--
Amendments and Assignment" in the accompanying prospectus and as otherwise
required by the Delaware Business Trust Act, the Trust Indenture Act and the
Declaration, the holders of the preferred securities will have no voting rights.
So long as any junior subordinated debentures are held by the Property
Trustee, the trustees will not:
- direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee or exercising any trust or
power conferred on the indenture trustee with respect to the junior
subordinated debentures;
- waive any past default that is waivable under Section 6.06 of the
Indenture; or
- exercise any right to rescind or annul a declaration of acceleration of
the maturity of the principal of the junior subordinated debentures;
without, in each case, obtaining the prior approval of the holders of a majority
in liquidation amount of all outstanding preferred securities and common
securities. The trustees shall not revoke any action previously authorized or
approved by a vote of the holders of the preferred securities except by a later
vote of the holders. The Property Trustee will notify each holder of preferred
securities of any notice of default with respect to the junior subordinated
debentures. In addition to obtaining the foregoing approvals of the holders of
the preferred securities and common securities, prior to taking any of the
foregoing actions, the trustees will obtain an opinion of counsel experienced in
these matters to the effect that for United States federal income tax purposes
the trust will not be classified as other than a grantor trust on account of
such action.
If a Declaration Event of Default has occurred and is continuing, then the
holders of a majority in liquidation amount of the preferred securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or to direct the exercise of
any trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee to exercise the remedies
available to it as a holder of the junior subordinated debentures. If the
Property Trustee fails to enforce its rights under the junior subordinated
debentures, a holder of preferred securities, to the extent permitted by
applicable law, may, after a period of 30 days has elapsed from the holder's
written request to the Property Trustee to enforce these rights, institute a
legal proceeding directly against Litchfield to enforce the Property Trustee's
rights under the junior subordinated debentures without first instituting any
legal proceeding against the Property Trustee or any other person or entity.
Further, if a Declaration Event of Default has occurred and is continuing and
the event is attributed to the failure of Litchfield to pay interest or
principal on the junior subordinated debentures on the date the 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
to enforce the payment to the holder of the principal of or interest on the
junior subordinated debentures having a principal amount equal to the aggregate
liquidation amount of the preferred securities of the holder on or after the
respective due date specified in the junior subordinated debentures. In
connection with such Direct Action, Litchfield will be subrogated to the rights
of the holder of preferred securities to the extent of any payment made by
Litchfield to the holders of preferred securities in such direct action. Except
as provided in the preceding sentences, the holders of preferred securities will
not be able to exercise directly any other remedy available to the holders of
the junior subordinated debentures. See "The Trusts--The Property Trustee" in
the accompanying prospectus.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of holders of the preferred securities will constitute a waiver of the
corresponding Declaration Event of Default in respect of the trust securities.
In the event the consent of the Property Trustee as the holder of the
junior subordinated debentures is required under the Indenture for any
amendment, modification or termination of the Indenture or the
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junior subordinated debentures, the Property Trustee will request the written
direction of the holders of the trust securities with respect to the amendment,
modification or termination and shall vote with respect to the amendment,
modification or termination as directed by a majority in liquidation amount of
the trust securities voting together as a single class. If any amendment,
modification or termination under the Indenture would require the consent or
vote of holders of junior subordinated debentures representing a specified
percentage greater than a majority in principal amount of the junior
subordinated debentures, the Property Trustee may only vote with respect to that
amendment, modification or termination as directed by the vote of holders of
trust securities representing such specified percentage of the aggregate
liquidation amount of the trust securities. The Property Trustee will be under
no obligation to take any action in accordance with the directions of the
holders of the trust securities unless the Property Trustee has received an
opinion of counsel experienced in these matters that the trust will not be
classified for United States federal income tax purposes as other than a grantor
trust on account of this 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
that purpose, at a meeting of all of the holders of trust securities 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 to be mailed to each
holder of record of preferred securities. Each notice will include a statement
setting forth:
- the date of the meeting;
- a description of any resolution proposed for adoption at the meeting on
which the holders are entitled to vote; and
- instructions for the delivery of proxies.
No vote or consent of the holders of preferred securities will be required
for the trust to redeem and cancel preferred securities or to distribute the
junior subordinated debentures in accordance with the Declaration.
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 Litchfield or by any affiliate of Litchfield will
not be entitled to vote or consent and shall, for purposes of the vote or
consent, be treated as if they were not outstanding.
The procedures by which persons owning preferred securities registered in
the name of and held by DTC or its nominee may exercise their voting rights are
described under "--Book-Entry Only Issuance--The Depository Trust Company"
below.
Holders of preferred securities will have no rights to increase or decrease
the number of trustees or to appoint, remove or replace a trustee, which rights
are held exclusively by the holders of the common securities.
MODIFICATION AND AMENDMENT OF THE DECLARATION
The Declaration may be modified and amended if approved by a majority
of the Regular Trustees, provided, that if any proposed modification or
amendment provides for, or the Regular Trustees otherwise propose to
effect:
- any action that would adversely affect the powers, preferences or special
rights of the trust securities, whether by amendment to the Declaration,
other than as described below, or otherwise; or
- the dissolution, winding-up or termination of the trust other than under
the terms of the Declaration;
then the holders of the outstanding trust securities as a single class will be
entitled to vote on the amendment or proposal, and the amendment or proposal
will not be effective except with the approval of at least a majority in
liquidation amount of the trust securities. If any amendment or proposal
referred to above would adversely affect only the preferred securities or the
common securities, then only the affected
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class of trust securities will be entitled to vote on the amendment or proposal
and the amendment or proposal shall not be effective except with the approval of
a majority in liquidation amount of such class of trust securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration:
- unless the Regular Trustees shall have first received
- an officers' certificate from Litchfield that the amendment is
permitted by, and conforms to, the terms of the Declaration and
- an opinion of counsel the amendment is permitted by, and conforms to,
the terms of the Declaration and that all conditions precedent, if
any, in the Declaration to execute and deliver the amendment have been
satisfied; and
- to the extent the result of the amendment would be to
- cause the trust to fail to continue to be classified for purposes of
United States federal income taxation as a grantor trust,
- reduce or otherwise adversely affect the powers of the Property
Trustee in contravention of the Trust Indenture Act or
- cause the trust to be deemed to be an "investment company" required to
be registered under the Investment Company Act.
Specified provisions of the Declaration may not be amended without the
consent of all of the holders of the trust securities. No amendment which
adversely affects the rights, powers and privileges of the Property Trustee or
the Delaware Trustee may be made without the consent of the Property Trustee or
Delaware Trustee, respectively. Article IV of the Declaration relating to the
obligation of Litchfield to purchase the common securities and to pay some
obligations and expenses of the trust as described under "The Trusts" in the
accompanying prospectus may not be amended without the consent of Litchfield.
The rights of holders of common securities under Article V of the Declaration to
increase or decrease the number of, and to appoint, replace or remove trustees
shall not be amended without the consent of each holder of common securities.
The Declaration further provides that it may be amended without the consent
of the holders of the trust securities to:
- cure any ambiguity;
- correct or supplement any provision in the Declaration that may be
defective or inconsistent with any other provision of the Declaration;
- add to the covenants, restrictions or obligations of Litchfield;
- conform to changes in, or a change in interpretation or application of
certain Investment Company Act regulations by the Securities and Exchange
Commission;
- make any other provisions with respect to matters or questions arising
under the Declaration which shall not be inconsistent with the other
provisions of the Declaration;
- modify, eliminate or add to any provisions of the Declaration to the
extent necessary to ensure that the trust will be classified for United
States federal income tax purposes as a grantor trust at all times that
any trust securities are outstanding or to ensure that the trust will not
be required to register as an "investment company" under the Investment
Company Act; and
- evidence the acceptance of the appointment of a successor trustee or fill
a vacancy created by an increase in the number of Regular Trustees;
which amendment does not adversely affect in any material respect the rights,
preferences or privileges of the holders of the trust securities.
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Book-Entry Only Issuance--The Depository Trust Company
The Depository Trust Company ("DTC") will act as securities depositary for
the preferred securities. The preferred securities will be issued only as fully
registered securities registered in the name of DTC or its nominee. One or more
fully-registered global preferred securities certificates, representing the
total aggregate number of preferred securities, will be issued and will be
deposited with DTC or pursuant to DTC's instructions.
The laws of some jurisdictions require that some purchasers of securities
take physical delivery of securities in definitive form. These laws may impair
the ability to transfer beneficial interests in a global preferred security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its participants deposit with
DTC. DTC also facilitates the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Direct Participants' accounts.
This eliminates the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to securities brokers
and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly.
Direct Participants and Indirect Participants are collectively referred to
herein as "Participants." The rules applicable to DTC and its Participants are
on file with the SEC.
When a Preferred Securities Global Certificate is issued, DTC will credit
on its book-entry registration and transfer system the number of Preferred
Securities represented by such Preferred Securities Global Certificate to the
accounts of institutions that have accounts with DTC. Ownership of beneficial
interests in a Preferred Securities Global Certificate will be limited to
Participants or persons that may hold interests through Participants. The
ownership interest of each actual purchaser of each preferred security is
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchases, but
Beneficial Owners will receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owners purchased preferred
securities. Entries are made on the books of Participants acting on behalf of
Beneficial Owners to show transfers of ownership interests. Beneficial Owners
will not receive certificates representing their ownership interests in the
preferred securities, except in the event that use of the book-entry system for
the preferred securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the preferred
securities, DTC's records reflect only the identity of the Direct Participants
to whose accounts such preferred securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers. So long as DTC, or its
nominee, is the owner of a Preferred Securities Global Certificate, DTC or such
nominee, as the case may be, will be considered the sole owner and holder of
record of the preferred securities represented by such Preferred Securities
Global Certificate for all purposes.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect.
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While DTC is acting as the securities depository for the preferred
securities, redemption notices will be sent by Litchfield and the trust directly
to DTC. DTC will then inform the Direct Participants, who will then contact the
Beneficial Owners. If less than all of the preferred securities are being
redeemed, DTC's practice is to determine by lot the interest of each Direct
Participant to be redeemed.
Although voting with respect to the preferred securities is limited, in
those instances in which a vote is required, neither DTC nor Cede & Co. will
consent or vote with respect to preferred securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the preferred
securities are credited on the record date, identified in a listing attached to
the Omnibus Proxy.
Distribution payments on the preferred securities represented by a
Preferred Series Global Certificate will be made by the Property Trustee to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices and will be the responsibility of
such Participants and not of DTC, the trust or Litchfield, subject to any
statutory or regulatory requirements as may be in effect at times. Payment of
Distributions to DTC is the responsibility of the trust, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided in this prospectus supplement, a Beneficial Owner will
not be entitled to receive physical delivery of preferred securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the preferred securities.
DTC may discontinue providing its services as securities depository with
respect to the preferred securities at any time by giving reasonable notice to
the trust. Under those circumstances, if a successor securities depository is
not obtained, preferred securities certificates will be required to be printed
and delivered. Additionally, the trust may decide to discontinue use of the
system of book-entry transfers through DTC, or a successor depository. In that
event, certificates for the preferred securities will be printed and delivered.
Under the Declaration, payments made by the trust to DTC or its nominee
will satisfy the trust's obligations under the Declaration, to the extent of the
payments so made. Beneficial Owners will not be, and will not be considered by
the trust to be, and will not have any rights as, owners of preferred securities
under the Declaration.
The trust, Litchfield and the trustees will have no responsibility or
obligation to any Direct Participant, Indirect Participant or any Beneficial
Owner or any other person not shown on the registration books of the trust as
being a registered owner with respect to: (1) the accuracy of any records
maintained by DTC or any Direct Participant or Indirect Participant, (2) the
payment of any amount due by DTC to any Direct Participant or by any Direct
Participant or Indirect Participant to any Beneficial Owner in respect of
Distributions, (3) the delivery of any notice by DTC to any Direct Participant
or by any Direct Participant or Indirect Participant to any Beneficial Owner
that is required or permitted to be given to registered owners under the terms
of the Declaration, (4) the selection of the Beneficial Owners to receive
payment in the event of any practical redemption of the preferred securities or
(5) any consent given or other action taken by DTC as a registered owner.
The trustee and the trust, so long as a book-entry only system is used for
the preferred securities, will send any notice of redemption or of proposed
document amendments requiring consent of registered owners and any other notices
required by the document to be sent to registered owners only to DTC, or any
successor securities depository, or its nominee. Any failure of DTC to advise
any Direct Participant, or of any Direct Participant or Indirect Participant to
notify the Beneficial Owner, of any notice and its
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content or effect will not affect the validity of the redemption of the
preferred securities called for redemption, the document amendment or any other
action premised on that notice.
The trust, Litchfield and the trustees cannot and do not assure that DTC
will distribute Distributions and other payments on the preferred securities
made to DTC or its nominee as the registered owner or any redemption or other
notices to the Participants, or that the Participants or others will distribute
the payments or notices to the Beneficial Owners, or that they will do so on a
timely basis, or that DTC will serve and act in the manner described in this
prospectus supplement. Beneficial Owners should make appropriate arrangements
with their broker or dealer regarding distribution of information regarding the
preferred securities that may be transmitted by or through DTC.
The foregoing information concerning DTC and DTC's book-entry system is
based upon information obtained from DTC and contains statements that are
believed to describe accurately DTC, the method of effecting book-entry
transfers of securities distributed through DTC and related matters. Neither the
trust nor Litchfield take any responsibility for the accuracy of these
statements.
Registrar, Transfer Agent and Paying Agent
If the preferred securities do not remain in book-entry only form, the
following provisions will apply.
Payment of Distributions and payments on redemption of the preferred
securities will be payable, the transfer of the preferred securities will be
registrable, and preferred securities will be exchangeable for preferred
securities of other denominations of a like aggregate liquidation amount at the
corporate trust office of the Property Trustee in New York, New York. Payment of
Distributions may be made at the option of the Regular Trustees on behalf of the
trust by check mailed to the address of the persons entitled to the payments and
the payment on redemption of any preferred security will be made only upon
surrender of the preferred security to the Property Trustee.
The Bank of New York or one of its affiliates will act as registrar and
transfer agent for the preferred securities. The Bank of New York will also act
as paying agent and, with the consent of the Regular Trustees, may designate
additional paying agents.
Registration of transfers of preferred securities will be effected without
charge by or on behalf of the trust but only upon payment, with the giving of
such indemnity as the Regular Trustees may require of, any tax or other
governmental charges that may be imposed in relation to it.
The trust will not be required to register or cause to be registered the
transfer of preferred securities after such preferred securities have been
called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a Declaration Event of
Default and after the curing of all Declaration Events of Default that may have
occurred, will undertake to perform only the duties that are specifically set
forth in the Declaration and, after the occurrence of a Declaration Event of
Default, that has not been cured or waived, shall exercise the rights and powers
vested in it by the Declaration and use the same degree of care and skill in
their exercise, as a prudent individual would exercise or use under the
circumstances in the conduct of his or her own affairs. The Property Trustee is
under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of preferred securities, unless offered
reasonable security and indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Property Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Property Trustee has
reasonable grounds for believing that the repayment of such funds or liability
or adequate indemnity against such risk or liability is not reasonably assured
to it.
Litchfield and its subsidiaries maintain commercial banking and trust
relationships with the Property Trustee and its affiliates.
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Governing Law
The Declaration and the preferred securities will be governed by, and
construed in accordance with, the laws of the State of Delaware.
Miscellaneous
The Regular Trustees are authorized and directed to take such action as
they determine in their discretion to be necessary or desirable in carrying out
the purposes of the trust, including, but not limited to:
- causing the trust not to be deemed to be an "investment company" required
to be registered under the Investment Company Act;
- causing the trust to be classified for United States federal income tax
purposes as a grantor trust; and
- cooperating with Litchfield to ensure that the junior subordinated
debentures will be treated as indebtedness of Litchfield for United
States federal income tax purposes.
In this connection, the Regular Trustees are authorized to take any action
not inconsistent with applicable law, the certificate of trust or the
Declaration that the Regular Trustees determine in their discretion to be
reasonable and necessary or desirable for such purposes.
Litchfield and the Regular Trustees on behalf of the trust will be required
to provide to the Property Trustee annually a certificate as to whether or not
Litchfield and the trust, respectively, are in compliance with all the
conditions and covenants under the Declaration.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Pursuant to the preferred securities guarantee, Litchfield will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full to
the holders of the preferred securities, the Guarantee Payments (as defined in
the accompanying prospectus) (without duplication of amounts theretofore paid by
the trust) as and when due, regardless of any defense, right of set-off or
counterclaim which the trust may have or assert. Litchfield's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by Litchfield to the holders of preferred securities or by causing the trust to
pay such amounts to such holders. The preferred securities guarantee will be
qualified as an indenture under the Trust Indenture Act. The Bank of New York
will act as indenture trustee under the preferred securities guarantee (the
"Guarantee Trustee"). The terms of the preferred securities guarantee will be
those set forth in such preferred securities guarantee and those made part of
such preferred securities guarantee by the Trust Indenture Act. The preferred
securities guarantee will be held by the Guarantee Trustee for the benefit of
the holders of the preferred securities. A summary description of the preferred
securities guarantee appears in the accompanying prospectus under the caption
"Description of the Preferred Securities Guarantees."
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the junior subordinated debentures in
which the trust will invest the proceeds from the issuance and sale of the trust
securities and which will be deposited in the trust as trust assets. The terms
of the junior subordinated debentures include those stated in the Junior
Subordinated Indenture dated as of [ ], 1999 between Litchfield and
The Bank of New York, as trustee (the "Indenture Trustee"), as supplemented by
Supplemental Indenture No. 1 dated as of [ ], 1999 between Litchfield
and the Indenture Trustee (as so supplemented, the "Indenture") and those made
part of the Indenture by the Trust Indenture Act. This description supplements
the description of the general terms and provisions of the junior subordinated
debentures set forth in the accompanying prospectus under the caption
"Description of the Junior Subordinated Debt Securities." The
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following description does not purport to be complete and is qualified in its
entirety by reference to the Indenture and the Trust Indenture Act. Whenever
particular provisions or defined terms in the Indenture are referred to herein,
such provisions or defined terms are incorporated by reference herein.
The Indenture does not limit the aggregate principal amount of indebtedness
which may be issued thereunder and provides that junior subordinated debentures
may be issued thereunder from time to time in one or more series. The junior
subordinated debentures constitute a separate series under the Indenture.
Under certain circumstances involving the dissolution of the trust, junior
subordinated debentures may be distributed to the holders of the trust
securities in liquidation of the trust. See "Description of the Preferred
Securities--Distribution of the Junior Subordinated Debentures."
GENERAL
The junior subordinated debentures are unsecured, subordinated obligations
of Litchfield, limited in aggregate principal amount to an amount equal to the
sum of:
- the stated liquidation amount of the preferred securities issued by the
trust; and
- the proceeds received by the trust upon issuance of the common securities
to Litchfield (which proceeds will be used to purchase an equivalent
principal amount of junior subordinated debentures).
The entire principal amount of the junior subordinated debentures will
become due and payable, together with any accrued and unpaid interest thereon,
on June 30, 2019. The junior subordinated debentures are not subject to any
sinking fund.
If junior subordinated debentures are distributed to holders of preferred
securities upon the dissolution of the trust, such junior subordinated
debentures will initially be issued as a Global Security (as defined below). As
described herein, under certain limited circumstances, junior subordinated
debentures may be issued in certificated form in exchange for a Global Security.
See "--Book-Entry and Settlement" below. In the event that junior subordinated
debentures are issued in certificated form, such junior subordinated debentures
will be in denominations of $10 and integral multiples thereof and may be
transferred or exchanged at the offices described below. Payments on junior
subordinated debentures issued as a Global Security will be made to DTC, a
successor depositary, or in the event that no depositary is used, to a paying
agent for the junior subordinated debentures.
In the event that junior subordinated debentures are issued in certificated
form, payments of principal and interest will be payable, the transfer of the
junior subordinated debentures will be registrable, and junior subordinated
debentures will be exchangeable for junior subordinated debentures of other
denominations of a like aggregate principal amount at the corporate trust office
of the Indenture Trustee in New York, New York; provided that payment of
interest may be made at the option of Litchfield by check mailed to the address
of the persons entitled thereto and that the payment of principal with respect
to any Junior Subordinated Debenture will be made only upon surrender of such
Junior Subordinated Debenture to the Indenture Trustee.
OPTIONAL REDEMPTION
Except as provided below, the junior subordinated debentures may not be
redeemed prior to June 30, 2004. Litchfield shall have the right to redeem the
junior subordinated debentures, in whole or in part, from time to time, on or
after June 30, 2004, upon not less than 30 nor more than 60 days' notice, at
100% of the principal amount of the junior subordinated debentures together with
accrued and unpaid interest, including Compounded Interest (as hereinafter
defined) to, but excluding, the redemption date.
If the junior subordinated debentures are redeemed on any Interest Payment
Date (as defined below), accrued and unpaid interest shall be payable to holders
of record on the relevant record date.
So long as the trust securities are outstanding, the proceeds from the
redemption of any junior subordinated debentures will be used to redeem trust
securities.
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Litchfield will also have the right to redeem the junior subordinated
debentures, in whole but not in part, within 90 days following the occurrence of
a Special Event as described under "Description of the Preferred
Securities--Special Event Redemption."
Litchfield may not redeem any junior subordinated debentures unless all
accrued and unpaid interest thereon, including Compounded Interest, if any, has
been paid for all quarterly periods terminating on or prior to the date of
notice of redemption.
If Litchfield gives a notice of redemption in respect of junior
subordinated debentures (which notice will be irrevocable), then by 10:00 a.m.,
New York City time, on the redemption date, Litchfield will deposit irrevocably
with the Indenture Trustee funds sufficient to pay the applicable Redemption
Price and will give irrevocable instructions and authority to pay such
Redemption Price to the holders of the junior subordinated debentures. If notice
of redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the redemption date interest will
cease to accrue on the junior subordinated debentures called for redemption,
such junior subordinated debentures will no longer be deemed to be outstanding
and all rights of holders of such junior subordinated debentures so called for
redemption will cease, except the right of the holders of such junior
subordinated debentures to receive the applicable Redemption Price but without
interest on such Redemption Price. If any date fixed for redemption of junior
subordinated debentures is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
Litchfield fails to repay the junior subordinated debentures on maturity or the
date fixed for redemption or if payment of the Redemption Price in respect of
junior subordinated debentures is improperly withheld or refused and not paid by
Litchfield, interest on such junior subordinated debentures will continue to
accrue from the original redemption date to the date of payment, in which case
the actual payment date will be considered the date fixed for redemption for
purposes of calculating the applicable Redemption Price. If fewer than all of
the junior subordinated debentures are to be redeemed, the junior subordinated
debentures will be redeemed pro rata or by lot or by any other method utilized
by the Indenture Trustee.
In the event of any redemption in part, Litchfield will not be required to:
- issue, register the transfer of, or exchange any junior subordinated
debentures during a period beginning at the opening of business 15 days
before the mailing of a notice of redemption of junior subordinated
debentures and ending at the close of business on the date of such
mailing; and
- register the transfer of or exchange any junior subordinated debentures
so selected for redemption, in whole or in part, except the unredeemed
portion of any junior subordinated debentures being redeemed in part.
INTEREST
The junior subordinated debentures will bear interest at the rate of [ ]%
per annum from . Interest will be payable quarterly in arrears June
30, September 30, December 31 and March 31 of each year (each, an "Interest
Payment Date"), commencing on June 30, 1999, to the person in whose name such
junior subordinated debenture is registered, subject to certain exceptions, at
the close of business on the Business Day next preceding such Interest Payment
Date. In the event (i) the preferred securities shall not continue to remain in
book-entry only form or (ii) if following distribution of the junior
subordinated debentures to holders of trust securities upon dissolution of the
trust as described under "Description of the Preferred Securities--Distribution
of the Junior Subordinated Debentures," the junior subordinated debentures shall
not continue to remain in book-entry only form, the relevant record date will be
the fifteenth day of the month in which the relevant Interest Payment Date
occurs. Interest payable on any Junior Subordinated Debenture that is not
punctually paid or duly provided for on any Interest Payment Date will forthwith
cease to be payable to the person in whose name such Junior Subordinated
Debenture is registered on the relevant record date, and such defaulted interest
will instead be payable to
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the person in whose name such junior subordinated debenture is registered on the
special record date or other specified date determined in accordance with the
Indenture; provided, however, that interest shall not be considered payable by
Litchfield on any Interest Payment Date falling within an Extension Period
unless Litchfield has elected to make a full or partial payment of interest
accrued on the junior subordinated debentures on such Interest Payment Date. The
amount of interest payable for any full quarterly interest period will be
computed on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly interest period for which interest is
computed, interest will be computed on the basis of the actual number of days
elapsed per 90-day quarter. If any date on which interest is payable on the
junior subordinated debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as Litchfield is not in default in the payment of interest on the
junior subordinated debentures, Litchfield will have the right to defer payments
of interest on the junior subordinated debentures by extending the interest
payment period at any time from time to time for an extension period not
exceeding 20 consecutive quarterly interest periods (each such period, an
"Extension Period"). Litchfield has no current intention of exercising its right
to extend an interest payment period. No interest will be due and payable on the
junior subordinated debentures during an Extension Period, except at the end
thereof. During any Extension Period, Litchfield will not:
- declare or pay any dividends on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any of its capital
stock other than:
- dividends or distributions in shares of, or options, warrants,
rights to subscribe for or purchase shares of, Litchfield's common
stock;
- any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any
such rights pursuant thereto;
- as a result of a reclassification of Litchfield's capital stock or
the exchange or the conversion of one class or series of
Litchfield's capital stock for another class or series of
Litchfield's capital stock;
- the payment of accrued dividends and the purchase of fractional
interests in shares of Litchfield's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the
security being converted or exchanged;
- purchases of Litchfield's common stock related to the issuance of
Litchfield's common stock or rights under any of Litchfield's
benefit plans for its directors, officers, employees, any of
Litchfield's dividend reinvestment plans or stock purchase plans,
or any of the benefit plans of any of Litchfield's affiliates for
such affiliates' directors, officers or employees;
- make any payment of principal or of interest or premium, if any, on or
repay, repurchase or redeem any debt security of Litchfield that, ranks
pari passu with or junior in interest to the junior subordinated
debentures; or
- make any guarantee payments with respect to any guarantee by Litchfield
of the debt securities of any subsidiary of Litchfield (other than the
preferred securities guarantee) if such guarantee ranks pari passu with
or junior in interest to the junior subordinated debentures.
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Prior to the termination of any such Extension Period, Litchfield 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 quarterly interest periods or extend beyond the maturity of the
junior subordinated debentures. On the Interest Payment Date occurring at the
end of each Extension Period, Litchfield will pay to the holders of junior
subordinated debentures of record on the record date for such Interest Payment
Date (regardless of who the holders of record may have been on other dates
during the Extension Period) all accrued and unpaid interest on the junior
subordinated debentures, together with interest thereon at the rate specified
for the junior subordinated debentures to the extent permitted by applicable
law, compounded quarterly ("Compounded Interest"). Upon the termination of any
Extension Period and the payment of all amounts then due, Litchfield may
commence a new Extension Period, subject to the above requirements. Litchfield
may also prepay at any time all or any portion of the interest accrued during an
Extension Period. Consequently, there could be multiple Extension Periods of
varying lengths throughout the term of the junior subordinated debentures, not
to exceed 20 consecutive quarterly interest periods; provided, that no such
period may extend beyond the stated maturity of the junior subordinated
debentures. The failure by Litchfield to make interest payments during an
Extension Period would not constitute a default or an event of default under the
Indenture or Litchfield's currently outstanding indebtedness.
If the Property Trustee is the sole holder of the junior subordinated
debentures, Litchfield will give the Property Trustee notice of its election to
begin an Extension Period one Business Day prior to the earlier of:
- the next succeeding date on which Distributions on the preferred
securities are payable; or
- the date the trust is required to give notice to the Nasdaq National
Market or other applicable self-regulatory organization or to holders of
the preferred securities of the record date or the date such Distribution
is payable.
The trust will give notice of Litchfield's election to begin such Extension
Period to the holders of the preferred securities.
If junior subordinated debentures have been distributed to holders of trust
securities, Litchfield will give the holders of the junior subordinated
debentures notice of its election to begin an Extension Period at least ten
Business Days prior to the earlier of:
- the next succeeding Interest Payment Date; or
- the date Litchfield is required to give notice to the Nasdaq National
Market (if the junior subordinated debentures are then listed thereon) or
other applicable self-regulatory organization or to holders of the junior
subordinated debentures of the record or payment date of such related
interest payment.
ADDITIONAL INTEREST
If at any time the trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the U.S. or any other taxing authority, then, in any such
case, Litchfield will pay as additional interest ("Additional Interest") on the
junior subordinated debentures such additional amounts as shall be required so
that the net amounts received and retained by the trust after paying any such
taxes, duties, assessments or other governmental charges will be equal to the
amounts the trust would have received had no such taxes, duties, assessments or
other governmental charges been imposed.
COMPOUNDED INTEREST
Payments of Compounded Interest on the junior subordinated debentures held
by the trust will make funds available to pay additional cash distributions on
Distributions in arrears in respect of the preferred securities pursuant to the
terms thereof.
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BOOK-ENTRY AND SETTLEMENT
If any junior subordinated debentures are distributed to holders of
preferred securities (see "Description of the Preferred Securities--
Distribution of the Junior Subordinated Debentures"), such junior subordinated
debentures will be issued in the form of one or more global certificates (each a
"Global Security") registered in the name of the Depositary or its nominee.
Except under the limited circumstances described below, junior subordinated
debentures represented by the Global Security will not be exchangeable for, and
will not otherwise be issuable as, junior subordinated debentures in definitive
form. The Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor Depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in a Global
Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of junior
subordinated debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing junior subordinated debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each such beneficial owner
must rely on the procedures of the Depositary or, if such person is not a
Participant, on the procedures of the Participant through which such person owns
its interest to exercise any rights of a holder under the Indenture. If junior
subordinated debentures are distributed to holders of preferred securities, DTC
will act as securities depositary for the junior subordinated debentures.
For a description of DTC and DTC's book-entry system, see "Description of
the Preferred Securities--Book-Entry Only Issuance--The Depository Trust
Company." As of the date of this prospectus supplement, the description herein
of DTC's book-entry system and DTC's practices as they relate to purchases,
transfers, notices and payments with respect to the preferred securities apply
in all material respects to any debt obligations represented by one or more
Global Securities held by DTC. Litchfield may appoint a successor to DTC or any
successor depositary in the event DTC or the successor depositary is unable or
unwilling to continue as a depository for the Global Securities.
Litchfield, the Indenture Trustee, any paying agent and any other agent of
Litchfield or the Indenture Trustee will not have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Security for junior subordinated
debentures or for maintaining, supervising or reviewing any records relating to
the beneficial ownership interests.
A Global Security shall be exchangeable for junior subordinated debentures
registered in the names of persons other than the depositary or its nominee only
if:
- the Depositary notifies Litchfield that it is unwilling or unable to
continue as a depositary for the Global Security and no successor
depositary shall have been appointed;
- 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 a depositary and no successor depositary shall have
been appointed; or
- Litchfield, in its sole discretion, determines that the Global Security
shall be so exchangeable.
Any Global Security that is exchangeable pursuant to the preceding sentence
will be exchangeable for junior subordinated debentures registered in the names
that the Depositary shall direct. It is expected that those instructions will be
based upon directions received by the Depositary from its Participants with
respect to ownership of beneficial interests in the Global Security.
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RELATIONSHIP BETWEEN THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED
DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the trust exists for the purposes of:
- issuing the trust securities evidencing undivided beneficial interests in
the assets of the trust and investing the proceeds thereof in the junior
subordinated debentures; and
- only engaging in other activities as are necessary, convenient and
incidental thereto or are specifically authorized in the Declaration.
As long as payments of interest and other payments are made when due on the
junior subordinated debentures, those payments will be sufficient to cover
Distributions and other payments due on the preferred securities primarily
because:
- the aggregate principal amount of junior subordinated debentures held as
trust assets by the trust will be equal to the sum of the aggregate
stated liquidation amount of the preferred securities and the common
securities;
- the interest rate and interest and other payment dates of the junior
subordinated debentures will match the distribution rate and Distribution
and other payment dates of the preferred securities;
- the Declaration further provides that the trustees will not cause or
permit the trust, among other things, to engage in any activity that is
not consistent with the limited purposes of the trust; and
- the Declaration provides that Litchfield will pay for all debts and
obligations, other than with respect to the trust securities, and all
costs and expenses of the trust, including the fees and expenses of the
trustees and any taxes and all costs and expenses with respect thereto,
to which the trust may become subject, except for United States
withholding taxes. However, no assurance can be given that Litchfield
will have sufficient resources to enable it to pay those debts,
obligations, costs and expenses on behalf of the trust.
Payments of Distributions and other payments due on the preferred
securities are guaranteed by Litchfield on a subordinated basis as and to the
extent set forth under "Description of the Preferred Securities Guarantees" in
the accompanying prospectus. If Litchfield does not make interest or other
payments on the junior subordinated debentures, the trust will not make
Distributions or other payments on the preferred securities. Under the
Declaration, if and to the extent Litchfield does make interest or other
payments on the junior subordinated debentures, the Property Trustee is
obligated to make Distributions or other payments on the preferred securities.
The preferred securities guarantee is a full and unconditional guarantee from
the time of issuance of the preferred securities, but the preferred securities
guarantee covers distributions and other payments on the preferred securities
only if and to the extent that Litchfield has made a payment to the Property
Trustee of interest or principal on the junior subordinated debentures.
The Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture with respect to the junior subordinated
debentures, including its rights as the holder of the junior subordinated
debentures to enforce Litchfield's obligations under the junior subordinated
debentures upon the occurrence of an Indenture Event of Default. The Guarantee
Trustee will have the right to enforce the preferred securities guarantee on
behalf of the holders of the preferred securities. In addition, the holders of
at least a majority in liquidation amount of the preferred securities will have
the right to direct the Property Trustee with respect to certain matters under
the Declaration and the preferred securities guarantee. If the Property Trustee
fails to enforce its rights under the Indenture, any holder of preferred
securities may, after a period of 30 days has elapsed from the holder's written
request to the Property Trustee to enforce these rights, institute a legal
proceeding against Litchfield to enforce those rights. If the Guarantee Trustee
fails to enforce the preferred securities guarantee, to the extent permitted by
applicable law, any holder of preferred securities may institute a legal
proceeding directly against Litchfield to enforce the Guarantee Trustee's rights
under the preferred securities guarantee. Notwithstanding the foregoing, if
Litchfield has failed to make a guarantee payment, a holder of preferred
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securities may directly institute a proceeding against Litchfield for
enforcement of the preferred securities guarantee for such payment. See
"Description of the Preferred Securities" and "Description of the Preferred
Securities Guarantee" herein and "Description of the Preferred Securities
Guarantees--Status of the Preferred Securities Guarantee" in the accompanying
prospectus.
The above mechanisms and obligations, taken together, provide a full and
unconditional guarantee by Litchfield of payments due on the preferred
securities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation,
counsel to Litchfield and the trust, the following are the material United
States federal income tax consequences of the ownership and disposition of the
preferred securities. Unless otherwise stated, this summary deals only with the
preferred securities held as capital assets by holders who acquire the preferred
securities upon original issuance at the price indicated on the cover of this
prospectus supplement. The tax treatment of a holder may vary depending on the
holder's particular situation. This summary does not deal with special classes
of holders, such as, for example, dealers in securities or currencies, banks,
thrifts, real estate investment trusts, regulated investment companies, life
insurance companies, persons holding preferred securities as part of a straddle
or as part of a hedging or conversion transaction, or persons whose functional
currency is not the United States dollar. Further, it does not include any
description of alternative minimum tax consequences or the tax laws of any state
or local government or any foreign government that may be applicable to the
preferred securities. This summary is based on the Internal Revenue Code of
1986, as amended, final and temporary Treasury Regulations promulgated
thereunder, published administrative positions of the Internal Revenue Service
(the "IRS"), and reported judicial decisions, all as existing on the date
hereof, and all of which are subject to change, possibly on a retroactive basis.
In particular, legislation was previously proposed by the Clinton Administration
in 1996 and 1997 that, if enacted, could have adversely affected Litchfield's
ability to deduct interest on the junior subordinated debentures. In addition,
the IRS has challenged the interest deduction in a similar arrangement that is
in the early stages of litigation in the Tax Court. Loss of the interest
deduction would permit Litchfield to cause a redemption of the junior
subordinated debentures and therefore cause a redemption of the preferred
securities. Alternatively, Litchfield could, in its discretion, dissolve the
trust and cause the junior subordinated debentures to be distributed to the
holders of the trust securities. See "Description of the Preferred
Securities -- Special Event Redemption." The authorities on which this summary
is based are subject to various interpretations, and it is therefore possible
that the federal income tax treatment of the ownership and disposition of
preferred securities may differ from the treatment described below.
Investors are advised to consult their own tax advisors as to the United
States federal income tax consequences of the ownership and disposition of the
preferred securities in light of their particular circumstances, as well as the
effect of any state, local or other tax laws.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Litchfield intends to take the position that the junior subordinated
debentures will be classified for United States federal income tax purposes as
indebtedness under current law. No assurance can be given, however, that this
position of Litchfield will not be challenged by the IRS. As mentioned above,
the allowability of the interest deduction in a similar arrangement is currently
being litigated in the Tax Court. The remainder of this discussion assumes that
the junior subordinated debentures will be classified for United States federal
income tax purposes as indebtedness of Litchfield.
CLASSIFICATION OF THE TRUST
Assuming full compliance with the terms of the Declaration, the trust will
be classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, each holder of
preferred securities will be considered the owner of a pro rata portion of the
junior subordinated debentures held by the trust and will be required to include
in gross income the holder's pro rata share of income accrued on the junior
subordinated debentures, whether or not cash is actually distributed to the
holders.
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INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under Treasury Regulations issued in 1996 applicable to debt instruments
(the "Regulations"), a "remote" contingency that stated interest will not be
timely paid will be ignored in determining whether a debt instrument is issued
with original issue discount ("OID"). Litchfield believes that the likelihood of
its exercising its option to defer payments is remote. Based on the foregoing,
the junior subordinated debentures will not be considered to be issued with OID
at the time of their original issuance and, accordingly, a holder should include
in gross income the holder's allocable share of interest on the junior
subordinated debentures in accordance with the holder's method of tax
accounting.
Under the Regulations, if Litchfield exercised its option to defer any
payment of interest, the junior subordinated debentures would at that time be
treated as issued with OID, and all stated interest on the junior subordinated
debentures would thereafter be treated as OID as long as the junior subordinated
debentures remained outstanding. In that event, each holder of the preferred
securities, including a taxpayer who otherwise uses the cash method of
accounting, would be required to include the holder's pro rata share of OID on
the junior subordinated debentures in income as it accrued, in accordance with a
constant yield method based on a compounding of interest, before the receipt of
Distributions on the preferred securities. Generally, during an Extension
Period, all of a holder's taxable interest income with respect to the junior
subordinated debentures will be accounted for as "OID" and actual distributions
of stated interest will not be separately reported as taxable income.
Consequently, during an Extension Period, a holder would be required to include
OID in gross income even though Litchfield would not make any actual cash
payments.
The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation herein.
No portion of the amounts received on the preferred securities will be
eligible for the dividends received deduction.
Subsequent uses of the term "interest" in this summary include income in
the form of OID.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD ON THE JUNIOR SUBORDINATED
DEBENTURES
Holders of preferred securities will begin to accrue OID with respect to
their pro rata share of the junior subordinated debentures during an Extension
Period. A holder who disposes of the preferred securities during an Extension
Period may suffer a loss because the market value of the preferred securities
will likely fall if Litchfield exercises its option to defer payments of
interest on the junior subordinated debentures. See "--Disposition of the
Preferred Securities" below. Furthermore, the market value of the preferred
securities may not reflect the accumulated Distributions that will be paid at
the end of the Extension Period, and a holder who sells the preferred securities
during the Extension Period will not receive from Litchfield any cash related to
the interest income the holder accrued and included in the holder's taxable
income under the OID rule (because that cash will be paid to the holder of
record at the end of the Extension Period).
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED
SECURITIES
Under current law, a distribution by the trust of the junior subordinated
debentures as described under the caption "Description of the Preferred
Securities--Distribution of the Junior Subordinated Debentures" will be
nontaxable and will result in the holder receiving directly the holder's pro
rata share of the junior subordinated debentures previously held indirectly
through the trust, with a holding period and tax basis equal to the holding
period and adjusted tax basis such holder was considered to have had in the
holder's pro rata share of the underlying junior subordinated debentures prior
to such distribution. A holder will include interest income in respect of junior
subordinated debentures received from the trust in the manner described above
under "-- Interest Income and Original Issue Discount."
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DISPOSITION OF THE PREFERRED SECURITIES
Upon a sale, exchange or other disposition of the preferred securities
(including a distribution of cash in redemption of a holder's preferred
securities upon redemption or repayment of the underlying junior subordinated
debentures, but excluding the distribution of junior subordinated debentures), a
holder will recognize gain or loss equal to the difference between the amount
realized on the sale of such preferred securities and the holder's adjusted tax
basis in the preferred securities. The amount realized will equal the cash
received, less the amount of accrued and unpaid interest with respect to the
holder's pro rata share of the junior subordinated debentures. The holder will
be required to include such accrued and unpaid interest in the holder's ordinary
income. Assuming that Litchfield does not exercise its option to defer payment
of interest on the junior subordinated debentures, a holder's adjusted tax basis
in the preferred securities generally will be the holder's initial purchase
price. If the junior subordinated debentures are deemed to be issued with OID as
a result of Litchfield's deferral of any interest payment or otherwise, a
holder's tax basis in the preferred securities generally will be the holder's
initial purchase price, increased by OID previously includible in the holder's
gross income to the date of disposition and decreased by Distributions or other
payments received on the preferred securities since and including the date of
the first Extension Period. Such gain or loss generally will be a capital gain
or loss and generally will be a long-term capital gain or loss if the preferred
securities have been held for more than one year.
If Litchfield exercises its option to defer any payment of interest on the
junior subordinated debentures, the preferred securities may trade at a price
that does not fully reflect the value of accrued but unpaid interest on the
underlying junior subordinated debentures. If this deferral occurs, a holder who
disposes of the holder's preferred securities between record dates for payments
of Distributions thereon will nevertheless be required to include in income, as
OID, accrued but unpaid interest on the junior subordinated debentures through
the date of disposition and to add that amount to the holder's adjusted tax
basis in the holder's preferred securities. Accordingly, the holder will
recognize a capital loss to the extent the selling price, which may not fully
reflect the value of accrued but unpaid interest, is less than the holder's
adjusted tax basis, which will include accrued but unpaid interest. Subject to
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
INFORMATION REPORTING TO HOLDERS
The trust will report the interest income paid or accrued during the year
with respect to the junior subordinated debentures, and any gross proceeds
received by the trust from the retirement or redemption of the junior
subordinated debentures, annually to the holders of record of the preferred
securities and the IRS. The trust currently intends to deliver these reports to
holders of record prior to January 31 following each calendar year. It is
anticipated that persons who hold preferred securities as nominees for
beneficial holders will report the required tax information to beneficial
holders on Form 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, preferred securities may
be subject to a "backup" withholding tax of 31% unless the holder complies with
certain certification procedures. Any withheld amounts will generally be allowed
as a credit against the holder's federal income tax, provided the required
information is timely filed with the IRS.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust who or that is, for U.S.
federal income tax purposes, a foreign corporation, a nonresident alien
individual, a foreign partnership or a nonresident fiduciary of a foreign estate
or trust.
United States Treasury Regulations were published in the Federal Register
on October 14, 1997 that affect the procedures to be followed by a United States
Alien Holder in establishing its non-U.S. person status. These regulations are
generally effective with respect to payments made after December 31, 1999,
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subject to transition rules. The discussion below is not intended to be a
complete discussion of the provisions of these regulations, and prospective
investors are urged to consult their own tax advisors with respect to the effect
of these regulations.
Litchfield and the trust, respectively, will not pay any additional amounts
on the junior subordinated debentures deemed to be held, and on the Preferred
Securities held, by a United States Alien Holder in respect of any tax,
assessment or governmental charge withheld or deducted.
PAYMENTS ON THE PREFERRED SECURITIES
As discussed above, Litchfield intends to take the position that the junior
subordinated debentures will be classified for United States federal income tax
purposes as indebtedness of Litchfield under current law. However, Litchfield
cannot assure you that this position will not be challenged by the IRS.
Assuming that the junior subordinated debentures are classified for United
States federal income tax purposes as indebtedness of Litchfield and subject to
the discussion of effectively connected income below, under present United
States federal income tax law, payments by the trust or any of its paying agents
to any holder of preferred securities who or that is a United States Alien
Holder will not be subject to U.S. federal withholding tax, provided that (a)
the beneficial owner of the preferred securities does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of Litchfield entitled to vote, (b) the beneficial owner of the
preferred securities is not a controlled foreign corporation that is related to
Litchfield through stock ownership, (c) the beneficial owner of the preferred
securities is not a bank deemed to be extending credit pursuant to a loan
agreement entered into in the ordinary course of its trade or business, and (d)
either (A) the beneficial owner of the preferred securities certifies to the
trust or its paying agent, under penalties of perjury, that the owner is not a
U.S. person and provides the owner's name, address and, if required, taxpayer
identification number, or (B)(x) a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and holds the
preferred securities in such capacity, certifies to the trust or its paying
agent, under penalties of perjury, that such statement has been received from
the beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the trust or its paying agent with a copy thereof
or (y) with respect to payments after December 31, 1999, a "qualified
intermediary" (which includes certain foreign financial institutions, foreign
clearing organizations or foreign branches of U.S. financial institutions or
clearing organizations which have entered into withholding agreements with the
IRS and have received appropriate certification from the beneficial owner)
provides the trust or its paying agent with an intermediary withholding
certificate.
If the junior subordinated debentures were not classified for United States
federal income tax purposes as indebtedness of Litchfield, payments by the trust
or any of its paying agents to any holder of preferred securities who or that is
a United States Alien Holder would be subject to U.S. withholding tax at a 30%
rate (or a lower rate prescribed by an applicable tax treaty).
Prospective investors that would be United States Alien Holders should
consult their tax advisors concerning the possible application of these rules.
SALE OR EXCHANGE OF PREFERRED SECURITIES
Subject to the discussion of effectively connected income below, a United
States Alien Holder (other than certain U.S. expatriates) generally will not be
subject to U.S. federal income tax on gain realized on the sale, exchange or
other disposition of the preferred securities unless the United States Alien
Holder is an individual who is present in the U.S. for 183 days or more in the
taxable year of disposition, and certain other conditions are satisfied.
EFFECTIVELY CONNECTED INCOME
If a United States Alien Holder of preferred securities is engaged in a
trade or business in the United States, and if the interest income paid or
accrued on the preferred securities is effectively connected with
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the conduct of such trade or business, the United States Alien Holder, although
exempt from the withholding tax on payments on preferred securities, will
generally be subject to regular United States income tax on the interest income
and on any gain realized on the sale, exchange or other disposition of preferred
securities in the same manner as if the holder were a U.S. person. Such a holder
will be required to provide to the applicable withholding agent a properly
executed form prescribed by the IRS in order to claim an exemption from
withholding tax. In addition, if such United States Alien Holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% (or a lower
rate prescribed by an applicable treaty) of its effectively connected earnings
and profits for the taxable year.
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UNDERWRITING
GENERAL
Based on the terms and conditions of an underwriting agreement, the trust
has agreed to sell to the underwriter named below, and the underwriter has
agreed to purchase from the trust, the number of preferred securities set forth
opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Tucker Anthony Cleary Gull.................................. [ ]
---------
Total............................................. [ ]
=========
</TABLE>
The underwriter is obligated to purchase all of the preferred securities,
if any preferred securities are purchased.
Litchfield and the trust have agreed with the underwriter to indemnify it
against certain civil liabilities, including liabilities under the Securities
Act of 1933, or to contribute with respect to payments which the underwriters
may be required to make.
The underwriter has in the past and may in the future engage in
transactions with, or perform services for, Litchfield or its subsidiaries in
the ordinary course of their businesses.
Litchfield will pay all expenses, estimated to be approximately $[ ],
associated with the offer and the sale of the preferred securities by the trust.
Litchfield has granted the underwriter an option to purchase an aggregate
of up to an additional [ ] preferred securities solely to cover
over-allotments, if any, at the initial offering price to the public plus
accrued interest. All or any of these options may be exercised at any time until
30 days after the date of the underwriting agreement.
COMMISSION AND DISCOUNTS
The underwriter will offer the preferred securities directly to the public
at a price of $10 per preferred security. The underwriter may also offer the
preferred securities to certain dealers at the above mentioned offering price
less a concession not in excess of $[ ] per preferred security. The
underwriter may allow, and such dealers may reallow, a discount not in excess of
$[ ] per preferred security to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
In view of the fact that the proceeds from the sale of the preferred
securities will be used to purchase the junior subordinated debentures,
Litchfield has agreed to pay to the underwriter as compensation for arranging
the investment therein of such proceeds an amount of $[ ] per preferred
security, (or a total of $[ ]).
The following tables show the per share and total underwriting discounts
and commissions Litchfield will pay to the underwriter. These amounts are shown
assuming both no exercise and full exercise of the underwriter over-allotment
option to purchase additional preferred securities.
UNDERWRITING DISCOUNTS AND COMMISSIONS PAYABLE BY LITCHFIELD
<TABLE>
<CAPTION>
WITH WITHOUT
OVER-ALLOTMENT EXERCISE OVER-ALLOTMENT EXERCISE
----------------------- -----------------------
<S> <C> <C>
Per preferred security.............................. $ $
Total............................................... $ $
</TABLE>
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<PAGE> 61
NASDAQ NATIONAL MARKET LISTING
Before this offering, there has been no established public trading market
for the preferred securities. The trust has applied to list the preferred
securities on the Nasdaq National Market under the symbol "LTCHP". If approved
for listing, Litchfield expects trading of the preferred securities to begin
within 30 days of the issuance of the preferred securities. In order to meet all
of the requirements for listing the preferred securities on the Nasdaq National
Market, the underwriter has agreed to sell the preferred securities to a minimum
of 400 beneficial holders. The underwriter has advised Litchfield that it
intends to make a market in the preferred securities prior to the commencement
of trading on the Nasdaq National Market. However, the underwriter is not
obligated to do so and may discontinue market making at any time without notice.
No assurances can be given about the liquidity of the trading market for the
preferred securities.
NO SALES OF SIMILAR SECURITIES
Litchfield and the trust have agreed that, during the period beginning on
the date of the underwriting agreement and continuing to and including the date
of delivery of the preferred securities to the underwriters in accordance with
the underwriting agreement, they will not offer, sell, contract to sell or
otherwise dispose of any preferred securities, any securities convertible into
or exchangeable into or exercisable for the preferred securities or the junior
subordinated debentures or any debt securities substantially similar to the
junior subordinated debentures or any equity securities substantially similar to
the preferred securities (except for the junior subordinated debentures and the
preferred securities issued pursuant to the underwriting agreement) without the
prior written consent of Tucker Anthony Cleary Gull.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the sale of the preferred securities, Securities and
Exchange Commission rules permit the underwriter to engage in transactions that
stabilize the price of the preferred securities. These transactions may include
purchases for the purpose of fixing or maintaining the price of the preferred
securities.
The underwriter may create a short position in the preferred securities in
connection with the offering. That means that it sells a larger number of the
preferred securities than is shown on the cover page of this prospectus
supplement. If it creates a short position, the underwriter may purchase
preferred securities in the open market to reduce the short position.
If the underwriter purchases the preferred securities to stabilize the
price or to reduce its short position, the price of the preferred securities
could be higher than it might be if it had not made such purchases. The
underwriter makes no representation or prediction about any effect that the
purchases may have on the price of the preferred securities.
The underwriter may suspend any of these activities at any time.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED [ ], 1999
PROSPECTUS
$100,000,000
[LITCHFIELD FINANCIAL CORPORATION LOGO]
JUNIOR SUBORDINATED DEBT SECURITIES
LITCHFIELD CAPITAL TRUST I
LITCHFIELD CAPITAL TRUST II
TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
LITCHFIELD FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
THE TRUSTS:
Litchfield Capital Trust I and Litchfield Capital Trust II are subsidiaries
of Litchfield Financial Corporation. The trusts are statutory business trusts
created under Delaware law. They exist for the purpose of issuing trust
preferred securities.
THE OFFERING:
JUNIOR SUBORDINATED DEBT SECURITIES
By this prospectus, Litchfield may offer junior subordinated debt
securities. Litchfield's obligations under these debt securities will be
unsecured and subordinate and junior in right of payment to all other senior
debt of Litchfield. Litchfield may issue and sell these junior subordinated debt
securities to the trusts in connection with the trusts' investment of proceeds
from the sale of their trust preferred securities and common securities. Under
certain circumstances the trusts may be dissolved and these junior subordinated
debt securities will be distributed to holders of the trusts' trust preferred
securities.
TRUST PREFERRED SECURITIES
By this prospectus, the trusts may offer and sell trust preferred
securities representing undivided beneficial interests in the assets of the
issuing trust. The trusts will use the proceeds from the sale of their trust
preferred securities and common securities to purchase junior subordinated debt
securities of Litchfield.
GUARANTEE
Litchfield will fully and unconditionally guarantee the trusts' payment
obligations with respect to their trust preferred securities on the terms
described in this prospectus and the accompanying prospectus supplement.
- --------------------------------------------------------------------------------
We will provide additional terms of our securities in one or more
supplements to this prospectus. You should read this prospectus supplement
carefully before you invest in our securities. This prospectus may not be used
to offer and sell our securities unless accompanied by a prospectus supplement.
- --------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
The date of this prospectus is [ ] , 1999
<PAGE> 63
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the SEC using a "shelf" registration process. By using this process, we may
offer the securities described in this prospectus in one or more public
offerings with a total aggregate initial offering price of up to $100,000,000.
This prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide a prospectus supplement.
The prospectus supplement will describe the specific terms of the offering. The
prospectus supplement may also add, update or change the information contained
in this prospectus. Please carefully read this prospectus and the applicable
prospectus supplement, in addition to the information contained in the documents
we refer to under the heading "Where You Can Find More Information."
You should rely only on the information contained or incorporated by
reference in this prospectus and any accompanying prospectus supplement. We have
not authorized anyone else to provide you with any different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. The information contained
in this prospectus is current only as of the date of this prospectus.
We have not included separate financial statements of the trusts in this
prospectus. We do not consider that such financial statements would be material
to holders of the trusts' trust preferred securities because:
- Each trust is a newly created special purpose entity;
- Each trust has no operating history or independent operations; and
- Neither trust is engaged in nor does it propose to engage in any activity
other than holding the Junior Subordinated Debt Securities (as defined
herein), issuing the trust securities (as defined herein) and any other
activity related thereto or specifically authorized by the trust's
Declaration (as defined herein).
Furthermore, taken together, Litchfield's obligations under the Junior
Subordinated Debt Securities, the Indenture, the Declarations and the preferred
securities guarantees (each, as defined herein) provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of distributions and
other amounts due on the trusts' preferred securities. See "The Trusts,"
"Description of the Preferred Securities," "Description of the Preferred
Securities Guarantees" and "Description of the Junior Subordinated Debt
Securities." In addition, we do not expect that the trusts will file reports
under the Securities Exchange Act of 1934, with the SEC.
WHERE YOU CAN FIND MORE INFORMATION
Litchfield files reports and other information with the SEC. You may read
and copy any document we file with the SEC at the SEC's Public Reference Room
located at 450 Fifth Street, N.W., Washington, D.C. 20549, at the district
office of the SEC located at 73 Tremont Street, Suite 600, Boston, MA 02108-
3912, and the regional office at 7 World Trade Center, Suite 1300, New York, New
York 10048. You may obtain further information regarding the operation of the
SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. Our filings
are also available to the public on the SEC's Internet site located at
http://www.sec.gov. In addition, you may inspect our reports at the offices of
Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, unless we
update or supersede that information by the information contained in this
prospectus or a prospectus supplement or by information that we file
subsequently that is incorporated by reference into this prospectus. We are
incorporating by reference into this prospectus the following documents that
Litchfield has filed with the
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<PAGE> 64
SEC and Litchfield's future filings with the SEC under Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act, until the offering of the securities offered
hereby is completed:
- Litchfield's Annual Report on Form 10-K for its fiscal year ended
December 31, 1998; and
- The definitive Proxy Statement dated March 23, 1999 for the Annual
Meeting of Litchfield's stockholders to be held on April 23, 1999.
This prospectus is part of a registration statement we have filed with the
SEC relating to our securities. As permitted by SEC rules, this prospectus does
not contain all of the information included in the registration statement and
the accompanying exhibits and schedules we file with the SEC. You should read
the registration statement, the exhibits and schedules for more information
about us and our securities. The registration statement, exhibits and schedules
are also available at the SEC's Public Reference Room or through its web site.
You may also obtain a copy of our filings with the SEC at no cost, by
writing to or telephoning us at the following address:
Litchfield Financial Corporation
430 Main Street
Williamstown, Massachusetts 01267
Attn: Treasurer
(413) 458-1000
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this prospectus and any accompanying prospectus
supplement, including the documents that are incorporated by reference as set
forth in "Where You Can Find More Information," that are not historical facts
are forward-looking statements. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Litchfield, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
Such factors include, among others, the risk factors set forth under "Risk
Factors" as well as the following:
- general economic and business conditions;
- industry trends;
- changes in business strategy or development plans;
- availability and quality of management; and
- availability, terms and deployment of capital.
Special attention should be paid to such forward-looking statements
including, but not limited to, statements relating to Litchfield's ability to
execute its growth strategies, realize its growth objectives and obtain
sufficient resources to finance its working capital needs and provide for its
known obligations.
Forward-looking statements are based on the beliefs of Litchfield's
management as well as assumptions made by and information currently available to
management. Litchfield and the trusts caution that assumptions, projections,
expectations, intentions or beliefs about future events may and often do vary
materially from actual results and the differences between assumptions,
projections, expectations, intentions or beliefs and actual results can be
material. Accordingly, there can be no assurance actual results will not differ
materially from those expressed or implied by forward-looking statements.
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LITCHFIELD FINANCIAL CORPORATION
Litchfield Financial Corporation is a diversified finance company that
provides financing to creditworthy borrowers for assets not typically financed
by banks. Litchfield provides such financing by making loans to businesses
secured by consumer receivables or other assets and by purchasing consumer
loans.
Litchfield provides financing to rural land dealers, timeshare resort
developers and other finance companies secured by receivables. Litchfield also
purchases consumer loans consisting primarily of loans to purchasers of rural
and vacation properties and vacation ownership interests popularly known as
timeshare interests, and provides loans to dealers and developers for the
acquisition and development of rural land and timeshare resorts. In addition,
Litchfield purchases other loans, such as consumer home equity loans, mortgages
and construction loans and tax lien certificates, and provides financing to
other businesses secured by receivables or other assets.
The principal sources of Litchfield's revenues are:
- interest and fees on loans,
- gains on sales of loans and
- servicing and other income.
Gains on sales of loans are based on the difference between the allocated
cost basis of the assets sold and the proceeds received, which includes the fair
value of any assets or liabilities that are newly created as a result of the
transaction. Because a significant portion of Litchfield's revenues is comprised
of gains realized upon sales of loans, the timing of such sales has a
significant effect on Litchfield's results of operations.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement,
Litchfield anticipates that any net proceeds from the sale of the securities
offered hereby will be used to support its business activities, as capital to
support senior indebtedness and for other general corporate purposes. Until used
for the purposes indicated, Litchfield will invest the net proceeds of this
offering in short-term investment-grade interest-bearing securities.
Each trust will use all proceeds received from the sale of its trust
securities to purchase junior subordinated debt securities from Litchfield.
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THE TRUSTS
Litchfield Capital Trust I and Litchfield Capital Trust II are statutory
business trusts created on April 12, 1999, under the Delaware Business Trust Act
pursuant to separate declarations of trust among the trustees of each trust and
Litchfield and the filing of a certificate of trust with the Secretary of State
of the State of Delaware. Each such declaration will be amended and restated in
its entirety (as so amended and restated, the "Declaration" and together, the
"Declarations") as of the date the respective trust initially issues trust
preferred securities representing preferred undivided beneficial interests in
the assets of such trust. Each Declaration will be qualified under the Trust
Indenture Act of 1939.
The following description summarizes the material terms of the Declarations
and is qualified in its entirety by reference to the form of Declaration, which
has been filed as an exhibit to the registration statement of which this
prospectus is a part, and the Trust Indenture Act.
The address of the principal office of each trust is c/o Litchfield
Financial Corporation, 430 Main Street, Williamstown, MA 01267, and the
telephone number of each trust at such address is
(413) 458-1000.
PREFERRED SECURITIES
Upon issuance of any preferred securities by a trust, the holders of the
preferred securities will own all of the issued and outstanding preferred
securities of such trust. Litchfield will, directly or indirectly, acquire
common securities representing common undivided beneficial interests in the
assets of each trust in an amount equal to 3% of the total capital of such
trust. Litchfield's common securities will constitute all of the issued and
outstanding common securities of each trust. The preferred securities and the
common securities will rank equally with each other and will have equivalent
terms; provided that
- if a Declaration Event of Default (as defined under "Events of Default")
under the Declaration of a trust occurs and is continuing, the holders of
preferred securities of such trust will have a priority over holders of
the common securities of such trust with respect to payments in respect
of distributions and payments upon liquidation, redemption and maturity
and (ii) the holders of common securities have the exclusive right to
appoint, remove or replace the trustees and to increase or decrease the
number of trustees. Each trust exists for the purposes of (a) issuing its
preferred securities, (b) issuing its common securities to Litchfield,
(c) investing the gross proceeds from the sale of its trust securities in
Junior Subordinated Debt Securities of Litchfield and (d) engaging in
only such other activities as are necessary, convenient or incidental
thereto or are specifically authorized in its Declaration. The rights of
the holders of the preferred securities of a trust, including economic
rights, rights to information and voting rights, are set forth in the
applicable Declaration, the Business Trust Act and the Trust Indenture
Act.
POWERS AND DUTIES OF TRUSTEES
The number of trustees of each trust will initially be five. Three of the
trustees (the "Regular Trustees") are individuals who are officers, directors or
employees of Litchfield. The fourth trustee is The Bank of New York, which is
unaffiliated with Litchfield and serves as the property trustee (the "Property
Trustee") and acts as the indenture trustee under the Declaration for purposes
of the Trust Indenture Act. The fifth trustee is The Bank of New York (Delaware)
which has its principal place of business in the State of Delaware (the
"Delaware Trustee"). Pursuant to each Declaration, legal title to the Junior
Subordinated Debt Securities purchased by a trust will be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
holders of the trust securities of such trust, and the Property Trustee will
have the legal power to exercise all rights, powers and privileges under the
Indenture (as defined under "Description of the Junior Subordinated Debt
Securities") with respect to such Junior Subordinated Debt Securities. In
addition, the Property Trustee will maintain exclusive control of a segregated
non-interest bearing bank account (the "Property Account") to hold all payments
in respect of the Junior Subordinated Debt Securities purchased by a trust for
the benefit of the holders of its trust securities. The Property Trustee will
promptly make distributions to the holders of the trust securities out
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of funds from the Property Account. The preferred securities guarantees are
separately qualified under the Trust Indenture Act and will be held by The Bank
of New York (the "Guarantee Trustee"), acting in its capacity as indenture
trustee with respect thereto, for the benefit of the holders of the applicable
preferred securities. As used in this prospectus and any accompanying prospectus
supplement, the term "Property Trustee" with respect to a trust refers to The
Bank of New York acting either in its capacity as a trustee under the related
Declaration and the holder of legal title to the Junior Subordinated Debt
Securities purchased by such trust or in its capacity as the Guarantee Trustee
under the applicable preferred securities guarantee, as the context may require.
Litchfield, as the direct or indirect owner of all of the common securities of
each trust, will have the exclusive right to appoint, remove or replace trustees
and to increase or decrease the number of trustees, provided that the number of
trustees will be, except under certain circumstances, at least five and the
majority of trustees will be Regular Trustees. The term of a trust will be set
forth in the applicable prospectus supplement but may dissolve earlier as
provided in the applicable Declaration.
The duties and obligations of the trustees of a trust will be governed by
the Declaration of such trust, the Business Trust Act and the Trust Indenture
Act. Under its Declaration, each trust will not, and the trustees will cause
such trust not to, engage in any activity other than in connection with the
purposes of such trust or other than as required or authorized by the related
Declaration. In particular, each trust will not and the trustees will cause each
trust not to (a) invest any proceeds received by such trust from holding the
Junior Subordinated Debt Securities purchased by such trust but shall promptly
distribute from the Property Account all such proceeds to holders of its trust
securities pursuant to the terms of the related Declaration and of its trust
securities; (b) acquire any assets other than as expressly provided in the
related Declaration; (c) possess property of such trust for other than a trust
purpose; (d) make any loans, other than loans represented by the Junior
Subordinated Debt Securities; (e) possess any power or otherwise act in such a
way as to vary the assets of such trust or the terms of its trust securities in
any way whatsoever, except as expressly provided in the related Declaration; (f)
issue any securities or other evidences of beneficial ownership of, or
beneficial interests in, such trust other than its trust securities; (g) incur
any indebtedness for borrowed money; (h) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee (as
defined under "Description of the Junior Subordinated Debt Securities") or
exercising any trust or power conferred upon the Indenture Trustee with respect
to the Junior Subordinated Debt Securities deposited in such trust as trust
assets; (i)waive any past default that is waivable under the Indenture; (j)
exercise any right to rescind or annul a declaration of acceleration of the
maturity of the principal of all of the Junior Subordinated Debt Securities
deposited in such trust as trust assets, without, in the case of clauses (h),
(i) and (j), obtaining the prior approval of the holders of a majority in
liquidation amount of all outstanding trust securities of such trust; (k)
consent to any amendment, modification or termination of the Indenture or the
Junior Subordinated Debt Securities deposited in such trust as trust assets,
where such consent is required, unless in the case of this clause (k) the
Property Trustee shall have received an opinion of counsel experienced in such
matters to the effect that such amendment, modification or termination will not
cause more than an insubstantial risk that for United States federal income tax
purposes such trust will not be classified as a grantor trust; (l) take or
consent to any action that would result in the placement of a lien, pledge,
charge, mortgage or other encumbrance on any of the property of such trust; (m)
vary the investment (within the meaning of Treasury Regulation Section
301.7701-4(c)) of such trust or of the holders of its trust securities; (n)
after the issuance of its preferred securities, enter into any contract or
agreement (other than any depositary agreement or any agreement with any
securities exchange or automated quotation system) that does not expressly
provide that the holders of such preferred securities, in their capacities as
such, have limited liability (in accordance with the provisions of the Business
Trust Act) for the liabilities and obligations of such trust or (o) revoke any
action previously authorized or approved by a vote of the holders of its
preferred securities except by subsequent vote of such holders.
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BOOKS AND RECORDS
The books and records of each trust will be maintained at the principal
office of such trust and will be open for inspection by a holder of preferred
securities of such trust or his authorized representative for any purpose
reasonably related to his interest in such trust during normal business hours.
VOTING
Holders of preferred securities generally will have limited voting rights,
relating only to the modification of the preferred securities and, under certain
circumstances, to the exercise of a trust's rights as holder of the Junior
Subordinated Debt Securities and the preferred securities guarantee. The holders
of the preferred securities will not be able to appoint, remove or replace, or
to increase or decrease the number of, trustees, which rights are vested
exclusively in the holders of the common securities.
THE PROPERTY TRUSTEE
The Property Trustee, for the benefit of the holders of the trust
securities of a trust, is authorized under each Declaration to exercise all
rights under the Indenture with respect to the Junior Subordinated Debt
Securities deposited in such trust as trust assets, including its rights as the
holder of such Junior Subordinated Debt Securities to enforce Litchfield's
obligations under such Junior Subordinated Debt Securities upon the occurrence
of an Indenture Event of Default (as defined herein under "Description of the
Junior Subordinated Debt Securities--Indenture Events of Default"). The Property
Trustee will also be authorized to enforce the rights of holders of the
preferred securities of a trust under the related preferred securities
guarantee. If any trust's failure to make distributions on the preferred
securities of such trust is a consequence of Litchfield's exercise of any right
under the terms of the Junior Subordinated Debt Securities deposited in such
trust as trust assets to extend the interest payment period for such Junior
Subordinated Debt Securities, the Property Trustee will have no right to enforce
the payment of distributions on such preferred securities until a Declaration
Event of Default shall have occurred. If a Declaration Event of Default has
occurred and is continuing, then the holders of at least a majority in
liquidation amount of the preferred securities of a trust will have the right to
direct the Property Trustee for such trust with respect to certain matters under
the related Declaration and the related preferred securities guarantee. If the
Property Trustee fails to enforce its rights under the applicable series of
Junior Subordinated Debt Securities, any holder of preferred securities, to the
extent permitted by applicable law, may, after a period of 30 days has elapsed
from such holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against Litchfield to enforce such
rights without first instituting any legal proceeding against the Property
Trustee or any other person. Notwithstanding the foregoing, if a Declaration
Event of Default under the applicable Declaration has occurred and is continuing
and such event is attributable to the failure of Litchfield to pay interest or
principal, or premium, if any, on the applicable series of Junior Subordinated
Debt Securities on the date such interest, principal or premium is otherwise
payable (or in the case of redemption, on the redemption date), then a holder of
preferred securities of such trust may directly institute a proceeding for
enforcement of payment to such holder of the principal of, or premium, if any,
or interest on the applicable series of Junior Subordinated Debt Securities
having a principal amount equal to the aggregate liquidation amount of the
preferred securities of such holder (a "Holder Direct Action") on or after the
respective due date specified in the applicable series of Junior Subordinated
Debt Securities. In connection with such Holder Direct Action, Litchfield will
be subrogated to the rights of such holder of preferred securities under the
applicable Declaration to the extent of any payment made by Litchfield to such
holder of preferred securities in such Holder Direct Action. Except as expressly
provided in the preceding sentences or in the applicable prospectus supplement,
the holders of preferred securities of such trust will not be able to exercise
directly any other remedy available to the holders of the applicable series of
Junior Subordinated Debt Securities.
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DISTRIBUTIONS
Pursuant to each Declaration, distributions on the preferred securities of
a trust must be paid on the dates payable to the extent that the Property
Trustee for such trust has cash on hand in the applicable Property Account to
permit such payment. The funds available for distribution to the holders of the
preferred securities of a trust will be limited to payments received by the
Property Trustee in respect of the Junior Subordinated Debt Securities that are
deposited in such trust as trust assets. If Litchfield does not make interest
payments on the Junior Subordinated Debt Securities deposited in a trust as
trust assets, the Property Trustee will not make distributions on the preferred
securities of such trust. Under each Declaration, if and to the extent
Litchfield does make interest payments on the Junior Subordinated Debt
Securities deposited in a trust as trust assets, the Property Trustee is
obligated to make distributions on the trust securities of such trust on a Pro
Rata Basis (as defined below). The payment of distributions on the preferred
securities of a trust is guaranteed by Litchfield as and to the extent set forth
under "Description of the Preferred Securities Guarantees." A preferred
securities guarantee is a guarantee from the time of issuance of the preferred
securities, but the preferred securities guarantee covers distributions and
other payments on the applicable preferred securities only if and to the extent
that Litchfield has made a payment to the Property Trustee of interest or
principal, or premium, if any, on the Junior Subordinated Debt Securities
deposited in a trust as trust assets. As used in this prospectus, the term "Pro
Rata Basis" shall mean pro rata to each holder of trust securities of a trust
according to the aggregate liquidation amount of the trust securities of such
trust held by the relevant holder in relation to the aggregate liquidation
amount of all trust securities of such trust outstanding unless, in relation to
a payment, a Declaration Event of Default under the related Declaration has
occurred and is continuing, in which case any funds available to make such
payment shall be paid first to each holder of the preferred securities of such
trust pro rata according to the aggregate liquidation amount of the preferred
securities held by the relevant holder in relation to the aggregate liquidation
amount of all the preferred securities of such trust outstanding, and only after
satisfaction of all amounts owed to the holders of such preferred securities, to
each holder of common securities of such trust pro rata according to the
aggregate liquidation amount of such common securities held by the relevant
holder in relation to the aggregate liquidation amount of all common securities
of such trust outstanding.
EVENTS OF DEFAULT
If an Indenture Event of Default occurs and is continuing with respect to
the Junior Subordinated Debt securities deposited in a trust as trust assets, an
Event of Default under the Declaration (a "Declaration Event of Default") of
such trust will occur and be continuing, with respect to any outstanding trust
securities of such trust. In such event, each Declaration provides that the
holders of common securities of such trust will be deemed to have waived any
such Declaration Event of Default with respect to the common securities until
all Declaration Events of Default with respect to the preferred securities of
such trust have been cured or waived or otherwise eliminated. Until all such
Declaration Events of Default with respect to the preferred securities of such
trust 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 of such trust and only the holders of such preferred securities will
have the right to direct the Property Trustee with respect to certain matters
under such Declaration and consequently under the Indenture. In the event that
any Declaration Event of Default with respect to the preferred securities of
such trust is waived by the holders of the preferred securities of such trust as
provided in the Declaration, the holders of common securities of such trust
pursuant to such Declaration have agreed that such waiver also constitutes a
waiver of such Declaration Event of Default with respect to such common
securities for all purposes under the Declaration without any further act, vote
or consent of the holders of such common securities. The Property Trustee shall
notify each holder of preferred securities of a trust of any notice of default
with respect to the related Junior Subordinated Debt Securities, unless such
default has been cured before the giving of such notice or the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers (as that term is defined in the applicable Declaration) of
the Property Trustee in good faith determines that the withholding of such
notice is in the interests of the holders of the trust securities of such trust.
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RECORD HOLDERS
Each Declaration provides that the trustees of such trust may treat the
person in whose name a certificate representing its preferred securities is
registered on the books and records of such trust as the sole holder thereof and
of the preferred securities represented thereby for purposes of receiving
distributions and for all other purposes and, accordingly, will not be bound to
recognize any equitable or other claim to or interest in such certificate or in
the preferred securities represented thereby on the part of any person, whether
or not the trustees of such trust shall have actual or other notice thereof.
Preferred securities will be issued in fully registered form. Unless otherwise
specified in a prospectus supplement, preferred securities will be represented
by one or more global certificates registered on the books and records of such
trust in the name of a depositary (the "Depositary") named in an accompanying
prospectus supplement or its nominee. Under each Declaration:
(i) such trust and the trustees thereof will be entitled to deal with
the Depositary (or any successor depositary) for all purposes, including
the payment of distributions and receiving approvals, votes or consents
under the related Declaration, and except as set forth in the related
Declaration with respect to the issuance of definitive certificates
representing the preferred securities, will have no obligation to persons
owning a beneficial interest in preferred securities ("Preferred Security
Beneficial Owners") registered in the name of and held by the Depositary or
its nominee; and
(ii) the rights of Preferred Security Beneficial Owners will be
exercised only through the Depositary (or any successor depositary) and
will be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Depositary and/or its
participants. With respect to preferred securities registered in the name
of and held by the Depositary or its nominee, all notices and other
communications required under each Declaration will be given to, and all
distributions on such preferred securities will be given or made to, the
Depositary (or its successor).
The specific terms of the depositary arrangement with respect to the
preferred securities of a trust will be disclosed in the applicable prospectus
supplement.
DEBTS AND OBLIGATIONS
In each Declaration, Litchfield has agreed to pay all debts and obligations
(other than with respect to the related trust securities) and all costs and
expenses of the applicable trust, including the fees and expenses of its
trustees and any taxes and all costs and expenses with respect thereto, to which
such trust may become subject, except for United States withholding taxes. The
foregoing obligations of Litchfield under each Declaration are for the benefit
of, and will be enforceable by, any person to whom any such debts, obligations,
costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor
has received notice thereof. Any such Creditor may enforce such obligations of
Litchfield directly against Litchfield, and Litchfield has irrevocably waived
any right or remedy to require that any such Creditor take any action against
any trust or any other person before proceeding against Litchfield. Litchfield
will be subrogated to all rights of a trust in respect of any amounts paid to
any Creditor by Litchfield. Litchfield has agreed in each Declaration to execute
such additional agreements as may be necessary or desirable in order to give
full effect to the foregoing.
DESCRIPTION OF THE PREFERRED SECURITIES
Each trust may issue, from time to time, only one series of preferred
securities having terms described in the prospectus supplement relating thereto.
The Declaration of each trust authorizes the Regular Trustees of such trust to
issue on behalf of such trust one series of preferred securities. Each
Declaration will be qualified as an indenture under the Trust Indenture Act. The
preferred securities will have such terms, including distributions, redemption,
voting, liquidation rights and such other preferred, deferred or other special
rights or such restrictions as set forth in the related Declaration or made part
of such Declaration by the Trust Indenture Act. Reference is made to the
prospectus supplement relating to the
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preferred securities of a trust for specific terms, including (i) the specific
designation of such preferred securities, (ii) the number of preferred
securities issued by such trust, (iii) the annual distribution rate (or method
of calculation thereof) for preferred securities issued by such trust, the date
or dates upon which such distributions will be payable and the record date or
dates for the payment of such distributions, (iv) whether distributions on the
preferred securities issued by such trust will be cumulative, and, in the case
of preferred securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
preferred securities issued by such trust will be cumulative, (v) the amount or
amounts which will be paid out of the assets of such trust to the holders of
preferred securities of such trust upon voluntary or involuntary dissolution,
winding-up or termination of such trust, (vi) the obligation or right, if any,
of such trust to purchase or redeem preferred securities issued by such trust
and the price or prices at which, the period or periods within which and the
terms and conditions upon which preferred securities issued by such trust will
or may be purchased or redeemed, in whole or in part, pursuant to such
obligation or right, (vii) the voting rights, if any, of preferred securities
issued by such trust in addition to those required by law, including the number
of votes per preferred security and any requirement for the approval by the
holders of preferred securities, as a condition to specified actions or
amendments to the Declaration of such trust, (viii) terms for any conversion or
exchange into other securities (ix) the rights, if any, to defer distributions
on the preferred securities by extending the interest payment period on the
Junior Subordinated Debt Securities and (x) any other relevant, terms, rights,
preferences, privileges, limitations or restrictions of preferred securities
issued by such trust consistent with the Declaration of such trust or with
applicable law. All preferred securities offered hereby will be guaranteed by
Litchfield as and to the extent set forth below under "Description of the
Preferred Securities Guarantees." Certain United States federal income tax
considerations applicable to any offering of preferred securities will be
described in the prospectus supplement relating thereto.
In connection with the issuance of the preferred securities, each trust
will issue one series of common securities. The Declaration of each trust
authorizes the Regular Trustees of such trust to issue on behalf of such trust
one series of common securities having such terms including distributions,
redemption, voting, liquidation rights or such restrictions as set forth
therein. The terms of the common securities issued by a trust will be
substantially identical to the terms of the preferred securities issued by such
trust and the common securities will rank pari passu, and payments will be made
thereon on a Pro Rata Basis with the preferred securities except that if a
Declaration Event of Default occurs and is continuing, the rights of the holders
of such common securities to payment in respect of distributions and payments
upon liquidation, redemption and maturity will be subordinated to the rights of
the holders of such preferred securities. The common securities issued by a
trust will also carry the right to vote and to appoint, remove or replace any of
the trustees of such trust. All of the common securities issued by a trust will
be directly or indirectly owned by Litchfield.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
The payment of periodic cash distributions with respect to the preferred
securities of each trust out of moneys held by the Property Trustee of each
trust, and payments on liquidation of each trust and redemption of preferred
securities of each trust, will be fully and unconditionally guaranteed by
Litchfield as described herein. Set forth below is a summary of the preferred
securities guarantees that will be executed and delivered by Litchfield for the
benefit of the holders from time to time of preferred securities. Each preferred
securities guarantee will be separately qualified under the Trust Indenture Act
and will be held by The Bank of New York, acting in its capacity as indenture
trustee with respect thereto (the "Guarantee Trustee"), for the benefit of
holders of the preferred securities of the applicable trust. The terms of each
preferred securities guarantee will be those set forth in such preferred
securities guarantee and those made part of such guarantee by the Trust
Indenture Act. This description summarizes the material terms of the preferred
securities guarantees and is qualified in its entirety by reference to the form
of preferred securities guarantee, which is filed as an exhibit to the
registration statement of which this prospectus forms a part, and the Trust
Indenture Act.
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GENERAL
Pursuant to each preferred securities guarantee, Litchfield will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the preferred securities issued by a trust, the
Guarantee Payments (as defined herein) (without duplication of amounts
theretofore paid by such trust), as and when due, regardless of any defense,
right of set-off or counterclaim that such trust may have or assert. The
following payments or distributions with respect to preferred securities issued
by a trust to the extent not paid or made by or on behalf of such trust will be
subject to such preferred securities guarantee (without duplication): (i) any
accumulated and unpaid distributions on such preferred securities, and the
redemption price, including all accumulated and unpaid distributions to, but
excluding, the date of redemption, with respect to such preferred securities
called for redemption by such trust but if and only to the extent that in each
case Litchfield has made a payment to the related Property Trustee of interest
or principal, or premium, if any, on the Junior Subordinated Debt Securities
deposited in such trust as trust assets and (ii) upon a voluntary or involuntary
dissolution, winding-up or termination of such trust (other than in connection
with the distribution of Junior Subordinated Debt Securities to the holders of
such preferred securities in exchange for preferred securities or the redemption
of all of such preferred securities upon the maturity or redemption of the
Junior Subordinated Debt Securities), the lesser of (a) the aggregate of the
liquidation amount and all accumulated and unpaid distributions on such
preferred securities to the date of payment, to the extent such trust has funds
on hand legally available therefor, and (b) the amount of assets of such trust
remaining available for distribution to holders of such preferred securities in
liquidation of such trust as required by applicable law (the "Guarantee
Payments"). Litchfield's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by Litchfield to the holders of such
preferred securities or by causing the applicable trust to pay such amounts to
such holders.
The preferred securities guarantee is a guarantee from the time of issuance
of the applicable preferred securities, but the preferred securities guarantee
covers distributions and other payments on such preferred securities only if and
to the extent that Litchfield has made a payment to the Property Trustee of
interest or principal, or premium, if any, on the Junior Subordinated Debt
Securities deposited in the applicable trust as trust assets. If Litchfield does
not make interest, principal or premium, if any, payments on the Junior
Subordinated Debt Securities deposited in the applicable trust as trust assets,
the Property Trustee will not make distributions on the preferred securities of
such trust and the trust will not have funds available therefor.
Litchfield's obligations under the Declaration for each trust, the
preferred securities guarantee issued with respect to preferred securities
issued by such trust, the Junior Subordinated Debt Securities purchased by such
trust and the Indenture, in the aggregate, will provide a full and unconditional
guarantee on a subordinated basis by Litchfield of payments due on the preferred
securities issued by such trust.
CERTAIN COVENANTS OF LITCHFIELD
In each preferred securities guarantee, Litchfield will covenant that, so
long as any preferred securities issued by the applicable trust remain
outstanding, Litchfield will not (i) declare or pay any dividends on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect to,
any of its capital stock (other than (a) dividends or distributions in shares
of, or options, warrants, rights to subscribe for or purchase shares of, common
stock of Litchfield, (b) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) as a result of a reclassification of Litchfield's capital
stock or the exchange or the conversion of one class or series of Litchfield's
capital stock for another class or series of Litchfield's capital stock, (d) the
payment of accrued dividends and the purchase of fractional interests in shares
of Litchfield's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, or (e)
purchases of Litchfield's common stock related to the issuance of Litchfield's
common stock or rights under any of Litchfield's benefit plans for its
directors, officers or employees, any of Litchfield's
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dividend reinvestment plans or stock purchase plans, or any of the benefit plans
of any of Litchfield's affiliates for such affiliates' directors, officers or
employees), (ii) make any payment of principal or of interest or premium, if
any, on or repay, repurchase or redeem any debt security of Litchfield that
ranks pari passu with or junior in interest to the Junior Subordinated Debt
Securities deposited in such trust or (iii) make any guarantee payments with
respect to any guarantee by Litchfield of the debt securities of any subsidiary
of Litchfield (other than pursuant to a preferred securities guarantee) if such
guarantee ranks pari passu with or junior in interest to the Junior Subordinated
Debt Securities deposited in such trust, if at such time (x) Litchfield shall be
in default with respect to its Guarantee Payments or other payment obligations
under the related preferred securities guarantee, (y) there shall have occurred
any Declaration Event of Default under the applicable Declaration or (z)
Litchfield shall have given notice of its election to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period as provided in the terms of the Junior Subordinated Debt Securities
deposited in such trust as trust assets and such period, or any extension
thereof, is continuing. In addition, so long as any preferred securities of a
trust remain outstanding, Litchfield has agreed (i) to remain the sole direct or
indirect owner of all of the outstanding common securities of such trust and not
to cause or permit such common securities to be transferred except to the extent
permitted by the applicable Declaration; provided that any permitted successor
of Litchfield under the Indenture may succeed to Litchfield's ownership of such
common securities and (ii) to use reasonable efforts to cause such trust to
continue to be treated as a grantor trust for United States federal income tax
purposes except in connection with a distribution of Junior Subordinated Debt
Securities to the holders of such preferred securities as provided in the
applicable Declaration.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of preferred securities in any material respect (in which case no
consent will be required), each preferred securities guarantee may be amended
only with the prior approval of Litchfield and the holders of not less than a
majority in liquidation amount of the outstanding preferred securities issued by
the applicable trust. The manner of obtaining any such approval of holders of
such preferred securities will be set forth in an accompanying prospectus
supplement. All guarantees and agreements contained in a preferred securities
guarantee shall bind the successors, assignees, receivers, trustees and
representatives of Litchfield and shall inure to the benefit of the holders of
the preferred securities of the applicable trust then outstanding. Except in
connection with a consolidation, merger or sale involving Litchfield that is
permitted under the Indenture, Litchfield may not assign its obligations under
any preferred securities guarantee.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
Each preferred securities guarantee will terminate and be of no further
force and effect as to the preferred securities issued by the applicable trust
(i) upon full payment of the redemption price of all preferred securities of
such trust, (ii) upon distribution of the Junior Subordinated Debt Securities to
the holders of the trust securities of such trust in exchange for all of the
trust securities issued by such trust or (iii) upon full payment of the amounts
payable in accordance with the applicable Declaration upon liquidation of such
trust. Notwithstanding the foregoing, each 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 issued by the applicable trust must
restore payment of any sums paid with respect to such preferred securities or
under such preferred securities guarantee.
STATUS OF THE PREFERRED SECURITIES GUARANTEE
Litchfield's obligation under each preferred securities guarantee to make
the Guarantee Payments will constitute an unsecured obligation of Litchfield and
will rank (i) subordinate and junior in right of payment to all other
liabilities of Litchfield, including the Junior Subordinated Debt Securities,
except those made pari passu or subordinate by their terms, and (ii) senior to
all capital stock (other than the most senior preferred stock issued, from time
to time, if any, by Litchfield, which preferred stock will rank
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pari passu with each preferred securities guarantee) now or hereafter issued by
Litchfield and to any guarantee now or hereafter entered into by Litchfield in
respect of any of its capital stock (other than the most senior preferred stock
issued, from time to time, if any, by Litchfield). Litchfield's obligations
under each preferred securities guarantee will rank pari passu with respect to
obligations under other guarantee agreements which it may enter into from time
to time to the extent that (i) such agreements shall be entered into in
substantially the form of the preferred securities guarantee and provide for
comparable guarantees by Litchfield of payment on preferred securities issued by
other trusts, partnerships or other entities affiliated with Litchfield that are
financing vehicles of Litchfield and (ii) the debentures or other evidences of
indebtedness of Litchfield relating to such preferred securities are junior
subordinated, unsecured indebtedness of Litchfield. Litchfield's obligations
under each preferred securities guarantee are effectively subordinated to all
existing and future liabilities, including trade payables, of Litchfield's
subsidiaries, except to the extent that Litchfield is a creditor of the
subsidiaries and is recognized as such. Each Declaration provides that each
holder of preferred securities by acceptance thereof agrees to the subordination
provisions and other terms of the related preferred securities guarantee.
Each preferred securities guarantee will constitute a guarantee of payment
and not merely of collection (that is, the guaranteed party may institute a
legal proceeding directly against the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity). Each preferred securities guarantee will be deposited with the
Guarantee Trustee, as indenture trustee, to be held for the benefit of the
holders of the preferred securities issued by the applicable trust. The
Guarantee Trustee will have the right to enforce the preferred securities
guarantee on behalf of the holders of the preferred securities issued by the
applicable trust. The holders of not less than a majority in aggregate
liquidation amount of the preferred securities issued by the applicable trust
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
related preferred securities guarantee or exercising any trust or other power
conferred upon the Guarantee Trustee under such preferred securities guarantee.
If the Guarantee Trustee fails to enforce such preferred securities guarantee as
above provided, any holder of preferred securities issued by the applicable
trust may institute a legal proceeding directly against Litchfield to enforce
its rights under such preferred securities guarantee without first instituting a
legal proceeding against the applicable trust, the Guarantee Trustee or any
other person or entity. Notwithstanding the foregoing, if Litchfield has failed
to make a Guarantee Payment, a holder of preferred securities may directly
institute a proceeding against Litchfield for enforcement of the applicable
preferred securities guarantee for such payment without first instituting a
legal proceeding against the applicable trust, the Guarantee Trustee or any
other person or entity.
MISCELLANEOUS
Litchfield will be required to provide annually to the Guarantee Trustee a
statement as to the performance by Litchfield of certain of its obligations
under each preferred securities guarantee and as to any default in such
performance. Litchfield is required to file annually with the Guarantee Trustee
an officers' certificate as to Litchfield's compliance with all conditions under
each preferred securities guarantee.
The Guarantee Trustee, prior to the occurrence of an event of default under
a preferred securities guarantee and after the curing or waiving of all events
of default that may have occurred, will undertake to perform only such duties as
are specifically set forth in the applicable preferred securities guarantee, and
no implied covenants will be read into such preferred securities guarantee.
After a default with respect to a preferred securities guarantee has occurred,
the Guarantee Trustee shall exercise such of the rights and powers vested in it
by such preferred securities guarantee, and use the same degree of care and
skill in its exercise thereof as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs. Subject to such
provision, the Guarantee Trustee is under no obligation to exercise any of the
rights or powers vested in it by a preferred securities guarantee at the request
or direction of any holder of the applicable preferred securities unless it is
offered security and indemnity satisfactory to it against the costs, expenses
and liabilities that might be incurred thereby.
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GOVERNING LAW
Each preferred securities guarantee will be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
conflicts of laws provisions thereof.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Litchfield may issue from time to time one or more series of Junior
Subordinated Debt Securities ("Junior Subordinated Debt Securities") under a
Junior Subordinated Indenture (the "Indenture") between Litchfield and The Bank
of New York, as trustee (the "Indenture Trustee"). The Indenture will be
qualified under the Trust Indenture Act. The form of the Indenture has been
filed as an exhibit to the registration statement of which this prospectus forms
a part. The following description summarizes the material terms of the
Indenture, and is qualified in its entirety by reference to the Indenture and
the Trust Indenture Act. Whenever particular provisions or defined terms in the
Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section and article references used herein are
references to provisions of the Indenture.
GENERAL
The Junior Subordinated Debt Securities will be unsecured junior
subordinated obligations of Litchfield. The Indenture does not limit the amount
of additional indebtedness Litchfield or any of its subsidiaries may incur.
Litchfield's rights and the rights of its creditors, including the holders of
Junior Subordinated Debt Securities, to participate in the assets of any
subsidiary of Litchfield upon the latter's liquidation or recapitalization will
be subject to the prior claims of the subsidiary's creditors, except to the
extent that Litchfield may itself be a creditor with recognized claims against
the subsidiary.
The Indenture does not limit the aggregate principal amount of indebtedness
that may be issued thereunder and provides that Junior Subordinated Debt
Securities may be issued thereunder from time to time in one or more series. The
Junior Subordinated Debt Securities are issuable in one or more series pursuant
to an indenture supplemental to the Indenture.
In the event Junior Subordinated Debt Securities are issued to a trust in
connection with the issuance of trust securities by such trust, such Junior
Subordinated Debt Securities subsequently may be distributed pro rata to the
holders of such trust securities in connection with the dissolution of such
trust at the election of Litchfield or upon the occurrence of certain events
described in the prospectus supplement relating to such trust securities. Only
one series of Junior Subordinated Debt Securities will be issued to each trust
in connection with the issuance of the trust securities by such trust.
Reference is made to the prospectus supplement which will accompany this
prospectus for the following terms of the series of Junior Subordinated Debt
Securities being offered thereby (to the extent such terms are applicable to the
Junior Subordinated Debt Securities of such series): (i) the specific
designation of such Junior Subordinated Debt Securities, aggregate principal
amount, purchase price and premium, if any; (ii) any limit on the aggregate
principal amount of such Junior Subordinated Debt Securities; (iii) the date or
dates on which the principal of such Junior Subordinated Debt Securities is
payable and the right to shorten, extend or defer such date or dates; (iv) the
rate or rates at which such Junior Subordinated Debt Securities will bear
interest or the method of calculating such rate or rates, if any; (v) the date
or dates from which such interest shall accrue, the interest payment dates on
which such interest will be payable or the manner of determination of such
interest payment dates and the record dates for the determination of holders to
whom interest is payable on any such interest payment dates; (vi) the right, if
any, to extend or defer the interest payment periods and the duration of such
extension; (vii) the period or periods within which, the price or prices at
which, and the terms and conditions upon which, such Junior Subordinated Debt
Securities may be redeemed, in whole or in part, at the option of Litchfield;
(viii) the obligation, if any, of Litchfield to redeem or purchase such Junior
Subordinated Debt Securities pursuant to any sinking fund or analogous
provisions (including payments made in cash in anticipation of future sinking
fund obligations) or at the option of the holder thereof and the period or
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periods for which, the price or prices at which, the currency or currencies
(including currency unit or units) in which and the terms and conditions upon
which, such Junior Subordinated Debt Securities will be redeemed or purchased,
in whole or part, pursuant to such obligation; (ix) any exchangeability,
conversion or prepayment provisions of the Junior Subordinated Debt Securities;
(x) any applicable United States federal income tax consequences, including
whether and under what circumstances Litchfield will pay additional amounts on
the Junior Subordinated Debt Securities held by a person who is not a U.S.
person in respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether Litchfield will have the option to redeem such
Junior Subordinated Debt Securities rather than pay such additional amounts;
(xi) the form of such Junior Subordinated Debt Securities; (xii) if other than
denominations of $10 or any integral multiple thereof, the denominations in
which such Junior Subordinated Debt Securities will be issuable; (xiii) any and
all other terms with respect to such series, including any modification of or
additions to the events of default or covenants provided for with respect to
such series, and any terms which may be required by or advisable under
applicable laws or regulations not inconsistent with the Indenture; and (xiv)
whether such Junior Subordinated Debt Securities are issuable as a global
security, and in such case, the identity of the depositary. (Section 2.01)
Unless otherwise indicated in the prospectus supplement relating thereto,
the Junior Subordinated Debt Securities will be issued in United States dollars
in fully registered form without coupons in denominations of $10 or integral
multiples thereof. Junior Subordinated Debt Securities may be presented for
exchange and Junior Subordinated Debt Securities in registered form may be
presented for transfer in the manner, at the places and subject to the
restrictions set forth in the Junior Subordinated Debt Securities and the
prospectus supplement. Such services will be provided without charge, other than
any tax or other governmental charge payable in connection therewith, but
subject to the limitations provided in the Junior Subordinated Debt Securities.
Junior Subordinated Debt Securities may bear interest at a fixed rate or a
floating rate. Junior Subordinated Debt Securities bearing no interest or
interest at a rate that at the time of issuance is below the prevailing market
rate will be sold at a discount below their stated principal amount. Special
United States federal income tax considerations applicable to any such
discounted Junior Subordinated Debt Securities or to certain Junior Subordinated
Debt Securities issued at par which are treated as having been issued at a
discount for United States federal income tax purposes will be described in the
relevant prospectus supplement.
CERTAIN COVENANTS OF LITCHFIELD APPLICABLE TO THE JUNIOR SUBORDINATED DEBT
SECURITIES
If Junior Subordinated Debt Securities are issued to a trust in connection
with the issuance of trust securities by such trust, Litchfield will covenant in
the Indenture that, so long as the preferred securities issued by the applicable
trust remain outstanding, Litchfield will not (i) declare or pay any dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its capital stock (other than (a) dividends or
distributions in shares of, or options, warrants, rights to subscribe for or
purchase shares of, common stock of Litchfield, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of Litchfield's capital stock or the exchange or the conversion
of one class or series of Litchfield's capital stock for another class or series
of Litchfield's capital stock, (d) the payment of accrued dividends and the
purchase of fractional interests in shares of Litchfield's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, or (e) purchases of Litchfield's common
stock related to the issuance of Litchfield's common stock or rights under any
of Litchfield's benefit plans for its directors, officers, employees, any of
Litchfield's dividend reinvestment plans or stock purchase plans, or any of the
benefit plans of any of Litchfield's affiliates for such affiliates' directors,
officers or employees), (ii) make any payment of principal or of interest or
premium, if any, on or repay, repurchase or redeem any debt security of
Litchfield that, ranks pari passu with or junior in interest to the Junior
Subordinated Debt Securities deposited in such trust or (iii) make any guarantee
payments with respect to any guarantee by Litchfield of the debt securities of
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any subsidiary of Litchfield (other than pursuant to a preferred securities
guarantee) if such guarantee ranks pari passu with or junior in interest to the
Junior Subordinated Debt Securities deposited in such trust, if at such time (x)
Litchfield shall be in default with respect to its Guarantee Payments or other
payment obligations under the related preferred securities guarantee, (y) there
shall have occurred any Indenture Event of Default with respect to the Junior
Subordinated Debt Securities deposited in such trust as trust assets or (z)
Litchfield shall have given notice of its election to defer payments of interest
on the Junior Subordinated Debt Securities by extending the interest payment
period as provided in the terms of the Junior Subordinated Debt Securities
deposited in such trust as trust assets and such period, or any extension
thereof, is continuing. In addition, if Junior Subordinated Debt Securities are
issued to a trust in connection with the issuance of trust securities by such
trust, for so long as any preferred securities issued by the applicable trust
remain outstanding, Litchfield has agreed (i) to remain the sole direct or
indirect owner of all of the outstanding common securities issued by the
applicable trust and not to cause or permit such common securities to be
transferred except to the extent permitted by the applicable Declaration;
provided that any permitted successor of Litchfield under the Indenture may
succeed to Litchfield's ownership of the common securities issued by the
applicable trust, (ii) to comply fully with all of its obligations and
agreements contained in the related Declaration and (iii) to use reasonable
efforts to cause the applicable trust to continue to be treated as a grantor
trust for United States federal income tax purposes except in connection with a
distribution of Junior Subordinated Debt Securities to holders of preferred
securities issued by the applicable trust as provided in the related
Declaration.
SUBORDINATION
The payment of principal of, premium, if any, and interest on the Junior
Subordinated Debt Securities will, to the extent and in the manner set forth in
the Indenture, be subordinated and junior in right of payment to the prior
payment in full, in cash or cash equivalents, of all Senior Debt of Litchfield
whether outstanding on the date of this prospectus or thereafter incurred.
Upon any payment by Litchfield or distribution of assets of Litchfield to
creditors upon any liquidation, dissolution, winding up, receivership,
reorganization, assignment for the benefit of creditors, marshaling of assets
and liabilities or any bankruptcy, insolvency or similar proceedings of
Litchfield, the holders of all Senior Debt will first be entitled to receive
payment in full of all amounts due or to become due thereon before the holders
of the Junior Subordinated Debt Securities will be entitled to receive any
payment in respect of the principal of, premium, if any, or interest on the
Junior Subordinated Debt Securities.
In the event and during the continuation of any default by Litchfield in
the payment of principal, premium, interest or any other payment due on any
Senior Debt, or in the event that the maturity of any Senior Debt has been
accelerated because of a default, then, in either case, no payment shall be made
by Litchfield with respect to the principal (including redemption payments) of
or premium, if any, or interest on the Junior Subordinated Debt Securities until
such default shall have been cured or waived in writing or shall have ceased to
exist or such Senior Debt shall have been discharged or paid in full.
In the event of the acceleration of the maturity of the Junior Subordinated
Debt Securities, then no payments shall be made by Litchfield with respect to
the principal (including redemption payments) of or premium, if any, or interest
on the Junior Subordinated Debt Securities until the holders of all Senior Debt
outstanding at the time of such acceleration shall receive payment in full of
such Senior Debt (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment shall be
received by the Indenture Trustee or any holder of Junior Subordinated Debt
Securities when such payment is prohibited by the preceding paragraphs, such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Debt or their respective representatives, or
to the trustee or trustees under any indenture pursuant to which any of such
Senior Debt may have been issued, as their respective interests may appear.
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By reason of such subordination, in the event of insolvency of Litchfield,
funds that would otherwise be payable to holders of Junior Subordinated Debt
Securities will be paid to the holders of Senior Debt of Litchfield to the
extent necessary to pay such Senior Debt in full, and Litchfield may be unable
to meet fully its obligations with respect to the Junior Subordinated Debt
Securities.
"Debt" is defined to mean, with respect to any person at any date of
determination (without duplication), (i) all indebtedness of such person for
borrowed money, (ii) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses, (iii) all
obligations of such person in respect of letters of credit or bankers'
acceptances or other similar instruments (or reimbursement obligations with
respect thereto) issued on the account of such person, (iv) all obligations of
such person to pay the deferred purchase price of property or services, except
certain trade payables, (v) all obligations of such person as lessee under
capitalized leases, (vi) all Debt of others secured by a lien on any asset of
such person, whether or not such Debt is assumed by such person; provided that,
for purposes of determining the amount of any Debt of the type described in this
clause, if recourse with respect to such Debt is limited to such asset, the
amount of such Debt shall be limited to the lesser of the fair market value of
such asset or the amount of such Debt, (vii) all Debt of others guaranteed by
such person to the extent such Debt is guaranteed by such person and (viii) to
the extent not otherwise included in this definition, all obligations of such
person for claims in respect of derivative products, including interest rate,
foreign exchange rate and commodity prices, forward contracts, options, swaps,
collars and similar arrangements.
"Senior Debt" is defined to mean the principal of (and premium, if any) and
interest on all Debt of Litchfield whether created, incurred or assumed before,
on or after the date of the Indenture; provided that such Senior Debt shall not
include (i) Debt of Litchfield that, when incurred and without respect to any
election under Section 1111(b) of Title 11, U.S. Code, was without recourse and
(ii) any other Debt of Litchfield which by the terms of the instrument creating
or evidencing the same is specifically designated as being subordinated to or
pari passu with the Junior Subordinated Debt Securities, and in particular the
Junior Subordinated Debt Securities shall rank pari passu with all other debt
securities and guarantees issued to any trust, partnership or other entity
affiliated with Litchfield which is a financing vehicle of Litchfield in
connection with an issuance of preferred securities by such financing entity.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Indenture Event of
Default" with respect to each series of Junior Subordinated Debt Securities:
(a) failure for 30 days to pay interest on the Junior Subordinated
Debt Securities of such series when due; provided that a valid extension of
the interest payment period by Litchfield shall not constitute a default in
the payment of interest for this purpose;
(b) failure to pay principal of or premium, if any, on the Junior
Subordinated Debt Securities of such series when due whether at maturity,
upon redemption, by declaration or otherwise;
(c) failure for 30 days to pay any sinking fund or analogous fund
payment with respect to the Junior Subordinated Debt Securities of such
series;
(d) failure to duly observe or perform, in any material respect, any
other covenant or agreement contained in the Indenture with respect to such
series for 90 days after written notice to Litchfield from the Indenture
Trustee or the holders of at least 25% in principal amount of the
outstanding Junior Subordinated Debt Securities of such series;
(e) certain events in bankruptcy, insolvency or reorganization of
Litchfield; or
(f) any other Indenture Event of Default applicable to the Junior
Subordinated Debt Securities of such series. (Section 6.01)
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In each and every such case, unless the principal of all the Junior
Subordinated Debt Securities of that series shall have already become due and
payable, either the Indenture Trustee or the holders of not less than 25% in
aggregate principal amount of the Junior Subordinated Debt Securities of that
series then outstanding, by notice in writing to Litchfield (and to the
Indenture Trustee if given by such holders), may declare the principal of all
the Junior Subordinated Debt Securities of that series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable. (Section 6.01)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities of that series have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Indenture Trustee or exercising any trust or power conferred on the
Indenture Trustee with respect to such series. (Section 6.06) The Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Junior Subordinated Debt Securities of that series may declare the
principal due and payable immediately upon an Indenture Event of Default with
respect to such series, but the holders of a majority in aggregate outstanding
principal amount of Junior Subordinated Debt Securities of such series may
rescind and annul such declaration and waive the default if the default has been
cured and a sum sufficient to pay all matured installments of interest and
principal otherwise than by acceleration and any premium has been deposited with
the Indenture Trustee. (Sections 6.01 and 6.06)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debt Securities of that series may, on behalf of the holders
of all the Junior Subordinated Debt Securities of that series, waive any past
default, except a default in the payment of principal, premium, if any, or
interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal otherwise than by acceleration
and any premium has been deposited with the Indenture Trustee) or a call for
redemption of the Junior Subordinated Debt Securities of that series. (Section
6.06) Litchfield is required to file annually with the Indenture Trustee a
certificate as to whether or not Litchfield is in compliance with all the
conditions and covenants under the Indenture. (Section 5.03)
If Junior Subordinated Debt Securities are issued to a trust in connection
with the issuance of trust securities of such trust, then under the applicable
Declaration an Indenture Event of Default with respect to such series of Junior
Subordinated Debt Securities will constitute a Declaration Event of Default. If
a Declaration Event of Default under the applicable Declaration has occurred and
is continuing and such event is attributable to the failure of Litchfield to pay
interest or principal, or premium, if any, on the applicable series of Junior
Subordinated Debt Securities on the date such interest, principal or premium is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of preferred securities of such trust may directly institute a Holder
Direct Action on or after the respective due date specified in the applicable
series of Junior Subordinated Debt Securities (see "The Trusts--The Property
Trustee"). In connection with such Holder Direct Action, Litchfield will be
subrogated to the rights of such holder of preferred securities under the
applicable Declaration to the extent of any payment made by Litchfield to such
holder of preferred securities in such Holder Direct Action. Except as expressly
provided in the preceding sentences or in the applicable prospectus supplement,
the holders of preferred securities of such trust will not be able to exercise
directly any other remedy available to the holders of the applicable series of
Junior Subordinated Debt Securities.
MODIFICATION OF THE INDENTURE
From time to time Litchfield and the Indenture Trustee may, without the
consent of the holders of Junior Subordinated Debt Securities, amend the
Indenture or indentures supplemental thereto for one or more of the following
purposes:
(a) to evidence the succession of another corporation or other entity
to Litchfield under the Indenture and the Junior Subordinated Debt
Securities and the assumption by such successor corporation or other entity
of the obligations of Litchfield thereunder;
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(b) to add further covenants, restrictions, conditions or provisions
for the protection of the holders of Junior Subordinated Debt Securities;
(c) to cure any ambiguity or to correct or supplement any provision
which may be defective or inconsistent with any other provision;
(d) to add to, change or eliminate any of the provisions of the
Indenture, provided that any such addition, change or elimination shall
become effective only after there are no such Junior Subordinated Debt
Securities of any series entitled to the benefit of such provision
outstanding;
(e) to provide for the issuance of Junior Subordinated Debt Securities
in coupon form;
(f) to evidence and provide for the acceptance of a successor trustee;
(g) to qualify or maintain the qualification of the Indenture under
the Trust Indenture Act;
(h) to establish the form or terms of a series of Junior Subordinated
Debt Securities; and
(i) to make any addition, change or elimination of any provision of
the Indenture that does not adversely affect the rights of any holder of
Junior Subordinated Debt Securities in any material respect. (Section 9.01)
The Indenture contains provisions permitting Litchfield and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Junior Subordinated Debt Securities of each
series affected by such modification, to modify the Indenture or any
supplemental indenture affecting the rights of the holders of such Junior
Subordinated Debt Securities; provided that no such modification may, without
the consent of the holder of each outstanding Subordinated Debt Security
affected thereby, (i) extend the fixed maturity of the Junior Subordinated Debt
Securities of any series, reduce the principal amount thereof, reduce the rate
or extend the time of payment of interest thereon, reduce any premium payable
upon the redemption thereof or (ii) reduce the percentage of Junior Subordinated
Debt Securities, the holders of which are required to consent to any such
modification. (Section 9.02)
BOOK-ENTRY AND SETTLEMENT
If any Junior Subordinated Debt Securities of a series are represented by
one or more global securities (each, a "Global Security"), the applicable
prospectus supplement will describe the circumstances, if any, under which
beneficial owners of interests in any such Global Security may exchange such
interests for Junior Subordinated Debt Securities of such series and of like
tenor and principal amount in any authorized form and denomination. Principal of
and any premium and interest on a Global Security will be payable in the manner
described in the applicable prospectus supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Junior Subordinated Debt Securities to be represented by
a Global Security will be described in the applicable prospectus supplement.
CONSOLIDATION, MERGER AND SALE
The Indenture will provide that Litchfield may not consolidate with or
merge into any other person or convey, transfer or lease its properties and
assets substantially as an entirety to any person and may not permit any person
to merge into or consolidate with Litchfield unless (i) either Litchfield will
be the resulting or surviving entity or any successor or purchaser is a
corporation, limited liability company, partnership or trust organized under the
laws of the United States of America, any State or the District of Columbia, and
any such successor or purchaser expressly assumes Litchfield's obligations under
the Junior Subordinated Debt Securities and the Indenture and (ii) immediately
after giving effect to the transaction no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default shall
have occurred and be continuing. (Section 10.01)
20
<PAGE> 82
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, Litchfield will be discharged from any
and all obligations in respect of a series of the Junior Subordinated Debt
Securities (except in each case for certain obligations to register the transfer
or exchange of such Junior Subordinated Debt Securities, replace stolen, lost or
mutilated Junior Subordinated Debt Securities of such series, maintain paying
agencies and hold moneys for payment in trust) if (i) Litchfield irrevocably
deposits with the Indenture Trustee cash or U.S. Government Obligations or a
combination thereof, as trust funds in an amount certified to be sufficient to
pay at maturity (or upon redemption) the principal of, premium, if any, and
interest on all outstanding Junior Subordinated Debt Securities of such series;
(ii) such deposit will not result in a breach or violation of, or constitute a
default under, any agreement or instrument to which Litchfield is a party or by
which it is bound; (iii) Litchfield delivers to the Indenture Trustee an opinion
of counsel to the effect that the holders of the Junior Subordinated Debt
Securities of such series will not recognize income, gain or loss for United
States federal income tax purposes as a result of such defeasance and discharge
and that such defeasance and discharge will not otherwise alter holders' United
States federal income tax treatment of principal, premium and interest payments
on such Junior Subordinated Debt Securities of such series (such opinion must be
based on a ruling of the Internal Revenue Service or a change in United States
federal income tax law occurring after the date of the Indenture, since such a
result would not occur under current tax law); (iv) Litchfield has delivered to
the Indenture Trustee an officers' certificate and an opinion of counsel, each
stating that all conditions precedent provided for relating to the defeasance
and discharge contemplated by such provision have been complied with; and (v) no
event or condition shall exist that pursuant to the applicable subordination
provisions, would prevent Litchfield from making payments of principal of,
premium, if any, and interest on the Junior Subordinated Debt Securities at the
date of the irrevocable deposit referred to above. (Section 11.01)
GOVERNING LAW
The Indenture and the Junior Subordinated Debt Securities will be governed
by the laws of the State of New York, without regard to the conflicts of laws
principles thereof. (Section 13.05)
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to the occurrence of an Indenture Event of
Default and after the curing of all Indenture Events of Default undertakes to
perform only such duties as are specifically set forth in the Indenture and,
after an Indenture Event of Default has occurred (which has not been cured or
waived), shall exercise such of the rights and powers vested in it by the
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs. (Section 7.01) Subject to such provision, the Indenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Junior Subordinated Debt Securities,
unless offered security or indemnity satisfactory to it by such holder against
the costs, expenses and liabilities that might be incurred thereby. (Section
7.02) The Indenture Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties or
in the exercise of any of its rights or powers if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of the Indenture or adequate indemnity against
such risk is not reasonably assured to it. (Section 7.01)
Litchfield and its subsidiaries maintain commercial banking and trust
relationships with the Indenture Trustee and its affiliates.
MISCELLANEOUS
Litchfield will have the right at all times to assign any of its rights or
obligations under the Indenture to an affiliate; provided that, in the event of
any such assignment, Litchfield will remain jointly and severally liable for all
such obligations. Subject to the foregoing, the Indenture will be binding upon
and
21
<PAGE> 83
inure to the benefit of the parties thereto and their respective successors and
assigns. The Indenture provides that it may not otherwise be assigned by the
parties thereto other than by Litchfield to a successor or purchaser pursuant to
a consolidation, merger, sale or conveyance permitted by the Indenture. (Section
13.11)
PLAN OF DISTRIBUTION
Litchfield may sell any series of Junior Subordinated Debt Securities and
each trust may sell its preferred securities (the Junior Subordinated Debt
Securities and the preferred securities are collectively referred to herein as
the "Offered Securities") being offered hereby in any of three ways (or in any
combination thereof): (i) through underwriters or dealers; (ii) directly to a
limited number of purchasers or to a single purchaser; or (iii) through agents.
The prospectus supplement with respect to any Offered Securities will set forth
the terms of the offering of such Offered Securities, including the name or
names of any underwriters, dealers or agents and the respective amounts of such
Offered Securities underwritten or purchased by each of them, the initial public
offering price of such Offered Securities and the proceeds to Litchfield or the
applicable trust, as the case may be, from such sale, any discounts, commissions
or other items constituting compensation from Litchfield or the applicable
trust, as the case may be, and any discounts, commissions or concessions allowed
or reallowed or paid to dealers and any securities exchanges on which such
Offered Securities may be listed. Any public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
If underwriters are used in the sale of any Offered Securities, such
Offered Securities will be acquired by the underwriters for their own account
and may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Such Offered Securities may be either offered to
the public through underwriting syndicates represented by managing underwriters,
or directly by underwriters. Unless otherwise set forth in the prospectus
supplement, the obligations of the underwriters to purchase such Offered
Securities will be subject to certain conditions precedent and the underwriters
will be obligated to purchase all of such Offered Securities if any are
purchased.
Offered Securities may be sold directly by Litchfield or a trust, as the
case may be, or through agents designated by Litchfield or such trust, as the
case may be, from time to time. Any agent involved in the offer or sale of
Offered Securities in respect of which this prospectus is delivered will be
named, and any commissions payable by Litchfield or the applicable trust, as the
case may be, to such agent will be set forth, in the prospectus supplement.
Unless otherwise indicated in the prospectus supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If so indicated in the prospectus supplement, Litchfield or the applicable
trust, as the case may be, will authorize underwriters, dealers or agents to
solicit offers by certain purchasers to purchase Offered Securities from
Litchfield or the applicable trust, as the case may be, at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
prospectus supplement, and the prospectus supplement will set forth the
commission payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
Litchfield and the applicable trust to indemnification by Litchfield and the
applicable trust against certain civil liabilities, including liabilities under
the Securities Act, or to contribution with respect to payments which the agents
or underwriters may be required to make in respect thereof. Agents and
underwriters may be customers of, engage in transactions with, or perform
services for Litchfield, the applicable trust and/or any of their affiliates in
the ordinary course of business.
Certain persons participating in the offering may engage in transactions
that stabilize, maintain or otherwise affect the price of the Offered
Securities. In connection with the offering, the underwriters or agents, as the
case may be, may purchase and sell the Offered Securities in the open market.
These
22
<PAGE> 84
transactions may include overallotment and stabilizing transactions and
purchases to cover syndicate short positions created in connection with the
offering. Stabilizing transactions consist of certain bids or purchases for the
purpose of preventing or retarding a decline in the market price of the Offered
Securities; and syndicate short positions involve the sale by the underwriters
or agents, as the case may be, of a greater number of Offered Securities than
they are required to purchase from Litchfield or the applicable trust, as the
case may be, in the offering. The underwriters may also impose a penalty bid,
whereby selling concessions allowed to syndicate members or other broker-dealers
for the Offered Securities sold for their account may be reclaimed by the
syndicate if such Offered Securities are repurchased by the syndicate in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Offered Securities, which may be
higher than the price that might otherwise prevail in the open market, and, if
commenced, may be discontinued at any time. These transactions may be effected
on the Nasdaq National Market, in the over-the-counter market or otherwise. For
a description of these activities, see "Plan of Distribution" or "Underwriting"
in the relevant prospectus supplement.
Unless otherwise indicated in the prospectus supplement, Litchfield does
not intend to list any of the Offered Securities on a national securities
exchange. No assurances can be given that there will be a market for the Offered
Securities.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplement, certain
matters of Delaware law relating to the validity of the preferred securities,
the enforceability of the applicable Declaration and the formation of the trusts
will be passed upon by Richards, Layton & Finger, P.A., Wilmington, Delaware,
special Delaware counsel to the trusts and Litchfield. The validity of the
applicable Preferred Securities Guarantee and the Junior Subordinated Debt
Securities offered hereby will be passed upon for Litchfield by Hutchins,
Wheeler & Dittmar, A Professional Corporation, Boston, Massachusetts and for the
Underwriters by Bass, Berry & Sims PLC, Nashville, Tennessee. Certain legal
matters may also be passed upon by John J. Malloy, Esq., Senior Vice President,
General Counsel and Clerk of Litchfield. James Westra,, a shareholder of
Hutchins, Wheeler & Dittmar, is a Director of Litchfield. Mr. Westra owns 1,735
shares of Litchfield's common stock and has options to acquire another 7,512
shares.
EXPERTS
The consolidated financial statements of Litchfield Financial Corporation
incorporated by reference in Litchfield's Annual Report (Form 10-K) for the year
ended December 31, 1998, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference therein
and incorporated herein by reference. Such financial statements are, and audited
financial statements to be included in subsequently filed documents will be,
incorporated herein in reliance upon the reports of Ernst & Young LLP pertaining
to such financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given on the authority of such firm as
experts in accounting and auditing.
23
<PAGE> 85
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] PREFERRED SECURITIES
LITCHFIELD CAPITAL TRUST I
[ ]% SERIES A TRUST PREFERRED SECURITIES
[LITCHFIELD FINANCIAL CORPORATION LOGO]
------------------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------------------
[ ], 1999
TUCKER ANTHONY CLEARY GULL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 86
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities being registered hereby are estimated as follows:
<TABLE>
<S> <C>
Registration fee under Securities Act....................... $ 27,800
Nasdaq listing fee.......................................... $ 51,223*
Legal fees and expenses..................................... $150,000*
Accounting fees and expenses................................ $ 20,000*
Printing and engraving...................................... $100,000*
Trustees fees and expenses.................................. $ 15,000*
NASD Fee.................................................... $ 10,500
Miscellaneous............................................... $ 5,477*
--------
Total............................................. $380,000*
========
</TABLE>
- ---------------
* Amounts are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 67 of Chapter 156B of the General Laws of the Commonwealth of
Massachusetts provides as follows:
"Section 67. Indemnification of directors, officers, employees and other
agents of a corporation, and persons who serve at its request as directors,
officers, employees or other agents of another organization, or who serve at its
request in any capacity with respect to any employee benefit plan, may be
provided by it to whatever extent shall be specified in or authorized by (i) the
articles of organization or (ii) a by-law adopted by the stockholders or (iii) a
vote adopted by the holders of a majority of the shares of stock entitled to
vote on the election of directors. Except as the articles of organization or
by-laws otherwise require, indemnification of any persons referred to in the
preceding sentence who are not directors of the corporation may be provided by
it to the extent authorized by the directors. Such indemnification may include
payment by the corporation of expenses incurred in defending a civil or criminal
action or proceeding in advance of the final disposition of such action or
proceeding, upon receipt of an undertaking by the person indemnified to repay
such payment if he shall be adjudicated to be not entitled to indemnification
under this section which undertaking may be accepted without reference to the
financial ability of such person to make repayment. Any such indemnification may
be provided although the person to be indemnified is no longer an officer,
director, employee or agent of the corporation or of such other organization or
no longer serves with respect to any such employee benefit plan.
No indemnification shall be provided for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the corporation or to the extent that such matter relates to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan.
The absence of any express provision for indemnification shall not limit
any right of indemnification existing independently of this section.
A corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or other agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or other agent of another organization or with
respect to any employee benefit plan, against any liability incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability."
II-1
<PAGE> 87
Article 7 of the Amended and Restated By-Laws of Litchfield provides that:
Each director and officer (and his heirs and personal representatives)
shall be indemnified by Litchfield against any Expenses incurred by him in
connection with any action, suit or proceeding, civil or criminal, brought or
threatened in or before any court, tribunal, administrative or legislative body
or agency in which he is involved as a result of his serving or having served as
a director or officer, except as limited by law or with respect to a proceeding
as to which it shall have been adjudicated that he did not act in good faith in
the reasonable belief that his action was in the best interests of Litchfield.
"Expense" means any fine or penalty, and any liability fixed by a judgment,
order, decree or award in such a proceeding and any professional fees and other
disbursements reasonably incurred in connection with such a proceeding.
Article Sixth of the Restated Articles of Organization of Litchfield
provides that:
No Director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a Director
notwithstanding any statutory provision or other law imposing such liability,
except for liability of a Director (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section sixty-one or sixty-two of Chapter 156B of the
Massachusetts General Laws, or (iv) for any transaction from which the Director
derived an improper personal benefit.
The directors and officers of Litchfield are insured against liabilities
which they incur in their capacity as such under policies of insurance carried
by Litchfield.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------- --------------------
<C> <S>
1.1 Form of Underwriting Agreement
4.1 Form of Junior Subordinated Indenture (the "Junior
Subordinated Indenture") between Litchfield and The Bank of
New York, as Trustee
4.2.1 Declaration of Trust of Litchfield Capital Trust I
4.2.2 Declaration of Trust of Litchfield Capital Trust II
4.3 Form of Amended and Restated Declaration of Trust
4.4.1 Certificate of Trust of Litchfield Capital Trust I
4.4.2 Certificate of Trust of Litchfield Capital Trust II
4.5 Form of Preferred Security (included in Exhibit 4.3)
4.6 Form of Supplemental Indenture to the Junior Subordinated
Indenture
4.7 Form of Junior Subordinated Debt Security (included in
Exhibit 4.6)
4.8 Form of Preferred Securities Guarantee
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation
5.2.1 Opinion of Richards, Layton & Finger, P.A. relating to
Litchfield Capital Trust I
5.2.2 Opinion of Richards, Layton & Finger, P.A. relating to
Litchfield Capital Trust II
8.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation as to certain tax matters
12.1 Statement re: Computation of Ratios
23.1 Consent of Ernst & Young LLP
23.2 Consent of Hutchins, Wheeler & Dittmar, A Professional
Corporation (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in
Exhibits 5.2.1 and 5.2.2)
24.1 Power of Attorney (included on signature page)
</TABLE>
II-2
<PAGE> 88
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------- --------------------
<C> <S>
25.1 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as the Trustee under the Junior
Subordinated Indenture
25.2 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as Property Trustee, relating to
Litchfield Capital Trust I
25.3 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as Property Trustee, relating to
Litchfield Capital Trust II
25.4 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as Guarantee Trustee, relating to
Litchfield Capital Trust I
25.5 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as Guarantee Trustee, relating to
Litchfield Capital Trust II
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) of this section do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new
II-3
<PAGE> 89
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant further undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 90
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston, Commonwealth of Massachusetts, on the 13th
day of April, 1999.
LITCHFIELD FINANCIAL CORPORATION
By: /s/ RICHARD A. STRATTON
----------------------------------
RICHARD A. STRATTON, PRESIDENT,
CHIEF EXECUTIVE OFFICER AND
DIRECTOR
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Richard A. Stratton and Heather A. Sica, and each of them, with full power of
substitution and full power to act without the other, his or her true and lawful
attorney-in-fact and agent in his or her name, place and stead, to execute in
the name and on behalf of each person, individually and in each capacity stated
below, and to file any and all amendments to this Registration Statement,
including any and all post-effective amendments, and any related Rule 462(b)
Registration Statement and any amendments thereto.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ RICHARD A. STRATTON President, Chief Executive April 13, 1999
- ----------------------------------------------------- Officer, and Director
RICHARD A. STRATTON
/s/ HEATHER A. SICA Executive Vice President and April 13, 1999
- ----------------------------------------------------- Director
HEATHER A. SICA
/s/ RONALD E. RABIDOU Executive Vice President, Chief April 13, 1999
- ----------------------------------------------------- Financial Officer and
RONALD E. RABIDOU Treasurer
/s/ JOHN A. COSTA Executive Vice President and April 13, 1999
- ----------------------------------------------------- Director
JOHN A. COSTA
/s/ GERALD SEGEL Director April 13, 1999
- -----------------------------------------------------
GERALD SEGEL
/s/ JAMES WESTRA Director April 13, 1999
- -----------------------------------------------------
JAMES WESTRA
</TABLE>
II-5
<PAGE> 91
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Litchfield
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, State of Massachusetts, on April 13,
1999.
LITCHFIELD CAPITAL TRUST I
By: Litchfield Financial
Corporation, as Sponsor
By: /s/ RONALD E. RABIDOU
--------------------------------
Name: Ronald E. Rabidou
Title: Executive Vice
President, Chief
Financial Officer and
Treasurer
II-6
<PAGE> 92
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Litchfield
Capital Trust II certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, State of Massachusetts, on April 13,
1999.
LITCHFIELD CAPITAL TRUST II
By: Litchfield Financial
Corporation, as Sponsor
By: /s/ RONALD E. RABIDOU
--------------------------------
Name: Ronald E. Rabidou
Title: Executive Vice President,
Chief
Financial Officer and
Treasurer
II-7
<PAGE> 93
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------- --------------------
<C> <S>
1.1 Form of Underwriting Agreement
4.1 Form of Junior Subordinated Indenture (the "Junior
Subordinated Indenture") between Litchfield and The Bank of
New York, as trustee
4.2.1 Declaration of Trust of Litchfield Capital Trust I
4.2.2 Declaration of Trust of Litchfield Capital Trust II
4.3 Form of Amended and Restated Declaration of Trust
4.4.1 Certificate of Trust of Litchfield Capital Trust I
4.4.2 Certificate of Trust of Litchfield Capital Trust II
4.5 Form of Preferred Security (included in Exhibit 4.3)
4.6 Form of Supplemental Indenture to the Junior Subordinated
Indenture
4.7 Form of Junior Subordinated Debt Security (included in
Exhibit 4.6)
4.8 Form of Preferred Securities Guarantee
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation
5.2.1 Opinion of Richards, Layton & Finger, P.A. relating to
Litchfield Capital Trust I
5.2.2 Opinion of Richards, Layton & Finger, P.A. relating to
Litchfield Capital Trust II
8.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional
Corporation as to certain tax matters
12.1 Statement re: Computation of Ratios
23.1 Consent of Ernst & Young LLP
23.2 Consent of Hutchins, Wheeler & Dittmar, A Professional
Corporation (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in
Exhibits 5.2.1 and 5.2.2)
24.1 Power of Attorney (included on signature page)
25.1 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as the Trustee under the Junior
Subordinated Indenture
25.2 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as Property Trustee, relating to
Litchfield Capital Trust I
25.3 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as Property Trustee, relating to
Litchfield Capital Trust II
25.4 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as Guarantee Trustee, relating to
Litchfield Capital Trust I
25.5 Statement of Eligibility under the Trust Indenture Act of
The Bank of New York, as Guarantee Trustee, relating to
Litchfield Capital Trust II
</TABLE>
<PAGE> 1
Exhibit 1.1
LITCHFIELD CAPITAL TRUST I
% TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
GUARANTEED BY
LITCHFIELD FINANCIAL CORPORATION
------------------------------------------------
UNDERWRITING AGREEMENT
April __, 1999
TUCKER ANTHONY INCORPORATED
One Beacon Street
Boston, Massachusetts 02108
Ladies and Gentlemen:
Litchfield Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), and Litchfield Financial
Corporation, a Massachusetts corporation (the "Company"), as depositor of the
Trust and as guarantor, propose, subject to the terms and conditions stated
herein, that the Trust issue and sell to the Underwriter named in Schedule I
hereto (the "Underwriter") an aggregate of __________ (the "Firm Securities")
and, at the election of the Underwriter, up to an additional ___________ (the
"Optional Securities"), of ______% Series A Trust Preferred Securities
(liquidation amount $10 per preferred security), representing undivided
beneficial interests in the assets of the Trust, guaranteed on a subordinated
basis by the Company as to the payment of distributions, and as to payments on
liquidation or redemption, to the extent set forth in a guarantee agreement (the
"Guarantee") between the Company and The Bank of New York, as trustee (the
"Guarantee Trustee"). The Firm Securities and the Optional Securities that the
Underwriter elect to purchase pursuant to Section 2 hereof are referred to
collectively as the "Preferred Securities." The Trust is to purchase, with the
proceeds of the sale of the Preferred Securities and up to ___________ (or
____________ assuming full exercise by the Underwriter of the over-allotment
option described herein) of its Common Securities (liquidation amount $25 per
common security) (the "Common Securities," and, collectively with the Preferred
Securities, the "Trust Securities"), $___________ aggregate principal amount (or
$____________ aggregate principal amount assuming full exercise by the
Underwriter of the over-allotment option described herein) of ____% Series A
Junior Subordinated Debentures due ___________ (the "Subordinated Debentures")
of the Company, to be issued pursuant
<PAGE> 2
to an Indenture (the "Indenture") between the Company and The Bank of New York,
as trustee (the "Indenture Trustee").
The Company will be the holder of 100% of the Common Securities. The
Trust will be subject to the terms of a Trust Agreement (the "Trust Agreement"),
among the Company, as Depositor, The Bank of New York, as Property Trustee
("Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee (the
"Delaware Trustee") and three individual trustees who are employees or officers
of or affiliated with the Company (the "Administrative Trustees"), and the
holders from time to time, of undivided beneficial interests in the assets of
the Trust. The Property Trustee, the Delaware Trustee and the Administrative
Trustees are collectively referred to herein as the "Trustees."
1. REPRESENTATIONS AND WARRANTIES OF THE TRUST AND THE COMPANY.
Each of the Trust and the Company represents and warrants to, and agrees with
the Underwriter that:
a. The Trust has filed with the Securities and Exchange
Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), a
registration statement on Form S-3 (Registration No.
333-______), including the related preliminary
prospectus relating to the offering of the Preferred
Securities, the Subordinated Debentures and the
Guarantee, has filed such amendments thereto as may
have been required as of the date hereof, and will
file such additional amendments as may hereafter be
required. Copies of such registration statement and
any amendments, including any post-effective
amendments, and all forms of the related prospectuses
contained therein and any supplements thereto, have
been delivered to the Underwriter. Such registration
statement, including the prospectus, prospectus
supplement, Part II, all financial schedules and
exhibits thereto, and all information deemed to be a
part of such Registration Statement pursuant to Rule
430A under the Securities Act, at the time when it
shall become effective, together with any
registration statement filed by the Trust pursuant to
Rule 462(b) of the Securities Act, is herein referred
to as the "Registration Statement," and the
prospectus and prospectus supplement included as part
of the Registration Statement on file with the
Commission that discloses all the information that
was omitted from the prospectus on the effective date
pursuant to Rule 430A of the Rules and Regulations
(as defined below) and in the form filed pursuant to
Rule 424(b) under the Securities Act is herein
referred to as the "Final Prospectus." The prospectus
and a prospectus supplement included as part of the
Registration Statement on the date when the
Registration Statement became effective is referred
to herein as the "Effective
2
<PAGE> 3
Prospectus." Any prospectus and prospectus supplement
included in the Registration Statement and in any
amendment thereto prior to the effective date of the
Registration Statement is referred to herein as a
"Preliminary Prospectus." For purposes of this
Agreement, "Rules and Regulations" mean the rules and
regulations promulgated by the Commission under
either the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as
applicable.
b. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and
each Preliminary Prospectus, at the time of filing
thereof, complied with the requirements of the
Securities Act and the Rules and Regulations, and did
not include any untrue statement of a material fact
or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in the light of the circumstances under
which they were made, not misleading; except that the
foregoing does not apply to statements or omissions
made in reliance upon and in conformity with written
information furnished to the Company or the Trust by
any Underwriter specifically for use therein
(it being understood that the only information so
provided is the information included in the first,
sixth and eighth paragraphs under the caption
"Underwriting" in the Final Prospectus). When the
Registration Statement becomes effective and at all
times subsequent thereto up to and including the
First Closing Date (as hereinafter defined), (i) the
Registration Statement, the Effective Prospectus and
Final Prospectus and any amendments or supplements
thereto will contain all statements which are
required to be stated therein in accordance with the
Securities Act, the Exchange Act and the Rules and
Regulations and will comply with the requirements of
the Securities Act, the Exchange Act and the Rules
and Regulations, and (ii) neither the Registration
Statement, the Effective Prospectus nor the Final
Prospectus nor any amendment or supplement thereto
will include any untrue statement of a material fact
or omit to state any material fact required to be
stated therein or necessary to make the statements
therein, in light of the circumstances in which they
are made, not misleading; except that the foregoing
does not apply to statements or omissions made in
reliance upon and in conformity with written
information furnished to the Company or the Trust by
the Underwriter specifically for use therein
(it being understood that the only information so
provided is the information included in the first,
sixth and eighth paragraphs under the caption
"Underwriting" in the Final Prospectus).
c. The Company and each subsidiary of the Company (as
used herein, the term "subsidiary" includes any
corporation, joint venture or partnership in which
the Company or any subsidiary of the Company has a
50% or greater ownership interest) is duly organized
and validly existing and in good
3
<PAGE> 4
standing under the laws of the respective
jurisdictions of their organization or incorporation,
as the case may be, with full power and authority
(corporate, partnership and other, as the case may
be) to own their properties and conduct their
businesses as now conducted and are duly qualified or
authorized to do business and are in good standing in
all jurisdictions wherein the nature of their
business or the character of property owned or leased
may require them to be qualified or authorized to do
business, except for jurisdictions in which the
failure to so qualify would not have a material
adverse effect on the Company and its subsidiaries
taken as a whole. The Company and its subsidiaries
hold all licenses, consents and approvals, and have
satisfied all eligibility and other similar
requirements imposed by federal and state regulatory
bodies, administrative agencies or other governmental
bodies, agencies or officials, in each case as
material to the conduct of the respective businesses
in which they are engaged in the Effective Prospectus
and the Final Prospectus.
d. The outstanding stock of each of the Company's
corporate subsidiaries is duly authorized, validly
issued, fully paid and nonassessable. All of the
outstanding stock of each of the Company's corporate
subsidiaries owned beneficially and of record by the
Company is owned clear of any lien, encumbrance,
pledge, equity or claim of any kind. Neither the
Company nor any of its subsidiaries is a partner or
joint venturer in any partnership or joint venture.
e. The Trust has been duly created and is validly
existing as statutory business trust in good standing
under the Business Trust Act of the State of Delaware
(the "Delaware Business Trust Act") with the trust
power and authority to own property and conduct its
business as described in the Registration Statement,
Effective Prospectus and Final Prospectus and has
conducted and will conduct no business other than the
transactions contemplated by this Agreement and
described in the Registration Statement, Effective
Prospectus and Final Prospectus; the Trust is not a
party to or bound by any agreement or instrument
other than this Agreement, the Trust Agreement and
the agreements and instruments contemplated by the
Trust Agreement and described in the Registration
Statement; based on expected operations and current
law, the Trust is not and will not be classified as
an association taxable as a corporation for United
States federal income tax purposes; and the Trust is
not a party to or subject to any action, suit or
proceeding of any nature;
f. The Preferred Securities have been duly and validly
authorized by the Trust, and, when issued and
delivered to the Underwriter against payment
therefor as provided herein, will be duly and validly
issued and, subject to the terms of the Trust
Agreement, fully paid and non-assessable undivided
beneficial interests in the assets of the Trust and
will conform to the description thereof contained in
the Registration Statement, Effective Prospectus and
Final Prospectus and will be in substantially the
form
4
<PAGE> 5
previously delivered to you; the issuance of the
Preferred Securities is not subject to preemptive or
other similar rights; the Preferred Securities will
have the rights set forth in the Trust Agreement, and
the terms of the Preferred Securities are valid and
binding on the Trust; the holders of the Preferred
Securities (the "Securityholders") will be entitled
to the same limitation of personal liability extended
to stockholders of private corporations for profit
organized under the General Corporation Law of the
State of Delaware;
g. The Common Securities have been duly and validly
authorized by the Trust and upon delivery by the
Trust to the Company against payment therefor as
described in the Registration Statement, Effective
Prospectus and Final Prospectus, will be duly and
validly issued undivided beneficial interests in the
assets of the Trust and will conform to the
description thereof contained in the Registration
Statement, Effective Prospectus and Final Prospectus;
the issuance of the Common Securities is not subject
to preemptive or other similar rights; and at the
First Closing Date (as defined in Section 2c hereof),
all of the issued and outstanding Common Securities
of the Trust will be directly owned by the Company
free and clear of any Lien (as defined below); and
the Trust Securities are the only interests
authorized to be issued by the Trust;
h. This Agreement has been duly authorized, executed and
delivered by the Company and the Trust and
constitutes a valid and binding agreement of each of
the Company and the Trust, enforceable against the
Company and the Trust in accordance with their terms.
No consent, approval, authorization or order of any
court or governmental agency or body or third party
is required for the performance of this Agreement by
the Company or the Trust or the consummation by the
Company or the Trust of the transactions contemplated
hereby or under the Guarantor Agreements (as defined
herein), except such as have been obtained and such
as may be required by the National Association of
Securities Dealers, Inc. ("NASD") or under the
Securities Act, or state securities or Blue Sky laws
in connection with the purchase and distribution of
the Preferred Securities. The Company's performance
of this Agreement and the Guarantor Agreements, and
by the Trust to the extent the Trust is a party to
such agreements, and the consummation of the
transactions contemplated hereby and thereby, and the
issuance and sale of the Trust Securities by the
Trust, will not result in a breach or violation of,
or conflict with, any of the terms and provisions of,
or constitute a material default under, the Trust
Agreement, any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or
instrument to which the Company or any of its
subsidiaries or the Trust is a party or to which the
Company or any of its subsidiaries or any of their
respective properties is subject, the Articles of
Organization or bylaws of the Company or any of its
subsidiaries or any statute or any judgment, decree,
order, rule or regulation of any court or
5
<PAGE> 6
governmental agency or body applicable to the
Company, or any subsidiary or any of their respective
properties. Neither the Company nor any subsidiary is
(i) in violation of its Articles of Organization,
(ii) in violation of any partnership agreement or
joint venture agreement, as the case may be, (iii) in
violation of its bylaws or any law, administrative
rule or regulation or arbitrators' or administrative
or court decree, judgment or order or (iv) in
violation of or default (there being no existing
state of facts which with notice or lapse of time or
both would constitute a default) in the performance
or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture,
deed of trust, mortgage, loan agreement, note, lease,
agreement or other instrument or permit to which it
is a party or by which it or any of its properties is
or may be bound.
i. The Guarantee, the Subordinated Debentures, the Trust
Agreement and the Indenture (collectively, the
"Guarantor Agreements") have each been duly
authorized and, when executed and delivered by the
Company, will constitute valid and legally binding
obligations of the Company, enforceable in accordance
with their respective terms, except to the extent (A)
that enforcement thereof may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or
hereafter in effect relating to the rights of
creditors generally, and (2) general principles of
equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); and
(B) with respect to the Indenture, the waiver
contained in Section ____ of the Indenture may be
deemed unenforceable.
j. The Subordinated Debentures are entitled to the
benefits provided by the Indenture; each of the
Guarantor Agreements will conform to the descriptions
thereof in the Registration Statement and will be in
substantially the form previously delivered to you.
6
<PAGE> 7
k. The documents that are incorporated by reference in
the Registration Statement, Effective Prospectus and
Final Prospectus or from which information is so
incorporated by reference, when they become effective
or were filed with the Commission, as the case may
be, complied in all material respects with the
requirements of the Securities Act of 1933, as
amended (the "Securities Act") or the Exchange Act,
as applicable, and the rules and regulations of the
Commission thereunder (the "Rules and Regulations").
l. The Company has full legal right, power and authority
to authorize the offering of the Guarantee and the
Subordinated Debentures, to execute, deliver and
perform this Agreement and to issue, sell and deliver
the Subordinated Debentures and the Guarantee.
m. The Trust has full legal right, power and authority
to authorize the offering of the Preferred
Securities, to execute, deliver and perform this
Agreement and to sell and deliver the Preferred
Securities to the Underwriter as provided
herein.
n. The capitalization of the Company as of December 31,
1998 is as set forth under the caption
"Capitalization" in the Effective Prospectus and the
Final Prospectus, and the Company's capital stock
conforms to the description in the Effective
Prospectus and the Final Prospectus. All the issued
shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and
nonassessable. None of the issued shares of capital
stock of the Company have been issued in violation of
any preemptive or similar rights. No holder of any
security of the Company has or will have any right to
require the registration of such security by virtue
of any transaction contemplated by this agreement.
The Underwriter will receive good and marketable
title to the Preferred Securities to be issued and
delivered hereunder, free and clear of all liens,
encumbrances, claims, security interests,
restrictions, stockholders' agreements and voting
trusts whatsoever.
7
<PAGE> 8
o. All offers and sales of the Company's securities
prior to the date hereof were at all relevant times
duly registered or exempt from the registration
requirements of the Securities Act and were duly
registered or the subject of an available exemption
from the registration requirements of the applicable
state securities or Blue Sky laws, or if not
registered in compliance with the applicable federal
and state securities laws, any actions arising from
such failure to register any such securities are
barred by applicable statute of limitations.
p. The consolidated financial statements and the related
notes of the Company, incorporated by reference in
the Registration Statement, the Effective Prospectus
and the Final Prospectus present fairly the financial
position, results of operations and changes in
financial position and cash flow of the Company and
its subsidiaries, at the dates and for the periods to
which they relate and have been prepared in
accordance with generally accepted accounting
principles applied on a consistent basis throughout
the periods indicated. The other financial statements
and schedules incorporated by reference in or as
schedules to the Registration Statement conform to
the requirements of the Securities Act, the Exchange
Act and the Rules and Regulations and present fairly
the information presented therein for the periods
shown. The financial and statistical data set forth
in the Effective Prospectus and the Final Prospectus
under the captions "Use of Proceeds," and "Summary
Financial Information of Litchfield" fairly presents
the information set forth therein on the basis stated
in the Effective Prospectus and the Final Prospectus.
Ernst & Young LLP, whose reports appear in the
Effective Prospectus and the Final Prospectus, are
independent accountants as required by the Securities
Act and the Rules and Regulations.
q. Subsequent to March 31, 1999, neither the Company nor
any subsidiary nor the Trust has sustained any
material loss or interference with its business or
properties from fire, flood, hurricane, earthquake,
accident or other calamity, whether or not covered by
insurance, or from any labor dispute or court or
governmental action, order or decree, which is not
disclosed in the Effective Prospectus and the Final
Prospectus; and subsequent to the respective dates as
of which information is given in the Registration
Statement, the Effective Prospectus and the Final
Prospectus, (i) neither the Company nor any of its
subsidiaries nor the Trust has incurred any material
liabilities or obligations, direct or contingent, or
entered into any material transactions not in the
ordinary course of business, and (ii) there has not
been any change in the capital stock, partnership
interests, joint venture interests, long-term debt or
obligations under capital leases of the Company and
its subsidiaries, or any issuance of options,
warrants or rights to purchase the capital stock of
the Company, or any adverse change, or any
development involving a prospective adverse change in
the management, business, prospects, financial
position, net worth or results of operations of the
Company or its
8
<PAGE> 9
subsidiaries, taken as a whole, or the Trust except
in each case as described in or contemplated by the
Effective Prospectus and the Final Prospectus.
r. Except as described in the Effective Prospectus and
the Final Prospectus, there is not pending, or to the
knowledge of the Company threatened, any action,
suit, proceeding, inquiry or investigation, to which
the Company, any of its subsidiaries or any of their
officers or directors is a party, or to which the
property of the Company or any subsidiary is subject,
before or brought by any court or governmental agency
or body, wherein an unfavorable decision, ruling or
finding could prevent or materially hinder the
consummation of this Agreement or result in a
material adverse change in the business condition
(financial or other), prospects, financial position,
net worth or results of operations of the Company or
its subsidiaries.
s. There are no contracts or other documents required by
the Securities Act or by the Rules and Regulations to
be described in the Registration Statement, the
Effective Prospectus or the Final Prospectus or to be
filed as exhibits to the Registration Statement which
have not been described or filed as required.
t. Except as described in the Effective Prospectus and
the Final Prospectus, the Company and each of its
subsidiaries have good and marketable title to all
real and material personal property owned by them,
free and clear of all liens, charges, encumbrances or
defects except those reflected in the financial
statements hereinabove described. The real and
personal property and buildings referred to in the
Effective Prospectus and the Final Prospectus which
are leased from others by the Company are held under
valid, subsisting and enforceable leases. The Company
or its subsidiaries owns or leases all such
properties as are necessary to its operations as now
conducted.
u. The Company's system of internal accounting controls
taken as a whole is sufficient to meet the broad
objectives of internal accounting control insofar as
those objectives pertain to the prevention or
detection of errors or irregularities in amounts that
would be material in relation to the Company's
financial statements; and, except as disclosed in the
Effective Prospectus and the Final Prospectus,
neither the Company nor any of its subsidiaries nor
any employee or agent of the Company or any
subsidiary has made any payment of funds of the
Company or any subsidiary or received or retained any
funds in violation of any law, rule or regulation.
v. The Company and its subsidiaries have filed all
federal, state and local income, excise and franchise
tax returns required to be filed through the date
hereof and have paid all taxes shown as due
therefrom; and there is no tax deficiency that has
been, nor does the Company or any subsidiary have
knowledge of any tax deficiency which is likely to
be, asserted against the
9
<PAGE> 10
Company or its subsidiaries, which if determined
adversely could materially and adversely affect the
earnings, assets, affairs, business prospects or
condition (financial or other) of the Company or its
subsidiaries.
w. The Company and its subsidiaries operate their
respective businesses in conformity in all material
respects with all applicable statutes, common laws,
ordinances, decrees, orders, rules and regulations of
governmental bodies. The Company and its subsidiaries
have all licenses, approvals or consents to operate
their respective businesses in all locations in which
such businesses are currently being operated, and the
Company and its subsidiaries are not aware of any
existing or imminent matter which may adversely
impact their operations or business prospects other
than as specifically disclosed in the Effective
Prospectus and the Final Prospectus. The Company has
not engaged in any activity, whether alone or in
concert with one of its customers, creating the
potential for exposure to material civil or criminal
monetary liability or other material sanctions under
federal or state laws regulating consumer credit
transactions, debt collection practices or land sales
practices.
x. Neither the Company nor any of its subsidiaries have
failed to file with the applicable regulatory
authorities any statement, report, information or
form required by any applicable law, regulation or
order where the failure to file the same would have a
material adverse effect on the Company and its
subsidiaries, taken as a whole; all such filings or
submissions were in material compliance with
applicable laws when filed and no deficiencies have
been asserted by any regulatory commission, agency or
authority with respect to such filings or
submissions. Neither the Company nor any of its
subsidiaries have failed to maintain in full force
and effect any license or permit necessary or proper
for the conduct of its business, or received any
notification that any revocation or limitation
thereof is threatened or pending, and, except as
disclosed in the Effective Prospectus and the Final
Prospectus, there is not pending any change under any
law, regulation, license or permit which could
materially adversely affect its business, operations,
property or business prospects. Neither the Company
nor any of its subsidiaries have received any notice
of violation of or been threatened with a charge of
violating and are not under investigation with
respect to a possible violation of any provision of
any law, regulation or order.
y. No labor dispute exists with the Company's employees
or with employees of its subsidiaries or is imminent
which could materially adversely affect the Company
or any of its subsidiaries. The Company is not aware
of any existing or imminent labor disturbance by its
employees or by any employees of its subsidiaries
which could be expected to materially adversely
effect the condition (financial or otherwise),
results of operations, properties, affairs,
10
<PAGE> 11
management, business affairs or business prospects of
the Company or any of its subsidiaries.
z. Except as disclosed in the Effective Prospectus and
the Final Prospectus, the Company and its
subsidiaries own or possess, or can acquire on
reasonable terms, the licenses, copyrights,
trademarks, service marks and trade names presently
employed by them in connection with the businesses
now operated by them, and neither the Company nor any
of its subsidiaries have received any notice of
infringement of or conflict with asserted rights of
others with respect to any of the foregoing which,
alone or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result
in any material adverse change in the condition,
financial or otherwise, or in the earnings, business
affairs or business prospects of the Company or its
subsidiaries.
aa. Neither the Company nor any of its subsidiaries, nor
any of the directors, officers, employees or agents
of the Company and its subsidiaries have taken and
will not take, directly or indirectly, any action
designed to cause or result in, or which has
constituted or which might be expected to constitute,
stabilization or manipulation of the price of the any
security of the Company in connection with the
offering, the sale or resale of the Preferred
Securities or the Company Common Stock issuable upon
exercise or conversion of Preferred Securities and
the Subordinated Debentures. The Company acknowledges
that the Underwriter may engage in passive
market making transactions on The Nasdaq Stock
Market's National Market (the "Nasdaq National
Market").
bb. The Company and each of its subsidiaries are insured
by insurers of reorganized financial responsibility
against such losses and risks and in such amounts as
are prudent and customary in the businesses in which
they are engaged; and the Company has no reason to
believe that it or any of its subsidiaries will not
be able to renew their existing insurance coverage as
and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to
continue their respective businesses at a comparable
cost.
cc. The Company is not, and will not become as a result
of the offering and sale of the Trust Securities and
Subordinated Debentures, an "investment company"
within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of
the Commission thereunder.
dd. The Company is in compliance in all material respects
with all presently applicable provisions of the
Employee Retirement Income Security Act of
11
<PAGE> 12
1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any
liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended,
including the regulations and published
interpretations thereunder (the "Code"), and each
"pension plan" for which the Company would have any
liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether
by action or by failure to act, which would cause the
loss of such qualification.
ee. The Preferred Securities have been approved for
listing on the Nasdaq National Market subject to
notice of issuance.
2. PURCHASE, SALE AND DELIVERY OF THE PREFERRED SECURITIES.
a. On the basis of the representations, warranties,
agreements and covenants herein contained and subject
to the terms and conditions herein set forth, the
Trust and the Company agree that the Trust shall
issue and sell to the Underwriter, and the
Underwriter agrees to purchase at a purchase
price of $_______ per Preferred Security, the number
of Firm Securities set forth opposite the
Underwriter's name in Schedule I hereto.
b. The Trust and the Company also grant to the
Underwriter an option to purchase, solely for the
purpose of covering over-allotments in the sale of
Firm Securities, all or any portion of the Optional
Securities at the purchase price per Preferred
Security set forth above, plus interest accrued from
the First Closing Date. The option granted hereby may
be exercised as to all or any part of the Optional
Securities at any time within 30 days after the date
the Registration Statement becomes effective. The
Underwriter shall not be under any obligation to
purchase any Optional Securities prior to the
exercise of such option. The option granted hereby
may be exercised by the Underwriter giving written
notice to the Company setting forth the number of
Optional Securities to be purchased and the date and
time for delivery of and payment for such Optional
Securities and stating that the Optional Securities
referred to therein are to be used for the purpose of
covering over-allotments in connection with the
distribution and sale of the Firm Securities. If such
notice is given prior to the First Closing Date (as
defined herein), the date set forth therein for such
delivery and payment shall not be earlier than two
full business days thereafter or the First Closing
Date, whichever occurs later. If such notice is given
on or after the First Closing Date, the date set
forth therein for such delivery and payment shall not
be earlier than three full business days thereafter.
In either
12
<PAGE> 13
event, the date so set forth shall not be more than 15 full
business days after the date of such notice. The date
and time set forth in such notice is herein called
the "Option Closing Date." Upon exercise of the
option, the Company shall become obligated to sell to
the Underwriter, and, subject to the terms and
conditions herein set forth, the Underwriter shall
become obligated to purchase from the Company the
number of Optional Securities specified in such
notice. Optional Securities shall be purchased for
the account of the Underwriter in proportion to the
number of Firm Securities set forth opposite the
Underwriter' name in Schedule I hereto, except that
the purchase obligations of the Underwriter shall be
adjusted so that the Underwriter shall not be
obligated to purchase fractional Optional Securities.
c. A global certificate or certificates in definitive
form for the Firm Securities which the Underwriter
has agreed to purchase hereunder shall be delivered
by or on behalf of the Trust to the Underwriter,
through the facilities of DTC, for the account of the
Underwriter against payment by the Underwriter or on
their behalf of the purchase price therefor by same
day funds to an account designated by the Trust, such
time of delivery against payment being herein
referred to as the "First Closing Date." The First
Closing Date and the Option Closing Date are herein
individually referred to as the "Closing Date" and
collectively referred to as the "Closing Dates." A
global certificate or certificates in definitive form
for the Optional Securities which the Underwriter
shall have agreed to purchase hereunder shall be
similarly delivered by or on behalf of the Trust on
the Option Closing Date against payment by the
Underwriter or on its behalf of the purchase price in
the manner set forth above. The global certificate or
certificates in definitive form for the Preferred
Securities will be in good delivery form and in such
denominations and registered in such names as Tucker
Anthony may request not less than 48 hours prior to
the First Closing Date or the Option Closing Date, as
the case may be. Such certificate or certificates
will be made available for checking at the office of
DTC or its designated custodian, at least 24 hours
prior to the First Closing Date or the Option Closing
Date, as the case may be. The Preferred Securities to
be purchased by the Underwriter hereunder will be
represented by one or more global Preferred
Securities in book-entry form which will be deposited
by or on behalf of the Trust with DTC or its
designated custodian.
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<PAGE> 14
d. As compensation to the Underwriter for its commitment
hereunder, and in view of the fact that the proceeds
of the sale of the Preferred Securities will be used
by the Trust to purchase the Subordinated Debentures
of the Company at each Closing Date the Company will
pay to Tucker Anthony an amount equal to $____ per
Preferred Security for the Preferred Securities to be
delivered by the Company at such Closing Date.
3. OFFERING BY THE UNDERWRITER. After the Registration
Statement becomes effective, the Underwriter proposes to offer for sale to the
public the Firm Securities and any Optional Securities which may be sold at the
price and upon the terms set forth in the Final Prospectus.
4. COVENANTS OF THE COMPANY. Each of the Company and the Trust,
jointly and severally, covenant and agree with the Underwriter:
a. To comply with the provisions of and make all
requisite filings with the Commission pursuant to
Rules 424(b), 430A and 462(b) of the Rules and
Regulations and to notify the Underwriter promptly
(in writing, if requested) of all such filings; to
notify the Underwriter promptly of any request by the
Commission for any amendment of or supplement to the
Registration Statement, the Effective Prospectus or
the Final Prospectus or for additional information;
to prepare and file with the Commission, promptly
upon the request of the Underwriter's any amendments
of or supplements to the Registration Statement, the
Effective Prospectus or the Final Prospectus which,
in the Underwriter's reasonable opinion, may be
necessary or advisable in connection with the
distribution of the Preferred Securities; and the
Company shall not file any amendment of or supplement
to the Registration Statement, the Effective
Prospectus or the Final Prospectus which is not
approved by the Underwriter after reasonable notice
thereof; to advise the Underwriters promptly of the
issuance by the Commission or any jurisdiction or
other regulatory body of any stop order or other
order suspending the effectiveness of the
Registration Statement, suspending or preventing the
use of any Preliminary Prospectus, the Effective
Prospectus or the Final Prospectus or suspending the
qualification of the Preferred Securities for
offering or sale in any jurisdiction, or of the
institution of any proceedings for any such purpose;
and to use its best efforts to prevent the issuance
of any stop order or other such order and, should a
stop order or other such order be issued, to obtain
as soon as possible the lifting thereof.
b. To take or cause to be taken all necessary action and
furnish to whomever the Underwriter direct such
information as may be reasonably required in
qualifying the Preferred Securities, the Subordinated
Debentures and the Guarantee, for
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<PAGE> 15
offer and sale under the securities or Blue Sky laws
of such jurisdictions as the Underwriter may
designate and will continue such qualifications in
effect for as long as may be reasonably necessary to
complete the distribution. The Company and the Trust
shall not be required to qualify as a foreign
corporation or trust or (except for the sole purpose
of complying with Blue Sky filing requirements) to
file a general consent to service of process in any
jurisdiction where it is not presently qualified or
where it would be subject to taxation as a foreign
corporation or trust.
c. Within the time during which a Final Prospectus
relating to the Preferred Securities, the
Subordinated Debentures and the Guarantee is required
to be delivered under the Securities Act, to comply
with all requirements imposed upon it by the
Securities Act, as now and hereafter amended, and by
the Rules and Regulations, as from time to time in
force, so far as is necessary to permit the
continuance of sales of or dealings in the Preferred
Securities, the Subordinated Debentures and the
Guarantee as contemplated by the provisions hereof
and the Final Prospectus. If during such period any
event occurs as a result of which the Final
Prospectus as then amended or supplemented would
include an untrue statement of a material fact or
omit to state a material fact necessary to make the
statements therein, in the light of the circumstances
then existing, not misleading, or if during such
period it is necessary to amend the Registration
Statement or supplement the Final Prospectus to
comply with the Securities Act, the Company and
Trusts shall promptly notify the Underwriter
and shall amend the Registration Statement or
supplement the Final Prospectus (at the expense of
the Company) so as to correct such statement or
omission or effect such compliance.
d. To furnish without charge to the Underwriter and make
available to the Underwriter copies of the
Registration Statement (four of which shall be signed
and shall be accompanied by all exhibits, including
any which are incorporated by reference, which have
not previously been furnished), each Preliminary
Prospectus, the Effective Prospectus and the Final
Prospectus, and all amendments and supplements
thereto, including any prospectus or supplement
prepared after the effective date of the Registration
Statement, in each case as soon as available and in
such quantities as the Underwriter may
reasonably request. The Company and Trusts will
deliver to the Underwriter a copy of each document
incorporated by reference in the Effective Prospectus
and the Final Prospectus which has not previously
been furnished.
e. To (i) deliver to the Underwriter at such office or
offices as the Underwriter may designate as many
copies of the Preliminary Prospectus and
15
<PAGE> 16
Final Prospectus as the Underwriter may
reasonably request, and (ii) for a period of not more
than nine months after the Registration Statement
becomes effective, send to the Underwriter as
many additional copies of the Final Prospectus and
any supplement thereto as the Underwriter may
reasonably request.
f. To make generally available to its security holders,
in the manner contemplated by Rule 158(b) under the
Securities Act as promptly as practicable and in any
event no later than 90 days after the end of its
fiscal quarter in which the first anniversary of the
effective date of the Registration Statement occurs,
an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act covering a period
of at least 12 consecutive months beginning after the
effective date of the Registration Statement.
g. At any time when the Company or the Trust is not
subject to Section 13 or 15(d) of the Exchange Act,
for the benefit of holders from time to time of
Preferred Securities or Subordinated Debentures, to
furnish at the Company's or the Trust's expense, as
appropriate, upon request, to holders of Preferred
Securities or Subordinated Debentures and prospective
purchasers of such securities information (the
"Additional Issuer Information") satisfying the
requirements of subsection (d)(4)(i) of Rule 144A
under the Securities Act.
h. To furnish to the holders of the Preferred Securities
as soon as practicable after the end of each fiscal
year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash
flows of the Company and its consolidated
subsidiaries certified by independent public
accountants) and, as soon as practicable after the
end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending
after the date of the Registration Statement (unless
such quarter is the fourth fiscal quarter, in which
case beginning with the second fiscal quarter ending
after the date of the Registration Statement)),
consolidated summary financial information of the
Company and its subsidiaries for such quarter in
reasonable detail.
i. During a period of five years from the date of the
Registration Statement, to furnish to you copies of
all reports or other communications (financial or
other) furnished to stockholders of the Company, and
to deliver to you (i) as soon as they are available,
copies of any reports and financial statements
furnished to or filed with the Commission or any
securities exchange on which the Preferred Securities
or any class of securities of the Company is listed;
and (ii)
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<PAGE> 17
such additional information concerning the business
and financial condition of the Company as you may
from time to time reasonably request (such financial
statements to be on a consolidated basis to the
extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to
its stockholders generally or to the Commission).
j. In the case of the Company, to issue the Guarantee
concurrently with the issue and sale of the Preferred
Securities as contemplated herein.
k. To apply the net proceeds from the sale of the
Preferred Securities, in the case of the Trust, and
the Subordinated Debentures, in the case of the
Company, as set forth under the caption "Use of
Proceeds" in the Final Prospectus.
l. From time to time, after the effective date of the
Registration Statement to file with the Commission
such reports as are required by the Securities Act,
the Exchange Act and the Rules and Regulations, and
shall also file with state securities commissions in
states where the Preferred Securities have been sold
by the Underwriter (as the Underwriter
shall have advised the Company in writing) such
reports as are required to be filed by the securities
acts and the regulations of those states.
m. During the period beginning from the date hereof and
continuing for a period of 180 days after the date of
the Effective Prospectus, not to offer, issue, sell,
contract to sell, grant any option (other than the
grant of options by the Company pursuant to plans in
effect on the date hereof) for the sale of, or
otherwise dispose of ("Transfer"), directly or
indirectly, (a) any trust certificates or other
securities of the Trust (other than the Preferred
Securities and the Common Securities), (b) any
preferred stock or any other security of the Company
or its affiliates that is substantially similar to
the Preferred Securities, (c) any shares of Company
common stock, or (d) any other securities which are
convertible into, or exercisable or exchangeable for,
any of (a) through (c) above, without the prior
consent of Tucker Anthony for a period of 180 days
after the date of the Effective Prospectus.
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<PAGE> 18
n. To not take, directly or indirectly, any action
designed to cause or result in, or which might
constitute or be expected to constitute,
stabilization or manipulation of the price of any
security of the Company in connection with the
offering, the sale or resale of the Preferred
Securities, the Guarantee or the Subordinated
Debentures.
5. EXPENSES. The Company agrees with the Underwriter that
whether or not the transactions contemplated by this Agreement are consummated
or this Agreement becomes effective or is terminated, the Company will pay all
fees and expenses incident to the performance of the obligations of the Company
and the Trust hereunder, including, but not limited to, (i) the fees,
disbursements and expenses of the Trust's and the Company's counsel and
accountants in connection with the issue of the Preferred Securities and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement and any amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriter; (ii) the cost of
printing or producing this Agreement, the Indenture, the Trust Agreement, the
Guarantee, any Blue Sky and legal investment memorandum, any closing documents
(including any compilations thereto) and any other documents in connection with
the offering, purchase, sale and delivery of the Preferred Securities; (iii) the
fees, disbursements and expenses of Hutchins, Wheeler & Dittmar, A Professional
Corporation, special tax counsel to the Trust; (iv) the cost of preparing the
Preferred Securities and the Subordinated Debentures; (v) the fees and expenses
of the Trustees and any other agent thereof and the fees and disbursements of
their counsel, including the fees and disbursements of counsel for the
Underwriter in connection with such qualification and in connection with the
Blue Sky and legal investment surveys; and (vi) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriter will pay all of its own costs and expenses, including the fees of
its counsel, transfer taxes on resale of any of the Preferred Securities by it,
and any advertising expenses connected with any offers it may make. The Company
shall not in any event be liable to any of the Underwriter for the loss of
anticipated profits from the transactions covered by this Agreement.
6. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligations
of the Underwriter to purchase and pay for the Firm Securities and Optional
Securities shall be subject, in its discretion, to the accuracy of the
representations and warranties of the Company and the Trust herein as of the
date hereof and as of the Closing Date as if made on and as of the Closing Date,
to the accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company and the Trust of all of
their covenants and agreements hereunder and to the following additional
conditions:
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<PAGE> 19
a. All filings required by Rules 424, 430A and 462 of
the Rules and Regulations shall have been made; no
stop order suspending the effectiveness of the
Registration Statement shall have been issued and no
proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the
Company or the Underwriter, shall be
contemplated by the Commission; any request of the
Commission for additional information (to be included
in the Registration Statement or the Final Prospectus
or otherwise) shall have been complied with to the
Underwriter' satisfaction; and the NASD, upon
review of the terms of the public offering of the
Shares, shall not have objected to such offering,
such terms or the Underwriter's participation
in the same.
b. The Underwriter shall not have advised the Company
and the Trust that the Registration Statement,
Preliminary Prospectus, the Effective Prospectus or
Final Prospectus, or any amendment or any supplement
thereto, contains an untrue statement of fact which,
in the Underwriter' reasonable judgment, is
material, or omits to state a fact which, in the
Underwriter' judgment, is material and is
required to be stated therein or necessary to make
the statements therein not misleading, and the
Company and the Trust shall not have cured such
untrue statement of fact or stated a statement of
fact required to be stated therein.
c. The Underwriter shall have received an
opinion, dated the Closing Date, from Hutchins,
Wheeler & Dittmar, A Professional Corporation
("Hutchins, Wheeler & Dittmar"), counsel for the
Company, substantially to the effect that:
(1) The Company has been duly organized and is
validly existing in good standing as a
corporation under the laws of the
Commonwealth of Massachusetts, with
corporate power and authority to own its
properties and conduct its business as now
conducted, and is duly qualified to do
business as a foreign corporation in good
standing in all other jurisdictions where
the failure to so qualify would have a
material adverse effect upon the Company and
its subsidiaries taken as a whole. The
Company holds all licenses, certificates,
permits, franchises and authorizations from
governmental authorities which are material
to the conduct of its business in all
locations in which such business is
currently being conducted.
(2) Each of the Company's subsidiaries is
validly existing and in good standing as a
corporation under the laws of the state of
its incorporation or organization, as the
case may be, with power and authority to own
its properties and conduct its business as
now conducted, and is duly qualified or
authorized to do business and is in good
standing in all other jurisdictions where
the failure to so
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<PAGE> 20
qualify would have a material adverse effect
upon the business of the Company and its
subsidiaries taken as a whole. The
outstanding stock of each of the Company's
subsidiaries is duly authorized, validly
issued, fully paid and nonassessable. All of
the outstanding stock of each of the
corporate subsidiaries owned beneficially
and of record by the Company is owned free
and clear of all liens, encumbrances,
equities and claims. No options or warrants
or other rights to purchase, agreements or
other obligations to issue or other rights
to convert any obligations into any shares
of capital stock or of ownership interests
in any of the Company's subsidiaries are
outstanding. Each of the Company's
subsidiaries holds all licenses,
certificates, permits, franchises and
authorizations from governmental authorities
which are material to the conduct of its
business in all locations in which such
business is currently being conducted.
(3) As of the dates specified therein,
the Company had authorized and issued
capital stock as set forth under the
caption "Capitalization" in the Final
Prospectus. All of the outstanding shares
of the capital stock of the Company have
been duly authorized and are validly
issued, fully paid and nonassessable; none
of the issued shares have been issued in
violation of or subject to any preemptive
rights provided for by law or by the
Company's Articles of Organization. There
are no preemptive rights or, to the
knowledge of such counsel, other rights to
subscribe for or to purchase, or any
restriction upon the transfer of, the
Preferred Securities pursuant to the
Company's Articles of Organization, bylaws
or other governing documents or, to the
knowledge of such counsel, any agreement or
other instrument to which the Company is a
party or by which it may be bound except as
described in the Effective Prospectus and
Final Prospectus and except for
restrictions on transfer imposed under
applicable securities laws. Neither the
filing of the Registration Statement nor
the offer or sale of the Preferred
Securities as contemplated by this
Agreement gives rise to any rights, other
than those which have been waived or
satisfied, for or relating to the
registration of any shares of Company
Common Stock or any other securities of the
Company. All offers and sales of the
Company's securities prior to the date
hereof were at all relevant times duly
registered or exempt from the registration
requirements of the Securities Act and were
duly registered or the subject of an
exemption from the registration
requirements of applicable state securities
or Blue Sky laws, or if not registered in
compliance with the applicable federal and
state securities laws, any actions arising
from such failure to register any such
securities are barred by applicable statute
of limitations.
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<PAGE> 21
(4) The Company has full legal right,
power and authority to enter into this
Agreement and the Guarantor Agreements, and
this Agreement and the Guarantor
Agreements, upon due execution,
authentication and delivery, have been duly
authorized, executed, and delivered by the
Company. This Agreement and the Guarantor
Agreements constitute valid and legally
binding obligations of the Company
enforceable against the Company in
accordance with their terms, except to the
extent that (A) enforcement thereof may be
limited by (1) bankruptcy, insolvency,
fraudulent transfer, rehabilitation,
conservation, reorganization, moratorium or
other similar laws now or hereafter in
effect relating to the rights of creditors
generally, and (2) general principles of
equity (regardless of whether
enforceability is considered in a
proceeding at law or in equity); (B) with
respect to the Indenture, the waiver
contained in Section ____ of the Indenture
may be deemed unenforceable and (C) with
respect to this Agreement, the
enforceability of indemnification and
contribution provisions may be limited by
federal and state securities laws and the
policies underlying such laws; the
Subordinated Debentures are entitled to
the benefits provided by the Indenture;
21
<PAGE> 22
(5) No consent, approval, authorization or order
of any court or governmental agency or body
or third party is required for the
performance of this Agreement or the
Guarantor Agreements and or the consummation
by the Company or the Trust of the
transactions contemplated hereby and
thereby, except such as have been obtained
under the Securities Act and such as may be
required by the NASD and under state
securities or Blue Sky laws in connection
with the purchase and distribution of the
Preferred Securities, the Guarantee and the
Subordinated Debentures. The performance of
this Agreement and the Guarantor Agreements
and the consummation of the transactions
contemplated hereby and thereby will not
conflict with or result in a breach or
violation of any of the terms or provisions
of, or constitute a default by the Company
or the Trust under, any indenture, mortgage,
deed of trust, loan agreement, lease or
other agreement or instrument known to such
counsel to which the Company is a party or
to which the Company or its properties is
subject, the Articles of Organization or
bylaws of the Company, any statute, or any
judgment, decree, order, rule or regulation
known to such counsel of any court or
governmental agency or body applicable to
the Company or any of its subsidiaries or
their properties.
(6) Except as described in the Final Prospectus,
there is not pending, or to the best
knowledge of such counsel threatened, any
action, suit, proceeding, inquiry or
investigation, to which the Company or any
of its subsidiaries is a party, or to which
the property of the Company or any of its
subsidiaries is subject, before or brought
by any court or governmental agency or body,
which, if determined adversely to the
Company or any of its subsidiaries, could
result in any material adverse change in the
business, financial position, net worth or
results of operations, or could materially
adversely affect the properties or assets,
of the Company or any of its subsidiaries.
(7) To the best knowledge of such counsel, no
default exists, and no event has occurred
which with notice or after the lapse of time
to cure
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<PAGE> 23
or both, would constitute a default, in the
due performance and observance of any term,
covenant or condition of any indenture,
mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to
which the Company or any of its subsidiaries
is a party or to which they or their
properties are subject, or of the Articles
of Organization or bylaws of the Company or
any of its subsidiaries.
(8) To the best knowledge of such counsel after
reasonable inquiry, neither the Company nor
any of its subsidiaries is in violation of
any law, ordinance, administrative or
governmental rule or regulation applicable
to the Company or any of its subsidiaries
and material to the Company and its
subsidiaries taken as a whole or any decree
of any court or governmental agency or body
having jurisdiction over the Company or any
of its subsidiaries.
(9) The Registration Statement and all post
effective amendments thereto have become
effective under the Securities Act, and, to
the best knowledge of such counsel, no stop
order suspending the effectiveness of the
Registration Statement has been issued and
no proceedings for that purpose have been
instituted or are threatened, pending or
contemplated by the Commission. All filings
required by Rule 424 and Rule 430A of the
Rules and Regulations have been made; the
Registration Statement, the Effective
Prospectus and Final Prospectus, and any
amendments or supplements thereto (except
for the financial statements and schedules
included therein as to which such counsel
need express no opinion), as of their
respective effective or issue dates,
complied as to form in all material respects
with the requirements of the Securities Act
and the Rules and Regulations; the
descriptions in the Registration Statement,
the Effective Prospectus and the Final
Prospectus of statutes, regulations, legal
and governmental proceedings, and contracts
and other documents are accurate in all
material respects and present fairly the
information required to be stated; and such
counsel does not know of any pending or
threatened legal or governmental
proceedings, statutes or regulations
required to be described in the Final
Prospectus which are not described as
required nor of any contracts or documents
of a character required to be described in
the Registration Statement or the Final
Prospectus or to be filed as exhibits to the
Registration Statement which are not
described and filed as required.
In addition to the matters set forth above, such
opinion shall also include a statement to the effect
that nothing has come to the attention of such
counsel which leads them to believe that the
Registration Statement, the Effective Prospectus and
the Final Prospectus or any amendment or supplement
thereto contains an untrue statement of a material
fact or omits to state a material fact
23
<PAGE> 24
required to be stated therein or necessary to make
the statements therein not misleading (except that
such counsel need express no view as to financial
statements, schedules and other financial information
included therein).
d. Richards, Layton & Finger, P.A., special Delaware
counsel for the Trust, shall have furnished to you their written
opinions, dated the Closing Date, in form and substance satisfactory
to you, to the effect that:
i. The Trust has been duly created and is
validly existing in good standing as a business trust under
the Business Trust Act, and all filings required under the
laws of the State of Delaware with respect to the creation and
valid existence of the Trust as a business trust have been
made.
ii. Under the Business Trust Act and the
Declaration, the Trust has the trust power and authority to
own property and conduct its business, all as described in the
Prospectus and the Prospectus Supplement.
iii. The Declaration constitutes a valid and
legally binding obligation of the Company and the Trustees,
and is enforceable against the Company and the Trustees, in
accordance with its terms, subject, as to enforcement, to the
effect upon the Declaration of (i) bankruptcy, insolvency,
reorganization, moratorium, receivership, liquidation,
fraudulent transfer and conveyance, and other similar laws
relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii)
the effect of applicable public policy on the enforceability
of provisions relating to indemnification or contribution.
iv. Under the Business Trust Act and the
Declaration, the Trust has the trust power and authority to
(a) execute and deliver, and to perform its obligations under,
the Underwriting Agreement and (b) issue and perform its
obligations under the Trust Securities.
v. Under the Business Trust Act and the
Declaration, the execution and delivery by the Trust of the
Underwriting Agreement, and the performance by the Trust of
its obligations thereunder, have been duly authorized by all
necessary trust action on the part of the Trust.
vi. Under the Declaration and the Business Trust
Act, the Underwriting Agreement has been duly executed by the
Trust.
24
<PAGE> 25
vii. The Preferred Securities have been duly
authorized by the Declaration and are duly and validly issued
and, subject to the qualifications set forth herein, fully
paid and non-assessable undivided beneficial interests in the
assets of the Trust and will entitle the Preferred Security
Holders to the benefits provided by the Declaration (subject
to the terms of the Declaration). The Preferred Security
Holders, as beneficial owners of the Trust, will be entitled
to the same limitation of personal liability extended to
stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware. We
note that the Preferred Security Holders may be obligated,
pursuant to the Declaration, (a) to provide indemnity and
security in connection with and pay taxes or governmental
charges arising from transfers of certificates evidencing the
Preferred Security Certificates and the issuance of
replacement Preferred Security Certificates, and (b) to
provide security and indemnity in connection with requests of
or directions to the Property Trustee to exercise its rights
and powers under the Declaration.
viii. The Common Securities have been duly
authorized by the Declaration and are validly issued and fully
paid undivided beneficial interests in the assets of the
Trust.
ix. Under the Business Trust Act and the
Declaration, the issuance of the Trust Securities is not
subject to preemptive rights.
x. The issuance and sale by the Trust of the
Trust Securities, the execution, delivery and performance by
the Trust of the Underwriting Agreement, and the consummation
by the Trust of the transactions contemplated by the
Underwriting Agreement and the Declaration and the compliance
by the Trust with its obligations thereunder do not violate
(a) any provisions of the Certificate or the Declaration, or
(b) any applicable Delaware law or administrative regulation.
xi. With respect to statements made in the
Prospectus under the caption "The Trusts" and in the
Prospectus Supplement under "REI Trust I," insofar as such
statements are statements of Delaware law, such statements are
fairly presented.
xii. No authorization, approval, consent or order
of any Delaware court or Delaware governmental authority or
Delaware agency is required to be obtained by the Trust solely
in connection with the sale of the Trust Securities.
xiii. The Preferred Security Holders (other than
those Preferred Security Holders who reside or are domiciled
in the State of Delaware) will have no liability for income
taxes imposed by the State of Delaware solely as a result of
their participation in the Trust, and the Trust will not be
liable for any income tax imposed by the State of Delaware.
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<PAGE> 26
e. Hutchins, Wheeler & Dittmar, A Professional
Corporation, counsel to the Trust and the Company in relation to the
classification of the Trust for United States federal income tax
purposes, shall have furnished their written opinion to the effect
that:
i. under then current law and assuming full
compliance with the terms of the Trust Agreement and the
Indenture (and certain other documents), and based on certain
facts and assumptions contained in such opinion, the Trust
will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable
as a corporation; and
ii. The statements made in the Effective
Prospectus or Final Prospectus under the caption "Certain
Federal Income Tax Consequences" are a fair and accurate
summary of certain of the United States federal income tax
issues relating to the ownership and the disposition of the
Preferred Securities.
f. The Underwriter shall have received an opinion
or opinions, dated the Closing Date, of Bass, Berry & Sims PLC, counsel
for the Underwriter, with respect to this Agreement, the Subordinated
Debentures, the Indenture, the Trust Agreement and the Registration
Statement, Effective Prospectus and the Final Prospectus, and such
other related matters as the Underwriter may require, and the Company
and Trust shall have furnished to such counsel
26
<PAGE> 27
such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters. Such counsel may rely on
Hutchins, Wheeler & Dittmar, Thomas P. McHugh, Esq., and John J.
Malloy, Esq. as to matters of Massachusetts law.
g. The Underwriter shall have received from Ernst
& Young LLP, a letter dated the date hereof and, at
the Closing Date, a second letter dated the Closing
Date, in form and substance satisfactory to the
Underwriter, stating that they are independent
public accountants with respect to the Company and
its subsidiaries within the meaning of the Securities
Act and the applicable Rules and Regulations, and to
the effect that:
(1) In their opinion, the financial statements
and schedules examined by them and included
in or incorporated by reference in the
Registration Statement comply as to form in
all material respects with the applicable
accounting requirements of the Securities
Act and the published Rules and Regulations
and are presented in accordance with
generally accepted accounting principles;
and they have made a review in accordance
with standards established by the American
Institute of Certified Public Accountants of
the consolidated interim financial
statements, selected financial data, and/or
condensed financial statements derived from
audited financial statements of the Company;
(2) On the basis of a reading of the latest
available unaudited interim consolidated
financial statements of the Company and its
subsidiaries, a reading of the minute books
of the Company and its subsidiaries,
inquiries of management of the Company
responsible for financial and accounting
matters and other specified procedures, all
of which have been agreed to by the
Underwriter nothing came to their attention
that caused them to believe that:
(a) the unaudited financial statements
included or incorporated by
reference in the Registration
Statement do not comply as to form
in all material respects with the
accounting requirements of the
federal securities laws and the
related published rules and
regulations thereunder or are not
in conformity with generally
accepted accounting principles
applied on a basis substantially
consistent with the basis for the
audited financial statements
contained in the Registration
Statement;
(b) any other unaudited financial
statement data included or
incorporated by reference in the
Final Prospectus do not agree with
the corresponding items in the
unaudited consolidated financial
statements from which data was
derived and any such unaudited data
were not determined on a basis
27
<PAGE> 28
substantially consistent with the
basis for the corresponding amounts
in the audited financial statements
included or incorporated by
reference in the Prospectus;
(c) at a specified date not more than
five days prior to the date of
delivery of such respective letter,
there was any change in the
consolidated capital stock, decline
in stockholders' equity or increase
in long-term debt of the Company
and its subsidiaries, or other
items specified by the Underwriter,
in each case as compared with
amounts shown in the latest balance
sheets included or incorporated by
reference in the Final Prospectus,
except in each case for changes,
decreases or increases which the
Final Prospectus discloses have
occurred or may occur or which are
described in such letters; and
(d) for the period from the closing
date of the latest consolidated
statements of income included or
incorporated by reference in the
Effective Prospectus and the Final
Prospectus to a specified date not
more than five days prior to the
date of delivery of such respective
letter, there were any decreases in
total revenues or net income of the
Company, or other items specified
by the Underwriter, or any
increases in any items specified by
the Underwriter, in each
case as compared with the
corresponding period of the
preceding year, except in each case
for decreases which the Final
Prospectus discloses have occurred
or may occur or which are described
in such letter.
They have carried out certain specified
procedures, not constituting an audit, with
respect to certain amounts, percentages and
financial information specified by the
Underwriter which are derived from
the general accounting records of the
Company and its subsidiaries, which appear
in the Effective Prospectus and the Final
Prospectus and have compared and agreed such
amounts, percentages and financial
information with the accounting records of
the Company and its subsidiaries or to
analyses and schedules prepared by the
Company and its subsidiaries from its
detailed accounting records.
In the event that the letters to be
delivered referred to above set forth any
such changes, decreases or increases, it
shall be a further condition to the
obligations of the Underwriter that
the Underwriter shall have
determined, after discussions with officers
of the Company responsible for financial and
accounting matters and with Ernst & Young
LLP, that such changes, decreases or
increases
28
<PAGE> 29
as are set forth in such letters do not
reflect a material adverse change in the
stockholders' equity or long-term debt of
the Company as compared with the amounts
shown in the latest consolidated balance
sheets of the Company included in the Final
Prospectus, or a material adverse change in
total revenues or net income, of the
Company, in each case as compared with the
corresponding period of the prior year.
h. The Trust Agreement, the Guarantee and the Indenture
shall have been executed and delivered, in each case
in a form reasonably satisfactory to you;
i. Subsequent to the respective dates as of which
information is given in the Registration Statement,
and except as stated therein, neither the Company nor
the Trust have sustained any material loss or
interference with their business or properties from
fire, flood, hurricane, earthquake, accident or other
calamity, whether or not covered by insurance, or
from any labor dispute or any court or governmental
action, order or decree, or become a party to or the
subject of any litigation which is material to the
Company or the Trust, nor shall there have been any
material adverse change, or any development involving
a prospective material adverse change, in the
business, properties, key personnel, capitalization,
net worth, results of operations or condition
(financial or other) of the Company or the Trust,
which loss, interference, litigation or change, in
the judgment of the Underwriter shall render
it unadvisable to commence or continue the offering
or the delivery of the Preferred Securities on the
terms and in the manner contemplated in this
Agreement and in the Registration Statement.
j. On or after the date hereof, none of the Company's
debt securities or the Preferred Securities are rated
by any "nationally recognized statistical rating
organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the
Act.
k. On or after the date hereof there shall not have
occurred any of the following: (i) trading in
securities on the New York Stock Exchange, the
American Stock Exchange, or the over-the-counter
market shall have been suspended or materially
limited or minimum or maximum prices shall have been
established on either of such Exchanges or such
market, or a banking moratorium shall have been
declared by Federal or state authorities; (ii) if at
or prior to the Closing Date trading in securities of
the Company shall have been suspended; or (iii) if
there shall have been such a material change in
general economic, political or financial conditions
or if the effect of international conditions on the
financial markets in the United States such as in the
judgment of the Underwriter makes it
impracticable or inadvisable to proceed with the
offering or the delivery of the Preferred Securities
on the terms and in the manner contemplated in the
Registration Statement.
29
<PAGE> 30
l. All such opinions, certificates, letters and
documents delivered pursuant to this Agreement will
comply with the provisions hereof only if they are
reasonably satisfactory to Tucker Anthony and their
counsel. The Company shall furnish to the
Underwriter such conformed copies of such
opinions, certificates, letters and documents in such
quantities as the Representatives shall reasonably
request.
m. There shall have been furnished to the Underwriters a
certificate, dated the Closing Date and addressed to
the Underwriter, signed by the Chief Executive
Officer and by the Chief Financial Officer of the
Company and the trustees of the Trust to the effect
that:
(1) the representations and warranties of the
Company and Trust in Section 1 of this
Agreement are true and correct, as if made
at and as of the Closing Date, and the
Company and Trust have complied with all the
agreements and satisfied all the conditions
on its part to be performed or satisfied at
or prior to the Closing Date;
(2) no stop order suspending the effectiveness
of the Registration Statement has been
issued, and no proceedings for that purpose
have been initiated or are pending, or to
their knowledge, threatened under the
Securities Act;
(3) all filings required by Rules 424, 430A and
462 of the Rules and Regulations have been
made;
(4) they have carefully examined the
Registration Statement, the Effective
Prospectus and the Final Prospectus, and any
amendments or supplements thereto, and such
documents do not include any untrue
statement of a material fact or omit to
state any material fact required to be
stated therein or necessary to make the
statements therein not misleading; and
(5) since the effective date of the Registration
Statement, there has occurred no event
required to be set forth in an amendment or
supplement to the Registration Statement,
the Effective Prospectus or the Final
Prospectus which has not been so set forth.
30
<PAGE> 31
The obligations of the Underwriter to purchase and pay for the Optional
Securities shall be subject, in its discretion, to each of the foregoing
conditions to purchase the Firm Securities, except that all references to the
"Closing Date" shall be deemed to refer to the Option Closing Date, if it shall
be a date other than the Closing Date.
7. CONDITION OF THE COMPANY'S AND THE TRUST'S OBLIGATIONS. The
obligations hereunder of the Company and the Trust are subject to the condition
set forth in Section 6(a) hereof.
8. INDEMNIFICATION AND CONTRIBUTION.
a. The Company and the Trust, jointly and severally,
agree to indemnify and hold harmless the Underwriter,
and each person, if any, who controls the Underwriter
within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or
several, to which the Underwriter or controlling
person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out
of or are based in whole or in part upon (i) any
inaccuracy in the representations and warranties of
the Company or the Trust contained herein, (ii) any
failure of the Company or the Trust to perform its or
their obligations hereunder or under law or (iii) any
untrue statement or alleged untrue statement of any
material fact contained in the Registration
Statement, any Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, or any amendment or
supplement thereto, or in any Blue Sky application or
other written information furnished by the Company
filed in any state or other jurisdiction in order to
qualify any or all of the Preferred Securities under
the securities laws thereof (a "Blue Sky
Application"), or arise out of or are based upon the
omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus,
the Effective Prospectus or Final Prospectus or any
amendment or supplement thereto or any Blue Sky
Application a material fact required to be stated
therein or necessary to make the statements therein
not misleading, and will reimburse each Underwriter
and each such controlling person for any legal or
other expenses reasonably incurred by the Underwriter
or such controlling person in connection with
investigating or defending any such loss, claim,
damage, liability or action as such expenses are
incurred; provided, however, that neither the Company
nor the Trust will be liable in any such case to the
extent that any such loss, claim, damage, or
liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement,
the Preliminary Prospectus, the Effective Prospectus
or Final Prospectus or such amendment or such
supplement or any Blue Sky Application in reliance
upon and in conformity with written information
furnished to the Company or the Trust by the
Underwriter specifically for use therein (it being
understood that the only information so provided is
the information included in the first, sixth and
eighth paragraphs under the
31
<PAGE> 32
caption "Underwriting" in any Preliminary
Prospectus and the Final Prospectus and the Effective
Prospectus).
b. The Underwriter will indemnify and hold harmless the
Trust and the Company, each of its directors, each of
its officers who signed the Registration Statement
and each person, if any, who controls the Company
within the meaning of the Securities Act, and each
Administrative Trustee or any other person who
controls the Trust within the meaning of the
Securities Act, against any losses, claims, damages
or liabilities to which the Company or Trust or any
such director, officer or controlling person may
become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in
the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or Final
Prospectus, or any amendment or supplement thereto,
or any Blue Sky Application, or arise out of or are
based upon the omission or the alleged omission to
state in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or Final
Prospectus or any amendment or supplement thereto or
any Blue Sky Application a material fact required to
be stated therein or necessary to make the statements
therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity
with written information furnished to the Company and
the Trust by the Underwriter specifically for use
therein (it being understood that the only
information so provided is the information included
in the first, sixth and eighth paragraphs under the
caption "Underwriting" in any Preliminary Prospectus
and in the Effective Prospectus and the Final
Prospectus);
c. Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any
action, including governmental proceedings, such
indemnified party will, if a claim in respect thereof
is to be made against the indemnifying party under
this Section 8 notify the indemnifying party of the
commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any
liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such
action is brought against any indemnified party, and
it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent
that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense
thereof, with counsel satisfactory to such
indemnified party; and after notice from the
indemnifying party to such indemnified party of its
election to so assume the defense thereof, the
indemnifying party will not be liable to
32
<PAGE> 33
such indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by such
indemnified party in connection with the defense
thereof other than reasonable costs of investigation
except that the indemnified party shall have the
right to employ separate counsel if, in its
reasonable judgment, it is advisable for the
indemnified party to be represented by separate
counsel, and in that event the fees and expenses of
separate counsel shall be paid by the indemnifying
party. Neither the Company nor the Trust will,
without prior written consent of the Underwriter,
settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action,
suit or proceeding (or related cause of action or
portion thereof) in respect of which indemnification
may be sought hereunder (whether or not the
Underwriter is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or
consent includes an unconditional release of such
Underwriter from all liability arising out of such
claim, action, suit or proceeding (or related cause
of action or portion thereof).
d. In order to provide for just and equitable
contribution in circumstances in which the indemnity
agreement provided for in the preceding part of this
Section 8 is for any reason held to be unavailable to
the Underwriter, the Company, or the Trust is
insufficient to hold harmless an indemnified party,
then the Company and the Trust shall contribute to
the damages paid by the Underwriter, and the
Underwriter shall contribute to the damages paid by
the Company and the Trust provided, however, that no
person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
In determining the amount of contribution to which
the respective parties are entitled, there shall be
considered the relative benefits received by each
party from the offering of the Preferred Securities
(taking into account the portion of the proceeds of
the offering realized by each), the parties' relative
knowledge and access to information concerning the
matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement
or omission, and any other equitable considerations
appropriate under the circumstances. The Company, the
Trust and the Underwriter agree that it would not be
equitable if the amount of such contribution were
determined by pro rata or per capita allocation.
Neither the Underwriter nor any person controlling
the Underwriter shall be obligated to make
contribution hereunder which in the aggregate exceeds
the amount paid to the Underwriter as compensation
for its commitment to purchase Preferred Securities
under this Agreement, less the aggregate amount of
any damages which the Underwriter and its controlling
persons have otherwise been required to pay in
respect of the same or any similar claim.
33
<PAGE> 34
For purposes of this Section, each person, if any,
who controls the Underwriter within the meaning of
Section 15 of the Securities Act shall have the same
rights to contribution as the Underwriter, and each
director of the Company, each officer of the Company
who signed the Registration Statement, and each
person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, shall
have the same rights to contribution as the Company,
and each Administrative Trustee and each person who
controls the Trust within the meaning of Section 15
of the Securities Act, shall have the same right to
contribution as the Trust.
e. The obligations of the Company and the Trust
under this Section 8 shall be in addition to any
liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to
each person, if any, who controls the Underwriter
within the meaning of the Securities Act; and the
obligations of the Underwriter under this
Section 8 shall be in addition to any liability which
the Underwriter may otherwise have and shall
extend, upon the same terms and conditions, to each
officer and director of the Company and to each
person, if any, who controls the Company within the
meaning of the Securities Act, and to each person who
controls the Trust within the meaning of the
Securities Act.
9. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Trust, the
Company, its officers and the Underwriter set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this
34
<PAGE> 35
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, the Underwriter or any controlling person, the Trust or any
Administrative Trustee or controlling person of the Trust (ii) any termination
of this Agreement and (iii) delivery of and payment for the Preferred
Securities.
10. EFFECTIVE DATE. This Agreement, after due execution, shall
become effective at whichever of the following times shall first occur: (i)
execution and delivery of this Agreement by the parties hereto or (ii) at such
time after the Registration Statement has become effective as the Underwriter
shall release the Firm Securities for sale to the public; provided, however,
that the provisions of Sections 5, 8, 9 and 10 hereof shall at all times be
effective. For purposes of this Section 10, the Firm Securities shall be deemed
to have been so released upon the release by the Underwriter for publication, at
any time after the Registration Statement has become effective, of any newspaper
advertisement relating to the Firm Securities or upon the release by the
Underwriter of telegrams offering the Firm Securities for sale to securities
dealers, whichever may occur first.
11. TERMINATION.
a. The Company's obligations under this Agreement may be
terminated by the Company by notice to the
Underwriter (i) at any time before it becomes
effective in accordance with Section 10 hereof, or
(ii) in the event that the condition set forth in
Section 7 shall not have been satisfied at or prior
to the First Closing Date.
b. This Agreement may be terminated by the Underwriter
by notice to the Company and the Trust (i) at any
time before it becomes effective in accordance with
Section 10 hereof; (ii) in the event that at or prior
to the First Closing Date the Company or the Trust
shall have failed, refused or been unable to perform
any agreement on the part of the Company or the Trust
to be performed hereunder or any other condition to
the obligations of the Underwriter hereunder is not
fulfilled; (iii) if at or prior to the Closing Date
trading in securities on the New York Stock Exchange,
the American Stock Exchange or the over-the-counter
market shall have been suspended or materially
limited or minimum or maximum prices shall have been
established on either of such Exchanges or such
market, or a banking moratorium shall have been
declared by Federal or state authorities; (iv) if at
or prior to the Closing Date trading in securities of
the Company shall have been suspended; or (v) if
there shall have been such a material change in
general economic, political or financial conditions
or if the effect of international conditions on the
financial markets in the United States shall be such
as, in the Underwriter reasonable judgment, makes it
inadvisable to commence or continue the offering of
the Preferred Securities at the offering price to the
public set forth on the cover page of the Prospectus
or to proceed with the delivery of the Securities.
35
<PAGE> 36
c. Termination of this Agreement pursuant to this
Section 11 shall be without liability of any party to
any other party other than as provided in Sections 5
and 8 hereof.
13. NOTICES. All communications hereunder shall be in writing and,
if sent to any of the Underwriter, shall be mailed or delivered or
telegraphed and confirmed in writing to Tucker Anthony Incorporated, One Beacon
Street, Boston, Massachusetts 02108, Attn: Gregory W. Benning, or if sent to the
Company or the Trust shall be mailed, delivered or telegraphed and confirmed in
writing to the Company or the Trust at 430 Main Street, Williamstown,
Massachusetts 01267, Attn: Richard A. Stratton.
14. MISCELLANEOUS. This Agreement shall inure to the benefit of
and be binding upon the Underwriter, the Company and the Trust and their
respective successors and legal representatives. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this Agreement.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the Company, the Trust and the Underwriter and
for the benefit of no other person except that (i) the representations and
warranties of the Company and the Trust contained in this Agreement shall also
be for the benefit of any person or persons who control the Underwriter within
the meaning of Section 15 of the Securities Act, and (ii) the indemnities by the
Underwriter shall also be for the benefit of the directors of the Company,
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Securities Act and the Administrative Trustee and any person or persons who
control the Trust within the meaning of Section 15 of the Securities Act. No
purchaser of Preferred Securities from the Underwriter will be deemed a
successor because of such purchase. The validity and interpretation of this
Agreement shall be governed by the laws of the State of Massachusetts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
15. NO LIABILITY OF PROPERTY TRUSTEE, DELAWARE TRUSTEE OR
GUARANTEE TRUSTEE.
It is understood and agreed by the parties hereto that (a)
each of the representations, undertakings and agreements herein made on the part
of the Trust is made and intended not as representations, warranties, covenants,
undertakings and agreements of any Trustee of the Trust, including, without
limitation, The Bank of New York as Guarantee Trustee or Property Trustee, or
The Bank of New York (Delaware) as Delaware Trustee, in their individual
capacity, but is made and intended for the purpose of binding only the Trust,
and (b) under no circumstances shall any Trustee, including The Bank of New York
as Guarantee Trustee or Property Trustee or The Bank of New York (Delaware) as
Delaware Trustee be personally liable for any breach or failure of any
obligation, representation, warranty, or covenant made or undertaken by the
Trust under this Agreement except, if such breach or failure is due to any gross
negligence or wilful misconduct of the Trustee.
36
<PAGE> 37
If the foregoing is in accordance with your understanding of our
agreement, please indicate your acceptance thereof in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between the Company, the Trust and the Underwriter.
Very truly yours,
LITCHFIELD FINANCIAL CORPORATION
By:
----------------------------------------
Name:
Title:
LITCHFIELD CAPITAL TRUST I
By: Litchfield Financial Corporation,
as sponsor
By:
-------------------------------------
Name:
Title:
Confirmed and accepted as
of the date first above written.
TUCKER ANTHONY CLEARY GULL
By:
-------------------------------
Name:
Title:
37
<PAGE> 38
SCHEDULE I
UNDERWRITER
NUMBER OF
FIRM SECURITIES
UNDERWRITER TO BE PURCHASED
- ----------------------------------------------------------- ----------------
Tucker Anthony Cleary Gull.................................
----------------
Total Firm Securities to be Purchased.............
================
38
<PAGE> 1
EXHIBIT 4.1
LITCHFIELD FINANCIAL CORPORATION
AND
THE BANK OF NEW YORK,
AS TRUSTEE
JUNIOR SUBORDINATED INDENTURE
DATED AS OF ___________, ____
JUNIOR SUBORDINATED DEBENTURES
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions
<S> <C> <C>
Section 1.01. Definitions.......................................................... 2
ARTICLE 2
Issue Description, Terms, Execution Registration
and Exchange of Debentures
Section 2.01. Designation, Terms, Amount, Authentication and Delivery
of Debentures........................................................ 8
Section 2.02. Form of Debenture and Trustee's Certificate.......................... 10
Section 2.03. Date and Denominations of Debentures and Provisions
for Payment of Principal, Premium and Interest....................... 11
Section 2.04. Execution of Debentures.............................................. 12
Section 2.05. Exchange of Debentures............................................... 14
Section 2.06. Temporary Debentures................................................. 15
Section 2.07. Mutilated, Destroyed, Lost or Stolen Debentures...................... 15
Section 2.08. Cancellation of Surrendered Debentures............................... 16
Section 2.09. Provisions of Indenture and Debentures for Sole
Benefit of Parties and Debentureholders.............................. 16
Section 2.10. Appointment of Authenticating Agent.................................. 16
Section 2.11. Global Debentures.................................................... 17
Section 2.12. CUSIP Numbers........................................................ 18
ARTICLE 3
Redemption of Debentures and Sinking Fund Provisions
Section 3.01. Redemption........................................................... 19
Section 3.02. Notice of Redemption................................................. 19
Section 3.03. Payment Upon Redemption.............................................. 20
Section 3.04. Sinking Funds for Debentures......................................... 21
Section 3.05. Satisfaction of Sinking Fund Payments With Debentures................ 21
Section 3.06. Redemption of Debentures for Sinking Fund............................ 21
ARTICLE 4
Particular Covenants of the Company
Section 4.01. Payment of Principal of (and Premium, if any) and
Interest on Debentures............................................... 22
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Section 4.02. Maintenance of Office or Agent for Payment of
Debentures, Designation of Office or Agency for Payment,
Registration, Transfer and Exchange of Debentures.................... 22
Section 4.03. Duties of Paying Agent; Company as Payment Agent; and
Holding Sums In Trust................................................ 22
Section 4.04. Appointment to Fill Vacancy in Office of Trustee..................... 23
ARTICLE 5
Debentureholders Lists and Reports by the Company and the Trustee
Section 5.01. Company to Furnish Trustee Information as to Names and
Addresses of Debentureholders........................................ 23
Section 5.02. Trustee to Preserve Information as to Names and
Addresses of Debentureholders........................................ 24
Section 5.03. Annual and Other Reports to Be Filed by Company With
the Trustee.......................................................... 25
Section 5.04. Trustee to Transmit Annual Report to Debentureholders................ 26
ARTICLE 6
Remedies of the Trustee and Debentureholders on Event of Default
Section 6.01. Events of Default Defined............................................ 26
Section 6.02. Covenant of Company to Pay to Trustee Whole Amount Due
on Debentures on Default in Payment of Interest or
Principal (and Premiums, if any)................................. 29
Section 6.03. Application of Moneys Collected by Trustee........................... 30
Section 6.04. Limitation on Suits by Holders of Debentures......................... 31
Section 6.05. Remedies Cumulative; Delay or Omission in Exercise of
Rights Not Waiver of Default......................................... 32
Section 6.06. Rights of Holders of Majority in Principal Amount of
Debentures to Direct Trustee and to Waive Defaults................... 32
Section 6.07. Trustee to Give Notice of Defaults Known To It, But
May Withhold in Certain Circumstances................................ 33
Section 6.08. Requirements of an Undertaking to Pay Costs in Certain
Suits Under Indenture or Against Trustee............................. 33
ARTICLE 7
Concerning the Trustee
Section 7.01. Upon Event of Default Occurring and Continuing, Trustee
Shall Exercise Powers Vested In It, and Use Same Degree
of Care and Skill In Their Exercise, as Prudent
Individual Would Use................................................. 34
Section 7.02. Certain Rights of the Trustee........................................ 35
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 7.03. Trustee Not Liable for Recitals In Indenture or In
Debentures........................................................... 37
Section 7.04. Trustee, Paying Agent or Debenture Registrar May Own
Debentures........................................................... 37
Section 7.05. Moneys Received by Trustee to Be Held In Trust Without
Interest............................................................. 37
Section 7.06. Trustee Entitled to Compensation, Reimbursement and
Indemnity............................................................ 38
Section 7.07. Right of Trustee to Rely on Certificate of Officers of
Company Where No Other Evidence Specifically Prescribed.............. 38
Section 7.08. Disqualification; Conflicting Interests.............................. 39
Section 7.09. Requirements for Eligibility of Trustee.............................. 39
Section 7.10. Resignation of Trustee and Appointment of Successor.................. 39
Section 7.11. Acceptance by Successor to Trustee................................... 41
Section 7.12. Successor to Trustee by Merger, Consolidation or
Succession to Business............................................... 42
Section 7.13. Preferential Collection of Claims Against the Company................ 42
ARTICLE 8
Concerning the Debentures
Section 8.01. Evidence of Action by Debentureholders............................... 42
Section 8.02. Proof of Execution of Instruments and of Holding of
Debentures........................................................... 43
Section 8.03. Who May Be Deemed Owners of Debentures............................... 43
Section 8.04. Debentures Owned by the Company or Controlled or
Controlling Companies Disregarded for Certain Purposes............... 43
Section 8.05. Instruments Executed by Debentureholders Bind Future
Holders.............................................................. 44
ARTICLE 9
Supplemental Indentures
Section 9.01. Purposes for Which Supplemental Indenture May Be
Entered Into Without Consent of Debentureholders..................... 44
Section 9.02. Modification of Indenture with Consent of
Debentureholders..................................................... 46
Section 9.03. Effect of Supplemental Indentures.................................... 47
Section 9.04. Debentures May Bear Notation of Changes By Supplemental
Indentures........................................................... 47
Section 9.05. Opinion of Counsel................................................... 47
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE 10
Consolidation, Merger, Sale or Conveyance
<S> <C> <C>
Section 10.01. Company May Consolidate, etc. on Certain Terms....................... 48
Section 10.02. Successor Corporation Substituted.................................... 48
Section 10.03. Opinion of Counsel................................................... 48
ARTICLE 11
Satisfaction and Discharge of Indenture; Unclaimed Moneys
Section 11.01. Satisfaction and Discharge of Indenture.............................. 48
Section 11.02. Application by Trustee of Funds Deposited For Payment of
Debentures........................................................... 51
Section 11.03. Repayment of Moneys Held by the Paying Agent......................... 51
Section 11.04. Repayment of Moneys Held by the Trustee.............................. 51
Section 11.05. Indemnification Relating to Governmental Obligations................. 51
ARTICLE 12
Immunity of Incorporators, Stockholders, Officers and Directors
Section 12.01. Incorporators, Stockholders, Officers and Directors of
Company Exempt From Individual Liability............................. 52
ARTICLE 13
Miscellaneous Provisions
Section 13.01. Successors and Assigns of Company Bound by Indenture................. 52
Section 13.02. Acts of Board, Committee or Officer of Successor
Company Valid........................................................ 52
Section 13.03. Surrender of Powers of the Company................................... 52
Section 13.04. Required Notices or Demands May be Served by Mail.................... 53
Section 13.05. Indenture and Debentures to Be Construed in Accordance
with Laws of the State of New York................................... 53
Section 13.06. Officer's Certificate and Opinion of Counsel to be
Furnished Upon Application or Demands by Company;
Statements To Be Included In Each Certificate or Opinion
With Respect to Compliance With Condition or Covenant................ 53
Section 13.07. Payments Due on Sundays or Holidays.................................. 53
Section 13.08. Provisions Required by Trust Indenture Act of 1939
to Control........................................................... 54
Section 13.09. Indenture May Be Executed by its Counterparts........................ 54
Section 13.10. Separability of Indenture Provisions................................. 54
Section 13.11. Assignment by Company to a Subsidiary or Affiliate................... 54
</TABLE>
iv
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 13.12. Holders of Preferred Securities as Third Party
Beneficiaries of the Indenture; Holders of Preferred
Securities May Institute Legal Proceedings Against the
Company in Certain Cases............................................. 54
ARTICLE 14
Subordination of Debentures
Section 14.01. Agreement to Subordinate............................................. 55
Section 14.02. Default on Senior Debt............................................... 55
Section 14.03. Liquidation; Dissolution; Bankruptcy................................. 56
Section 14.04. Subrogation of Debentures............................................ 57
Section 14.05. Authorization by Debentureholders.................................... 58
Section 14.06. Notice to Trustee.................................................... 58
Section 14.07. Trustee's Relation to Senior Debt.................................... 59
Section 14.08. No Impairment to Subordination....................................... 59
Section 14.09. Article Applicable to Paying Agents.................................. 60
Section 14.10. Trust Moneys Not Subordinated........................................ 60
</TABLE>
v
<PAGE> 7
THIS JUNIOR SUBORDINATED INDENTURE, is dated as of the ___ day of
_________, ____, between Litchfield Financial Corporation, a corporation duly
organized and existing under the laws of The Commonwealth of Massachusetts
(hereinafter sometimes referred to as the "Company"), and The Bank of New York,
a New York banking corporation, as Trustee (hereinafter sometimes referred to as
the "Trustee"):
WHEREAS, for its lawful corporate purposes, the Company has fully
authorized the execution and delivery of this Indenture to provide for the
issuance of unsecured junior subordinated debentures (hereinafter referred to as
the "Debentures"), in an unlimited aggregate principal amount to be issued from
time to time in one or more series in accordance with the terms of this
Indenture, as registered Debentures without coupons, to be authenticated by the
certificate of the Trustee;
WHEREAS, to provide the terms and conditions upon which the Debentures are
to be authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture;
WHEREAS, the Debentures and the certificate of authentication to be borne
by the Debentures (the "Certificate of Authentication") are to be substantially
in such forms as may be approved by the Board of Directors (as defined below) or
set forth in any indenture supplemental to this Indenture; and
WHEREAS, all acts and things necessary to make the Debentures issued
pursuant hereto, when executed by the Company and authenticated and delivered by
the Trustee in accordance with the terms of this Indenture, the valid, binding
and legal obligations of the Company, and to constitute a valid indenture and
agreement according to its terms, have been done and performed or will be done
and performed prior to the issuance of such Debentures, and the execution of
this Indenture has been and the issuance hereunder of the Debentures has been or
will be prior to issuance in all respects duly authorized, and the Company, in
the exercise of the legal right and power in it vested, executes this Indenture
and proposes to make, execute, issue and deliver the Debentures;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Debentures
are and are to be authenticated, issued and delivered, and in consideration of
the premises and of the acquisition and acceptance of the Debentures by the
holders thereof, the Company covenants and agrees with the Trustee, for the
equal and proportionate benefit (subject to the provisions of this Indenture) of
the respective holders from time to time of the Debentures, without any
discrimination, preference or priority of any one Debenture over any other by
reason of priority in the time of issue, sale or negotiation thereof, or
otherwise, except as provided herein, as follows:
<PAGE> 8
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. The terms defined in this Section (except as in
this Indenture otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture, any resolution of the Board of
Directors of the Company and of any indenture supplemental hereof shall have the
respective meanings specified in this Section. All other terms used in this
Indenture which are defined in the Trust Indenture Act of 1939, as amended, or
which are by reference in such Act defined in the Securities Act of 1933, as
amended (except as herein otherwise expressly provided or unless the context
otherwise requires), shall have the meanings assigned to such terms in said
Trust Indenture Act and in said Securities Act as in force at the date of this
instrument.
"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; provided, however, no Litchfield Capital
Trust to which Debentures have been issued shall be deemed to be an Affiliate of
the Company. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authenticating Agent" means an authenticating agent with respect to all or
any of the series of Debentures, as the case may be, appointed with respect to
all or any series of the Debentures, as the case may be, by the Trustee pursuant
to Section 2.10.
"Board of Directors" means the Board of Directors of the Company, or any
committee of such Board duly authorized to act hereunder.
"Board Resolution" means a copy of one or more resolutions, certified by
the secretary or an assistant secretary of the Company to have been adopted or
consented to by the Board of Directors and to be in full force and effect, and
delivered to the Trustee.
"Business Day", with respect to any series of Debentures, means any day
other than (i) a Saturday or a Sunday, (ii) a day on which banking institutions
in the Borough of Manhattan, The City and State of New York or Boston,
Massachusetts are authorized or obligated by law or executive order to close or
(iii) a day on which the Corporate Trust Office of the Trustee, or, with respect
to Debentures of a series initially issued to a Litchfield Capital Trust, the
principal corporate trust office of the Property Trustee under the related
Declaration of Trust, is closed for business.
"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer, the principal accounting officer or
the Treasurer of the Company. The Certificate need not comply with the
provisions of Section 13.06.
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<PAGE> 9
"Common Securities" means the common undivided beneficial interests in the
assets of the applicable Litchfield Capital Trust.
"Company" means Litchfield Financial Corporation, a corporation duly
organized and existing under the laws of The Commonwealth of Massachusetts, and,
subject to the provisions of Article 10, shall also include its successor and
assigns.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Indenture is located at 101
Barclay Street, Floor 21 West, New York, New York 10286, Attention: Corporate
Trust Trustee Administration.
"Debenture" or "Debentures" means any Debenture or Debentures, as the case
may be, authenticated and delivered under this Indenture.
"Debenture Register" has the meaning assigned in Section 2.05(b).
"Debenture Registrar" has the meaning assigned in Section 2.05(b).
"Debentureholder", "holder of Debentures", "registered holder", or other
similar term, means the person or persons in whose name or names a particular
Debenture shall be registered on the books of the Company kept for the purpose
in accordance with the terms of this Indenture.
"Debt" means, with respect to any Person at any date of determination
(without duplication), (i) all indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses, (iii) all obligations of such
Person in respect of letters of credit or bankers' acceptances or other similar
instruments (or reimbursement obligations thereto) issued on the account of such
person, (iv) all obligations of such person to pay the deferred purchase price
of property or services, except Trade Payables, (v) all obligations of such
Person as lessee under capitalized leases, (vi) all Debt of others secured by a
Lien on any asset of such Person, whether or not such Debt is assumed by such
Person; provided that, for purposes of determining the amount of any Debt of the
type described in this clause (vi), if recourse with respect to such Debt is
limited to such asset, the amount of such Debt shall be limited to the lesser of
the fair market value of such asset or the amount of such Debt, (vii) all Debt
of others Guaranteed by such Person to the extent such Debt is Guaranteed by
such Person, and (viii) to the extent not otherwise included in this definition,
all obligations of such Person for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity prices, forward
contracts, options, swaps, collars and similar arrangements.
"Declaration of Trust" means the Amended and Restated Declaration of Trust
of a Litchfield Capital Trust, if any, specified in the applicable Board
Resolution or supplemental indenture establishing a particular series of
Debentures pursuant to Section 2.01 hereof.
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<PAGE> 10
"Default" means any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default hereunder.
"Depositary" means with respect to Debentures of any series, for which the
Company shall determine that such Debentures will be issued as one or more
Global Debentures, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Exchange Act or other applicable statute or regulation, which, in each case,
shall be designated by the Company pursuant to either Section 2.01 or 2.11.
"Event of Default", with respect to Debentures of a particular series means
any event specified in Section 6.01(a), continued for the period of time, if
any, and the giving of the notice, if any, therein designated.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Debenture" means, with respect to any series of Debentures, a
Debenture in the form prescribed in Section 2.11 executed by the Company and
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instruction, all in accordance with the Indenture, which shall be registered in
the name of the Depositary or its nominee.
"Governmental Obligations" means securities that are (i) direct obligations
of the United States of America for the payment of which its full faith and
credit is pledged or (ii) obligations of a person controlled or supervised by
and acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the Governmental Obligation or the specific payment of principal of
or interest on the Governmental Obligation evidenced by such depository receipt.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Debt or other obligation of any other
Person and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Debt of other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part);
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<PAGE> 11
provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Indenture" means this instrument as originally executed, or, if amended or
supplemented as herein provided, as so amended or supplemented.
"Interest Payment Date" when used with respect to any installment of
interest on a Debenture of a particular series means the date specified in such
Debenture or in a Board Resolution or in an indenture supplemental hereto with
respect to such series as the fixed date on which an installment of interest
with respect to Debentures of that series is due and payable.
"Lien" means, with respect to any property, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
property. For purposes of this Indenture, the Company shall be deemed to own
subject to a Lien any property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such property.
"Litchfield Capital Trust" means any statutory business trust created under
the laws of the State of Delaware as specified in the applicable Board
Resolution or supplemental indenture establishing a particular series of
Debentures pursuant to Section 2.01 hereof.
"Officers' Certificate" means a certificate signed by the President or a
Vice President and by the Treasurer or an Assistant Treasurer or the Comptroller
or an Assistant Comptroller or the Secretary or an Assistant Secretary of the
Company, and delivered to the Trustee. Each such certificate shall include the
statements provided for in Section 13.06, if and to the extent required by the
provisions thereof.
"Opinion of Counsel" means an opinion in writing signed by legal counsel,
who may be counsel for the Company, a Litchfield Capital Trust or the Trustee,
which may be an employee of the Company but not an employee of a Litchfield
Capital Trust or the Trustee, and who shall be reasonably acceptable to the
Trustee. Each such opinion shall include the statements provided for in Section
13.06, if and to the extent required by the provisions thereof.
"Outstanding", when used with reference to Debentures of any series,
subject to the provisions of Section 8.01, means, as of any particular time, all
Debentures of that series theretofore authenticated and delivered by the Trustee
under this Indenture, except (a) Debentures theretofore cancelled by the Trustee
or any paying agent, or delivered to the Trustee or any paying agent for
cancellation or which have previously been cancelled; (b) Debentures or portions
thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust for the holders of such Debentures by the Company
(if the Company shall act as its own paying agent); provided, however, that if
such Debentures or portions of such Debentures are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as in Article
3
5
<PAGE> 12
provided, or provision satisfactory to the Trustee shall have been made for
giving such notice; (c) Debentures paid pursuant to Section 2.07; and (d)
Debentures in lieu of or in substitution for which other Debentures shall have
been authenticated and delivered pursuant to the terms of Section 2.07;
provided, however, that in determining whether the holders of the requisite
principal amount of Outstanding Debentures are present at a meeting of holders
of Debentures for quorum purposes or have consented to or voted in favor of any
request, demand, authorization, direction, notice, consent, waiver, amendment or
modification hereunder, Debentures held for the account of the Company, any of
its subsidiaries or any of its Affiliates shall be disregarded and deemed not to
be Outstanding, except that in determining whether the Trustee shall be
protected in making such a determination or relying upon any such quorum,
consent or vote, only Debentures which the Trustee actually knows to be so owned
shall be so disregarded.
"Person" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Payment", when used with respect to the Debentures of any series,
means the place or places where the principal of and any premium and interest on
the Debentures of that series are payable as specified as contemplated by
Section 2.01.
"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 2.07 in lieu of a lost, destroyed or
stolen Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Debenture.
"Preferred Securities" means the preferred undivided beneficial interests
in the assets of the applicable Litchfield Capital Trust.
"Property Trustee" means the entity performing the function of the Property
Trustee under the applicable Declaration of Trust of a Litchfield Capital Trust.
"Responsible Officer" shall mean, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such Person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
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<PAGE> 13
"Security Exchange" when used with respect to the Debentures of any series
which are held as trust assets of a Litchfield Capital Trust pursuant to the
Declaration of Trust of such Litchfield Capital Trust, means the distribution of
the Debentures of such series by such Litchfield Capital Trust in exchange for
the Preferred Securities and Common Securities of such Litchfield Capital Trust
in dissolution of such Litchfield Capital Trust pursuant to the Declaration of
Trust of such Litchfield Capital Trust.
"Senior Debt" means the principal of (and premium, if any) and interest on
all Debt of the Company whether created, incurred or assumed before, on or after
the date of this Indenture; provided that such Senior Debt shall not include (i)
Debt of the Company that, when incurred and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, was without recourse, and (ii) any
other Debt of the Company which by the terms of the instrument creating or
evidencing the same is specifically designated as being subordinated to or pari
passu with the Debentures, and in particular the Debentures shall rank pari
passu with all other debt securities and guarantees issued to any trust,
partnership or other entity affiliated with the Company which is a financing
vehicle of the Company in connection with an issuance of preferred securities by
such financing entity.
"Subsidiary" means any corporation at least a majority of whose outstanding
voting stock shall at the time be owned, directly or indirectly, by the Company
or by one or more Subsidiaries or by the Company and one or more Subsidiaries.
For the purposes only of this definition of the term "Subsidiary", the term
"voting stock", as applied to the stock of any corporation shall mean stock of
any class or classes having ordinary voting power for the election of a majority
of the directors of such corporation, other than stock having such power only by
reason of the occurrence of a contingency.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Trustee" means The Bank of New York, a New York banking corporation, and,
subject to the provisions of Article 7, shall also include its successors and
assigns, and, if at any time there is more than one person acting in such
capacity hereunder, "Trustee" shall mean each such person. The term "Trustee" as
used with respect to a particular series of the Debentures shall mean the
trustee with respect to that series.
"Trust Indenture Act", subject to the provisions of Section 9.01 and 9.02,
means the Trust Indenture Act of 1939, as amended and in effect at the date of
execution of this Indenture.
7
<PAGE> 14
ARTICLE 2
ISSUE DESCRIPTION, TERMS, EXECUTION REGISTRATION AND EXCHANGE OF DEBENTURES
SECTION 2.01. DESIGNATION, TERMS, AMOUNT, AUTHENTICATION AND DELIVERY OF
DEBENTURES. The aggregate principal amount of Debentures which may be
authenticated and delivered under this Indenture is unlimited.
The Debentures may be issued in one or more series up to the aggregate
principal amount of Debentures of that series from time to time authorized by or
pursuant to a Board Resolution or pursuant to one or more indentures
supplemental hereto, prior to the initial issuance of Debentures of a particular
series. Prior to the initial issuance of Debentures of any series, there shall
be established in or pursuant to a Board Resolution, and set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto:
(1) the title of the Debentures of the series (which shall distinguish the
Debentures of the series from all other Debentures);
(2) any limit upon the aggregate principal amount of the Debentures of
that series which may be authenticated and delivered under this Indenture
(except for Debentures authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Debentures of that series);
(3) the date or dates on which the principal of the Debentures of the
series is payable and the right to shorten, extend or defer such date or dates;
(4) the rate or rates at which the Debentures of the series shall bear
interest or the manner of calculation of such rate or rates, if any;
(5) the date or dates from which such interest shall accrue, the Interest
Payment Dates on which such interest will be payable or the manner of
determination of such Interest Payment Dates and the record date for the
determination of holders to whom interest is payable on any such Interest
Payment Dates;
(6) the right, if any, to extend or defer the interest payment periods and
the duration of such extension;
(7) the period or periods within which, the price or prices at which, and
the terms and conditions upon which, Debentures of the series may be redeemed,
in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase
Debentures of the series pursuant to any sinking fund or analogous provisions
(including payments made in cash in anticipation of future sinking fund
obligations) or at the option of a holder thereof and the period or periods
within which, the price or prices at which, the currency or currencies
(including
8
<PAGE> 15
currency unit or units) in which and the terms and conditions upon which,
Debentures of the series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(9) any exchangeability, conversion or prepayment provisions of the
Debentures;
(10) the form of the Debentures of the series including the form of the
Certificate of Authentication for such series;
(11) if other than denominations of $25 or any integral multiple thereof,
the denominations in which the Debentures of the series shall be issuable;
(12) whether the Debentures are issuable as one or more Global Debentures
and, in such case, the identity of the Depositary for such series, the form of
any legend or legends which shall be borne by any such Global Debentures in
addition to or in lieu of that set forth in Section 2.11 and any circumstances
in addition to or in lieu of those set forth in Section 2.11 in which any such
Global Debentures may be exchanged in whole or in part for Debentures
registered, and any transfer of such Global Debentures in whole or in part may
be registered, in the name or names of Persons other than the Depositary for
such Global Debentures or a nominee thereof;
(13) if the Debentures of such series are to be deposited as trust assets
in a Litchfield Capital Trust the name of the applicable Litchfield Capital
Trust (which shall distinguish such statutory business trust from all other
Litchfield Capital Trusts) into which the Debentures of such series are to be
deposited as trust assets and the date of its Declaration of Trust;
(14) the place or places where the principal of (and premium, if any) and
interest on the Debentures of such series shall be payable, the place or places
where the Debentures of such series may be presented for registration of
transfer or exchange, and the place or places where notices and demands to or
upon the Company in respect of the Debentures of such series may be made;
(15) if other than U.S. dollars, the currency or currencies (including
currency unit or units) in which the principal of (and premium, if any) and
interest, if any, on the Debentures of the series shall be payable, or in which
the Debentures of the series shall be denominated;
(16) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Debentures of such series;
(17) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the maturity thereof;
(18) the additions or changes, if any, to this Indenture with respect to
the Debentures of such series as shall be necessary to permit or facilitate the
issuance of the Debentures of such
9
<PAGE> 16
series in bearer form, registrable or not registrable as to principal, and with
or without interest coupons;
(19) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Debentures of such series or the manner
in which such amounts will be determined;
(20) the appointment of any Paying Agent or Agents for the Debentures of
such series;
(21) the relative degree, if any, to which the Debentures of such series
shall be senior to or be subordinated to other series of Debentures in right of
payment, whether such other series of Debentures are Outstanding or not;
(22) any and all other terms with respect to the Debentures of such series
(and any terms which may be required by or advisable under applicable laws or
regulations not inconsistent with the terms of this Indenture); and
(23) an identification of any applicable United States Federal income tax
consequences with respect to the Debentures of such series, including whether
and under what circumstances the Company will pay additional amounts on the
Debentures of such series held by a Person who is not a U.S. Person in respect
of any tax, assessment or governmental charge withheld or deducted and, if so,
whether the Company will have the option to redeem the Debentures of such series
rather than pay such additional amounts.
All Debentures of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to any
such Board Resolution or in any indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 2.02. FORM OF DEBENTURE AND TRUSTEE'S CERTIFICATE. The Debentures
of any series and the Trustee's certificate of authentication to be borne by
such Debentures shall be substantially of the tenor and purport as set forth in
one or more indentures supplemental hereto or as provided in a Board Resolution
and as set forth in an Officers' Certificate, and may have such letters, numbers
or other marks of identification or designation and such legends or endorsements
typewritten, printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Indenture,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
automated quotation system on which Debentures of that series may be listed or
traded, or to conform to usage.
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SECTION 2.03. DATE AND DENOMINATIONS OF DEBENTURES AND PROVISIONS FOR
PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Debentures shall be issuable as
registered Debentures and in the denominations of $10 or any integral multiple
thereof, subject to Section 2.01(11). The Debentures of a particular series
shall bear interest payable on the dates and at the rate specified with respect
to that series. The principal of and the interest on the Debentures of any
series, as well as any premium thereon in case of redemption thereof prior to
maturity, shall, subject to Section 2.01(8) and (15), be payable in the coin or
currency of the United States of America which at the time is legal tender for
public and private debt, at the Place of Payment. Each Debenture shall be dated
the date of its authentication. Interest on the Debentures shall be computed on
the basis of a 360-day year composed of twelve 30-day months.
The interest installment on any Debenture which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date for
Debentures of that series shall be paid to the person in whose name said
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on the regular record date for such interest installment. In the event
that any Debenture of a particular series or portion thereof is called for
redemption and the redemption date is subsequent to a regular record date with
respect to any Interest Payment Date and prior to such Interest Payment Date,
interest on such Debenture will be paid upon presentation and surrender of such
Debenture as provided in Section 3.03.
Any interest on any Debenture which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date for Debentures of the same
series (herein called "Defaulted Interest") shall forthwith cease to be payable
to the registered holder on the relevant regular record date by virtue of having
been such holder; and such Defaulted Interest shall be paid by the Company, at
its election, as provided in clause (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on Debentures
to the persons in whose names such 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 such Debenture and the date of
the proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the persons entitled
to such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a special record date for the payment of such Defaulted Interest which
shall not be more than 15 nor less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the 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 Debentureholder at his or her address as it appears in the Debenture
Register (as hereinafter defined), not less than 10 days prior to such special
record date. Notice of the proposed payment of such Defaulted Interest
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<PAGE> 18
and the special record date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names such Debentures
(or their Predecessor Debentures) are registered on such special record date and
shall be no longer payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on any
Debentures in any other lawful manner not inconsistent with the requirements of
any securities exchange or automated quotation system on which such Debentures
may be listed or traded, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Unless otherwise set forth in a Board Resolution or one or more indentures
supplemental hereto establishing the terms of any series of Debentures pursuant
to Section 2.01 hereof, the term "regular record date" as used in this Section
with respect to a series of Debentures with respect to any Interest Payment Date
for such series shall mean either the fifteenth day of the month immediately
preceding the month in which an Interest Payment Date established for such
series pursuant to Section 2.01 hereof shall occur, if such Interest Payment
Date is the first day of a month, or the last day of the month immediately
preceding the month in which an Interest Payment Date established for such
series pursuant to Section 2.01 hereof shall occur, if such Interest Payment
Date is the fifteenth day of a month, whether or not such date is a Business
Day.
Subject to the foregoing provisions of this Section, each Debenture of a
series delivered under this Indenture upon transfer of or in exchange for or in
lieu of any other Debenture of such series shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debenture.
SECTION 2.04. EXECUTION OF DEBENTURES. The Debentures shall, subject to the
provisions of Section 2.06, be printed on steel engraved borders or fully or
partially engraved, or legibly typed, as the proper officers of the Company may
determine, and shall be signed on behalf of the Company by the Chairman or Vice
Chairman of its Board of Directors or its Chief Executive Officer, President or
one of its Vice Presidents, under its corporate seal attested by its Secretary
or one of its Assistant Secretaries. The signature of the Chairman, Vice
Chairman, Chief Executive Officer, President or a Vice President and/or the
signature of the Secretary or an Assistant Secretary in attestation of the
corporate seal, upon the Debentures, may be in the form of a manual or facsimile
signature and may be imprinted or otherwise reproduced on the Debentures and for
that purpose the Company may use the manual or facsimile signature of any person
who shall have been a Chairman, Vice Chairman, Chief Executive Officer,
President or Vice President, or of any person who shall have been a Secretary or
Assistant Secretary, notwithstanding the fact that at the time the Debentures
shall be authenticated and delivered or disposed of such person shall have
ceased to be the Chairman, Vice Chairman, Chief Executive Officer, President or
a Vice President, or the Secretary or an Assistant Secretary, of the Company, as
the case may be. The seal of the Company may be in the form of a facsimile of
the
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seal of the Company and may be impressed, affixed, imprinted or otherwise
reproduced on the Debentures.
Only such Debentures as shall bear thereon a Certificate of Authentication
substantially in the form established for such Debentures, executed manually by
an authorized signatory of the Trustee, or by any Authenticating Agent with
respect to such Debentures, shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose. Such certificate executed by the
Trustee, or by any Authenticating Agent appointed by the Trustee with respect to
such Debentures, upon any Debenture executed by the Company shall be conclusive
evidence that the Debenture so authenticated has been duly authenticated and
made available for delivery hereunder and that the holder is entitled to the
benefits of this Indenture. Notwithstanding the foregoing, if any Debenture
shall have been authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Debenture to the Trustee for
cancellation as provided in Section 2.08, for all purposes of this Indenture
such Debenture shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Debentures of any series executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Debentures, signed by its
President or any Vice President and its Treasurer or any Assistant Treasurer,
and the Trustee in accordance with such written order shall authenticate and
make available for delivery such Debentures. Each Debenture shall be dated the
date of its authentication by the Trustee.
In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
The Trustee shall not be required to authenticate such Debentures if the
issue of such Debentures pursuant to this Indenture will affect the Trustee's
own rights, duties or immunities under the Debentures and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
SECTION 2.05. EXCHANGE OF DEBENTURES.
------------ ----------------------
(a) Debentures of any series may be exchanged upon presentation thereof at
a Place of Payment, for other Debentures of such series of authorized
denominations, and for a like aggregate principal amount, upon payment of a sum
sufficient to cover any tax or other governmental charge in relation thereto,
all as provided in this Section. In respect of any Debentures so surrendered for
exchange, the Company shall execute, the Trustee shall authenticate and such
office or agency shall make available for delivery in exchange therefor the
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<PAGE> 20
Debenture or Debentures of the same series which the Debentureholder making the
exchange shall be entitled to receive, bearing numbers not contemporaneously
outstanding.
(b) The Company shall keep, or cause to be kept, at the Corporate Trust
Office of the Trustee (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment is herein sometimes
collectively referred to as the "Debenture Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall register the
Debentures and the transfers of Debentures as in this Article provided and which
at all reasonable times shall be open for inspection by the Trustee. The
registrar for the purpose of registering Debentures and transfer of Debentures
as herein provided shall be appointed by the Company (the "Debenture
Registrar"). The initial Debenture Registrar shall be the Trustee.
Upon surrender for transfer of any Debenture at the office or agency of the
Company in a Place of Payment, the Company shall execute and the Trustee shall
authenticate and deliver, in the name of the transferee or transferees, one or
more new Debentures of the same series as the Debenture presented, of any
authorized denominations and of like tenor and aggregate principal amount.
All Debentures presented or surrendered for exchange or registration of
transfer, as provided in this Section, shall be accompanied (if so required by
the Company or the Debenture Registrar) by a written instrument or instruments
of transfer, in form satisfactory to the Company or the Debenture Registrar,
duly executed by the registered holder or by his duly authorized attorney in
writing.
(c) No service charge shall be made for any exchange or registration of
transfer of Debentures, or issue of new Debentures in case of partial redemption
of any series, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge in relation thereto, other than exchanges
pursuant to Section 2.06, the second paragraph of Section 3.03 and Section 9.04
not involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or register
the transfer of any Debentures during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Debentures and ending at the close of business on the day of such mailing, nor
(ii) to register the transfer of or exchange any Debentures of any series or
portions thereof called for redemption. The provisions of this Section 2.05 are,
with respect to any Global Debenture, subject to Section 2.11 hereof.
SECTION 2.06. TEMPORARY DEBENTURES. Pending the preparation of definitive
Debentures of any series, the Company may execute, and the Trustee shall
authenticate and make available for delivery, temporary Debentures (printed,
lithographed or typewritten) of any authorized denomination, and substantially
in the form of the definitive Debentures in lieu of which they are issued, but
with such omissions, insertions and variations as may be appropriate for
temporary Debentures, all as may be determined by the Company. Every temporary
Debenture of any series shall be executed by the Company and be authenticated by
the Trustee
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upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Debentures of such series. Without unnecessary delay
the Company will execute and will furnish definitive Debentures of such series
and thereupon any or all temporary Debentures of such series may be surrendered
in exchange therefor (without charge to the holders), at a Place of Payment, and
upon receipt of a written order of the Company signed by its President or any
Vice President and its Treasurer or any Assistant Treasurer, the Trustee shall
authenticate and deliver in exchange for such temporary Debentures an equal
aggregate principal amount of definitive Debentures of such series, unless the
Company advises the Trustee to the effect that definitive Debentures need not be
executed and furnished until further notice from the Company. Until so
exchanged, the temporary Debentures of such series shall be entitled to the same
benefits under this Indenture as definitive Debentures of such series
authenticated and delivered hereunder.
SECTION 2.07. MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES. In case any
temporary or definitive Debenture shall become mutilated or be destroyed, lost
or stolen, the Company (subject to the next succeeding sentence) shall execute,
and upon its written request the Trustee (subject as aforesaid) shall
authenticate and make available for delivery, a new Debenture of the same series
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Debenture, or in lieu of and in substitution for the Debenture
so destroyed, lost or stolen. In every case the applicant for a substituted
Debenture shall furnish to the Company and to the Trustee such security or
indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and to the Trustee evidence to their satisfaction of the
destruction, loss or theft of the applicant's Debenture and of the ownership
thereof. The Trustee may authenticate any such substituted Debenture and make
available for delivery the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted Debenture, 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.
In case any Debenture which has matured or is about to mature shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Debenture, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debenture) if the applicant
for such payment shall furnish to the Company and to the Trustee such security
or indemnity as they may require to save them harmless, and, in case of
destruction, loss or theft, evidence to the satisfaction of the Company and the
Trustee of the destruction, loss or theft of such Debenture and of the ownership
thereof.
Every Debenture issued pursuant to the provisions of this Section in
substitution for any Debenture which is mutilated, destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the mutilated, destroyed, lost or stolen Debenture shall be found at any
time, or be enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Debentures of
the same series duly issued hereunder. All Debentures shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated,
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destroyed, lost or stolen Debentures, and shall preclude (to the extent lawful)
any and all other rights or remedies, notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the replacement or
payment of negotiable instruments or other securities without their surrender.
SECTION 2.08. CANCELLATION OF SURRENDERED DEBENTURES. All Debentures
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be delivered
to the Trustee for cancellation, or, if surrendered to the Trustee, shall be
cancelled by it, and no Debentures shall be issued in lieu thereof except as
expressly required or permitted by any of the provisions of this Indenture. On
written request of the Company, the Trustee shall deliver to the Company
cancelled Debentures held by the Trustee. If the Company shall otherwise acquire
any of the Debentures, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Debentures
unless and until the same are delivered to the Trustee for cancellation.
SECTION 2.09. PROVISIONS OF INDENTURE AND DEBENTURES FOR SOLE BENEFIT OF
PARTIES AND DEBENTUREHOLDERS. Nothing in this Indenture or in the Debentures,
express or implied, shall give or be construed to give to any person, firm or
corporation, other than the parties hereto and the holders of the Debentures,
any legal or equitable right, remedy or claim under or in respect of this
Indenture, or under any covenant, condition or provision herein contained; all
such covenants, conditions and provisions being for the sole benefit of the
parties hereto and of the holders of the Debentures.
SECTION 2.10. APPOINTMENT OF AUTHENTICATING AGENT. So long as any of the
Debentures of any series remain outstanding there may be an Authenticating Agent
for any or all such series of Debentures which the Trustee shall have the right
to appoint. Said Authenticating Agent shall be authorized to act on behalf of
the Trustee to authenticate Debentures of such series issued upon exchange,
transfer or partial redemption thereof, and Debentures so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. All references in
this Indenture to the authentication of Debentures by the Trustee shall be
deemed to include authentication by an Authenticating Agent for such series
except for authentication upon original issuance or pursuant to Section 2.07
hereof. Each Authenticating Agent shall be acceptable to the Company and shall
be a corporation which has a combined capital and surplus, as most recently
reported or determined by it, sufficient under the laws of any jurisdiction
under which it is organized or in which it is doing business to conduct a trust
business, and which is otherwise authorized under such laws to conduct such
business and is subject to supervision or examination by Federal or State
authorities. If at any time any Authenticating Agent shall cease to be eligible
in accordance with these provisions, it shall resign immediately.
Any Authenticating Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Company. The Trustee may at any time (and
upon request by the Company shall) terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
to the Company. Upon resignation, termination or
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cessation of eligibility of any Authenticating Agent, the Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all the rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.
SECTION 2.11. GLOBAL DEBENTURES.
------------ -----------------
(a) If the Company shall establish pursuant to Section 2.01 that the
Debentures of a particular series are to be issued as one or more Global
Debentures, then the Company shall execute and the Trustee shall, in accordance
with Section 2.04, authenticate and deliver, one or more Global Debentures which
(i) shall represent, and shall be denominated in an aggregate amount equal to
the aggregate principal amount of, all of the Outstanding Debentures of such
series, (ii) shall be registered in the name of the Depositary or its nominee,
(iii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instruction and (iv) shall bear, subject to Section 2.01(12), a
legend substantially to the following effect: "Except as otherwise provided in
Section 2.11 of the Indenture, this Debenture may be transferred, in whole but
not in part, only to another nominee of the Depositary or to a successor
Depositary or to a nominee of such successor Depositary."
(b) Notwithstanding the provisions of Section 2.05, the Global Debenture
of a series may be transferred, in whole but not in part and in the manner
provided in Section 2.05, only to another nominee of the Depositary for such
series, or to a successor Depositary for such series selected or approved by the
Company or to a nominee of such successor Depositary.
(c) If at any time the Depositary for a series of Debentures notifies the
Company that it is unwilling or unable to continue as Depositary for such series
or if at any time the Depositary for such series shall no longer be registered
or in good standing under the Exchange Act, or other applicable statute or
regulation and a successor Depositary for such series is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such condition, as the case may be, this Section 2.11 shall no longer be
applicable to the Debentures of such series and the Company will execute, and
subject to Section 2.05, the Trustee will authenticate and make available for
delivery Debentures of such series in definitive registered form without
coupons, in authorized denominations, and in an aggregate principal amount equal
to the principal amount of the Global Debentures of such series in exchange for
such Global Debentures. In addition, the Company may at any time determine that
the Debentures of any series shall no longer be represented by one or more
Global Debentures and that the provisions of this Section 2.11 shall no longer
apply to the Debentures of such series. In such event the Company will execute
and subject to Section 2.05, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will authenticate and
deliver Debentures of such series in definitive registered form without coupons,
in authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debentures of such series in exchange for such
Global Debentures. Upon the exchange of the Global Debentures for Debentures in
definitive registered form without coupons, in authorized
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denominations, the Global Debentures shall be cancelled by the Trustee. Such
Debentures in definitive registered form issued in exchange for Global
Debentures pursuant to this Section 2.11(c) 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 name such Debentures are so registered.
(d) Debentures distributed to holders of Global Certificates (as defined
in the applicable Declaration of Trust) upon the dissolution of the applicable
Litchfield Capital Trust shall be distributed in the form of one or more Global
Debentures registered in the name of the Depositary or its nominee, and
deposited with the Debenture Registrar, as custodian for the Depositary, or with
such Depositary, for credit by the Depositary to the respective accounts of the
beneficial owners of the Debentures represented thereby (or such other accounts
as they may direct). Debentures distributed to holders of Certificates (as
defined in the applicable Declaration of Trust), other than Global Certificates,
upon the dissolution of the applicable Litchfield Capital Trust shall not be
issued in the form of a Global Debenture or any other form intended to
facilitate book-entry trading in beneficial interests in such Debentures.
(e) The Depositary or its nominee, as the registered owner of a Global
Debenture, shall be the holder of such Global Debenture for all purposes under
this Indenture and the Debentures, and owners of beneficial interests in a
Global Debenture shall hold such interests pursuant to the applicable procedures
of the Depositary. Accordingly, any such owner's beneficial interest in a Global
Debenture shall be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
its participants. None of the Company, the Trustee or the Debenture Registrar
shall have any liability in respect of any transfer effected by the Depositary.
(f) The rights of owners of beneficial interests in a Global Debenture
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its participants.
SECTION 2.12. CUSIP NUMBERS. The Company in issuing the Debentures may use
"CUSIP" numbers, and the Trustee shall use such CUSIP numbers in notices of
redemption or exchange as a convenience to Debentureholders and no
representation shall be made as to the correctness of such numbers either as
printed on the Debentures or as contained in any notice of redemption or
exchange. The Company shall promptly notify the Trustee of any change in the
CUSIP numbers of the Debentures.
ARTICLE 3
REDEMPTION OF DEBENTURES AND SINKING FUND PROVISIONS
SECTION 3.01. REDEMPTION. The Company may redeem the Debentures of any
series issued hereunder on and after the dates and in accordance with the terms
established for such series pursuant to Section 2.01 hereof.
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SECTION 3.02. NOTICE OF REDEMPTION.
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(a) In case the Company shall desire to exercise such right to redeem all
or, as the case may be, a portion of the Debentures of any series in accordance
with the right reserved so to do, it shall give notice of such redemption to the
Trustee. The Trustee shall then notify holders of the Debentures of such series
who are to be redeemed by mailing, first class postage prepaid, by a notice of
such redemption not less than 30 days and not more than 60 days before the date
fixed for redemption of that series to such holders at their last addresses as
they shall appear upon the Debenture Register. Any notice which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the registered holder receives the notice. In any case, failure
duly to give such notice to the holder of any Debenture of any series designated
for redemption in whole or in part, or any defect in the notice, shall not
affect the validity of the proceedings for the redemption of any other
Debentures of such series or any other series. In the case of any redemption of
Debentures prior to the expiration of any restriction on such redemption
provided in the terms of such Debentures or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with any such restriction.
Each such notice of redemption shall identify the Debentures to be redeemed
(including CUSIP number) and shall specify: (i) the date fixed for redemption,
(ii) the redemption price at which Debentures of that series are to be redeemed,
(iii) the place or places where Debentures are to be surrendered for payment of
the redemption price, (iv) that payment of the redemption price will be made
upon presentation and surrender of such Debentures, at such place or places, (v)
that interest accrued to the date fixed for redemption will be paid as specified
in said notice, (vi) that from and after said date interest will cease to accrue
and (vii) that the redemption is for a sinking fund, if such is the case. If
less than all the Debentures of a series are to be redeemed, the notice to the
holders of Debentures of that series to be redeemed in whole or in part shall
specify the particular Debentures to be so redeemed. In case any Debenture is to
be redeemed in part only, the notice which relates to such Debenture shall state
the portion of the principal amount thereof to be redeemed, and shall state that
on and after the redemption date, upon surrender of such Debenture, a new
Debenture or Debentures of such series in principal amount equal to the
unredeemed portion thereof will be issued.
(b) In the event of a partial redemption of a series of Debentures, the
Company shall give the Trustee at least 45 days' notice in advance of the date
fixed for redemption as to the aggregate principal amount of Debentures of the
series to be redeemed and the other information set forth in the immediately
preceding paragraph, and thereupon the Trustee shall select, by lot or in such
other manner as it shall deem appropriate and fair in its discretion and which
may provide for the selection of a portion or portions (equal to $10 or any
integral multiple thereof) of the principal amount of such Debentures of a
denomination larger than $10, the Debentures to be redeemed and shall thereafter
promptly notify the Company in writing of the numbers of the Debentures to be
redeemed, in whole or in part. 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 Debenture redeemed or to be redeemed
only in part, to the portion of the principal
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<PAGE> 26
amount of such Debenture which has been or is to be redeemed. If the Company
shall so direct, Debentures registered in the name of the Company, any Affiliate
or any Subsidiary thereof shall not be included in the Debentures selected for
redemption.
The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its President or any Vice President,
instruct the Trustee or any paying agent to call all or any part of the
Debentures of a particular series for redemption and to give notice of
redemption in the manner set forth in this Section, such notice to be in the
name of the Company or its own name as the Trustee or such paying agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the
case may be, such Debenture Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required under the
provisions of this Section.
SECTION 3.03. PAYMENT UPON REDEMPTION.
------------ -----------------------
(a) If the giving of notice of redemption shall have been completed as
above provided and funds deposited as required, the Debentures or portions of
Debentures of the series to be redeemed specified in such notice shall become
due and payable on the date and at the place stated in such notice at the
applicable redemption price, together with interest accrued to the date fixed
for redemption, and interest on such Debentures or portions of Debentures shall
cease to accrue on and after the date fixed for redemption, unless the Company
shall default in the payment of such redemption price and accrued interest with
respect to any such Debenture or portion thereof. On presentation and surrender
of such Debentures on or after the date fixed for redemption at the place of
payment specified in the notice, said Debentures shall be paid and redeemed at
the applicable redemption price for such series, together with interest accrued
thereon to, but excluding, the date fixed for redemption (but if the date fixed
for redemption is an interest payment date, the interest installment payable on
such date shall be payable to the registered holder at the close of business on
the applicable record date pursuant to Section 2.03).
(b) Upon presentation of any Debenture of such series which is to be
redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or agency where the Debenture is presented shall
make available for delivery to the holder thereof, at the expense of the
Company, a new Debenture or Debentures of the same series, of authorized
denominations in principal amount equal to the unredeemed portion of the
Debenture so presented.
SECTION 3.04. SINKING FUNDS FOR DEBENTURES. The provisions of Sections
3.04, 3.05 and 3.06 shall be applicable to any sinking fund for the retirement
of Debentures of a series, except as otherwise specified as contemplated by
Section 2.01 for Debentures of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Debentures of any series is herein referred to as a "mandatory sinking fund
payment", and any
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payment in excess of such minimum amount provided for by the terms of Debentures
of any series is herein referred to as an "optional sinking fund payment". If
provided for by the terms of Debentures for any series, the cash amount of any
sinking fund payment may be subject to reduction as provided in Section 3.05.
Each sinking fund payment shall be applied to the redemption of Debentures of
any series as provided for by the terms of Debentures of such series.
SECTION 3.05. SATISFACTION OF SINKING FUND PAYMENTS WITH DEBENTURES. The
Company (i) may deliver outstanding Debentures of a series (other than any
previously called for redemption) and (ii) may apply as a credit Debentures of a
series which have been redeemed either at the election of the Company pursuant
to the terms of such Debentures or through the application of permitted optional
sinking fund payments pursuant to the terms of such Debentures, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Debentures of such series required to be made pursuant to the terms of such
Debentures as provided for by the terms of such series; provided that such
Debentures have not been previously so credited. Such Debentures shall be
received and credited for such purpose by the Trustee at the redemption price
specified in such Debentures for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 3.06. REDEMPTION OF DEBENTURES FOR SINKING FUND. Not less than 45
days prior to each sinking fund payment date for any series of Debentures, the
Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for that series pursuant to the
terms for that series, the portion thereof, if any, which is to be satisfied by
delivering and crediting Debentures of that series pursuant to Section 3.05 and
the basis for such credit and will, together with such Officers' Certificate,
deliver to the Trustee any Debentures to be so delivered. Not less than 30 days
before each such sinking fund payment date the Trustee shall select the
Debentures to be redeemed upon such sinking fund payment date in the manner
specified in Section 3.02 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 3.02. Such notice having been duly given, the redemption of such
Debentures shall be made upon the terms and in the manner stated in Section
3.03.
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
The Company covenants and agrees for each series of the Debentures as
follows:
SECTION 4.01. PAYMENT OF PRINCIPAL OF (AND PREMIUM, IF ANY) AND INTEREST ON
DEBENTURES. The Company will duly and punctually pay or cause to be paid the
principal of (and premium, if any) and interest on the Debentures of that series
at the time and place and in the manner provided herein and established with
respect to such Debentures.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENT FOR PAYMENT OF DEBENTURES,
DESIGNATION OF OFFICE OR AGENCY FOR PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
OF DEBENTURES. So long as any series of the Debentures remain outstanding, the
Company agrees to maintain an office or agency in each Place of Payment, with
respect to each such series and at such other location or locations as may be
designated as provided in this Section 4.02, where (i) Debentures of that series
may be presented for payment, (ii) Debentures of that series may be presented as
hereinabove authorized for registration of transfer and exchange, and (iii)
notices and demands to or upon the Company in respect of the Debentures of that
series and this Indenture may be given or served, such designation to continue
with respect to such office or agency until the Company shall, by written notice
signed by its President or a Vice President and delivered to the Trustee,
designate some other office or agency for such purposes or any of them. 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, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, notices and demands.
SECTION 4.03. DUTIES OF PAYING AGENT; COMPANY AS PAYMENT AGENT; AND HOLDING
------------ -------------------------------------------------------------
SUMS IN TRUST.
- -------------
(a) If the Company shall appoint one or more paying agents for all or any
series of the Debentures, other than the Trustee, the Company will cause each
such paying agency to execute and deliver to the Trustee an instrument in which
such agent shall agree with the Trustee, subject to the provisions of this
Section:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of (and premium, if any) or interest on the Debentures
of that series (whether such sums have been paid to it by the Company or by any
other obligor of such Debentures) in trust for the benefit of the persons
entitled thereto;
(2) that it will give the Trustee written notice of any failure by
the Company (or by any other obligor of such Debentures) to make any payment of
the principal of (and premium, if any) or interest on the Debentures of that
series when the same shall be due and payable;
(3) that it will, at any time during the continuance of any failure
referred to in the preceding paragraph (a)(2) above, upon the written request of
the Trustee, forthwith pay to the Trustee all sums so held in trust by such
paying agent; and
(4) that it will perform all other duties of paying agent as set
forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to any
series of the Debentures, it will on or before each due date of the principal of
(and premium, if any) or interest on Debentures of that series, set aside,
segregate and hold in trust for the benefit of the persons
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<PAGE> 29
entitled thereto a sum sufficient to pay such principal (and premium, if any) or
interest so becoming due on Debentures of that series until such sums shall be
paid to such persons or otherwise disposed of as herein provided and will
promptly notify in writing the Trustee of such action, or any failure (by it or
any other obligor on such Debentures) to take such action. Whenever the Company
shall have one or more paying agents for any series of Debentures, it will,
prior to 11:00 a.m. New York City time on each due date of the principal of (and
premium, if any) or interest on any Debentures of that series, deposit with the
paying agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
persons entitled to such principal, premium or interest, and (unless such paying
agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
(c) Anything in this Section to the contrary notwithstanding, (i) the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Section 11.05, and (ii) 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 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 terms and conditions 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.
SECTION 4.04. APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 7.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
ARTICLE 5
DEBENTUREHOLDERS LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. COMPANY TO FURNISH TRUSTEE INFORMATION AS TO NAMES AND
ADDRESSES OF DEBENTUREHOLDERS. The Company will furnish or cause to be furnished
to the Trustee (a) on each regular record date (as defined in Section 2.03) a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the holders of each series of Debentures as of such regular record
date, provided, that the Company shall not be obligated to furnish or cause to
be furnished such list at any time that the list shall not differ in any respect
from the most recent list furnished to the Trustee by the Company 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;
provided, however, no such list need be furnished for any series for which the
Trustee shall be the Debenture Registrar.
SECTION 5.02. TRUSTEE TO PRESERVE INFORMATION AS TO NAMES AND ADDRESSES OF
DEBENTUREHOLDERS.
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(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Debentures contained in the most recent list furnished to it as provided in
Section 5.01 and as to the names and addresses of holders of Debentures received
by the Trustee in its capacity as Debenture Registrar (if acting in such
capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 5.01 upon receipt of a new list so furnished.
(c) In case three or more holders of Debentures of a series (hereinafter
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a Debenture for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other holders
of Debentures of such series or holders of all Debentures with respect to their
rights under this Indenture or under such Debentures, and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall within five Business Days after the receipt
of such application, at its election, either:
(1) afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection (a) of
this Section 5.02; or
(2) inform such applicants as to the approximate number of holders of
Debentures of such series or of all Debentures, as the case may be, whose names
and addresses appear in the information preserved at the time by the Trustee, in
accordance with the provisions of subsection (a) of this Section 5.02, and as to
the approximate cost of mailing to such Debentureholders the form of proxy or
other communication, if any, specified in such application.
(d) If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each holder of such series or of all Debentures, as the case
may be, whose name and address appears in the information preserved at the time
by the Trustee in accordance with the provisions of subsection (a) of this
Section 5.02, a copy of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Trustee of the material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless within five days after
such tender, the Trustee shall mail to such applicants and file with the
Securities and Exchange Commission (the "Commission"), together with a copy of
the material to be mailed, a written statement to the effect that, in the
opinion of the Trustee, such mailing would be contrary to the best interests of
the holders of Debentures of such series or of all Debentures, as the case may
be, or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, the Commission shall
find, after notice and opportunity for hearing, that all the objections so
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<PAGE> 31
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Debentureholders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise, the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(e) Each and every holder of the Debentures, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any paying agent nor any Debenture Registrar shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the holders of Debentures in accordance with the provisions of
subsection (c) of this Section 5.02, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under said subsection
(c).
SECTION 5.03. ANNUAL AND OTHER REPORTS TO BE FILED BY COMPANY WITH THE
------------ --------------------------------------------------------
TRUSTEE.
- -------
(a) The Company covenants and agrees to file with the Trustee, within 15
days after the Company is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Company is not required to file information, documents or
reports pursuant to either of such sections, then to file with the Trustee and
the Commission in accordance with the rules and regulations prescribed from time
to time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations. Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable over-night delivery service which provides for
evidence of receipt, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to subsections (a) and (b) of this Section
as may be required by rules and regulations prescribed from time to time by the
Commission.
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(d) The Company covenants and agrees to furnish to the Trustee, on or
before May 15 in each calendar year in which any of the Debentures are
outstanding, or on or before such other day in each calendar year as the Company
and the Trustee may from time to time agree upon, a Certificate as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this subsection (d), such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture.
(e) The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default, an Officers' Certificate setting forth the details of such
Event of Default and the action which the Company proposes to take with respect
thereto.
SECTION 5.04. TRUSTEE TO TRANSMIT ANNUAL REPORT TO DEBENTUREHOLDERS.
------------ -----------------------------------------------------
(a) The Trustee shall transmit to Debentureholders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee
shall, within 60 days after each January 15 following the date of this
Indenture, commencing January 15, 2000, deliver to Debentureholders a brief
report, dated as of such January 15, which complies with the provisions of such
Section 313(a).
(b) The Trustee shall comply with Section 313(b) and 313(c) of the Trust
Indenture Act.
(c) A copy of each such report shall, at the time of such transmission to
Debentureholders, be filed by the Trustee with the Company, with each stock
exchange upon which any Debentures are listed (if so listed) and also with the
Commission. The Company agrees to notify the Trustee when any Debentures become
listed on any stock exchange and of any delisting thereof.
ARTICLE 6
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT DEFINED.
------------ -------------------------
(a) Whenever used herein with respect to Debentures of a particular
series, "Event of Default" means any one or more of the following events which
has occurred and is continuing:
(1) default in the payment of any installment of interest upon any of
the Debentures of that series, as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; provided,
however, that a valid extension of an interest payment period by the Company in
accordance with the terms of any indenture supplemental hereto, shall not
constitute a default in the payment of interest for this purpose;
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(2) default (i) in the payment of the principal of (and premium, if
any, on) any of the Debentures of that series as and when the same shall become
due and payable whether at maturity, upon redemption, by declaring or otherwise,
or (ii) in any payment required by any sinking or analogous fund established
with respect to that series, and in the case of this clause (ii) only,
continuance of such default for a period of 30 days;
(3) failure on the part of the Company duly to observe or perform, in
any material respect, any other of the covenants or agreements on the part of
the Company with respect to that series contained in such Debentures or
otherwise established with respect to that series of Debentures pursuant to
Section 2.01 hereof or contained in this Indenture (other than a covenant or
agreement which has been expressly included in this Indenture solely for the
benefit of one or more series of Debentures other than such series) for a period
of 90 days after the date on which written notice of such failure, requiring the
same to be remedied and stating that such notice is a "Notice of Default"
hereunder, shall have been given to the Company by the Trustee, by registered or
certified mail, or to the Company and the Trustee by the holders of at least 25%
in principal amount of the Debentures of that series at the time Outstanding;
(4) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Company as bankrupt or insolvent, or
approving as properly filed a petition seeking liquidation or reorganization of
the Company under the Federal Bankruptcy Code or any other similar applicable
Federal or State law, and such decree or order shall have continued unvacated
and unstayed for a period of 90 days; or an involuntary case shall be commenced
under such Code in respect of the Company and shall continue undismissed for a
period of 90 days or an order for relief in such case shall have been entered;
or a decree or order of a court having jurisdiction in the premises shall have
been entered for the appointment on the ground of insolvency or bankruptcy of a
receiver or custodian or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of its property, or for the winding up or
liquidation of its affairs, and such decree or order shall have remained in
force unvacated and unstayed for a period of 90 days;
(5) the Company shall institute proceedings to be adjudicated a
voluntary bankrupt or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking liquidation or
reorganization under the Federal Bankruptcy Code or any other similar applicable
Federal or State law, or shall consent to the filing of any such petition, or
shall consent to the appointment on the ground of insolvency or bankruptcy of a
receiver or custodian or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property, or shall make an assignment for the benefit
of creditors; or
(6) any other Event of Default provided with respect to Debentures of
that series.
(b) In each and every such case, unless the principal of all the
Debentures of that series shall have already become due and payable, either the
Trustee or the holders of not less
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than 25% in aggregate principal amount of the Debentures of that series then
Outstanding hereunder, by notice in writing to the Company (and to the Trustee
if given by such Debentureholders), may declare the principal of all the
Debentures of that series to be due and payable immediately and upon any such
declaration the same shall become and shall be immediately due and payable,
anything contained in this Indenture or in the Debentures of that series or
established with respect to that series pursuant to Section 2.01 hereof to the
contrary notwithstanding. Payment of principal and interest on such Debentures
shall remain subordinated to the extent provided in Article 14 notwithstanding
that such amount shall become immediately due and payable as herein provided.
(c) Section 6.01(b), however, is subject to the condition that if, at any
time after the principal of the Debentures of that series shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Company shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Debentures of that series and the
principal of (and premium, if any, on) any and all Debentures of that series
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium if any, and, to the extent that such payment is
enforceable under applicable law, upon overdue installments of interest, at the
rate per annum expressed in the Debentures of that series to the date of such
payment or deposit) and the amount payable to the Trustee under Section 7.06,
and any and all defaults under the Indenture, other than the nonpayment of
principal on Debentures of that series which shall not have become due by their
terms, shall have been remedied or waived as provided in Section 6.06 then and
in every such case the holders of a majority in aggregate principal amount of
the Debentures of that series then outstanding (subject to, in the case of any
series of Debentures held as trust assets of a Litchfield Capital Trust and with
respect to which a Security Exchange has not theretofore occurred, such consent
of the holders of the Preferred Securities and the Common Securities of such
Litchfield Capital Trust as may be required under the Declaration of Trust of
such Litchfield Capital Trust), by written notice to the Company and to the
Trustee, may rescind and annul such declaration and its consequences with
respect to that series of Debentures; but no such rescission and annulment shall
extend to or shall affect any subsequent default, or shall impair any right
consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debentures of that series under this Indenture and such proceedings
shall have been discontinued or abandoned because of such rescission or
annulment or for any other reason or shall have been determined adversely to the
Trustee, then and in every such case the Company and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Company and the Trustee shall continue as
though no such proceedings had been taken.
(e) If, prior to a Security Exchange with respect to the Debentures of any
series, a Default with respect to the Debentures of such series shall have
occurred, the Company expressly acknowledges that under the circumstances set
forth in the applicable Declaration of Trust, any holder of Preferred Securities
of the applicable Litchfield Capital Trust may, to the fullest extent
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<PAGE> 35
permitted by law, enforce directly against the Company the applicable Property
Trustee's rights hereunder. In furtherance of the foregoing and for the
avoidance of any doubt, the Company acknowledges that, under the circumstances
described in the applicable Declaration of Trust, any such holder of Preferred
Securities, in its own name, in the name of the applicable Litchfield Capital
Trust or in the name of the holders of the Preferred Securities issued by such
Litchfield Capital Trust, may institute or cause to be instituted a proceeding,
including, without limitation, any suit in equity, an action at law or other
judicial or administrative proceeding, to enforce the applicable Property
Trustee's rights hereunder directly against the Company as issuer of the
applicable series of Debentures, and may prosecute such proceeding to judgment
or final decree, and enforce the same against the Company.
SECTION 6.02. COVENANT OF COMPANY TO PAY TO TRUSTEE WHOLE AMOUNT DUE ON
------------ ---------------------------------------------------------
DEBENTURES ON DEFAULT IN PAYMENT OF INTEREST OR PRINCIPAL (AND PREMIUMS, IF
- ---------------------------------------------------------------------------
ANY).
- ----
(a) The Company covenants that (1) in case default shall be made in the
payment of any installment of interest on any of the Debentures of a series, or
any payment required by any sinking or analogous fund established with respect
to that series as and when the same shall have become due and payable, and such
default shall have continued for a period of 30 days, or (2) in case default
shall be made in the payment of the principal of (or premium, if any, on) any of
the Debentures of a series when the same shall have become due and payable,
whether upon maturity of the Debentures of a series or upon redemption or upon
declaration or otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of the Debentures of that series,
the whole amount that then shall have become due and payable on all such
Debentures for principal (and premium, if any) or interest, or both, as the case
may be, with interest upon the overdue principal (and premium, if any) and (to
the extent that payment of such interest is enforceable under applicable law and
without duplication of any other amounts paid by the Company or the applicable
Litchfield Capital Trust in respect thereof) upon overdue installments of
interest at the rate per annum expressed in the Debentures of that series; and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, and the amount payable to the Trustee under
Section 7.06.
(b) In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon the
Debentures of that series and collect in the manner provided by law out of the
property of the Company or other obligor upon the Debentures of that series
wherever situated the moneys adjudged or decreed to be payable.
(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or other judicial
proceedings affecting the Company, any other obligor on such Debentures, or the
creditors or property of either, the Trustee shall have the power to intervene
in such proceedings and take any action therein that may be
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permitted by the court and shall (except as may be otherwise provided by law) be
entitled to file such proofs of claim and other papers and documents as may be
necessary or advisable in order to have the claims of the Trustee and of the
holders of Debentures of such series allowed for the entire amount due and
payable by the Company or such other obligor under the Indenture at the date of
institution of such proceedings and for any additional amount which may become
due and payable by the Company or such other obligor after such date, and to
collect and receive any moneys or other property payable or deliverable on any
such claim, and to distribute the same after the deduction of the amount payable
to the Trustee under Section 7.06; and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of the holders of
Debentures of such series to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
such Debentureholders, to pay to the Trustee any amount due it under Section
7.06.
(d) All rights of action and of asserting claims under this Indenture, or
under any of the terms established with respect to Debentures of that series,
may be enforced by the Trustee without the possession of any of such Debentures,
or the production thereof at any trial or other proceeding relative thereto, and
any such suit or 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 payment to the Trustee of any amounts due under Section
7.06, be for the ratable benefit of the holders of the Debentures of such
series.
In case of an Event of Default hereunder, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Debentureholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Debentures of that series or the rights of any holder thereof or to authorize
the Trustee to vote in respect of the claim of any Debentureholder in any such
proceeding.
SECTION 6.03. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys
collected by the Trustee pursuant to this Article with respect to a particular
series of Debentures shall be applied in the order following, at the date or
dates fixed by the Trustee and, in case of the distribution of such moneys on
account of principal (or premium, if any) or interest, upon presentation of the
several Debentures of that series, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 7.06;
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SECOND: To the payment of all Senior Debt of the Company if and to the
extent required by Article 14;
THIRD: To the payment of the amounts then due and unpaid upon Debentures of
such series for principal (and premium, if any) and interest 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 premium, if any) and
interest, respectively; and
FOURTH: The balance, if any, to the Person or Persons entitled thereto.
SECTION 6.04. LIMITATION ON SUITS BY HOLDERS OF DEBENTURES. No holder of
any Debenture of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(i) such holder previously shall have given to the Trustee written notice of an
Event of Default and of the continuance thereof with respect to Debentures of
such series specifying such Event of Default, as hereinbefore provided, (ii) the
holders of not less than 25% in aggregate principal amount of the Debentures of
such series then outstanding shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as trustee hereunder,
(iii) shall have offered to the Trustee indemnity satisfactory to it against the
costs, expenses and liabilities to be incurred therein or thereby, (iv) the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity, shall have failed to institute any such action, suit or proceeding;
and (v) during such 60 day period, the holders of a majority in principal amount
of the Debentures of that series do not give the Trustee a direction
inconsistent with the request; it being understood and intended, and being
expressly covenanted by the taker and holder of every Debenture of such series
with every other such taker and holder and Trustee, that no one or more holders
of Debentures of such series shall have any right in any manner whatsoever by
virtue or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other of such Debentures, or to
obtain or seek to obtain priority over or preference to any other such holder,
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all holders of
Debentures of such series. For the protection and enforcement of the provisions
of this Section, each and every Debentureholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provisions of this Indenture, however, the right
of any holder of any Debenture to receive payment of the principal of (and
premium, if any) and interest on such Debenture, as therein provided, on or
after the respective due dates expressed in such Debenture (or in the case of
redemption, on the redemption date), or to institute suit for the enforcement of
any such payment on or after such respective dates or redemption date, shall not
be impaired or affected without the consent of such holder.
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SECTION 6.05. REMEDIES CUMULATIVE; DELAY OR OMISSION IN EXERCISE OF RIGHTS
------------ ------------------------------------------------------------
NOT WAIVER OF DEFAULT.
- ---------------------
(a) All powers and remedies given by this Article 6 to the Trustee or to
the Debentureholders shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any others thereof or of any other powers and remedies
available to the Trustee or the holders of the Debentures, by judicial
proceedings or otherwise, to enforce performance or observance of the covenants
and agreements contained in this Indenture or otherwise established with respect
to such Debentures.
(b) No delay or omission of the Trustee or of any holder of any of the
Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
given by this Article or by law to the Trustee or to the Debentureholders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Debentureholders.
SECTION 6.06. RIGHTS OF HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF
DEBENTURES TO DIRECT TRUSTEE AND TO WAIVE DEFAULTS. The holders of a majority in
aggregate principal amount of the Debentures of any series at the time
Outstanding, determined in accordance with Section 8.04 (with, in the case of
any series of Debentures held as trust assets of a Litchfield Capital Trust and
with respect to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common Securities of such
Litchfield Capital Trust as may be required under the Declaration of Trust of
such Litchfield Capital Trust), shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee with respect to such
series; provided, however, that such direction shall not be in conflict with any
rule of law or with this Indenture or unduly prejudicial to the rights of
holders of Debentures of any other series at the time Outstanding determined in
accordance with Section 8.04 not parties thereto. Subject to the provisions of
Section 7.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee in good faith shall, by a Responsible Officer or
Officers of the Trustee, determine that the proceeding so directed would involve
the Trustee in personal liability. The holders of a majority in aggregate
principal amount of the Debentures of any series at the time Outstanding
affected thereby, determined in accordance with section 8.04 (with, in the case
of any series of Debentures held as trust assets of a Litchfield Capital Trust
and with respect to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common Securities of such
Litchfield Capital Trust as may be required under the Declaration of Trust of
such Litchfield Capital Trust), may on behalf of the holders of all of the
Debentures of such series waive any past default in the performance of any of
the covenants contained herein or established pursuant to Section 2.01 with
respect to such series and its consequences, except a default in the payment of
the principal of, or premium, if any, or interest on, any of the Debentures of
that series as and when the same shall become due by the terms of such
Debentures otherwise than by acceleration (unless such default has been
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cured and a sum sufficient to pay all matured installments of interest and
principal and any premium has been deposited with the Trustee (in accordance
with Section 6.01(c)), or a call for redemption of Debentures of that series.
Upon any such waiver, the default covered thereby shall be deemed to be cured
for all purposes of this Indenture and the Company, the Trustee and the holders
of the Debentures of such series shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 6.07. TRUSTEE TO GIVE NOTICE OF DEFAULTS KNOWN TO IT, BUT MAY
WITHHOLD IN CERTAIN CIRCUMSTANCES. The Trustee shall, within 90 days after the
occurrence of a default with respect to a particular series, transmit by mail,
first class postage prepaid, to the holders of Debentures of that series, as
their names and addresses appear upon the Debenture Register, notice of all
defaults with respect to that series known to the Trustee, unless such defaults
shall have been cured before the giving of such notice (the term "defaults" for
the purposes of this Section being hereby defined to be the events specified in
subsections (1), (2), (3), (4) and (5) of Section 6.01(a), not including any
periods of grace provided for therein and irrespective of the giving of notice
provided for by subsection (3) of Section 6.01(a)); provided, that, except in
the case of default in the payment of the principal of (or premium, if any) or
interest on any of the Debentures of that series or in the payment of any
sinking fund installment established with respect to that series, the 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 Trustee in good faith determine that the
withholding of such notice is in the interests of the holders of Debentures of
that series; provided further, that in the case of any default of the character
specified in Section 6.01(a)(3) with respect to Debentures of such series no
such notice to the holders of the Debentures of that series shall be given until
at least 30 days after the occurrence thereof.
The Trustee shall not be deemed to have knowledge of any default, except
(i) a default under subsection (a)(1) or (a)(2) of Section 6.01 as long as the
Trustee is acting as paying agent for such series of Debentures or (ii) any
default as to which a Responsible Officer of the Trustee shall have received
written notice.
SECTION 6.08. REQUIREMENTS OF AN UNDERTAKING TO PAY COSTS IN CERTAIN SUITS
UNDER INDENTURE OR AGAINST TRUSTEE. All parties to this Indenture agree, and
each holder of any Debentures by his or her acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Debentureholder, or group of Debentureholders, holding more than 10% in
aggregate principal amount of the outstanding Debentures of any series, or to
any suit instituted by any Debentureholder for the
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enforcement of the payment of the principal of (or premium, if any) or interest
on any Debenture of such series, on or after the respective due dates expressed
in such Debenture or established pursuant to this Indenture.
ARTICLE 7
CONCERNING THE TRUSTEE
SECTION 7.01. UPON EVENT OF DEFAULT OCCURRING AND CONTINUING, TRUSTEE SHALL
------------ -------------------------------------------------------------
EXERCISE POWERS VESTED IN IT, AND USE SAME DEGREE OF CARE AND SKILL IN THEIR
- ----------------------------------------------------------------------------
EXERCISE, AS PRUDENT INDIVIDUAL WOULD USE.
- -----------------------------------------
(a) The Trustee, prior to the occurrence of an Event of Default with
respect to Debentures of a series and after the curing of all Events of Default
with respect to Debentures of that series which may have occurred, shall
undertake to perform with respect to Debentures of such series such duties and
only such duties as are specifically set forth in this Indenture, and no implied
covenants shall be read into this Indenture against the Trustee. In case an
Event of Default with respect to Debentures of a series has occurred (which has
not been cured or waived), the Trustee shall exercise with respect to Debentures
of that series such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) prior to the occurrence of an Event of Default with respect to
Debentures of a series and after the curing or waiving of all such Events of
Default with respect to that series which may have occurred:
(i) the duties and obligations of the Trustee shall with respect
to Debentures of such series be determined solely by the express provisions of
this Indenture and the Trust Indenture Act and the Trustee shall not be liable
with respect to Debentures of such series except for the performance of such
duties and obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may with respect to Debentures of such series 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 Trustee and
conforming to the requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are specifically required
to be furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not
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they conform to the requirements of this Indenture but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(3) the 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 principal amount of the Debentures of
any series at the time outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture with respect
to the Debentures of that series;
(4) none of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or liability is not reasonably assured to it under
the terms of this Indenture or adequate indemnity against such risk is not
reasonably assured to it; and
(5) 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
Article 7.
SECTION 7.02. CERTAIN RIGHTS OF THE TRUSTEE. Except as otherwise provided
in Section 7.01:
(a) The Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, security 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, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Board Resolution or an instrument
signed in the name of the Company by the President or any Vice President and by
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer (unless other evidence in respect thereof is specifically prescribed
herein);
(c) The Trustee may consult with counsel of its selection 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 or suffered or
omitted hereunder in good faith and in reliance thereon;
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(d) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Debentureholders, pursuant to the provisions of this Indenture,
unless such Debentureholders shall have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities which
may be incurred therein or thereby; nothing herein contained shall, however,
relieve the Trustee of the obligation, upon the occurrence of an Event of
Default with respect to a series of the Debentures (which has not been cured or
waived) to exercise with respect to Debentures of that series such of the rights
and powers vested in it by this Indenture, and to use the same degree of care
and skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
(e) The Trustee shall not be liable for any action taken or omitted to be
taken by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; nothing
herein contained shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default with respect to a series of the Debentures
(which has not been cured or waived) to exercise with respect to Debentures of
that series such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs;
(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, consent, order, approval, bond, security, or
other papers or documents, unless requested in writing so to do by the holders
of not less than a majority in principal amount of the outstanding Debentures of
the particular series affected thereby (determined as provided in Section 8.04);
provided, however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require indemnity satisfactory to it against such costs,
expenses or liabilities as a condition to so proceeding. The reasonable expense
of every such examination shall be paid by the Company or, if paid by the
Trustee, shall be repaid by the Company upon demand;
(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 rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
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SECTION 7.03. TRUSTEE NOT LIABLE FOR RECITALS IN INDENTURE OR IN
------------ --------------------------------------------------
DEBENTURES.
- ----------
(a) The recitals contained herein and in the Debentures (other than the
Certificate of Authentication on the Debentures) shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same.
(b) The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or application by the
Company of any of the Debentures or of the proceeds of such Debentures, or for
the use or application of any moneys paid over by the Trustee in accordance with
any provision of this Indenture or established pursuant to Section 2.01, or for
the use or application of any moneys received by any paying agent other than the
Trustee.
SECTION 7.04. TRUSTEE, PAYING AGENT OR DEBENTURE REGISTRAR MAY OWN
DEBENTURES. The Trustee or any paying agent or Debenture Registrar, in its
individual or any other capacity, may become the owner or pledgee of Debentures
and, subject to Sections 7.08 and 7.13, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, paying agent or Debenture
Registrar.
SECTION 7.05. MONEYS RECEIVED BY TRUSTEE TO BE HELD IN TRUST WITHOUT
INTEREST. Subject to the provisions of Section 11.05, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but 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 moneys received by it hereunder except such as it
may agree in writing to pay thereon.
SECTION 7.06. TRUSTEE ENTITLED TO COMPENSATION, REIMBURSEMENT AND
------------ ---------------------------------------------------
INDEMNITY.
- ---------
(a) The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation as the Company and
the Trustee shall from time to time agree in writing (which shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust) for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and the Company will pay or reimburse the Trustee upon
its request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the reasonable expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Company also covenants to indemnify each of the
Trustee or any predecessor Trustee and their officers, agents, directors and
employees for, and to hold them harmless against, any and all loss, liability,
damage, claim or expense including taxes (other than taxes based upon, measured
by or determined by the income of the Trustee) incurred without
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negligence or bad faith on the part of the Trustee and arising out of or in
connection with the acceptance or administration of this trust, including the
reasonable costs and expenses of defending itself against any claim (whether
asserted by the Company, any Debentureholder or any other Person) of liability
in the premises. The provisions of this Section 7.06 shall survive the
termination of this Indenture and resignation or removal of the Trustee.
(b) The obligations of the Company under this Section to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Debentures. When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 6.01(4) or Section 6.01(5), 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.
SECTION 7.07. RIGHT OF TRUSTEE TO RELY ON CERTIFICATE OF OFFICERS OF
COMPANY WHERE NO OTHER EVIDENCE SPECIFICALLY PRESCRIBED. Except as otherwise
provided in Sections 7.01 and 7.02, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or suffering or omitting
to take any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted to be taken by it under the provisions of this Indenture upon the faith
thereof.
SECTION 7.08. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee has
or shall acquire any "conflicting interest" within the meaning of Section 310(b)
of the Trust Indenture Act, the Trustee and the Company shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of said Section 310(b).
SECTION 7.09. REQUIREMENTS FOR ELIGIBILITY OF TRUSTEE. There shall at all
times be a Trustee with respect to the Debentures issued hereunder which shall
at all times be a corporation or banking association organized and doing
business under the laws of the United States of America or any state or
territory thereof or of the District of Columbia, or a corporation or other
Person permitted to act as trustee by the Commission, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars, and subject to supervision or examination by
Federal, State, territorial, or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of
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this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any person
directly or indirectly controlling, controlled by, or under common control with
the Company, serve as a Trustee. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 7.10.
SECTION 7.10. RESIGNATION OF TRUSTEE AND APPOINTMENT OF SUCCESSOR.
------------ ---------------------------------------------------
(a) The Trustee or any successor hereafter appointed, may at any time
resign with respect to the Debentures of one or more series by giving written
notice thereof to the Company and by transmitting notice of resignation by mail,
first class postage prepaid, to the Debentureholders of such series, as their
names and addresses appear upon the Debenture Register. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee
with respect to Debentures of such series by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 60 days after the mailing of such
notice of resignation, the resigning Trustee may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
trustee with respect to Debentures of such series, or any Debentureholder of
that series who has been a bona fide holder of a Debenture or Debentures for at
least six months may, subject to the provisions of Section 6.08, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of Section
7.08 after written request therefor by the Company or by any Debentureholder who
has been a bona fide holder of a Debenture or Debentures for at least six
months; or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.09 and shall fail to resign after written request
therefor by the Company or by any such Debentureholder; or
(3) the Trustee shall become incapable of acting, or shall be
adjudged 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, the Company may remove the
Trustee with respect to all Debentures and appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the Trustee so removed and
one copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days
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after the mailing of such notice of removal, the Trustee so removed may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor trustee with respect to Debentures of such
series, or any Debentureholder of that series who has been a bona fide holder of
a Debenture or Debentures for at least six months may, subject to the provisions
of Section 6.08, on behalf of himself and all others similarly situated,
petition any such court for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Debentures of any series at the time outstanding may at any time remove the
Trustee with respect to such series and appoint a successor trustee. If no
successor Trustee shall have been so appointed and have accepted appointment
within 60 days after the mailing of such notice of removal, the Trustee being
removed may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Debentures of such series.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debentures of a series pursuant to any of
the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 7.11.
(e) Any successor trustee appointed pursuant to this Section may be
appointed with respect to the Debentures of one or more series or all of such
series, and at any time there shall be only one Trustee with respect to the
Debentures of any particular series.
SECTION 7.11. ACCEPTANCE BY SUCCESSOR TO TRUSTEE.
------------ ----------------------------------
(a) In case of the appointment hereunder of a successor trustee with
respect to all Debentures, every such successor trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor trustee all the rights, powers, and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor trustee with
respect to the Debentures of one or more (but not all) series, the Company, the
retiring Trustee and each successor trustee with respect to the Debentures of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor trustee shall accept such appointment and which shall (1)
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor trustee all the rights, powers,
trusts and duties of the
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retiring Trustee with respect to the Debentures of that or those series to which
the appointment of such successor trustee relates, (2) contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Debentures
of that or those series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee, and (3) add to or change any of
the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust, that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart from any
trust or trusts hereunder administered by any other such Trustee and that no
Trustee shall be responsible for any act or failure to act on the part of any
other Trustee hereunder; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein, such retiring Trustee shall
with respect to the Debentures of that or those series to which the appointment
of such successor trustee relates have no further responsibility for the
exercise of rights and powers or for the performance of the duties and
obligations vested in the Trustee under this Indenture, and each such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Debentures of that or those series to which the appointment of such
successor trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor trustee, to the extent contemplated by such supplemental indenture,
the property and money held by such retiring Trustee hereunder with respect to
the Debentures of that or those series to which the appointment of such
successor trustee relates.
(c) Upon request of any such successor trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor trustee all such rights, power and trusts referred to in
paragraph (a) or (b) of this Section 7.11, as the case may be.
(d) 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.
(e) Upon acceptance of appointment by a successor trustee as provided in
this Section 7.11, the successor trustee shall transmit notice of the succession
of such trustee hereunder by mail, first class postage prepaid, to the
Debentureholders, as their names and addresses appear upon the Debenture
Register.
SECTION 7.12. SUCCESSOR TO TRUSTEE BY MERGER, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any corporation or banking association 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 of
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
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the parties hereto, anything herein to the contrary notwithstanding. In case any
Debentures shall have been authenticated, but not made available for delivery,
by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
make available for delivery the Debentures so authenticated with the same effect
as if such successor Trustee had itself authenticated such Debentures.
SECTION 7.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. The
Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding
any creditor relationship described in Section 311(b) of the Trust Indenture
Act. A Trustee who has resigned or been removed shall be subject to Section
311(a) of the Trust Indenture Act to the extent included therein as though such
resignation or removal, as the case may be, had not occurred.
ARTICLE 8
CONCERNING THE DEBENTURES
SECTION 8.01. EVIDENCE OF ACTION BY DEBENTUREHOLDERS. Whenever in this
Indenture it is provided that the holders of a majority or specified percentage
in aggregate principal amount of the Debentures of a particular series may take
any action (including the making of any demand or request, the giving of any
notice consent or waiver or the taking of any other action) the fact that at the
time of taking any such action the holders of such majority or specified
percentage of that series have joined therein may be evidenced by any instrument
or any number of instruments of similar tenor executed by such holders of
Debentures of that series in person or by agent or proxy appointed in writing.
If the Company shall solicit from the Debentureholders of any series any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for such series for the determination
of Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Debentureholders of record at the
close of business on the record date shall be deemed to be Debentureholders for
the purposes of determining whether Debentureholders of the requisite proportion
of Outstanding Debentures of that series have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other action, and for that purpose the Outstanding Debentures of that series
shall be computed as of the record date; provided that no such authorization,
agreement or consent by such Debentureholders on the record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
SECTION 8.02. PROOF OF EXECUTION OF INSTRUMENTS AND OF HOLDING OF
DEBENTURES. Subject to the provisions of Sections 7.01 and 7.02, proof of the
execution of any instrument by a Debentureholder (such proof will not require
notarization) or his agent or proxy and proof of the
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holding by any person of any of the Debentures shall be sufficient if made in
the following manner;
(a) The fact and date of the execution by any such person of any
instrument may be proved in any reasonable manner acceptable to the Trustee.
(b) The ownership of Debentures shall be proved by the Debenture Register
of such Debentures or by a certificate of the Debenture Registrar thereof.
(c) The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
SECTION 8.03. WHO MAY BE DEEMED OWNERS OF DEBENTURES. Prior to the due
presentment for registration of transfer of any Debenture, the Company, the
Trustee, any paying agent and any Debenture Registrar may deem and treat the
person in whose name such Debenture shall be registered upon the books of the
Company as the absolute owner of such Debenture (whether or not such Debenture
shall be overdue and notwithstanding any notice of ownership or writing thereon
made by anyone other than the Debenture Registrar) for the purpose of receiving
payment of or on account of the principal of, premium, if any, and (subject to
Section 2.03) interest on such Debenture and for all other purposes; and neither
the Company nor the Trustee nor any paying agent nor any Debenture Registrar
shall be affected by any notice to the contrary.
SECTION 8.04. DEBENTURES OWNED BY THE COMPANY OR CONTROLLED OR CONTROLLING
COMPANIES DISREGARDED FOR CERTAIN PURPOSES. In determining whether the holders
of the requisite aggregate principal amount of Debentures of a particular series
have concurred in any direction, consent or waiver under this Indenture,
Debentures of that series which are owned by the Company or any other obligor on
the Debentures of that series or by any Subsidiary of the Company or of such
other obligor on the Debentures of that series shall be disregarded and deemed
not to be Outstanding for the purpose of any such determination, except that for
the purpose of determining whether the Trustee shall be protected in relying on
any such direction, consent or waiver, only Debentures of such series which a
Responsible Officer of the Trustee actually knows are so owned shall be so
disregarded. Debentures so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section, if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right so to act with
respect to such Debentures and that the pledgee is not a person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. In case of a dispute as to
such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee.
SECTION 8.05. INSTRUMENTS EXECUTED BY DEBENTUREHOLDERS BIND FUTURE HOLDERS.
At any time prior to (but not after) the evidencing to the Trustee, as provided
in Section 8.01, of the taking of any action by the holders of the majority or
percentage in aggregate principal amount of the Debentures of a particular
series specified in this Indenture in connection with such action,
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any holder of a Debenture of that series which is shown by the evidence to be
included in the Debentures the holders of which have consented to such action
may, by filing written notice with the Trustee, and upon proof of holding as
provided in Section 8.02, revoke such action so far as concerns such Debenture.
Except as aforesaid any such action taken by the holder of any Debenture shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Debenture, and of any Debenture issued in exchange therefor, on
registration of transfer thereof or in place thereof, irrespective of whether or
not any notation in regard thereto is made upon such Debenture. Any action taken
by the holders of the majority or percentage in aggregate principal amount of
the Debentures of a particular series specified in this Indenture in connection
with such action shall be conclusively binding upon the Company, the Trustee and
the holders of all the Debentures of that series.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01. PURPOSES FOR WHICH SUPPLEMENTAL INDENTURE MAY BE ENTERED INTO
WITHOUT CONSENT OF DEBENTUREHOLDERS. In addition to any supplemental indenture
otherwise authorized by this Indenture, the Company and the Trustee may from
time to time and at any time enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as then
in effect), without the consent of the Debentureholders, for one or more of the
following purposes:
(a) to evidence the succession of another corporation or other entity to
the Company, and the assumption by any such successor of the obligations of the
Company contained herein or otherwise established with respect to the
Debentures;
(b) to add further covenants, restrictions, conditions or provisions for
the protection of the holders of the Debentures of all or any series as the
Board of Directors and the Trustee shall consider to be for the protection of
the holders of Debentures of all or any series, and to make the occurrence, or
the occurrence and continuance, of a default in any of such additional
covenants, restrictions, conditions or provisions a default or an Event of
Default with respect to such series permitting the enforcement of all or any of
the several remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant, restriction, condition
or provision such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default or may limit the right of the holders of a majority in aggregate
principal amount of the Debentures of such series to waive such default;
(c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture or to make such other provisions in regard to matters or questions
arising under this Indenture as shall not be inconsistent with the
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provisions of this Indenture and shall not materially adversely affect the
interests of the holders of the Debentures of any series;
(d) to add to, change or eliminate any of the provisions of this
Indenture, provided that any such addition, change or elimination shall become
effective only when there is no Debenture outstanding of any series created
prior to the execution of such supplemental indenture which is entitled to the
benefit of such provision;
(e) to provide for the issuance under this Indenture of Debentures in
coupon form (including Debentures registrable as to principal only) and to
provide for exchangeability of such Debentures with the Debentures issued
hereunder in fully registered form and to make all appropriate changes for such
purposes;
(f) to evidence and provide for the acceptance of appointment hereunder by
a successor trustee with respect to the Debentures;
(g) to qualify or maintain qualification of this Indenture under the Trust
Indenture Act;
(h) to establish the form or terms of Debentures of any series as
permitted by Section 2.01; or
(i) to make any addition, change or elimination of any provision of this
Indenture that does not adversely affect the rights of any Debentureholder in
any material respect.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to, but may in its discretion, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section may
be executed by the Company and the Trustee without the consent of the holders of
any of the Debentures at the time outstanding, notwithstanding any of the
provisions of Section 9.02.
SECTION 9.02. MODIFICATION OF INDENTURE WITH CONSENT OF DEBENTUREHOLDERS.
With the consent (evidenced as provided in Section 8.01) of the holders of not
less than a majority in aggregate principal amount of the Debentures of each
series affected by such supplemental indenture or indentures at the time
outstanding (and, in the case of any series of Debentures held as trust assets
of a Litchfield Capital Trust and with respect to which a Security Exchange has
not theretofore occurred, such consent of holders of the Preferred Securities
and the Common Securities of such Litchfield Capital Trust as may be required
under the Declaration of Trust of such Litchfield Capital Trust), the Company
and the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the
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provisions of the Trust Indenture Act as then in effect) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the holders of the Debentures of such series under this
Indenture; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity of any Debentures of any series, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any premium payable upon the redemption thereof,
without the consent of the holder of each Debenture so affected or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Debenture (and, in the case of any series of Debentures held as trust
assets of a Litchfield Capital Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of the holders of the
Preferred Securities and the Common Securities of such Litchfield Capital Trust
as may be required under the Declaration of Trust of such Litchfield Capital
Trust) then outstanding and affected thereby.
Upon the request of the Company, and upon the filing with the Trustee of
evidence of the consent of Debentureholders (and, in the case of any series of
Debentures held as trust assets of a Litchfield Capital Trust and with respect
to which a Security Exchange has not theretofore occurred, such consent of
holders of the Preferred Securities and the Common Securities of such Litchfield
Capital Trust as may be required under the Declaration of Trust of such
Litchfield Capital Trust) required to consent thereto as aforesaid, the Trustee
shall join with the Company in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion but shall not be obligated to enter into such supplemental
indenture.
It shall not be necessary for the consent of the Debentureholders of any
series affected thereby under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the
Debentureholders of all series affected thereby as their names and addresses
appear upon the Debenture Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article or of Section
10.01, this Indenture shall, with respect to such series, be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Debentures of the series affected
thereby shall thereafter be determined, exercised and enforced hereunder subject
in all respects to such modifications and amendments and all the terms and
conditions of
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any such supplemental indenture shall be and be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
SECTION 9.04. DEBENTURES MAY BEAR NOTATION OF CHANGES BY SUPPLEMENTAL
INDENTURES. Debentures of any series, affected by a supplemental indenture,
authenticated and delivered after the execution of such supplemental indenture
pursuant to the provisions of this Article or of Section 10.01, may bear a
notation in form approved by the Company, provided such form meets the
requirements of any exchange upon which such series may be listed or traded, as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Debentures of that series so modified as to conform, in the
opinion of the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Debentures of
that series then outstanding.
SECTION 9.05. OPINION OF COUNSEL. The Trustee, subject to the provisions of
Sections 7.01 and 7.02, may receive an Opinion of Counsel as conclusive evidence
that any supplemental indenture executed pursuant hereto complies with the
requirements of this Article 9.
ARTICLE 10
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 10.01. COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. The Company
shall not consolidate with or merge into any other Person or convey, transfer or
lease its properties and assets substantially as an entirety to any other
Person, and the Company shall not permit any other Person to consolidate with or
merge into the Company, unless:
(a) either the Company shall be the continuing corporation, or the
corporation (if other than the Company) formed by such consolidation or into
which the Company is merged or to which the properties and assets of the Company
substantially as an entity are transferred or leased shall be a corporation,
limited liability company, partnership or trust organized and existing under the
laws of the United States of America or any state thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Debentures and this Indenture; and
(b) immediately after giving effect to such transaction no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing.
SECTION 10.02. SUCCESSOR CORPORATION SUBSTITUTED. The successor corporation
formed by such consolidation or into which the Company is merged or to which
such 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 corporation had been
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named as the Company herein, and thereafter (except in the case of a lease to
another Person) the predecessor corporation shall be relieved of all obligations
and covenants under the Indenture and the Debentures and, in the event of such
conveyance, or transfer, any such predecessor corporation may be dissolved and
liquidated.
SECTION 10.03. OPINION OF COUNSEL. The Trustee, subject to the provisions
of Sections 7.01 and 7.02, may receive an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance, transfer or
other disposition, and any such assumption, comply with the provisions of this
Article.
ARTICLE 11
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 11.01. SATISFACTION AND DISCHARGE OF INDENTURE.
------------- ---------------------------------------
(A) If at any time (a) the Company shall have paid or caused to be paid
the principal of, premium, if any, and interest on all the Debentures of any
series Outstanding hereunder (other than Debentures of such series which have
been destroyed, lost or stolen and which have been replaced or paid as provided
in Section 2.07) as and when the same shall have become due and payable, or (b)
the Company shall have delivered to the Trustee for cancellation all Debentures
of any series theretofore authenticated (other than any Debentures of such
series which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.07) or (c) (i) all the Debentures of
any series not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or by their terms will become due and payable within one
year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and (ii) the
Company shall have irrevocably deposited or caused to be deposited with the
Trustee as trust funds the entire amount in cash (other than moneys repaid by
the Trustee or any paying agent to the Company in accordance with Section 11.04)
or Government Obligations, maturing as to principal and interest at such times
and in such amounts as will insure the availability of cash, or a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (A) the principal of, premium, if any, and
interest on all Debentures of such series on each date that such principal or
interest is due and payable and (B) any mandatory sinking fund payments on the
dates on which such payments are due and payable in accordance with the terms of
the Indenture and the Debentures of such series; and if, in any such case, the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company, then this Indenture shall cease to be of further effect (except as
to (i) rights of registration of transfer and exchange of Debentures of such
series and the Company's right of optional redemption, if any, (ii) substitution
of mutilated, defaced, destroyed lost or stolen Debentures, (iii) rights of
holders of Debentures to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), and remaining rights of the Debentureholders to receive mandatory
sinking fund payments, if any, (iv) the rights, obligations, duties and
immunities of the Trustee hereunder, (v) the rights of the holders of Debentures
of such series as beneficiaries hereof with
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respect to the property so deposited with the Trustee payable to all or any of
them and (vi) the obligations of the Company under Section 4.02) and the
Trustee, on demand of the Company accompanied by an Officers' Certificate and an
Opinion of Counsel and at the cost and expense of the Company, shall execute
proper instruments acknowledging such satisfaction of and discharging this
Indenture; provided, that the rights of the Debentureholders to receive amounts
in respect of principal of, premium, if any, and interest on the Debentures held
by them shall not be delayed longer than required by then-applicable mandatory
rules or policies of any securities exchange or automated quotation system upon
which the Debentures are listed or traded. The Company agrees to reimburse the
Trustee for any costs or expenses thereafter reasonably and properly incurred
and to compensate the Trustee for any services thereafter reasonably and
properly rendered by the Trustee in connection with this Indenture or the
Debentures of such series.
(B) The following provisions shall apply to the Debentures of each series
unless specifically otherwise provided in a Board Resolution or indenture
supplemental hereto provided pursuant to Section 2.01. In addition to discharge
of the Indenture pursuant to the next preceding paragraph, the Company shall be
deemed to have paid and discharged the entire indebtedness on all the Debentures
of a series on the date of the deposit referred to in subparagraph (a) below,
and the provisions of this Indenture with respect to the Debentures of such
series shall no longer be in effect (except as to (i) rights of registration of
transfer and exchange of Debentures of such series and the Company's right of
optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed,
lost or stolen Debentures, (iii) rights of holders of Debentures to receive
payments of principal thereof and interest thereon, upon the original stated due
dates therefor (but not upon acceleration), and remaining rights of the holders
of Debentures to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v) the
rights of the Holders of Debentures as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them and (vi)
the obligations of the Company under Section 4.02) and the Trustee, at the
expense of the Company, shall at the Company's request, execute proper
instruments acknowledging the same, if
(a) with reference to this provision the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust funds
in trust, specifically pledged as security for, and dedicated solely to, the
benefit of the holders of the Debentures of such series (i) cash in an amount,
or (ii) Governmental Obligations maturing as to principal and interest at such
times and in such amounts as will insure the availability of cash or (iii) a
combination thereof, sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (A) the principal of, premium, if any, and
interest on all Debentures of such series on each date that such principal or
interest is due and payable and (B) any mandatory sinking fund payments on the
dates on which such payments are due and payable in accordance with the terms of
the Indenture and the Debentures of such series;
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(b) such deposit will not result in a breach or violation of, or
constitute a default under, any agreement or instrument to which the Company is
a party or by which it is bound;
(c) the Company has delivered to the Trustee an Opinion of Counsel
based on the fact that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since the date
hereof, there has been a change in the applicable Federal income tax law, in
either case to the effect that, and such opinion shall confirm that, the holders
of the Debentures of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred;
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to the defeasance contemplated by this provision have been complied
with; and
(e) no event or condition shall exist that, pursuant to the
provisions of Section 14.02 or 14.03, would prevent the Company from making
payments of the principal of, premium, if any, or interest on the Debentures of
such series on the date of such deposit.
SECTION 11.02. APPLICATION BY TRUSTEE OF FUNDS DEPOSITED FOR PAYMENT OF
DEBENTURES. Subject to Section 11.04, all moneys deposited with the Trustee (or
other trustee) pursuant to Section 11.01 shall be held in trust and applied by
it to the payment, either directly or through any paying agent (including the
Company acting as its own paying agent), to the Holders of the particular
Debentures of such series for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest; but such money need not be segregated from other
funds except to the extent required by law.
SECTION 11.03. REPAYMENT OF MONEYS HELD BY THE PAYING AGENT. In connection
with the satisfaction and discharge of this Indenture with respect to Debentures
of any series, all moneys then held by any paying agent under the provisions of
this Indenture with respect to such series of Debentures shall, upon demand of
the Company, be repaid to it or paid to the Trustee and thereupon such paying
agent shall be released from all further liability with respect to such moneys.
SECTION 11.04. REPAYMENT OF MONEYS HELD BY THE TRUSTEE. Any moneys
deposited with or paid to the Trustee or any paying agent for the payment of the
principal of or interest on any Debenture of any series and not applied but
remaining unclaimed for two years after the date upon which such principal or
interest shall have become due and payable, shall, upon the written request of
the Company and unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, be repaid to the Company by the
Trustee for such series or such paying agent, and the Holder of the Debentures
of such series shall, unless
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otherwise required by mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Company for any payment
which such holder may be entitled to collect, and all liability of the Trustee
or any paying agent with respect to such moneys shall thereupon cease; provided,
however, that the Trustee or such paying agent, before being required to make
any such repayment with respect to moneys deposited with it for any payment
series, shall at the expense of the Company, mail by first-class mail to holders
of such Debentures at their addresses as they shall appear on the Debenture
Register, notice, that such moneys remain and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing or
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 11.05. INDEMNIFICATION RELATING TO GOVERNMENTAL OBLIGATIONS. The
Company shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the Governmental Obligations deposited pursuant
to Section 11.01 or the principal or interest received in respect of such
obligations.
ARTICLE 12
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 12.01. INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF
COMPANY EXEMPT FROM INDIVIDUAL LIABILITY. 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.
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ARTICLE 13
MISCELLANEOUS PROVISIONS
SECTION 13.01. SUCCESSORS AND ASSIGNS OF COMPANY BOUND BY INDENTURE. All
the covenants, stipulations, promises and agreements in this Indenture contained
by or on behalf of the Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 13.02. ACTS OF BOARD, COMMITTEE OR OFFICER OF SUCCESSOR COMPANY
VALID. Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at the
time be the lawful sole successor of the Company.
SECTION 13.03. SURRENDER OF POWERS OF THE COMPANY. The Company by
instrument in writing executed by authority of two-thirds of its Board of
Directors and delivered to the Trustee may surrender any of the powers reserved
to the Company and thereupon such power so surrendered shall terminate both as
to the Company and as to any successor corporation.
SECTION 13.04. REQUIRED NOTICES OR DEMANDS MAY BE SERVED BY MAIL. Except as
otherwise expressly provided herein, any notice or demand which by any provision
of this Indenture is required or permitted to be given or served by the Trustee
or by the holders of Debentures to or on the Company may be given or served by
being deposited first class postage prepaid in a post-office letterbox addressed
(until another address is filed in writing by the Company with the Trustee), as
follows: Litchfield Financial Corporation, 430 Main Street, P.O. Box 488,
Williamstown, Massachusetts 01267, Attention: Corporate Secretary. Any notice,
election, request or demand by the Company or any Debentureholder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the Corporate Trust Office of the
Trustee.
SECTION 13.05. INDENTURE AND DEBENTURES TO BE CONSTRUED IN ACCORDANCE WITH
LAWS OF THE STATE OF NEW YORK. This Indenture and each Debenture shall be deemed
to be a contract made under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State (without
regard to principles of conflicts of laws thereof).
SECTION 13.06. OFFICER'S CERTIFICATE AND OPINION OF COUNSEL TO BE FURNISHED
------------- ------------------------------------------------------------
UPON APPLICATION OR DEMANDS BY COMPANY; STATEMENTS TO BE INCLUDED IN EACH
- -------------------------------------------------------------------------
CERTIFICATE OR OPINION WITH RESPECT TO COMPLIANCE WITH CONDITION OR COVENANT.
- ----------------------------------------------------------------------------
(a) Upon any application or demand by the Company to the Trustee to take
any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
documents is
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specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
(b) Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
in this Indenture (other than the certificate provided pursuant to Section
5.03(d) of this Indenture) shall include (1) a statement that the person making
such certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07. PAYMENTS DUE ON SUNDAYS OR HOLIDAYS. Except as provided
pursuant to Section 2.01 pursuant to a Board Resolution, and as set forth in an
Officers' Certificate, or established in one or more indentures supplemental to
the Indenture, in any case where the date of maturity of interest or principal
of any Debenture or the date of redemption of any Debenture shall not be a
Business Day then payment of interest or principal (and premium, if any) may be
made on the next succeeding Business Day, with the same force and effect as if
made on the nominal date of maturity or redemption, and no interest shall accrue
for the period after such nominal date.
SECTION 13.08. PROVISIONS REQUIRED BY TRUST INDENTURE ACT OF 1939 TO
CONTROL. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.09. INDENTURE MAY BE EXECUTED BY ITS COUNTERPARTS. This
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
SECTION 13.10. SEPARABILITY OF INDENTURE PROVISIONS. In case any one or
more of the provisions contained in this Indenture or in the Debentures of any
series shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Indenture or of such Debentures, but this Indenture
and such Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 13.11. ASSIGNMENT BY COMPANY TO A SUBSIDIARY OR AFFILIATE. The
Company will have the right at all times to assign any of its rights or
obligations under this Indenture to a Subsidiary or an Affiliate; provided that,
in the event of any such assignment, the Company will remain jointly and
severally liable for all such obligations. Subject to the foregoing, this
Indenture is binding upon and inures to the benefit of the parties thereto and
their respective
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successors and assigns. This Indenture may not otherwise be assigned by the
parties hereto (other than pursuant to Article 10).
SECTION 13.12. HOLDERS OF PREFERRED SECURITIES AS THIRD PARTY BENEFICIARIES
OF THE INDENTURE; HOLDERS OF PREFERRED SECURITIES MAY INSTITUTE LEGAL
PROCEEDINGS AGAINST THE COMPANY IN CERTAIN CASES. The Company acknowledges that,
prior to a Security Exchange with respect to Debentures of any series held as
trust assets of a Litchfield Capital Trust, if the Property Trustee of such
Litchfield Capital Trust fails to enforce its rights under this Indenture as the
holder of the Debentures of a series held as trust assets of such Litchfield
Capital Trust, any holder of the Preferred Securities of such Litchfield Capital
Trust may, to the fullest extent permitted by law, institute legal proceedings
directly against the Company to enforce such Property Trustee's rights under
this Indenture without first instituting any legal proceedings against such
Property Trustee or any other Person; provided that, if an Event of Default has
occurred and is continuing and such event is attributed 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), then a holder of Preferred Securities of such Litchfield
Capital Trust may directly institute a proceeding 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 (a "Holder Direct Action") on or after the respective due date
specified in the Debentures. In connection with such Holder Direct Action, the
Company will be subrogated to the rights of such holder of Preferred Securities
to the extent of any payment made by the Company to such holders of Preferred
Securities in such Holder Direct Action. Except as provided in the preceding
sentences, the holders of Preferred Securities of such Litchfield Capital Trust
will not be able to exercise directly any other remedy available to the holders
of the Debentures.
ARTICLE 14
SUBORDINATION OF DEBENTURES
SECTION 14.01. AGREEMENT TO SUBORDINATE. The Company covenants and agrees,
and each Debentureholder issued hereunder by his acceptance thereof likewise
covenants and agrees, that all Debentures shall be issued subject to the
provisions of this Article 14; and each person holding any Debenture, whether
upon original issue or upon transfer, assignment or exchange thereof accepts and
agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest 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
all Senior Debt, whether outstanding at the date of this Indenture or thereafter
incurred.
No provision of this Article 14 shall prevent the occurrence of any Default
or Event of Default hereunder.
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SECTION 14.02. DEFAULT ON SENIOR DEBT. 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 Debt, or in the event that the
maturity of any Senior Debt has been accelerated because of a default, then, in
either case, no payment shall be made by the Company with respect to the
principal (including redemption payments) of or premium, if any, or interest on
the Debentures until such default shall have been cured or waived in writing or
shall have ceased to exist or such Senior Debt shall have been discharged or
paid in full.
In the event of the acceleration of the maturity of the Debentures, then no
payment shall be made by the Company with respect to the principal (including
redemption payments) of or premium, if any, or interest on the Debentures until
the holders of all Senior Debt outstanding at the time of such acceleration
shall receive payment in full of such Senior Debt (including any amounts due
upon acceleration).
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Debentureholder when such payment is prohibited
by the preceding paragraphs of this Section 14.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Senior Debt or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear.
SECTION 14.03. 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 liquidation,
dissolution, winding up, receivership, reorganization, assignment for the
benefit of creditors, marshaling of assets and liabilities or any bankruptcy,
insolvency or similar proceedings of the Company, all amounts due or to become
due upon all Senior Debt shall first be paid in full, in cash or cash
equivalents, or payment thereof provided for in accordance with its terms,
before any payment is made on account of the principal of, premium, if any, or
interest on the indebtedness evidenced by the Debentures, and upon any such
liquidation, dissolution, winding up, receivership, reorganization, assignment,
marshaling or proceeding, any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to which the
Debentureholders or the Trustee under this Indenture would be entitled, except
for the provisions of this Article 14, 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 Debentureholders or by the
Trustee under this Indenture if received by them or it, directly to the holders
of Senior Debt (pro rata to such holders on the basis of the respective amounts
of Senior Debt held by such holders) or their respective representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Debt may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior Debt in full
(including, without limitation, except to the extent, if any, prohibited by
mandatory provisions of law, post-petition interest, in any such proceedings),
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt, before any payment or distribution is made to the
holders of the indebtedness evidenced by the Debentures or to the Trustee under
this Indenture.
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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 under this Indenture or the holders of the Debentures before all Senior
Debt is paid in full or provision is made for such payment in accordance with
its terms, such payment or distribution shall be held in trust for the benefit
of and shall be paid over or delivered to the holders of such Senior Debt or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior Debt
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Debt remaining unpaid until all such Senior Debt
shall have been paid in full in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Debt.
For purposes of this Article 14, 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 arrangement, reorganization or readjustment, the payment of which
is subordinated (at least to the extent provided in this Article 14 with respect
to the Debentures) to the payment of all Senior Debt which may at the time be
outstanding; provided, that (i) the Senior Debt is assumed by the new
corporation, if any, resulting from any such arrangement, reorganization or
readjustment, and (ii) the rights of the holders of the Senior Debt are not,
without the consent of such holders, altered by such arrangement, reorganization
or readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided in Article 10 shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section if such other
Person shall, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions stated in Article 10. Nothing in Section 14.02 or
this Section 14.03 shall apply to claims of, or payments to, the Trustee under
or pursuant to Article 7, except as provided therein. This Section shall be
subject to the further provisions of Section 14.06.
SECTION 14.04. SUBROGATION OF DEBENTURES. Subject to the payment in full of
all Senior Debt, the rights of the holders of the Debentures shall be subrogated
to the rights of the holders of Senior Debt to receive payments or distributions
of cash, property or securities of the Company applicable to the Senior Debt
until the principal of, premium, if any, and interest on the Debentures shall be
paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Debt of any cash, property or
securities to which the holders of the Debentures or the Trustee on their behalf
would be entitled except for the provisions of this Article 14 and no payment
over pursuant to the provisions of this Article 14 to the holders of Senior Debt
by holders of the Debentures or the Trustee on their behalf shall, as between
the Company, its creditors other than holders of Senior Debt and the holders of
the Debentures, be deemed to be a payment by the Company to or on account of the
Senior Debt; and no payments or distributions of cash, property or securities to
or for the benefit of the Debentureholders pursuant to the subrogation
provisions of this Article, which would otherwise
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have been paid to the holders of Senior Debt shall be deemed to be a payment by
the Company to or for the account of the Debentures. It is understood that the
provisions of this Article 14 are and are intended solely for the purpose of
defining the relative rights of the holders of the Debentures, on the one hand,
and the holders of the Senior Debt, on the other hand.
Nothing contained in this Article 14 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 Debt, 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, 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 other than
the holders of the Senior Debt, nor shall anything herein or therein prevent the
holder of any Debenture or the Trustee on his behalf from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article 14 of the holders
of Senior Debt in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in
this Article 14, the Trustee, subject to the provisions of Article 7, and the
holders of the Debentures shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such liquidation,
dissolution, winding up, receivership, reorganization, assignment or marshaling
proceedings are pending, or a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, delivered to the Trustee or to the holders of the Debentures, for
the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 14.
SECTION 14.05. AUTHORIZATION BY DEBENTUREHOLDERS. Each holder of a
Debenture by his acceptance thereof authorizes and directs the Trustee in his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article 14 and appoints the Trustee his attorney-
in-fact for any and all such purposes.
SECTION 14.06. NOTICE TO TRUSTEE. The Company shall give prompt written
notice to the Trustee and to any paying agent of any fact known to the Company
which would prohibit the making of any payment of moneys to or by the Trustee or
any paying agent in respect of the Debentures pursuant to the provisions of this
Article 14. Regardless of anything to the contrary contained in this Article 14
or elsewhere in this Indenture, the Trustee shall not be charged with knowledge
of the existence of any Senior Debt or of any default or event of default with
respect to any Senior Debt or of any other facts which would prohibit the making
of any payment of moneys to or by the Trustee, unless and until the Trustee
shall have received notice in writing at its principal Corporate Trust Office to
that effect signed by an officer of the Company, or by a holder or agent of a
holder of Senior Debt who shall have been certified by the Company or otherwise
established to the reasonable satisfaction of the Trustee to be such holder or
agent, or
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by the trustee under any indenture pursuant to which Senior Debt shall be
outstanding, and, prior to the receipt of any such written notice, the Trustee
shall, subject to the provisions of Article 7, be entitled to assume that no
such facts exist; provided, however, that if on a date at least three Business
Days prior to the date upon which by the terms hereof any such moneys shall
become payable for any purpose (including, without limitation, the payment of
the principal of, or interest on any Debenture) the Trustee shall not have
received with respect to such moneys the notice provided for in this Section
14.06, then, regardless of anything herein to the contrary, the Trustee shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
The Trustee shall be entitled to conclusively rely on the delivery to it of
a written notice by a Person representing himself to be a holder of Senior Debt
(or a trustee on behalf of such holder) to establish that such notice has been
given by a holder of Senior Debt or a trustee on behalf of any such holder. 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 Debt to
participate in any payment or distribution pursuant to this Article 14, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article 14, 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 14.07. TRUSTEE'S RELATION TO SENIOR DEBT. The Trustee and any agent
of the Company or the Trustee shall be entitled to all the rights set forth in
this Article 14 with respect to any Senior Debt which may at any time be held by
it in its individual or any other capacity to the same extent as any other
holder of Senior Debt and nothing in this Indenture shall deprive the Trustee or
any such agent, of any of its rights as such holder. Nothing in this Article
shall apply to claims of, or payments to, the Trustee under or pursuant to
Article 7.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 14, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt and, subject to the provisions of
Article 7, the Trustee shall not be liable to any holder of Senior Debt if it
shall pay over or deliver to holders of Debentures, the Company or any other
person moneys or assets to which any holder of Senior Debt shall be entitled by
virtue of this Article 14 or otherwise.
Nothing in this Article 14 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.06.
SECTION 14.08. NO IMPAIRMENT TO SUBORDINATION. No right of any present or
future holder of any Senior Debt to enforce subordination as herein provided
shall at any time in any
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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 Debt of the Company may, at any time and from time to time,
without the consent of or notice to the Trustee or the Debentureholders, without
incurring responsibility to the Debentureholders and without impairing or
releasing the subordination provided in this Article 14 or the obligations
hereunder of the holders of the Debentures to the holders of such Senior Debt,
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 Debt,
or otherwise amend or supplement in any manner such Senior Debt or any
instrument evidencing the same or any agreement under which such Senior Debt is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Debt; (iii) release any
Person liable in any manner for the collection of such Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company, as the case
may be, and any other Person.
SECTION 14.09. ARTICLE APPLICABLE TO PAYING AGENTS. In case at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as extending to
and including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee.
SECTION 14.10. TRUST MONEYS NOT SUBORDINATED. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Section 11.02 of this Indenture by
the Trustee for the payment of principal of and interest on the Debentures shall
not be subordinated to the prior payment of any Senior Debt or subject to the
restrictions set forth in this Article 14, and none of the Debentureholders
shall be obligated to pay over any such amount to the Company or any holder of
Senior Debt of the Company or any other creditor of the Company.
The Bank of New York, a New York banking corporation, as Trustee, hereby
accepts the trust in this Indenture declared and provided, upon the terms and
conditions herein above set forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
LITCHFIELD FINANCIAL CORPORATION
By:
-------------------------------------
Name and Title:
THE BANK OF NEW YORK, as Trustee
By:
-------------------------------------
Name and Title:
STATE OF
COUNTY OF
BEFORE ME, the undersigned authority, on this day of _____________, ____,
personally appeared ________________________ on behalf of Litchfield Financial
Corporation, known to me (or proved to me by introduction upon the oath of a
person known to me) to be the person and officer whose name is subscribed to the
foregoing instrument, and acknowledged to me that he or she executed the same as
the act of such corporation and for the purposes and consideration herein
expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL THIS day of , .
----- --------- ----
-----------------------------------
Notary Public
My Commission Expires:
STATE OF
COUNTY OF
BEFORE ME, the undersigned authority, on this day of _____________, ____,
personally appeared _______________________ of The Bank of New York, a New York
banking corporation, known to me (or proved to me by introduction upon the oath
of a person known to me) to be the person and officer whose name is subscribed
to the foregoing instrument, and acknowledged to me that he or she executed the
same as the act of such trust for the purposes and consideration herein
expressed and in the capacity therein stated.
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GIVEN UNDER MY HAND AND SEAL THIS _____ day of _________, ____.
-----------------------------------
Notary Public
My Commission Expires:
61
<PAGE> 1
Exhibit 4.2.1
DECLARATION OF TRUST, dated as of April 12, 1999 (this "Declaration of
Trust"), among Litchfield Financial Corporation, a Massachusetts corporation, as
Sponsor (the "Sponsor"), and The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as trustee (the "Property
Trustee"), The Bank of New York (Delaware), a Delaware banking corporation, not
in its individual capacity but solely as trustee (the "Delaware Trustee"), and
Ronald E. Rabidou, not in his individual capacity but solely as trustee (the
Property Trustee, Delaware Trustee and such individual as trustee, collectively
the "Trustees"). The Sponsor and the Trustees hereby agree as follows:
1. The Delaware business trust created hereby shall be known as "Litchfield
Capital Trust I" (the "Trust"), in which name the Trustees, or the Sponsor to
the extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trust the sum of $10. The Trust hereby acknowledges receipt of such amount from
the Sponsor, which amount shall constitute the initial trust estate. It is the
intention of the parties hereto that the Trust created hereby constitutes a
business trust under Chapter 38 of Title 12 of the Delaware Code, 12 DEL. C, ss.
3801, et seq, (the "Business Trust Act"), and that this document constitutes the
governing instrument of the Trust. The Trustees are hereby authorized and
directed to execute and file a certificate of trust with the Secretary of State
of the State of Delaware in accordance with provisions of the Business Trust
Act. The Trust is hereby established by the Sponsor and the Trustees for the
purposes of (i) issuing preferred securities representing undivided beneficial
interests in the assets of the Trust (the "Preferred Securities") in exchange
for cash and investing the proceeds thereof in junior subordinated debentures of
the Sponsor, (ii) issuing and selling common securities representing an
undivided beneficial interest in the assets of the Trust (the "Common
Securities") to the Sponsor in exchange for cash and investing the proceeds
thereof in additional junior subordinated debentures of the Sponsor, and (iii)
engaging in such other activities as are necessary, convenient or incidental
thereto.
3. The Sponsor and the Trustees will enter into an amended and restated
Declaration of Trust, satisfactory to each such party and substantially in the
form included as an exhibit to the 1933 Act Registration Statement referred to
below, to provide for the contemplated operation of the Trust created hereby and
the issuance of the Preferred Securities and Common Securities referred to
therein. Prior to the execution and delivery of such amended and restated
Declaration of Trust, the Trustees shall not have any duty or obligation
hereunder or with respect of the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise.
4. The Sponsor, as the sponsor of the Trust, is hereby authorized (i) to
prepare and file with the Securities and Exchange Commission (the "Commission")
and execute, in each case on behalf of the Trust, (a) a Registration Statement
on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective
or post-effective amendments to such Registration Statement, relating to the
registration under the Securities Act of 1933, as amended, of the Preferred
Securities and certain other securities of the Sponsor and (b) if the Sponsor
shall deem it desirable, a Registration Statement on Form 8-A (the "1934 Act
Registration Statement")
<PAGE> 2
(including all pre-effective and post-effective amendments thereto) relating to
the registration of the Preferred Securities under Section 12 of the Securities
Exchange Act of 1934, as amended, (ii) if the Sponsor shall deem it desirable,
to prepare and file with the New York Stock Exchange or one or more national
securities exchange(s) (each, an "Exchange") or the National Association of
Securities Dealers, Inc. (the "NASD") and execute on behalf of the Trust a
listing application or applications and all other applications, statements,
certificates, agreements and other instruments as shall be necessary or
desirable to cause the Preferred Securities to be listed on any such Exchange or
the NASD's Nasdaq National Market ("Nasdaq"), (iii) to prepare and file and
execute on behalf of the Trust such applications, reports, surety bonds,
irrevocable consents, appointments of attorney for service of process and other
papers and documents as the Sponsor, on behalf of the Trust, may deem necessary
or desirable to register the Preferred Securities under the securities or "Blue
Sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem
necessary or desirable, (iv) to negotiate the terms of and execute on behalf of
the Trust an underwriting agreement among the Trust, the Sponsor and any
underwriter(s), dealer(s) or agent(s ) relating to the Preferred Securities, as
the Sponsor, on behalf of the Trust, may deem necessary or desirable, and (v) to
execute and deliver on behalf of the Trust letters or documents to, or
instruments for filing with, a depository relating to the Preferred Securities.
In the event that any filing referred to in clauses (i)-(iii) above is required
by the rules and regulations of the Commission, any Exchange, Nasdaq, the NASD
or state securities or blue sky laws, to be executed on behalf of the Trust by a
Trustee, any natural person appointed pursuant to Section 6 hereof, in his or
her capacity as trustee of the Trust, and the Sponsor are hereby authorized to
join in any such filing and to execute on behalf of the Trust any and all of the
foregoing.
5. This Declaration of Trust may be executed in one or more counterparts.
6. The number of Trustees shall initially shall be five (5) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided, however, that the number of Trustees shall in no
event be less than three (3); and provided, further that to the extent required
by the Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and meets other
requirements imposed by applicable law. Subject to the foregoing, the Sponsor is
entitled to appoint or remove without cause any Trustee at any time. The
Trustees may resign upon thirty days' prior notice to the Sponsor.
7. The Trust may be dissolved and terminated before the issuance of the
Preferred Securities at the election of the Sponsor.
8. This Declaration of Trust shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
LITCHFIELD FINANCIAL CORPORATION,
as Sponsor
By: /s/ Ronald E. Rabidou
________________________________________
Name: Ronald E. Rabidou
Title: Chief Financial Officer
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely as
Delaware Trustee
By: /s/ Mary Jane Morrissey
________________________________________
Name: Mary Jane Morrissey
Title: Authorized Signatory
THE BANK OF NEW YORK,
not in its individual capacity but solely as
Property Trustee
By: /s/ Michael Culhane
________________________________________
Name: Michael Culhane
Title: Vice President
JOHN J. MALLOY,
not in his individual capacity but solely as
Regular Trustee
/s/ John J. Malloy
________________________________________
HEATHER A. SICA,
not in her individual capacity but solely as
Regular Trustee
/s/ Heather A. Sica
________________________________________
RONALD E. RABIDOU,
not in his individual capacity but solely as
Regular Trustee
/s/ RONALD E. RABIDOU
____________________________________________
3
<PAGE> 1
Exhibit 4.2.2
DECLARATION OF TRUST, dated as of April 12, 1999 (this "Declaration of
Trust"), among Litchfield Financial Corporation, a Massachusetts corporation, as
Sponsor (the "Sponsor"), and The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as trustee (the "Property
Trustee"), The Bank of New York (Delaware), a Delaware banking corporation, not
in its individual capacity but solely as trustee (the "Delaware Trustee"), and
Ronald E. Rabidou, not in his individual capacity but solely as trustee (the
Property Trustee, Delaware Trustee and such individual as trustee, collectively
the "Trustees"). The Sponsor and the Trustees hereby agree as follows:
1. The Delaware business trust created hereby shall be known as "Litchfield
Capital Trust II" (the "Trust"), in which name the Trustees, or the Sponsor to
the extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trust the sum of $10. The Trust hereby acknowledges receipt of such amount from
the Sponsor, which amount shall constitutes the initial trust estate. It is the
intention of the parties hereto that the Trust created hereby constitute a
business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. ss.
3801, et seq. (the "Business Trust Act"), and that this document constitutes the
governing instrument of the Trust. The Trustees are hereby authorized and
directed to execute and file a certificate of trust with the Secretary of State
of the State of Delaware in accordance with provisions of the Business Trust
Act. The Trust is hereby established by the Sponsor and the Trustees for the
purposes of (i) issuing preferred securities representing undivided beneficial
interests in the assets of the Trust (the "Preferred Securities") in exchange
for cash and investing the proceeds thereof in junior subordinated debentures of
the Sponsor, (ii) issuing and selling common securities representing an
undivided beneficial interest in the assets of the Trust (the "Common
Securities") to the Sponsor in exchange for cash and investing the proceeds
thereof in additional junior subordinated debentures of the Sponsor, and (iii)
engaging in such other activities as are necessary, convenient or incidental
thereto.
3. The Sponsor and the Trustees will enter into an amended and restated
Declaration of Trust, satisfactory to each such party and substantially in the
form included as an exhibit to the 1933 Act Registration Statement referred to
below, to provide for the contemplated operation of the Trust created hereby and
the issuance of the Preferred Securities and Common Securities referred to
therein. Prior to the execution and delivery of such amended and restated
Declaration of Trust, the Trustees shall not have any duty or obligation
hereunder or with respect of the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise.
4. The Sponsor, as the sponsor of the Trust, is hereby authorized (i) to
prepare and file with the Securities and Exchange Commission (the "Commission")
and execute, in each case on behalf of the Trust, (a) a Registration Statement
on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective
or post-effective amendments to such Registration Statement, relating to the
registration under the Securities Act of 1933, as amended, of the Preferred
Securities and certain other securities of the Sponsor and (b) if the Sponsor
shall deem it desirable, a Registration Statement on Form 8-A (the "1934 Act
Registration Statement")
<PAGE> 2
(including all pre-effective and post-effective amendments thereto)
relating to the registration of the Preferred Securities under Section 12 of the
Securities Exchange Act of 1934, as amended, (ii) if the Sponsor shall deem it
desirable, to prepare and file with the New York Stock Exchange or one or more
national securities exchange(s) (each, an "Exchange") or the National
Association of Securities Dealers, Inc. (the "NASD") and execute on behalf of
the Trust a listing application or applications and all other applications,
statements, certificates, agreements and other instruments as shall be necessary
or desirable to cause the Preferred Securities to be listed on any such Exchange
or the NASD's Nasdaq National Market ("Nasdaq"), (iii) to prepare and file and
execute on behalf of the Trust such applications, reports, surety bonds,
irrevocable consents, appointments of attorney for service of process and other
papers and documents as the Sponsor, on behalf of the Trust, may deem necessary
or desirable to register the Preferred Securities under the securities or "Blue
Sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem
necessary or desirable, (iv) to negotiate the terms of and execute on behalf of
the Trust an underwriting agreement among the Trust, the Sponsor and any
underwriter(s), dealer(s) or agent(s) relating to the Preferred Securities, as
the Sponsor, on behalf of the Trust, may deem necessary or desirable, and (v) to
execute and deliver on behalf of the Trust letters or documents to, or
instruments for filing with, a depository relating to the Preferred Securities.
In the event that any filing referred to in clauses (i)-(iii) above is required
by the rules and regulations of the Commission, any Exchange, Nasdaq, the NASD
or state securities or blue sky laws, to be executed on behalf of the Trust by a
Trustee, any natural person appointed pursuant to Section 6 hereof, in his or
her capacity as trustee of the Trust, and the Sponsor are hereby authorized to
join in any such filing and to execute on behalf of the Trust any and all of the
foregoing.
5. This Declaration of Trust may be executed in one or more counterparts.
6. The number of Trustees shall initially shall be five (5) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided, however, that the number of Trustees shall in no
event be less than three (3); and provided, further that to the extent required
by the Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and meets other
requirements imposed by applicable law. Subject to the foregoing, the Sponsor is
entitled to appoint or remove without cause any Trustee at any time. The
Trustees may resign upon thirty days' prior notice to the Sponsor.
7. The Trust may be dissolved and terminated before the issuance of the
Preferred Securities at the election of the Sponsor.
8. This Declaration of Trust shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
LITCHFIELD FINANCIAL CORPORATION,
as Sponsor
By: /s/ Ronald E. Rabidou
----------------------------------------
Name: Ronald E. Rabidou
Title: Chief Financial Officer
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely as
Delaware Trustee
By: /s/ Mary Jane Morrissey
----------------------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
THE BANK OF NEW YORK,
not in its individual capacity but solely as
Property Trustee
By: /s/ Michael Culhane
----------------------------------------
Name: Michael Culhane
Title: Vice President
JOHN J. MALLOY,
not in his individual capacity but solely as
Regular Trustee
/s/ John J. Malloy
----------------------------------------
HEATHER A. SICA,
not in her individual capacity but solely as
Regular Trustee
/s/ Heather A. Sica
----------------------------------------
RONALD E. RABIDOU,
not in his individual capacity but solely as
Regular Trustee
/s/ Ronald E. Rabidou
----------------------------------------
3
<PAGE> 1
EXHIBIT 4.3
AMENDED AND RESTATED DECLARATION OF TRUST
OF
LITCHFIELD CAPITAL TRUST I
DATED AS OF ___________, ____
<PAGE> 2
TABLE OF CONTENTS
(This Table of Contents does not constitute part of the Amended and
Restated Declaration of Trust and should not have any bearing upon the
interpretation of any of its terms or provisions.)
PAGE
ARTICLE 1
Definitions
Section 1.01. Definitions............................................ 2
Affiliate....................................................... 2
Book Entry Interest............................................. 2
Business Day.................................................... 2
Business Trust Act.............................................. 2
Certificate..................................................... 2
Certificate of Trust............................................ 3
Clearing Agency................................................. 3
Clearing Agency Participant..................................... 3
Closing Date.................................................... 3
Code............................................................ 3
Commission...................................................... 3
Common Securities............................................... 3
Common Security Certificate..................................... 3
Covered Person.................................................. 3
Creditor........................................................ 3
Debenture Trustee............................................... 3
Debentures...................................................... 3
Definitive Preferred Security Certificates...................... 3
Delaware Trustee................................................ 4
Depositary Agreement............................................ 4
Distribution.................................................... 4
DTC............................................................. 4
Event of Default................................................ 4
Exchange........................................................ 4
Exchange Act.................................................... 4
First Closing Date ............................................. 4
Fiscal Year..................................................... 4
Global Certificate.............................................. 4
Holder.......................................................... 4
Holder Direct Action............................................ 4
Litchfield Financial............................................ 4
Sponsor......................................................... 4
Indemnified Person.............................................. 4
Indenture....................................................... 4
Indenture Event of Default...................................... 4
<PAGE> 3
Investment Company.............................................. 5
Investment Company Act.......................................... 5
Legal Action.................................................... 5
Liquidation Distribution........................................ 5
List of Holders................................................. 5
Majority in liquidation amount of the Securities................ 5
NASD............................................................ 5
Nasdaq.......................................................... 5
1933 Act Registration Statement................................. 5
1934 Act Registration Statement................................. 5
Officers' Certificate........................................... 5
Opinion of Counsel.............................................. 6
Option Closing Date ............................................ 6
Original Declaration............................................ 6
Paying Agent.................................................... 6
Payment Amount.................................................. 6
Person.......................................................... 6
Preferred Guarantee............................................. 6
Preferred Securities............................................ 6
Preferred Security Beneficial Owner............................. 6
Preferred Security Certificate.................................. 6
Property Trustee................................................ 7
Property Account................................................ 7
Quorum.......................................................... 7
Regular Trustee................................................. 7
Related Party................................................... 7
Resignation Request............................................. 7
Responsible Officer............................................. 7
Rule 3a-7....................................................... 7
Securities...................................................... 7
Securities Act.................................................. 7
Special Event................................................... 7
Successor Delaware Trustee...................................... 7
Successor Entity................................................ 7
Successor Property Trustee...................................... 7
Successor Securities............................................ 7
Super Majority.................................................. 8
Supplemental Indenture.......................................... 8
10% in liquidation amount of the Securities..................... 8
Treasury Regulations............................................ 8
Trust........................................................... 8
Trustee......................................................... 8
Trustees........................................................ 8
Trust Indenture Act............................................. 8
Underwriting Agreement.......................................... 8
<PAGE> 4
ARTICLE 2
Trust Indenture Act
Section 2.01. Trust Indenture Act; Application....................... 8
Section 2.02. Lists of Holders of Preferred Securities............... 9
Section 2.03. Reports by the Property Trustee........................ 9
Section 2.04. Periodic Reports to the Property Trustee............... 10
Section 2.05. Evidence of Compliance with Conditions Precedent....... 10
Section 2.06. Events of Default; Waiver.............................. 10
Section 2.07. Disclosure of Information.............................. 12
ARTICLE 3
Organization
Section 3.01. Name................................................... 12
Section 3.02. Office................................................. 12
Section 3.03. Issuance of the Securities............................. 12
Section 3.04. Purchase of Debentures................................. 13
Section 3.05. Purpose................................................ 13
Section 3.06. Authority.............................................. 14
Section 3.07. Title to Property of the Trust......................... 14
Section 3.08. Powers and Duties of the Regular Trustees.............. 14
Section 3.09. Prohibition of Actions by the Trust and the Trustees... 17
Section 3.10. Powers and Duties of the Property Trustee.............. 18
Section 3.11. Delaware Trustee....................................... 21
Section 3.12. Certain Rights and Duties of the Property Trustee...... 21
Section 3.13. Registration Statement and Related Matters............. 25
Section 3.14. Filing of Amendments to Certificate of Trust........... 26
Section 3.15. Execution of Documents by the Regular Trustees......... 26
Section 3.16. Trustees Not Responsible for Recitals or Issuance of
Securities............................................. 26
Section 3.17. Duration of the Trust.................................. 26
Section 3.18. Mergers................................................ 26
Section 3.19. Property Trustee May File Proofs of Claim.............. 38
ARTICLE 4
Sponsor
Section 4.01. Purchase of Common Securities by the Sponsor........... 29
Section 4.02. Expenses............................................... 29
ARTICLE 5
Trustees
Section 5.01. Number of Trustees; Qualifications..................... 30
<PAGE> 5
Section 5.02. Appointment, Removal and Resignation of the Trustees... 32
Section 5.03. Vacancies among the Trustees........................... 33
Section 5.04. Effect of Vacancies.................................... 33
Section 5.05. Meetings............................................... 34
Section 5.06. Delegation of Power.................................... 34
Section 5.07. Merger, Conversion, Consolidation or Succession to
Business............................................... 34
ARTICLE 6
Distributions
Section 6.01. Distributions.......................................... 35
ARTICLE 7
Issuance of the Securities
Section 7.01. General Provisions Regarding the Securities............ 35
ARTICLE 8
Dissolution of the Trust
Section 8.01. Dissolution of the Trust............................... 37
ARTICLE 9
Transfer of Interests
Section 9.01. Transfer of Securities................................. 37
Section 9.02. Transfer of Certificates............................... 38
Section 9.03. Deemed Security Holders................................ 38
Section 9.04. Book Entry Interests................................... 38
Section 9.05. Notices to Holders of Certificates..................... 39
Section 9.06. Appointment of Successor Clearing Agency............... 39
Section 9.07. Definitive Preferred Securities Certificates........... 40
Section 9.08. Mutilated, Destroyed, Lost or Stolen Certificates...... 40
ARTICLE 10
Limitation of Liability; Indemnification
Section 10.01. Exculpation........................................... 40
Section 10.02. Indemnification....................................... 41
Section 10.03. Outside Business...................................... 41
<PAGE> 6
ARTICLE 11
Accounting
Section 11.01. Fiscal Year........................................... 42
Section 11.02. Certain Accounting Matters............................ 42
Section 11.03. Banking............................................... 43
Section 11.04. Withholding........................................... 43
ARTICLE 12
Amendments and Meetings
Section 12.01. Amendments............................................ 43
Section 12.02. Meetings of the Holders of Securities; Action by
Written Consent....................................... 44
ARTICLE 13
Representations of the Property Trustee and the Delaware Trustee
Section 13.01. Representations and Warranties of the Property
Trustee............................................... 46
Section 13.02. Representations and Warranties of the Delaware
Trustee............................................... 46
ARTICLE 14
Miscellaneous
Section 14.01. Notices............................................... 47
Section 14.02. Undertaking for Costs................................. 48
Section 14.03. Governing Law......................................... 49
Section 14.04. Headings.............................................. 49
Section 14.05. Partial Enforceability................................ 49
Section 14.06. Counterparts.......................................... 49
Section 14.07. Intention of the Parties.............................. 49
Section 14.08. Successors and Assigns................................ 49
Section 14.09. No Recourse........................................... 49
SIGNATURES AND SEALS
EXHIBIT A: CERTIFICATE OF TRUST
EXHIBIT B: TERMS OF THE PREFERRED SECURITIES
EXHIBIT C: TERMS OF THE COMMON SECURITIES
<PAGE> 7
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
LITCHFIELD CAPITAL TRUST I
AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration") dated and
effective as of __________, ____ by Richard A. Stratton, an individual, Heather
A. Sica, an individual, and Ronald E. Rabidou, an individual, as Regular
Trustees (the "Regular Trustees"), The Bank of New York, a New York banking
corporation, as Property Trustee (the "Property Trustee") and The Bank of New
York (Delaware), a Delaware banking corporation, as Delaware Trustee (the
"Delaware Trustee") (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"), Litchfield Financial Corporation, a Massachusetts
corporation, as trust sponsor ("Litchfield Financial" or the "Sponsor"), and by
the holders, from time to time, of undivided beneficial interests in the assets
of the Trust to be issued pursuant to this Declaration.
WHEREAS, the Sponsor and certain of the Trustees entered into a Declaration of
Trust dated as of [ ], 1999 (the "Original Declaration") in order to
establish Litchfield Capital Trust I, a statutory business trust (the "Trust"),
under the Business Trust Act (as hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of Trust") of the Trust was
filed with the office of the Secretary of State of the State of Delaware on
[ ]; and
WHEREAS, the Trustees and the Sponsor desire to continue the Trust pursuant to
the Business Trust Act for the purpose of, as described more fully in Sections
303 and 304 hereof, (i) issuing and selling Preferred Securities (as hereinafter
defined) representing preferred undivided beneficial interests in the assets of
the Trust for cash and investing the proceeds thereof in Debentures (as
hereinafter defined) of Litchfield Financial issued under the Indenture (as
hereinafter defined) to be held as assets of the Trust and (ii) issuing and
selling Common Securities (as hereinafter defined) representing common undivided
beneficial interests in the assets of the Trust to Litchfield Financial in
exchange for cash and investing the proceeds thereof in additional Debentures
issued under the Indenture to be held as assets of the Trust;
NOW, THEREFORE, it being the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Act, that the Original
Declaration be amended and restated in its entirety as provided herein and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all Debentures referred to in clauses (i) and (ii) of the
previous paragraph purchased by the Trust will be held for the benefit of the
Holders (as hereinafter defined) from time to time, of the Certificates (as
hereinafter defined) representing undivided beneficial interests in the assets
of the Trust issued hereunder, subject to the provisions of this Declaration.
<PAGE> 8
ARTICLE 1
Definitions
Section 1.01. Definitions.
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.01;
(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
Amended and Restated Declaration of Trust (including Exhibits A, B and C
hereto (the "Exhibits")) as modified, supplemented or amended from time
to time;
(d) all references in this Declaration to Articles, Sections and Exhibits
are to Articles and Sections of 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.
"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.
"Book Entry Interest" means a beneficial interest in a Global Certificate
registered in the name of a Clearing Agency or a nominee thereof,
ownership and transfers of which shall be maintained and made through
book entries by such Clearing Agency as described in Section 9.04.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in the Borough of Manhattan, The City and
State of New York or Boston, Massachusetts are authorized or required by
law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code (S) 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a Common Security Certificate or a Preferred Security
Certificate.
2
<PAGE> 9
"Certificate of Trust" has the meaning set forth in the second WHEREAS
clause above.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depository
for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and
which shall undertake to effect book entry transfers and pledges of the
Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the Closing Date as specified in the Underwriting
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation. A reference to a specific section
(Sec.) of the Code refers not only to such specific section but also to
any corresponding provision of any Federal tax statute enacted after the
date of this Declaration, as such specific section or corresponding
provision is in effect on the date of application of the provisions of
this Declaration containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section 7.01(b).
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form
of Annex I to Exhibit C.
"Covered Person" means (i) any officer, director, shareholder, partner,
member, representative, employee or agent of the Trust or of any of its
Affiliates, (ii) any officer, director, shareholder, employee,
representative or agent of Litchfield Financial or of any of its
Affiliates and (iii) the Holders from time to time of the Securities.
"Creditor" has the meaning specified in Section 4.02(c).
"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 junior subordinated debentures issued by
Litchfield Financial under the Indenture to the Property Trustee and
entitled the "____% Junior Subordinated Debentures due [ ]".
"Definitive Preferred Security Certificates" has the meaning set forth in
3
<PAGE> 10
Section 9.04.
"Delaware Trustee" has the meaning set forth in Section 5.01(a)(3).
"Depositary Agreement" means the agreement among the Trust, the Property
Trustee and DTC dated as of the Closing Date, as the same may be amended
or supplemented from time to time.
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.01.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means that an Indenture
Event of Default has occurred and is continuing with respect to the
Debentures.
"Exchange" has the meaning specified in Section 3.13.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.
"First Closing Date" means the First Closing Date as specified in the
Underwriting Agreement.
"Fiscal Year" has the meaning specified in Section 11.01.
"Global Certificate" has the meaning set forth in Section 9.04.
"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.
"Holder Direct Action" has the meaning specified in Section 3.10(e).
"Indemnified Person" means any Trustee, any Affiliate of any Trustee, any
Paying Agent, any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee or Paying Agent, or
any employee or agent of the Trust or of any of its Affiliates.
"Indenture" means the Junior Subordinated Indenture dated as of
_________, ____ between Litchfield Financial and the Debenture Trustee as
supplemented by the _______ Supplemental Indenture thereto dated as of
____________, ____, pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means that an event or condition defined as
an "Event of Default" with respect to the Debentures under Section
6.01(a) of the Indenture has occurred and is continuing.
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"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.
"Legal Action" has the meaning specified in Section 3.08(g).
"Liquidation Distribution" has the meaning set forth in Exhibits B and C
hereto establishing the terms of the Securities.
"List of Holders" has the meaning specified in Section 2.02(a).
"Litchfield Financial" or " Sponsor" means Litchfield Financial
Corporation, a Massachusetts corporation, or any successor entity
resulting from any merger, consolidation, amalgamation or other business
combination, in its capacity as sponsor of the Trust.
"Majority in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in
the penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s)
of outstanding Securities voting together as a single class or, as the
context may require, Holder(s) of outstanding Preferred Securities or
Common Securities voting separately as a class, who are the record owners
of a relevant class of Securities whose liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise,
plus accumulated and unpaid Distributions to the date upon which the
voting percentages are determined) represents more than 50% of the
liquidation amount of all outstanding Securities of such class.
"NASD" has the meaning specified in Section 3.13.
"Nasdaq" has the meaning specified in Section 3.13.
"1933 Act Registration Statement" has the meaning specified in Section
3.13.
"1934 Act Registration Statement" has the meaning specified in Section
3.13.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the Chief Executive Officer, the President or a Vice President,
and by the Treasurer, an Associate Treasurer, an Assistant Treasurer, the
Comptroller, the Secretary or an Assistant Secretary of the Sponsor, and
delivered to the appropriate Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 2.04 shall be the
principal executive, financial or accounting officer of the Sponsor. Any
Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Declaration shall include:
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(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Sponsor, which may be
an employee of the Sponsor but not an employee of the Trust or the
Property Trustee, and who shall be reasonably acceptable to the Property
Trustee. Any Opinion of Counsel pertaining to Federal income tax matters
may rely on published rulings of the Internal Revenue Service.
"Option Closing Date" means the Option Closing Date as specified in the
Underwriting Agreement.
"Original Declaration" has the meaning set forth in the first WHEREAS
clause above.
"Paying Agent" has the meaning specified in Section 3.10(i).
"Payment Amount" has the meaning specified in Section 6.01.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated association, government
or any agency or political subdivision thereof, or any other entity of
whatever nature.
"Preferred Guarantee" means the Guarantee Agreement dated as of
__________, ____ of Litchfield Financial in respect of the Preferred
Securities.
"Preferred Securities" has the meaning specified in Section 7.01(b).
"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 Clearing Agency, or on the
books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive certificate in fully
registered form representing a Preferred Security substantially in the
form of Annex I to Exhibit B.
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"Property Trustee" means the Trustee meeting the eligibility requirements
set forth in Section 5.01(c) and having the duties set forth for the
Property Trustee herein.
"Property Account" has the meaning specified in Section 3.10(c)(i).
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both such Regular Trustees.
"Regular Trustee" means any Trustee other than the Property Trustee and
the Delaware Trustee.
"Related Party" means any direct or indirect wholly owned subsidiary of
Litchfield Financial or any other Person which owns, directly or
indirectly, 100% of the outstanding voting securities of Litchfield
Financial.
"Resignation Request" has the meaning specified in Section 5.02(d).
"Responsible Officer" means, when used with respect to the Property
Trustee, any officer within the corporate trust department of the
Property Trustee, including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other
officer of the Property Trustee who customarily performs functions
similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred
because of such Person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration
of this Declaration.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act or any
successor rule thereunder.
"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.
"Special Event" has the meaning set forth in the terms of the Securities
as set forth in paragraph 4 of Exhibits B and C hereto.
"Successor Delaware Trustee" has the meaning specified in Section
5.02(b)(ii).
"Successor Entity" has the meaning specified in Section 3.18(b)(i).
"Successor Property Trustee" has the meaning specified in Section
5.02(b)(i).
"Successor Securities" has the meaning specified in Section
3.18(b)(i)(B).
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"Super Majority" has the meaning specified in Section 2.06(a)(ii).
"Supplemental Indenture" means the _____ Supplemental Indenture dated as
of ________, ____ between Litchfield Financial and the Debenture Trustee,
pursuant to which the Debentures are to be issued.
"10% in liquidation amount of the Securities" means, except as otherwise
required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the
context may require, Holder(s) of outstanding Preferred Securities or
Common Securities, voting separately as a class, who are the record
owners of a relevant class of Securities whose liquidation amount
(including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accumulated and unpaid Distributions to
the date upon which the voting percentages are determined) represents 10%
or more of the liquidation amount of all outstanding Securities of such
class.
"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).
"Trust" has the meaning set forth in the first WHEREAS clause above.
"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.
"Underwriting Agreement" means the Underwriting Agreement dated as of
__________, ____ among the Trust, the Sponsor and Tucker Anthony
Incorporated, as representatives of the several underwriters named
therein.
ARTICLE 2
Trust Indenture Act
Section 2.01. Trust Indenture Act; Application.
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(a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control;
(c) the Property Trustee, to the extent permitted by applicable law
and/or the rules and regulations of the Commission, shall be the only
Trustee which is a trustee for the purposes of the Trust Indenture Act;
and
(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.
Section 2.02. Lists of Holders of Preferred Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Property Trustee unless the Property Trustee is
registrar for the Securities, (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
("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 that 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 (S)(S)
310(b), 311 and 312(b) of the Trust Indenture Act.
Section 2.03. Reports by the Property Trustee.
Within 60 days after January 15 of each year, the Property Trustee shall
provide to the Holders of the Securities such reports as are required by
(S) 313 of the Trust Indenture Act, if any, in the form, in the manner
and at the times provided by (S) 313 of the Trust Indenture Act. The
Property Trustee shall also comply with the requirements of (S) 313(d) of
the Trust Indenture Act. A copy of each such report shall, at the time of
such transmission to Holders, be filed by the Property Trustee with the
Company, with each stock exchange upon which any Preferred
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Securities are listed (if so listed) and also with the Commission. The
Company agrees to notify the Property Trustee when any Preferred
Securities become listed on any stock exchange and of any delisting
thereof.
Section 2.04. Periodic Reports to the Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Property Trustee, the Commission and the Holders of the
Securities, as applicable, such documents, reports and information as
required by (S) 314(a)(1)-(3) (if any) of the Trust Indenture Act and the
compliance certificates required by (S) 314(a)(4) and (c) of the Trust
Indenture Act, any such certificates to be provided in the form, in the
manner and at the times required by (S) 314(a)(4) and (c) of the Trust
Indenture Act (provided that any certificate to be provided pursuant to
(S) 314(a)(4) of the Trust Indenture Act shall be provided within 120
days of the end of each Fiscal Year). Delivery of such reports,
information and documents to the Property Trustee is for informational
purposes only and the Property Trustee's receipt of such shall not
constitute constructive notice of any information contained therein,
including the Company's compliance with any of its covenants hereunder
(as to which the Property Trustee is entitled to rely exclusively on
Officers' Certificates).
Section 2.05. 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 provided for in this Declaration which relate to any
of the matters set forth in (S) 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to (S)
314(c) may be given in the form of an Officers' Certificate.
Section 2.06. 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 Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event
of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under this
Declaration shall also not be waivable; or
(ii) requires the consent or vote of the holders of greater than a
majority in aggregate principal amount of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under
this Declaration may only be waived by the vote of the Holders of at
least the proportion in aggregate liquidation amount of the Preferred
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
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The foregoing provisions of this Section 2.06(a) shall be in lieu of (S)
316(a)(1)(B) of the Trust Indenture Act and such (S) 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 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 an 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 an 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 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 Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event
of Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of the
Common Securities are deemed to have waived such Event of Default under
the Declaration as provided above in Section 2.06(a) or below in this
Section 2.06(b), the Event of Default under this Declaration 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 Event of Default under this Declaration as provided above in
Section 2.06(a) or below in this Section 2.06(b), the Event of Default
under this Declaration may only be waived by the vote of the Holders of
at least the proportion in aggregate liquidation amount of the Common
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding;
provided, further, that the Holders of Common Securities will be deemed to have
waived any such Event of Default and all Events of Defaults with respect to the
Common Securities and their consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such 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 2.06(b) shall be in lieu of (S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such (S)(S) 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. In the event that any Event
of Default with respect to the Preferred Securities is waived by the Holders of
Preferred Securities as provided in the Declaration, the Holders of Common
Securities agree that such waiver shall also constitute the waiver of such Event
of Default with respect to the Common Securities for all purposes under the
Declaration without any further act, vote or consent of the
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Holders of the Common Securities. Subject to the foregoing provisions of this
Section 2.06(b), upon waiver, any such default shall cease to exist and any
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 Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee, at the direction of the Holders of Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.06(c) shall be in
lieu of (S) 316(a)(1)(B) of the Trust Indenture Act and such (S)
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 2.07. Disclosure of Information.
The disclosure of information as to the names and addresses of the
Holders of the Securities in accordance with (S) 312 of the Trust
Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or
any law hereafter enacted which does not specifically refer to (S) 312 of
the Trust Indenture Act, nor shall the Property Trustee be held
accountable by reason of mailing any material pursuant to a request made
under (S) 312(b) of the Trust Indenture Act.
ARTICLE 3
Organization
Section 3.01. Name.
The Trust continued by this Declaration is named "Litchfield Capital
Trust I" as such name may be modified from time to time by the Regular
Trustees following written notice to the Holders of the 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 3.02. Office.
The address of the principal office of the Trust is c/o Litchfield
Financial Corporation, 430 Main Street, Williamstown, Massachusetts
01267. Upon ten days' written notice to the Holders, the Regular Trustees
may change the location of the Trust's principal office.
Section 3.03. Issuance of the Securities.
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The Sponsor, on behalf of the Trust and pursuant to the Original
Declaration, executed and delivered the Underwriting Agreement.
On the First Closing Date and contemporaneously with the execution and
delivery of this Declaration, the Regular Trustees, on behalf of the
Trust, shall execute and deliver (i) one or more Global Certificates,
registered in the name of the nominee of the initial Clearing Agency as
specified in Section 9.04 for the benefit of the underwriters named in
the Underwriting Agreement, in an aggregate amount of ___________
Preferred Securities having an aggregate liquidation amount of
$__________, against receipt of the aggregate purchase price of such
Preferred Securities of $___________, and (ii) to the Sponsor, one or
more Common Securities Certificates, registered in the name of the
Sponsor, in an aggregate amount of ________ Common Securities having an
aggregate liquidation amount of $____________, against receipt of the
aggregate purchase price of such Common Securities of $___________.
On the Option Closing Date, if any, the Regular Trustees, on behalf of
the Trust, shall execute and deliver (i) one or more Global Certificates,
registered in the name of the nominee of the initial Clearing Agency as
specified in Section 9.04 for the benefit of the underwriters named in
the Underwriting Agreement, in an aggregate amount of up to ___________
Preferred Securities having an aggregate liquidation amount of up to
$__________, against receipt of the aggregate purchase price of such
Preferred Securities of up to $___________ plus accrued interest from the
First Closing Date, and (ii) to the Sponsor, one or more Common
Securities Certificates, registered in the name of the Sponsor, in an
aggregate amount of up to ________ Common Securities having an aggregate
liquidation amount of up to $____________, against receipt of the
aggregate purchase price of such Common Securities of up to $___________.
Section 3.04. Purchase of Debentures.
On the First Closing Date and contemporaneously with the execution and
delivery of this Declaration, the Regular Trustees, on behalf of the
Trust, shall purchase from the Sponsor with the proceeds received by the
Trust from the sale of the Securities on such date pursuant to Section
3.03, at a purchase price of 100% of the principal amount thereof,
Debentures,registered in the name of the Property Trustee and having an
aggregate principal amount equal to $___________, and, in satisfaction
of the purchase price for such Debentures, the Regular Trustee, on
behalf of the Trust, shall deliver or cause to be delivered to the
Sponsor the sum of $___________.
On the Option Closing Date, if any, the Regular Trustees, on behalf of
the Trust, shall purchase from the Sponsor with the proceeds received by
the Trust from the sale of the Securities on such date pursuant to
Section 3.03, at a purchase price of 100% of the principal amount thereof
plus accrued interest from the First Closing Date, Debentures, registered
in the name of the Property Trustee and having an aggregate principal
amount equal to up to $___________, and, in satisfaction of the purchase
price for such Debentures, the Regular Trustee, on behalf of the Trust,
shall deliver or cause to be delivered to the Sponsor the sum of up to
$___________.
Section 3.05. Purpose.
The exclusive purposes and functions of the Trust are: (a)(i) to issue
and sell Preferred Securities for cash and use the proceeds of such sales
to acquire from Litchfield Financial Debentures issued under the
Indenture having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so issued and sold; (ii)
to enter into such agreements and arrangements as may be necessary in
connection with the sale of Preferred Securities to the initial
purchasers thereof (including the Underwriting Agreement) and to take all
action, and exercise such discretion, as may be necessary or desirable in
connection therewith and to file such registration statements or make
such other filings under the Securities Act, the Exchange Act or state
securities or "Blue Sky" laws as may be necessary or desirable in
connection therewith and the issuance of the Preferred Securities; and
(iii) to issue and sell Common Securities to Litchfield Financial for
cash and use the proceeds of such sale to purchase as trust assets an
equal aggregate principal amount of Debentures issued under the
Indenture; and (b) except as otherwise limited herein, to engage in only
those other activities necessary, convenient or incidental thereto,
including such other activities specifically authorized in this
Declaration. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, mortgage or pledge any of its assets
or at any time while the Securities are outstanding, otherwise undertake
(or permit to be undertaken) any activity that would result in
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or cause the Trust not to be classified for United States Federal income
tax purposes as a grantor trust.
Section 3.06. Authority.
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 dealing with the Trust are entitled to rely conclusively
on the power and authority of the Trustees as set forth in this
Declaration.
Section 3.07. Title to Property of the Trust.
Except as provided in Section 3.10 with respect to the Debentures and the
Property Account or unless 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 undivided beneficial interests in the assets of the
Trust.
Section 3.08. Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, authority and duty
to cause the Trust, and shall cause the Trust, to engage in the following
activities:
(a) to issue Preferred Securities and Common Securities, in each case 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 simultaneous issuances of both
Preferred Securities and Common Securities on each Closing Date;
(b) in connection with the issuance of the Preferred Securities, at the
direction of the Sponsor, to effect or cause to be effected the filings,
and to execute or cause to be executed, the documents, set forth in
Section 3.13 and to execute, deliver and perform on behalf of the Trust
the Depositary Agreement;
(c) to acquire as trust assets 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 all of the
Debentures to be vested in, and the Debentures to be held of record in
the
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name of, the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Common Securities;
(d) if and to the extent that the Sponsor on behalf of the Trust has not
already done so, to cause the Trust to enter into the Underwriting
Agreement and such other agreements and arrangements as may be necessary
or desirable in connection with the sale of the Preferred Securities to
the initial purchasers thereof and the consummation thereof, and to take
all action, and exercise all discretion, as may be necessary or desirable
in connection with the consummation thereof;
(e) 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 to take any ministerial action in relation to a Special Event;
(f) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including for the
purposes of (S) 316(c) of the Trust Indenture Act and with respect to
Distributions, voting rights, redemptions, and exchanges, and to issue
relevant notices to Holders of the Preferred Securities and Common
Securities as to such actions and applicable record dates;
(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 3.10(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 to the Property Trustee required by (S)
314(a)(4) of the Trust Indenture Act, which certificate may be executed
by any Regular Trustee;
(k) to incur expenses which are necessary or incidental to carrying 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, the Regular Trustees hereby initially
appointing the Property Trustee for such purposes;
(m) to take all actions and perform such duties as may be required of the
Regular Trustee pursuant to the terms of the Securities set forth in
Exhibits B and C hereto;
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(n) to take all actions which 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 Securities or to enable the Trust to effect the purposes for which
the Trust has been created;
(o) to take all actions, not inconsistent with this Declaration or with
applicable law, which the Regular Trustees determine in their discretion
to be necessary or desirable in carrying out the purposes of the Trust
and the activities of the Trust as set out in this Section 3.08,
including, but not limited to:
(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 Sponsor to ensure that the Debentures will be
treated as indebtedness of the Sponsor for United States Federal income
tax purposes;
(p) to take all actions 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, and to comply with any requirements imposed by any taxing
authority on holders of instruments treated as indebtedness for United
States Federal income tax purposes;
(q) subject to the requirements of Rule 3a-7 (if the Trust is excluded
from the definition of an Investment Company solely by reason of Rule
3a-7) and (S) 317(b) of the Trust Indenture Act, to appoint one or more
Paying Agents in addition to the Property Trustee; and
(r) 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.
The Regular Trustees must exercise the powers set forth in this Section 3.08 in
a manner which is consistent with the purposes and functions of the Trust set
out in Section 3.05, and the Regular Trustees shall not take any action which is
inconsistent with the purposes and functions of the Trust set forth in Section
3.05.
Subject to this Section 3.08, the Regular Trustees shall have none of the powers
or any of the authority of the Property Trustee set forth in Section 3.10.
The Regular Trustees shall take all actions on behalf of the Trust that are not
specifically required by this Declaration to be taken by any other Trustee.
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Any expenses incurred by the Regular Trustees pursuant to this Section 3.08
shall be reimbursed by the Sponsor.
Section 3.09. Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property Trustee)
shall cause the Trust not to, engage in any activity other than in
connection with the purposes of the Trust or other than as required or
authorized by this Declaration. In particular, the Trust shall not and
the Trustees (including the Property Trustee) shall not cause the Trust
to:
(a) invest any proceeds received by the Trust from holding the Debentures
but shall promptly distribute from the Property Account all such proceeds
to Holders of Securities pursuant to the terms of this Declaration and of
the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans, other than loans represented by the Debentures;
(e) 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, except as
otherwise expressly provided herein;
(f) issue any securities or other evidences of beneficial ownership of,
or beneficial interests in, the Trust other than the Securities;
(g) incur any indebtedness for borrowed money;
(h) (i) direct the time, method and place of conducting any proceeding
for any remedy available to the Debenture Trustee or exercising any trust
or power conferred upon the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section
6.06 of the Indenture, or (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the
Debentures, without, in each case, obtaining the prior approval of the
Holders of a Majority in liquidation amount of all outstanding
Securities;
(i) revoke any action previously authorized or approved by a vote of the
Holders of Preferred Securities except by subsequent vote of such
Holders;
(j) consent to any amendment, modification or termination of the
Indenture or the Debentures, where such consent shall be required, unless
in the case of this clause (j) the Property Trustee shall have received
an Opinion of Counsel experienced in such matters to the effect that such
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amendment, modification or termination will not cause more than an
insubstantial risk that for United States Federal income tax purposes the
Trust will not be classified as a grantor trust;
(k) take or consent to any action that would result in the placement of a
lien, pledge, charge, mortgage or other encumbrance on any of the Trust
property;
(l) vary the investment (within the meaning of Treasury Regulation
Section 301.7701-4(c)) of the Trust or of the Holders of Securities; or
(m) after the date hereof, enter into any contract or agreement (other
than any depositary agreement or any agreement with any securities
exchange or automated quotation system) that does not expressly provide
that the Holders of Preferred Securities, in their capacities as such,
have limited liability (in accordance with the provisions of the Business
Trust Act) for the liabilities and obligations of the Trust, which
express provision shall be in substantially the following form, "The
Holders of the Preferred Securities, in their capacities as such, shall
not be personally liable for any liabilities or obligations of the Trust
arising out of this Agreement, and the parties hereto hereby agree that
the Holders of the Preferred Securities, in their capacities as such,
shall be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware."
Section 3.10. 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 Article 5. 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, if the Property Trustee
does not also act as the Delaware Trustee, the Delaware Trustee.
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing bank account
(the "Property Account") in the name of and under the exclusive control
of the Property Trustee on behalf of the Holders of the Securities and on
the receipt of payments of funds made in respect of the Debentures held
by the Property Trustee, deposit such funds into the Property Account
and, without any further acts of the Property Trustee or the Regular
Trustees, promptly make payments to the Holders of the Preferred
Securities and Common Securities from the Property Account in accordance
with Section 6.01. Funds in the Property Account shall be held
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uninvested, and without liability for interest thereon, until disbursed
in accordance with this Declaration. The Property Account shall be an
account which is maintained with a banking institution whose long term
unsecured indebtedness is rated by a "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act, at least investment grade;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect promptly the redemption of the Preferred Securities
and the Common Securities to the extent the Debentures are redeemed or
mature;
(iii) upon notice of distribution issued by the Regular Trustees in
accordance with the terms of the Preferred Securities and the Common
Securities, engage in such ministerial activities as shall be necessary
or appropriate to effect promptly pursuant to terms of the Securities the
distribution of Debentures to Holders of Securities upon the election of
the Holder of Common Securities to distribute the Debentures to Holders
of Securities and dissolve the Trust; and
(iv) have the legal power to exercise all of the rights, powers and
privileges of a holder of the Debentures under the Indenture and, if an
Event of Default occurs and is continuing, the Property Trustee, subject
to Section 3.10(e), shall for the benefit of the Holders of the
Securities, enforce its rights as holder of the Debentures under the
Indenture, subject to the rights of the Holders of the Preferred
Securities pursuant to the terms of this Declaration, the Business Trust
Act and the Trust Indenture Act.
(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 set forth in Exhibits B and C hereto.
(e) If an Event of Default has occurred and is continuing, then the
Holders of a Majority in liquidation amount of the Preferred Securities
will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property
Trustee under the Declaration, including the right to direct the Property
Trustee to exercise the remedies available to it as a holder of the
Debentures. If the Property Trustee fails to enforce its rights under the
Debentures, a Holder of Preferred Securities, to the extent permitted by
applicable law, may, after a period of 30 days has elapsed since such
Holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against the Sponsor to enforce the
Property Trustee's rights under the Debentures without first instituting
any legal proceeding against the Property Trustee or any other Person;
provided further, that, if an Event of Default has occurred and is
continuing and such event is attributed to the failure of the Sponsor 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 of the
principal of or interest on the Debentures having a principal amount
equal to the aggregate liquidation
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amount of the Preferred Securities of such Holder (a "Holder Direct
Action") on or after the respective due date specified in the Debentures.
In connection with such Holder Direct Action, the Sponsor will be
subrogated to the rights of such Holder of Preferred Securities to the
extent of any payment made by the Sponsor to such Holders of Preferred
Securities in such Holder Direct Action. Except as provided in the
preceding sentences, the Holders of Preferred Securities will not be able
to exercise directly any other remedy available to the Holders of the
Debentures.
(f) All moneys deposited in the Property Account and all Debentures held
by the Property Trustee for the benefit of the Holders of the Securities
will not be subject to any right, charge, security interest, lien or
claim of any kind in favor of, or for the benefit of the Property Trustee
or its agents or their creditors.
(g) The Property Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities actually known to a Responsible
Officer of the Property Trustee, transmit by mail, first class postage
prepaid, to the holders of the Securities, as their names and addresses
appear upon the register, notice of such defaults with respect to the
Securities known to the Property Trustee, unless such defaults shall have
been cured before the giving of such notice (the term "defaults" for the
purposes of this Section 3.10(g) being hereby defined to be an Indenture
Event of Default, not including any periods of grace provided for in the
Indenture and irrespective of the giving of any notice provided therein);
provided, that, except in the case of default in the payment of the
principal of (or premium, if any) or interest on any of 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. The Property Trustee
shall not be deemed to have knowledge of any default, except (i) a
default in the payment of principal, premium or interest on the
Debentures or (ii) any default as to which the Property Trustee shall
have received written notice or a Responsible Officer charged with the
administration of this Declaration shall have obtained written notice.
(h) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds
thereof distributed to the Holders of Securities pursuant to the
terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and accepted
that appointment in accordance with Article 5.
(i) The Property Trustee shall act as paying agent in respect of the
Common Securities and, if the Preferred Securities are not in book entry
only form, the Preferred Securities and, subject to Section 3.08(q), may
authorize one or more Persons (each, a "Paying Agent") to pay
Distributions, redemption payments or liquidation payments on behalf of
the Trust with respect
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to the Preferred Securities. Any such Paying Agent shall comply with (S)
317(b) of the Trust Indenture Act. Any Paying Agent may be removed by the
Property Trustee, after consultation with the Regular Trustees, at any
time and a successor Paying Agent or additional Paying Agents may be
appointed at any time by the Property Trustee, subject to Section
3.08(q).
(j) The Property Trustee shall give prompt written notice to the Holders
of the Securities of any notice received by it from Litchfield Financial
of its election to defer payments of interest on the Debentures by
extending the interest payment period with respect thereto.
(k) Subject to this Section 3.10, the Property Trustee shall have none of
the powers or the authority of the Regular Trustees set forth in Section
3.08.
(l) The Property Trustee shall exercise the powers, duties and rights set
forth in this Section 3.10 and Section 3.12 in a manner which is
consistent with the purposes and functions of the Trust set out in
Section 3.05, and the Property Trustee shall not take any action which is
inconsistent with the purposes and functions of the Trust set forth in
Section 3.05.
Section 3.11. Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.01(a)(3), 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 Trustees described in this
Declaration. Except as set forth in Section 5.01(a)(3), the Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling
the requirements of (S) 3807(a) of the Business Trust Act. No implied
covenants or obligations shall be read into this Declaration against the
Delaware Trustee.
Section 3.12. Certain Rights and Duties of the Property Trustee.
(a) The Property Trustee, before the occurrence of an 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 Declaration, and no implied covenants shall be read into this
Declaration against the Property Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06),
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 person would exercise or use under the
circumstances in the conduct of his or her 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:
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(i) prior to the occurrence of an 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 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; provided, however, that 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;
(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 hereunder or under the Indenture, or exercising any trust or
power conferred upon the Property Trustee under this Declaration; and
(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 adequate indemnity
against such risk or liability is not reasonably assured to it.
(c) Subject to the provisions of Section 3.12(a) and (b):
(i) whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or established
prior to 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 and, if the Trust is excluded from
the definition of Investment Company solely by means of Rule 3a-7,
subject to the requirements of Rule 3a-7,
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request and rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Regular
Trustees;
(ii) the Property Trustee (A) may consult with counsel (which may be
counsel to the Sponsor or any of its Affiliates and may include any of
its employees) selected by it in good faith and with due care and the
advice or opinion of such counsel with respect to legal matters shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon and in accordance with such advice and opinion and (B) shall have
the right at any time to seek instructions concerning the administration
of this Declaration from any court of competent jurisdiction;
(iii) 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 by it in good faith and with due care;
(iv) 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 offered to the
Property Trustee security and indemnity satisfactory to the Property
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; provided that nothing contained in this clause
(iv) shall relieve the Property Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured or waived) to
exercise such of the rights and powers vested in it by this Declaration,
and to use the same degree of care and skill in this exercise, as a
prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs; and
(v) any action taken by the Property Trustee or its agents hereunder
shall bind 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.
(d) The recitals contained herein shall be taken as the statements of the
Sponsor, and the Property Trustee assumes no responsibility for the correctness
of the same. The Property Trustee makes no representations as to the validity or
sufficiency of this Declaration.
(e) The Property Trustee, in its individual or any other capacity, may become
the owner or pledgee of Preferred Securities and may otherwise deal with the
Sponsor with the same rights it would have if it were not the Property Trustee.
(f) All moneys received by the Property Trustee shall, until used or applied as
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herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Property Trustee shall be under no liability for interest on any moneys
received by it hereunder except such as it may agree in writing to pay thereon.
(g) (i) The Sponsor covenants and agrees to pay to the Property Trustee from
time to time, and the Property Trustee shall be entitled to, such compensation
as the Sponsor and the Property Trustee shall from time to time agree in writing
(which shall not be limited by any provision of law in regard to the
compensation of a Property Trustee of an express trust) for all services
rendered by it in the execution of the trusts hereby created and in the exercise
and performance of any of the powers and duties hereunder of the Property
Trustee, and the Sponsor will pay or reimburse the Property Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Property Trustee in accordance with any of the provisions of this
Declaration (including the reasonable compensation and the reasonable expenses
and disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Sponsor also covenants to indemnify each of the
Property Trustee or any predecessor Property Trustee and their officers, agents,
directors and employees for, and to hold them harmless against, any and all
loss, liability, damage, claim or expense including taxes (other than taxes
based upon, measured by or determined by the income of the Property Trustee)
incurred without negligence or bad faith on the part of the Property Trustee and
arising out of or in connection with the acceptance or administration of this
trust, including the reasonable costs and expenses of defending itself against
any claim (whether asserted by the Sponsor, any Holder or any other Person) of
liability in the premises. The provisions of this subpart (g) of this Section
3.12 shall survive the termination of this Declaration and resignation or
removal of the Property Trustee.
(ii) The obligations of the Sponsor under this subpart (g) of this
Section 3.12 to compensate and indemnify the Property Trustee and to pay
or reimburse the Property Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder. Such
additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Property
Trustee as such, except funds held in trust for the benefit of the
holders of particular Securities.
(h) Except as otherwise provided in this Section 3.12, whenever in the
administration of the provisions of this Declaration the Property Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or suffering or omitting to take any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Property
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Property Trustee and such certificate, in the
absence of negligence or bad faith on the part of the Property Trustee, shall be
full warrant to the Property Trustee for any action taken, suffered or omitted
to be taken by it under the provisions of this Declaration upon the faith
thereof.
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(i) Whether or not expressly stated, every provision of this Declaration
pertaining to the Property Trustee shall be subject to this Section 3.12.
Section 3.13. Registration Statement and Related Matters.
In accordance with the Original Declaration, Litchfield Financial, as the
sponsor of the Trust, was authorized (i) to file with the Commission and
execute, in each case on behalf of the Trust, (a) the Registration
Statement on Form S-3 (File No. 333-______) (the "1933 Act Registration
Statement") including any pre-effective or post-effective amendments
thereto, relating to the registration under the Securities Act of the
Preferred Securities and (b) if Litchfield Financial shall deem it
desirable, a Registration Statement on Form 8-A or other appropriate form
(the "1934 Act Registration Statement") (including all pre-effective and
post-effective amendments thereto) relating to the registration of the
Preferred Securities under Section 12 of the Exchange Act; (ii) if
Litchfield Financial shall deem it desirable, to prepare and file with
the New York Stock Exchange or one or more national securities
exchange(s) (each, an "Exchange") or the National Association of
Securities Dealers, Inc. (the "NASD") and execute on behalf of the Trust
a listing application or applications and all other applications,
statements, certificates, agreements and other instruments as shall be
necessary or desirable to cause the Preferred Securities to be listed on
any such Exchange or The Nasdaq National Market ("Nasdaq"); (iii) to file
and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of
process and all other papers and documents as Litchfield Financial, on
behalf of the Trust, may deem necessary or desirable to register the
Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as Litchfield Financial on behalf of the Trust, may deem
necessary or desirable; and (iv) to negotiate the terms and execute on
behalf of the Trust the Underwriting Agreement. In the event that any
filing referred to in clauses (i)-(iii) above is required by the rules
and regulations of the Commission, any Exchange, Nasdaq, the NASD or
state securities or blue sky laws, to be executed on behalf of the Trust
by one or more Trustees, the Regular Trustees, in their capacities as
Trustees of the Trust, and Litchfield Financial are hereby authorized and
directed to join in any such filing and to execute on behalf of the Trust
any and all of the foregoing. In connection with all of the foregoing,
Litchfield Financial and each Trustee, solely in its capacity as Trustee
of the Trust, have constituted and appointed, and hereby confirm the
appointment of, ______________, ___________, and _____________ and each
of them, as his, her or its, as the case may be, true and lawful
attorneys-in-fact, and agents, with full power of substitution and
resubstitution, for Litchfield Financial or such Trustee or in Litchfield
Financial's or such Trustee's name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to the 1933 Act Registration Statement and the 1934 Act
Registration Statement and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission,
granting unto said attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing requisite and necessary to
be done in connection therewith, as fully to all intents and purposes as
Litchfield Financial or such Trustee might or could do in person, hereby
ratifying and confirming all that said attorneys-
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in-fact and agents or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Section 3.14. Filing of Amendments to Certificate of Trust.
The Certificate of Trust as filed with the Secretary of State of the
State of Delaware on [ ], 1999 is attached hereto as Exhibit A. On or
after the date of execution of this Declaration, the Trustees shall cause
the filing with the Secretary of State of the State of Delaware of such
amendments, if any, to the Certificate of Trust as the Trustees shall
deem necessary or desirable.
Section 3.15. Execution of Documents by the Regular Trustees.
Except as otherwise required by the Business Trust Act with respect to
the Certificate of Trust or otherwise and except as provided in Sections
7.01(c) and 9.08, any Regular Trustee, or if there is only one, such
Regular Trustee is authorized to execute and deliver on behalf of the
Trust any documents which the Regular Trustees have the power and
authority to execute or deliver pursuant to this Declaration.
Section 3.16. Trustees 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 3.17. Duration of the Trust.
The Trust, absent dissolution pursuant to the provisions of Article 8
hereof, shall continue without dissolution until June 30, 2019.
Section 3.18. Mergers.
(a) The Trust may not merge with or into, convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, except
as described in Section 3.18(b) and (c) of this Declaration or Section 3
of Exhibit B or Exhibit C.
(b) The Trust may, at the request of the Sponsor, 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, the Delaware
Trustee or the Property Trustee, merge with or into, convert into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease
its properties and assets
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as an entirety or substantially as an entirety to, a trust organized as
such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under the
Securities and this Declaration; or
(B) substitutes for the Securities other securities having substantially
the same terms as the Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Securities rank with
respect to Distributions and payments upon liquidation, redemption and
otherwise;
(ii) the Sponsor expressly appoints 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 Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or with another organization in which the Preferred Securities
are then listed or quoted, if any;
(iv) if the Preferred Securities (including any Successor Securities) are
rated by any nationally recognized statistical rating organization prior
to such transaction, such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause
the Preferred Securities (including any Successor Securities), or if the
Debentures are so rated, the Debentures, to be downgraded by any
nationally recognized statistical rating organization;
(v) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of any
Successor Securities) in any material respect (other than with respect to
any dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially identical to that
of the Trust;
(vii) prior to such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
Opinion of Counsel experienced in such matters that:
(A) such merger, conversion, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of 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, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor the
Successor Entity will be required to register as an Investment Company;
and
(C) following such merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for United
States Federal income tax purposes;
(viii) the Sponsor or any permitted successor or assignee owns all of the
common securities of such Successor Entity and guarantees the obligations
of such Successor Entity under the Successor Securities at least to the
extent provided by the Preferred Guarantee; and
(ix) there shall have been furnished to the Property Trustee an Officers'
Certificate and an Opinion of Counsel, each to the effect that all
conditions precedent in this Declaration to such transaction have been
satisfied.
(c) Notwithstanding Section 3.18(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, convert into, or be replaced
by, or convey, transfer or lease its properties and assets as an entirety
or substantially as an entirety to, any other Person or permit any other
Person to consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger, conversion, replacement,
conveyance, transfer or lease would cause the Trust or the Successor
Entity not to be classified as a grantor trust for United States Federal
income tax purposes or would cause the Holders of the Securities not to
be treated as owning an undivided interest in the Debentures.
Section 3.19. Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor
upon the Securities or the property of the Trust or of such other obligor
or their creditors, the Property Trustee (irrespective of whether any
Distributions on the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Property Trustee shall have made any demand on the Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the
fullest extent permitted by law, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Securities (or, if the Securities are
original issue discount Securities, such portion of the liquidation
amount as may be specified in the terms of such Securities) and to file
such other papers or documents as may be necessary or advisable in order
to have the claims of the Property Trustee (including any claim for the
reasonable compensation, expenses, disbursements
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and advances of the Property Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
(b) 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 Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or compensation affecting the Securities
or the rights of any Holder thereof to authorize the Property Trustee to vote in
respect of the claim of any Holder in any such proceeding.
ARTICLE 4
Sponsor
Section 4.01. Purchase of Common Securities by the Sponsor.
On the Closing Date, the Sponsor will purchase all of the Common
Securities issued by the Trust at the same time as the Preferred
Securities to be issued on such date are issued, such purchase to be in
an amount equal to 3% of the total capital of the Trust.
Section 4.02. Expenses.
(a) In connection with the purchase of the Debentures by the Trust, the
Sponsor, in its capacity as Sponsor and not as a Holder, shall be
responsible for and shall pay for all debts and obligations (other than
with respect to the Securities) and all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to the
organization of the Trust, the issuance of the Preferred Securities to
initial purchasers thereof, the fees and expenses (including reasonable
counsel fees and expenses) of the Trustees (including any amounts payable
under Article 10), 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 disposition of Trust assets).
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(b) In connection with the purchase of the Debentures by the Trust, the
Sponsor, in its capacity as Sponsor and not as a Holder, will pay any and
all taxes (other than United States withholding taxes attributable to the
Trust or its assets) and all liabilities, costs and expenses with respect
to such taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.02 shall be for the
benefit of, and shall be enforceable by, any Person to whom any such
debts, obligations, costs, expenses and taxes are owed (a "Creditor")
whether or not such Creditor has received notice hereof. Any such
Creditor may enforce the Sponsor's obligations under this Section 4.02
directly against the Sponsor and the Sponsor irrevocably waives any right
or remedy to require that any such Creditor take any action against the
Trust or any other Person before proceeding against the Sponsor.
(d) The Sponsor shall be subrogated to all (if any) rights of the Trust
in respect of any amounts paid to any Creditor by the Sponsor under this
Section 4.02.
ARTICLE 5
Trustees
Section 5.01. Number of Trustees; Qualifications.
(a) The number of Trustees initially shall be five (5). At any time (i)
before the issuance of the Securities, the Sponsor may, by written
instrument, increase or decrease the number of, and appoint, remove and
replace, the Trustees, and (ii) after the issuance of the Securities the
number of Trustees may be increased or decreased solely by, and Trustees
may be appointed, removed or replaced solely by, vote of Holders of
Common Securities representing a Majority in liquidation amount of the
Common Securities voting as a class; provided that in any case:
(1) the number of Trustees shall be at least five (5) unless the Trustee
that acts as the Property Trustee also acts as the Delaware Trustee, in
which case the number of Trustees shall be at least four (4);
(2) at least a majority of the Trustees shall at all times be officers,
directors or employees of Litchfield Financial;
(3) if required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be either a natural person who is a resident of the State
of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and otherwise is
permitted to act as a Trustee hereunder under the laws of the State of
Delaware, except that if the Property Trustee has its principal place of
business in the State of Delaware and otherwise is permitted to act as a
Trustee hereunder under the laws of the State of Delaware, then the
Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application; and
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(4) there shall at all times be a Property Trustee hereunder which shall
satisfy the requirements of Section 5.01(c).
Each Trustee shall be either a natural person at least 21 years of age or a
legal entity which shall act through one or more duly appointed representatives.
(b) The initial Regular Trustees shall be:
John J. Malloy, Heather A. Sica and Ronald E. Rabidou
c/o LITCHFIELD FINANCIAL CORPORATION, 430 Main Street, Williamstown,
Massachusetts 01267
(c) There shall at all times be one Trustee which shall act as the Property
Trustee. In order to act as the Property Trustee hereunder, such Trustee shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation or national banking association 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, national
banking association 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 $50,000,000, and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation or national
banking association 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 5.01(c)(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 reason of Rule 3a-7 and to the extent Rule 3a-7 requires a
trustee having certain qualifications to hold title to the "eligible assets" (as
defined in Rule 3a-7) of the Trust, the Property Trustee shall possess those
qualifications.
If at any time the Property Trustee shall cease to satisfy the requirements of
clauses (i)-(iii) above, the Property Trustee shall immediately resign in the
manner and with the effect set out in Section 5.02(d). If the Property Trustee
has or shall acquire any "conflicting interest" within the meaning of (S) 310(b)
of the Trust Indenture Act, the Property Trustee and the Holders of the Common
Securities (as if such Holders were the obligor referred to in (S) 310(b) of the
Trust Indenture Act) shall in all respects comply with the provisions of (S)
310(b) of the Trust Indenture Act. The
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Preferred Guarantee and the Indenture shall be deemed to be specifically
described in this Declaration for the purposes of clause (i) of the first
proviso contained in (S) 310(b) of the Trust Indenture Act.
The initial Trustee which shall serve as the Property Trustee is The Bank of New
York, a New York banking corporation, whose address is as set forth in Section
14.01(b).
(d) The initial Trustee which shall serve as the Delaware Trustee is The
Bank of New York (Delaware), a Delaware banking corporation, whose
address is as set forth in Section 14.01(c).
(e) Any action taken by the Holders of Common Securities pursuant to this
Article 5 shall be taken at a meeting of the Holders of Common Securities
convened for such purpose or by written consent as provided in Section
12.02.
(f) No amendment may be made to this Section 5.01 which would change any
rights with respect to the number, existence or appointment and removal
of Trustees, except with the consent of each Holder of Common Securities.
Section 5.02. Appointment, Removal and Resignation of the Trustees.
(a) Subject to Section 5.02(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of the Securities, by written instrument executed
by the Sponsor; and
(ii) after the issuance of the Securities by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a
class.
(b) (i) The Trustee that acts as the Property Trustee shall not be
removed in accordance with Section 5.02(a) until a successor Trustee
possessing the qualifications to act as the Property Trustee under
Section 5.01(c) (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, the
Sponsor and the Property Trustee being removed; and
(ii) the Trustee that acts as the Delaware Trustee shall not be removed
in accordance with Section 5.02(a) until a successor Trustee possessing
the qualifications to act as the Delaware Trustee under Section
5.01(a)(3) (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, the
Sponsor and the Delaware Trustee being removed.
(c) A Trustee appointed to office shall hold such office until his
successor shall have been appointed or until his death, removal or
resignation.
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(d) Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") 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 until:
(A) a Successor Property Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Property Trustee and
delivered to the Regular Trustees, the Sponsor and the resigning Property
Trustee; or
(B) if the Trust is excluded from the definition of an Investment Company
solely by reason of Rule 3a-7, 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 instrument executed by such
Successor Delaware Trustee and delivered to the Regular Trustees, the
Sponsor and the resigning Delaware Trustee.
(e) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this Section
5.02 within 60 days after delivery of a notice of removal or a
Resignation Request, the Property Trustee or Delaware Trustee being
removed or resigning as the case may be may petition, at the expense of
the Sponsor, any court of competent jurisdiction for appointment of a
Successor Property Trustee or Successor Delaware Trustee, as the case may
be. Such court may thereupon after prescribing such notice, if any, as it
may deem proper and prescribe, appoint a Successor Property Trustee or
Successor Delaware Trustee, as the case may be.
Section 5.03. Vacancies among the Trustees.
If a Trustee ceases to hold office for any reason and the number of Trustees is
not reduced pursuant to Section 5.01 or if the number of Trustees is increased
pursuant to Section 5.01, a vacancy shall occur. A resolution certifying the
existence of such vacancy by 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 the requirements of this
Article 5.
Section 5.04. Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee, or
any one of them, shall not operate to dissolve, terminate or annul the Trust.
Whenever a vacancy in the number of Regular Trustees shall occur until such
vacancy is filled as provided in this Article 5, the Regular Trustees in office,
regardless of their
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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 5.05. Meetings.
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 meeting 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
meeting 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 such 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 otherwise provided 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.
Section 5.06. 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 registration statement or amendment thereto
or other document or schedule filed with the Commission or making any other
governmental filing (including, without limitation, the filings referred to
in Section 3.13).
(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 5.07. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee or any
Regular Trustee that is not a natural person, as the case may be, may be merged
or converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the
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Property Trustee or the Delaware Trustee or the Regular Trustees, as the case
may be, shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of the Property Trustee or the Delaware Trustee
or the Regular Trustee, as the case may be, shall be the successor of the
Property Trustee or the Delaware Trustee or the Regular Trustees, as the case
may be, hereunder, provided that such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
ARTICLE 6
Distributions
Section 6.01. Distributions.
Holders shall receive periodic distributions, redemption payments and
liquidation distributions in accordance with the applicable terms of the
relevant Holder's Securities as set forth in Exhibits B and C hereto
("Distributions"). If and to the extent that Litchfield Financial makes a
payment of interest (including Additional Interest (as defined in the
Indenture)), 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 promptly make a Distribution of the Payment Amount to Holders in
accordance with the terms of the Securities as set forth in Exhibits B and C
hereto.
ARTICLE 7
Issuance of the Securities
Section 7.01. General Provisions Regarding the Securities.
(a) The Regular Trustees shall issue on behalf of the Trust Securities in fully
registered form representing undivided beneficial interests in the assets of the
Trust in accordance with Section 7.01(b) and for the consideration specified in
Section 3.03.
(b) The Regular Trustees shall issue on behalf of the Trust one class of
preferred securities representing preferred undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Exhibit B (the
"Preferred Securities") hereto, which terms are incorporated by reference in,
and made a part of, this Declaration as if specifically set forth herein, and
one class of common securities representing common undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Exhibit C (the "Common Securities") hereto, which terms are incorporated by
reference in, and made a part of, this Declaration as if specifically set forth
herein. The Trust shall have no securities or other interests in the assets of
the Trust other than the Preferred Securities and the Common Securities.
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(c) The Certificates shall be signed on behalf of the Trust by one or more of
the Regular Trustees. Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical and
other minor errors or defects in any such reproduction of any such signature
shall not affect the validity of any Certificate. In case any Regular Trustee
who shall have signed any of the Certificates shall cease to be such Regular
Trustee before the Certificate so signed shall be delivered by the Trust,
such Certificate nevertheless may be delivered as though the person who
signed such Certificate had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons as, at the
actual date of the execution of such Certificate, shall be the Regular
Trustees, although at the date of the execution and delivery of this
Declaration any such person was not a Regular Trustee. Certificates shall be
typewritten, printed, lithographed or engraved or may be produced in any
other manner as is reasonably acceptable to the Regular Trustees, as
evidenced by one or more of their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate, or as
may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
automated quotation system on which Securities may be listed or traded, or
with any rule or regulation of the Clearing Agency, or to conform to usage.
Pending the preparation of definitive Certificates, one or more of the
Regular Trustees on behalf of the Trust may execute temporary Certificates
(printed, lithographed or typewritten), in substantially the form of the
definitive Certificates in lieu of which they are issued, but with such
omissions, insertions and variations as may be appropriate for temporary
Certificates, all as may be determined by the Regular Trustees. Each
temporary Certificate shall be executed by one or more of the Regular
Trustees on behalf of the Trust upon the same conditions and in substantially
the same manner, and with like effect, as definitive Certificates. Without
unnecessary delay, one or more of the Regular Trustees on behalf of the Trust
will execute and furnish definitive Certificates and thereupon any or all
temporary Certificates may be surrendered to the transfer agent and registrar
in exchange therefor (without charge to the Holders). Each Preferred Security
Certificate whether in temporary or definitive form shall be countersigned,
upon receipt of a written order of the Trust signed by one Regular Trustee,
by the manual signature of an authorized signatory of the Person acting as
registrar and transfer agent for the Preferred Securities, which shall
initially be the Property Trustee.
(d) 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.
(e) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and
non- assessable.
(f) 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.
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(g) Upon issuance of the Securities as provided in this Declaration, the
Regular Trustees on behalf of the Trust shall return to Litchfield Financial
the $10 constituting initial trust assets as set forth in the Original
Declaration.
ARTICLE 8
Dissolution of the Trust
Section 8.01. Dissolution of the Trust.
The Trust shall dissolve:
(i) when all of the Securities shall have been called for redemption and the
amounts necessary for redemption thereof shall have been paid to the Holders
of the Securities in accordance with the terms of the Securities; or
(ii) when all of the Debentures shall have been distributed to the Holders of
the Securities in exchange for all of the Securities in accordance with the
terms of the Securities;
(iii) upon the expiration of the term of the Trust as set forth in Section
3.17; or
(iv) upon a decree of judicial dissolution.
Upon dissolution and the completion of the winding up of the affairs of the
Trust, the Trust and this Declaration shall terminate when a certificate of
cancellation is filed by the Trustees with the Secretary of State of the State
of Delaware. The Trustees shall so file such a certificate as soon as
practicable after the occurrence of an event referred to in this Section 8.01.
The provisions of Sections 3.12 and 4.02 and Article 10 shall survive the
termination of the Trust and this Declaration.
ARTICLE 9
Transfer of Interests
Section 9.01. Transfer of Securities.
(a) 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. To the fullest extent permitted by law, any transfer or
purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article 9, Preferred Securities shall be freely
transferable.
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(c) The Holder of the Common Securities may not transfer the Common
Securities except (a) in connection with transactions permitted under Section
10.01 of the Indenture, or (b) to the Sponsor or an Affiliate thereof in
compliance with applicable law (including the Securities Act and applicable
state securities and blue sky laws). To the fullest extent permitted by law,
any attempted transfer of the Common Securities other than as set forth in
the immediately preceding sentence shall be void.
Section 9.02. Transfer of Certificates.
The Regular Trustees shall provide for the registration of Certificates and
of transfers of Certificates, which will be effected without charge but only
upon payment (with such indemnity as the Regular Trustees may require) in
respect of any tax or other government charges which may be imposed in
relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees. Every
Certificate 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 Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees. A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by
this Declaration.
Section 9.03. 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 Trustees shall
have actual or other notice thereof.
Section 9.04. Book Entry Interests.
Unless otherwise specified in the terms of the Preferred Securities, the
Preferred Security Certificates, on original issuance, will be issued in the
form of one or more, fully registered, global Preferred Security Certificates
(each a "Global Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner
will receive a definitive Preferred Security Certificate representing such
Preferred Security Beneficial Owner's interests in such Global Certificates,
except as provided in Section 9.07. Unless and until definitive, fully
registered Preferred Security
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Certificates (the "Definitive Preferred Security Certificates") have been
issued to the Preferred Security Beneficial Owners pursuant to Section 9.07:
(i) the provisions of this Section 9.04 shall be in full force and effect;
(ii) the Trust and the Trustees shall be entitled to deal with the Clearing
Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Certificates and, except as set forth herein in Section
9.07 or in Rule 3a-7 (if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7) with respect to the
Property Trustee, shall have no obligation to the Preferred Security
Beneficial Owners;
(iii) to the extent that the provisions of this Section 9.04 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.04 shall control; and
(iv) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants. DTC
will make book entry transfers among the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global Certificates to
such Clearing Agency Participants, provided, that solely for the purposes of
determining whether the Holders of the requisite amount of Preferred
Securities have voted on any matter provided for in this Declaration, so long
as definitive Preferred Security Certificates have not been issued (pursuant
to Section 9.07 hereof), the Trustees may conclusively rely on, and shall be
protected in relying on,
any written instrument (including a proxy) delivered to the Trustees by the
Clearing Agency setting forth the Preferred Security Beneficial Owners' votes or
assigning the right to vote on any matter to any other Persons either in whole
or in part.
Section 9.05. Notices to Holders of Certificates.
Whenever a notice or other communication to the Holders is required to be
given under this Declaration, unless and until Definitive Preferred Security
Certificates shall have been issued pursuant to Section 9.07, the relevant
Trustees shall give all such notices and communications, specified herein to
be given to Holders of Preferred Securities, to the Clearing Agency and, with
respect to any Preferred Security Certificate registered in the name of a
Clearing Agency or the nominee of a Clearing Agency, the Trustees shall,
except in Rule 3a-7 (if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7) with respect to the
Property Trustee, have no notice obligations to the Preferred Security
Beneficial Owners.
Section 9.06. Appointment of Successor Clearing Agency.
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If any Clearing Agency elects to discontinue its services as securities
depository with respect to the Preferred Securities, the Regular Trustees
may, in their sole discretion, appoint a successor Clearing Agency with
respect to the Preferred Securities.
Section 9.07. Definitive Preferred Securities Certificates.
If (i) a Clearing Agency elects to discontinue its services as securities
depository with respect to the Preferred Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 9.06 or (ii) the Regular Trustees elect after consultation with the
Sponsor to terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities, then (x) Definitive Preferred Security
Certificates shall be prepared by the Regular Trustees on behalf of the Trust
with respect to such Preferred Securities and (y) upon surrender of the
Global Certificates by the Clearing Agency, accompanied by registration
instructions, the Regular Trustees shall cause Definitive Preferred Security
Certificates to be delivered to Preferred Security Beneficial Owners in
accordance with the instructions of the Clearing Agency. Neither the Trustees
nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on, and shall be protected in relying
on, such instructions.
Section 9.08. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and (b)
there shall be delivered to the Regular Trustees such security or indemnity
as may be required by them to keep each of them harmless, then in the absence
of notice that such Certificate shall have been acquired by a bona fide
purchaser, one or more of the Regular Trustees on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under
this Section 9.08, the Regular Trustees may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate issued pursuant to this
section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
ARTICLE 10
Limitation of Liability; Indemnification
Section 10.01. 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
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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 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.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of
Securities, in their capacities as Holders, shall be entitled to the same
limitation of liability that is extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
Section 10.02. Indemnification.
(a) To the fullest extent permitted by applicable law, the Sponsor shall
indemnify and hold harmless each Indemnified Person from and against any
loss, liability, expense, damage or claim incurred by such Indemnified Person
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 to be within the scope of authority conferred on
such Indemnified Person by this Declaration, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, liability,
expense, damage or claim incurred by such Indemnified Person by reason of
gross negligence (or, in the case of the Property Trustee, negligence) or
willful misconduct with respect to such acts or omissions.
(b) The provisions of this Section 10.02 shall survive the termination of
this Declaration or the resignation or removal of any Trustee.
Section 10.03. Outside Business.
The Sponsor and any Trustee (in the case of the Property Trustee, subject to
Section 5.01(c)) 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
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improper. Neither the Sponsor nor any 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 the Sponsor or any 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 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 depository for, trustee
or agent for, or act on any committee or body of holders of, securities or
other obligations of the Sponsor or any of its Affiliates.
ARTICLE 11
Accounting
Section 11.01. 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 11.02. 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.
(b) If required by applicable law, the Regular Trustees shall, as soon as
available after the end of each Fiscal Year of the Trust, cause to be
prepared and mailed to each Holder of Securities unaudited financial
statements of the Trust for such Fiscal Year, prepared in accordance with
generally accepted accounting principles; provided that if the Trust is
required to comply with the periodic reporting requirements of Section 13(a)
or 15(d) of the Exchange Act, such financial statements for such Fiscal Year
shall be examined and reported on by a firm of independent certified public
accountants selected by the Regular Trustees (which firm may be the firm used
by the Sponsor).
(c) The Regular Trustees shall cause to be duly prepared and mailed to each
Holder 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.
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(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 such form as is required by the Code, 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 11.03. 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 Account and no other funds from the Trust shall be deposited
in the Property Account. The sole signatories for such accounts shall be
designated by the Regular Trustees; provided, however, that the Property
Trustee shall designate the sole signatories for the Property Account.
Section 11.04. Withholding.
The Trust and the Trustees shall comply with all withholding requirements
under United States Federal, State and local law. The Regular Trustees 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 Regular Trustees to assist them in determining the extent
of, and in fulfilling, the Trust's withholding obligations. The Trust 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 to be withheld was not withheld from a Distribution, the Trust may
reduce subsequent Distributions by the amount of such withholding.
ARTICLE 12
Amendments and Meetings
Section 12.01. Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable
terms of the Securities, this Declaration may be amended by, and only by, a
written instrument executed by a majority of the Regular Trustees; provided,
however, that (i) no amendment or modification to this Declaration shall be
made, and any such purported amendment shall be void and ineffective: (A)
unless the Regular Trustees shall have first received: (x) an Officers'
Certificate that such amendment is permitted by, and conforms to, the terms
of this Declaration; and
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(y) an Opinion of Counsel that such amendment is permitted by, and conforms to,
the terms of this Declaration and that all conditions precedent, if any, in this
Declaration to the execution and delivery of such amendment have been satisfied;
and (B) to the extent the result of such amendment would be to: (x) cause the
Trust to fail to continue to be classified for purposes of United States Federal
income taxation as a grantor trust; (y) reduce or otherwise adversely affect the
rights or powers of the Property Trustee in contravention of the Trust Indenture
Act; or (z) cause the Trust to be deemed to be an Investment Company required to
be registered under the Investment Company Act; (ii) at such time after the
Trust has issued any Securities which remain outstanding, any amendment which
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; (iii) Section 4.02, Section 9.01(c) and
this Section 12.01 shall not be amended without the consent of all of the
Holders of the Securities; (iv) no amendment which adversely affects the rights,
powers and privileges of the Property Trustee or the Delaware Trustee shall be
made without the consent of the Property Trustee or the Delaware Trustee,
respectively; (v) Article 4 shall not be amended without the consent of the
Sponsor; and (vi) the rights of the Holders of Common Securities under Article 5
to increase or decrease the number of, and to appoint, replace or remove,
Trustees shall not be amended without the consent of each Holder of Common
Securities.
(b) Notwithstanding Section 12.02(a), 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, (iv) conform to
any changes in Rule 3a-7 (if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7) or any change in
interpretation or application of Rule 3a-7 (if the Trust is excluded from the
definition of an Investment Company solely by reason of Rule 3a-7) by the
Commission, (v) make any other provisions with respect to matters or
questions arising under this Declaration which shall not be inconsistent with
the other provisions of this Declaration, (vi) modify, eliminate or add to
any provisions of this Declaration to such extent as shall be necessary to
ensure that the Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Securities are outstanding
or to ensure that the Trust will not be required to register as an Investment
Company under the Investment Company Act, and (vii) pursuant to Section 5.02,
evidence the acceptance of the appointment of a successor Trustee or fill a
vacancy created by an increase in the number of Regular Trustees, which
amendment does not adversely affect in any material respect the rights,
preferences or privileges of the Holders.
Section 12.02. Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of Preferred Securities and/or Common 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 the
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 or automated quotation system on which the Preferred Securities are
then listed, traded or quoted. The Regular Trustees shall call a meeting of
the Holders of Preferred Securities or Common Securities, if
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directed to do so by 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 notices in 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 specified Certificates 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 provision shall apply to meetings of the Holders of Securities:
(i) Notice of any such meeting shall be given by mail to all the Holders of
Securities having a right to vote thereat not less than seven (7) days nor
more than sixty (60) days prior to 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 automated
quotation system on which the Preferred Securities are then listed, traded or
quoted, 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 and without prior notice
if a consent in writing setting forth the action so taken is signed by
Holders of Securities owning not less than the minimum aggregate liquidation
amount of Securities 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 Holders of Securities 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 a Security 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 the Security
executing it. Except as otherwise provided herein or in the terms of the
Securities, 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.
(iv) Unless otherwise provided in the Business Trust Act, this Declaration or
the rules of any stock exchange or automated quotation system on which the
Preferred Securities are then listed, traded or quoted, the Regular Trustees,
in their sole discretion, shall establish all other provisions relating
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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
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 13
Representations of the Property Trustee and the Delaware Trustee
Section 13.01. Representations and Warranties of the Property Trustee.
The Trustee which acts as the 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 the Property Trustee that:
(i) The Property Trustee is a national banking association or a banking
corporation with trust powers, duly organized, validly existing and in good
standing under the laws of the United States or the laws of the state of its
incorporation, with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration.
(ii) The execution, delivery and performance by the Property Trustee of this
Declaration have 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).
(iii) The execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter
or by-laws of the Property Trustee.
(iv) No consent, approval or authorization of, or registration with or notice
to, any banking authority which supervises or regulates the Property Trustee
is required for the execution, delivery or performance by the Property
Trustee of this Declaration.
(v) The Property Trustee satisfies the qualifications set forth in Section
5.01(c).
Section 13.02. Representations and Warranties of the Delaware Trustee.
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The Trustee which acts as the initial Delaware Trustee represents and
warrants to the Trust and the Sponsor at the date of this Declaration, 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 the Delaware Trustee, that:
(i) The Delaware Trustee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, with corporate
power and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration.
(ii) The execution, delivery and performance by the Delaware Trustee of this
Declaration have been duly authorized by all necessary corporate action on
the part of the Delaware Trustee. This 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).
(iii) No consent, approval or authorization of, or registration with or
notice to, any banking authority which supervises or regulates the Delaware
Trustee, if any, is required for the execution, delivery or performance by
the Delaware Trustee of this Declaration.
(iv) The Delaware Trustee is a natural person who is a resident of the State
of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware and is a Person that satisfies for
the Trust (S) 3807(a) of the Business Trust Act.
ARTICLE 14
Miscellaneous
Section 14.01. Notices.
All notices provided for in this Declaration shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed
by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the Trust's
mailing address set forth below (or such other address as the Regular
Trustees on behalf of the Trust may give notice of to the Holders of the
Securities):
Litchfield Capital Trust I c/o Litchfield Financial Corporation, 430 Main
Street, Williamstown, MA 01267 Attention: Treasurer, Telecopy: (413) 458-1020
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(b) if given to the Property Trustee, at the mailing address of the Property
Trustee set forth below (or such other address as the Property Trustee may
give notice of to the Holders of the Securities):
101 Barclay Street Floor 21 West New York, New York 10286 Attention:
Corporate Trust Trustee Administration Telecopy: (212) 815-5915
(c) if given to the Delaware Trustee, at the mailing address of the Delaware
Trustee set forth below (or such other address as the Delaware Trustee may
give notice of to the Holders of the Securities):
White Clay Center Route 273 Newark, Delaware 19711 Attention: Corporate Trust
Department
(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 of to the Trust):
Litchfield Financial Corporation, 430 Main Street, Williamstown,
Massachusetts 01267, Attention: Treasurer, Telecopy: (413) 458-1020
(e) if given to any other Holder, at the address set forth on the books and
records of the Trust.
A copy of any notice to the Property Trustee or the Delaware Trustee shall
also be sent to the Trust. All 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 14.02. Undertaking for Costs.
All parties to this Declaration agree, and each Holder of any Securities by
his or her acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right
or remedy under this Declaration, or in any suit against the Property Trustee
for any action taken or omitted by it as Property Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section 1402
shall not apply to any suit instituted by the Property Trustee, to any suit
instituted by any Holder of Preferred Securities, or group of Holders of
Preferred Securities, holding more than 10% in aggregate liquidation amount
of the outstanding Preferred Securities, or to any suit instituted by any
Holder of Preferred Securities for the enforcement of the payment of the
principal of (or premium, if any) or interest on the Debentures, on or after
the respective due dates expressed in such Debentures.
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Section 14.03. Governing Law.
This Declaration, the Securities 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.
Section 14.04. 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 14.05. 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.
Section 14.06. Counterparts.
This Declaration may contain more than one counterpart of the signature pages
and this Declaration may be executed by the affixing of the signature of the
Sponsor and 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.
Section 14.07. Intention of the Parties.
It is the intention of the parties hereto that the Trust not be classified
for United States Federal income tax purposes as an association taxable as a
corporation or partnership but that the Trust be treated as a grantor trust
for United States federal income tax purposes. The provisions of this
Declaration shall be interpreted to further this intention of the parties.
Section 14.08. 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 14.09. No Recourse.
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The Trust's obligations hereunder are intended to be the obligations of the
Trust and no recourse for the payment of Distributions, or for any claim upon
the Securities or otherwise in respect thereof, shall be had against any Holder
of Securities or any Affiliate of a Holder of Securities, solely by reason of
such Person's being a Holder of Securities or an Affiliate of a Holder of
Securities, it being understood that the Holder of Securities, solely by reason
of being a Holder of Securities, has limited liability (in accordance with the
provisions of the Business Trust Act) for the liabilities and obligations of the
Trust. Nothing contained in this Section 14.09 shall be construed to limit the
exercise or enforcement, in accordance with the terms of this Declaration, the
Preferred Guarantee and the Indenture, of the rights and remedies against the
Trust or the Sponsor.
IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as
of the day and year first above written.
LITCHFIELD FINANCIAL CORPORATION,
as Sponsor
By:
------------------------------
Name:
Title:
---------------------------------------
Ronald E. Rabidou, as Regular Trustee
---------------------------------------
Heather A. Sica, as Regular Trustee
---------------------------------------
John J. Malloy, as Regular Trustee
THE BANK OF NEW YORK,
as Property Trustee
By:
------------------------------------
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:------------------------------------
Name:
Title:
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EXHIBIT A
CERTIFICATE OF TRUST
OF
LITCHFIELD CAPITAL TRUST I
THIS CERTIFICATE OF TRUST of Litchfield Capital Trust I (the "Trust"), dated as
of April ___, 1999, is being duly executed and filed by the undersigned, as
trustees, with the Secretary of State of the State of Delaware to form a
business trust under the Delaware Business Trust Act (12 Del. Code (S) 3801 et
seq.).
1. Name. The name of the business trust being formed hereby is Litchfield
Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are The
Bank of New York (Delaware), a Delaware banking corporation, White Clay
Center, Route 273, Newark, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be effective at the time
of its filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust at the time of filing this Certificate of Trust, have executed this
Certificate of Trust as of the date first above written.
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity, but solely
as Delaware Trustee
By:___________________________________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity but solely
as Property Trustee
By:___________________________________________________
Name:
Title:
JOHN J. MALLOY
not in his individual capacity but solely
as Regular Trustee
______________________________________________________
HEATHER A. SICA,
not in her individual capacity but solely
as Regular Trustee
______________________________________________________
RONALD E. RABIDOU,
not in his individual capacity but solely
as Regular Trustee
______________________________________________________
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EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.01(b) of the Amended and Restated Declaration of Trust of
Litchfield Capital Trust I dated as of ____________, ____ (as amended from time
to time, the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):
1. DESIGNATION AND NUMBER. _________ (_______) Preferred Securities of the Trust
with an aggregate liquidation amount at any time outstanding with respect to the
assets of the Trust of ___________________________________________ Dollars
($___________), and each with a liquidation amount with respect to the assets of
the Trust of $10 per Preferred Security, and __________ (__________) Preferred
Securities of the Trust with an aggregate liquidation amount at any time
outstanding with respect to the assets of the Trust of _________ Dollars
($_________) and each with a liquidation amount with respect to the assets of
the Trust of $10 per Preferred Security for issuance upon the exercise of the
option granted to the Underwriter solely to cover over-allotments, if any, are
hereby designated as "____% Series A Trust Preferred Securities,". The Preferred
Security Certificates evidencing the Preferred Securities shall be substantially
in the form attached hereto as Annex I, 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 automated quotation system
on which the Preferred Securities are then listed, traded or quoted. In
connection with the issuance and sale of the Preferred Securities and the Common
Securities, the Trust will purchase as trust assets Debentures of Litchfield
Financial having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities and the Common Securities so
issued and bearing interest at an annual rate equal to the annual Distribution
rate on the Preferred Securities and the Common Securities and having payment
and redemption provisions which correspond to the payment and redemption
provisions of the Preferred Securities and the Common Securities.
2. DISTRIBUTIONS. (a) Distributions payable on each Preferred Security will be
fixed at a rate per annum of ____% (the "Coupon Rate") of the stated liquidation
amount of $10 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 calendar quarter will accumulate additional
distributions thereon at the Coupon Rate per annum (to the extent permitted by
applicable law), compounded quarterly. The term "Distributions" as used herein
means such periodic cash distributions and any such additional distributions
payable unless otherwise stated. A Distribution will be made by the Property
Trustee only to the extent that interest payments are made in respect of the
Debentures held by the Property Trustee and to the extent the Trust has funds on
hand legally available therefor. The amount of Distributions payable for any
period will be computed for any full quarterly Distribution period on the basis
of a 360-day year of twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 90-day quarter.
(b) Distributions on the Preferred Securities will accumulate from
___________, _____ and will be payable quarterly in arrears, on ______,
______, _____ and _____ of each year, commencing
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on ________________, ____, except as otherwise described below, but only if
and to the extent that interest payments are made in respect of the
Debentures held by the Property Trustee. So long as Litchfield Financial
shall not be in default in the payment of interest on the Debentures,
Litchfield Financial has the right under the Indenture for the Debentures to
defer payments of interest on the Debentures by extending the interest
payment period at any time and from time to time on the Debentures for a
period not exceeding 20 consecutive quarterly interest periods (each, an
"Extension Period"), during which Extension Period no interest shall be due
and payable on the Debentures. As a consequence of such deferral,
Distributions shall also be deferred. Despite such deferral, Distributions
will continue to accumulate with additional distributions thereon (to the
extent permitted by applicable law but not at a rate greater than the rate at
which interest is then accruing on the Debentures) at the Coupon Rate
compounded quarterly during any such Extension Period; provided that no
Extension Period shall extend beyond the stated maturity of the Debentures.
Prior to the termination of any such Extension Period, Litchfield Financial
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 quarterly interest periods. Upon the termination of any
Extension Period and the payment of all amounts then due, Litchfield
Financial may commence a new Extension Period, subject to the above
requirements. Payments of accumulated Distributions will be payable to
Holders of Preferred Securities as they appear on the books and records of
the Trust on the first record date after the end of the Extension Period.
(c) Distributions on the Preferred Securities will be payable promptly by the
Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and
records of the Trust on the relevant record dates. While the Preferred
Securities remain in book-entry only form, the relevant record dates shall be
one business day prior to the relevant Distribution date, and if the
Preferred Securities are no longer in book-entry only form, the relevant
record dates will be the fifteenth (15th) day of the month prior to the
relevant Distribution date, which record and payment dates correspond to the
record and interest payment dates on the Debentures. Distributions payable on
any Preferred Securities that are not punctually paid on any Distribution
payment date as a result of Litchfield Financial' having failed to make the
corresponding interest payment on the Debentures will forthwith cease to be
payable to the Person in whose name such Preferred Security is registered on
the relevant record date, and such defaulted Distribution will instead be
payable to the person in whose name such Preferred Security is registered on
the special record date established by the Regular Trustees, which record
date shall correspond to the special record date or other specified date
determined in accordance with the Indenture; provided, however, that
Distributions shall not be considered payable on any Distribution payment
date falling within an Extension Period unless Litchfield Financial has
elected to make a full or partial payment of interest accrued on the
Debentures on such Distribution payment date. Subject to any applicable laws
and regulations and the provisions of the Declaration, each payment in
respect of the Preferred Securities will be made as described in paragraph 8
hereof. If any date on which Distributions are payable on the Preferred
Securities is not a Business Day, then payment of the Distribution payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on
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the immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable.
(d) All Distributions paid with respect to the Preferred Securities and the
Common Securities will be paid Pro Rata (as defined below) to the Holders
thereof entitled thereto. If an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to Distributions.
(e) In the event that there is any money or other property held by or for the
Trust that is not accounted for under the Declaration, such money or property
shall be distributed Pro Rata among the Holders of the Preferred Securities
and the Common Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. (a) In the event of any voluntary
or involuntary dissolution of the Trust, the Holders of the Preferred Securities
and the Common Securities will be entitled to receive Pro Rata solely out of the
assets of the Trust legally available for distribution to Holders of Preferred
Securities and Common Securities after satisfaction of liabilities to the
creditors of the Trust, an amount equal to the aggregate of the stated
liquidation amount of $10 per Preferred Security and Common Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution, and after satisfaction of liabilities to the creditors of the
Trust, Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Preferred Securities and the Common Securities and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on, such Preferred Securities and the Common Securities,
shall be distributed Pro Rata to the Holders of the Preferred Securities and the
Common Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid only in
part because the Trust has insufficient assets on hand legally available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and the Common Securities
shall be paid, subject to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
(b) The Holder of the Common Securities shall have the right to direct the
Property Trustee in writing at any time to dissolve the Trust and to
distribute Debentures to Holders in exchange for Securities (which direction
is optional and wholly within the discretion of the Holder of the Common
Securities). Upon the receipt of any such written direction, the Property
Trustee shall promptly (i) distribute Debentures in an aggregate principal
amount equal to the aggregate stated liquidation amount of the Preferred
Securities and the Common Securities held by each Holder, which Debentures
bear accrued and unpaid interest in an amount equal to the accumulated and
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unpaid Distributions on the Preferred Securities and the Common Securities of
such Holder, in exchange for the Preferred Securities and Common Securities
of such Holder and (ii) dissolve the Trust.
(c) On the date fixed for any distribution of Debentures, upon dissolution of
the Trust, (i) the Preferred Securities will no longer be deemed to be
outstanding and may be canceled by the Regular Trustees, and (ii)
Certificates representing Preferred Securities will be deemed to represent
beneficial interests in the Debentures having an aggregate principal amount
equal to the stated liquidation amount of, and bearing accrued and unpaid
interest equal to accumulated and unpaid Distributions on, such Preferred
Securities until such Certificates are presented to Litchfield Financial or
its agent for transfer or reissuance.
(d) If Debentures are distributed to Holders of the Preferred Securities,
Litchfield Financial, pursuant to the terms of the Indenture, 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.
4. REDEMPTION OF DEBENTURES. The Preferred Securities may be redeemed only if
Debentures having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities and the Common Securities are
repaid or redeemed as set forth below:
(a) Upon the repayment of the Debentures, in whole or in part, whether at
maturity, upon redemption at any time or from time to time on or after
_________, ____, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid or redeemed, upon not less than 30 nor more than 60
days' notice, at a redemption price of $10 per Preferred Security and Common
Security plus an amount equal to accumulated and unpaid Distributions thereon
to, but excluding, the date of redemption, payable in cash (the "Redemption
Price"). The date of any such repayment or redemption of Preferred Securities
and Common Securities shall be established to coincide with the repayment or
redemption date of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Preferred Securities will be
redeemed as described in paragraph 4(f)(ii) below. If a partial redemption
would result in the delisting of the Preferred Securities by any national
securities exchange or other organization on which the Preferred Securities
are then listed or traded, Litchfield Financial pursuant to the Indenture
will redeem Debentures only in whole and, as a result, the Trust may redeem
the Preferred Securities only in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each as
hereinafter defined, and each a "Special Event") shall occur and be
continuing, Litchfield Financial shall have the right at any time, upon not
less than 30 nor more than 60 days' notice, to redeem the Debentures in whole
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or in part for cash at the Redemption Price within 90 days following the
occurrence of such Special Event, and promptly following such redemption,
Preferred Securities and Common Securities with an aggregate liquidation
amount equal to the aggregate principal amount of the Debentures so redeemed
will be redeemed by the Trust at the Redemption Price on a Pro Rata basis.
The Common Securities will be redeemed Pro Rata with the Preferred
Securities, except that if an Event of Default has occurred and is
continuing, the Preferred Securities will have a priority over the Common
Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Sponsor and the Regular Trustees shall have
obtained an Opinion of Counsel experienced in such matters (a "Dissolution
Tax Opinion") to the effect that on or after ____________, ____ 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 on or after _________, ____, 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 income 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 taxes, duties or other governmental charges or (iii)
interest payable by Litchfield Financial to the Trust on the Debentures is
not, or within 90 days of the date thereof will not be, deductible by
Litchfield Financial for United States Federal income tax purposes.
"Investment Company Event" means that the Sponsor and the Regular Trustees
shall have received an Opinion of Counsel experienced in practice under the
Investment Company Act that, as a result of the occurrence of a change in law
or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an insubstantial
risk that the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after _________, ____.
(d) The Trust may not redeem fewer than all the outstanding Preferred
Securities unless all accumulated and unpaid Distributions have been paid on
all Preferred Securities for all quarterly Distribution periods terminating
on or prior to the date of redemption.
(e) [Intentionally omitted.]
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(f) (i) Notice of any redemption of, or notice of distribution of Debentures
in exchange for, the Preferred Securities and the Common Securities (a
"Redemption/Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. 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 prepaid, to Holders of
Preferred Securities and Common Securities. Each Redemption/Distribution
Notice shall be addressed to the Holders of Preferred Securities and Common
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 Preferred Securities
are to be redeemed, the Preferred Securities to be redeemed will 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 DTC (or successor Clearing Agency) or any other nominee, the
Preferred Securities will be redeemed from, and the distribution of the
proceeds of such redemption will be made to, DTC (or successor Clearing
Agency).
(iii) Subject to paragraph 8 hereof, if the Trust gives a
Redemption/Distribution Notice in respect of a redemption of Preferred
Securities as provided in this paragraph 4 then (A) while the Preferred
Securities are in book-entry only form, with respect to the Preferred
Securities, by 10:00 a.m., New York City time, on the redemption date,
provided that Litchfield Financial has paid the Property Trustee, in
immediately available funds, a sufficient amount of cash in connection with
the related redemption or maturity of the Debentures, the Property Trustee
will deposit irrevocably with DTC (or successor Clearing Agency) funds
sufficient to pay the applicable Redemption Price with respect to the
Preferred Securities and will give DTC (or successor Clearing Agency)
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Preferred Securities and (B) if the Preferred Securities are
issued in definitive form, with respect to the Preferred Securities and
provided that Litchfield Financial has paid the Property Trustee, in
immediately available funds, a sufficient amount of cash in connection with
the related redemption or maturity of the Debentures, the Property Trustee
will pay the relevant Redemption Price to the Holders of such Preferred
Securities by check mailed to the address of the relevant Holder appearing on
the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on
the redemption date, Distributions will cease to accumulate on the Preferred
Securities called for redemption, such Preferred Securities will no longer be
deemed to be outstanding and all rights of Holders of such Preferred
Securities so called for redemption will cease, except the right of the
Holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Trustees nor the Trust
shall be required to register or cause to be registered the transfer of any
Preferred Securities which have been so called for redemption. If any
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date fixed for redemption of Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in respect of
Preferred Securities is improperly withheld or refused and not paid either by
the Property Trustee or by Litchfield Financial pursuant to the Preferred
Guarantee, Distributions on such Preferred Securities will continue to
accumulate, from the original redemption date to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on
behalf of the Trust to DTC or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or, if Definitive
Preferred Security Certificates have been issued, to the Holders of the
Preferred Securities.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States Federal securities laws), Litchfield Financial or
any of its Affiliates may at any time and from time to time purchase
outstanding Preferred Securities by tender, in the open market or by private
agreement.
5. VOTING RIGHTS. (a) Except as provided under paragraph 5(b) below and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) 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, other than as described in Section
12.01(b) of the Declaration, or otherwise, or (ii) the dissolution,
winding-up or termination of the Trust, other than as described in Section
8.01 of the Declaration, Section 3 of Exhibit B or Section 3 of Exhibit C,
then the Holders of outstanding Securities will be entitled to vote on such
amendment or proposal as a single class and such amendment or proposal shall
not be effective except with the approval of the Holders of Securities of at
least a Majority in liquidation amount of the Securities, voting together as
a single class; provided, however, that (A) if any amendment or proposal
referred to in clause (i) above would adversely affect only the Preferred
Securities or the Common Securities, then only the affected class of
Securities will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a Majority in liquidation amount of such class of Securities and (B)
amendments to the Declaration shall be subject to such further requirements
as are set forth in Sections 12.01 and 12.02 of the Declaration.
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
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with respect to such amendment, modification or termination. The Property
Trustee 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 such amendment,
modification or termination of the Indenture requires the consent or vote of (1)
holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only vote with respect to that amendment, modification
or termination as directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of Securities unless the Property Trustee shall have received, at the
expense of the Sponsor, an Opinion of Counsel experienced in such matters to the
effect that the Trust will not be classified for United States Federal income
tax purposes as other than a grantor trust on account of such action.
So long as any Debentures are held by the Property Trustee, the Trustees shall
not (i) direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee of the Indenture (the "Debenture Trustee"), or
exercising any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
6.06 of the Indenture or (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Debentures,
without, in each case, obtaining the prior approval of the Holders of a Majority
in liquidation amount of all outstanding Preferred Securities and Common
Securities. The Trustees shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities except by
subsequent vote of such Holders. The Property Trustee shall notify each Holder
of Preferred Securities of any notice of default with respect to the Debentures.
In addition to obtaining the foregoing approvals of such Holders of the
Preferred Securities and Common Securities, prior to taking any of the foregoing
actions, the Trustees shall obtain an Opinion of Counsel experienced in such
matters to the effect that for United States Federal income tax purposes the
Trust will not be classified as other than a grantor trust on account of such
action.
If an Event of Default has occurred and is continuing, then the Holders of a
Majority in liquidation amount of the Preferred Securities will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
right to direct the Property Trustee to exercise the remedies available to it as
a holder of the Debentures. If the Property Trustee fails to enforce its rights
under the Debentures, a Holder of Preferred Securities, to the extent permitted
by applicable law, may, after a period of 30 days has elapsed since such
Holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against the Sponsor to enforce the
Property Trustee's rights under the Debentures without first instituting any
legal proceeding against the Property Trustee or any other Person; provided
further, that, if an Event of Default has occurred and is continuing and such
event is attributed to the failure of the Sponsor to pay interest or principal
on the Debentures on the date such
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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 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 (a "Holder Direct
Action") on or after the respective due date specified in the Debentures. In
connection with such Holder Direct Action, the Sponsor will be subrogated to the
rights of such Holder of Preferred Securities to the extent of any payment made
by the Sponsor to such Holders of Preferred Securities in such Holder Direct
Action. Except as provided in the preceding sentences, the Holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the Holders of the Debentures.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of the Holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the
Securities.
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 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 to be mailed to each Holder
of record of Preferred Securities. Each such notice will include a statement
setting forth (i) the date of such meeting, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
and (iii) instructions for the delivery of proxies.
No vote or consent of the Holders of Preferred Securities will be required for
the Trust to redeem and cancel Preferred Securities or to distribute the
Debentures in accordance with the Declaration.
Notwithstanding that Holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by Litchfield Financial or by any
Affiliate of Litchfield Financial shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
Except as provided in this paragraph 5, Holders of the Preferred Securities will
have no rights to increase or decrease the number of Trustees or to appoint,
remove or replace a Trustee, which voting rights are vested exclusively in the
Holders of the Common Securities.
6. PRO RATA TREATMENT. A reference in these terms of the Preferred Securities to
any payment, Distribution or treatment as being "Pro Rata" shall mean pro rata
to each Holder of Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default 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
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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.
7. RANKING. The Preferred Securities rank pari passu and payment thereon will be
made Pro Rata with the Common Securities, except that when an Event of Default
occurs and is continuing, the rights of Holders of Preferred Securities to
payment in respect of Distributions and payments upon liquidation, redemption or
otherwise rank in priority to the rights of Holders of the Common Securities.
8. TRANSFER, EXCHANGE, METHOD OF PAYMENTS. Payment of Distributions and payments
on redemption of the Preferred Securities will be payable, the transfer of the
Preferred Securities will be registrable, and Preferred Securities will be
exchangeable for Preferred Securities of other denominations of a like aggregate
liquidation amount, at the corporate trust office of the Property Trustee in The
City of New York; provided that payment of Distributions may be made at the
option of the Regular Trustees on behalf of the Trust by check mailed to the
address of the persons entitled thereto and that the payment on redemption of
any Preferred Security will be made only upon surrender of such Preferred
Security to the Property Trustee.
9. ACCEPTANCE OF INDENTURE AND PREFERRED GUARANTEE. Each Holder of Preferred
Securities, by the acceptance thereof, agrees to the provisions of (i) the
Preferred Guarantee, including the subordination provisions therein, and (ii)
the Indenture and the Debentures, including the subordination provisions of the
Indenture.
10. NO PREEMPTIVE RIGHTS. The Holders of Preferred Securities shall have no
preemptive or similar rights to subscribe to any additional Preferred Securities
or Common Securities.
11. MISCELLANEOUS. These terms shall constitute a part of the Declaration. The
Trust will provide a copy of the Declaration and the Indenture to a Holder of
Preferred Securities without charge on written request to the Trust at its
principal place of business.
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Annex I
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - THIS PREFERRED
SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY ("DTC") OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR
PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED
SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR
ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO LITCHFIELD
CAPITAL TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
Certificate Number Number of Preferred Securities: __________ ________________
Aggregate Liquidation Amount: $____________
CUSIP NO. ____________
Certificate Evidencing Preferred Securities
of
Litchfield Capital Trust I
____% Series A Trust Preferred Securities
(liquidation amount $10 per Preferred Security)
Litchfield Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that _________ (the
"Holder") is the registered owner of _____
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(______) preferred securities of the Trust representing preferred undivided
beneficial interests in the assets of the Trust and designated the ____% Series
A Trust Preferred Securities (liquidation amount $10 per Preferred Security)
(the "Preferred Securities"). The Preferred Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer. The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and this Certificate
and the Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Declaration of Trust of the Trust dated as of ___________, ____, as the same may
be amended from time to time (the "Declaration") including the designation of
the terms of Preferred Securities as set forth in Exhibit B thereto. The
Preferred Securities and the Common Securities issued by the Trust pursuant to
the Declaration represent undivided beneficial interests in the assets of the
Trust, including the Debentures (as defined in the Declaration) issued by
Litchfield Financial Corporation, a Massachusetts corporation ("Litchfield
Financial"), to the Trust pursuant to the Indenture referred to in the
Declaration. The Holder is entitled to the benefits of the Guarantee Agreement
of Litchfield Financial dated as of __________, ____, as the same may be amended
from time to time (the "Guarantee") to the extent provided therein. The Trust
will furnish a copy of the Declaration, the Guarantee and the Indenture to the
Holder without charge upon written request to the Trust at its principal place
of business or registered office.
The Holder of this Certificate, by accepting this Certificate, is deemed to have
(i) agreed to the terms of the Indenture and the Debentures, including that the
Debentures are subordinate and junior in right of payment to all Senior Debt (as
defined in the Indenture) as and to the extent provided in the Indenture, and
(ii) agreed to the terms of the Guarantee, including that the Guarantee is
subordinate and junior in right of payment to all other liabilities of
Litchfield Financial, including the Debentures, except those made pari passu or
subordinate by their terms, and senior to all capital stock (other than the most
senior preferred stock issued, from time to time, if any, by Litchfield
Financial, which preferred stock will rank pari passu with the Guarantee) now or
hereafter issued by Litchfield Financial and to any guarantee now or hereafter
entered into by Litchfield Financial in respect of any of its capital stock
(other than the most senior preferred stock issued, from time to time, if any,
by Litchfield Financial).
Upon receipt of this Certificate, the Holder is bound by the Declaration and is
entitled to the benefits thereunder.
IN WITNESS WHEREOF, Trustees of the Trust have executed this Certificate.
LITCHFIELD CAPITAL TRUST I
---------------------------------------
Ronald E. Rabidou, as Regular Trustee
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-------------------------------------
Heather A. Sica, as Regular Trustee
-------------------------------------
John J. Malloy, as Regular Trustee
Dated:
Countersigned and Registered:
The Bank of New York
Transfer Agent and Registrar
By:
---------------------------
Authorized Signatory
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[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a rate per
annum of ___ % (the "Coupon Rate") of the stated liquidation amount of $10 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 accumulate additional distributions thereon at the Coupon
Rate per annum (to the extent permitted by applicable law), compounded
quarterly. The term "Distributions" as used herein means such periodic cash
distributions and any such additional distributions 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
Trust has funds on hand legally available therefor. The amount of Distributions
payable for any period will be computed for any full quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly Distribution period for which Distributions
are computed, Distributions will be computed on the basis of the actual number
of days elapsed per 90-day quarter.
Distributions on the Preferred Securities will accumulate from _________, ____,
and will be payable quarterly in arrears, on ______, ______, ______ and ______
of each year, commencing on ________, ____, but only if and to the extent that
interest payments are made in respect of the Debentures held by the Property
Trustee. So long as Litchfield Financial shall not be in default in the payment
of interest on the Debentures, Litchfield Financial has the right under the
Indenture for the Debentures to defer payments of interest on the Debentures by
extending the interest payment period at any time and from time to time on the
Debentures for a period not exceeding 20 consecutive quarterly interest periods
(each an "Extension Period"), during which Extension Period no interest shall be
due and payable on the Debentures. As a consequence of such deferral,
Distributions shall also be deferred. Despite such deferral, Distributions will
continue to accumulate with additional distributions thereon (to the extent
permitted by applicable law but not at a rate greater than the rate at which
interest is then accruing on the Debentures) at the Coupon Rate compounded
quarterly during any such Extension Period; provided that no Extension Period
shall extend beyond the stated maturity of the Debentures. Prior to the
termination of any such Extension Period, Litchfield Financial 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
quarterly interest periods. Upon the termination of any Extension Period and the
payment of all amounts then due, Litchfield Financial may commence a new
Extension Period, subject to the above requirements. Payments of accumulated
Distributions will be payable to Holders of Preferred Securities as they appear
on the books and records of the Trust on the first record date after the end of
the Extension Period.
The Preferred Securities shall be redeemable as provided in the Declaration.
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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: _________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME(S) AS WRITTEN UPON THE FACE OF THIS PREFERRED SECURITY
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
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EXHIBIT C
TERMS OF
COMMON SECURITIES
Pursuant to Section 7.01(b) of the Amended and Restated Declaration of Trust of
Litchfield Capital Trust I dated as of ____________, ____ (as amended from time
to time, the "Declaration"), the designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth below (each capitalized term used but not defined herein having the
meaning set forth in the Declaration):
1. DESIGNATION AND NUMBER. _________ (_______) Common Securities of the Trust
with an aggregate liquidation amount at any time outstanding with respect to the
assets of the Trust of ___________________________________________ Dollars
($___________), and each with a liquidation amount with respect to the assets of
the Trust of $10 per Common Security, and __________ (__________) Common
Securities of the Trust with an aggregate liquidation amount at any time
outstanding with respect to the assets of the Trust of __________ Dollars
($__________), and each with a liquidation amount with respect to the assets of
the Trust of $10 per Common Security, for issuance upon the exercise of the
option granted to the Underwriter solely to cover over-allotments, if any, are
hereby designated as "____% Series A Trust Common Securities". The Common
Security Certificates evidencing the Common Securities shall be substantially in
the form attached hereto as Annex I, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
The Common Securities are to be issued and sold to Litchfield Financial in
consideration of $_____________ in cash. In connection with the issuance and
sale of the Preferred Securities and the Common Securities, the Trust will
purchase as trust assets Debentures of Litchfield Financial having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities and the Common Securities so issued, and bearing interest at an
annual rate equal to the annual Distribution rate on the Preferred Securities
and the Common Securities and having payment and redemption provisions which
correspond to the payment and redemption provisions of the Preferred Securities
and the Common Securities.
2. DISTRIBUTIONS. (a) Distributions payable on each Common Security will be
fixed at a rate per annum of ____% (the "Coupon Rate") of the stated liquidation
amount of $10 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 calendar quarter will accumulate additional distributions
thereon at the Coupon Rate per annum (to the extent permitted by applicable
law), compounded quarterly. The term "Distributions" as used herein means such
periodic cash distributions and any such additional distributions payable unless
otherwise stated. A Distribution will be made by the Property Trustee only to
the extent that interest payments are made in respect of the Debentures held by
the Property Trustee and to the extent the Trust has funds on hand legally
available therefor. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will be
computed on the basis of the actual number of days elapsed per 90-day quarter.
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(b) Distributions on the Common Securities will accumulate from ___________,
____ and will be payable quarterly in arrears, on ______, ______, _____ and
_____ of each year commencing on ________________, ____, except as otherwise
described below, but only if and to the extent that interest payments are
made in respect of the Debentures held by the Property Trustee. So long as
Litchfield Financial shall not be in default in the payment of interest on
the Debentures, Litchfield Financial has the right under the Indenture for
the Debentures to defer payments of interest on the Debentures by extending
the interest payment period at any time and from time to time on the
Debentures for a period not exceeding 20 consecutive quarterly interest
periods (each, an "Extension Period"), during which Extension Period no
interest shall be due and payable on the Debentures. As a consequence of such
deferral, Distributions shall also be deferred. Despite such deferral,
Distributions will continue to accumulate with additional distributions
thereon (to the extent permitted by applicable law but not at a rate greater
than the rate at which interest is then accruing on the Debentures) at the
Coupon Rate compounded quarterly during any such Extension Period; provided
that no Extension Period shall extend beyond the stated maturity of the
Debentures. Prior to the termination of any such Extension Period, Litchfield
Financial 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 quarterly interest periods. Upon the
termination of any Extension Period and the payment of all amounts then due,
Litchfield Financial may commence a new Extension Period, subject to the
above requirements. Payments of accumulated Distributions will be payable to
Holders of Common Securities as they appear on the books and records of the
Trust on the first record date after the end of the Extension Period.
(c) Distributions on the Common Securities will be payable promptly by the
Property Trustee (or other Paying Agent) upon receipt of immediately
available funds to the Holders thereof as they appear on the books and
records of the Trust on the relevant record dates. While the Preferred
Securities remain in book-entry only form, the relevant record dates for the
Common Securities shall be one business day prior to the relevant
Distribution date, and if the Preferred Securities are no longer in
book-entry only form, the relevant record dates for the Common Securities
will be the fifteenth (15th) day of the month prior to the relevant
Distribution date, which record and payment dates correspond to the record
and interest payment dates on the Debentures. Distributions payable on any
Common Securities that are not punctually paid on any Distribution payment
date as a result of Litchfield Financial' having failed to make the
corresponding interest payment on the Debentures will forthwith cease to be
payable to the person in whose name such Common Security is registered on the
relevant record date, and such defaulted Distribution will instead be payable
to the person in whose name such Common Security is registered on the special
record date established by the Regular Trustees, which record date shall
correspond to the special record date or other specified date determined in
accordance with the Indenture; provided, however, that Distributions shall
not be considered payable on any Distribution payment date falling within an
Extension Period unless Litchfield Financial has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
payment date. Subject to any applicable laws and regulations and the
provisions of the Declaration, each payment in respect of the Common
Securities will be made as described in paragraph 8 hereof. If any date on
which Distributions are payable on the Common Securities is not a Business
Day, then payment of the Distribution payable on such date will be
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made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on the date such payment was originally payable.
(d) All Distributions paid with respect to the Common Securities and the
Preferred Securities will be paid Pro Rata (as defined below) to the Holders
thereof entitled thereto. If an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to Distributions.
(e) In the event that there is any money or other property held by or for the
Trust that is not accounted for under the Declaration, such money or property
shall be distributed Pro Rata among the Holders of the Preferred Securities
and the Common Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. (a) In the event of any voluntary
or involuntary dissolution of the Trust, the Holders of the Preferred Securities
and the Common Securities will be entitled to receive Pro Rata solely out of the
assets of the Trust legally available for distribution to Holders of Preferred
Securities and Common Securities after satisfaction of liabilities to the
creditors of the Trust, an amount equal to the aggregate of the stated
liquidation amount of $10 per Preferred Security and Common Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with such
dissolution, and after satisfaction of liabilities to the creditors of the
Trust, Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Preferred Securities and the Common Securities and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on, such Preferred Securities and the Common Securities,
shall be distributed Pro Rata to the Holders of the Preferred Securities and the
Common Securities in exchange for such Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid only in
part because the Trust has insufficient assets on hand legally available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and the Common Securities
shall be paid, subject to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive Liquidation
Distributions upon any such dissolution Pro Rata with Holders of Preferred
Securities, except that if an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to such Liquidation Distribution.
(b) The Holder of the Common Securities shall have the right to direct
the Property Trustee in writing at any time to dissolve the Trust and
to distribute Debentures to Holders in exchange for Securities (which
direction is optional and wholly within the discretion of the Holder of
the Common Securities). Upon the receipt of any such written direction,
the Property Trustee shall promptly (i) distribute Debentures in an
aggregate principal amount
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equal to the aggregate stated liquidation amount of the Preferred
Securities and the Common Securities held by each Holder, which
Debentures bear accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on the Preferred Securities and
the Common Securities of such Holder, in exchange for the Preferred
Securities and Common Securities of such Holder and (ii) dissolve the
Trust.
(c) On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Common Securities will no longer be
deemed to be outstanding and may be canceled by the Regular Trustees,
and (ii) Certificates representing Common Securities will be deemed to
represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing
accrued and unpaid interest equal to accumulated and unpaid
Distributions on, such Common Securities until such Certificates are
presented to Litchfield Financial or its agent for transfer or
reissuance.
4. REDEMPTION OF DEBENTURES. The Common Securities may be redeemed only
if Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities and the Common
Securities are repaid or redeemed as set forth below:
(a) Upon the repayment of the Debentures, in whole or in part, whether at
maturity, upon redemption at any time or from time to time on or after
_________, ____, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid or redeemed, upon not less than 30 nor more than 60
days' notice, at a redemption price of $10 per Preferred Security and Common
Security plus an amount equal to accumulated and unpaid Distributions thereon
to, but excluding, the date of redemption, payable in cash (the "Redemption
Price"). The date of any such repayment or redemption of Preferred Securities
and Common Securities shall be established to coincide with the repayment or
redemption date of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and Common
Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Common Securities will be
redeemed as described in paragraph 4(e)(ii) below. If a partial redemption
would result in the delisting of the Preferred Securities by any national
securities exchange or other organization on which the Preferred Securities
are then listed or traded, Litchfield Financial pursuant to the Indenture
will redeem Debentures only in whole and, as a result, the Trust may redeem
the Common Securities only in whole.
(c) If, at any time, a Tax Event or an Investment Company Event (each as
hereinafter defined, and each, a "Special Event") shall occur and be
continuing, Litchfield Financial shall have the right at any time, upon not
less than 30 nor more than 60 days' notice, to redeem the Debentures in whole
or in part for cash at the Redemption Price within 90 days following the
occurrence of such Special Event, and promptly following such redemption,
Preferred Securities and Common Securities with
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an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so redeemed will be redeemed by the Trust at the Redemption
Price on a Pro Rata basis. The Common Securities will be redeemed Pro Rata
with the Preferred Securities, except that if an Event of Default has
occurred and is continuing, the Preferred Securities will have a priority
over the Common Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Sponsor and the Regular Trustees shall have
obtained an Opinion of Counsel experienced in such matters (a "Dissolution
Tax Opinion") to the effect that on or after ____________, ____ 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 on or after _________, ____, 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 income 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 taxes, duties or other governmental charges or (iii)
interest payable by Litchfield Financial to the Trust on the Debentures is
not, or within 90 days of the date thereof will not be, deductible by
Litchfield Financial for United States Federal income tax purposes.
"Investment Company Event" means that the Sponsor and the Regular Trustees
shall have received an Opinion of Counsel experienced in practice under the
Investment Company Act that, as a result of the occurrence of a change in law
or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than an insubstantial
risk that the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after _________, ____.
(d) The Trust may not redeem fewer than all the outstanding Common Securities
unless all accumulated and unpaid Distributions have been paid on all Common
Securities for all quarterly Distribution periods terminating on or prior to
the date of redemption.
(e) (i) Notice of any redemption of, or notice of distribution of Debentures
in exchange for, the Preferred Securities and the Common Securities (a
"Redemption/Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of
the calculation of the date of
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redemption or exchange and the dates on which notices are given pursuant to
this paragraph 4(e)(i), a Redemption/Distribution Notice shall be deemed to
be given on the day such notice is first mailed by first- class mail, postage
prepaid, to Holders of Preferred Securities and Common Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of Preferred
Securities and Common 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 Common Securities are
to be redeemed, the Common Securities to be redeemed will be redeemed Pro
Rata from each Holder of Common Securities (subject to adjustment to
eliminate fractional Common Securities).
(iii) If the Trust gives a Redemption/Distribution Notice in respect of a
redemption of Common Securities as provided in this paragraph 4 (which notice
will be irrevocable), then immediately prior to the close of business on the
redemption date, provided that Litchfield Financial has paid to the Property
Trustee in immediately available funds a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures,
Distributions will cease to accumulate on the Common Securities called for
redemption, such Common Securities will no longer be deemed to be outstanding
and all rights of Holders of such Common Securities so called for redemption
will cease, except the right of the Holders of such Common Securities to
receive the Redemption Price, but without interest on such Redemption Price.
Neither the Trustees nor the Trust shall be required to register or cause to
be registered the transfer of any Common Securities which have been so called
for redemption. If any date fixed for redemption of Common Securities is not
a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay) except that, if
such Business Day falls in the next calendar year, such payment will be made
on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date fixed for redemption. If payment of the
Redemption Price in respect of Common Securities is improperly withheld or
refused and not paid by the Property Trustee, Distributions on such Common
Securities will continue to accumulate, from the original redemption date to
the date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the Redemption
Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on
behalf of the Trust to Holders of the Common Securities.
5. VOTING RIGHTS. (a) Except as provided under paragraph 5(b) below and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
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(b) Holders of Common Securities have the sole right under the Declaration to
increase or decrease the number of Trustees, and to appoint, remove or
replace a Trustee, any such increase, decrease, appointment, removal or
replacement to be approved by Holders of Common Securities representing a
Majority in liquidation amount of the Common Securities.
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, other than as described in Section 12.01(b) of the
Declaration, or otherwise, or (ii) the dissolution, winding-up or termination of
the Trust, other than as described in Section 8.01 of the Declaration or Section
3 of this Exhibit C or Section 3 of Exhibit B, then the Holders of outstanding
Securities will be entitled to vote on such amendment or proposal as a single
class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities of at least a Majority in liquidation
amount of the Securities, voting together as a single class; provided, however,
that (A) if any amendment or proposal referred to in clause (i) above would
adversely affect only the Preferred Securities or the Common Securities, then
only the affected class of Securities will be entitled to vote on such amendment
or proposal and such amendment or proposal shall not be effective except with
the approval of at least a Majority in liquidation amount of such class of
Securities, (B) the rights of Holders of Common Securities under Section 5.02 of
the Declaration to increase or decrease the number of, and to appoint, replace
or remove, Trustees shall not be amended without the consent of each Holder of
Common Securities, and (C) amendments to the Declaration shall be subject to
such further requirements as are set forth in Sections 12.01 and 12.02 of the
Declaration.
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. The Property
Trustee 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 such amendment,
modification or termination of the Indenture requires the consent or vote of (1)
holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only vote with respect to that amendment, modification
or termination as directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the Property Trustee shall be
under no obligation to take any action in accordance with the directions of the
Holders of Securities unless the Property Trustee shall have received, at the
expense of the Sponsor, an Opinion of Counsel experienced in such matters to the
effect that the Trust will not be classified for United States Federal income
tax purposes as other than a grantor trust on account of such action.
So long as any Debentures are held by the Property Trustee, the Trustees shall
not (i) direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee of the
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Indenture (the "Debenture Trustee"), or exercising any trust or power conferred
on such Debenture Trustee with respect to the Debentures, (ii) waive any past
default that is waivable under Section 6.06 of the Indenture or (iii) exercise
any right to rescind or annul a declaration of acceleration of the maturity of
the principal of the Debentures, without, in each case, obtaining the prior
approval of the Holders of a Majority in liquidation amount of all outstanding
Common Securities and Preferred Securities. The Trustees shall not revoke any
action previously authorized or approved by a vote of the Holders of the Common
Securities except by subsequent vote of such Holders. The Property Trustee shall
notify each Holder of Common Securities of any notice of default with respect to
the Debentures. In addition to obtaining the foregoing approvals of such Holders
of the Common Securities and Preferred Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an Opinion of Counsel experienced
in such matters to the effect that for United States Federal income tax purposes
the Trust will not be classified as other than a grantor trust on account of
such action.
Notwithstanding any other provision of these terms, each Holder of Common
Securities will be deemed to have waived any Event of Default with respect to
the Common Securities and its consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived by the Holders of
Preferred Securities as provided in the Declaration or otherwise eliminated, and
until all Events of Default with respect to the Preferred Securities have been
so cured, waived by the Holders of Preferred Securities or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of 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 Declaration or of the Securities. In the event that any Event of Default
with respect to the Preferred Securities is waived by the Holders of Preferred
Securities as provided in the Declaration, the Holders of Common Securities
agree that such waiver shall also constitute the waiver of such Event of Default
with respect to the Common Securities for all purposes under the Declaration
without any further act, vote or consent of the Holders of the Common
Securities.
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of the Holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the
Securities.
Any required 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 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 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, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote and (iii)
instructions for the delivery of proxies.
No vote or consent of the Holders of Common Securities will be required for the
Trust to redeem and cancel Common Securities or to distribute the Debentures in
accordance with the Declaration.
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6. PRO RATA TREATMENT. A reference in these terms of the Common Securities to
any payment, Distribution or treatment as being "Pro Rata" shall mean pro rata
to each Holder of Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default 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.
7. RANKING. The Common Securities rank pari passu and payment thereon will be
made Pro Rata with the Preferred Securities, except that when an Event of
Default occurs and is continuing, the rights of Holders of Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption or
otherwise are subordinate to the rights of Holders of the Preferred Securities.
8. TRANSFER, EXCHANGE, METHOD OF PAYMENTS. Payment of Distributions and payments
on redemption of the Common Securities will be payable, the transfer of the
Common Securities will be registrable, and Common Securities will be
exchangeable for Common Securities of other denominations of a like aggregate
liquidation amount, at the principal corporate trust office of the Property
Trustee in The City of New York; provided that payment of Distributions may be
made at the option of the Regular Trustees on behalf of the Trust by check
mailed to the address of the persons entitled thereto and that the payment on
redemption of any Common Security will be made only upon surrender of such
Common Security to the Property Trustee. Notwithstanding the foregoing,
transfers of Common Securities are subject to conditions set forth in Section
9.01(c) of the Declaration.
9. ACCEPTANCE OF INDENTURE. Each Holder of Common Securities, by the acceptance
thereof, agrees to the provisions of Indenture and the Debentures, including the
subordination provisions of the Indenture.
10. NO PREEMPTIVE RIGHTS. The Holders of Common Securities shall have no
preemptive or similar rights to subscribe to any additional Common Securities or
Preferred Securities.
11. MISCELLANEOUS. These terms shall constitute a part of the Declaration. The
Trust will provide a copy of the Declaration and the Indenture to a Holder of
Common Securities without charge on written request to the Trust at its
principal place of business.
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<PAGE> 82
Annex I
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number NUMBER OF COMMON SECURITIES
Certificate Evidencing Common Securities
of
Litchfield Capital Trust I
____% Series A Trust Common Securities
(liquidation amount $10 per Common Security)
Litchfield Capital Trust I, a statutory business trust created 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 common undivided beneficial
interests in the assets of the Trust and designated the "____% Series A Trust
Common Securities" (liquidation amount $10 per Common Security) (the "Common
Securities"). The Common Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer and satisfaction of
the other conditions set forth in the Declaration (as defined below) including,
without limitation, Section 9.01(c) thereof. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth in, and this Certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Declaration of Trust of
the Trust dated as of __________, ____, as the same may be amended from time to
time (the "Declaration") including the designation of the terms of Common
Securities as set forth in Exhibit C thereto. The Common Securities and the
Preferred Securities issued by the Trust pursuant to the Declaration represent
undivided beneficial interests in the assets of the Trust, including the
Debentures (as defined in the Declaration) issued by Litchfield Financial
Corporation, a Massachusetts corporation ("Litchfield Financial"), to the Trust
pursuant to the Indenture referred to in the Declaration. The Trust will furnish
a copy of the Declaration and the Indenture to the Holder without charge upon
written request to the Trust at its principal place of business or registered
office.
The Holder of this Certificate, by accepting this Certificate, is deemed to have
agreed to the terms of the Indenture and the Debentures, including that the
Debentures are subordinate and junior in right
76
<PAGE> 83
of payment to all Senior Debt (as defined in the Supplemental Indenture) as and
to the extent provided in the Indenture.
Upon receipt of this Certificate, the Holder is bound by the Declaration and is
entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trustees of the Trust have executed this Certificate
this ___ day of _______________, ____.
LITCHFIELD CAPITAL TRUST I
--------------------------------
John J. Malloy, as Regular Trustee
--------------------------------
Heather A. Sica, as Regular Trustee
--------------------------------
Ronald E. Rabidou, as Regular Trustee
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate per annum
of ___ % (the "Coupon Rate") of the stated liquidation amount of $10 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 accumulate additional distributions thereon at the Coupon Rate per annum
(to the extent permitted by applicable law) compounded quarterly. The term
"Distributions" as used herein means such periodic cash distributions and any
such additional distributions 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 Trust has funds on hand
legally available therefor. The amount of Distributions payable for any period
will be computed for any full quarterly Distribution period on the basis of a
360-day year of twelve 30-day months, and for any period shorter than a full
quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
per 90-day quarter.
Distributions on the Common Securities will accumulate from _________, ____ and
will be payable quarterly in arrears, on _____________, ____________,
_____________ and _____________ of each year, commencing on ________, ____, but
only if and to the extent that interest payments are made in respect of the
Debentures held by the Property Trustee. So long as Litchfield Financial shall
not be in default in the payment of interest on the Debentures, Litchfield
Financial has the right under the Indenture for the Debentures to defer payments
of interest on the Debentures by extending the interest payment period at any
time and from time to time on the Debentures for a period not
77
<PAGE> 84
exceeding 20 consecutive quarterly interest periods (each an "Extension
Period"), during which Extension Period no interest shall be due and payable on
the Debentures. As a consequence of such deferral, Distributions shall also be
deferred. Despite such deferral, Distributions will continue to accumulate with
additional distributions thereon (to the extent permitted by applicable law but
not at a rate greater than the rate at which interest is then accruing on the
Debentures) at the Coupon Rate compounded quarterly during any such Extension
Period; provided that no Extension Period shall extend beyond the stated
maturity of the Debentures. Prior to the termination of any such Extension
Period, Litchfield Financial 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 quarterly interest periods.
Upon the termination of any Extension Period and the payment of all amounts then
due, Litchfield Financial may commence a new Extension Period, subject to the
above requirements. Payments of accumulated Distributions will be payable to
Holders of Common Securities as they appear on the books and records of the
Trust on the first record date after the end of the Extension Period.
The Common Securities shall be redeemable as provided in the Declaration.
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<PAGE> 85
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)
79
<PAGE> 1
Exhibit 4.4.1
CERTIFICATE OF TRUST
OF
LITCHFIELD CAPITAL TRUST I
THIS CERTIFICATE OF TRUST of Litchfield Capital Trust I (the "Trust"),
dated as of April 12, 1999, is being duly executed and filed by the undersigned,
as trustees, with the Secretary of State of the State of Delaware to form a
business trust under the Delaware Business Trust Act (12 Del. C. ss. 3801 et
seq.).
1. Name. The name of the business trust formed hereby is "Litchfield
Capital Trust I."
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are The Bank
of New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be effective at the time
of its filing with the Secretary of State of the State of Delaware.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the Trust
at the time of filing this Certificate of Trust, have executed this Certificate
of Trust as of the date first above written.
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely
as Delaware Trustee
By: /s/ Mary Jane Morrissey
---------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
THE BANK OF NEW YORK,
not in its individual capacity but solely
as Property Trustee
By: /s/ Michael Culhane
---------------------------
Name: Michael Culhane
Title: Vice President
JOHN J. MALLOY,
not in his individual capacity but solely
as Regular Trustee
/s/ John J. Malloy
---------------------
HEATHER A. SICA,
not in her individual capacity but solely as
Regular Trustee
/s/ Heather A. Sica
---------------------
RONALD E. RABIDOU
not in his individual capacity but solely
as Regular Trustee
/s/ Ronald E. Rabidou
----------------------
2
<PAGE> 1
Exhibit 4.4.2
CERTIFICATE OF TRUST
OF
LITCHFIELD CAPITAL TRUST II
THIS CERTIFICATE OF TRUST of Litchfield Capital Trust II (the "Trust"),
dated as of April 12, 1999, is being duly executed and filed by the undersigned,
as trustees, with the Secretary of State of the State of Delaware to form a
business trust under the Delaware Business Trust Act (12 Del. C. ss. 3801 et
seq.).
1. Name. The name of the business trust formed hereby is "Litchfield
Capital Trust II."
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are The Bank
of New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be effective at the time
of its filing with the Secretary of State of the State of Delaware.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the Trust
at the time of filing this Certificate of Trust, have executed this Certificate
of Trust as of the date first above written.
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely
as Delaware Trustee
By: /s/ Mary Jane Morrissey
--------------------------
Name: Mary Jane Morrissey
Title: Authorized Signatory
THE BANK OF NEW YORK,
not in its individual capacity but solely
as Property Trustee
By: /s/ Michael Culhane
--------------------------
Name: Michael Culhane
Title: Vice President
JOHN J. MALLOY,
not in his individual capacity but solely
as Regular Trustee
/s/ John J. Malloy
- -----------------------------
HEATHER A. SICA,
not in her individual capacity but solely as
Regular Trustee
/s/ Heather A. Sica
- -----------------------------
RONALD E. RABIDOU,
not in her individual capacity but solely as
Regular Trustee
/s/ Ronald E. Rabidou
- -----------------------------
2
<PAGE> 1
EXHIBIT 4.6
LITCHFIELD FINANCIAL CORPORATION
AND
THE BANK OF NEW YORK,
AS TRUSTEE
SUPPLEMENTAL INDENTURE NO. 1
DATED AS OF , 1999
----------
TO
JUNIOR SUBORDINATED INDENTURE
DATED AS OF __________, 1999
% SERIES A JUNIOR SUBORDINATED DEBENTURES DUE 2019
--
$
------------
<PAGE> 2
SUPPLEMENTAL INDENTURE NO. 1, dated as of the __________ day of __________,
1999, between Litchfield Financial Corporation, a corporation duly organized and
existing under the laws of The Commonwealth of Massachusetts (the "Company"),
and The Bank of New York, a New York banking corporation, as trustee (the
"Trustee").
RECITALS
The Company has heretofore executed and delivered to the Trustee a Junior
Subordinated Indenture, dated as of __________, 1999 (the "Indenture"),
providing for the issuance from time to time of one or more series of its
unsecured junior subordinated debentures (the "Debentures").
Pursuant to the terms of the Indenture, the Company desires to provide for
the establishment of a new series of Debentures to be designated as the __%
Series A Junior Subordinated Debentures due 2019 (the "Series A Debentures"),
the form and substance of such Series A Debentures and the terms, provisions and
conditions thereof to be set forth as provided in the Indenture and this
Supplemental Indenture No. 1.
The Company has caused Litchfield Capital Trust I ("Litchfield Capital
Trust I") to be created as a statutory business trust under the Business Trust
Act of the State of Delaware (12 Del. Code ss.3801 et seq.) pursuant to a
Declaration of Trust, dated as April 12, 1999 (the "Original Declaration"), and
the filing of a Certificate of Trust with the Secretary of State of the State of
Delaware on April 12, 1999.
The Original Declaration is to be amended and restated in its entirety
pursuant to an Amended and Restated Declaration of Trust dated as of __________,
1999 (such Amended and Restated Declaration of Trust, as amended from time to
time, the "Declaration of Trust").
Litchfield Capital Trust I desires to issue its __% Series A Trust
Preferred Securities (the "Preferred Securities") and sell such Preferred
Securities to the underwriters set forth in that certain Underwriting Agreement
dated__________, 1999 by and among the Company, Litchfield Capital Trust I and
the underwriters named therein.
In connection with such purchases of Preferred Securities and the related
purchase by the Company of the Common Securities (as defined in the Declaration
of Trust) of Litchfield Capital Trust I, Litchfield Capital Trust I will
purchase and hold as trust assets the Series A Debentures.
Pursuant to the Declaration of Trust, the legal title to the Series A
Debentures shall be owned and held of record in the name of The Bank of New York
or its successor under the Declaration of Trust, as Property Trustee (the
"Property Trustee"), in trust for the benefit of holders of the Preferred
Securities and the Common Securities.
Upon written direction of the Company or any subsequent holder of the
Common Securities, the Regular Trustees (as defined in the Declaration of Trust)
of Litchfield Capital Trust I shall, unless the Series A Debentures are redeemed
as described herein, dissolve Litchfield
<PAGE> 3
Capital Trust I and cause to be distributed to the holders of the Preferred
Securities and the Common Securities, on a Pro Rata basis (determined as
provided in the terms of the Preferred Securities and Common Securities attached
as Exhibits B and C to the Declaration of Trust), Series A Debentures and, in
connection with a Liquidation Distribution (as defined in the Declaration of
Trust), the Regular Trustees may cause to be distributed to holders of Preferred
Securities and Common Securities, on a Pro Rata basis, Series A Debentures (each
a "Dissolution Event").
Section 2.01 of the Indenture provides that various matters with respect to
any series of Debentures issued under the Indenture may be established in an
indenture supplemental to the Indenture.
Subparagraph (h) of Section 9.01 of the Indenture provides that the Company
and the Trustee may enter into an indenture supplemental to the Indenture to
establish the form or terms of Debentures of any series as permitted by Section
2.01 of the Indenture.
For and in consideration of the premises and the issuance of the series of
Debentures provided for herein, it is mutually covenanted and agreed, for the
equal and proportionate benefit of the holders of the Debentures of such series,
as follows:
ARTICLE ONE
RELATION TO INDENTURE; ADDITIONAL DEFINITIONS
SECTION 1.01. RELATION TO INDENTURE. This Supplemental Indenture No. 1
constitutes an integral part of the Indenture.
SECTION 1.02. ADDITIONAL DEFINITIONS. For all purposes of this Supplemental
Indenture No. 1:
(1) Capitalized terms used herein shall have the meanings specified herein
or in the Indenture, as the case may be;
(2) "Additional Interest" has the meaning set forth in Section 2.05(d)
hereof;
(3) "Change in Investment Company Act Law" has the meaning set forth in
the definition of Investment Company Event;
(4) "Common Securities" has the meaning set forth in the Recitals herein;
(5) "Compounded Interest" has the meaning set forth in Section 2.05(a)
hereof;
(6) "Debentures" has the meaning set forth in the Recitals herein;
3
<PAGE> 4
(7) "Declaration of Trust" has the meaning set forth in the Recitals
herein;
(8) "Dissolution Event" has the meaning set forth in the Recitals herein;
(9) "Extended Interest Payment Period" has the meaning set forth in
Section 4.01(a) hereof;
(10) "Guarantee Payments" has the meaning set forth in Section 5.01 hereof;
(11) "Indenture" has the meaning set forth in the Recitals herein;
(12) "Interest Payment Date" has the meaning set forth in Section 2.05(a)
hereof;
(13) "Investment Company Act" means the Investment Company Act of 1940, as
amended;
(14) "Investment Company Event" means that the Company and the Regular
Trustees shall have received an opinion of counsel, who may be counsel for
Litchfield Capital Trust I, the Trustee or the Company, who may be an employee
of the Company but not an employee of Litchfield Capital Trust I or the Trustee,
and who shall be reasonably acceptable to the Trustee, experienced in practice
under the Investment Company Act that as a result of the occurrence of a change
in law or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in Investment Company Act Law"), there is more than an
insubstantial risk that Litchfield Capital Trust I is or will be considered an
"investment company" which is required to be registered under the Investment
Company Act, which Change in Investment Company Act Law becomes effective on or
after__________, 1999;
(15) "Liquidation Distribution" has the meaning set forth in the Recitals
herein;
(16) "Maturity Date" has the meaning set forth in Section 2.03 hereof;
(17) "Non Book-Entry Preferred Securities" has the meaning set forth in
Section 2.04(b)(ii) hereof;
(18) "Optional Redemption Price" has the meaning set forth in Section
3.01(a) hereof;
(19) "Original Declaration" has the meaning set forth in the Recitals
herein;
(20) "Preferred Securities" has the meaning set forth in the Recitals
herein;
4
<PAGE> 5
(21) "Preferred Securities Guarantee" means the Guarantee Agreement, dated
as of __________, 1999, between the Company and The Bank of New York as the
initial Guarantee Trustee thereunder, in respect of the Preferred Securities;
(22) "Property Account" has the meaning set forth in Section 2.04(a)
hereof;
(23) "Property Trustee" has the meaning set forth in the Recitals herein;
(24) "Regular Trustees" has the meaning set forth in the Recitals herein;
(25) "Litchfield Capital Trust I" has the meaning set forth in the Recitals
herein;
(26) "Series A Debentures" has the meaning set forth in the Recitals herein
and Section 2.01 hereof;
(27) "Special Event" means either a Tax Event or an Investment Company
Event;
(28) "Tax Event" means that the Company and the Regular Trustees shall have
received an opinion of counsel, who may be counsel for Litchfield Capital Trust
I, the Trustee or the Company, who may be an employee of the Company but not an
employee of Litchfield Capital Trust I or the Trustee, and who shall be
reasonably acceptable to the Trustee, experienced in such matters to the effect
that on or after __________, 1999 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 by any
legislative body, court, governmental agency or regulatory authority 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 on
or after __________, 1999, there is more than an insubstantial risk that (i)
Litchfield Capital Trust I is, or will be within 90 days of the date thereof,
subject to federal income tax with respect to income accrued or received on the
Series A Debentures, (ii) Litchfield Capital Trust I is, or will be within 90
days of the date thereof, subject to more than a de minimis amount of taxes,
duties or other governmental charges or (iii) interest payable by the Company to
Litchfield Capital Trust I on the Series A Debentures is not, or within 90 days
of the date thereof will not be, deductible by the Company for federal income
tax purposes;
(29) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this Supplemental
Indenture No. 1; and
5
<PAGE> 6
\
(30) The terms "herein," "hereof," "hereunder" and other words of similar
import refer to this Supplemental Indenture No. 1.
ARTICLE TWO
GENERAL TERMS AND CONDITIONS OF THE __% SERIES A DEBENTURES
SECTION 2.01. TITLE OF DEBENTURES. There shall be and is hereby authorized
a series of Debentures designated as the "__% Series A Junior Subordinated
Debentures due 2019" (the "Series A Debentures").
SECTION 2.02. LIMITATION ON AGGREGATE PRINCIPAL AMOUNT. The aggregate
principal amount of the Series A Debentures shall be limited to $__________;
provided, however, that the authorized aggregate principal amount of the Series
A Debentures may be increased above such amount by a Board Resolution to such
effect. Each Series A Debenture shall be dated the date of its authentication.
SECTION 2.03. MATURITY DATE. The Series A Debentures shall mature and the
principal amount thereof shall be due and payable together with all accrued and
unpaid interest thereon, including Additional Interest and Compounded Interest,
if any, on __________, 2019 (the "Maturity Date").
SECTION 2.04. PLACE OF PAYMENT, REGISTRATION OR EXCHANGE.
------------ ------------------------------------------
(a) Except as provided in Section 2.04(b), the Series A Debentures shall
be issued in fully registered certificated form without interest coupons in
denominations of $10 or integral multiples thereof. Principal and interest on
the Series A Debentures issued in certificated form will be payable, the
transfer of such Series A Debentures will be registrable and such Series A
Debentures will be exchangeable for Series A Debentures bearing identical terms
and provisions at the Corporate Trust Office of the Trustee; provided, however,
that payment of interest may be made at the option of the Company by check
mailed to the registered holders at such addresses as shall appear in the
Debenture Register and that the payment of principal with respect to the Series
A Debentures will only be made upon surrender of the Series A Debentures to the
Trustee. Notwithstanding the foregoing, so long as the Property Trustee is the
legal owner and record holder of the Series A Debentures, the payment of the
principal of and interest (including
6
<PAGE> 7
Additional Interest and Compounded Interest, if any) on the Series A Debentures
held by the Property Trustee will be made by the Company in immediately
available funds on the payment date therefor at such place and to the Property
Account (as defined in the Declaration of Trust) established and maintained by
the Property Trustee pursuant to the Declaration of Trust.
(b) In connection with a Dissolution Event:
(i) Series A Debentures in certificated form may be presented to the
Trustee by the Property Trustee in exchange for one or more Global Debentures
representing the Series A Debentures in an aggregate principal amount equal to
all Outstanding Series A Debentures, 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 one
or more Global Debentures representing the Series A Debentures in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Indenture and this Supplemental Indenture No. 1.
Payments on the Series A Debentures issued as a Global Debenture will be made to
the Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, Series A Debentures in certificated form may be presented to
the Trustee by the Property Trustee and any Definitive Preferred Security
Certificate (as defined in the Declaration of Trust) which represents Preferred
Securities other than Preferred Securities held by the Clearing Agency (as
defined in the Declaration of Trust) or its nominee ("Non Book- Entry Preferred
Securities") will be deemed to represent beneficial interests in Series A
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 Definitive Preferred Security Certificate is
presented to the Debenture Registrar for transfer or reissuance at which time
such Preferred Security Certificate will be canceled and a Series 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 Definitive Preferred Security Certificate canceled will be
executed by the Company and delivered to the Trustee for authentication and
delivery in accordance with the Indenture and this Supplemental Indenture No. 1.
Upon issuance of such Series A Debentures, Series A Debentures with an
equivalent aggregate amount that were presented by the Property Trustee to the
Trustee will be deemed to have been canceled.
SECTION 2.05. INTEREST AND INTEREST RATES.
------------ ---------------------------
(a) Each Series A Debenture will bear interest at the rate of __% per
annum from __________, 1999 until the principal thereof becomes due and payable,
and on any overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum (__%), compounded quarterly ("Compounded Interest"), payable
(subject to the provisions of Article Four) quarterly in arrears
7
<PAGE> 8
on June 30, September 30, December 31 and March 31 of each year (each an
"Interest Payment Date"), commencing on June 30, 1999, to the person in whose
name such Series A Debenture or any predecessor Series A Debenture is
registered, at the close of business on the regular record date for such
interest installment, which, except as set forth below, shall be, in respect of
any Series A Debentures of which the Property Trustee is the registered holder
or a Global Debenture, the close of business on the Business Day next preceding
that Interest Payment Date. Notwithstanding the foregoing sentence, if the
Preferred Securities are no longer in book-entry only form or if pursuant to the
provisions of Section 2.11(c) of the Indenture the Series A Debentures are not
represented by a Global Debenture, the regular record dates for such interest
installment shall be the close of business on the fifteenth day of the month in
which that Interest Payment Date occurs.
(b) Any such interest installment not punctually paid or duly provided for
shall forthwith cease to be payable to the registered holders on such regular
record date, and shall instead be paid to the person in whose name the Series A
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered holders
of the Series A Debentures not less than 10 days prior to such special record
date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange or quotation system on which
the Series A Debentures may be listed or traded, and upon such notice as may be
required by such exchange or quotation system, all as more fully provided in
Section 2.03 of the Indenture.
(c) The amount of interest payable for any full quarterly interest period
will be computed on the basis of a 360-day year of twelve 30-day months, and for
any period shorter than a full quarterly interest period for which interest is
computed, interest shall be computed on the basis of the actual number of days
elapsed per 90-day quarter. In the event that any date on which interest is
payable on the Series A Debentures is not a Business Day, then payment of
interest payable on such date shall be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable.
(d) If at any time Litchfield Capital Trust I shall be required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States of America or any other
taxing authority, then, in any such case, the Company shall pay as additional
interest ("Additional Interest") on the Series A Debentures such additional
amounts as shall be required so that the net amounts received and retained by
Litchfield Capital Trust I after paying any such taxes, duties, assessments or
other governmental charges shall be equal to the amounts Litchfield Capital
Trust I would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
8
<PAGE> 9
SECTION 2.06. DENOMINATION OF DEBENTURES. The Series A Debentures shall be
in registered form without coupons and shall be issuable in denominations of $10
and integral multiples thereof.
SECTION 2.07. CURRENCY. Payment of principal and interest on the Series A
Debentures shall be payable in U.S. dollars.
SECTION 2.08. PAYING AGENT. The Trustee shall initially serve as paying
agent of the Series A Debentures.
SECTION 2.09. SINKING FUND OBLIGATIONS. The Company has no obligation to
redeem or purchase any Series A Debentures pursuant to any sinking fund or
analogous provisions (including payments made in cash in anticipation of future
sinking fund obligations) or at the option of a holder thereof.
ARTICLE THREE
OPTIONAL REDEMPTION OF THE SERIES A DEBENTURES
SECTION 3.01. OPTIONAL REDEMPTION ON OR AFTER JUNE 30, 2004.
------------ ----------------------------------------------
(a) Except as provided in Section 3.02 hereof and subject to the
provisions below, Series A Debentures shall not be redeemed by the Company prior
to June 30, 2004. Subject to the terms of Article 3 of the Indenture, the
Company shall have the right to redeem the Series A Debentures, without premium
or penalty, in whole or in part, at any time from time to time on or after June
30, 2004, upon not less than 30 nor more than 60 days' notice to each holder of
the Series A Debentures, at a redemption price of 100% of the principal amount
of the Series A Debentures, together with any accrued and unpaid interest
thereon, including Compounded Interest and Additional Interest, if any, to, but
excluding, the date of such redemption (the "Optional Redemption Price").
(b) If the Series A Debentures are redeemed on any Interest Payment Date,
accrued and unpaid interest shall be payable to holders of record on the
relevant record date.
(c) The Company shall not redeem any Series A Debentures unless all
accrued and unpaid interest thereon, including Compounded Interest and
Additional Interest, if any, has been paid for all quarterly interest periods
terminating on or prior to the date of notice of redemption.
(d) If the Company gives a notice of redemption in respect of Series A
Debentures (which notice will be irrevocable), then by 10:00 a.m., New York City
time, on the redemption date, the Company shall deposit irrevocably with the
Trustee funds sufficient to pay the applicable Optional Redemption Price and
shall give irrevocable instructions and authority to pay such Optional
Redemption Price to the holders of the Series A Debentures. If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the
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<PAGE> 10
close of business on the redemption date interest shall cease to accrue on the
Series A Debentures called for redemption, such Series A Debentures shall no
longer be deemed to be outstanding and all rights of holders of such Series A
Debentures so called for redemption shall cease, except the right of the holders
of such Series A Debentures to receive the Optional Redemption Price but without
interest on such Optional Redemption Price.
(e) If any date fixed for redemption of any Series A Debentures is not a
Business Day, then payment of the Optional Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calender year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If the Company fails to repay the
Series A Debentures on maturity or the date fixed for redemption or if payment
of the Optional Redemption Price in respect of the Series A Debentures is
improperly withheld or refused and not paid by the Company, interest on such
Series A Debentures shall continue to accrue from the original redemption date
to the date of payment, in which case the actual payment date shall be
considered the date fixed for redemption for purposes of calculating the
Optional Redemption Price.
(f) In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Series A
Debentures during a period beginning at the opening of business 15 days before
the mailing of a notice of redemption of Series A Debentures and ending at the
close of business on the date of such mailing and (ii) register the transfer of
or exchange any Series A Debentures so selected for redemption, in whole or in
part, except the unredeemed portion of any Series A Debentures being redeemed in
part.
SECTION 3.02. OPTIONAL REDEMPTION UPON THE OCCURRENCE OF A SPECIAL EVENT.
If a Special Event shall occur and be continuing, the Company shall have the
right at any time to redeem the Series A Debentures in whole, but not in part,
for cash at the Optional Redemption Price within 90 days following the
occurrence of such Special Event.
SECTION 3.03. PARTIAL REDEMPTION. If the Series A Debentures are only
partially redeemed pursuant to this Article Three, the Series A Debentures will
be redeemed pro rata or by lot or by any other method utilized by the Trustee.
Notwithstanding the foregoing, if a partial redemption of the Series A
Debentures would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed or traded, the Company shall not be permitted to
effect such partial redemption and will only redeem the Series A Debentures in
whole.
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ARTICLE FOUR
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.01. OPTION TO EXTEND INTEREST PAYMENT PERIOD.
------------ ----------------------------------------
(a) So long as the Company is not in default in the payment of interest on
the Series A Debentures, the Company shall have the right to defer payments of
interest on the Series A Debentures by extending the interest payment period of
the Series A Debentures at any time and from time to time for up to 20
consecutive quarterly interest periods (each such period an "Extended Interest
Payment Period"), at the end of which period the Company shall pay all interest
accrued and unpaid thereon (together with Compounded Interest and Additional
Interest, if any); provided that no Extended Interest Payment Period may extend
beyond the Maturity Date or redemption date of the Series A Debentures.
(b) During any Extended Interest Payment Period, the Company shall not (i)
declare or pay any dividend on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any of its capital stock,
other than: (A) dividends or distributions in shares of, or options, warrants,
rights to subscribe for or purchase shares of, the Company's common stock;
(B) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto;
(C) as a result of a reclassification of the Company's capital stock
or the exchange or the conversion of one class or series of the Company's
capital stock for another class or series of the Company's capital stock;
(D) the payment of accrued dividends and the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged; or
(E) purchases of the Company's common stock related to the issuance
of the Company's common stock or rights under any of the Company's benefit plans
for its directors, officers, employees, any of the Company's dividend
reinvestment plans or stock purchase plans, or any of the benefit plans of any
of the Company's Affiliates for such Affiliates' directors, officers or
employees;
(ii) make any payment of principal or of interest or premium, if any, on or
repay, repurchase or redeem any debt security of the Company that, ranks pari
passu with or junior in interest to the Series A Debentures; or (iii) make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiary of the Company (other than the Preferred
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Securities Guarantee) if such guarantee ranks pari passu with or junior in
interest to the Series A Debentures.
(c) Prior to the termination of any Extended Interest Payment Period, the
Company may pay all or any portion of the interest accrued on the Series A
Debentures on any Interest Payment Date to holders of record on the regular
record date for such Interest Payment Date or from time to time further extend
such Extended Interest Payment Period; provided that such Extended Interest
Payment Period together with all such further extensions thereof shall not
exceed 20 consecutive quarterly interest periods. Upon the termination of any
Extended Interest Payment Period and the payment of all accrued and unpaid
interest, including any Additional Interest and Compounded Interest, the Company
may commence a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extended Interest
Payment Period, except at the end thereof. On the Interest Payment Date
occurring at the end of the Extended Interest Payment Period, the Company shall
pay all accrued and unpaid interest on the Series A Debentures, including any
Additional Interest and Compounded Interest, to the holders of the Series A
Debentures in whose names the Series A Debentures are registered in the
Debenture Register (regardless of who the holders of record may have been on
other dates during the Extended Interest Payment Period) on the record date for
such Interest Payment Date.
SECTION 4.02. NOTICE OF EXTENSION OF INTEREST PAYMENT PERIOD.
------------ ----------------------------------------------
(a) So long as the Property Trustee is the legal owner and sole holder of
record of the Series A Debentures, at the time the Company elects to begin an
Extended Interest Payment Period, the Company shall give both the Property
Trustee and the Trustee notice of its election to begin such Extended Interest
Payment Period one Business Day prior to the earlier of (i) the next succeeding
date on which Distributions (as defined in the Declaration of Trust) on the
Preferred Securities are payable or (ii) the date Litchfield Capital Trust I is
required to give notice of the record date or the date such Distributions are
payable to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Preferred Securities, but in any event not
less than one Business Day prior to such record date.
(b) If as a result of a Dissolution Event Series A Debentures have been
distributed to holders of Trust Securities, the Company shall give the holders
of the Series A Debentures and the Trustee notice of its election to begin an
Extended Interest Payment Period at least 10 Business Days prior to the earlier
of (i) the next succeeding Interest Payment Date or (ii) the date the Company is
required to give notice of the record or payment date of such related interest
payment to the New York Stock Exchange (if the Series A Debentures are then
listed thereon) or other applicable self-regulatory organization or to holders
of the Series A Debentures.
(c) The quarter in which any notice is given pursuant to Section 4.02
shall be counted as one of the quarters permitted in the maximum Extended
Interest Payment Period permitted under this Article Four.
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ARTICLE FIVE
COVENANTS APPLICABLE TO THE SERIES A DEBENTURES
SECTION 5.01. PROHIBITED ACTIONS WHILE PREFERRED SECURITIES ARE
OUTSTANDING. So long as any Preferred Securities issued by Litchfield Capital
Trust I remain outstanding, the Company shall not (i) declare or pay any
dividends on, or redeem, purchase, acquire or make a distribution or liquidation
payment with respect to, any of its capital stock (other than (a) dividends or
distributions in shares of, or options, warrants, rights to subscribe for or
purchase shares of, common stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a shareholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) as a result of a
reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (d) the payment of accrued
dividends and the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, or (e) purchases of the
Company's common stock related to the issuance of the Company's common stock or
rights under any of the Company's benefit plans for its directors, officers,
employees, any of the Company's dividend reinvestment plans or stock purchase
plans, or any of the benefit plans of any of the Company's Affiliates for such
Affiliates' directors, officers or employees), (ii) make any payment of
principal or of interest or premium, if any, on or repay, repurchase or redeem
any debt security of the Company that, ranks pari passu with or junior in
interest to the Series A Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any Subsidiary
of the Company (other than pursuant to the Preferred Securities Guarantee) if
such guarantee ranks pari passu with or junior in interest to the Series A
Debentures, if at such time (x) the Company shall be in default with respect to
its Guarantee Payments (as defined in the Preferred Securities Guarantee) or
other payment obligations under the Preferred Securities Guarantee, (y) there
shall have occurred any Event of Default with respect to the Series A Debentures
or (z) the Company shall have given notice of its election to defer payments of
interest on the Series A Debentures by extending the interest payment period in
accordance with Article Four hereof.
SECTION 5.02. LISTING ON NASDAQ. In connection with the distribution of the
Series A Debentures to the holders of the Preferred Securities upon a
Dissolution Event, the Company will use its best efforts to list such Series A
Debentures on the Nasdaq National Market or on such other exchange or quotation
system as the Preferred Securities are then listed and traded.
SECTION 5.03. COMPLIANCE WITH THE DECLARATION OF TRUST. The Company
covenants and agrees for the benefit of the holders of the Preferred Securities
to comply fully with all of its obligations and agreements under the Declaration
of Trust, including, without limitation, its obligations under Article 4
thereof.
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SECTION 5.04. COVENANTS WITH RESPECT TO LITCHFIELD CAPITAL TRUST I. Prior
to the distribution of Series A Debentures to the holders of Preferred
Securities upon a Dissolution Event, the Company covenants and agrees for the
benefit of the holders of the Preferred Securities (i) to remain the sole direct
or indirect owner of all of the outstanding Common Securities and not to cause
or permit the Common Securities to be transferred except as permitted by the
Declaration of Trust, provided that any permitted successor of the Company under
the Indenture may succeed to the Company's ownership of the Common Securities,
and (ii) use reasonable efforts to cause Litchfield Capital Trust I to continue
to be treated as a grantor trust for United States federal income tax purposes,
except in connection with a Dissolution Event.
ARTICLE SIX
FORM OF SERIES A DEBENTURES
SECTION 6.01. The Series A Debentures and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the following
forms:
(FORM OF FACE OF DEBENTURE)
[IF THE NOTE IS TO BE A GLOBAL DEBENTURE, INSERT - This Debenture is a
Global Debenture within the meaning of the Indenture hereinafter referred to and
is registered in the name of a Depositary or a nominee of a Depositary. This
Debenture is exchangeable for Debentures registered in the name of a person
other than the Depositary or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Debenture (other than a
transfer of this Debenture as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
Unless this Debenture is presented by an authorized representative to The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
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No. $
[CUSIP NO. ]
-------------------------
LITCHFIELD FINANCIAL CORPORATION
-- % SERIES A JUNIOR SUBORDINATED DEBENTURE DUE 2019
LITCHFIELD FINANCIAL CORPORATION, a corporation duly organized and existing
under the laws of The Commonwealth of Massachusetts (herein referred to as the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
_____________________________, or registered assigns, the principal sum of
___________________ Dollars on __________, 2019, provided, if a Tax Event
occurs, then the Company will have the right (a) prior to the dissolution of
Litchfield Capital Trust I, to shorten the Maturity Date of this series of
Debentures to the minimum extent required, but not earlier than _______________,
or (b) to direct the Property Trustee to dissolve Litchfield Capital Trust I (if
not previously dissolved) and shorten the Maturity Date of this series of
Debentures to the minimum extent required, but not earlier than _______________,
in each case such that in the opinion of counsel to the Company, experienced in
such matters, after shortening the Maturity Date, interest paid on this series
of Debentures will be deductible for federal income tax purposes, and to pay
interest on said principal sum from __________, 1999 or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, quarterly in arrears on June 30,
September 30, December 31 and March 31 of each year, commencing __________, 1999
at the rate of __% per annum plus Additional Interest and Compounded Interest,
if any, until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any.
So long as the Company is not in default in the payment of interest on this
series of Debentures, the Company shall have the right to defer payments of
interest on this series of Debentures by extending the interest payment period
of this series of Debentures at any time from time to time for up to 20
consecutive quarterly interest periods (each such period an "Extended Interest
Payment Period"), at the end of which period the Company shall pay all interest
accrued and unpaid thereon (together with Compounded Interest and Additional
Interest, if any); provided that no Extended Interest Payment Period may extend
beyond the Maturity Date or redemption date of this series of Debentures. Prior
to the termination of any Extended Interest Payment Period, the Company may pay
all or any portion of the interest accrued on this series of Debentures on any
Interest Payment Date to holders of record on the regular record date for such
Interest Payment Date or prepay at any time all or any portion of the interest
accrued during an Extension Period or from time to time further extend such
Extended Interest Payment Period; provided that such Extended Interest Payment
Period together with all such further extensions thereof shall not exceed 20
consecutive quarterly interest periods or extend beyond the Maturity Date or
redemption date of this series of Debentures. Upon the termination of any
Extended Interest Payment Period and the payment of all accrued and unpaid
interest, including any
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<PAGE> 16
Additional Interest and Compounded Interest, the Company may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof. On the Interest Payment Date occurring at the end of
the Extended Interest Payment Period, the Company shall pay all accrued and
unpaid interest on this series of Debentures, including any Additional Interest
and Compounded Interest, to the holders of this series of Debentures in whose
names this series of Debentures are registered in the Debenture Register
(regardless of who the holders of record may have been on other dates during the
Extended Interest Payment Period) on the record date for such Interest Payment
Date.
The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months, and for any
period shorter than a full quarterly interest period for which interest is
computed, interest shall be computed on the basis of the actual number of days
elapsed per 90-day quarter. In the event that any date on which interest is
payable on this series of Debentures is not a Business Day, then payment of
interest payable on such date shall be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date such payment was
originally payable. The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the person in whose name this Debenture (or one or more
Predecessor Debentures, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, [IF
LITCHFIELD CAPITAL TRUST I OR ITS PROPERTY TRUSTEE IS THE HOLDER OF RECORD OF
THIS DEBENTURE -- which shall be the close of business on the Business Day next
preceding such Interest Payment Date, provided if the Preferred Securities of
Litchfield Capital Trust I are no longer in book-entry only form, the regular
record dates shall be the close of business on the fifteenth (15th) day of the
month in which such Interest Payment Date occurs] [IF PURSUANT TO THE PROVISIONS
OF SECTION 2.11(c) OF THE INDENTURE THIS series of Debentures IS NOT REPRESENTED
BY A GLOBAL DEBENTURE -- which shall be the close of business on the fifteenth
(15th) day of the month in which such Interest Payment Date occurs.] Any such
interest installment not punctually paid or duly provided for shall forthwith
cease to be payable to the registered holders on such regular record date, and
shall instead 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 to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered holders of this series
of Debentures not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange or quotation system on which the
Debentures of this series may be listed or traded, and upon such notice as may
be required by such exchange or quotation system, all as more fully provided in
Section 2.03 of the Indenture. The principal of and the interest on this
Debenture shall be payable at the Corporate Trust Office of the Trustee, in any
coin or currency of the United States of America which at the time of payment is
legal tender for payment of public and private debts;
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<PAGE> 17
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such addresses as shall
appear in the Debenture Register and that the payment of principal will only be
made upon the surrender of this Debenture to the Trustee. Notwithstanding the
foregoing, so long as the owner and record holder of this Debenture is the
Property Trustee (as defined in the Indenture), the payment of the principal of
and interest (including Additional Interest and Compounded Interest, if any) on
this Debenture will be made by the Company in immediately available funds on the
payment date therefor at such place and to the Property Account (as defined in
the Indenture) established and maintained by the Property Trustee pursuant to
the Declaration of Trust (as defined in the Indenture).
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Debt (as defined in the Indenture), and this Debenture is
issued subject to the provisions of the Indenture with respect thereto. Each
holder of this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes. Each holder hereof, by his
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Debt, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.
Dated: LITCHFIELD FINANCIAL CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
By:
--------------------------------
Name:
Title:
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<PAGE> 18
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.
as Trustee or as Authentication Agent
By: By:
--------------------------------- ---------------------------
Authorized Signatory Authorized Signatory
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<PAGE> 19
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of __________, 1999 duly executed and delivered between
the Company and The Bank of New York, a New York banking corporation, as Trustee
(herein referred to as the "Trustee"), as supplemented by the Supplemental
Indenture No. 1 dated as of __________, 1999 between the Company and the Trustee
(said Indenture as so supplemented being hereinafter referred to as the
"Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Debentures, and, to the extent specifically set forth in the
Indenture, the holders of Senior Debt and Preferred Securities. By the terms of
the Indenture, the Debentures are issuable in series which may vary as to
amount, date of maturity, rate of interest and in other respects as in the
Indenture provided. This series of Debentures is designated the __% Series A
Junior Subordinated Debentures due 2019 and is limited in aggregate principal
amount as specified in said Supplemental Indenture No. 1.
Except as provided in the next paragraph, the Debentures of this series
shall not be redeemed by the Company prior to __________, 2004. The Company
shall have the right to redeem this Debenture at the option of the Company,
without premium or penalty, in whole or in part, at any time from time to time
on or after __________, 2004 (an "Optional Redemption"), upon not less than 30
nor more than 60 days' notice to the holders of the Debentures of this series,
at the redemption price of 100% of the principal amount of the Debentures,
together with any accrued but unpaid interest thereon, including Compounded
Interest and Additional Interest, if any, to, but excluding, the date of such
redemption (the "Optional Redemption Price").
If the Debentures of this series are redeemed on any Interest Payment Date,
accrued and unpaid interest shall be payable to holders of record on the
relevant record date.
The Company shall not redeem any Debentures of this series unless all
accrued and unpaid interest thereon, including Compounded Interest and
Additional Interest, if any, has been paid for all quarterly interest periods
terminating on or prior to the date of notice of redemption.
If a Tax Event or an Investment Company Event (each, a "Special Event")
shall occur or be continuing, the Company shall have the right at any time to
redeem the Debentures of this series in whole, but not in part, for cash at the
Optional Redemption Price within 90 days following the occurrence of such
Special Event.
"Tax Event" means that the Company and the Regular Trustees shall have
received an opinion of counsel experienced in such matters to the effect that on
or after __________, 1999 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
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<PAGE> 20
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 by any
legislative body, court, governmental agency or regulatory authority 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 on
or after __________, 1999, there is more than an insubstantial risk that (i)
Litchfield Capital Trust I is, or will be within 90 days of the date thereof,
subject to federal income tax with respect to income accrued or received on the
Debentures of this series, (ii) Litchfield Capital Trust I is, or will be within
90 days of the date thereof, subject to more than a de minimis amount of taxes,
duties or other governmental charges or (iii) interest payable by the Company to
Litchfield Capital Trust I on the Debentures of this series is not, or within 90
days of the date thereof will not be, deductible by the Company for federal
income tax purposes;
"Investment Company Event" means that the Company and the Regular Trustees
shall have received an opinion of counsel experienced in practice under the
Investment Company Act that as a result of the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority (a
"Change in Investment Company Act Law"), there is more than an insubstantial
risk that Litchfield Capital Trust I is or will be considered an "investment
company" which is required to be registered under the Investment Company Act,
which Change in Investment Company Act Law becomes effective on or after
__________, 1999.
If the Debentures of this series are only partially redeemed by the Company
pursuant to an Optional Redemption, the Debentures shall be redeemed pro rata or
by lot or in some other equitable manner determined by the Trustee; provided if,
at the time of redemption, the Debentures of this series are registered as a
Global Debenture, the Depository shall determine the principal amount of such
Debentures of this series held by each holder of Debentures to be redeemed in
accordance with its customary procedures. Notwithstanding the foregoing, if a
partial redemption of the Debentures of this series would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed or traded,
the Company shall not be permitted to effect such partial redemption and will
only redeem the Debentures of this series in whole.
In the event of redemption of this Debenture in part only, a new Debenture
or Debentures of this series for unredeemed portion hereof will be issued in the
name of the holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures of this
series may be declared, and upon such
20
<PAGE> 21
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Debenture upon compliance by the Company with certain
conditions set forth therein.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture (and, if this Debenture is held as a
trust asset of Litchfield Capital Trust I, such consent of holders of the
Preferred Securities and the Common Securities as may be required under the
Declaration of Trust), to execute supplemental indentures for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the holders of the Debentures; provided, however, that
no such supplemental indenture shall (i) extend the fixed maturity of the
Debentures of this series, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof, without the consent of the holder of each
Debenture so affected or (ii) reduce the aforesaid percentage of Debentures, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Debenture (and, if this Debenture is
held as a trust asset of Litchfield Capital Trust I, such consent of the holders
of the Preferred Securities and the Common Securities as may be required under
the Declaration of Trust) then outstanding and affected thereby. The Indenture
also contains provisions permitting the holders of a majority in aggregate
principal amount of the Debentures of a series at the time Outstanding affected
thereby (subject, in the case of a Debenture held as a trust asset of Litchfield
Capital Trust I and with respect to which a Securities Exchange has not
theretofore occurred, to such consent of holders of Preferred Securities and
Common Securities as may be required under the Declaration of Trust), on behalf
of the holders of the Debentures of such series, to waive any past default in
the performance of any of the covenants contained in the Indenture, or
established pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any of the Debentures of such series as and when the same
shall become due by the terms of the Debentures of such series otherwise than by
acceleration (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal and any premium has been
deposited with the Trustee), or a call for redemption of the Debentures of such
series. Any such consent or waiver by the registered holder of this Debenture
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Debenture and of
any Debenture issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Debenture.
Subject to Section 13.11 of the Indenture, no reference herein to the
Indenture (other than such Section) and no provision of this Debenture or of the
Indenture shall alter or impair the
21
<PAGE> 22
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Debenture at the time and place at the rate
and in the money herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered holder hereof on the
Debenture Register, upon surrender of this Debenture for registration of
transfer at the Corporate Trust Office of the Trustee accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the registered holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Debenture,
the Company, the Trustee, any paying agent and any Debenture Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Debenture Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
interest due hereon and for all other purposes, and neither the Company nor the
Trustee nor any paying agent nor any Debenture Registrar shall be affected by
any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
[If certificated Debentures -- The Debentures of this series are issuable
only in registered form without coupons in denominations of $10 and any integral
multiple thereto.] [If Global Debenture -- This Global Debenture is exchangeable
for Debentures in definitive form under certain limited circumstances set forth
in the Indenture. Debentures of this series so issued are issuable only in
registered form without coupons in denominations of $10 or any integral multiple
thereof.] As provided in the Indenture and subject to certain limitations [If
Global Debenture -- herein and] therein set forth, Debentures of this series [If
Global Debenture -- so issued] are exchangeable for a like aggregate principal
amount of Debentures of this series of a different authorized denomination, as
requested by the holder surrendering the same.
All terms used in this Debenture which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
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<PAGE> 23
The Company and, by its acceptance of this Debenture or a beneficial
interest therein, the holder of, and any Person that acquires a beneficial
interest in, this Debenture agree that for United States federal, state and
local tax purposes it is intended that this Debenture constitute indebtedness.
THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
ARTICLE SEVEN
MISCELLANEOUS PROVISIONS
SECTION 7.01. The Indenture, as supplemented by this Supplemental
Indenture, is in all respects ratified and confirmed. This Supplemental
Indenture No. 1 shall be deemed part of the Indenture in the manner and to the
extent herein and therein provided.
SECTION 7.02. The recitals herein contained are made by the Company and not
by the Trustee, and the Trustee assumes no responsibility for the correctness
thereof. The Trustee makes no representation as to the validity or sufficiency
of this Supplemental Indenture No. 1.
SECTION 7.03. This Supplemental Indenture No. 1 may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
SECTION 7.04. THIS SUPPLEMENTAL INDENTURE NO. 1 AND EACH SERIES A DEBENTURE
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 1 to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
Attest: LITCHFIELD FINANCIAL CORPORATION
By: By:
-------------------------------- --------------------------------
Name: Name:
Title: Title:
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<PAGE> 24
Attest: THE BANK OF NEW YORK, as Trustee
By: By:
-------------------------------- --------------------------------
Name: Name:
Title: Title:
24
<PAGE> 1
EXHIBIT 4.8
LITCHFIELD FINANCIAL CORPORATION
GUARANTEE AGREEMENT
LITCHFIELD CAPITAL TRUST I
DATED AS OF , 1999
-----------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE 1
Definitions
<S> <C> <C>
Section 1.01. Definitions......................................................... 2
ARTICLE 2
Trust Indenture Act
Section 2.01. Trust Indenture Act; Application.................................... 6
Section 2.02. Lists of Holders of Preferred Securities............................ 6
Section 2.03. Reports by the Guarantee Trustee.................................... 6
Section 2.04. Periodic Reports to the Guarantee Trustee........................... 7
Section 2.05. Evidence of Compliance with Conditions Precedent.................... 7
Section 2.06. Events of Default; Waiver........................................... 7
Section 2.07. Disclosure of Information........................................... 7
Section 2.08. Conflicting Interest................................................ 8
ARTICLE 3
Powers, Duties and Rights of The Guarantee Trustee
Section 3.01. Powers and Duties of the Guarantee Trustee.......................... 8
Section 3.02. Certain Rights and Duties of the Guarantee Trustee.................. 9
Section 3.03. Not Responsible for Recitals or Issuance of Guarantee...............11
Section 3.04. Guarantee Trustee May Own Preferred Securities......................11
Section 3.05. Moneys Received by Guarantee Trustee to Be Held In Trust
Without Interest...................................................11
Section 3.06. Guarantee Trustee Entitled to Compensation,
Reimbursement and Indemnity.........................................11
Section 3.07. Right of Guarantee Trustee to Rely on Certificate of
Officers of Guarantor Where No Other Evidence
Specifically Prescribed.............................................12
ARTICLE 4
Guarantee Trustee
Section 4.01. Qualifications......................................................12
Section 4.02. Appointment, Removal and Resignation of the
Guarantee Trustee...................................................13
i
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<TABLE>
<CAPTION>
ARTICLE 5
Guarantee
<S> <C> <C>
Section 5.01. Guarantee...........................................................13
Section 5.02. Waiver of Notice....................................................14
Section 5.03. Obligations Not Affected............................................14
Section 5.04. Enforcement of Guarantee............................................15
Section 5.05. Guarantee of Payment................................................15
Section 5.06. Subrogation.........................................................15
Section 5.07. Independent Obligations.............................................16
ARTICLE 6
Limitation of Transactions; Subordination
Section 6.01. Limitation of Transactions..........................................16
Section 6.02. Subordination.......................................................16
ARTICLE 7
Termination
Section 7.01. Termination.........................................................17
ARTICLE 8
Limitation of Liability; Indemnification
Section 8.01. Exculpation.........................................................17
Section 8.02. Indemnification.....................................................18
Section 8.03. Survive Termination.................................................18
ARTICLE 9
Miscellaneous
Section 9.01. Successors and Assigns..............................................18
Section 9.02. Amendments..........................................................18
Section 9.03. Notices.............................................................18
Section 9.04. Genders.............................................................19
Section 9.05. Benefit.............................................................19
Section 9.06. Governing Law.......................................................19
Section 9.07. Counterparts........................................................19
Section 9.08. Limited Liability...................................................19
ii
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<PAGE> 4
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of __________, 1999, is executed and
delivered by Litchfield Financial Corporation, a Massachusetts corporation (the
"Guarantor"), and The Bank of New York, a New York banking corporation, as the
initial Guarantee Trustee (as defined herein) for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of Litchfield Capital Trust I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of ______________, 1999 among the trustees of the
Issuer named therein, Litchfield Financial Corporation, as Sponsor, and the
Holders from time to time of preferred undivided beneficial interests in the
assets of the Issuer, the Issuer may issue up to $_________ aggregate
liquidation amount of its __% Series A Trust Preferred Securities (the
"Preferred Securities") representing preferred undivided beneficial interests in
the assets of the Issuer and having the terms set forth in Exhibit B to the
Declaration, of which $__________ aggregate liquidation amount of Preferred
Securities is being issued as of the date hereof; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities, the
Guarantor desires to irrevocably and unconditionally agree, to the extent set
forth herein, to pay to the Holders the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;
and
NOW, THEREFORE, in consideration of the purchase by the initial purchasers
thereof of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders from time to time.
ARTICLE 1
DEFINITIONS
SECTION 1.0. DEFINITIONS.
----------- -----------
(a) Capitalized terms used in this Guarantee Agreement but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.01;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
2
<PAGE> 5
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"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.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer, having the terms set forth in
Exhibit C to the Declaration.
"Debentures" means the series of unsecured junior subordinated debentures
issued by the Guarantor under the Indenture to the Property Trustee and entitled
the "_____% Junior Subordinated Debentures due ____."
"Declaration" has the meaning set forth in the first WHEREAS clause above.
"Distributions" means the periodic distributions and other payments payable
to Holders in accordance with the terms of the Preferred Securities set forth in
Exhibit B to the Declaration.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payment, any such
default shall constitute an Event of Default only if the Guarantor shall have
received notice of such default and shall not have cured such default within 60
days after receipt of such notice.
"Guarantee Payments" shall mean the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions and the Redemption Price, including all accumulated and unpaid
Distributions to, but excluding, the date of redemption, with respect to the
Preferred Securities called for redemption by the Issuer but only if and to the
extent that in each case the Guarantor has made a payment to the Property
Trustee of interest or principal or premium, if any, on the Debentures and (ii)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to Holders
in exchange for Preferred Securities or the redemption of all the Preferred
Securities upon the maturity or redemption of the Debentures as provided in the
3
<PAGE> 6
Declaration), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Issuer has funds on hand legally available therefor,
and (b) the amount of assets of the Issuer remaining available for distribution
to Holders in liquidation of the Issuer as required by applicable law (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York, a New York banking
corporation, until a Successor Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee Agreement, and
thereafter means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of ______ __,
1999 between the Guarantor and The Bank of New York, as trustee, as supplemented
by the ________ Supplemental Indenture thereto dated as of ___________, 1999
(the "Supplemental Indenture"), pursuant to which the Debentures are to be
issued to the Property Trustee.
"Liquidation Distribution" has the meaning specified in the definition of
Guarantee Payments.
"Majority in liquidation amount of the Preferred Securities" means, except
as otherwise required by the Trust Indenture Act, Holder(s) of outstanding
Preferred Securities voting together as a single class, who are the record
owners of Preferred Securities whose liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) represents more than 50% of the liquidation amount
of all outstanding Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, the Chief Executive Officer, the President
or a Vice President, and by the Treasurer, an Associate Treasurer, an Assistant
Treasurer, the Comptroller, the Secretary or an Assistant Secretary, of such
Person, and delivered to the Guarantee Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 2.04 shall be the principal
executive, financial or accounting officer of the Guarantor. Any Officers'
Certificate delivered with respect
4
<PAGE> 7
to compliance with a condition or covenant provided for in this Guarantee
Agreement shall include:
(i) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(ii) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(iii) a statement that each 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
(iv) 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 Securities" has the meaning set forth in the first WHEREAS
clause above.
"Property Trustee" means the Person acting as Property Trustee under the
Declaration.
"Redemption Price" means the amount payable on redemption of the Preferred
Securities in accordance with the terms of the Preferred Securities.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer within the corporate trust department of the Guarantee
Trustee, including any vice president, assistant vice president, assistant
secretary, assistant treasurer, trust officer or any other officer of the
Guarantee Trustee who customarily performs functions similar to those performed
by the Persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of such Person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Guarantee Agreement.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as a Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
5
<PAGE> 8
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. TRUST INDENTURE ACT; APPLICATION.
------------ --------------------------------
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by ss.ss.310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; and
(c) the application of the Trust Indenture Act to this Guarantee Agreement
shall not affect the nature of the Preferred Securities as equity securities
representing preferred undivided beneficial interests in the assets of the
Issuer.
SECTION 2.02. LISTS OF HOLDERS OF PREFERRED SECURITIES.
------------ ----------------------------------------
(a) The Guarantor shall provide the Guarantee Trustee (unless the
Guarantee Trustee is otherwise the registrar of the Preferred Securities) (i)
within 14 days after each record date for payment of Distributions, a list, in
such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such date, and (ii) at any
other time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 14 days before such List of Holders is
given to the Guarantee Trustee; provided that the Guarantor shall not be
obligated to provide such List of Holders at any time that the List of Holders
does not differ from the most recent List of Holders given to the Guarantee
Trustee by the Guarantor. The Guarantee Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in the List of
Holders given to it; provided, that the Guarantee Trustee may destroy any List
of Holders previously given to it on receipt of a new List of Holders.
(b) the Guarantee Trustee shall comply with its obligations under
ss.ss.310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.03. REPORTS BY THE GUARANTEE TRUSTEE. Within 60 days after
January 15 of each year, commencing January 15, 2000, the Guarantee Trustee
shall provide to the Holders such reports as are required by ss.313 of the Trust
Indenture Act, if any, in the form, in the manner and at the times provided by
ss.313 of the Trust Indenture Act. The Guarantee Trustee shall also comply with
the other requirements of ss.313 of the Trust Indenture Act. A copy of each such
report shall, at the time of such transmission to the Holders, be filed by the
Guarantee Trustee with the Company, with each stock exchange upon which any
Preferred Securities are listed (if
6
<PAGE> 9
so listed) and also with the Commission. The Company agrees to notify the
Guarantee Trustee when any Preferred Securities become listed on any stock
exchange and any delisting thereof.
SECTION 2.04. PERIODIC REPORTS TO THE GUARANTEE TRUSTEE. The Guarantor
shall provide to the Guarantee Trustee, the Commission and the Holders, as
applicable, such documents, reports and information as required by
ss.314(a)(1)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by ss.314(a)(4) and (c) of the Trust Indenture Act, any
such certificates to be provided in the form, in the manner and at the times
required by ss.314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to ss.314(a)(4) of the Trust Indenture Act
shall be provided within 120 days of the end of each fiscal year of the Issuer).
Delivery of such reports, information and documents to the Guarantee Trustee is
for informational purposes only and the Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein,
including the Company's compliance with any of its covenants hereunder (as to
which the Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
which 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) may be given in the form of an Officers' Certificate.
SECTION 2.06. EVENTS OF DEFAULT; WAIVER.
------------ -------------------------
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default, or
impair any right consequent thereon.
(b) The right of any Holder to receive payment of the Guarantee Payments
in accordance with this Guarantee Agreement, or to institute suit for the
enforcement of any such payment, shall not be impaired without the consent of
each such Holder.
SECTION 2.07. DISCLOSURE OF INFORMATION. The disclosure of information as
to the names and addresses of the Holders in accordance with ss.312 of the Trust
Indenture Act, regardless of the source from which such information was derived,
shall not be deemed to be a violation of any existing law, or any law hereafter
enacted which does not specifically refer to ss.312 of the Trust Indenture Act,
nor shall the Guarantee Trustee be held accountable by reason of mailing any
material pursuant to a request made under ss.312(b) of the Trust Indenture Act.
7
<PAGE> 10
SECTION 2.08. CONFLICTING INTEREST. The Declaration shall be deemed to be
specifically described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in ss.310(b) of the Trust Indenture Act.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.01. POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
------------ ------------------------------------------
(a) This Guarantee Agreement shall be held by the Guarantee Trustee in
trust for the benefit of the Holders. The Guarantee Trustee shall not transfer
its right, title and interest in this Guarantee Agreement to any Person except a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Guarantee Trustee or to a Holder exercising his or her
rights pursuant to Section 5.04(iv). The right, title and interest of the
Guarantee Trustee to this Guarantee Agreement shall vest automatically in each
Person who may hereafter be appointed as Guarantee Trustee in accordance with
Article 4. Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) This Guarantee Agreement and all moneys received by the Property
Trustee in respect of the Guarantee Payments will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of, or for the
benefit of, the Guarantee Trustee or its agents or their creditors.
(d) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default known to a Responsible Officer of the Guarantee Trustee,
transmit by mail, first class postage prepaid, to the Holders, as their names
and addresses appear upon the List of Holders, notice of all such Events of
Default, unless such defaults shall have been cured before the giving of such
notice; provided, that, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers, of the Guarantee
Trustee in good faith determine that the withholding of such notice is in the
interests of the Holders. The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default except any Event of Default as to which the
Guarantee Trustee shall have received written notice or a Responsible Officer
charged with the administration of this Guarantee Agreement shall have obtained
written notice of such Event of Default.
(e) The Guarantee Trustee shall continue to serve as a trustee until a
Successor Guarantee Trustee has been appointed and accepted that appointment in
accordance with Article 4.
8
<PAGE> 11
SECTION 3.02. CERTAIN RIGHTS AND DUTIES OF THE GUARANTEE TRUSTEE.
------------ --------------------------------------------------
(a) The Guarantee Trustee, before the occurrence of an Event of Default
and after the curing or waiving of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.06), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee Agreement, and the
Guarantee Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Guarantee Agreement, and
no implied covenants or obligations shall be read into this Guarantee Agreement
against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof or the Trust Indenture Act
are specifically required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee Agreement or the Trust
Indenture Act, as the case may be;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee Trustee,
unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a Majority in liquidation amount of Preferred
Securities relating to the time, method and place of
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conducting any proceeding for any remedy available to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if 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 Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to it.
(c) Subject to the provisions of Section 3.02(a) and (b):
(i) whenever in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Guarantee
Trustee (unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and rely upon an Officers'
Certificate, which, upon receipt of such request, shall be promptly delivered by
the Guarantor;
(ii) the Guarantee Trustee (A) may consult with counsel (which may be
counsel to the Guarantor or any of its Affiliates and may include any of its
employees) selected by it in good faith and with due care 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 reliance thereon and in
accordance with such advice and opinion and (B) shall have the right at any time
to seek instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction;
(iii) the Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, and the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed by it in
good faith and with due care;
(iv) the Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have offered to the
Guarantee Trustee security and indemnity satisfactory to the Guarantee Trustee
against the costs, expenses (including its attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction; provided that nothing contained in this clause (iv) shall relieve the
Guarantee Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured or waived) to exercise such of the rights and powers
vested in it by this Guarantee Agreement, and to use the same degree of care and
skill in this exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; and
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(v) any action taken by the Guarantee Trustee or its agents hereunder
shall bind the Holders and the signature of the Guarantee 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 Guarantee Trustee
to so act, or as to its compliance with any of the terms and provisions of this
Guarantee Agreement, both of which shall be conclusively evidenced by the
Guarantee Trustee's or its agent's taking such action.
SECTION 3.03. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE. The
recitals contained in this Guarantee Agreement shall be taken as the statements
of the Guarantor and the Guarantee Trustee does not assume any responsibility
for their correctness. The Guarantee Trustee makes no representations as to the
validity or sufficiency of this Guarantee Agreement.
SECTION 3.04. GUARANTEE TRUSTEE MAY OWN PREFERRED SECURITIES. The Guarantee
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Preferred Securities and may otherwise deal with the Guarantor with
the same rights it would have if it were not Guarantee Trustee.
SECTION 3.05. MONEYS RECEIVED BY GUARANTEE TRUSTEE TO BE HELD IN TRUST
WITHOUT INTEREST. All moneys received by the Guarantee Trustee shall, until used
or applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by law. The Guarantee Trustee shall be under no liability for interest
on any moneys received by it hereunder except such as it may agree in writing to
pay thereon.
SECTION 3.06. GUARANTEE TRUSTEE ENTITLED TO COMPENSATION, REIMBURSEMENT AND
INDEMNITY.
(a) The Guarantor covenants and agrees to pay to the Guarantee Trustee
from time to time, and the Guarantee Trustee shall be entitled to, such
compensation as the Guarantor and the Guarantee Trustee shall from time to time
agree in writing (which shall not be limited by any provision of law in regard
to the compensation of a Guarantee Trustee of an express trust) for all services
rendered by it in the execution of the trusts hereby created and in the exercise
and performance of any of the powers and duties hereunder of the Guarantee
Trustee, and the Guarantor will pay or reimburse the Guarantee Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Guarantee Trustee in accordance with any of the provisions of this
Guarantee Agreement (including the reasonable compensation and the reasonable
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Guarantor also covenants to indemnify each of
the Guarantee Trustee or any predecessor Guarantee Trustee and their officers,
agents, directors and employees for, and to hold them harmless against, any and
all loss, liability, damage, claim or expense including taxes (other than taxes
based upon, measured by or determined by the income of the Guarantee
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Trustee) incurred without negligence or bad faith on the part of the Guarantee
Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim (whether asserted by the Guarantor, any
Holder or any other Person) of liability in the premises. The provisions of this
Section 3.06 shall survive the termination of this Guarantee Agreement and
resignation or removal of the Guarantee Trustee.
(b) The obligations of the Guarantor under this Section 3.06 to compensate
and indemnify the Guarantee Trustee and to pay or reimburse the Guarantee
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder. Such additional indebtedness shall be secured by a lien
prior to that of the Preferred Securities upon all property and funds held or
collected by the Guarantee Trustee as such, except funds held in trust for the
benefit of the holders of particular Preferred Securities.
SECTION 3.07. RIGHT OF GUARANTEE TRUSTEE TO RELY ON CERTIFICATE OF OFFICERS
OF GUARANTOR WHERE NO OTHER EVIDENCE SPECIFICALLY PRESCRIBED. Except as
otherwise provided in Section 3.02, whenever in the administration of the
provisions of this Guarantee Agreement the Guarantee Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Guarantee Trustee, be
deemed to be conclusively proved and established by an Officers' Certificate
delivered to the Guarantee Trustee and such certificate, in the absence of
negligence or bad faith on the part of the Guarantee Trustee, shall be full
warrant to the Guarantee Trustee for any action taken, suffered or omitted to be
taken by it under the provisions of this Guarantee Agreement upon the faith
thereof.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.01. QUALIFICATIONS. There shall at all times be a Guarantee
Trustee that shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a national banking association or 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 $50,000,000, 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 clause (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.
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If at any time the Guarantee Trustee shall cease to satisfy the
requirements of clauses (i) and (ii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02. If
the Guarantee Trustee has or shall acquire any "conflicting interest" within the
meaning of ss.310(b) of the Trust Indenture Act, the Guarantee Trustee and the
Guarantor shall in all respects comply with the provisions of ss.310(b) of the
Trust Indenture Act.
SECTION 4.02. APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE
------------ -----------------------------------------------------
TRUSTEE.
- -------
(a) Subject to Section 4.02(b), the Guarantee Trustee may be appointed or
removed without cause by the Guarantor upon 60 days' prior written notice.
(b) The Guarantee Trustee shall not be removed in accordance with Section
4.02(a) until a Successor Guarantee Trustee possessing the qualifications to act
as Guarantee Trustee under Section 4.01 has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor and the Guarantee Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold office until its
successor shall have been appointed or until its removal or resignation.
(d) The Guarantee Trustee may resign from office (without need for prior
or subsequent accounting) by an instrument (a "Resignation Request") in writing
signed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that no such resignation of the Guarantee
Trustee shall be effective until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01 has been appointed
and has accepted such appointment by instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(e) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of a notice of removal or a Resignation Request, the
Guarantee Trustee being removed or resigning as the case may be may petition any
court of competent jurisdiction for appointment of a Successor Guarantee
Trustee. Such court may thereupon after such notice, if any, as it may deem
proper and prescribe, appoint a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01.
ARTICLE 5
GUARANTEE
SECTION 5.01. GUARANTEE. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid
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by the Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim which the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.02. WAIVER OF NOTICE. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands. Notwithstanding anything to the
contrary herein, the Guarantor retains all of its rights under the Indenture to
extend the interest payment period on the Debentures and the Guarantor shall not
be obligated hereunder to make any Guarantee Payment during any Extended
Interest Payment Period (as defined in the Supplemental Indenture) with respect
to the Distributions on the Preferred Securities.
SECTION 5.03. OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that result from any Extended Interest Payment Period), Redemption
Price, Liquidation Distribution (as defined in the Declaration) or any other
sums payable under the terms of the Preferred Securities or the extension of
time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions that result from any Extended Interest Payment Period);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
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(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.03 that the obligations of the Guarantor with respect to the
Guarantee Payments shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.04. ENFORCEMENT OF GUARANTEE. The Guarantor and the Guarantee
Trustee expressly acknowledge that (i) this Guarantee Agreement will be
deposited with the Guarantee Trustee to be held for the benefit of the Holders;
(ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on
behalf of the Holders; (iii) Holders representing not less than a Majority in
liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or other power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) if the Guarantee Trustee fails to enforce this Guarantee
Agreement as provided in clauses (ii) and (iii) above, any Holder may institute
a legal proceeding directly against the Guarantor to enforce its rights under
this Guarantee Agreement, without first instituting a legal proceeding against
the Issuer, the Guarantee Trustee or any other Person. Notwithstanding the
foregoing, if the Guarantor has failed to make a Guarantee Payment, a Holder may
directly institute a proceeding against the Guarantor for enforcement of this
Guarantee Agreement for such payment without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other Person.
SECTION 5.05. GUARANTEE OF PAYMENT. This Guarantee Agreement creates a
guarantee of payment and not merely of collection. This Guarantee Agreement will
not be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon the distribution
of the Debentures to the Holders as provided in the Declaration.
SECTION 5.06. SUBROGATION. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
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SECTION 5.07. INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01. LIMITATION OF TRANSACTIONS. So long as any Preferred
Securities remain outstanding, the Guarantor agrees that it will not declare or
pay dividends on, or redeem, purchase, acquire or make a distribution or
liquidation payment with respect to, any of its common stock or preferred stock
(other than (a) dividends or distributions in shares of, or options, warrants,
rights to subscribe for or purchase shares of, common stock of the Guarantor,
(b) any declaration of a dividend in connection with the implementation of a
shareholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
as a result of a reclassification of the Guarantor's capital stock or the
exchange or the conversion of one class or series of the Guarantor's capital
stock for another class or series of the Guarantor's capital stock, (d) the
payment of accrued dividends and the purchase of fractional interests in shares
of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
or (e) purchases of the Guarantor's common stock related to the issuance of the
Guarantor's common stock or rights under any of the Guarantor's benefit plans
for its directors, officers or employees, any of the Guarantor's dividend
reinvestment plans or stock purchase plans, or any of the benefit plans of any
of the Guarantor's Affiliates, for such Affiliate's directors, officers or
employees) or make any guarantee payment with respect thereto, if at such time
(i) the Guarantor shall be in default with respect to its Guarantee Payments or
other payment obligations hereunder, (ii) there shall have occurred any event of
default under the Declaration or (iii) the Guarantor shall have given notice of
its election of an Extended Interest Payment Period and such period, or any
extension thereof, is continuing. In addition, so long as any Preferred
Securities remain outstanding, the Guarantor agrees that it (i) will remain the
sole direct or indirect owner of all of the outstanding Common Securities and
shall not cause or permit the Common Securities to be transferred except to the
extent such transfer is permitted under Section 9.01 of the Declaration;
provided that any permitted successor of the Guarantor under the Indenture may
succeed to the Guarantor's ownership of the Common Securities and (ii) will use
reasonable efforts to cause the Issuer to continue to be treated as a grantor
trust for United States federal income tax purposes except in connection with a
distribution of Debentures as provided in the Declaration.
SECTION 6.02. SUBORDINATION. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, including the
Debentures, except those made pari passu or
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subordinate by their terms, and (ii) senior to all capital stock (other than the
most senior preferred stock issued, from time to time, if any, by the Guarantor,
which preferred stock will rank pari passu with this Guarantee Agreement) now or
hereafter issued by the Guarantor and to any guarantee now or hereafter entered
into by the Guarantor in respect of any of its capital stock (other than the
most senior preferred stock issued, from time to time, if any, by the
Guarantor). The Guarantor's obligations under this Guarantee Agreement will rank
pari passu with respect to obligations under other guarantee agreements which it
may enter into from time to time to the extent that (i) such agreements shall be
entered into in substantially the form hereof and provide for comparable
guarantees by the Guarantor of payment on preferred securities issued by other
trusts, partnerships or other entities affiliated with the Guarantor that are
financing vehicles of the Guarantor and (ii) the debentures or other evidences
of indebtedness of the Guarantor relating to such preferred securities are
junior subordinated, unsecured indebtedness of the Guarantor.
ARTICLE 7
TERMINATION
SECTION 7.01. TERMINATION. This Guarantee Agreement shall terminate and be
of no further force and effect (i) upon full payment of the Redemption Price of
all Preferred Securities, (ii) upon the distribution of Debentures to Holders
and holders of Common Securities in exchange for all of the Preferred Securities
and Common Securities or (iii) upon full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer. Notwithstanding
the foregoing, this Guarantee Agreement will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder must restore payment
of any sums paid with respect to the Preferred Securities or under this
Guarantee Agreement.
ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.01. EXCULPATION.
------------ -----------
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Holder 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 Guarantee Agreement and
in a manner such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee
Agreement 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
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care by or on behalf of the Guarantor, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
SECTION 8.02. INDEMNIFICATION. To the fullest extent permitted by
applicable law, the Guarantor shall indemnify and hold harmless each Indemnified
Person from and against any loss, liability, expense, damage or claim incurred
by such Indemnified Person by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this
Guarantee Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, liability, expense, damage or claim incurred
by such Indemnified Person by reason of negligence or willful misconduct with
respect to such acts or omissions.
SECTION 8.03. SURVIVE TERMINATION. The provisions of Sections 8.01 and 8.02
shall survive the termination of this Guarantee Agreement or the resignation or
removal of the Guarantee Trustee.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assignees,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders then outstanding. Except in connection with a
consolidation, merger or sale involving the Guarantor that is permitted under
Article Ten of the Indenture, the Guarantor shall not assign its obligations
hereunder.
SECTION 9.02. AMENDMENTS. Except with respect to any changes which do not
adversely affect the rights of Holders in any material respect (in which case no
consent of Holders will be required), this Guarantee Agreement may only be
amended with the prior approval of the Guarantor and the Holders of not less
than a Majority in liquidation amount of the Preferred Securities. The
provisions of Section 12.02 of the Declaration concerning meetings of Holders
shall apply to the giving of such approval.
SECTION 9.03. NOTICES. Any notice, request or other communication required
or permitted to be given hereunder shall be in writing, duly signed by the party
giving such notice, and delivered, telecopied or mailed by first class mail as
follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
Litchfield Financial Corporation, 430 Main Street, P.O. Box 488,
Williamstown, MA 01267, Telecopy: (413) 458-1020
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(b) if given to the Guarantee Trustee, to the address set forth below or
such other address as the Guarantee Trustee may give notice of to the Holders:
The Bank of New York 101 Barclay Street Floor 21 West New York, New York
10286 Attention: Corporate Trust Trustee Administration Telecopy: (212)
815-5915
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 9.04. GENDERS. The masculine, feminine and neuter genders used
herein shall include the masculine, feminine and neuter genders.
SECTION 9.05. BENEFIT. This Guarantee Agreement is solely for the benefit
of the Holders and subject to Section 3.01(a) is not separately transferable
from the Preferred Securities.
SECTION 9.06. GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
SECTION 9.07. COUNTERPARTS. This Guarantee Agreement may be executed in
counterparts, each of which shall be an original; but such counterparts shall
together constitute one and the same instrument.
SECTION 9.08. LIMITED LIABILITY. The Holders, in their capacities as such,
shall not be personally liable for any liabilities or obligations of the
Guarantor arising out of this Guarantee Agreement, and the parties hereby agree
that the Holders, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to the stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
LITCHFIELD FINANCIAL CORPORATION
By:
--------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Guarantee
Trustee
By:
--------------------------------
Name:
Title:
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<PAGE> 1
EXHIBIT 5.1
April 14, 1999
Litchfield Financial Corporation
430 Main Street
Williamstown, MA 01267
Re: Litchfield Financial Corporation
--------------------------------
Ladies and Gentlemen:
We have acted as counsel for Litchfield Financial Corporation, a
Massachusetts corporation (the "Company"), in connection with the preparation of
the Registration Statement on Form S-3 (the "Registration Statement"), filed by
Litchfield Capital Trust I and Litchfield Capital Trust II, each a statutory
business trust created under the laws of the State of Delaware (the "Trusts"),
and the Company with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), on April
14, 1999, relating to the proposed issuance and sale from time to time of up to
(i) $100,000,000 aggregate principal amount of the Company's Junior Subordinated
Debt Securities (the "Debt Securities"), each series of which will be issued
pursuant to a Junior Subordinated Indenture (the "Indenture") to be entered into
between the Company and The Bank of New York, as Trustee, as such Indenture will
be supplemented, in connection with the issuance of each such series, by a
supplemental indenture creating such series (each, a "Supplemental Indenture"),
(ii) $100,000,000 aggregate liquidation amount of preferred securities of the
Trusts (the "Preferred Securities") and (iii) the Company's guarantees with
respect to the Preferred Securities (each, a "Guarantee" and, collectively, the
"Guarantees"), each of which Guarantees will be issued pursuant to a guarantee
agreement between the Company and The Bank of New York as Trustee thereunder
(each, a "Guarantee Agreement" and, collectively, the "Guarantee Agreements").
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Registration Statement.
As such counsel, we have examined, among other things, originals or
copies identified to our satisfaction as being true copies of the originals of
the following documents:
(a) Charter Documents of the Company and its subsidiaries and all
amendments thereto;
<PAGE> 2
Litchfield Financial Corporation
April 14, 1999
Page 2
(b) By-Laws of the Company and its subsidiaries as amended and now
in effect;
(c) forms (filed as exhibits to the Registration Statement) of the
Indenture and the Guarantee Agreements (the "Documents");
(d) minute books of the Company as furnished to us by the Company,
(e) certificates of public officials and of representatives of the
Company; and
(f) statutes and other instruments or documents.
In giving such opinions, we have relied upon certificates of officers
of the Company with respect to the accuracy of the material factual matters
contained in such certificates. In making our examination, we have assumed that
all signatures on documents examined by us are genuine, that all documents
submitted to us as originals are authentic, that all documents submitted to
us as certified or photostatic copies conform with the original copies of such
documents and that each of the parties to the Documents other than the Company
has all requisite power and authority to enter into and perform its respective
obligations in connection with the transactions described in the Documents to
which it is a party.
Based upon the foregoing, and based on the qualifications hereinafter
set forth, and after giving consideration to such other legal matters as we deem
necessary, it is our opinion that:
1. With respect to a series of Debt Securities, when (i) the
Indenture and the Supplemental Indenture relating to such series of Debt
Securities have been duly authorized and validly executed and delivered by each
of the parties thereto; (ii) the Indenture has been duly qualified under the
Trust Indenture Act of 1939, as amended; (iii) the Board of Directors of the
Company (the "Board") has taken all necessary corporate action to approve and
establish the terms of such series of Debt Securities, to approve the issuance
thereof and the terms of the offering thereof and related matters; and (iv) such
Debt Securities have been duly executed, authenticated, issued and delivered in
accordance with the provisions of the Indenture and the Supplemental Indenture
relating to such series of Debt Securities and the provisions of the applicable
definitive purchase, underwriting or similar agreement approved by the Board
upon payment of the consideration therefor provided for therein, such Debt
Securities will constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as the
enforceability thereof is subject to the effect of (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws relating to or
affecting creditors' rights generally, (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and (iii) public policy considerations of court decisions
which may limit the rights of any party to obtain certain remedies and to
indemnification, including indemnification for tortious or criminal acts or
violations of law.
<PAGE> 3
Litchfield Financial Corporation
April 14, 1999
Page 3
2. With respect to a Guarantee to be issued pursuant to the
applicable Guarantee Agreement, when (i) such Guarantee Agreement has been duly
authorized, validly executed and delivered by each of the parties thereto, (ii)
such Guarantee Agreement has been duly qualified under the Trust Indenture Act
of 1939, as amended and (iii) the Board has taken all necessary corporate action
to approve the issuance thereof and the terms of the offering thereof and
related matters; such Guarantee will constitute a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as the enforceability thereof is subject to the effect of (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other laws relating to or affecting creditors' rights generally, (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and (iii) public policy considerations or
court decisions which may limit the rights of any party to obtain certain
remedies and to indemnification, including indemnification for tortious or
criminal acts or violations of law.
At your request, this opinion is being furnished to you for filing as
Exhibit 5.1 to the Registration Statement. Additionally, we hereby consent to
the reference to our Firm under the caption "Legal Matters" in the Registration
Statement. In giving such consent, we do not thereby concede that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
/s/ Hutchins, Wheeler & Dittmar
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
<PAGE> 1
Exhibit 5.2.1
[Letterhead of Richards, Layton & Finger, P.A.]
April 13, 1999
Litchfield Capital Trust I
c/o Litchfield Financial Corporation
430 Main Street
P.O. Box 488
Williamstown, MA 01267
Re: Litchfield Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for Litchfield Financial
Corporation, a Massachusetts corporation (the "Company"), and Litchfield
Capital Trust I, a Delaware business trust (the "Trust"), in connection with
the matters set forth herein. At your request, this opinion is being furnished
to you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of the Trust, dated as of April 12, 1999
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on April 12, 1999;
(b) The Declaration of Trust of the Trust, dated as of April 12, 1999,
among the Company and the trustees of the Trust named therein;
(c) A form of Amended and Restated Declaration of Trust of the Trust
(including Exhibits A, B and C thereto) (the "Declaration"), to be entered
into among the Company, as sponsor, the trustees of the Trust named therein,
and the holders, from time to time, of undivided beneficial interests in the
assets of the Trust, attached as an exhibit to the Registration Statement (as
defined below);
(d) The Registration Statement on Form S-3 (the "Registration Statement"),
including a prospectus (the "Prospectus") and a prospectus supplement, relating
to the Trust
<PAGE> 2
Litchfield Capital Trust I
April 13, 1999
Page 2
Preferred Securities of the Trust representing undivided beneficial interests in
the assets of the Trust (each, a "Preferred Security" and collectively, the
"Preferred Securities"), as proposed to be filed by the Company, the Trust and
others with the Securities and Exchange Commission on or about April 13, 1999;
and
(e) A Certificate of Good Standing for the Trust, dated April 13, 1999,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are used
as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration and
the Certificate are in full force and effect and have not been amended, (ii)
except to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Declaration and the Registration Statement, and (vii) that
the Preferred Securities are issued and sold to the Preferred Security Holders
in accordance with the Declaration and the Registration Statement.
<PAGE> 3
Litchfield Capital Trust I
April 13, 1999
Page 3
We have not participated in the preparation of the Registration Statement and
assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered only
with respect to Delaware laws and rules, regulations and orders thereunder that
are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. In addition, we hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
<PAGE> 1
Exhibit 5.2.2
[Letterhead of Richards, Layton & Finger, P.A.]
April 13, 1999
Litchfield Capital Trust II
c/o Litchfield Financial Corporation
430 Main Street
P.O. Box 488
Williamstown, MA 01267
Re: Litchfield Capital Trust II
Ladies and Gentlemen:
We have acted as special Delaware counsel for Litchfield Financial
Corporation, a Massachusetts corporation (the "Company"), and Litchfield
Capital Trust II, a Delaware business trust (the "Trust"), in connection with
the matters set forth herein. At your request, this opinion is being furnished
to you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies of the
following:
(a) The Certificate of Trust of the Trust, dated as of April 12, 1999
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on April 12, 1999;
(b) The Declaration of Trust of the Trust, dated as of April 12, 1999,
among the Company and the trustees of the Trust named therein;
(c) A form of Amended and Restated Declaration of Trust of the Trust
(including Exhibits A, B and C thereto) (the "Declaration"), to be entered
into among the Company, as sponsor, the trustees of the Trust named therein,
and the holders, from time to time, of undivided beneficial interests in the
assets of the Trust, attached as an exhibit to the Registration Statement (as
defined below);
(d) The Registration Statement on Form S-3 (the "Registration Statement"),
including a prospectus (the "Prospectus") and a prospectus supplement, relating
to the Trust
<PAGE> 2
Litchfield Capital Trust II
April 13, 1999
Page 2
Preferred Securities of the Trust representing undivided beneficial interests in
the assets of the Trust (each, a "Preferred Security" and collectively, the
"Preferred Securities"), as proposed to be filed by the Company, the Trust and
others with the Securities and Exchange Commission on or about April 13, 1999;
and
(e) A Certificate of Good Standing for the Trust, dated April 13, 1999,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are used
as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Declaration and
the Certificate are in full force and effect and have not been amended, (ii)
except to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Declaration and the Registration Statement, and (vii) that
the Preferred Securities are issued and sold to the Preferred Security Holders
in accordance with the Declaration and the Registration Statement.
<PAGE> 3
Litchfield Capital Trust II
April 13, 1999
Page 3
We have not participated in the preparation of the Registration Statement and
assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered only
with respect to Delaware laws and rules, regulations and orders thereunder that
are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement. In addition, we hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
<PAGE> 1
EXHIBIT 8.1
April 14, 1999
Litchfield Financial Corporation
430 Main Street
Williamstown, MA 01267
Litchfield Capital Trust I
430 Main Street
Williamstown, MA 01267
Re: Tax Opinion
-----------
Ladies and Gentlemen:
We have acted as counsel to Litchfield Financial Corporation, a
Massachusetts corporation ("Litchfield"), and Litchfield Capital Trust I and
Litchfield Capital Trust II, each of which is a Delaware statutory business
trust (collectively, the "Trusts"), relating to the registration of (i)
$100,000,000 aggregate principal amount of Junior Subordinated Debentures of
Litchfield and (ii) $100,000,000 aggregate liquidation amount of preferred
securities of the Trusts. In that connection, reference is made to the
registration statement under the Securities Act of 1933, as amended, of
Litchfield and the Trusts on Form S-3 (Registration Nos. 333- __________,
333-__________01 and 333-__________-02) filed with the Securities and Exchange
Commission (the "Commission") on April __, 1999 (the "Prospectus"), and a
prospectus supplement dated April __, 1999, (the "Prospectus Supplement")
describing the __________% Series A Trust Preferred Securities, of Litchfield
Capital Trust I (the "Preferred Securities") and the __________% Series A Junior
Subordinated Debentures due 2019 of Litchfield (the "Junior Subordinated
Debentures"). Capitalized terms not otherwise defined herein shall have the
meaning specified in the Prospectus and the Prospectus Supplement.
As such counsel, we have examined, among other things, originals or
copies identified to our satisfaction as being true copies of the originals of
the following documents:
<PAGE> 2
(a) the Prospectus; and
(b) the Prospectus Supplement.
In addition, we have assumed that the Junior Subordinated Debentures and the
Preferred Securities will be issued in accordance with the operative documents
described in the Prospectus and the Prospectus Supplement.
Based on the assumptions set forth under the heading "Certain Federal
Income Tax Consequences" in the Prospectus Supplement we are of the opinion that
statements of legal conclusion set forth under such heading reflect the material
federal income tax consequences of the ownership and disposition of the
Preferred Securities. This opinion represents only our best judgment as to such
consequences and is not binding on the Internal Revenue Service or any court of
law, tribunal, administrative agency or other governmental body. The conclusions
are based on the Internal Revenue Code of 1986, as amended, final and temporary
Treasury Regulations promulgated thereunder, published administrative positions
of the Internal Revenue Service, and reported judicial decisions, all as
existing on the date hereof. No assurance can be given that future legislative,
administrative or judicial changes or interpretations, on either a prospective
or retroactive basis, would not adversely affect the accuracy of such statements
of legal conclusion in the Prospectus Supplement. Nevertheless, by rendering
this opinion, we undertake no responsibility to advise you of any new
developments in the application or interpretation of the federal income tax
laws.
Our opinion is limited to tax matters specifically covered hereby and
may be relied upon only with respect to such matters. This opinion letter shall
not be construed as or deemed to be a guaranty or insuring agreement.
This opinion is intended for the benefit of Litchfield, the Trusts, and
the holders of the Preferred Securities and may not be relied upon or utilized
for any other purpose or by any other person and may not be made available to
any other person without our prior written consent. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement and to the
references to this Firm in the section captioned "Certain Federal Income Tax
Consequences" in the Prospectus Supplement. In giving this consent, we do not
thereby admit that we come within the category of a person whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Commission thereunder.
Very truly yours,
/s/ Hutchins, Wheeler & Dittmar
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
<PAGE> 1
Exhibit 12.1
LITCHFIELD FINANCIAL CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 4318 5515 8574 10737 14369
INTEREST EXPENSE 3158 6138 7197 10675 14265
---- ----- ----- ----- -----
TOTAL 7476 11653 15771 21412 28634
==== ===== ===== ===== =====
TOTAL 7476 11653 15771 21412 28634
---- ----- ----- ----- -----
INTEREST EXPENSE 3158 6138 7197 10675 14265
RATIO OF EARNINGS TO FIXED
CHARGES 2.37 1.90 2.19 2.01 2.01
==== ===== ===== ===== =====
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333- ) of Litchfield Financial
Corporation for the registration of Trust Preferred Securities, and to the
incorporation by reference therein of our report dated January 30, 1999, with
respect to the consolidated financial statements of Litchfield Financial
Corporation incorporated by reference in its Annual Report (Form 10-K) for the
year ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Boston, Massachusetts
April 12, 1999
<PAGE> 1
EXHIBIT 25.1
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
LITCHFIELD FINANCIAL CORPORATION
(Exact name of obligor as specified in its charter)
Massachusetts 04-3023928
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
430 Main Street 01267
Williamstown, MA (Zip code)
(Address of principal executive offices)
---------------------------
Junior Subordinated Debt Securities
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street, New York, N.Y. 10006,
and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 13th day of April, 1999.
THE BANK OF NEW YORK
By: /s/ REMO J. REALE
--------------------------------
Name: REMO J. REALE
Title: ASSISTANT VICE PRESIDENT
-3-
<PAGE> 4
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and currency
and coin............................................. $ 3,951,273
Interest-bearing balances............................. 4,134,162
Securities:
Held-to-maturity securities........................... 932,468
Available-for-sale securities......................... 4,279,246
Federal funds sold and Securities purchased
under agreements to resell............................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............................................37,861,802
LESS: Allowance for loan and
lease losses......................................... 619,791
LESS: Allocated transfer risk
reserve.............................................. 3,572
Loans and leases, net of unearned income,
allowance, and reserve............................... 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including
capitalized leases)................................... 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries
and associated companies.............................. 196,032
Customers' liability to this bank on acceptances
outstanding........................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
-----------
Total assets........................................... $60,077,664
===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................................... $27,020,578
Noninterest-bearing................................... 11,271,304
Interest-bearing...................................... 15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................... 17,197,743
Noninterest-bearing................................... 103,007
Interest-bearing...................................... 17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase.............................. 1,761,170
Demand notes issued to the U.S. Treasury............... 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less........... 1,903,700
With remaining maturity of more than one
year through three years............................. 0
With remaining maturity of more than three years...... 31,639
Bank's liability on acceptances executed and
outstanding........................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
-----------
Total liabilities...................................... 54,583,127
===========
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments....
(29,725)
-----------
Total equity capital................................... 5,494,537
-----------
Total liabilities and equity capital................... $60,077,664
===========
</TABLE>
<PAGE> 6
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Gerald L. Hassell ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 25.2
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
Litchfield Capital Trust I
(Exact name of obligor as specified in its charter)
Delaware (To Be Applied For)
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
430 Main Street 01267
Williamstown, MA (Zip code)
(Address of principal executive offices)
---------------------------
Trust Preferred Securities
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York, N.Y.
New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 13th day of April, 1999.
THE BANK OF NEW YORK
By: /s/ REMO J. REALE
--------------------------------
Name: REMO J. REALE
Title: ASSISTANT VICE PRESIDENT
-3-
<PAGE> 4
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and currency
and coin............................................. $ 3,951,273
Interest-bearing balances............................. 4,134,162
Securities:
Held-to-maturity securities........................... 932,468
Available-for-sale securities......................... 4,279,246
Federal funds sold and Securities purchased
under agreements to resell............................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............................................37,861,802
LESS: Allowance for loan and
lease losses......................................... 619,791
LESS: Allocated transfer risk
reserve.............................................. 3,572
Loans and leases, net of unearned income,
allowance, and reserve............................... 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including
capitalized leases)................................... 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries
and associated companies.............................. 196,032
Customers' liability to this bank on acceptances
outstanding........................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
-----------
Total assets........................................... $60,077,664
===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................................... $27,020,578
Noninterest-bearing................................... 11,271,304
Interest-bearing...................................... 15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................... 17,197,743
Noninterest-bearing................................... 103,007
Interest-bearing...................................... 17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase.............................. 1,761,170
Demand notes issued to the U.S. Treasury............... 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less........... 1,903,700
With remaining maturity of more than one
year through three years............................. 0
With remaining maturity of more than three years...... 31,639
Bank's liability on acceptances executed and
outstanding........................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
-----------
Total liabilities...................................... 54,583,127
===========
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments....
(29,725)
-----------
Total equity capital................................... 5,494,537
-----------
Total liabilities and equity capital................... $60,077,664
===========
</TABLE>
<PAGE> 6
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Gerald L. Hassell ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 25.3
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
Litchfield Capital Trust II
(Exact name of obligor as specified in its charter)
Delaware (To Be Applied For)
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
430 Main Street 01267
Williamstown, MA (Zip code)
(Address of principal executive offices)
---------------------------
Trust Preferred Securities
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of New York 2 Rector Street, New York, N.Y.
10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 13th day of April, 1999.
THE BANK OF NEW YORK
By: /s/ REMO J. REALE
--------------------------------
Name: REMO J. REALE
Title: ASSISTANT VICE PRESIDENT
-3-
<PAGE> 4
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and currency
and coin............................................. $ 3,951,273
Interest-bearing balances............................. 4,134,162
Securities:
Held-to-maturity securities........................... 932,468
Available-for-sale securities......................... 4,279,246
Federal funds sold and Securities purchased
under agreements to resell............................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............................................37,861,802
LESS: Allowance for loan and
lease losses......................................... 619,791
LESS: Allocated transfer risk
reserve.............................................. 3,572
Loans and leases, net of unearned income,
allowance, and reserve............................... 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including
capitalized leases)................................... 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries
and associated companies.............................. 196,032
Customers' liability to this bank on acceptances
outstanding........................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
-----------
Total assets........................................... $60,077,664
===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................................... $27,020,578
Noninterest-bearing................................... 11,271,304
Interest-bearing...................................... 15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................... 17,197,743
Noninterest-bearing................................... 103,007
Interest-bearing...................................... 17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase.............................. 1,761,170
Demand notes issued to the U.S. Treasury............... 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less........... 1,903,700
With remaining maturity of more than one
year through three years............................. 0
With remaining maturity of more than three years...... 31,639
Bank's liability on acceptances executed and
outstanding........................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
-----------
Total liabilities...................................... 54,583,127
===========
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments....
(29,725)
-----------
Total equity capital................................... 5,494,537
-----------
Total liabilities and equity capital................... $60,077,664
===========
</TABLE>
<PAGE> 6
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Gerald L. Hassell ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 25.4
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
Litchfield Capital Trust I
(Exact name of obligor as specified in its charter)
Delaware (To Be Applied For)
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
430 Main Street 01267
Williamstown, MA (Zip code)
(Address of principal executive offices)
---------------------------
Trust Preferred Securities
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York, N.Y.
New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 13th day of April, 1999.
THE BANK OF NEW YORK
By: /s/ REMO J. REALE
--------------------------------
Name: REMO J. REALE
Title: ASSISTANT VICE PRESIDENT
-3-
<PAGE> 4
EXHIBIT 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and currency
and coin............................................. $ 3,951,273
Interest-bearing balances............................. 4,134,162
Securities:
Held-to-maturity securities........................... 932,468
Available-for-sale securities......................... 4,279,246
Federal funds sold and Securities purchased
under agreements to resell............................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............................................37,861,802
LESS: Allowance for loan and
lease losses......................................... 619,791
LESS: Allocated transfer risk
reserve.............................................. 3,572
Loans and leases, net of unearned income,
allowance, and reserve............................... 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including
capitalized leases)................................... 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries
and associated companies.............................. 196,032
Customers' liability to this bank on acceptances
outstanding........................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
-----------
Total assets........................................... $60,077,664
===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................................... $27,020,578
Noninterest-bearing................................... 11,271,304
Interest-bearing...................................... 15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................... 17,197,743
Noninterest-bearing................................... 103,007
Interest-bearing...................................... 17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase.............................. 1,761,170
Demand notes issued to the U.S. Treasury............... 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less........... 1,903,700
With remaining maturity of more than one
year through three years............................. 0
With remaining maturity of more than three years...... 31,639
Bank's liability on acceptances executed and
outstanding........................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
-----------
Total liabilities...................................... 54,583,127
===========
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments....
(29,725)
-----------
Total equity capital................................... 5,494,537
-----------
Total liabilities and equity capital................... $60,077,664
===========
</TABLE>
<PAGE> 6
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Gerald L. Hassell ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 25.5
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
---------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------------------
LITCHFIELD FINANCIAL CORPORATION
(Exact name of obligor as specified in its charter)
Massachusetts 04-3023928
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
430 Main Street 01267
Williamstown, MA (Zip code)
(Address of principal executive offices)
---------------------------
Guarantee of Trust Preferred Securities of
Litchfield Capital Trust II
(Title of the indenture securities)
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York, N.Y.
New York 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y.
10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
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<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 13th day of April, 1999.
THE BANK OF NEW YORK
By: /s/ REMO J. REALE
--------------------------------
Name: REMO J. REALE
Title: ASSISTANT VICE PRESIDENT
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<PAGE> 4
EXHIBIT 7
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Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1998, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and currency
and coin............................................. $ 3,951,273
Interest-bearing balances............................. 4,134,162
Securities:
Held-to-maturity securities........................... 932,468
Available-for-sale securities......................... 4,279,246
Federal funds sold and Securities purchased
under agreements to resell............................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income...............................................37,861,802
LESS: Allowance for loan and
lease losses......................................... 619,791
LESS: Allocated transfer risk
reserve.............................................. 3,572
Loans and leases, net of unearned income,
allowance, and reserve............................... 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including
capitalized leases)................................... 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries
and associated companies.............................. 196,032
Customers' liability to this bank on acceptances
outstanding........................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
-----------
Total assets........................................... $60,077,664
===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices................................... $27,020,578
Noninterest-bearing................................... 11,271,304
Interest-bearing...................................... 15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................... 17,197,743
Noninterest-bearing................................... 103,007
Interest-bearing...................................... 17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase.............................. 1,761,170
Demand notes issued to the U.S. Treasury............... 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less........... 1,903,700
With remaining maturity of more than one
year through three years............................. 0
With remaining maturity of more than three years...... 31,639
Bank's liability on acceptances executed and
outstanding........................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
-----------
Total liabilities...................................... 54,583,127
===========
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments....
(29,725)
-----------
Total equity capital................................... 5,494,537
-----------
Total liabilities and equity capital................... $60,077,664
===========
</TABLE>
<PAGE> 6
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni )
Gerald L. Hassell ) Directors
Alan R. Griffith )
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