<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1996
----------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-11030
---------------------
First USA, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 75-2291060
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1601 Elm Street, 47th Floor, Dallas, Texas 75201
- --------------------------------------------------------------------------------
(address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code 214-849-2000
----------------
N/A
- --------------------------------------------------------------------------------
Former Name, Former Address and former Fiscal Year, If Changed Since Last Report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _______
-------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at December 31, 1996
- ---------------------------------------- ------------------------------------
<S> <C>
Common Stock, $.01 par value 123,016,240 shares
6 1/4% Mandatory Convertible Preferred
Stock, $.01 par value 5,750,000 shares
</TABLE>
<PAGE>
FIRST USA, INC.
FORM 10-Q QUARTERLY REPORT
Table of Contents
-----------------
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
----
<S> <C> <C>
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets -
December 31, 1996 (Unaudited) and June 30, 1996.......................... 3
Condensed Consolidated Statements of Income (Unaudited) -
Three and Six Months Ended December 31, 1996 and 1995.................... 4
Condensed Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended December 31, 1996 and 1995.............................. 5
Notes to Interim Condensed Consolidated Financial
Statements (Unaudited)................................................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............................ 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................ 24
Item 4. Submission of Matters to a Vote of Security Holders...................... 24
Item 6. Exhibits and Reports on Form 8-K
Index of Exhibits........................................................ 25
Reports on Form 8-K...................................................... 27
Signatures ....................................................................... 28
</TABLE>
<PAGE>
P A R T I. F I N A N C I A L I N F O R M A T I O N
FIRST USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
-------------- --------------
(Unaudited) (See Note A)
<S> <C> <C>
ASSETS
Cash and due from banks $ 173,626 $ 254,553
Short-term investments 2,473 40,701
Federal funds sold 330,200 97,450
-------------- --------------
Cash and cash equivalents 506,299 392,704
Investments, at cost (market value of $3,611,310 and $2,875,309
at December 31, 1996 and June 30, 1996, respectively) 3,608,418 2,903,091
Loans 5,195,859 3,564,434
Allowance for possible credit losses (122,587) (74,163)
-------------- --------------
Net loans 5,073,272 3,490,271
Premises and equipment, net 113,322 116,666
Accrued interest receivable 72,845 51,558
Due from securitizations 186,736 182,462
Customer base intangible, net 42,830 70,008
Other assets 601,857 428,741
-------------- --------------
$ 10,205,579 $ 7,635,501
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank notes and other borrowings $ 5,121,683 $ 3,356,506
Interest-bearing deposits 1,705,124 1,460,321
Federal funds purchased 1,536,450 1,308,460
Accrued interest payable 68,926 60,246
Accrued expenses and other liabilities 342,466 383,508
-------------- --------------
8,774,649 6,569,041
-------------- --------------
Company-obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely subordinated
debentures of the Company 200,000 -
Stockholders' equity
6 1/4% mandatory convertible preferred stock, $.01 par value 58 58
Common stock, $.01 par value 1,231 1,210
Additional paid-in capital 608,629 568,840
Retained earnings 621,012 496,352
-------------- --------------
1,230,930 1,066,460
-------------- --------------
$ 10,205,579 $ 7,635,501
============== ==============
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements.
3
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
--------------------------- ---------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
(See Note A) (See Note A)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 98,271 $ 86,153 $ 186,100 $ 158,161
Investments 54,152 44,920 104,522 85,326
Federal funds sold 4,220 1,488 6,179 3,781
------------ ------------ ------------ ------------
Total Interest Income 156,643 132,561 296,801 247,268
INTEREST EXPENSE
Bank notes and other borrowings 68,744 51,717 123,796 94,951
Deposits 23,341 31,936 44,104 64,628
Federal funds purchased 22,642 20,314 42,755 35,429
------------ ------------ ------------ ------------
Total Interest Expense 114,727 103,967 210,655 195,008
------------ ------------ ------------ ------------
NET INTEREST INCOME 41,916 28,594 86,146 52,260
PROVISION FOR POSSIBLE CREDIT LOSSES 75,750 19,672 105,377 40,903
------------ ------------ ------------ ------------
NET INTEREST INCOME (EXPENSE) AFTER PROVISION
FOR POSSIBLE CREDIT LOSSES (33,834) 8,922 (19,231) 11,357
OTHER OPERATING INCOME
Securitization income 255,876 213,890 507,303 409,611
Gain on sale of subsidiary common stock 106,878 - 106,878 -
Interchange income 13,843 4,335 25,375 7,653
Fee income 9,938 7,107 16,386 13,588
Other 37,505 27,049 81,662 47,269
------------ ------------ ------------ ------------
Total Other Operating Income 424,040 252,381 737,604 478,121
OTHER OPERATING EXPENSE
Postage, shipping, stationery and supplies 59,879 41,748 107,203 73,552
Salaries and employee benefits 49,738 34,714 100,254 65,958
Data processing and communications 36,604 25,384 71,101 48,965
Occupancy and equipment 17,775 11,505 33,550 21,491
Amortization of intangibles 15,384 13,925 30,535 27,698
Other 87,497 40,592 151,903 71,444
------------ ------------ ------------ ------------
Total Other Operating Expense 266,877 167,868 494,546 309,108
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES AND SUBSIDIARY
TRUST DISTRIBUTIONS 123,329 93,435 223,827 180,370
Provision for income taxes 43,827 34,506 80,269 66,546
Distributions on preferred securities of subsidiary trust,
net of taxes 370 370
------------ ------------ ------------ ------------
NET INCOME $ 79,132 $ 58,929 $ 143,188 $ 113,824
============ ============ ============ ============
Net income per share $ 0.58 $ 0.44 $ 1.05 $ 0.86
============ ============ ============ ============
Weighted average common and common
equivalent shares outstanding 136,960,979 133,294,990 136,056,694 133,030,744
============ ============ ============ ============
Cash dividends paid per common share $ 0.06 $ 0.03 $ 0.105 $ 0.06
============ ============ ============ ============
Cash dividends paid per preferred share $ 0.498 $ 0.498 $ 0.996 $ 0.996
============ ============ ============ ============
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements.
4
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
--------------------------------
1996 1995
------------- ------------
(See Note A)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 143,188 $ 113,824
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on sale of subsidiary common stock (106,878) -
Provision for possible credit losses 105,377 40,903
Provision for depreciation and amortization 70,104 51,241
Equity in earnings of subsidiary (3,306) -
Net changes in operating assets and liabilities:
Accrued interest receivable (21,356) (10,302)
Accrued interest payable 9,239 7,355
Accrued expenses and other liabilities (8,768) (25,955)
Other operating activities (62,618) 25,520
------------- ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 124,982 202,586
INVESTING ACTIVITIES
Proceeds from maturities of investments 421,249 290,373
Purchases of investments (1,145,436) (631,146)
Net increase in loans, excluding acquisitions and sales (4,393,436) (4,242,418)
Proceeds from sales of loans 2,684,040 3,806,559
Proceeds from sale of subsidiary common stock 139,814 -
Purchases of merchant portfolios, processing services and other acquisitions (192,871) (39,118)
Purchases of premises and equipment (48,927) (34,190)
Other investing activities 124 (12,872)
------------- ------------
NET CASH USED FOR INVESTING ACTIVITIES (2,535,443) (862,812)
FINANCING ACTIVITIES
Dividends paid to common stockholders (12,801) (6,976)
Dividends paid to preferred stockholders (5,727) (5,727)
Issuance of common stock, net 27,601 3,826
Net payments to trustees relating to securitizations (4,336) (3,171)
Net increase in bank notes and other borrowings 1,840,892 757,829
Net increase (decrease) in interest-bearing deposits 252,437 (337,028)
Net increase in federal funds purchased 227,990 498,985
Issuance of subsidiary trust mandatorily redeemable preferred securities 198,000 -
------------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,524,056 907,738
------------- ------------
INCREASE IN CASH AND CASH EQUIVALENTS 113,595 247,512
Cash and cash equivalents at beginning of period 392,704 236,778
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 506,299 $ 484,290
============= ============
</TABLE>
See Notes to Interim Condensed Consolidated Financial Statements.
5
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
First USA, Inc. and its subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For purposes of comparability, certain prior period
amounts have been reclassified. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
December 31, 1996 are not necessarily indicative of the results that may be
expected for the fiscal year ending June 30, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996.
On October 16, 1996, the Company's Board of Directors approved a two-for-one
common stock split and increased the quarterly cash dividend to $0.12 per share
on a present (pre-split) basis. The two-for-one common stock split was effected
in the form of a 100% stock dividend payable November 12, 1996, to stockholders
of record on October 28, 1996. The financial statements presented reflect the
retroactive treatment of this stock split.
Note B - Merger with BANC ONE CORPORATION
On January 19, 1997, the Company and BANC ONE CORPORATION ("BANC ONE") entered
into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
the Company would merge with and into BANC ONE and BANC ONE would be the
surviving corporation (the "Merger"). Pursuant to the Merger Agreement, each
share of the Company's common stock will be converted into 1.1659 shares of BANC
ONE common stock, subject to change under certain circumstances at BANC ONE's
option in order to prevent a termination of the Merger Agreement that would
otherwise occur if the trading price of BANC ONE's common stock falls below
$38.60 during the period prior to the Merger (the "Common Exchange Ratio"). The
Merger will qualify as a tax free reorganization under the Internal Revenue
Code. BANC ONE intends to account for the Merger under the pooling of interests
method of accounting.
Pursuant to the Merger Agreement, certain benefits of the Company's employees
vest upon approval of the Merger by the stockholders of the Company. In
particular, all of the Company's outstanding stock options will vest,
restrictions previously placed upon certain stock grants will lapse and the
loans pursuant to the First USA Paymentech, Inc. ("Paymentech") stock loan
program will be forgiven. The Company expects to incur additional costs related
to the Merger, all of which will be expensed upon consummation of the Merger.
The Merger is subject to approvals by the shareholders of the Company and BANC
ONE, the receipt of all required regulatory approvals and the making of all
necessary governmental filings. The Merger is expected to close in the second
quarter of calendar 1997.
6
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note C - Allowance for Possible Credit Losses
The activity in the allowance for possible credit losses is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- -----------------------
1996 1995 1996 1995
--------- -------- ---------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Beginning allowance for possible credit losses $ 76,617 $ 68,000 $ 74,163 $ 66,000
Provision for possible credit losses 75,750 19,672 105,377 40,903
Recoveries of loans previously charged off 2,259 5,136 4,203 6,738
Loans charged off (32,039) (22,793) (61,156) (43,626)
---------- --------- ----------- ----------
Ending allowance for possible credit losses $ 122,587 $ 70,015 $ 122,587 $ 70,015
========== ========== =========== ==========
Ending allowance as a % of total loans 2.4 % 1.9 % 2.4 % 1.9 %
========== ========== =========== ==========
</TABLE>
The provision for possible credit losses for the six months ended December 31,
1996 includes an increase in the allowance for possible credit losses of $48.4
million due primarily to an increase in on-balance-sheet loans.
Note D - Financial Instruments with Off-Balance Sheet Risk
At December 31, 1996 and June 30, 1996, the Company had interest rate swap
agreements with notional amounts totaling $2.2 billion and $2.1 billion,
respectively. The Company enters into interest rate swap agreements to convert
fixed rate liabilities to floating rate liabilities as an efficient alternative
to floating rate funding sources.
Note E - Asset Securitization
The Company had outstanding securitizations of credit card loans of $17.2
billion and $15.2 billion at December 31, 1996 and June 30, 1996, respectively.
These transactions have been recorded as sales and the Company records no gain
at the time of sale. The associated net servicing fees are recognized monthly
over the lives of the transactions on an accrual basis and are included in
securitization income in the statements of income.
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,"
which provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities. In addition, the statement
provides standards for distinguishing transfers of financial assets that are
sales from transfers that are secured borrowings and provides implementation
guidance for securitization transactions and repurchase agreements. The
statement is effective for transactions occurring subsequent to
December 31,1996.
7
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note E - Asset Securitization -- continued
The Company is currently evaluating the effect of this statement on its
prospective consolidated financial statements and anticipates it will have to
begin the recognition of gains on securitization transactions as required by
SFAS No. 125. The Company anticipates additional expenses related to product
development and marketing to offset the effect of the gains on securitization
transactions. The Company will adopt the statement for all securitization
transactions occurring subsequent to December 31, 1996, including transfers of
receivables pursuant to existing securitization structures that occur after
December 31, 1996.
Note F - Paymentech Public Offering
In December 1996, Paymentech completed a public offering pursuant to which the
Company and Paymentech sold 4.3 million and 3.0 million shares of Paymentech
common stock, respectively, for $34 per share. During the second fiscal
quarter, net proceeds to the Company from the sale of a portion of its
investment in Paymentech were $139.8 million and the Company recognized a pre-
tax gain of $106.9 million, which is included in other operating income. As a
result of the offerings, the Company's ownership in Paymentech was reduced from
77% to 57%.
The Company currently accounts for its investment in Paymentech under the
equity method due to the insignificance of the Company's investment in
Paymentech to its consolidated financial statements. The Company previously
consolidated Paymentech in its financial statements.
Note G - Company-Obligated Redeemable Preferred Securities of Subsidiary Trust
Holding Solely Subordinated Debentures of the Company
During the quarter ended December 31, 1996, First USA Capital Trust I
(the "Capital Trust"), a wholly owned Delaware business trust, completed a $200
million underwritten offering of 9.33% tax deductible redeemable preferred
securities. The Capital Trust invested the proceeds from the redeemable
preferred securities in junior subordinated debentures, due January 15, 2027,
issued by the Company. Proceeds from the sale of the junior subordinated
debentures by the Company were used for general corporate purposes, including
capital contributions to operating subsidiaries.
8
<PAGE>
FIRST USA, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note H - Net Income per Share
Net income per share is calculated as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
-------------------------------- --------------------------------
1996 1995 1996 1995
--------------- ------------- -------------- --------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
Net income $ 79,132 $ 58,929 $ 143,188 $ 113,824
============== =============== ============== ===============
Average common shares outstanding 122,439,385 118,498,574 121,957,937 118,199,336
Common stock equivalents:
Stock options 4,938,644 5,213,466 4,515,807 5,248,458
Mandatory convertible preferred stock 9,582,950 9,582,950 9,582,950 9,582,950
-------------- --------------- -------------- ---------------
Weighted average common and common
equivalent shares outstanding 136,960,979 133,294,990 136,056,694 133,030,744
============== =============== ============== ===============
Net income per share $ 0.58 $ 0.44 $ 1.05 $ 0.86
============== =============== ============== ===============
</TABLE>
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company is one of the nation's largest providers of Visa and MasterCard
services through its wholly owned principal operating subsidiary, First USA
Bank. First USA Bank is an issuer of Visa and MasterCard credit cards with
approximately 15.9 million credit cards issued and $22.2 billion in managed
credit card loans outstanding at December 31, 1996. First USA Bank's
profitability is affected by loan growth, interest rate spread, Cardmember
usage, credit quality and marketing expenses.
The Company's newest wholly owned operating subsidiary, First USA Federal
Savings Bank ("FSB"), conducts its operations as a direct bank, offering
customers banking products via phone, mail and other electronic distribution
channels. FSB's current offerings of financial products include mortgages,
limited testing of auto and homeowners' insurance and unsecured installment
loans and soon is expected to include remote banking, retail certificates of
deposit, auto loans and other financial products.
First USA Paymentech, Inc. ("Paymentech") is the third largest payment
processor of bankcard transactions in the United States, according to published
industry sources, with approximately $30.9 billion in sales volume processed in
approximately 574.2 million transactions for the fiscal year ended June 30,
1996. As a result of Paymentech's public offerings which occurred during the
quarter ended December 31, 1996, the Company's ownership in Paymentech was
reduced from 77% to 57%.
Merger with BANC ONE Corporation
On January 19, 1997, the Company and BANC ONE CORPORATION ("BANC ONE") entered
into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
the Company would merge with and into BANC ONE and BANC ONE would be the
surviving corporation (the "Merger"). Pursuant to the Merger Agreement, each
share of the Company's common stock will be converted into 1.1659 shares of BANC
ONE common stock, subject to change under certain circumstances at BANC ONE's
option in order to prevent a termination of the Merger Agreement that would
otherwise occur if the trading price of BANC ONE's common stock falls below
$38.60 during the period prior to the Merger (the "Common Exchange Ratio"). The
Merger will qualify as a tax free reorganization under the Internal Revenue
Code. BANC ONE intends to account for the Merger under the pooling of interests
method of accounting.
Pursuant to the Merger Agreement, certain benefits of the Company's employees
vest upon approval of the Merger by the stockholders of the Company. In
particular, all of the Company's outstanding stock options will vest,
restrictions previously placed upon certain stock grants will lapse and the
loans pursuant to the Paymentech stock loan program will be forgiven. The
Company expects to incur additional costs related to the Merger, all of which
will be expensed upon consummation of the Merger.
The Merger is subject to approvals by the shareholders of the Company and BANC
ONE, the receipt of all required regulatory approvals and the making of all
necessary governmental filings. The Merger is expected to close in the second
quarter of calendar 1997.
Results of Operations
Net income for the quarter ended December 31, 1996, was $79.1 million, or
$0.58 per share, compared with net income of $58.9 million, or $0.44 per share,
for the quarter ended December 31, 1995. The increase in operating results is
attributable to the 28.9% growth of average managed loans from $16.1 billion to
$20.7 billion, increased credit card charge volume, an increase in managed loan
10
<PAGE>
Results of Operations -- continued
yield, a decrease in cost of funds, and increased payment processing volume.
These increases were partially offset by increased net credit losses. During
the quarter ended December 31, 1996, the Company recognized a $106.9 million
pre-tax gain on the sale of a portion of its investment in Paymentech. This
pre-tax gain was offset by additional provisions for possible credit losses and
increased expenses generally related to product development and marketing.
Net income for the six months ended December 31, 1996 was $143.2 million, or
$1.05 per share, compared with $113.8 million, or $0.86 per share, for the six
months ended December 31, 1995. Included in net income for the six months ended
December 31, 1996 is a one-time charge of $15.5 million, recorded by Paymentech,
related to an acquisition. This one-time charge reduced the Company's net
income by $7.4 million, or $0.06 per share. The increase in operating results
is attributable to the 32.1% growth of average managed loans, increased credit
card charge volume, an increase in managed loan yield, a decrease in cost of
funds, and increased payment processing volume. These increases were partially
offset by increased net credit losses. In December 1996, the Company recorded a
$106.9 million pre-tax gain on the sale of a portion of its investment in
Paymentech. This pre-tax gain was offset by additional provisions for possible
credit losses and increased expenses generally related to product development
and marketing.
On-balance-sheet loans increased from $3.6 billion at December 31, 1995 to
$5.2 billion as of December 31, 1996, which reflects the results of the
Company's direct solicitations, partially offset by the Company's completion of
securitizations of $5.4 billion.
Managed Portfolio Reporting and Analysis
It is management's practice to analyze its financial performance on a
"managed" portfolio basis, in addition to analyzing information as reported
under generally accepted accounting principles. The effect of securitizing
loans is to remove these loans from the balance sheet and to record net interest
income and fees less net credit losses on the securitized loans as
securitization income. Managed loan statistics include loans sold in
securitization transactions and the Company's on-balance-sheet loan portfolio.
The Company's consolidated statements of income and balance sheets are adjusted
to eliminate the effect of securitizing loans to analyze the data on a "managed"
portfolio basis.
The following table depicts the changes in the Company's key financial data as a
result of securitizing loans as of and for the three and six months ended
December 31, 1996 and 1995. The As Reported information is derived from
consolidated financial statements which have been prepared in conformity with
generally accepted accounting principles. Managed loan data include loans sold
in securitization transactions and the Company's on-balance-sheet loan
portfolio.
11
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended December 31,
----------------------------------------------------------------------
1996 1995
--------------------------------- ---------------------------------
As Reported Managed As Reported Managed
--------------- -------------- --------------- --------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Income Statement Statistics:
- ---------------------------
Net interest income $ 41,916 $ 395,164 $ 28,594 $ 263,332
Other operating income:
Securitization income 255,876 - 213,890 -
Gain on sale of subsidiary stock 106,878 106,878 - -
Interchange income 13,843 72,376 4,335 52,973
Fee income 9,938 70,910 7,107 44,407
Other 37,505 37,505 27,049 27,049
-------------- -------------- --------------- --------------
Total other operating income 424,040 287,669 252,381 124,429
Provision for possible credit losses 75,750 292,627 19,672 126,458
-------------- -------------- --------------- --------------
Net revenue after provision for
possible credit losses $ 390,206 $ 390,206 $ 261,303 $ 261,303
============== ============== =============== ==============
Balance Sheet and Other Statistics:
- ----------------------------------
Average loans $ 4,541,496 $ 20,714,292 $ 4,131,728 $ 16,069,091
End of period loans 5,195,859 22,404,152 3,592,564 17,454,639
Securitizations 17,208,293 - 13,862,075 -
Loan yield 8.66 % 13.34 % 8.34 % 12.67 %
Cost of funds 5.85 5.86 6.27 6.27
Delinquency rate 3.55 5.19 2.86 3.57
Net credit loss rate 2.62 4.76 1.71 3.10
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended December 31,
--------------------------------------------------------------
1996 1995
----------------------------- -------------------------------
As Reported Managed As Reported Managed
--------------- ----------- --------------- -------------
(Dollars in Thousands)
Income Statement Statistics:
- ---------------------------
<S> <C> <C> <C> <C>
Net interest income $ 86,146 $ 786,317 $ 52,260 $ 492,441
other operating income:
Securitization income 507,303 - 409,611 -
Gain on sale of subsidiary stock 106,878 106,878 - -
Interchange income 25,375 129,224 7,653 96,421
Fee income 16,386 124,234 13,588 83,205
Other 81,662 81,662 47,269 47,269
--------------- ------------ ------------- ------------
Total other operating income 737,604 441,998 478,121 226,895
Provision for possible credit losses 105,377 509,942 40,903 229,858
--------------- ------------ ------------- ------------
Net revenue after provision for
possible credit losses $ 718,373 $ 718,373 $ 489,478 $ 489,478
=============== ============ ============= ============
Balance Sheet and Other Statistics:
- ----------------------------------
Average loans $ 4,162,771 $19,928,216 $ 3,752,254 $ 15,084,124
End of period loans 5,195,859 22,404,152 3,592,564 17,454,639
Securitizations 17,208,293 - 13,862,075 -
Loan yield 8.94 % 13.59 % 8.43 % 12.68 %
Cost of funds 5.85 5.88 6.33 6.30
Delinquency rate 3.55 5.19 2.86 3.57
Net credit loss rate 2.74 4.63 1.97 2.99
</TABLE>
Net Interest Income
For the three months ended December 31, 1996, net interest income was $41.9
million, an increase of 46.6% from net interest income of $28.6 million for the
three months ended December 31, 1995. This increase was due to an increase in
interest income on loans of $12.1 million, primarily due to growth in on-
balance-sheet loans and increased yield. Interest income from investments,
excluding interest income from cash equivalents, increased $10.6 million due to
an increase in average investments from $2.5 billion to $3.3 billion, partially
offset by a decrease in yield from 6.84% to 6.43% for the three months ended
December 31, 1995 and 1996, respectively. Interest expense increased $10.8
million due to an increase in average interest-bearing liabilities from $6.6
billion to $7.8 billion, to supplement the funding of loan growth, which is
primarily funded by securitizations. This increase was partially offset by a
decrease in cost of funds from 6.27% to 5.85% for the three months ended
December 31, 1995 and 1996, respectively.
For the six months ended December 31, 1996, net interest income was $86.1
million, an increase of 64.8% from net interest income of $52.3 million for the
six months ended December 31, 1995. This increase was due to an increase in
interest income on loans of $27.9 million due to growth in on-balance-sheet
loans and an increase in yield. Interest income from investments, excluding
interest income from cash equivalents, increased $20.2 million due to an
increase in average investments from $2.4 billion to $3.1 billion, partially
offset by a decrease in yield from 6.80% to 6.49% for the six months ended
December 31, 1995 and 1996, respectively. Interest expense increased $15.6
million due to an increase in average interest-bearing liabilities from $6.1
billion to $7.1 billion, to supplement the funding of loan
13
<PAGE>
Net Interest Income -- continued
growth, which is primarily funded by securitizations. This increase was
partially offset by a decrease in cost of funds from 6.33% to 5.85% for the six
months ended December 31, 1995 and 1996, respectively.
Net interest margin on a managed basis was 6.49% for the three months ended
December 31, 1996, compared with 5.61% for the three months ended December 31,
1995. The increase is due to managed loan interest yield increasing from 12.67%
for the three months ended December 31, 1995 to 13.34% for the three months
ended December 31, 1996, reflecting changes in the overall pricing distribution
of the credit card loan portfolio. In addition, cost of funds decreased from
6.27% for the three months ended December 31, 1995 to 5.86% for the three months
ended December 31, 1996.
For the six months ended December 31, 1996, net interest margin on a managed
basis was 6.73%, compared with 5.57% for the six months ended December 31, 1995.
The increase is due to managed loan interest yield increasing from 12.68% for
the six months ended December 31, 1995 to 13.59% for the six months ended
December 31, 1996, reflecting changes in the overall pricing distribution of the
credit card loan portfolio. In addition, cost of funds decreased from 6.30% for
the six months ended December 31, 1995 to 5.88% for the six months ended
December 31, 1996.
14
<PAGE>
Net Interest Income -- continued
The following tables provide an analysis of net interest income, average
balance sheet data, net interest margin and interest rate spread for the three
month and six month periods ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
Three Months Ended December 31,
--------------------------------------------------------------------------------
1996 1995
--------------------------------------- --------------------------------------
Average Average Average Average
Balance Rate Interest Balance Rate Interest
------------- --------- ----------- ------------- --------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets
Cash equivalents $ 32,229 10.57 % $ 859 $ 108,262 8.20 % $ 2,232
Federal funds sold 309,824 5.40 4,220 100,610 5.88 1,488
Investments 3,313,288 6.43 53,293 2,494,557 6.84 42,688
Loans 4,541,496 8.66 98,271 4,131,728 8.34 86,153
------------- --------- ----------- ------------- --------- -----------
Total earning assets 8,196,837 7.64 % $ 156,643 6,835,157 7.76 % $ 132,561
Other assets 1,312,604 1,034,552
------------- -------------
Total assets $ 9,509,441 $ 7,869,709
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities
Bank notes and other borrowings $ 4,602,214 5.93 % $ 68,744 $ 3,246,978 6.34 % $ 51,717
Interest-bearing deposits 1,529,541 6.05 23,341 1,974,885 6.43 31,936
Federal funds purchased 1,647,585 5.45 22,642 1,370,762 5.90 20,314
------------- --------- ----------- ------------- --------- -----------
Total interest-bearing liabilities 7,779,340 5.85 % $ 114,727 6,592,625 6.27 % $ 103,967
Other liabilities 566,661 484,667
------------- -------------
Total liabilities 8,346,001 7,077,292
Stockholders' equity 1,163,440 792,417
------------- -------------
Total liabilities and stockholders'
equity $ 9,509,441 $ 7,869,709
============= =============
Net interest margin and net interest --------- ----------- --------- -----------
income (a) 2.05 % $ 41,916 1.67 % $ 28,594
========= =========== ========= ===========
Interest rate spread (b) 1.79 % 1.49 %
========= =========
OFF-BALANCE-SHEET TRANSACTIONS
Average securitized loans $16,172,796 14.66 % $ 592,585 $11,937,363 14.17 % $ 422,852
Securitized loans cost of funds 16,172,796 5.87 239,337 11,937,363 6.27 188,114
--------- ----------- --------- -----------
Securitized loans net interest rate spread 8.79 % $ 353,248 7.90 % $ 234,738
========= =========== ========= ===========
INCLUDING SECURITIZED LOANS
Total earning assets $24,369,633 12.30 % $ 749,228 $18,772,520 11.83 % $ 555,413
Interest-bearing liabilities 23,952,136 5.86 354,064 18,529,988 6.27 292,081
--------- ----------- --------- -----------
Net interest margin and net interest income (a) 6.49 % $ 395,164 5.61 % $ 263,332
========= =========== ========= ===========
Interest rate spread (b) 6.44 % 5.56 %
========= =========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended December 31,
----------------------------------------------------------------------------------
1996 1995
--------------------------------------- ----------------------------------------
Average Average Average Average
Balance Rate Interest Balance Rate Interest
------------- --------- ----------- ------------- --------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets
Cash equivalents $ 67,098 7.91 % $ 2,676 $ 83,732 8.72 % $ 3,670
Federal funds sold 226,436 5.41 6,179 127,276 5.91 3,781
Investments 3,138,240 6.49 101,846 2,401,083 6.80 81,656
Loans 4,162,771 8.94 186,100 3,752,254 8.43 158,161
------------- --------- ----------- ------------- --------- -----------
Total earning assets 7,594,545 7.82 % 296,801 6,364,345 7.77 % $ 247,268
Other assets 1,215,464 950,291
------------- -------------
Total assets $ 8,810,009 $ 7,314,636
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities
Bank notes and other borrowings $ 4,121,114 5.96 % $ 123,796 $ 2,958,147 6.38 % $ 94,951
Interest-bearing deposits 1,473,195 5.94 44,104 1,980,180 6.49 64,628
Federal funds purchased 1,552,556 5.46 42,755 1,188,704 5.93 35,429
------------- --------- ----------- ------------- --------- -----------
Total interest-bearing liabilities 7,146,865 5.85 % $ 210,655 6,127,031 6.33 % $ 195,008
Other liabilities 534,307 420,926
------------- -------------
Total liabilities 7,681,172 6,547,957
Stockholders' equity 1,128,837 766,679
------------- -------------
Total liabilities and stockholders'
equity $ 8,810,009 $ 7,314,636
============= =============
Net interest margin and net interest --------- ----------- --------- -----------
income (a) 2.27 % $ 86,146 1.64 % $ 52,260
========= =========== ========= ===========
Interest rate spread (b) 1.97 % 1.44 %
========= =========
OFF-BALANCE-SHEET TRANSACTIONS
Average securitized loans $15,765,445 14.82 % $1,168,394 $11,331,870 14.08 % $ 798,026
Securitized loans cost of funds 15,765,445 5.89 468,223 11,331,870 6.28 357,845
--------- ----------- --------- -----------
Securitized loans net interest rate spread 8.93 % $ 700,171 7.80 % $ 440,181
========= =========== ========= ===========
INCLUDING SECURITIZED LOANS
Total earning assets $23,359,990 12.54 % $1,465,195 $17,696,215 11.81 % $1,045,294
Interest-bearing liabilities 22,912,310 5.88 678,878 17,458,901 6.30 552,853
--------- ----------- --------- -----------
Net interest margin and net interest income (a) 6.73 % $ 786,317 5.57 % $ 492,441
========= =========== ========= ===========
Interest rate spread (b) 6.66 % 5.51 %
========= =========
</TABLE>
- ----------------------
(a) Net interest margin is computed by dividing net interest income by average
total earning assets.
(b) Interest rate spread is the average earning assets rate minus the average
interest-bearing liabilities rate.
16
<PAGE>
Other Operating Income
Other operating income was $424.0 million for the three months ended December
31, 1996 compared with $252.4 million for the three months ended December 31,
1995. The three months ended December 31, 1996 included a $106.9 million gain
of the sale of Paymentech common stock, a $42.0 million increase in
securitization income, due to the 35.5% increase in average securitized loans
partially offset by increased credit losses and a $10.5 million increase in
other operating income resulting primarily from increased payment processing
volume for Paymentech, partially offset by the change in method of accounting
for Paymentech to the equity method. During the three months ended December 31,
1996, Paymentech processed approximately $11.1 billion in sales volume in
approximately 342 million total transactions.
For the six months ended December 31, 1996, other operating income was $737.6
million, compared with $478.1 million for the six months ended December 31,
1995. The six months ended December 31, 1996 included a $106.9 million gain of
the sale of Paymentech common stock, a $97.7 million increase in securitization
income, due to the 39.1% increase in average securitized loans partially offset
by increased credit losses and a $34.4 million increase in other operating
income resulting primarily from increased payment processing volume for
Paymentech, partially offset by the change in method of accounting for
Paymentech to the equity method. During the six months ended December 31, 1996,
Paymentech processed approximately $20.1 billion in sales volume in
approximately 605 million total transactions.
Other Operating Expenses
Other operating expenses, excluding amortization of intangibles, increased
63.4% to $251.5 million for the three months ended December 31, 1996, versus
$153.9 million for the three months ended December 31, 1995. Postage, shipping,
stationery and supplies increased $18.1 million, data processing and
communications increased $11.2 million, and other expenses increased $46.9
million due to increased marketing costs associated with loan solicitations and
increased accounts, transaction volumes and balances, resulting primarily from
the 28.9% increase in average managed loans. Salaries and employee benefits
increased $15.0 million primarily due to the increase in number of employees.
Occupancy and equipment expenses increased $6.3 million primarily due to
facility expansions. The increases to other operating expenses were partially
offset by the Company's change in method of accounting for Paymentech to the
equity method.
Other operating expenses, excluding amortization of intangibles, increased
64.9% to $464.0 million for the six months ended December 31, 1996, versus
$281.4 million for the six months ended December 31, 1995. Postage, shipping,
stationery and supplies increased $33.7 million, data processing and
communications increased $22.1 million, and other expenses, which include
Paymentech's one-time charge of $15.5 million, increased $80.5 million due
primarily to increased marketing costs associated with loan solicitations and
increased accounts, transaction volumes and balances, resulting primarily from
the 32.1% increase in average managed loans. Salaries and employee benefits
increased $34.3 million primarily due to the increase in number of employees.
Occupancy and equipment expenses increased $12.1 million primarily due to
facility expansions. The increases to other operating expenses were partially
offset by the Company's change in method of accounting for Paymentech to the
equity method.
Asset Quality
The Company's delinquency and net credit loss rates at any time reflect, among
other factors, the quality of the credit card loans, the average seasoning of
the Company's accounts, the success of the Company's collection efforts and
general economic conditions.
17
<PAGE>
Asset Quality - continued
As a result of a slower rate of growth, intense competition and the overall
softening in consumer credit, delinquency and net credit loss rates for the
Company trended higher during the quarter. Over the past year, new unseasoned
loans became a smaller percentage of managed credit card loans, which
contributed to the increase in managed delinquency and managed credit card loss
rates. In light of these conditions, the Company continues to tighten and refine
credit underwriting. The Company believes that delinquency and net credit loss
rates will continue to increase as a result of this seasoning and will generally
follow industry trends. The managed delinquency rate at December 31, 1996 was
5.19%, and the managed net credit loss rate for the second quarter of fiscal
year 1997 was 4.76%. The managed net credit loss rate for the six months ended
December 31, 1996 was 4.63%. The Company's focus continues to be to optimize the
profitability of each account within the context of acceptable risk
characteristics. The Company has developed a credit process through the
experience of numerous marketing, credit and risk management tests which the
Company believes is a reliable basis for predicting the asset quality of new
accounts. The Company also believes that its frequent and early contact with
delinquent customers, as well as active portfolio management, has a significant
impact on predicting delinquency trends and managing net credit losses.
Delinquencies
The following table represents the delinquency trends of the Company's loans
as reported for financial purposes and for managed loans. An account is
contractually delinquent if the minimum payment is not received by the billing
date. It is the Company's policy to accrue interest and fee income on all
credit card accounts, except as specified below, until the account is charged
off. In certain situations where an account becomes delinquent and a legitimate
hardship exists, a loan may qualify to be placed on nonaccrual status, provided
that the account is closed and the credit card is returned. All hardship
situations result in either a charge off of the account or a re-establishment to
reliable paying status. The Company has stringent policies governing the
placement of accounts into hardship and the ultimate disposition of these
accounts.
<TABLE>
<CAPTION>
At December 31, 1996 At June 30, 1996
--------------------------- -----------------------------
Percent of Percent of
Loans Total Loans Loans Total Loans
------------ -------------- ------------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Managed Loans
- -------------
Loans outstanding $ 22,404,152 100.00 % $ 18,727,825 100.00 %
============== ========= ============== =========
Loans delinquent
35 to 64 days $ 359,471 1.60 % $ 272,496 1.46 %
65 to 94 days 250,725 1.12 159,814 0.85
95 or more days 552,740 2.47 378,193 2.02
-------------- --------- -------------- ---------
Total $ 1,162,936 5.19 % $ 810,503 4.33 %
============== ========= ============== =========
As Reported
- -----------
Loans outstanding $ 5,195,859 100.00 % $ 3,564,434 100.00 %
============== ========= ============== =========
Loans delinquent
35 to 64 days $57,423 1.10 % $ 37,221 1.04 %
65 to 94 days 39,880 0.77 21,182 0.60
95 or more days 87,365 1.68 50,497 1.42
-------------- --------- -------------- ---------
Total $ 184,668 3.55 % $ 108,900 3.06 %
============== ========= ============== =========
</TABLE>
18
<PAGE>
Net Credit Losses
Net credit losses include the principal amount (excluding accrued
finance charges and fees) of losses resulting from Cardmembers unwilling or
unable to pay, as well as bankrupt and deceased accounts, less current period
recoveries. Loans are charged off prior to the end of the seventh billing cycle
after having become contractually past due unless a payment has been received
sufficient to bring the account into a different delinquency category or bring
the account current.
The following table presents the Company's net credit losses for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
--------------------------------- --------------------------------
1996 1995 1996 1995
--------------- --------------- --------------- --------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Managed Loans
- -------------
Average loans outstanding $20,714,292 $16,069,091 $19,928,216 $15,084,124
Net credit losses $ 246,657 $ 124,443 $ 461,518 $ 225,843
Net credit losses as a percentage
of average loans outstanding 4.76 % 3.10 % 4.63 % 2.99 %
As Reported
- -----------
Average loans outstanding $ 4,541,496 $ 4,131,728 $ 4,162,771 $ 3,752,254
Net credit losses $ 29,780 $ 17,657 $ 56,953 $ 36,888
Net credit losses as a percentage
of average loans outstanding 2.62 % 1.71 % 2.74 % 1.97 %
</TABLE>
Provision and Allowance for Possible Credit Losses
The provision for possible credit losses includes current period credit
losses and an amount which, in the judgment of management, is necessary to
maintain the allowance for possible credit losses at a level that reflects known
and inherent risks in the loan portfolio. For the three and six months ended
December 31, 1996, the Company's provision for possible credit losses was $75.8
million and $105.4 million, respectively, which included charges of $46.0
million and $48.4 million, respectively, to increase the allowance for possible
credit losses, due primarily to the increase in on-balance-sheet loans. This
compared to provisions of $19.7 million and $40.9 million for the three and six
months ended December 31, 1995, respectively.
Funding and Liquidity
Traditional asset liquidity is provided by cash, cash equivalents and
investments. These items represented 40.3%, 43.2%, and 41.3% of the Company's
assets as of December 31, 1996, June 30, 1996, and December 31, 1995,
respectively.
The Company had securitized loans of $17.2 billion, $15.2 billion and $13.9
billion at December 31, 1996, June 30, 1996, and December 31, 1995,
respectively. During the six months ended December 31, 1996, the Company
completed securitizations of approximately $2.8 billion. At December 31, 1996,
securitized loans had a weighted average remaining life of 3.6 years and a
weighted average cost of funds of approximately 5.93%. The market for
securities backed by receivables is a reliable, efficient and cost-effective
source of funds, which the Company plans to continue to use as a source of
funding.
19
<PAGE>
Funding and Liquidity -- continued
When securitized loans amortize, First USA Bank's funding requirements
increase accordingly. The Company plans to fund the amortization of
securitizations in the future through securitization of additional loans,
issuance of bank and deposit notes, acceptance of additional deposits and the
use of other bank liabilities.
The Company had $2.4 billion and $1.9 billion in bank notes outstanding at
December 31, 1996 and June 30, 1996, respectively. At December 31, 1996, bank
notes had average maturities of 1.78 years and an average cost of 6.04%. In
addition, the Company had approximately $1.3 billion and $1.0 billion of term
federal funds purchased at December 31, 1996 and June 30, 1996, respectively.
The average maturities of the term federal funds purchased were three months at
December 31, 1996 with an average cost of 5.61%.
Interest-bearing deposits, which primarily represent brokered and directly
placed deposits, totaled $1.7 billion at December 31, 1996 and $1.5 billion at
June 30, 1996. At December 31, 1996, interest-bearing deposits had an average
cost of 5.94%. The maturity distribution for interest-bearing deposits is set
forth in the following table.
<TABLE>
<CAPTION>
At December 31, 1996
--------------------------
Amount Percent
---------- -----------
(Dollars in Thousands)
Equal to or more than $100,000
- ------------------------------
<S> <C> <C>
Less than three months $ 377,154 22.12 %
Three to six months 313,209 18.37
Six to twelve months 502,821 29.49
More than twelve months 511,940 30.02
------------- ---------
$ 1,705,124 100.00 %
============= =========
</TABLE>
In December 1995, First USA Financial, Inc., the Company's wholly owned
subsidiary, entered into a $300 million, five-year, unsecured revolving credit
facility with a bank syndicate. The credit facility bears interest based on
LIBOR plus 0.25% to 0.65% and commitment fees ranging from 0.125% to 0.25% on
the unused portion based on First USA Financial, Inc.'s debt to capitalization
ratio. The revolving credit facility provides a source of additional liquidity
to manage cash flow, provide capital to subsidiaries for expansion and for other
corporate uses. At December 31, 1996, there were no borrowings under the
revolving credit facility.
At December 31, 1996, the Company had interest rate swap agreements with
commercial banks having a total notional principal amount of $2.2 billion. The
Company enters into interest rate swap agreements to convert fixed rate
liabilities to floating rate liabilities as an efficient alternative to issuing
floating rate funding sources.
In December 1996, Paymentech completed a public offering pursuant to which
the Company and Paymentech sold 4.3 million and 3.0 million shares of Paymentech
common stock, respectively, for $34 per share. During the second fiscal quarter,
net proceeds to the Company from the sale of a portion of its investment in
Paymentech were $139.8 million and the Company recognized a pre-tax gain of
$106.9 million, which is included in other operating income. As a result of the
offerings, the Company's ownership in Paymentech was reduced from 77% to 57%.
The Company currently accounts for its investment in Paymentech under the
equity method due to the insignificance of the Company's investment in
Paymentech to its consolidated financial statements. The Company previously
consolidated Paymentech in its financial statements.
20
<PAGE>
Funding and Liquidity -- continued
During the quarter ended December 31, 1996, First USA Capital Trust I (the
"Capital Trust"), a wholly owned Delaware business trust, completed a $200
million underwritten offering of 9.33% tax deductible redeemable preferred
securities. The Capital Trust invested the proceeds from the preferred
securities in junior subordinated debentures, due January 15, 2027, issued by
the Company. Proceeds from the sale of the junior subordinated debentures by
the Company were used for general corporate purposes, including capital
contributions to operating subsidiaries.
During fiscal 1994, the Company issued 5.75 million shares of 6 1/4% mandatory
convertible preferred stock. Beginning May 20, 1997, the Company may redeem
each share of the preferred stock. Upon consummation of the Merger, each share
of the Company's preferred stock will be exchanged for one share of BANC ONE
6 1/4% convertible preferred stock. The terms of the BANC ONE preferred stock
will be substantially the same as the Company's preferred stock except that it
will be convertible into BANC ONE common stock and the conversion ratio will be
adjusted to reflect the Common Exchange Ratio. However, pursuant to the Merger
Agreement, the Company has agreed to call the Company's preferred stock for
redemption on May 20, 1997, and the Company has reserved 11.5 million shares of
common stock to redeem the preferred stock. First USA and BANC ONE anticipate
that the Merger will occur on or after May 20, 1997.
The Company implemented a Dividend Reinvestment and Stock Purchase Plan (the
"DRIP Plan") in December 1995, pursuant to which participants may purchase
shares of the Company's common stock by automatically reinvesting quarterly cash
dividends or by making optional cash investments, and pursuant to which
participants may also sell or otherwise dispose of common stock acquired under
the DRIP Plan. As of December 31, 1996, approximately 1.2 million shares of
common stock had been issued by the Company pursuant to the DRIP Plan, which
generated net proceeds of approximately $34.7 million. From the inception of
the DRIP Plan through December 31, 1996, in excess of 90% of such common stock
purchases were made by financial intermediaries, who may have resold such shares
of common stock shortly before or after acquiring them (including coverage of
short positions). The Company has not extended to any such purchasers any
rights or privileges other than those to which they would otherwise be entitled
as participants or prospective participants in the DRIP Plan, nor has the
Company entered into any agreements with any such persons regarding their
purchases of such shares or any resales or distributions thereof. Pursuant to
the Merger Agreement, the Company is limited to the issuance of 45,000 shares of
common stock per quarter through the DRIP Plan.
Investments
The Company's investments, which totaled $3.6 billion and $2.9 billion at
December 31, 1996 and June 30, 1996, respectively, consist primarily of variable
rate U.S. government agency mortgage-backed securities which enhance yield and
provide a source of secondary liquidity through repurchase agreements and are
primarily classified as held-to-maturity. The average maturity based on
historical payment rates of the investment portfolio at December 31, 1996 was
approximately 6.4 years.
21
<PAGE>
Investments -- continued
The following table presents maturities of the investment portfolio at
December 31, 1996 and reflects scheduled payments and expected prepayments based
on historical payment rates.
<TABLE>
<CAPTION>
Amount Percentage Yield
------------ ------------ -----------
(Dollars in Thousands)
<S> <C> <C> <C>
Within 1 year $ 467,255 12.95 % 6.41 %
1 - 5 years 1,409,809 39.07 6.41
5 - 10 years 901,165 24.97 6.43
After 10 years 830,189 23.01 6.37
------------ ------------ -----------
Total carrying value $3,608,418 100.00 % 6.56 %
============ ============ ===========
</TABLE>
Capital Adequacy
The Company's stockholders' equity increased to $1.2 billion at December 31,
1996, compared with $1.1 billion at June 30, 1996, primarily as a result of
retained earnings. In addition, the Company's tangible equity increased to $1.2
billion at December 31, 1996, from $1.0 billion at June 30, 1996.
First USA Bank's stockholder's equity increased from $860.6 million at June
30, 1996 to $1.2 billion at December 31, 1996, primarily as a result of capital
contributions from the Company of $250 million and retained earnings, partially
offset by dividends paid to the Company. First USA Bank is subject to the
capital adequacy guidelines adopted by the Federal Deposit Insurance
Corporation. At December 31, 1996, First USA Bank's risk-based total capital
ratio was 23.73%, its tier 1 capital ratio was 19.91%, and its leverage ratio
was 13.35%. At December 31, 1996, First USA Bank met the requirements of a
"well capitalized" institution.
Income Taxes
The Company's consolidated provision for income taxes includes state and
federal income tax components. The Company's effective income tax rate was
35.5% and 35.9% for the three and six months ended December 31, 1996,
respectively, compared with 36.9% for the three and six months ended December
31, 1995. The decrease in effective rate is due to the change in the method of
accounting for Paymentech to the equity method.
Capital Expenditures
The Company spent $77.1 million and $48.9 million for capital expenditures for
fiscal 1996 and the six months ended December 31, 1996, respectively. Capital
expenditures are made generally to accommodate growth in loans and provide for
increased operating efficiencies. In addition, the Company has incurred capital
expenditures related to facility expansions and additions.
22
<PAGE>
Selected Ratios
The following table presents certain financial ratios for the Company and
First USA Bank for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- ---------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
First USA, Inc.
Return on assets (a) 3.33 % 3.00 % 3.42 % 3.11 %
Return on stockholders' equity (a) 27.21 29.75 26.69 29.69
Average stockholders' equity to average assets 12.23 10.07 12.81 10.48
First USA Bank
Return on assets 1.60 % 3.39 % 2.78 % 3.56 %
Return on stockholder's equity 14.61 39.45 24.78 40.00
Average stockholder's equity to average assets 10.95 8.60 11.24 8.91
Net interest margin 1.96 1.65 2.17 1.62
Net interest margin (managed) 6.51 5.61 6.74 5.56
</TABLE>
(a) Data for the six months ended December 31, 1996, excludes Paymentech's one-
time merger, integration and impairment charge of $15.5 million. This one-
time charge reduced the Company's net income for the first fiscal quarter by
$7.4 million, or $0.06 per share.
23
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
First USA Bank (the "Bank") was named a defendant in a class action lawsuit
filed on May 26, 1995 in the District Court of Willacy County, Texas by a former
cardmember of the Bank. In this action, the plaintiff contends that he and all
others similarly situated are entitled to statutory penalties for alleged
violations by the Bank of the Texas Debt Collection Act and the Texas Deceptive
Trade Practices Act. Similar class action lawsuits have been filed in Texas
against other banks and entities. The Bank believes that plaintiff's claim
under these statutes is not valid. On April 8, 1996, the Court granted the
Bank's motion for summary judgment and dismissed the plaintiff's claim. The
plaintiff has appealed the judgment and the Bank intends to vigorously defend
against all claims arising under such appeal. While it is impossible to predict
the outcome of such lawsuit, the Company believes such lawsuit will not have a
material adverse effect.
The Bank was named a defendant in a class action lawsuit filed on December
19, 1995 in the United States District Court for the Northern District of
California by a former cardmember of the Bank. In this action, the plaintiff
contends that she and all others similarly situated are entitled to equitable
relief and compensatory and statutory damages for alleged violations by the Bank
of the Federal Truth-in-Lending Act, the California unfair business practices
statutes, breach of contract, negligent misrepresentation and fraud and deceit.
The Bank believes that plaintiff's claims are not valid and answered the
plaintiff's compliant, denying all liability. On June 21, 1996, the District
Court denied the Bank's motion to dismiss the case and plaintiff's motion for a
preliminary injunction. The parties have reached a tentative settlement of the
lawsuit which is subject to class notice and court approval. While it is
impossible to predict the final outcome of such lawsuit, including any final
settlement, the Company believes such lawsuit will not have a material adverse
effect.
Item 4. Submission of Matters to a Vote of Security Holders
a. The 1996 Annual Meeting of Stockholders was held on November 6, 1996.
b. The following Directors were elected at such meeting:
<TABLE>
<CAPTION>
Votes Cast to
Withhold
Votes For Authority
-------------- ---------------
<S> <C> <C>
Gene H. Bishop 56,413,554 237,416
John C. Tolleson 56,438,975 211,995
Carl H. Westcott 56,423,830 227,140
</TABLE>
The following Directors are also continuing in their office after such
meeting:
Gerald S. Armstrong
Charles T. Russell
Rupinder S. Sidhu
Roger T. Staubach
Richard W. Vague
24
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders -- continued
The following other matters were approved at such meeting:
<TABLE>
<CAPTION>
Item Votes For Votes Against Abstain
- ------------------------------------------------- ------------- ------------- -----------
<S> <C> <C> <C>
Adoption of the First USA, Inc. Deferred
Compensation Plan 56,169,238 343,759 137,973
Adoption of an amendment to the First USA,
Inc. Employee Stock Purchase Plan to
increase the number of shares of Common
Stock available for purchase under such
plan and to increase the maximum percentage
of compensation that each employee is eligible
to allocate for participation under such plan. 55,816,563 699,288 126,389
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
Index of Exhibits
-----------------
a. Exhibits
The following exhibits are incorporated by reference or filed herewith:
Exhibit Number Description
- -------------- -----------
2.1 Agreement and Plan of Merger dated as of January 19, 1997 by
and between BANC ONE CORPORATION and First USA, Inc., filed as
Exhibit 2.1 on the Company's Current Report on Form 8-K, filed
on January 28, 1997 and incorporated by reference herein.
3.1 Restated Certificate of Incorporation of the Company, filed as
Exhibit 3.1.1 to the Company's Annual Report on Form 10-K for
the Company's Fiscal Year Ended June 30, 1992 and incorporated
by reference herein.
3.1.1 Certificate of Correction of the Restated Certificate of
Incorporation of the Company, filed as Exhibit 3.1.1 to the
Company's Quarterly Report on Form 10-Q for the Fiscal Quarter
ended December 31, 1993 and incorporated by reference herein.
3.1.2 Certificate of Amendment to the Restated Certificate of
Incorporation of the Company, filed as Exhibit 3.1.2 to the
Company's Quarterly Report on Form 10-Q for the Fiscal Quarter
ended December 31, 1993 and incorporated by reference herein.
3.2 By-Laws of the Company, filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-1 (No. 33-45110) and
incorporated by reference herein.
4.1 Certificate of the Powers, Designations, Preferences and
Rights of the 6 1/4% PRIDES, Mandatory Convertible Preferred
Stock, filed as Exhibit 4.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1996 and
incorporated by reference herein.
4.2 Form of Global Bank Note, Floating Rate, filed as Exhibit 4.3
to the Company's Quarterly Report on Form 10-Q for the Fiscal
Quarter ended December 31, 1995 and incorporated by reference
herein.
4.3 Form of Global Bank Note, Fixed Rate, filed as Exhibit 4.4 to
the Company's Quarterly Report on Form 10-Q for the Fiscal
Quarter ended December 31, 1995 and incorporated by reference
herein.
25
<PAGE>
4.4 Form of Global Deposit Note, Floating Rate, filed as Exhibit
4.5 to the Company's Quarterly Report on Form 10-Q for the
Fiscal Quarter ended December 31, 1995 and incorporated by
reference herein.
4.5 Form of Global Deposit Note, Fixed Rate, filed as Exhibit 4.6
to the Company's Quarterly Report on Form 10-Q for the Fiscal
Quarter ended December 31, 1995 and incorporated by reference
herein.
4.6* Indenture dated as of December 20, 1996 between the Company
and The Bank of New York, as trustee, relating to the
Company's Series A Junior Subordinated Deferrable Interest
Debentures due 2027.
4.7* Form of Certificate of the Company's Series A Junior
Subordinated Deferrable Interest Debentures due 2027 (included
as Exhibit A to Exhibit 4.6).
4.8* Amended and Restated Declaration of Trust of First USA Capital
Trust I dated as of December 20, 1996 among the administrative
trusses, The Bank of New York (Delaware) as Delaware trustee,
The Bank of New York, as property trustee and First USA, Inc.
as sponsor.
10.1 Fourth Amendment to the 1991 Stock Option Plan, effective
October 16, 1996, filed as Exhibit 10.11.4 to the Company's
Quarterly Report on Form 10-Q for the Fiscal Quarter ended
September 1996 and incorporated by reference herein.
10.2 Stock Option Agreement, dated January 19, 1997, between First
USA, Inc., as issuer, and BANC ONE CORPORATION, as grantee,
filed as Exhibit 99.1 on the Company's Current Report on Form
8-K, filed on January 28, 1997 and incorporated by reference
herein.
10.3 Stock Option Agreement, dated January 19, 1997, between BANC
ONE CORPORATION, as issuer, and First USA, Inc., as grantee,
filed as Exhibit 99.2 on the Company's Current Report on Form
8-K, filed on January 28, 1997 and incorporated by reference
herein.
10.4 Amendment No.2 to the Stock Purchase Plan of First USA, Inc.,
filed as Exhibit 99.1 to the Company's Registration Statement
on Form S-8, filed on August 30, 1996 and incorporated by
reference herein.
10.5 Pooling and Servicing Agreement, dated as of December 3, 1996,
between First USA Securitization Corporation, as Transferor,
First USA Federal Savings Bank, as Servicer, and Bankers Trust
(Delaware), as Trustee, filed as Exhibit 99 on the Company's
Current Report on Form 8-K, filed on January 2, 1997 and
incorporated by reference herein.
10.6 Series 1996-6 Supplement, dated as of November 13, 1996, to
the Pooling and Servicing Agreement, dated as of September 1,
1992, between First USA Bank, as Transferor and Servicer, and
The Bank of New York (Delaware), as Trustee, filed as Exhibit
99 on the Company's Current Report on Form 8-K, filed on
November 21, 1996 and incorporated by reference herein.
10.7 Series 1996-7 Supplement, dated as of December 11, 1996, to
the Pooling and Servicing Agreement, dated as of September 1,
1992, between First USA Bank, as Transferor and Servicer, and
The Bank of New York (Delaware), as Trustee, filed as Exhibit
99.1 on the Company's Current Report on Form 8-K, filed on
November 21, 1996 and incorporated by reference herein.
10.8 Series 1996-8 Supplement, dated as of December 11, 1996, to
the Pooling and Servicing Agreement, dated as of September 1,
1992, between First USA Bank, as Transferor and Servicer, and
The Bank of New York (Delaware), as Trustee, filed as Exhibit
99.2 on the Company's Current Report on Form 8-K, filed on
November 21, 1996 and incorporated by reference herein.
10.9* Series A Capital Securities Guarantee Agreement dated as of
December 20, 1996 between the Company and The Bank of New
York, as trustee.
10.10* Registration Rights Agreement dated as of December 20, 1996
among the Company, First USA Capital Trust I and Merrill
Lynch, Pierce Fenner & Smith Incorporated and J. P. Morgan
Securities Inc., as initial purchasers.
11* Computation of Net Income per Share.
27* Financial Data Schedule
- --------------------
* Filed herewith.
26
b. Reports on Form 8-K filed during the quarter ended December 31, 1996:
Form 8-K filed November 21, 1996:
Item 5. Other Events - Securitization of credit card receivables
Item 7. Financial Information and Exhibits
Form 8-K filed December 26, 1996:
Item 5. Other Events - Securitization of credit card receivables
Item 7. Financial Information and Exhibits
Reports on Form 8-K filed subsequent to the quarter ended December 31, 1996:
Form 8-K filed January 2, 1997:
Item 5. Other Events - Securitization of credit card receivables
Item 7. Financial Information and Exhibits
Form 8-K filed January 28, 1997:
Item 5. Other Events - Merger Agreement with BANC ONE CORPORATION
Item 7. Financial Information and Exhibits
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 13, 1997
First USA, Inc.
By: /s/ Jack M. Antonini
-----------------------------------------
Jack M. Antonini
Vice Chairman and Chief Financial Officer
(Principal Financial Officer and Duly
Authorized Officer)
28
<PAGE>
INDEX OF EXHIBITS
-----------------
Sequentially
Exhibit Number Description of Exhibit Numbered Page
- -------------- ---------------------- -------------
4.6 Indenture dated as of December 20, 1996
between the Company and The Bank of New York,
as trustee, relating to the Company's Series A
Junior Subordinated Deferrable Interest
Debentures due 2027.
4.7 Form of Certificate of the Company's Series A
Junior Subordinated Deferrable Interest
Debentures due 2027 (included as Exhibit A to
Exhibit 4.6).
4.8 Amended and Restated Declaration of Trust of
First USA Capital Trust I dated as of
December 20, 1996 among the administrative
trustees, The Bank of New York (Delaware) as
Delaware trustee, The Bank of New York, as
property trustee and First USA, Inc. as
sponsor.
10.9 Series A Capital Securities Guarantee Agreement
dated as of December 20, 1996 between the Company
and The Bank of New York, as trustee.
10.10 Registration Rights Agreement dated as of
December 20, 1996 among the Company, First USA
Capital Trust I and Merrill Lynch, Pierce
Fenner & Smith Incorporated and J. P. Morgan
Securities Inc., as initial purchasers.
11 Computation of Net Income Per Share.
27 Financial Data Schedule.
29
<PAGE>
EXHIBIT 4.6
================================================================================
FIRST USA, INC.
------------------------------
------------------------------
INDENTURE
DATED AS OF DECEMBER 20, 1996
------------------------------
THE BANK OF NEW YORK
AS TRUSTEE
------------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
================================================================================
<PAGE>
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture
dated as of December 20, 1996 between First USA, Inc. and The
Bank of New York, Trustee:
ACT SECTION INDENTURE SECTION
310(a)(1)....................................................6.09
(a)(2) ...................................................6.09
310(a)(3).....................................................N/A
(a)(4).....................................................N/A
310(a)(5)..............................................6.10, 6.11
310(b)........................................................N/A
310(c).......................................................6.13
311(a) and (b)................................................N/A
311(c)..............................................4.01, 4.02(a)
312(a).......................................................4.02
312(b) and (c)...............................................4.04
313(a).......................................................4.04
313(b)(1)....................................................4.04
313(b)(2)....................................................4.04
313(c).......................................................4.04
313(d).......................................................4.04
314(a).......................................................4.03
314(b)........................................................N/A
314(c)(1) and (2)............................................6.07
314(c)(3).....................................................N/A
314(d) .......................................................N/A
314(e).......................................................6.07
314(f) .......................................................N/A
315(a)(c) and (d)............................................6.01
315(b) ......................................................5.08
315(e) ......................................................5.09
316(a)(1) ...................................................5.07
316(a)(2) ....................................................N/A
316(a) last sentence ........................................2.09
316(b) ......................................................9.02
317(a) ......................................................5.05
317(b) ......................................................6.05
318(a) .....................................................13.08
__________________
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
TABLE OF CONTENTS*
Page
----
ARTICLE I
DEFINITIONS....................... 1
SECTION 1.01. Definitions.................................... 1
Additional Interest...................................... 1
Adjusted Treasury Rate................................... 2
Affiliate................................................ 2
Authenticating Agent..................................... 2
Bankruptcy Law........................................... 2
Board of Directors....................................... 2
Board Resolution......................................... 3
Business Day............................................. 3
Capital Securities....................................... 3
Capital Securities Guarantee............................. 3
Commission............................................... 3
Common Securities........................................ 3
Common Securities Guarantee.............................. 4
Common Stock............................................. 4
Company.................................................. 4
Company Request.......................................... 4
Comparable Treasury Issue"............................... 4
Comparable Treasury Price"............................... 4
Compounded Interest...................................... 5
Custodian................................................ 5
Declaration.............................................. 5
Default.................................................. 5
Deferred Interest........................................ 5
Definitive Securities.................................... 5
Depositary............................................... 5
Dissolution Event........................................ 5
Event of Default......................................... 5
Exchange Act............................................. 5
Exchange Offer........................................... 5
Extended Interest Payment Period......................... 6
Federal Reserve.......................................... 6
First USA Capital Trust.................................. 6
Global Security.......................................... 6
Indebtedness for Money Borrowed.......................... 6
Indenture................................................ 6
Initial Optional Redemption Date......................... 6
Interest Payment Date.................................... 6
_________
* THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED
TO BE A PART OF THE INDENTURE.
i
<PAGE>
Liquidated Damages....................................... 6
Maturity Date............................................ 6
Mortgage................................................. 7
Non Book-Entry Capital Securities........................ 7
Officers................................................. 7
Officers' Certificate.................................... 7
Opinion of Counsel....................................... 7
Optional Redemption Price................................ 7
Other Debentures......................................... 7
Other Guarantees......................................... 7
outstanding.............................................. 7
Person................................................... 8
Predecessor Security..................................... 8
Principal Office of the Trustee.......................... 8
Purchase Agreement....................................... 8
Property Trustee......................................... 8
Quotation Agent.......................................... 8
Redemption Price......................................... 8
Reference Treasury Dealer................................ 8
Reference Treasury Dealer Quotations..................... 9
Registration Rights Agreement............................ 9
Regulatory Capital Event................................. 9
Remaining Life........................................... 9
Responsible Officer...................................... 9
Restricted Security...................................... 10
Rule 144A................................................ 10
Securities............................................... 10
Securities Act........................................... 10
Securityholder........................................... 10
holder of Securities..................................... 10
Security Register........................................ 10
Senior Indebtedness...................................... 10
Series A Securities...................................... 10
Series B Securities...................................... 10
Special Event............................................ 10
Special Event Redemption Price........................... 10
Subsidiary............................................... 11
Tax Event................................................ 11
Trustee.................................................. 12
Trust Indenture Act of 1939.............................. 12
Trust Securities......................................... 12
U.S. Government Obligations.............................. 12
ARTICLE II
SECURITIES........................ 12
SECTION 2.01. Forms Generally................................ 12
SECTION 2.02. Execution and Authentication................... 13
SECTION 2.03. Form and Payment............................... 13
SECTION 2.04. Legends........................................ 14
SECTION 2.05. Global Security................................ 14
ii
<PAGE>
SECTION 2.06 Interest....................................... 16
SECTION 2.07. Transfer and Exchange.......................... 17
SECTION 2.08. Replacement Securities......................... 19
SECTION 2.09. Treasury Securities............................ 19
SECTION 2.10. Temporary Securities........................... 19
SECTION 2.11. Cancellation................................... 20
SECTION 2.12. Defaulted Interest............................. 20
SECTION 2.13. CUSIP Numbers.................................. 21
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY........... 21
SECTION 3.01. Payment of Principal, Premium and Interest..... 21
SECTION 3.02. Offices for Notices and Payments, etc.......... 22
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office......................................... 22
SECTION 3.04. Provision as to Paying Agent................... 23
SECTION 3.05. Certificate to Trustee......................... 24
SECTION 3.06. Compliance with Consolidation Provisions....... 24
SECTION 3.07. Limitation on Dividends........................ 24
SECTION 3.08. Covenants as to First USA Capital Trust........ 25
SECTION 3.09. Payment of Expenses............................ 25
SECTION 3.10. Payment Upon Resignation or Removal............ 26
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE................. 27
SECTION 4.01. Securityholders' Lists......................... 27
SECTION 4.02. Preservation and Disclosure of Lists........... 27
SECTION 4.03. Reports by Company............................. 29
SECTION 4.04. Reports by the Trustee......................... 30
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT................... 31
SECTION 5.01. Events of Default.............................. 31
SECTION 5.02. Payment of Securities on Default; Suit There-
for............................................ 33
SECTION 5.03. Application of Moneys Collected by Trustee..... 35
SECTION 5.04. Proceedings by Securityholders................. 36
SECTION 5.05. Proceedings by Trustee......................... 37
SECTION 5.06. Remedies Cumulative and Continuing............. 37
SECTION 5.07. Direction of Proceedings and Waiver of De-
faults by Majority of Securityholders.......... 37
SECTION 5.08. Notice of Defaults............................. 38
SECTION 5.09. Undertaking to Pay Costs....................... 39
iii
<PAGE>
ARTICLE VI
CONCERNING THE TRUSTEE.................. 39
SECTION 6.01. Duties and Responsibilities of Trustee......... 39
SECTION 6.02. Reliance on Documents, Opinions, etc........... 41
SECTION 6.03. No Responsibility for Recitals, etc............ 42
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securi-
ties........................................... 43
SECTION 6.05. Moneys to be Held in Trust..................... 43
SECTION 6.06. Compensation and Expenses of Trustee........... 43
SECTION 6.07. Officers' Certificate as Evidence.............. 44
SECTION 6.08. Conflicting Interest of Trustee................ 44
SECTION 6.09. Eligibility of Trustee......................... 44
SECTION 6.10. Resignation or Removal of Trustee.............. 45
SECTION 6.11. Acceptance by Successor Trustee................ 47
SECTION 6.12. Succession by Merger, etc...................... 47
SECTION 6.13. Limitation on Rights of Trustee as a Credi-
tor............................................ 48
SECTION 6.14. Authenticating Agents.......................... 48
ARTICLE VII
CONCERNING THE SECURITYHOLDERS.............. 49
SECTION 7.01. Action by Securityholders...................... 49
SECTION 7.02. Proof of Execution by Securityholders.......... 50
SECTION 7.03. Who Are Deemed Absolute Owners................. 51
SECTION 7.04. Securities Owned by Company Deemed Not Out-
standing....................................... 51
SECTION 7.05. Revocation of Consents; Future Holders Bound... 51
ARTICLE VIII
SECURITYHOLDERS' MEETINGS................ 52
SECTION 8.01. Purposes of Meetings........................... 52
SECTION 8.02. Call of Meetings by Trustee.................... 52
SECTION 8.03. Call of Meetings by Company or
Securityholders................................ 53
SECTION 8.04. Qualifications for Voting...................... 53
SECTION 8.05. Regulations.................................... 53
SECTION 8.06. Voting......................................... 54
ARTICLE IX
AMENDMENTS........................ 55
SECTION 9.01. Without Consent of Securityholders............. 55
SECTION 9.02. With Consent of Securityholders................ 56
iv
<PAGE>
SECTION 9.03. Compliance with Trust Indenture Act; Effect
of Supplemental Indentures..................... 58
SECTION 9.04. Notation on Securities......................... 58
SECTION 9.05. Evidence of Compliance of Supplemental Inden-
ture to be Furnished Trustee................... 58
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE.... 58
SECTION 10.01. Company May Consolidate, etc., on Certain
Terms.......................................... 58
SECTION 10.02. Successor Corporation to be Substituted for
Company........................................ 59
SECTION 10.03. Opinion of Counsel to be Given Trustee......... 60
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE......... 60
SECTION 11.01. Discharge of Indenture......................... 60
SECTION 11.02. Deposited Moneys and U.S. Government Obliga-
tions to be Held in Trust by Trustee........... 61
SECTION 11.03. Paying Agent to Repay Moneys Held.............. 61
SECTION 11.04. Return of Unclaimed Moneys..................... 61
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations......................... 62
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS.................. 64
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations.................................... 64
ARTICLE XIII
MISCELLANEOUS PROVISIONS................. 64
SECTION 13.01. Successors..................................... 64
SECTION 13.02. Official Acts by Successor Corporation......... 64
SECTION 13.03. Surrender of Company Powers.................... 64
SECTION 13.04. Addresses for Notices, etc..................... 65
SECTION 13.05. Governing Law.................................. 65
SECTION 13.06. Evidence of Compliance with Conditions Prece-
dent........................................... 65
SECTION 13.07. Business Days.................................. 66
SECTION 13.08. Trust Indenture Act to Control................. 66
SECTION 13.09. Table of Contents, Headings, etc............... 66
SECTION 13.10. Execution in Counterparts...................... 66
SECTION 13.11. Separability................................... 66
v
<PAGE>
SECTION 13.12. Assignment..................................... 66
SECTION 13.13. Acknowledgement of Rights...................... 67
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND.................. 67
SECTION 14.01. Special Event Redemption....................... 67
SECTION 14.02. Optional Redemption by Company................. 68
SECTION 14.03. No Sinking Fund................................ 69
SECTION 14.04. Notice of Redemption; Selection of Securi-
ties........................................... 69
SECTION 14.05. Payment of Securities Called for Redemption.... 70
ARTICLE XV
SUBORDINATION OF SECURITIES............... 70
SECTION 15.01. Agreement to Subordinate....................... 70
SECTION 15.02. Default on Senior Indebtedness................. 71
SECTION 15.03. Liquidation; Dissolution; Bankruptcy........... 72
SECTION 15.04. Subrogation.................................... 73
SECTION 15.05. Trustee to Effectuate Subordination............ 74
SECTION 15.06. Notice by the Company.......................... 75
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness................................... 76
SECTION 15.08. Subordination May Not Be Impaired.............. 76
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD........... 77
SECTION 16.01. Extension of Interest Payment Period........... 77
SECTION 16.02. Notice of Extension............................ 78
EXHIBIT A.....................................................A-1
Testimonium
Signatures
Acknowledgements
vi
<PAGE>
THIS INDENTURE, dated as of December 20, 1996, between First USA,
Inc., a Delaware corporation (hereinafter sometimes called the "Company"), and
The Bank of New York, a New York banking corporation, as trustee (hereinafter
sometimes called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the
Securities by the holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the respective holders from
time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which
are by reference therein defined in the Securities Act, shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture as originally executed.
The following terms have the meanings given to them in the Declaration: (i)
Clearing Agency; (ii) Delaware Trustee; (iii) Depository; (iv) Capital Security
Certificate; (v) Property Trustee; (vi) Administrative Trustees; (vii) Direct
Action; and (viii) Purchase Agreement. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms in accordance
with generally accepted accounting principles and the term "generally accepted
accounting principles" means such accounting principles as are generally
accepted at the time of any computation. The words "herein", "hereof" and
"hereunder" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision. Headings are
used for convenience of reference only and do not affect interpretation. The
singular includes the plural and vice versa.
"Additional Interest" shall have the meaning set forth
in Section 2.06(c).
<PAGE>
"Adjusted Treasury Rate" means, with respect to any redemption
date, the rate per annum equal to (i) the yield, under the heading which
represents the average for the immediately prior week, appearing in the most
recently published statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the maturity corresponding to the Remaining Life, yields
for the two published maturities most closely corresponding to the Remaining
Life shall be interpolated, and the Adjusted Treasury Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date, in each case
calculated on the third Business Day preceding the redemption date, plus in each
case (a) 1.25% if such redemption date occurs on or prior to December 31, 1997,
and (b) 0.50% in all other cases.
"Affiliate" means, with respect to a specified Person, (a) any
Person directly or indirectly owning, controlling or holding the power to vote
10% or more of the outstanding voting securities or other ownership interests of
the specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of
the Company or any duly authorized committee of that board.
2
<PAGE>
"Board Resolution" shall mean a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a Saturday or a Sunday or a day on which banking
institutions in The City of New York or Wilmington, Delaware are authorized or
required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests in
the assets of First USA Capital Trust which rank pari passu with the Common
Securities issued by First USA Capital Trust; provided, however, that if an
-------- -------
Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the Capital
Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are entitled. References to "Capital
Securities" shall include collectively any Series A Capital Securities and
Series B Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee that the
Company may enter into with The Bank of New York or other Persons that operates
directly or indirectly for the benefit of holders of Capital Securities of First
USA Capital Trust and shall include a Series A Capital Securities Guarantee and
a Series B Capital Securities Guarantee with respect to the Series A Capital
Securities and the Series B Capital Securities, respectively.
"Commission" shall mean the Securities and Exchange Commission,
as from time to time constituted, created under the Exchange Act, or if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests in
the assets of First USA Capital Trust which rank pari passu with Capital
Securities issued by First USA Capital Trust; provided, however, that if an
-----------------
Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the Capital
Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are entitled.
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"Common Securities Guarantee" shall mean any guarantee that the
Company may enter into with any Person or Persons that operates directly or
indirectly for the benefit of holders of Common Securities of First USA Capital
Trust.
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean First USA, Inc., a Delaware corporation,
and, subject to the provisions of Article X, shall include its successors and
assigns.
"Company Request" or "Company Order" shall mean a written request
or order signed in the name of the Company by the Chairman, the Chief Executive
Officer, the President, a Vice Chairman, a Vice President, the Comptroller, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
Remaining Life of the Securities that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining Life
of the Securities. If no United States Treasury security has a maturity which is
within a period from three months before to three months after the Initial
Optional Redemption Date, the two most closely corresponding United States
Treasury securities shall be used as the Comparable Treasury Issue, and the
Adjusted Treasury Rate shall be interpolated or extrapolated on a straight-line
basis, rounding to the nearest month, using such securities.
"Comparable Treasury Price" means, with respect to any redemption
date pursuant to Section 14.01, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third Business Day preceding such redemption date, as
set forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
Business Day, (A) the average of five Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such Quotations.
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"Compounded Interest" shall have the meaning set forth
in Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Declaration" means the Amended and Restated Declaration of Trust
of First USA Capital Trust, dated as of December 20, 1996.
"Default" means any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Securities" shall mean those securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities of any
series, for which the Company shall determine that such Securities will be
issued as a Global Security, 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 Section 2.05(d).
"Dissolution Event" means the liquidation of the Trust pursuant
to the Declaration, and the distribution of the Securities held by the Property
Trustee to the holders of the Trust Securities issued by the Trust pro rata in
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accordance with the Declaration.
"Event of Default" shall mean any event specified in Section
5.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Company to exchange Series B Securities
for Series A Securities and to exchange a Series B Capital Securities Guarantee
for a Series A Capital Securities Guarantee and (ii) by First USA Capital Trust
to exchange Series B Capital Securities for Series A Capital Securities.
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"Extended Interest Payment Period" shall have the meaning set
forth in Section 16.01.
"Federal Reserve" shall mean the Board of Governors of
the Federal Reserve System.
"First USA Capital Trust" or the "Trust" shall mean First USA
Capital Trust I, a Delaware business trust created for the purpose of issuing
its undivided beneficial interests in connection with the issuance of Securities
under this Indenture.
"Global Security" means, with respect to the Securities, a
Security 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.
"Indebtedness for Money Borrowed" shall mean any obligation of,
or any obligation guaranteed by, the Company for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments but shall not include (i) any trade accounts payable in the ordinary
course of business, (ii) any such indebtedness that is by terms ranks pari passu
with or junior in right of payment to the Securities, (iii) all other debt
securities, and guarantees in respect of those debt securities, issued to any
other trust, or a trustee of such trust, partnership or other entity affiliated
with the Company that is a financing vehicle of the Company (a "financing
entity") in connection with the issuance by such financing entity of equity
securities or other securities guaranteed by the Company pursuant to an
instrument that ranks pari passu with or junior in right of payment to the
Capital Securities Guarantee, and (iv) any other indebtedness that would
otherwise qualify as indebtedness for Money Borrowed to the extent that such
indebtedness by its terms ranks pari passu with or junior in right of payment to
any Indebtedness described in any of (i), (ii) or (iii).
"Indenture" shall mean this instrument as originally executed or,
if amended as herein provided, as so amended.
"Initial Optional Redemption Date" means January 15,
2007.
"Interest Payment Date" shall have the meaning set
forth in Section 2.06.
"Liquidated Damages" shall have the meaning set forth
in the Registration Rights Agreement.
"Maturity Date" shall mean January 15, 2027.
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"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.05.
"Officers" shall mean any of the Chairman, a Vice
Chairman, the Chief Executive Officer, the President, a Vice
President, the Comptroller, the Group Director, the Secretary or
an Assistant Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed
by two Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who
may be an employee of the Company, and who shall be acceptable to the Trustee.
"Optional Redemption Price" shall have the meaning set
forth in Section 14.02.
"Other Debentures" means all junior subordinated debentures
issued by the Company from time to time and sold to trusts to be established by
the Company (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees issued by the Company
with respect to capital securities (if any) and issued to other trusts
established by the Company (if any), in each case similar to the Trust.
The term "outstanding," when used with reference to Securities,
shall, subject to the provisions of Section 7.04, mean, as of any particular
time, all Securities authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or
the Authenticating Agent or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for the payment
or redemption of which moneys 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 segre-
gated in trust by the Company (if the Company
shall act as its own paying agent); provided that,
if such Securities, or portions thereof, are to be
redeemed prior to maturity thereof, notice of such
redemption shall have been given as in Article
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Fourteen provided or provision satisfactory to the Trustee
shall have been made for giving such notice; and
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.08 unless proof
satisfactory to the Company and the Trustee is presented
that any such Securities are held by bona fide holders in
due course.
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt and as that
evidenced by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 2.08 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar term, shall
mean the principal office of the Trustee, at which at any particular time its
corporate trust business shall be administered.
"Purchase Agreement" shall mean the Purchase Agreement dated
December 17, 1996 among the Company, First USA Capital Trust and the initial
purchasers named therein.
"Property Trustee" shall have the same meaning as set
forth in the Declaration.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Company.
"Redemption Price" means the Special Event Redemption
Price or the Optional Redemption Price, as the context requires.
"Reference Treasury Dealer" means (i) Merrill Lynch, Government
Securities, Inc. and its successors; provided, however, that if the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by
the Company.
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"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date pursuant to Section
14.01, the average, as determined by the Trustee, of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m. New York City time on the third Business Day preceding such
redemption date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of December 20, 1996, by and among the Company, the Trust
and the Initial Purchasers named therein as such agreement may be amended,
modified or supplemented from time to time.
"Regulatory Capital Event" shall occur at any time, following the
date (the "Election Date") on which the Company shall effectively elect to treat
the Capital Securities as Tier 1 Capital (or its equivalent), that the Company
shall have received an opinion of independent bank regulatory counsel
experienced in such matters to the effect that, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any rules, guidelines or
policies of the Federal Reserve or, if applicable, the Office of Thrift
Supervision or, in each case, its successors or (b) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the Election Date, the Capital Securities do
not constitute, or within 90 days of the date thereof, will not constitute, Tier
I Capital (or its then equivalent).
"Remaining Life" means, with respect to any optional redemption
pursuant to Section 14.01, the period from the date of such redemption to, and
including, the Initial Optional Redemption Date.
"Responsible Officer", when used with respect to the Trustee,
shall mean the chairman or any vice chairman of the board of directors, the
chairman or any vice chairman of the executive committee of the board of
directors, the chairman of the trust committee, the president, any vice
president, the cashier, any assistant cashier, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer, the controller or any assistant controller or any other
officer or assistant officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
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"Restricted Security" shall mean Securities that bear or are
required to bear the legends set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities" means, collectively, the Series A Securities and the
Series B Securities.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Securityholder", "holder of Securities", or other similar terms,
shall mean any person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
"Security Register" shall mean (i) prior to a Dissolution Event,
the list of holders provided to the Trustee pursuant to Section 4.01, and (ii)
following a Dissolution Event, any security register maintained by a security
registrar for the securities appointed by the Company following the execution of
a supplemental indenture providing for transfer procedures as provided for in
Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness for Money
Borrowed, whether outstanding on the date of execution of this Indenture or
thereafter created, assumed or incurred, unless the terms thereof specifically
provide that it is not superior in right of payment to the Series A Securities
or the Series B Securities, and any deferrals, renewals or extensions of such
Senior Indebtedness.
"Series A Securities" means the Company's 9.33% Series A Junior
Subordinated Deferrable Interest Debentures due January 15, 2027, as
authenticated and issued under this Indenture.
"Series B Securities" means the Company's Series B 9.33% Junior
Subordinated Deferrable Interest Debentures due January 15, 2027, as
authenticated and issued under this Indenture.
"Special Event" means either a Regulatory Capital Event
or a Tax Event.
"Special Event Redemption Price" shall mean, with respect to any
redemption of the Securities pursuant to Section 14.01 hereof, an amount in cash
equal to the greater of (i) 100% of the principal amount to be redeemed or
(ii) the sum, as determined by a Quotation Agent, of the present values of the
princi-
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pal amount and premium payable with respect to an optional redemption pursuant
to Section 14.02 on the Initial Optional Redemption Date, together with
scheduled payments of interest on the Securities during the Remaining Life of
the Securities, discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus, in each case, any accrued and unpaid interest thereon,
including Compounded Interest and Additional Interest, if any, to the date of
such redemption.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of whose outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by First USA Capital Trust and
the Company of an opinion of a nationally recognized tax counsel experienced in
such matters to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws or any regulations
thereunder of the United States or any political subdivision or taxing authority
thereof or therein or as a result of any official administrative pronouncement
or judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is announced
on or after December 20, 1996, there is more than an insubstantial risk that (i)
First USA Capital Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Securities, (ii) interest payable by the Company on
the Securities is not, or within 90 days of the date of such opinion will not
be, deductible by the Company, in whole or in part, for United States federal
income tax purposes, or (iii) First USA Capital Trust is, or will be within 90
days of the date of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
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"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article Six hereof,
shall also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture Act
of 1939 as in force at the date of execution of this Indenture, except as
provided in Section 9.03.
"Trust Securities" shall mean the Capital Securities
and the Common Securities, collectively.
"U.S. Government Obligations" shall mean securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
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SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual
or facsimile signature. If an Officer whose signature is on a Security no longer
holds that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Security has been authenticated under this Indenture. The form
of Trustee's certificate of authentication to be borne by the Securities shall
be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed the sum of (a) $206,186,000 aggregate
principal amount of the Securities and (b) such aggregate principal amount
(which as shall not exceed $30,928,000 aggregate principal amount) of the
Securities, if any, as shall be purchased by First USA Capital Trust pursuant to
an overallotment option in accordance with the terms and provisions of the
Debenture Subscription Agreement dated as of December 20, 1996 between the
Company and First USA Capital Trust, except as provided in Sections 2.07, 2.08,
2.10 and 14.05.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be
issued in fully registered certificated form without interest coupons. Principal
of, premium, if any, and interest on the Securities issued in certificated form
will be payable, the transfer of such Securities will be registrable and such
Securities will be exchangeable for Securities bearing identical terms and
provisions at the office or agency of the Trustee; provided, however, that
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payment of interest with respect to Securities in global form may be made at the
option of the Company (i) by check mailed to the holder at such address as shall
appear in the Security Register or (ii) by transfer to an account maintained by
the Person entitled thereto, provided that proper transfer instructions have
been received in writing by the relevant record date. Notwithstanding the
foregoing, so long as the holder of any Securities is the Property Trustee, the
payment of the principal of, premium, if any, and interest (including Compounded
Interest and Additional Interest, if any) on such Securities held by the
Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.
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SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section 2.04 or
as otherwise determined by the Company in accordance with applicable law, each
Security shall bear the applicable legends relating to restrictions on transfer
pursuant to the securities laws in substantially the form set forth on Exhibit A
hereto.
(b) The Company shall issue and the Trustee shall authenticate
Series B Securities in exchange for Series A Securities accepted for exchange in
the Exchange Offer, which Series B Securities shall not bear the legends
required by subsection (a) above, in each case unless the holder of such Series
A Securities is either (A) a broker-dealer who purchased such Series A
Securities directly from the Company for resale pursuant to Rule 144A or any
other available exemption under the Securities Act, (B) a Person participating
in the distribution of the Series A Securities or (C) a Person who is an
affiliate (as defined in Rule 144 under the Securities Act) of the Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry form,
the related Definitive Securities shall be presented to the Trustee (if
an arrangement with the Depositary has been maintained) by the Property
Trustee in exchange for one or more Global Securities (as may be
required pursuant to Section 2.07) in an aggregate principal amount
equal to the aggregate principal amount of all outstanding Securities,
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 Administrative
Trustees; the Company upon any such presentation shall execute one or
more Global Securities in such aggregate principal amount and deliver
the same to the Trustee for authentication and delivery in accordance
with the Indenture; and payments on the Securities issued as a Global
Security will be made to the Depositary; and
(ii) if any Capital Securities are held in certificated
form, the related Definitive Securities may be presented to the Trustee
by the Property Trustee and any Capital Security certificate which
represents Capital Securities other than Capital Securities in
book-entry form ("Non Book-Entry Capital Securities") will be deemed to
represent beneficial interests in Securities presented to the Trustee by
the Property Trustee having an aggregate principal amount equal to the
aggregate liquidation amount
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of the Non Book-Entry Capital Securities until such Capital Security
certificates are presented to the Security Registrar for transfer or
reissuance, at which time such Capital Security certificates will be
cancelled and a Security, registered in the name of the holder of the
Capital Security certificate or the transferee of the holder of such
Capital Security certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the
Capital Security certificate cancelled, will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with the Indenture. Upon the issuance of such Securities,
Securities with an equivalent aggregate principal amount that were
presented by the Property Trustee to the Trustee will be deemed to have
been cancelled.
(b) The Global Securities shall represent the aggregate amount of
outstanding Securities from time to time endorsed thereon; provided, that the
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aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of any
increase or decrease in the amount of outstanding Securities represented thereby
shall be made by the Trustee, in accordance with instructions given by the
Company as required by this Section 2.05.
(c) The Global Securities may be transferred, in whole but not in
part, only to another nominee of the Depositary, or to a successor Depositary
selected or approved by the Company or to a nominee of such successor
Depositary.
(d) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or the Depositary has ceased to be
a clearing agency registered under the Exchange Act, and a successor Depositary
is not appointed by the Company within 90 days after the Company receives such
notice or becomes aware of such condition, as the case may be, the Company will
execute, and the Trustee, upon written notice from the Company, will
authenticate and make available for delivery the Definitive Securities, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Security in exchange for such Global Security. If
there is an Event of Default, the Depositary shall have the right to exchange
the Global Securities for Definitive Securities. In addition, the Company may at
any time determine that the Securities shall no longer be represented by a
Global Security. In the event of such an Event of Default or such a
determination, the Company shall execute, and subject to Section 2.07, the
Trustee, upon receipt of an Officers' Certificate evidencing such determination
by the Company, will authenticate and make available for delivery the Definitive
Securities, in authorized
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denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security in exchange for such Global Security. Upon the
exchange of the Global Security for such Definitive Securities, in authorized
denominations, the Global Security shall be cancelled by the Trustee. Such
Definitive Securities issued in exchange for the Global Security shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Definitive Securities
to the Depositary for delivery to the Persons in whose names such Definitive
Securities are so registered.
SECTION 2.06 Interest.
(a) Each Security will bear interest at the rate of 9.33% per
annum (the "Coupon Rate") from the most recent date to which interest has been
paid or, if no interest has been paid, from December 20, 1996, 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 Coupon Rate, compounded
semi-annually, payable (subject to the provisions of Article XVI) semi-annually
in arrears on January 15 and July 15 of each year (each, an "Interest Payment
Date") commencing on July 15, 1997, to the Person in whose name such Security or
any predecessor Security is registered, at the close of business on the regular
record date for such interest installment, which shall be the first day of the
month in which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. In the event that any Interest Payment Date
falls on a day that is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), with the
same force and effect as if made on such date.
(c) During such time as the Property Trustee is the holder of any
Securities, the Company shall pay any additional amounts on the Securities as
may be necessary in order that the amount of Distributions then due and payable
by the First USA Capital Trust on the outstanding Securities shall not be
reduced as a result of any additional taxes, duties and other governmental
charges to which the First USA Capital Trust has become subject as a result of a
Tax Event ("Additional Interest").
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SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. The Series A Securities, and those
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Series B Securities with respect to which any Person described in Section
2.04(b)(A), (B) or (C) is the beneficial owner, may not be transferred except in
compliance with the legend contained in Exhibit A unless otherwise determined by
the Company in accordance with applicable law. Upon any distribution of the
Securities following a Dissolution Event, the Company and the Trustee shall
enter into a supplemental indenture pursuant to Section 9.01 to provide for the
transfer restrictions and procedures with respect to the Securities
substantially similar to those contained in the Declaration to the extent
applicable in the circumstances existing at such time.
(b) General Provisions Relating to Transfers and Exchanges. To
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permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Definitive Securities and Global Securities at
the Trustee's request. All Definitive Securities and Global Securities issued
upon any registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Definitive
Securities or Global Securities surrendered upon such registration of transfer
or exchange.
No service charge shall be made to a holder for any registration
of transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption or any
notice of selection of Securities for redemption under Article Fifteen hereof
and ending at the close of business on the day of such mailing; or (ii) register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
Prior to due presentment for the registration of a transfer of
any Security, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and premium, if
any, and interest on such Securities, and neither the Trustee, any Agent nor the
Company shall be affected by notice to the contrary.
(c) Exchange of Series A Securities for Series B Securities.
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The Series A Securities may be exchanged for Series
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B Securities pursuant to the terms of the Exchange Offer. The Trustee shall make
the exchange as follows:
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Securities, the transactions
contemplated by the Exchange Offer have been consummated;
and
(B) the principal amount of Series A Securities prop-
erly tendered in the Exchange Offer that are rep-
resented by a Global Security and the principal
amount of Series A Securities properly tendered in
the Exchange Offer that are represented by Defin-
itive Securities, the name of each holder of such
Definitive Securities, the principal amount at
maturity properly tendered in the Exchange Offer
by each such holder and the name and address to
which Definitive Securities for Series B Securi-
ties shall be registered and sent for each such
holder.
The Trustee, upon receipt of (i) such Officers' Certificate, (ii)
an Opinion of Counsel (x) to the effect that the Series B Securities have been
registered under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act and (y) with respect to the matters set
forth in Section 3(p) of the Registration Rights Agreement and (iii) a Company
Order, shall authenticate (A) a Global Security for Series B Securities in
aggregate principal amount equal to the aggregate principal amount of Series A
Securities represented by a Global Security indicated in such Officers'
Certificate as having been properly tendered and (B) Definitive Securities
representing Series B Securities registered in the names of, and in the
principal amounts indicated in, such Officers' Certificate.
If the principal amount at maturity of the Global Security for
the Series B Securities is less than the principal amount at maturity of the
Global Security for the Series A Securities, the Trustee shall make an
endorsement on such Global Security for Series A Securities indicating a
reduction in the principal amount at maturity represented thereby.
The Trustee shall deliver such Definitive Securities for Series B
Securities to the holders thereof as indicated in such Officers' Certificate.
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SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's requirements
for replacements of Securities are met. An indemnity bond must be supplied by
the holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss that any of them may suffer if a Security is replaced. The Company or the
Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
SECTION 2.09. Treasury Securities.
In determining whether the holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any Affiliate of the Company shall be
considered as though not outstanding, except that for purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities that a Trustee actually knows to be so owned shall
be so considered.
SECTION 2.10. Temporary Securities.
Pending the preparation of Definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company shall cause
Definitive Securities to be prepared without unreasonable delay. The Definitive
Securities shall be printed, lithographed or engraved, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the tempo-
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rary Securities at the office or agency maintained by the Company for such
purpose pursuant to Section 3.02 hereof, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, in exchange therefor the same aggregate principal amount of Definitive
Securities of authorized denominations. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as Definitive Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or destroy cancelled Securities in accordance with
its normal practices (subject to the record retention requirement of the
Exchange Act) unless the Company directs them to be returned to it. The Company
may not issue new Securities to replace Securities that have been redeemed or
paid or that have been delivered to the Trustee for cancellation. All cancelled
Securities held by the Trustee shall be delivered to the Company.
SECTION 2.12. Defaulted Interest.
Any interest on any Security that is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the holder
on the relevant regular record date by virtue of having been such holder; and
such Defaulted Interest shall be paid by the Company, at its election, as
provided in clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Security and the date of the proposed
payment, and at the same time the 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
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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 Securityholder at his or her address as it appears in
the Security Register, not less than 10 days prior to such special
record date. Notice of the proposed payment of such Defaulted Interest
and the special record date therefor having been mailed as aforesaid,
such Defaulted Interest shall be paid to the Persons in whose names such
Securities (or their respective Predecessor Securities) are registered
on such special record date and shall be no longer payable pursuant to
the following clause (b).
(b) The Company may make payment of any Defaulted Interest on any
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustees of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Securityholders; provided that any
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such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the holders
of the Securities that it will duly and punctually pay or cause to be paid the
principal of and premium, if any, and
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interest on the Securities at the place, at the respective times and in the
manner provided herein. Each installment of interest on the Securities may be
paid by mailing checks for such interest payable to the order of the holder of
Security entitled thereto as they appear in the Security Register. The Company
further covenants to pay any and all amounts including, without limitation,
Liquidated Damages, if any, on the dates and in the manner required under the
Registration Rights Agreement.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remains outstanding, the Company
will maintain in the Borough of Manhattan, The City of New York, an office or
agency where the Securities may be presented for payment, an office or agency
where the Securities may be presented for registration of transfer and for
exchange as in this Indenture provided and an office or agency where notices and
demands to or upon the Company in respect of the Securities or of this Indenture
may be served. The Company will give to the Trustee written notice of the
location of any such office or agency and of any change of location thereof.
Until otherwise designated from time to time by the Company in a notice to the
Trustee, any such office or agency for all of the above purposes shall be the
office or agency of the Trustee. In case the Company shall fail to maintain any
such office or agency in the Borough of Manhattan, The City of New York, or
shall fail to give such notice of the location or of any change in the location
thereof, presentations and demands may be made and notices may be served at the
principal corporate trust office of the Trustee.
In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside the Borough of
Manhattan, The City of New York, where the Securities may be presented for
registration of transfer and for exchange in the manner provided in this
Indenture, and the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in the Borough of Manhattan,
The City of New York, for the purposes above mentioned. The Company will give to
the Trustee prompt written notice of any such designation or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
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SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Securities, it will cause such
paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the
Trustee, subject to the provision of this Section 3.04,
(1) that it will hold all sums held by it as such agent
for the payment of the principal of and premium, if
any, or interest on the Securities (whether such
sums have been paid to it by the Company or by any
other obligor on the Securities of such series) in
trust for the benefit of the holders of the
Securities; and
(2) that it will give the Trustee notice of any failure
by the Company (or by any other obligor on the
Securities) to make any payment of the principal of
and premium or interest on the Securities when the
same shall be due and payable.
(b) If the Company shall act as its own paying agent,
it will, on or before each due date of the princi-
pal of and premium, if any, or interest on the
Securities, set aside, segregate and hold in trust
for the benefit of the holders of the Securities a
sum sufficient to pay such principal, premium or
interest so becoming due and will notify the
Trustee of any failure to take such action and of
any failure by the Company (or by any other obli-
gor under the Securities) to make any payment of
the principal of and premium, if any, or interest
on the Securities when the same shall become due
and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for
the purpose of obtaining a satisfaction and dis-
charge with respect to the Securities hereunder,
or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust for any such
series by the Trustee or any paying agent hereun-
der, as required by this Section 3.04, such sums
to be held by the Trustee upon the trusts herein
contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in
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trust as provided in this Section 3.04 is subject
to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, commencing with the first fiscal
year ending after the date hereof, so long as Securities are outstanding
hereunder, an Officers' Certificate, one of the signers of which shall be the
principal executive, principal financial or principal accounting officer of the
Company stating that in the course of the performance by the signers of their
duties as officers of the Company they would normally have knowledge of any
default by the Company in the performance of any covenants contained herein,
stating whether or not they have knowledge of any such default and, if so,
specifying each such default of which the signers have knowledge and the nature
thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other Person unless the
provisions of Article Ten hereof are complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common and
preferred stock) or (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Company
(including any Other Debentures) that rank pari passu with or junior in right of
payment to the Securities or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any Subsidiary of the
Company (including any Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Securities (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, Common Stock of the Company; (b) any declaration of a
dividend in connection with the implementation of a stockholder rights plan, or
the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto; (c) payments under the Capital
Securities Guarantee; (d) 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
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Company's capital stock; (e) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged; and (f)
purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Company's benefit plans for its directors, officers or
employees or any of the Company's dividend reinvestment plans) if at such time
(i) there shall have occurred any event of which the Company has actual
knowledge that (a) with the giving of notice or the lapse of time, or both,
would constitute an Event of Default and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (ii) if such Securities are held
by the Property Trustee, the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee or (iii) the
Company shall have given notice of its election of the exercise of its right to
extend the interest payment period pursuant to Section 16.01 and any such
extension shall be continuing.
SECTION 3.08. Covenants as to First USA Capital Trust.
In the event Securities are issued to First USA Capital Trust or
a trustee of such trust in connection with the issuance of Trust Securities by
First USA Capital Trust, for so long as such Trust Securities remain
outstanding, the Company will (i) maintain 100% direct ownership of the Common
Securities of First USA Capital Trust; provided, however, that any successor of
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the Company, permitted pursuant to Article Ten, may succeed to the Company's
ownership of such Common Securities, (ii) use its reasonable efforts to cause
First USA Capital Trust (a) to remain a business trust, except in connection
with a distribution of Securities, the redemption of all of the Trust Securities
of First USA Capital Trust or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration of First USA Capital Trust, and (b) to
otherwise continue to be treated as a grantor trust and not an association
taxable as a corporation for United States federal income tax purposes and (iii)
to use its reasonable efforts to cause each holder of Trust Securities to be
treated as owning an individual beneficial interest in the Securities.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the
Securities to the First USA Capital Trust and in connection with the sale of the
Trust Securities by the First USA Capital Trust, the Company, in its capacity as
borrower with respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Securities, including commissions to the initial purchasers
payable pursuant to the Purchase Agree-
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ment, fees and expenses in connection with any exchange offer or other action to
be taken pursuant to the Registration Rights Agreement and compensation of the
Trustee in accordance with the provisions of Section 6.06;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the First USA
Capital Trust, the offering, sale and issuance of the Trust Securities
(including commissions to the initial purchasers in connection therewith), the
fees and expenses of the Property Trustee and the Delaware Trustee, the costs
and expenses relating to the operation of the Trust, including without
limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition, financing, and
disposition of Trust assets;
(c) be primarily and fully liable for any indemnifica-
tion obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obligations (other
than payments of principal of, premium, if any, or interest on the Trust
Securities) related to First USA Capital Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or resignation
of the Trustee, unless otherwise stated, the Company shall pay to the Trustee
all amounts accrued and owing to the date of such termination, removal or
resignation. Upon termination of the Declaration or the removal or resignation
of the Delaware Trustee or the Property Trustee, as the case may be, pursuant to
Section 5.7 of the Declaration, the Company shall pay to the Delaware Trustee or
the Property Trustee, as the case may be, all amounts accrued and owing to the
date of such termination, removal or resignation.
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ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause to
be furnished to the Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the
Securityholders as of such record date; and
(b) at such other times as the 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,
except that, no such lists need be furnished so long as the
Trustee is in possession thereof by reason of its acting as
Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(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 the
Securities (1) contained in the most recent list
furnished to it as provided in Section 4.01 or (2)
received by it in the capacity of Securities reg-
istrar (if so acting) hereunder. The Trustee may
destroy any list furnished to it as provided in
Section 4.01 upon receipt of a new list so fur-
nished.
(b) In case three or more holders of Securities (here-
inafter referred to as "applicants") apply in
writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has
owned a Security for a period of at least six
months preceding the date of such application, and
such application states that the applicants desire
to communicate with other holders of Securities or
with holders of all Securities with respect to
their rights under this Indenture and is accompa-
nied by a copy of the form of proxy or other com-
munication which such applicants propose to trans-
mit, then the Trustee shall within 5 Business Days
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after the receipt of such application, at its election,
either:
(1) afford such applicants access to the information preserved
at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number of
holders of all Securities, whose names and addresses
appear in the information preserved at the time by the
Trustee in accordance with the provisions of subsection
(a) of this Section 4.02, and as to the approximate cost
of mailing to such Securityholders the form of proxy or
other communication, if any, specified in such
application.
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
Securityholder whose name and address appear in the
information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this
Section 4.02 a copy of the form of proxy or other
communication which is specified in such request with
reasonable promptness after a tender to the 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 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 Securities of such series or
all Securities, as the case may be, or would be in
violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission,
after opportunity for a hearing upon the objections
specified in the written statement so filed, shall enter
an order refusing to sustain any of such objections or if,
after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and
opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so
declaring, the Trustee shall mail copies of such material
to all such Securityholders with reasonable promptness
after the entry of such order and the renewal of such
tender; otherwise the Trustee shall be relieved of
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any obligation or duty to such applicants respect-
ing their application.
(c) Each and every holder of Securities, by receiving
and holding the same, agrees with Company and the
Trustee that neither the Company nor the Trustee
nor any paying agent shall be held accountable by
reason of the disclosure of any such information
as to the names and addresses of the holders of
Securities in accordance with the provisions of
subsection (b) of this Section 4.02, regardless of
the source from which such information was de-
rived, and that the Trustee shall not be held
accountable by reason of mailing any material
pursuant to a request made under said subsection
(b).
SECTION 4.03. Reports by Company.
(a) The Company covenants and agrees to file with the
Trustee, within 15 days after the date on which
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
said 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 infor-
mation, documents or reports pursuant to either of
such sections, then to file with the Trustee and
the Commission, in accordance with rules and regu-
lations prescribed from time to time by the Com-
mission, 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 pre-
scribed from time to time in such rules and regu-
lations.
(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 said 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.
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(c) The Company covenants and agrees to transmit by
mail to all holders of Securities, as the names
and addresses of such holders appear upon the
Security Register, within 30 days after the filing
thereof with the 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 4.03 as may be required by
rules and regulations prescribed from time to time
by the Commission.
(d) Delivery of such reports, information and docu-
ments to the Trustee is for informational purposes
only and the Trustee's receipt of such shall not
constitute constructive notice of any information
contained therein or determinable from information
contained therein, including the Company's compli-
ance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively
on Officers' Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule
144A under the Securities Act, the Company shall,
upon request, provide the information required by
clause (d)(4) thereunder to each Holder and to
each beneficial owner and prospective purchaser of
Securities identified by any holder of Restricted
Securities, unless such information is furnished
to the Commission pursuant to Section 13 or 15(d)
of the Exchange Act.
SECTION 4.04. Reports by the Trustee.
(a) The Trustee shall transmit to Securityholders such
reports concerning the Trustee and its actions
under this Indenture as may be required pursuant
to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. If required by
Section 313(a) of the Trust Indenture Act, the
Trustee shall, within sixty days after each Decem-
ber 15 following the date of this Indenture, com-
mencing December 15, 1997, deliver to
Securityholders a brief report, dated as of such
December 15, which complies with the provisions of
such Section 313(a).
(b) A copy of each such report shall, at the time of
such transmission to Securityholders, be filed by
the Trustee with each stock exchange, if any, upon
which the Securities are listed, with the Commis-
sion and with the Company. The Company will
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promptly notify the Trustee when the Securities
are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall constitute
an Event of Default hereunder (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgement, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any
Security or any Other Debentures when it becomes
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 hereof
shall not constitute a default in the payment of
interest for this purpose; or
(b) default in the payment of all or any part of the principal
of (or premium, if any, on) any Security or any Other
Debentures as and when the same shall become due and
payable either at maturity, upon redemption, by
declaration or otherwise; or
(c) default in the performance, or breach, of any
covenant or warranty of the Company in this Inden-
ture (other than a covenant or warranty a default
in whose performance or whose breach is elsewhere
in this Section specifically dealt with), and
continuance of such default or breach for a period
of 90 days after there has been given, by regis-
tered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the
holders of at least 25% in aggregate principal
amount of the outstanding Securities a written
notice specifying such default or breach and re-
quiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an
involuntary case under any applicable bankruptcy,
insolvency or other similar
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law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Company or for any substantial
part of its property, or ordering the winding-up or
liquidation of its affairs and such decree or order shall
remain unstayed and in effect for a period of 90
consecutive days; or
(e) the Company shall commence a voluntary case under
any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an
involuntary case under any such law, or shall
consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar offi-
cial) of the Company or of any substantial part of
its property, or shall make any general assignment
for the benefit of creditors, or shall fail gener-
ally to pay its debts as they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Trustee or the
holders of not less than 25% in aggregate principal amount of the Securities
then outstanding may declare the principal amount of all Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the holders of the outstanding Securities), and upon any
such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition
that if, at any time after the principal of the Securities shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, (i)
the Company shall pay or shall deposit with the Trustee a sum sufficient to pay
(A) all matured installments of interest upon all the Securities and the
principal of and premium, if any, on any and all Securities which shall have
become due otherwise than by acceleration (with interest upon such principal and
premium, if any, and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest, at the same rate as
the rate of interest specified in the Securities to the date of such payment or
deposit) and (B) such amount as shall be sufficient to cover reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee except as a
result of negligence or bad faith, and (ii) any and all Events of Default under
the Indenture shall have been cured,
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waived or otherwise remedied as provided herein, then, in every such case, the
holders of a majority in aggregate principal amount of the Securities then
outstanding, by written notice to the Company and to the Trustee, may rescind
and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the holders of the Securities shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Securities on Default; Suit Therefor.
The Company covenants that (a) in case default shall be made in
the payment of any installment of interest upon any of the Securities as and
when the same shall become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of the principal of or premium, if any, on any of the Securities as and
when the same shall have become due and payable, whether at maturity of the
Securities or upon redemption or by declaration or otherwise, then, upon demand
of the Trustee, the Company will pay to the Trustee, for the benefit of the
holders of the Securities, the whole amount that then shall have become due and
payable on all such Securities for principal and premium, if any, or interest,
or both, as the case may be, with interest upon the overdue principal and
premium, if any, and (to the extent that payment of such interest is enforceable
under applicable law and, if the Securities are held by First USA Capital Trust
or a trustee of such trust, without duplication of any other amounts paid by
First USA Capital Trust or trustee in respect thereof) upon the overdue
installments of interest at the rate borne by the Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any expenses or liabilities incurred by the
Trustee hereunder other than through its negligence or bad faith.
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 actions or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may prosecute
any
33
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such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the
Securities and collect in the manner provided by law out of the property of the
Company or any other obligor on the Securities wherever situated the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Securities
under Title 11, United States Code, or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Company or
such other obligor, or in the case of any other similar judicial proceedings
relative to the Company or other obligor upon the Securities, or to the
creditors or property of the Company or such other obligor, the Trustee,
irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 5.02, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the Securities
and, in case of any judicial proceedings, to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for reasonable compensation to the Trustee
and each predecessor Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as a result
of negligence or bad faith) and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Securities, or
to the creditors or property of the Company or such other obligor, unless
prohibited by applicable law and regulations, to vote on behalf of the holders
of the Securities in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable proceedings,
and to collect and receive any moneys or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make such
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of such payments directly to the Securityholders, to pay to the Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances made,
by the Trustee and each predecessor Trustee except as a result of negligence or
bad faith.
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Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, or the production thereof on
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the holders of the Securities, and it shall not be necessary to make any holders
of the Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys, upon presentation of the Securities in respect of which moneys have
been collected, and stamping thereon the payment, if only partially paid, and
upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and reasonable compensation to the Trustee, its
agents, attorneys and counsel, and of all other expenses and liabilities
incurred, and all advances made, by the Trustee except as a result of its
negligence or bad faith;
Second: To the payment of all Senior Indebtedness of
the Company if and to the extent required by Article Fifteen;
Third: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and be
unpaid, to the payment of the amounts then due and unpaid upon Securities for
principal of (and premium, if any) and interest on the Securities, in respect of
which or for the benefit of which money has been collected, ratably, without
preference of priority of any kind, according to the amounts due on such
Securities for principal (and premium, if any) and interest, respectively; and
35
<PAGE>
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof with respect to the
Securities specifying such Event of Default, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Securities then outstanding shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and 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, it being understood and intended, and being expressly
covenanted by the taker and holder of every Security with every other taker and
holder and the Trustee, that no one or more holders of Securities shall have any
right in any manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any other holder of
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Securities.
Notwithstanding any other provisions in this Indenture, however,
the right of any holder of any Security to receive payment of the principal of
(premium, if any) and interest on such Security, on or after the same shall have
become due and payable, or to institute suit for the enforcement of any such
payment, shall not be impaired or affected without the consent of such holder
and by accepting a Security hereunder it is expressly understood, intended and
covenanted by the taker and holder of every Security with every other such taker
and holder and the Trustee, that no one or more holders of Securities shall have
any right in any manner whatsoever by virtue or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of the holders of any
other Securities, or to obtain or seek to obtain priority over or preference to
any other such holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
holders of Securities. For the protection and enforcement of the provisions of
this Section, each and every
36
<PAGE>
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default under this Indenture and the
Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities and
is continuing, 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 by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the Trustee or
to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to the
Trustee or the holders of the Securities, by judicial proceedings or otherwise,
to enforce the performance or observance of the covenants and agreements
contained in this Indenture or otherwise established with respect to the
Securities, and no delay or omission of the Trustee or of any holder of any of
the Securities to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 5.04, every power and remedy
given by this Article V or by law to the Trustee or to the Securityholders may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee; provided,
--------
however, that (subject to the provisions of Section 6.01) the Trustee shall
- ------
37
<PAGE>
have the right to decline to follow any such direction if the Trustee shall
determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully be
taken or if the Trustee in good faith by its board of directors or trustees,
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or proceedings so directed
would involve the Trustee in personal liability. Prior to any declaration
accelerating the maturity of the Securities, the holders of a majority in
aggregate principal amount of the Securities at the time outstanding may on
behalf of the holders of all of the Securities waive any past default or Event
of Default and its consequences except a default (a) in the payment of principal
of or premium, if any, or interest on any of the Securities or (b) in respect of
covenants or provisions hereof which cannot be modified or amended without the
consent of the holder of each Security affected; provided, however, that if the
-------- -------
Securities are held by Property Trustee, such waiver or modification to such
waiver shall not be effective until the holders of a majority in aggregate
liquidation amount of Trust Securities shall have consented to such waiver or
modification to such waiver; provided further, that if the consent of the holder
-------- -------
of each outstanding Security is required, such waiver shall not be effective
until each holder of the Trust Securities shall have consented to such waiver.
Upon any such waiver, the default covered thereby shall be deemed to be cured
for all purposes of this Indenture and the Company, the Trustee and the holders
of the Securities shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon. Whenever any default or
Event of Default hereunder shall have been waived as permitted by this Section
5.07, said default or Event of Default shall for all purposes of the Securities
and this Indenture be deemed to have been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities mail to all Securityholders, as the names
and addresses of such holders appear upon the Security register, notice of all
defaults known to the Trustee, unless such defaults shall have been cured before
the giving of such notice (the term "defaults" for the purpose of this Section
5.08 being hereby defined to be the events specified in clauses (a), (b), (c),
(d) and (e) of Section 5.01, not including periods of grace, if any, provided
for therein, and irrespective of the giving of written notice specified in
clause (c) of Section 5.01); and provided that, except in the case of default in
the payment of the principal of or premium, if any, or interest on any of the
Securities, the Trustee shall be protected
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<PAGE>
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 determines that the withholding of such
notice is in the interests of the Securityholders; and provided further, that in
the case of any default of the character specified in Section 5.01(c) no such
notice to Securityholders shall be given until at least 60 days after the
occurrence thereof but shall be given within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the 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 5.09 shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Securityholder, or group of
Securityholders, holding in the aggregate more than 10% in aggregate principal
amount of the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Security against the Company on or after the
same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued hereunder,
the Trustee, prior to the occurrence of an Event of Default and after the curing
or waiving of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred (which has not been cured or
waived) the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
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<PAGE>
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
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of De-
fault which may have occurred
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable
except for the performance of such duties and
obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations
shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on the part of the
Trustee, the 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 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 they
conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers of
the Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(c) 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 Securityholders pursuant to Section 5.07,
relating to the time, method and place of conduct-
ing any proceeding for any remedy available to the
Trustee, or exercising any trust or power con-
ferred upon the Trustee, under this Indenture.
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
40
<PAGE>
of any of its duties or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this Indenture or adequate
indemnity against such risk is not reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, bond, note, debenture or other paper or
document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the
Company mentioned herein may be sufficiently evi-
denced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically
prescribed); and any Board Resolution may be evi-
denced to the Trustee by a copy thereof certified
by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel of its selection and
any advice or Opinion of Counsel shall be full and
complete authorization and protection in respect of any
action taken or suffered omitted by it hereunder in good
faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exer-
cise any of the rights or powers vested in it by
this Indenture at the request, order or direction
of any of the Securityholders, pursuant to the
provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee
reasonable security or indemnity against the
costs, expenses and liabilities which may be in-
curred therein or thereby;
(e) the Trustee shall not be liable for any action
taken or omitted by it in good faith and believed
by it to be authorized or within the discretion or
rights or powers conferred upon it by this Inden-
ture; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (that has not
been cured or waived), to exercise such of the
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<PAGE>
rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any inves-
tigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order,
approval, bond, debenture, coupon or other paper
or document, unless requested in writing to do so
by the holders of a majority in aggregate princi-
pal amount of the outstanding Securities; provid-
ed, however, that if the payment within a reason-
able 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 reasonable
indemnity against such expense or liability as a
condition to so proceeding; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly
or by or through agents (including any Authenticating
Agent) or attorneys, and the Trustee shall not be
responsible for any misconduct or negligence on the part
of any such agent or attorney appointed by it with due
care.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Securities. The Trustee and
the Authenticating Agent shall not be accountable for the use or application by
the Company of any Securities or the proceeds of any Securities authenticated
and delivered by the Trustee or the Authenticating Agent in conformity with the
provisions of this Indenture.
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<PAGE>
SECTION 6.04. Trustee, Authenticating Agent, Paying
Agents, Transfer Agents or Registrar May
Own Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights it
would have if it were not Trustee, Authenticating Agent, paying agent, transfer
agent or Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys received
by the Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee and any paying agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company. So long as no Event of Default shall have occurred and be continuing,
all interest allowed on any such moneys shall be paid from time to time upon the
written order of the Company, signed by the Chairman of the Board of Directors,
the President or a Vice President or the Treasurer or an Assistant Treasurer of
the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as borrower, covenants and agrees to pay to the
Trustee from time to time, and the Trustee shall be entitled to, such
compensation as shall be agreed to in writing between the Company and the
Trustee (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the 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 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 its officers, agents,
directors and employees) for, and to hold it harmless against, any and all loss,
damage, claim, liability or expense including taxes (other than taxes based on
the income of the Trustee) incurred without 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 costs and expenses of defending
itself against any claim of liability in the premises. The obligations of the
Company under this Section 6.06 to compensate and indemnify the Trustee
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<PAGE>
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 Securities 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 Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination of
this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02, whenever
in the administration of the provisions of this Indenture the Trustee shall deem
it necessary or desirable that a matter be proved or established prior to taking
or omitting any action hereunder, such matter (unless other evidence in respect
thereof is herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the 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 or omitted by
it under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
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.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia or a corporation
or other Person permitted to act as trustee by the Commission authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000) and subject to
supervision or examination by federal, state, territo-
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rial, or District of Columbia authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 6.09 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving writ-
ten notice of such resignation to the Company and
by mailing notice thereof to the holders of the
Securities at their addresses as they shall appear
on the Security register. Upon receiving such
notice of resignation, the Company shall promptly
appoint a successor trustee or trustees by written
instrument, in duplicate, one copy of which in-
strument 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 to the
affected Securityholders, the resigning Trustee
may petition any court of competent jurisdiction
for the appointment of a successor trustee, or any
Securityholder who has been a bona fide holder of
a Security for at least six months may, subject to
the provisions of Section 5.09, on behalf of him-
self and all others similarly situated, petition
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 pre-
scribe, 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 6.08 after written request
therefor by the Company or by any Securityholder
who has been a bona fide hold-
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er of a Security or Securities for at least
six months, or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.09 and
shall fail to resign after written request therefor
by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge
or control of the Trustee or of its property or
affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, the Company may remove the Trustee
and appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor
trustee, or, subject to the provisions of Section 5.09,
any Securityholder who has been a bona fide holder of a
Security for at least six months may, on behalf of himself
and all others similarly situated, petition any court of
competent jurisdiction for the removal of the 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 Securities at the time outstanding
may at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed
as successor trustee unless within 10 days after
such nomination the Company objects thereto or if
no successor trustee shall have been so appointed
and shall have accepted appointment within 30 days
after such removal, in which case the Trustee so
removed or any Securityholder, upon the terms and
conditions and otherwise as in subsection (a) of
this Section 6.10 provided, may petition any court
of competent jurisdiction for an appointment of a
successor trustee.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions
of this Section 6.10 shall be-
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come effective upon acceptance of appointment by the
successor trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Company and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Company or of the successor trustee,
the trustee ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of Section 6.06, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring trustee thereunder. Upon
request of any such successor trustee, the Company shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.
No successor trustee shall accept appointment as provided in this
Section 6.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided
in this Section 6.11, the Company shall mail notice of the succession of such
trustee hereunder to the holders of Securities at their addresses as they shall
appear on the Security register. If the Company fails to mail such notice within
10 days after the acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Company.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder
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without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture any Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name
of the successor trustee; and in all such cases such certificates shall have the
full force which the Securities or this Indenture elsewhere provides that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or
authenticate Securities in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
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.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by the
Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Securities issued
upon exchange or transfer thereof as fully to all intents and purposes as though
any such Authenticating Agent had been expressly authorized to authenticate and
deliver Securities; provided, that the Trustee shall have no liability to the
Company for any acts or omissions of the Authenticating Agent with respect to
the authentication and delivery of Securities. Any such Authenticating Agent
shall at all times be a corporation organized and doing business under the laws
of the United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $5,000,000 and being subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.14 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report
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of condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 6.14 without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent by giving written notice
of termination to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
any Authenticating Agent shall cease to be eligible under this Section 6.14, the
Trustee may, and upon the request of the Company shall, promptly appoint a
successor Authenticating Agent eligible under this Section 6.14, shall give
written notice of such appointment to the Company and shall mail notice of such
appointment to all Securityholders as the names and addresses of such holders
appear on the Security Register. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating
Agent from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any action
taken by it as such in accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or
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waiver or the taking of any other action) the fact that at the time of taking
any such action the holders of such specified percentage have joined therein may
be evidenced (a) by any instrument or any number of instruments of similar tenor
executed by such Securityholders in person or by agent or proxy appointed in
writing, or (b) by the record of such holders of Securities voting in favor
thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article Eight, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders.
If the Company shall solicit from the Securityholders 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 the determination of
Securityholders 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 Securityholders of record at the
close of business on the record date shall be deemed to be Securityholders for
the purposes of determining whether Securityholders of the requisite proportion
of Outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the Outstanding Securities shall be computed as of
the record date; provided, however, that no such authorization, agreement or
-------- -------
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05, proof
of the execution of any instrument by a Securityholder or his agent or proxy
shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall be proved by the
Security Register or by a certificate of the Security registrar. The Trustee may
require such additional proof of any matter referred to in this Section as it
shall deem necessary.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.06.
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SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Security registrar may deem the person in whose name
such Security shall be registered upon the Security Register to be, and may
treat him as, the absolute owner of such Security (whether or not such Security
shall be overdue) for the purpose of receiving payment of or on account of the
principal of and premium, if any, and interest on such Security and for all
other purposes; and neither the Company nor the Trustee nor any Authenticating
Agent nor any paying agent nor any transfer agent nor any Security registrar
shall be affected by any notice to the contrary. All such payments so made to
any holder for the time being or upon his order shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Securities shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Securities which the
Trustee actually knows are so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 7.04 if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Securities and that the pledgee
is not the Company or any such other obligor or person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In the 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 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Security specified in
this Indenture in connection
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with such action, any holder of a Security (or any Security issued in whole or
in part in exchange or substitution therefor) the serial number of which is
shown by the evidence to be included in the Securities the holders of which have
consented to such action may, by filing written notice with the Trustee at its
principal office and upon proof of holding as provided in Section 7.02, revoke
such action so far as concerns such Security (or so far as concerns the
principal amount represented by any exchanged or substituted Security). Except
as aforesaid any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security, and of any Security issued in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Security or any Security issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time and from
time to time pursuant to the provisions of this Article Eight for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the
waiving of any default hereunder and its consequences, or
to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of
Article Five;
(b) to remove the Trustee and nominate a successor
trustee pursuant to the provisions of Article Six;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal
amount of such Securities under any other provision of
this Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders to
take any action specified in Section 8.01, to be held at such time and at such
place in the Borough of Manhat-
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tan, The City of New York, as the Trustee shall determine. Notice of every
meeting of the Securityholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be mailed to holders of Securities at their addresses as they shall appear
on the Securities Register. Such notice shall be mailed not less than 20 nor
more than 180 days prior to the date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of the
Board of Directors, or the holders of at least 10% in aggregate principal amount
of the Securities then outstanding, shall have requested the Trustee to call a
meeting of Securityholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have mailed the notice of such meeting within 20 days after receipt of such
request, then the Company or such Securityholders may determine the time and the
place in said Borough of Manhattan for such meeting and may call such meeting to
take any action authorized in Section 8.01, by mailing notice thereof as
provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a person
shall (a) be a holder of one or more Securities or (b) a person appointed by an
instrument in writing as proxy by a holder of one or more Securities. The only
persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders
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calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each
holder of Securities or proxy therefor shall be entitled to one vote for each
$1,000 principal amount of Securities held or represented by him; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not outstanding and ruled by the chairman of the meeting
to be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Securities held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Securityholders. Any meeting of Securityholders duly called pursuant to the
provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the meeting
may be held as so adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of holders
of Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The record shall be
signed and verified by the affidavits of the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. The holders of the Series A Capital
Securities and the Series B Capital Securities shall vote for all purposes as a
single class.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
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ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company and the Trustee may from time to time and at any time
amend the Indenture, without the consent of the Securityholders, for one or more
of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by
the successor corporation of the covenants, agreements and
obligations of the Company pursuant to Article Ten hereof;
(b) to add to the covenants of the Company such fur-
ther covenants, restrictions or conditions for the
protection of the Securityholders as the Board of
Directors and the Trustee shall consider to be for
the protection of the Securityholders, and to make
the occurrence, or the occurrence and continuance,
of a default in any of such additional covenants,
restrictions or conditions a default or an Event
of Default permitting the enforcement of all or
any of the remedies provided in this Indenture as
herein set forth; provided, however, that in re-
spect of any such additional covenant, restriction
or condition such amendment may provide for a
particular period of grace after default (which
period may be shorter or longer than that allowed
in the case of other defaults) or may provide for
an immediate enforcement upon such default or may
limit the remedies available to the Trustee upon
such default;
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities
registrable as to principal only) and to provide for
exchangeability of such Securities with the Securities
issued hereunder in fully registered form and to make all
appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental
indenture which may be defective or inconsistent with any
other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture;
provided that any
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such action shall not materially adversely affect
the interests of the holders of the Securities;
(e) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Securities;
(f) to make provision for transfer procedures, certif-
ication, book-entry provisions, the form of re-
stricted securities legends, if any, to be placed
on Securities, and all other matters required
pursuant to Section 2.07 or otherwise necessary,
desirable or appropriate in connection with the
issuance of Securities to holders of Capital Secu-
rities in the event of a distribution of Securi-
ties by First USA Capital Trust following a Dis-
solution Event;
(g) to qualify or maintain qualification of this In-
denture under the Trust Indenture Act; or
(h) to make any change that does not adversely affect the
rights of any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture to effect such amendment, to make any
further appropriate agreements and stipulations which may be therein contained
and to accept the conveyance, transfer and assignment of any property
thereunder, but the 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 amendment to the Indenture authorized by the provisions of
this Section 9.01 may be executed by the Company and the Trustee without the
consent of the holders of any of the Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding, the Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the holders of the Securities; provided, however, that no such amendment shall
without the consent of the
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holders of each Security then outstanding and affected thereby (i) extend the
Maturity Date of any Security, or reduce the rate or extend the time of payment
of interest thereon (except as contemplated by Article Sixteen), or reduce the
principal amount thereof, or reduce any amount payable on redemption thereof, or
make the principal thereof or any interest or premium thereon payable in any
coin or currency other than that provided in the Securities, or impair or affect
the right of any Securityholder to institute suit for payment thereof, or (ii)
reduce the aforesaid percentage of Securities the holders of which are required
to consent to any such amendment to the Indenture, provided, however, that if
-------- -------
the Securities are held by First USA Capital Trust, such amendment shall not be
effective until the holders of a majority in liquidation amount of Trust
Securities shall have consented to such amendment; provided, further, that if
-------- -------
the consent of the holder of each outstanding Security is required, such
amendment shall not be effective until each holder of the Trust Securities shall
have consented to such amendment.
Upon the request of the Company accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Trustee of evidence of the consent of
Securityholders 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. The Trustee may receive an
Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article is authorized or permitted by, and conforms
to, the terms of this Article and that it is proper for the Trustee under the
provisions of this Article to join in the execution 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, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 9.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
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SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions of
this Article Nine shall comply with the Trust Indenture Act. Upon the execution
of any supplemental indenture pursuant to the provisions of this Article Nine,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Securities shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the execution of any
supplemental indenture affecting such series pursuant to the provisions of this
Article Nine may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Company, authenticated by the Trustee or the Authenticating
Agent and delivered in exchange for the Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02,
may receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant hereto complies with
the requirements of this Article Nine.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation or merger of the Company with or into any other
Person (whether or not affiliated with the Company, as the case may be), or
successive consolida-
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tions or mergers in which the Company, as the case may be, or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance,
transfer or lease of the property of the Company, as the case may be, or its
successor or successors as an entirety, or substantially as an entirety, to any
other Person (whether or not affiliated with the Company, as the case may be, or
its successor or successors) authorized to acquire and operate the same;
provided, that (a) the Company is the surviving Person, or the Person formed by
- --------
or surviving any such consolidation or merger (if other than the Company) or to
which such sale, conveyance, transfer or lease of property is made is a Person
organized and existing under the laws of the United States or any State thereof
or the District of Columbia, and (b) upon any such consolidation, merger, sale,
conveyance, transfer or lease, the due and punctual payment of the principal of
(and premium, if any) and interest on the Securities according to their tenor
and the due and punctual performance and observance of all the covenants and
conditions of this Indenture to be kept or performed by the Company shall be
expressly assumed, by supplemental indenture (which shall conform to the
provisions of the Trust Indenture Act, as then in effect) satisfactory in form
to the Trustee executed and delivered to the Trustee by the Person formed by
such consolidation, or into which the Company, as the case may be, shall have
been merged, or by the Person which shall have acquired such property, (c) after
giving effect to such consolidation, merger, sale, conveyance, transfer or
lease, no Default or Event of Default shall have occurred and be continuing and
(d) such consolidation, merger, sale, conveyance, transfer or lease does not
cause the Securities to be downgraded by a nationally recognized statistical
rating organization.
SECTION 10.02. Successor Corporation to be Substituted
for Company.
In case of any such consolidation, merger, conveyance or transfer
and upon the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the due and punctual payment of the principal of and premium, if any, and
interest on all of the Securities and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed or observed by the Company, such successor Person shall succeed to and
be substituted for the Company, with the same effect as if it had been named
herein as the party of the first part, and the Company thereupon shall be
relieved of any further liability or obligation hereunder or upon the
Securities. Such successor Person thereupon may cause to be signed, and may
issue either in its own name or in the name of First USA, Inc., any or all of
the Securities issuable hereunder which theretofore shall not have been signed
by the Company and delivered to the Trustee or the Authenticating Agent; and,
upon the order of such successor Person instead of the Company and subject
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to all the terms, conditions and limitations in this Indenture prescribed, the
Trustee or the Authenticating Agent shall authenticate and deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee or the Authenticating Agent for authentication,
and any Securities which such successor Person thereafter shall cause to be
signed and delivered to the Trustee or the Authenticating Agent for that
purpose. All the Securities so issued shall in all respects have the same legal
rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Indentures had been issued at the date of the execution hereof.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and 6.02,
may receive an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or lease, and any assumption, permitted or
required by the terms of this Article Ten complies with the provisions of this
Article Ten.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than any Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.08) and not theretofore cancelled, or
(b) all the Securities not theretofore cancelled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds
sufficient to pay on the Maturity Date or upon redemption all of the Securities
(other than any Securities which shall have been destroyed, lost or stolen and
which shall have been replaced or paid as provided in Section 2.08) not
theretofore cancelled or delivered to the Trustee for cancellation, including
principal and premium, if any, and interest due or to become due to the Maturity
Date or redemption date, as the case may be, but excluding, however, the amount
of any moneys for the payment of principal of or premium, if any, or interest on
the Securities (1) theretofore repaid to the Company in accordance with the
provisions of Section 11.04, or (2) paid to any State or to the District of
Columbia pursuant to its unclaimed property or similar laws, and if in either
case
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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
for the provisions of Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10
and 11.04 hereof shall survive until such Securities shall mature and be paid.
Thereafter, Sections 6.10 and 11.04 shall survive, and the Trustee, on demand of
the Company accompanied by any Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture, the Company,
however, hereby agreeing to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee in connection with
this Indenture or the Securities.
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by
Trustee.
Subject to the provisions of Section 11.04, all moneys and U.S.
Government Obligations deposited with the Trustee pursuant to Sections 11.01 or
11.05 shall be held in trust and applied by it to the payment, either directly
or through any paying agent (including the Company if acting as its own paying
agent), to the holders of the particular Securities for the payment of which
such moneys or U.S. Government Obligations have been deposited with the Trustee,
of all sums due and to become due thereon for principal, premium, if any, and
interest.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.05 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the holders of outstanding Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys
then held by any paying agent of the Securities (other than the Trustee) shall,
upon written 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. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying
agent for payment of the principal of or premium, if any, or interest on
Securities and not applied but remaining unclaimed by the holders of Securities
for two years after the date upon which the principal of or premium, if any, or
interest on such Securities, as the case may be, shall have become due and pay-
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able, shall be repaid to the Company by the Trustee or such paying agent on
written demand; and the holder of any of the Securities shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
and all liability of the Trustee or such paying agent with respect to such
moneys shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or
U.S. Government Obligations.
The Company shall be deemed to have been Discharged (as defined
below) from its respective obligations with respect to the Securities on the
91st day after the applicable conditions set forth below have been satisfied
with respect to the Securities at any time after the applicable conditions set
forth below have been satisfied:
(1) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as
defined below) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the
benefit of the holders of the Securities (i) money in an
amount, or (ii) U.S. Government Obligations which through
the payment of interest and principal in respect thereof
in accordance with their terms will provide, not later
than one day before the due date of any payment, money in
an amount, or (iii) a combination of (i) and (ii),
sufficient, in the opinion (with respect to (ii) and
(iii)) of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee and the Defeasance Agent,
if any, to pay and discharge each installment of principal
of and interest and premium, if any, on the outstanding
Securities on the dates such installments of principal,
interest or premium are due;
(2) if the Securities are then listed on any national
securities exchange, the Company shall have delivered to
the Trustee and the Defeasance Agent, if any, an Opinion
of Counsel to the effect that the exercise of the option
under this Section 11.05 would not cause such Securities
to be delisted from such exchange;
(3) no Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the
date of such deposit; and
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(4) the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the
effect that holders of the Securities will not recognize
income, gain or loss for United States federal income tax
purposes as a result of the exercise of the option under
this Section 11.05 and will be subject to United States
federal income tax on the same amount and in the same
manner and at the same times as would have been the case
if such option had not been exercised, and such opinion
shall be accompanied by a private letter ruling to that
effect received from the United States Internal Revenue
Service or a revenue ruling pertaining to a comparable
form of transaction to that effect published by the United
States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by, and obligations under,
the Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except (A) the rights
of holders of Securities to receive, from the trust fund described in clause (1)
above, payment of the principal of and the interest and premium, if any, on the
Securities when such payments are due; (B) the Company's obligations with
respect to the Securities under Sections 2.07, 2.08, 5.02 and 11.04; and (C) the
rights, powers, trusts, duties and immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which is
eligible to act as Trustee hereunder and which assumes all of the obligations of
the Trustee necessary to enable the Trustee to act hereunder. In the event such
a Defeasance Agent is appointed pursuant to this Section, the following
conditions shall apply:
(1) The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting
forth such Defeasance Agent's rights and responsibilities;
(2) The Defeasance Agent shall provide verification to
the Trustee acknowledging receipt of sufficient
money and/or U. S. Government Obligations to meet
the applicable conditions set forth in this Sec-
tion 11.05.
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ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest on any Security, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture, or in any Security, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor Person to the Company, either
directly or through the Company or any successor Person to the Company, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and as
a consideration for, the execution of this Indenture and the issue of the
Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in this
Indenture contained by the Company shall bind its successors and assigns whether
so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at
the time be the lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of 2/3
(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
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terminate both as to the Company, as the case may be, and as to
any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Securities on the Company may be given or served by being deposited postage
prepaid by registered or certified mail in a post office letter box addressed
(until another address is filed by the Company with the Trustee for the purpose)
to the Company, 1601 Elm Street, 47th Floor, Dallas, Texas 75201, Attention:
Philip E. Taken, General Counsel. Any notice, direction, request or demand by
any Securityholder 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
office of the Trustee, addressed to the Trustee, 101 Barclay Street, 21 West,
New York, New York 10206, Attention: Corporate Trust - Trustee Administration.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a contract
made under the laws of the State of New York, and for all purposes shall be
governed by and construed in accordance with the laws of said State, without
regard to conflicts of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the 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 in the opinion of
the signers all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in 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,
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in the opinion of such person, such condition or covenant has
been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of or premium,
if any, or interest on the Securities will not be a Business Day, the payment of
such principal of or premium, if any, or interest on the Securities need not be
made on such date but may be made on the next succeeding Business Day, with the
same force and effect as if made on the date of payment and no interest shall
accrue for the period from and after such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with another provision included in this Indenture which
is required to be included in this Indenture by any of Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, such required provision shall
control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles
and sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Securities, but this Indenture and the Securities shall be construed as if
such invalid or illegal or unenforceable provision had never been contained
herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company,
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provided that, in the event of any such assignment, the Company, as the case may
- --------
be, will remain liable for all such obligations. Subject to the foregoing, the
Indenture is binding upon and inures to the benefit of the parties thereto and
their respective successors and assigns. This Indenture may not otherwise be
assigned by the parties thereto.
SECTION 13.13. Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities
held by First USA Capital Trust or a trustee of such trust, if the Property
Trustee of such Trust fails to enforce its rights under this Indenture as the
holder of the Securities held as the assets of First USA Capital Trust any
holder of Capital Securities may 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 or entity. Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay principal of or premium, if any, or interest on
the Securities when due, the Company acknowledges that a holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or premium, if any, or interest on the
Securities having a principal amount equal to the aggregate liquidation amount
of the Capital Securities of such holder on or after the respective due date
specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Redemption.
If a Special Event has occurred and is continuing then,
notwithstanding Section 14.02(a) but subject to Section 14.02(c), the Company
shall have the right at any time prior to the Initial Optional Redemption Date,
upon not (i) not less than 45 days written notice to the Trustee and (ii) not
less than 30 days nor more than 60 days written notice to the Securityholders,
to redeem the Securities, in whole (but not in part), within 90 days following
the occurrence of such Special Event at the Special Event Redemption Price.
Following a Special Event, the Company shall take such action as is necessary to
promptly determine the Special Event Redemption Price, including without
limitation the appointment by the Company of a Quotation Agent. The Special
Event Redemption Price shall be paid prior to 12:00 noon, New York time, on the
date of such redemption or such earlier time as the Company determines, provided
--------
that the Company shall deposit
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with the Trustee an amount sufficient to pay the Special Event Redemption Price
by 10:00 a.m., New York time, on the date such Special Event Prepayment Price is
to be paid.
SECTION 14.02. Optional Redemption by Company.
(a) Subject to the provisions of this Article Fourteen, the
Company shall have the right to redeem the Securities, in whole or in part, from
time to time, on or after the Initial Optional Redemption Date at the optional
redemption prices set forth below (expressed as percentages of principal) plus
accrued and unpaid interest thereon (including Additional Interest and
Compounded Interest, if any) to the applicable date of redemption (the "Optional
Redemption Price") if redeemed during the 12-month period beginning January 15
of the years indicated below.
Year Percentage
---- ----------
2007 104.6650%
2008 104.1985%
2009 103.7320%
2010 103.2655%
2011 102.7990%
2012 102.3325%
2013 101.8660%
2014 101.3995%
2015 100.9330%
2016 100.4665%
2017 and thereafter 100.0000%
--------
If the Securities are only partially redeemed pursuant to this
Section 14.02, the Securities will be redeemed pro rata or by lot or by any
--- ----
other method utilized by the Trustee; provided, that if at the time of
--------
redemption the Securities are registered as a Global Security, the Depositary
shall determine, in accordance with its procedures, the principal amount of such
Securities held by each holder of a Security to be redeemed. The Optional
Redemption Price shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company determines, provided
--------
that the Company shall deposit with the Trustee an amount sufficient to pay the
Optional Redemption Price by 10:00 a.m., New York time, on the date such
Optional Redemption Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02, upon the
entry of an order for dissolution of the First USA Capital Trust by a court of
competent jurisdiction, the Securities thereafter will be subject to optional
redemption, in whole only, but not in part, on or after January 15, 2007, at the
optional redemption prices set forth in Section 14.02 and otherwise in
accordance with this Article Fourteen.
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(c) Any redemption of Securities pursuant to Section 14.01 or
Section 14.02 shall be subject to the receipt by the Company of any required
regulatory approval.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking
fund.
SECTION 14.04. Notice of Redemption; Selection of Securities.
In case the Company shall desire to exercise the right to redeem
all, or, as the case may be, any part of the Securities in accordance with their
terms, it shall fix a date for redemption and shall mail a notice of such
redemption at least 30 and not more than 60 days prior to the date fixed for
redemption to the holders of Securities so to be redeemed as a whole or in part
at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.
Each such notice of redemption shall specify the CUSIP number of
the Securities to be redeemed, the date fixed for redemption, the redemption
price at which the Securities are to be redeemed (or the method by which such
redemption price is to be calculated), the place or places of payment that
payment will be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for redemption will be paid as specified in
said notice, and that on and after said date interest thereon or on the portions
thereof to be redeemed will cease to accrue. If less than all the Securities are
to be redeemed the notice of redemption shall specify the numbers of the
Securities to be redeemed. In case any Security is to be redeemed in part only,
the notice of redemption shall state the portion of the principal amount thereof
to be redeemed and shall state that on and after the date fixed for redemption,
upon surrender of such Security, a new Security or Securities in principal
amount equal to the unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents an amount of money sufficient to
redeem on the redemption date all the Securities so called for redemption at the
appropri-
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ate Redemption Price, together with accrued interest to the date fixed for
redemption.
The Company will give the Trustee notice not less than 45 days
prior to the redemption date as to the aggregate principal amount of Securities
to be redeemed and the Trustee shall select, in such manner as in its sole
discretion it shall deem appropriate and fair, the Securities or portions
thereof (in integral multiples of $1,000, except as otherwise set forth in the
applicable form of Security) to be redeemed.
SECTION 14.05. Payment of Securities Called for Redemption.
If notice of redemption has been given as provided in Section
14.04, the Securities or portions of Securities with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable Redemption Price, together
with interest accrued to the date fixed for redemption (subject to the rights of
holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the redemption
date), and on and after said date (unless the Company shall default in the
payment of such Securities at the Redemption Price, together with interest
accrued to said date) interest on the Securities or portions of Securities so
called for redemption shall cease to accrue. On presentation and surrender of
such Securities at a place of payment specified in said notice, the said
Securities or the specified portions thereof shall be paid and redeemed by the
Company at the applicable Redemption Price, together with interest accrued
thereon to the date fixed for redemption (subject to the rights of holders of
Securities on the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the redemption date).
Upon presentation of any Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of Securities
issued hereunder likewise covenants and agrees, that
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the Securities shall be issued subject to the provisions of this Article
Fifteen; and each holder of a Security, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions.
The payment by the Company of the principal of, premium, if any,
and interest on all Securities issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this Indenture or thereafter incurred.
No provision of this Article Fifteen shall prevent the occurrence
of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
No payment of principal (including redemption payments) of,
premium, if any, or interest on the Securities may be made at any time when (i)
any Senior Indebtedness is not paid when due, (ii) any applicable grace period
with respect to such default has ended and such default has not been cured or
waived or ceased to exist, or (iii) the maturity of any Senior Indebtedness has
been accelerated because of a default.
In the event of the acceleration of the maturity of the
Securities, 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 Securities until the holders of all Senior Indebtedness outstanding at the
time of such acceleration shall receive payment in full of all amounts due in
respect of such Senior Indebtedness (including any amounts due upon
acceleration).
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section 15.02, such payment shall be held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing, within 90 days of
such payment of the amounts then due and owing on such Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of such Senior Indebtedness.
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SECTION 15.03. 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 dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal (and premium, if any) or interest on the Securities;
and upon any such dissolution or winding-up or liquidation or reorganization,
any payment by the Company, or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the
Securityholders or the Trustee would be entitled to receive from the Company,
except for the provisions of this Article Fifteen, 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 Securityholders or by the
Trustee under the Indenture if received by them or it, directly to the holders
of Senior Indebtedness of the Company (pro rata to such holders on the basis of
the respective amounts of Senior Indebtedness held by such holders, as
calculated by the Company) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all amounts in respect of
such Senior Indebtedness in full, in money or money's worth, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all amounts in respect of Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all amounts in respect of such
Senior Indebtedness in full in money in accordance with its terms, after giving
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effect to any concurrent payment or distribution to or for the benefit of the
holders of such Senior Indebtedness.
For purposes of this Article Fifteen, the words "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Fifteen with
respect to the Securities to the payment of Senior Indebtedness that may at the
time be outstanding, provided that (i) such Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of such Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the Company
following the sale, conveyance, transfer or lease of its property as an
entirety, or substantially as an entirety, to another Person upon the terms and
conditions provided for in Article Ten of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 15.03 if such other Person shall, as a part of such consolidation,
merger, sale, conveyance, transfer or lease, comply with the conditions stated
in Article Ten of this Indenture. Nothing in Section 15.02 or in this Section
15.03 shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.05 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Securityholders shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Company, as the case may be, applicable to such
Senior Indebtedness until the principal of (and premium, if any) and interest on
the Securities shall be paid in full; and, for the purposes of such subrogation,
no payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Securityholders or the Trustee would
be entitled except for the provisions of this Article Fifteen, and no payment
over pursuant to the provisions of this Article Fifteen to or for the benefit of
the holders of such Senior Indebtedness by Securityholders or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness of the Company, and the holders of the Securities, be deemed to be
a payment by the Company to or on account of such Senior Indebtedness. It is
understood that the provisions of this Article Fifteen are and are intended
solely for the purposes of defining the relative rights of the holders of the
Securities, on the one
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hand, and the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article Fifteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the Securities
and creditors of the Company, as the case may be, other than the holders of
Senior Indebtedness of the Company, as the case may be, nor shall anything
herein or therein prevent the Trustee or the holder of any Security from
exercising all remedies otherwise permitted by applicable law upon default under
the Indenture, subject to the rights, if any, under this Article Fifteen of the
holders of such Senior Indebtedness in respect of cash, property or securities
of the Company, as the case may be, received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Fifteen, the Trustee, subject to the provisions of
Article Six of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders, for
the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, as the case may be, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article Fifteen.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article Fifteen and appoints the Trustee such Securityholder's
attorney-in-fact for any and all such purposes.
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SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of any fact known to the Company that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Securities pursuant to
the provisions of this Article Fifteen. Notwithstanding the provisions of this
Article Fifteen or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article Fifteen, unless and until
a Responsible Officer shall have received written notice thereof from the
Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Article Six of this Indenture, shall be entitled in
all respects to assume that no such facts exist; provided, however, that if the
-------- -------
Trustee shall not have received the notice provided for in this Section 15.06 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (or premium, if any) or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary that may be received by it within two Business Days prior
to such date.
The Trustee, subject to the provisions of Article Six of this
Indenture, 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
Indebtedness of the Company, as the case may be (or a trustee on behalf of such
holder), to establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article Fifteen, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Fifteen, 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.
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Upon any payment or distribution of assets of the Company
referred to in this Article Fifteen, the Trustee and the Securityholders shall
be entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to the
Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the 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 Fifteen.
SECTION 15.07. Rights to the Trustee; holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article Fifteen in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article Fifteen,
and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Article Six of this
Indenture, the Trustee shall not be liable to any holder of such Senior
Indebtedness if it shall pay over or deliver to Securityholders, the Company or
any other Person money or assets to which any holder of such Senior Indebtedness
shall be entitled by virtue of this Article Fifteen or otherwise.
Nothing in this Article Fifteen shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company, as the
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case may be, or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company, as the case may be, with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article
Fifteen or the obligations hereunder of the holders of the Securities to the
holders of such Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in
any manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of such Senior Indebtedness; and (iv) exercise or
refrain from exercising any rights against the Company, as the case may be, and
any other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable; provided that no
-------- ----
Extended Interest Payment Period may extend beyond the Maturity Date. To the
extent permitted by applicable law, interest, the payment of which has been
deferred because of the extension of the interest payment period pursuant to
this Section 16.01, will bear interest thereon at the Coupon Rate compounded
semi-annually for each semi-annual period of the Extended Interest Payment
Period ("Compounded Interest"). At the end of the Extended Interest Payment
Period, the Company shall pay all interest accrued and unpaid on the Securities,
including any Additional Interest and Compounded Interest (together, "Deferred
Interest") that shall be payable to
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the holders of the Securities in whose names the Securities are registered in
the Security Register on the first record date after the end of the Extended
Interest Payment Period. Before the termination of any Extended Interest Payment
Period, the Company may further defer payments of interest by further extending
such period, provided that such period, together with all such previous and
--------
further extensions within such Extended Interest Payment Period, shall not
exceed 10 consecutive semi-annual periods, including the first such semi-annual
period during such Extended Interest Payment Period, or extend beyond the
Maturity Date. Upon the termination of any Extended Interest Payment Period and
the payment of all Deferred Interest then due, 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, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give written notice to the Administrative Trustees, the
Property Trustee and the Trustee of its selection of such Extended Interest
Payment Period five Business Days before the earlier of (i) the next succeeding
date on which distributions on the Trust Securities issued by First USA Capital
Trust are payable, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions are payable, to any national
securities exchange or to holders of the Capital Securities issued by the Trust,
but in any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give the holders of the Securities and the Trustee written
notice of its selection of such Extended Interest Payment Period at least 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of the record or
payment date of such interest payment to any national securities exchange.
(c) The semi-annual period in which any notice is given pursuant
to paragraphs (a) or (b) of this Section 16.02 shall be counted as one of the 10
semi-annual periods permitted in the maximum Extended Interest Payment Period
permitted under Section 16.01.
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<PAGE>
The Bank of New York hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed by their respective officers thereunto duly authorized, as
of the day and year first above written.
FIRST USA, INC.
By /s/ Philip E. Taken
----------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By /s/ Stephen J. Giurlando
------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
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<PAGE>
EXHIBIT A
---------
(FORM OF FACE OF SECURITY)
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: - THIS SECURITY IS
A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR in SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC (AND ANY PAYMENT HEREON IS
MADE TO CEDE & CO.OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE
A-1
<PAGE>
THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO THE CORPORATION, AND (ii) PURSUANT TO
CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON
THE REVERSE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE
COMPANY. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
No. CUSIP No. ______________
A-2
<PAGE>
FIRST USA, INC.
9.33% SERIES ___ JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE DUE JANUARY 15, 2027
First USA, Inc., a Delaware corporation (the "Company", which
term includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to ______________ or registered
assigns, the principal sum of _____________ Dollars on January 15, 2027 (the
"Maturity Date"), unless previously redeemed, and to pay interest on the
outstanding principal amount hereof from December 20, 1996, 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, semi-annually (subject to
deferral as set forth herein) in arrears on January 15 and July 15 of each year,
commencing July 15, 1997 at the rate of 9.33% per annum until the principal
hereof shall have become due and payable, and on any overdue principal and
premium, if any, and (without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months and, for any period less than a full
calendar month, the number of days elapsed in such month. In the event that any
date on which the principal of (or premium, if any) or interest on this Security
is payable is not a Business Day, then payment payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), with the same force and effect as
if made on such date.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the person in whose name this Security (or one or more Predecessor
Securities, as defined in said Indenture) is registered at the close of business
on the regular record date for such interest installment, which shall be the
first day of the month in which the relevant interest payment date falls. Any
such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the holders on such regular record date and may
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a special record date to
be fixed by the Trustee for the payment of such defaulted interest, notice
whereof shall be given to the holders of Securities not less than 10 days prior
to such special record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.
A-3
<PAGE>
The principal of (and premium, if any) and interest on this
Security shall be payable at the office or agency of the Trustee maintained for
that purpose in any coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts;
provided, however, that, payment of interest may be made at the option of the
- -------- -------
Company by (i) check mailed to the holder at such address as shall appear in the
Security Register or (ii) by transfer to an account maintained by the Person
entitled thereto, provided that proper written transfer instructions have been
received by the relevant record date. Notwithstanding the foregoing, so long as
the Holder of this Security is the Property Trustee, the payment of the
principal of (and premium, if any) and interest on this Security will be made at
such place and to such account as may be designated by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all amounts in respect of Senior Indebtedness, and this
Security is issued subject to the provisions of the Indenture with respect
thereto. Each holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
A-4
<PAGE>
The provisions of this Security are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
FIRST USA, INC.
By: ____________________________
Name:
Title
Attest:
By: _______________________
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated ______________
THE BANK OF NEW YORK,
as Trustee
By____________________
Authorized Signatory
A-5
<PAGE>
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of December
20, 1996 (the "Indenture"), duly executed and delivered between the Company and
The Bank of New York, as Trustee (the "Trustee"), to which Indenture 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 Securities.
Upon the occurrence and continuation of a Special Event, the
Company shall have the right at any time prior to January 15, 2007 (the "Initial
Optional Redemption Date") to redeem this Security in whole (but not in part) at
the Special Event Redemption Price. "Special Event Redemption Price" shall mean,
with respect to any redemption of the Securities following a Special Event, an
amount in cash equal to the greater of (i) 100% of the principal amount to be
redeemed or (ii) the sum, as determined by a Quotation Agent, of the present
values of the principal amount and premium payable with respect to an Optional
Redemption (as defined below) on the Initial Optional Redemption Date, together
with scheduled payments of interest on the Securities from the redemption date
to and including the Initial Optional Redemption Date, discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, any
accrued and unpaid interest thereon, including Compounded Interest and
Additional Interest, if any, to the date of such redemption.
In addition, the Company shall have the right to redeem this
Security, in whole or in part, at any time on or after the Initial Optional
Redemption Date (an "Optional Redemption"), at the Optional Redemption Price as
set forth below (expressed as percentages of principal to be redeemed) plus
accrued and unpaid interest thereon (including Additional Interest and
Compounded Interest, if any) to the applicable date of redemption if redeemed
during the 12-month period beginning January 15 of the years indicated below.
Year Percentage
---- ----------
2007 104.6650%
2008 104.1985%
2009 103.7320%
2010 103.2655%
2011 102.7990%
2012 102.3325%
2013 101.8660%
2014 101.3995%
2015 100.9330%
2016 100.4665%
2017 and thereafter 100.0000%
A-6
<PAGE>
The Optional Redemption Price or the Special Event Redemption
Price, as the case requires, shall be paid prior to 12:00 noon, New York time,
on the date of such redemption or at such earlier time as the Company
determines, provided, that the Company shall deposit with the Trustee an amount
sufficient to pay the applicable Redemption Price by 10:00 a.m., New York City
time, on the date such Redemption Price is to be paid. Any redemption pursuant
to this paragraph will be made upon not less than 30 days nor more than 60 days
notice. If the Securities are only partially redeemed by the Company pursuant to
an Optional Redemption, the Securities will be redeemed pro rata or by lot or by
--- ----
any other method utilized by the Trustee; provided that if, at the time of
--------
redemption, the Securities are registered as a Global Security, the Depositary
shall determine the particular Securities to be redeemed in accordance with its
procedures.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any redemption of Securities by
the Company shall be subject to the receipt by the Company of any required
regulatory approval.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, as defined in the Indenture,
to execute supplemental indentures for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of modifying in any manner the rights of the holders of the Securities;
provided, however, that no such supplemental indenture shall, without the
consent of each holder of Securities then outstanding and affected thereby, (i)
extend the Maturity Date of any Securities, or reduce the principal amount
thereof, or reduce any amount payable on redemption thereof, or reduce the rate
or extend the time of payment of interest thereon (subject to Article Sixteen of
the Indenture), or make the principal of, or interest or premium on, the
Securities payable in any coin or currency other than U.S. dollars, or impair or
affect the right of any holder of Securities to institute suit for the payment
thereof, or (ii) reduce the aforesaid percentage of Securities, the holders of
which are required to consent to any such supplemental indenture. The Indenture
also contains provisions permitting the holders of a majority in aggregate
principal amount of the Securities at the
A-7
<PAGE>
time outstanding affected thereby, on behalf of all of the holders of the
Securities, to waive any past default in the performance of any of the covenants
contained in the Indenture, or established pursuant to the Indenture, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any of the Securities or a default in respect of any
covenant or provision under which the Indenture cannot be modified or amended
without the consent of each holder of Securities then outstanding. Any such
consent or waiver by the holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Security and of any Security issued in
exchange heretofore or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Security at the time and place and at the
rate and in the money herein prescribed.
The Company shall have the right, at any time and from time to
time during the term of the Securities, to defer payments of interest by
extending the interest payment period of such Securities for a period not
exceeding 10 consecutive semi-annual periods, including the first such
semi-annual period during such extension period, and not to extend beyond the
Maturity Date of the Securities (an "Extended Interest Payment Period"), at the
end of which period the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Securities to the
extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extended Interest Payment Period, the Company
may further defer payments of interest by further extending such Extended
Interest Payment Period, provided that such Extended Interest Payment Period,
--------
together with all such previous and further extensions within such Extended
Interest Payment Period, shall not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extended Interest Payment
Period, or extend beyond the Maturity Date of the Securities. Upon the
termination of any such Extended Interest Payment Period and the payment of all
accrued and unpaid interest and any additional amounts then due, the Company may
commence a new Extended Interest Payment Period, subject to the foregoing
requirements.
The Company has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock) or (ii) make any payment of principal,
interest or premium, if any,
A-8
<PAGE>
on or repay or repurchase or redeem any debt securities of the Company that rank
pari passu with or junior in right of payment to the Securities or (iii) make
any guarantee payments with respect to any guarantee by the Company of the debt
securities or any Subsidiary of the Company (including any Other Guarantees) if
such guarantee ranks pari passu or junior in right of payment to the Securities
(other than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock of the Company; (b)
any declaration of a dividend in connection with the implementation of a
stockholder's rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto; (c)
payments under the Capital Securities Guarantee; (d) 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; (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the exchange or
conversion of such capital stock or the security being exchanged or converted
and (f) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Company's benefit plans for its directors, officers or
employees or any of the Company's dividend reinvestment plans) if at such time
(i) there shall have occurred any event of which the Company has actual
knowledge that (a) is, or with the giving of notice or the lapse of time, or
both, would be, an Event of Default and (b) in respect of which the Company
shall not have taken reasonable steps to cure, (ii) if such Securities are held
by First USA Capital Trust, the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee or (iii) the
Company shall have given notice of its election of the exercise of its right to
extend the interest payment period and any such extension shall be continuing.
The Securities are issuable only in registered form without
coupons in denominations of $1,000.00 and any integral multiple thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the office or agency
of the Trustee in the City and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or the
Trustee duly executed by the holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
A-9
<PAGE>
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any paying agent and the registrar may deem
and treat the holder hereof as the absolute owner hereof (whether or not this
Security shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Security Registrar) for the purpose of
receiving payment of or on account of the principal hereof and premium, if any,
and interest due hereon and for all other purposes, and neither the Company nor
the Trustee nor any paying agent nor any registrar shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest on this Security, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture, against
any incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor Person, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
A-10
<PAGE>
EXHIBIT 4.8
================================================================================
AMENDED AND RESTATED DECLARATION
OF TRUST
First USA Capital Trust I
Dated as of December 20, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions........................................ 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................... 10
SECTION 2.2 Lists of Holders of Securities..................... 10
SECTION 2.3 Reports by the Property Trustee.................... 11
SECTION 2.4 Periodic Reports to Property Trustee............... 11
SECTION 2.5 Evidence of Compliance with Conditions Precedent... 11
SECTION 2.6 Events of Default; Waiver.......................... 11
SECTION 2.7 Event of Default; Notice........................... 13
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................... 14
SECTION 3.2 Office............................................. 14
SECTION 3.3 Purpose............................................ 14
SECTION 3.4 Authority.......................................... 14
SECTION 3.5 Title to Property of the Trust..................... 15
SECTION 3.6 Powers and Duties of the Administrative Trustees... 15
SECTION 3.7 Prohibition of Actions by the Trust and the
Trustees........................................... 18
SECTION 3.8 Powers and Duties of the Property Trustee.......... 19
SECTION 3.9 Certain Duties and Responsibilities of the Prop-
erty Trustee....................................... 22
SECTION 3.10 Certain Rights of Property Trustee................. 24
SECTION 3.11 Delaware Trustee................................... 26
SECTION 3.12 Execution of Documents............................. 26
SECTION 3.13 Not Responsible for Recitals or Issuance of Secu-
rities............................................. 27
SECTION 3.14 Duration of Trust.................................. 27
SECTION 3.15 Mergers............................................ 27
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities............ 29
SECTION 4.2 Responsibilities of the Sponsor.................... 29
SECTION 4.3 Right to Proceed................................... 30
i
<PAGE>
Page
----
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee...... 30
SECTION 5.2 Delaware Trustee................................... 31
SECTION 5.3 Property Trustee; Eligibility...................... 31
SECTION 5.4 Certain Qualifications of Administrative Trustees
and Delaware Trustee Generally..................... 32
SECTION 5.5 Administrative Trustees............................ 32
SECTION 5.6 Delaware Trustee................................... 33
SECTION 5.7 Appointment, Removal and Resignation of Trustees... 33
SECTION 5.8 Vacancies among Trustees........................... 35
SECTION 5.9 Effect of Vacancies................................ 35
SECTION 5.10 Meetings........................................... 35
SECTION 5.11 Delegation of Power................................ 36
Section 5.12 Merger, Conversion, Consolidation or Succession
to Business........................................ 36
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions...................................... 37
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities............ 37
SECTION 7.2 Execution and Authentication....................... 38
SECTION 7.3 Form and Dating.................................... 39
SECTION 7.4 Registrar, Paying Agent and Exchange Agent......... 41
SECTION 7.5 Paying Agent to Hold Money in Trust................ 41
SECTION 7.6 Replacement Securities............................. 42
SECTION 7.7 Outstanding Capital Securities..................... 42
SECTION 7.8 Capital Securities in Treasury..................... 42
SECTION 7.9 Temporary Securities............................... 43
SECTION 7.10 Cancellation....................................... 44
SECTION 7.11 CUSIP Numbers...................................... 44
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust............................... 44
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities............................. 46
SECTION 9.2 Transfer Procedures and Restrictions............... 46
SECTION 9.3 Deemed Security Holders............................ 55
SECTION 9.4 Book Entry Interests............................... 55
ii
<PAGE>
Page
----
SECTION 9.5 Notices to Clearing Agency......................... 56
SECTION 9.6 Appointment of Successor Clearing Agency........... 56
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.......................................... 56
SECTION 10.2 Exculpation........................................ 57
SECTION 10.3 Fiduciary Duty..................................... 57
SECTION 10.4 Indemnification.................................... 58
SECTION 10.5 Outside Businesses................................. 62
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year........................................ 62
SECTION 11.2 Certain Accounting Matters......................... 62
SECTION 11.3 Banking............................................ 63
SECTION 11.4 Withholding........................................ 63
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments......................................... 64
SECTION 12.2 Meetings of the Holders; Action by Written Con-
sent............................................... 66
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trust-
ee................................................. 68
SECTION 13.2 Representations and Warranties of Delaware Trust-
ee................................................. 68
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement; Liquidated Dam-
ages............................................... 69
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices............................................ 72
SECTION 15.2 Governing Law...................................... 73
SECTION 15.3 Intention of the Parties........................... 73
SECTION 15.4 Headings........................................... 73
iii
<PAGE>
Page
----
SECTION 15.5 Successors and Assigns............................. 73
SECTION 15.6 Partial Enforceability............................. 74
SECTION 15.7 Counterparts....................................... 74
ANNEX I TERMS OF SECURITIES................................I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE............. A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE.............. A2-1
EXHIBIT B SPECIMEN OF DEBENTURE..............................B-1
EXHIBIT C PURCHASE AGREEMENT.................................C-1
iv
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
FIRST USA CAPITAL TRUST I
December 20, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of December 20, 1996, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established First USA Capital
Trust I (the "Trust"), a trust formed under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of December 11, 1996 (the "Original
Declaration"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on December 11, 1996, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer (each as hereinafter defined);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
-----------
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to this
Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and Annexes
and Exhibits are to Articles and Sections of and Annexes and Exhibits
to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Administrative Trustee" has the meaning set forth in Section 5.1.
----------------------
"Affiliate" has the same meaning as given to that term in Rule 405
---------
under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
-----
"Authorized Officer" of a Person means any other Person that is
------------------
authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
-------------------
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or a
------------
day on which banking institutions in The City of New
<PAGE>
York or Wilmington, Delaware are authorized or required by law or executive
order 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.
"Capital 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).
"Capital Securities" means, collectively, the Series A Capital
------------------
Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series A
----------------------------
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a "Clearing
---------------
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital 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 Capital 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 Time" means the "Closing Time" under the Purchase Agreement.
------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
----------
Commission as from time to time constituted, or if any time after the execution
of this Declaration such Commission is not existing and performing the duties
now assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
-----------------
<PAGE>
"Common Securities Guarantee" means the guarantee agreement dated as
---------------------------
of December 20, 1996 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee;
--------------------------
(b) any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
----------------------
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay Street, 21 West, New York,
New York 10286.
"Covered Person" means: (a) any officer, director, shareholder,
--------------
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means First USA, Inc., a Delaware corporation, or
----------------
any successor entity resulting from any consolidation, amalgamation, merger or
other business combination, in its capacity as issuer of the Debentures under
the Indenture.
"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, collectively, the Series A Debentures and the
----------
Series B Debentures.
"Default" means an event, act or condition that with notice of lapse
-------
of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in
-----------------------------
Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
----------------
"Direct Action" shall have the meaning set forth in Section 3.8(e).
-------------
"Distribution" means a distribution payable to Holders in accordance
------------
with Section 6.1.
<PAGE>
"DTC" means The Depository Trust Company, the initial Clearing Agency.
---
"Event of Default" in respect of the Securities means an Event of
----------------
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.4.
--------------
"Exchange Offer" means the offer that may be made pursuant to the
--------------
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and the Series B Capital
Securities Guarantee for the Series A Capital Securities Guarantee.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in Section
----------------------------
10.4(b).
"Global Capital Securities" has the meaning set forth in Section
-------------------------
7.3(a).
"Global Capital Security" has the meaning set forth in Section 7.3(a).
-----------------------
"Holder" means a Person in whose name a Security is registered, such
------
Person being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
------------------
Indemnified Person.
"Indenture" means the Indenture dated as of December 20, 1996, among
---------
the Debenture Issuer and The Bank of New York, as amended from time to time.
"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.
<PAGE>
"Legal Action" has the meaning set forth in Section 3.6(g).
------------
"Majority in liquidation amount" means, with respect to the Trust
------------------------------
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Ministerial Action" has the meaning set forth in Annex I hereto.
------------------
"Offering Memorandum" has the meaning set forth in Section 3.6(b).
-------------------
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary, or the Secretary or an Assistant Secretary of such Person.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
------------------
be an employee of the Sponsor, and who shall be acceptable to the Property
Trustee.
<PAGE>
"Paying Agent" has the meaning specified in Section 7.4.
------------
"Person" means a legal person, including any individu al, corporation,
------
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorpo rated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Property Trustee" has the meaning set forth in Section 5.3(a).
----------------
"Property Trustee Account" has the meaning set forth in Section
------------------------
3.8(c).
"Purchase Agreement" means the Purchase Agreement for the initial
------------------
offering and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in Rule
----
144A.
"Quorum" means a majority of the Administrative Trust ees or, if there
------
are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
---------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of December 20, 1996, by and among the Trust, the Debenture
Issuer and the Initial Purchasers named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the Registration
----------------------
Rights Agreement.
"Related Party" means, with respect to the Sponsor, any direct or
-------------
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
-------------------
officer within the Corporate Trust Office of the Property Trustee, including any
vice-president, any assis tant vice-president, any assistant secretary, the
treasurer, any assistant treasurer or other officer of the Corporate Trust
Office of the Property Trustee customarily performing functions similar to those
performed by any of the above designated offi cers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the particu
lar subject.
<PAGE>
"Restricted Definitive Capital Securities" has the meaning set forth
----------------------------------------
in Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by
---------------------------
Section 9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section
----------------------------
9.2.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
---------
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may
--------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule may
---------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" or "Trust Securities" means the Common Securities and the
---------- ----------------
Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
---------------------
Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section
---------------------------
7.1(a).
"Series B Capital Securities" has the meaning specified in Section
---------------------------
7.1(a).
"Series A Capital Securities Guarantee" means the guarantee agreement
-------------------------------------
dated as of December 20, 1996 of Sponsor in respect of the Series A Capital
Securities.
"Series B Capital Securities Guarantee" means the guarantee agreement
-------------------------------------
to be entered in connection with the Exchange Offer by the Sponsor in respect of
the Series B Capital Securities.
"Series A Debentures" means the Series A 9.33% Junior Subordinated
-------------------
Deferrable Interest Debentures due January 15, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Series B Debentures" means the Series B 9.33% Junior Subordinated
-------------------
Deferrable Interest Debentures due January 15, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
<PAGE>
"Special Event" has the meaning set forth in Annex I hereto.
-------------
"Sponsor" means First USA, Inc., a Delaware corporation, or any
-------
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
--------------
"10% in liquidation amount" means, with respect to the Trust
-------------------------
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Treasury Regulations" means the income tax regulations, including
--------------------
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
------- --------
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended from time to time, or any successor legislation.
"Unrestricted Global Capital Security" has the meaning set forth in
------------------------------------
Section 9.2(b).
<PAGE>
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
--------------------------------
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
------------------------------
(a) Each of the Sponsor and the Administrative 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
-------- ----
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Property Trustee by the Sponsor and the
Administrative 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) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
<PAGE>
SECTION 2.3 Reports by the Property Trustee.
-------------------------------
Within 60 days after December 15 of each year, commencing December
15, 1997, the Property Trustee shall provide to the Holders of the Capital
Securities such reports as are required by (S) 313 of the Trust Indenture Act,
if any, in the form and in the manner 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.
SECTION 2.4 Periodic Reports to Property Trustee.
------------------------------------
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are required by (S) 314 (if any) and the compliance certificate
required by (S) 314 of the Trust Indenture Act in the form, in the manner and at
the times required by (S) 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Prece dent.
-------------------------------------------------
Each of the Sponsor and the Administrative 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 that 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)(1) of the
Trust Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
-------------------------
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital 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 the
Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in aggregate
principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default
under the Declaration may only be waived by the vote of the Holders
of at least the proportion in aggregate liquidation amount of the
Capital Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
<PAGE>
The foregoing provisions of this Section 2.6(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
Capital 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 Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
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 below in this Section 2.6(b), the
Event of Default under the 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 the Declaration as provided below in this
Section 2.6(b), the Event of Default under the 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, each Holder of Common Securities will be deemed to have waived
- -------- -------
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences if all Events of Default with respect to the
Capital 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 Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b)
<PAGE>
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. Subject to the foregoing provisions of this
Section 2.6(b), upon such 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 the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(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 2.7 Event of Default; Notice.
------------------------
(a) The Property Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of all defaults with respect to the Securities actually known to a
Responsible Officer of the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Event of Default as defined in
the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
-------- ----
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 5.01(a) and 5.01(b) of the Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of the Declaration shall have
actual knowledge.
<PAGE>
(c) Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a cer tification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust is named "First USA Capital Trust I" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the
Administrative Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust is c/o First USA,
Inc., 1601 Elm Street, 47th Floor, Dallas, Texas 75201. On ten Business Days
written notice to the Holders of Securities, the Administrative Trustees may
designate another principal office.
SECTION 3.3 Purpose.
-------
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities, (b) use the proceeds from the sale of the Securities to acquire
the Debentures, and (c) except as otherwise limited herein, to engage in only
those other activities necessary, advisable or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, mortgage or pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4 Authority.
---------
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall
<PAGE>
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 3.5 Title to Property of the Trust.
------------------------------
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
-------------------------------------------------
The Administrative Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that except, in the case of (i) and (ii), as
-------- -------
contemplated in Section 7.1(a), (i) the Trust may issue no more than one series
of Capital Securities and no more than one series of Common Securities, (ii)
there shall be no interests in the Trust other than the Securities, and (iii)
the issuance of Securities shall be limited to a simultaneous issuance of both
Capital Securities and Common Securities at any Closing Time,
(b) in connection with the issue and sale of the Capital Securities
and the consummation of the Exchange Offer, at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by the
Sponsor, in relation to the offering and sale of Series A Capital
Securities to qualified institutional buyers in reliance on Rule 144A
under the Securities Act and to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act), and to execute and file with the Commission, at such time as
determined by the Sponsor, any Registration Statement, including any
amendments thereto, as contemplated by the Registration Rights
Agreement;
<PAGE>
(ii) execute and file any documents prepared by the Sponsor, or take any
acts as determined by the Sponsor to be necessary in order to qualify
or register all or part of the Capital Securities in any State in
which the Sponsor has determined to qualify or register such Capital
Securities for sale;
(iii) at the direction of the Sponsor, execute and file an application,
prepared by the Sponsor, to the New York Stock Exchange or any other
national stock exchange or the Nasdaq Stock Market's National Market
for listing or quotation of the Capital Securities;
(iv) to execute and deliver letters, documents, or instruments with DTC and
other Clearing Agencies relating to the Capital Securities;
(v) if required, execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by
the Sponsor, relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act; and
(vi) execute and enter into the Purchase Agreement and the Registration
Rights Agreement providing for the sale of the Capital Securities;
(c) to acquire the Series A Debentures with the proceeds of the sale
of the Series A Capital Securities and the Common Securities and to exchange the
Series A Debentures for a like principal amount of Series B Debentures, pursuant
to the Exchange Offer; provided, however, that the Administrative Trustees shall
-------- -------
cause legal title to the Debentures to be held of record in the name of the
Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of (S)316(c) of the Trust Indenture Act, Distributions,
voting rights, redemptions and exchanges, and to issue relevant notices to the
Holders of Capital Securities and Holders of Common Securities as to such
actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Administrative Trustees pursuant to the terms of the Securities;
<PAGE>
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and manag ers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by (S) 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
neces sary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Administrative Trustees determine in their discretion
to be necessary or desirable in carrying out the activities of the Trust as set
out in this Section 3.6, including, but not limited to:
<PAGE>
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal income
tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the Debentures
will be treated as indebtedness of the Debenture Issuer for United
States federal income tax purposes.
(q) to take all action necessary to consummate the Exchange Offer or
otherwise cause the Capital Securities to be registered pursuant to an effective
registration statement in accordance with the provisions of the Registration
Rights Agreement.
(r) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Administrative Trustees, on behalf of
the Trust.
The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Administrative Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
----------------------------------------------------
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding the Debentures,
but shall distribute all such proceeds to Holders pursuant to the
terms of this Declaration and of the Securities;
<PAGE>
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans represented
by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the Trust
assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of,
or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A) direct the
time, method and place of conducting any proceeding with respect to any
remedy available to the Debenture Trustee, or exercising any trust or
power conferred upon the Debenture Trustee with respect to the Deben
tures, (B) waive any past default that is waivable under the Indenture,
(C) exercise any right to rescind or annul any declaration that the
principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required unless the Trust
shall have received an opinion of a nationally recognized independent
tax counsel experienced in such matters to the effect that such
modification 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.
SECTION 3.8 Powers and Duties of the Property Trustee.
-----------------------------------------
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders. The right, title and interest of the Property Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.7. 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 Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
<PAGE>
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust account
(the "Property Trustee Account") in the name of and under the exclusive control
of the Property Trustee on behalf of the Holders and, upon the receipt of
payments of funds made in respect of the Debentures held by the Property
Trustee, deposit such funds into the Property Trustee Account and make payments
to the Holders of the Capital Securities and Holders of the Common Securities
from the Property Trustee Account in accordance with Section 6.1. Funds in the
Property Trustee Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Trustee Account shall be an account that is
maintained with a banking institution the rating on whose long-term unsecured
indebtedness is at least equal to the rating assigned to the Capital Securities
by a "nationally recognized statistical rating organization", as that term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Administrative
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Property Trustee has actual knowledge or the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act and if such Property Trustee shall have failed to take such Legal
Action, the Holders of the Capital Securities may take such Legal Action, to the
same extent as if such Holders of Capital Securities held an aggregate principal
amount of Debentures equal to the aggregate liquidation amount of such Capital
Securities, without first proceeding against the Property Trustee or the Trust;
provided however, that if an Event of Default has occurred and is continuing and
such event is attributable to the failure of the Debenture Issuer to pay the
principal of or premium, if any, or interest on the Debentures on the date such
<PAGE>
principal, premium, if any, or interest is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Capital Securities may
directly institute a proceeding for enforcement of payment to such Holder of
the principal of or premium, if any, or interest on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of Capital Securities to the extent of any payment made by the
Debenture Issuer to such Holder of Capital Securities in such Direct Action.
Except as provided in the preceding sentences, the Holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders pursuant to the terms of the Securities;
or
(ii) a Successor Property Trustee has been appointed and has accepted that
appointment in accordance with Section 5.7.
(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default actually known to a Responsible Officer occurs and
is continuing, the Property Trustee shall, for the benefit of Holders, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake any actions
set forth in (S) 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all securities and any such Paying Agent
shall comply with (S) 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by the
Property Trustee.
<PAGE>
(j) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Administrative
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
-----------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Trust Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and in the Securities 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 2.6)
of which a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their exercise,
as a prudent 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:
(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 in the
Securities 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 in the Securities, 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
<PAGE>
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, or exercising any
trust or power conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property Trustee to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that the repayment of
such funds or liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property Trustee
against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody, safe
keeping and physical preservation of the Debentures and the Property Trustee
Account shall be to deal with such property in a similar manner as the Property
Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or lia bility for or with
respect to the value, genuineness, exis tence or sufficiency of the Debentures
or the payment of any taxes or assessments levied thereon or in connection
therewith;
(vii) the Property Trustee shall not be liable for any interest on any
money received by it except as it may other-
<PAGE>
wise agree in writing with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in relation to the Property
Trustee Account maintained by the Property Trustee pursuant to Section
3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Sponsor with their respective
duties under this Declaration, nor shall the Property Trustee be liable for any
default or misconduct of the Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
----------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative Trustees
contemplated by this Declaration may be sufficiently evidenced by an Officers'
Certificate;
(iii) whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Property Trustee (unless
other evidence is herein specifically prescribed) may, in the absence of bad
faith on its part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the Sponsor
or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts of its
selection and the advice or opinion of such counsel and experts with respect to
legal matters or advice within the scope of such experts' area of expertise
shall be full and complete authorization and protection in
<PAGE>
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion, such counsel may be counsel to
the Sponsor or any of its Affiliates, and may include any of its employees. The
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Declaration at the request or
direction of any Holder, unless such Holder shall have provided to the Property
Trustee security and indemnity, reasonably satisfactory to the Property Trustee,
against the costs, expenses (including reasonable attorneys' fees and expenses
and the expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Property Trustee provided, that, nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(vii) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Property Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents hereunder shall
bind the Trust and the Holders of the Securities, and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to
perform any such action and no third party shall be required to inquire as to
the authority of the Property Trustee to so act or as to its compliance with any
of the terms and provisions of this Declaration, both of which shall be
conclusively evidenced by the Property Trustee's or its agent's taking such
action;
<PAGE>
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders which instructions may
only be given by the Holders of the same proportion in liquidation amount of
the Securities as would be entitled to direct the Property Trustee under the
terms of the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other action until
such instructions are received, and (iii) shall be protected in conclusively
relying on or acting in or accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without negligence, and
reasonably believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
----------------
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Administrative Trustees or the Property Trustee described in this
Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be
a Trustee for the sole and limited purpose of fulfilling the requirements of
(S)3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents.
----------------------
Unless otherwise determined by the Administrative Trustees, and except
as otherwise required by the Business Trust Act, a majority of the
Administrative Trustees or, if there are
<PAGE>
only two, any Administrative Trustee or, if there is only one, such
Administrative Trustee is authorized to execute on behalf of the Trust any
documents that the Administrative Trustees have the power and authority to
execute pursuant to Section 3.6; provided that, the registration statement
-------- ----
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by all of the Administrative Trustees.
SECTION 3.13 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 3.14 Duration of Trust.
-----------------
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence up to January 15, 2028.
SECTION 3.15 Mergers.
-------
(a) The Trust may not merge with or 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
3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the consent of
the Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders, the Delaware
Trustee or the Property Trustee, merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets 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; 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
<PAGE>
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 on which the Capital Securities are then
listed or quoted;
(iv) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Capital Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the Holders (including 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 identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Sponsor has received an opinion of an
independent counsel to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including any Successor
Securities) in any material respect (other than with respect to any
dilution of the Holders' interest in the new entity); and
(B) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor the Successor Entity
will be required to register as an Investment Company; and
(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
<PAGE>
provided by the Capital Securities Guarantee and the Common Securities
Guarantee.
(c) Notwithstanding Section 3.15(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, 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, 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.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
---------------------------------------
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Series A Capital Securities are
issued and sold. In addition, upon any later Date of Delivery (as defined in
the Purchase Agreement) the Sponsor will purchase such additional number of
Common Securities as provided in the Common Stock Subscription Agreement dated
as of December 20, 1996 between the Sponsor and the Trust.
SECTION 4.2 Responsibilities of the Sponsor.
-------------------------------
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Memorandum and to prepare for filing by
the Trust with the Commission any Registration Statement, including any
amendments thereto as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
<PAGE>
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market for listing or quotation
of the Capital Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital Securities.
SECTION 4.3 Right to Proceed.
----------------
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on the
Capital Securities is attributable to the failure of the Company to pay interest
or principal on the Debentures, to institute a proceeding directly against the
Debenture Issuer for enforcement of its payment obligations on the Debentures.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee.
---------------------------------------------
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities;
provided, however, that, the number of Trustees shall in no event be less than
- -------- -------
two (2); provided further that (1) one Trustee, in the case of a natural person,
-------- -------
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, is an entity which has its principal place of business in the
State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (an
"Administrative Trustee"); and (3) one
<PAGE>
Trustee shall be the Property Trustee for so long as this Declaration is
required to qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements. Notwithstanding the above, unless an Event of Default shall have
occurred and be continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any jurisdiction in which
any part of the Trust's property may at the time be located, the Holders of a
Majority in liquidation amount of the Common Securities acting as a class at a
meeting of the Holders of the Common Securities, and the Administrative Trustees
shall have power to appoint one or more persons either to act as a co-trustee,
jointly with the Property Trustee, of all or any part of the Trust's property,
or to act as separate trustee of any such property, in either case with such
powers as may be provided in the instrument of appointment, and to vest in such
person or persons in such capacity any property, title, right or power deemed
necessary or desirable, subject to the provisions of this Declaration. In case
an Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make any such appointment of a co-trustee.
SECTION 5.2 Delaware Trustee.
----------------
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,
provided that, if the Property Trustee has its principal place of business in
- -------- ----
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
-----------------------------
(a) There shall at all times be one Trustee (the "Property Trustee")
which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of the
United States of America or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the Commission to act as
<PAGE>
an institutional trustee under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred
to above, then for the purposes of this Section 5.3(a)(ii), the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) 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 Holder of the Common Securities (as if it 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.
(d) The Capital Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware
---------------------------------------------------------------
Trustee Generally.
-----------------
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
SECTION 5.5 Administrative Trustees.
-----------------------
The initial Administrative Trustees shall be:
<PAGE>
Jack M. Antonini
Peter W. Atwater
Philip E. Taken
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Administrative Trustees is called with respect to any matter over
which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) Unless otherwise determined by the Administrative Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents which the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that, the
-------- ----
registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by all of the Administrative Trustees; and
(c) An Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.6.
SECTION 5.6 Delaware Trustee.
----------------
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
-------------------------------------------------
(a) Subject to Section 5.7(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument executed by
the Sponsor;
(ii) unless an Event of Default shall have occurred and be continuing after
the issuance of any Securities, by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; and
<PAGE>
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee or
the Delaware Trustee, by vote of Holders of a Majority in liquidation amount of
the Capital Securities voting as a class at a meeting of Holders of the Capital
Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(a) until a Successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Administrative Trustees
and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed in
accordance with this Section 5.7(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
-------- -------
that:
(i) No such resignation of the Trustee that acts as the Property Trustee
shall be effective:
(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the resigning
Property Trustee; or
(B) until the assets of the Trust have been completely liquidated and
the proceeds thereof distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware Trustee
shall be effective until a Successor Delaware Trustee has been appointed and has
accepted such appointment by instrument executed by such Successor Delaware
Trustee and delivered to the Trust, the Sponsor and the resigning Delaware
Trustee.
<PAGE>
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.7 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for ap pointment of
a Successor Property Trustee or Successor Delaware Trustee. 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.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or successor Delaware
Trustee, as the case may be.
SECTION 5.8 Vacancies among Trustees.
------------------------
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 5.7, the
Administrative Trustees in office, regardless of their number, shall have all
the powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Declaration.
SECTION 5.10 Meetings.
--------
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular
<PAGE>
meetings of the Administrative Trustees may be held at a time and place fixed by
resolution of the Administrative Trustees. Notice of any in-person meetings of
the Administrative Trustees 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. Notice of any telephonic meetings of the
Administrative Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of an Administrative
Trustee at a meeting shall constitute a waiver of notice of such meeting except
where an Administrative Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Administrative Trustees may be taken at a meeting
by vote of a majority of the Administrative 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 Administrative Trustees. In the event there is only one Administrative
Trustee, any and all action of such Administrative Trustee shall be evidenced by
a written consent of such Administrative Trustee.
SECTION 5.11 Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Administrative 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 Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
Section 5.12 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Property Trustee or the Delaware Trustee or
any Administrative 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 corporation
resulting
36
<PAGE>
from any merger, conversion or consolidation to which the Property Trustee or
the Delaware Trustee, as the case may be, shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Property Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case may be,
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities. If and to the extent that the
Debenture Issuer makes a payment of interest (including Compounded Interest (as
defined in the Indenture) and Additional Interest (as defined in the
Indenture)), premium and/or principal on the Debentures held by the Property
Trustee or Liquidated Damages (as defined in the Registration Rights Agreement)
or any other payments pursuant to the Registration Rights Agreement with respect
to the Debentures held by the Property Trustee (the amount of any such payment
being a "Payment Amount"), the Property Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Administrative Trustees shall on behalf of the Trust issue one
class of capital securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the "Series A
Capital Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities"). The Administrative Trustees shall
on behalf of the Trust issue one class of capital securities representing
undivided beneficial interests in the Trust having such terms as set forth in
Annex I (the "Series B Capital Securities") in exchange for Series A Capital
Securities accepted for exchange in the Exchange Offer, which Series B Capital
Securities shall not bear the legends required by Section 9.2(i) unless the
Holder of such Series A Capital Securities is either (A) a broker-dealer who
purchased
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such Series A Capital Securities directly from the Trust for resale pursuant to
Rule 144A or any other available exemption under the Securities Act, (B) a
Person participating in the distribution of the Series A Capital Securities or
(C) a Person who is an affiliate (as defined in Rule 144A) of the Trust. The
Trust shall issue no securities or other interests in the assets of the Trust
other than the Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(d) Every Person, by virtue of having become a Holder or a Capital
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.
SECTION 7.2 Execution and Authentication.
----------------------------
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities shall cease to be such Administrative
Trustee before the Securities so signed shall be delivered by the Trust, such
Securities nevertheless may be delivered as though the person who signed such
Securities had not ceased to be such Administrative Trustee; and any Securities
may be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Administrative Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Capital Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Capital Securities for
original issue. The aggregate number of
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Capital Securities outstanding at any time shall not exceed the number set forth
in the Terms in Annex I hereto except as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as
the Property Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
---------------
The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in writing. Each
Capital Security shall be dated the date of its authentication. The terms and
provisions of the Securities set forth in Annex I and the forms of Securities
set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and
to the extent applicable, the Property Trustee and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby.
(a) Global Securities. Securities offered and sold to QIBs in
-----------------
reliance on Rule 144A, as provided in the Purchase Agreement, shall be issued in
the form of one or more, permanent global Securities in definitive, fully
registered form without Distribution coupons with the global legend and
Restricted Securities Legend set forth in Exhibit A-1 hereto (a "Global Capital
Security"), which shall be deposited on behalf of the purchasers of the Capital
Securities represented thereby with the Property Trustee, at its New York
office, as custodian for the Clearing Agency, and registered in the name of the
Clearing Agency or a nominee of the Clearing Agency, duly executed by the Trust
and authenticated by the Property Trustee as hereinafter provided. The number
of Capital Securities represented by the Global Cap-
39
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ital Security may from time to time be increased or decreased by adjustments
made on the records of the Property Trustee and the Clearing Agency or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to
---------------------
the Global Capital Security and such other Capital Securities in global form as
may be authorized by the Trust to be deposited with or on behalf of the Clearing
Agency.
The Trust shall execute and the Property Trustee shall, in accordance
with this Section 7.3, authenticate and make available for delivery initially
one or more Global Capital Securities that (i) shall be registered in the name
of Cede & Co. or other nominee of such Clearing Agency and (ii) shall be
delivered by the Trustee to such Clearing Agency or pursuant to such Clearing
Agency's written instructions or held by the Property Trustee as custodian for
the Clearing Agency.
Members of, or participants in, the Clearing Agency ("Participants")
shall have no rights under this Declaration with respect to any Global Capital
Security held on their behalf by the Clearing Agency or by the Property Trustee
as the custodian of the Clearing Agency or under such Global Capital Security,
and the Clearing Agency may be treated by the Trust, the Property Trustee and
any agent of the Trust or the Property Trustee as the absolute owner of such
Global Capital Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Trust, the Property Trustee or any
agent of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Clearing Agency or
impair, as between the Clearing Agency and its Participants, the operation of
customary practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided in Section
-----------------------------
7.9, owners of beneficial interests in a Global Capital Security will not be
entitled to receive physical delivery of certificated Capital Securities
("Definitive Capital Securities"). Purchasers of Securities who are "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) will receive Capital Securities in the form of individual certificates in
definitive, fully registered form without distribution coupons and with the
Restricted Securities Legend set forth in Exhibit A-1 hereto ("Restricted
Definitive Capital Securities"); provided, however, that upon transfer of such
-------- -------
Restricted Definitive Capital Securities to a QIB, such Restricted Definitive
Capital Securities will, unless the Global Capital Security has previously been
exchanged, be exchanged for an interest in a Global Capital Security pursuant to
the provisions of Section 9.2. Restricted Definitive Capital Securities will
bear the Restricted Securities Legend set forth on Exhibit
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A-1 unless removed in accordance with this Section 7.3 or Section 9.2.
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.
------------------------------------------
The Trust shall maintain in the Borough of Manhattan, The City of New
York, (i) an office or agency where Capital Securities may be presented for
registration of transfer ("Registrar"), (ii) an office or agency where Capital
Securities may be presented for payment ("Paying Agent") and (iii) an office or
agency where Securities may be presented for exchange ("Exchange Agent"). The
Registrar shall keep a register of the Capital Securities and of their transfer.
The Trust may appoint the Registrar, the Paying Agent and the Exchange Agent and
may appoint one or more co-registrars, one or more additional paying agents and
one or more additional exchange agents in such other locations as it shall
determine. The term "Registrar" includes any additional registrar, "Paying
Agent" includes any additional paying agent and the term "Exchange Agent"
includes any additional exchange agent. The Trust may change any Paying Agent,
Registrar, co-registrar or Exchange Agent without prior notice to any Holder.
The Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Administrative Trust ees. The Trust shall notify the
Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Exchange Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Exchange Agent. The Trust shall act as Paying Agent, Registrar, co-registrar,
and Exchange Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar, Paying
Agent, and Exchange Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
-----------------------------------
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of liquidation amounts or Distributions on the Securities, and
will notify the Property Trustee if there are insufficient funds for such
purpose. While any such insufficiency continues, the Property Trustee may
require a Paying Agent to pay all money held by it to the Property Trustee. The
Trust at any time may require a Paying Agent to pay all money held by it to the
Property Trustee and to account for any money disbursed by it. Upon payment
over to the Property Trustee, the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the money. If the
Trust or the Sponsor or
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an Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
----------------------
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall
authenticate a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. An indemnity bond must be provided
by the Holder which, in the judgment of the Property Trustee, is sufficient to
protect the Trustees, the Sponsor or any authenticating agent from any loss
which any of them may suffer if a Security is replaced. The Trust may charge
such Holder for its expenses in replacing a Security.
Every replacement Security is an additional beneficial interest in
the Trust.
SECTION 7.7 Outstanding Capital Securities.
------------------------------
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those cancelled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Capital
Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms
of this Declaration, they cease to be outstanding and Distributions on them
shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 Capital Securities in Treasury.
------------------------------
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be
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fully protected in relying on any such direction, waiver or consent, only
Securities which the Property Trustee actually knows are so owned shall be so
disregarded.
SECTION 7.9 Temporary Securities.
--------------------
(a) Until Definitive Securities are ready for delivery, the Trust may
prepare and, in the case of the Capital Securities, the Property Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of Definitive Securities but may have variations that the Trust
considers appropriate for temporary Securities. Without unreasonable delay, the
Trust shall prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate Definitive Securities in exchange for temporary
Securities.
(b) A Global Capital Security deposited with the Clearing Agency or
with the Property Trustee as custodian for the Clearing Agency pursuant to
Section 7.3 shall be transferred to the beneficial owners thereof in the form of
certificated Capital Securities only if such transfer complies with Section 9.2
and (i) the Clearing Agency notifies the Company that it is unwilling or unable
to continue as Clearing Agency for such Global Capital Security or if at any
time such Clearing Agency ceases to be a "clearing agency" registered under the
Exchange Act and a clearing agency is not appointed by the Sponsor within 90
days of such notice, (ii) a Default or an Event of Default has occurred and is
continuing or (iii) the Trust at its sole discretion elects to cause the
issuance of certificated Capital Securities.
(c) Any Global Capital Security that is transferable to the beneficial
owners thereof in the form of certificated Capital Securities pursuant to this
Section 7.9 shall be surrendered by the Clearing Agency to the Property Trustee
located in the Borough of Manhattan, The City of New York, to be so transferred,
in whole or from time to time in part, without charge, and the Property Trustee
shall authenticate and make available for delivery, upon such transfer of each
portion of such Global Capital Security, an equal aggregate liquidation amount
of Securities of authorized denominations in the form of certificated Capital
Securities. Any portion of a Global Capital Security transferred pursuant to
this Section shall be registered in such names as the Clearing Agency shall
direct. Any Capital Security in the form of certificated Capital Securities
delivered in exchange for an interest in the Restricted Global Capital Security
shall, except as otherwise provided by Sections 7.3 and 9.1, bear the Restricted
Securities Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of a
Global Capital Security may grant proxies and otherwise authorize any person,
including Participants and persons
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that may hold interests through Participants, to take any action which such
Holder is entitled to take under this Declaration or the Securities.
(e) In the event of the occurrence of any of the events specified in
Section 7.9(b), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Capital Securities in fully registered form
without distribution coupons.
SECTION 7.10 Cancellation.
------------
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent shall
forward to the Property Trustee any Capital Securities surrendered to them for
registration of transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Capital Securities, surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of cancelled Capital Securities as the Trust directs, provided that the
Property Trustee shall not be obligated to destroy Capital Securities. The
Trust may not issue new Capital Securities to replace Capital Securities that it
has paid or that have been delivered to the Property Trustee for cancellation or
that any holder has exchanged.
SECTION 7.11 CUSIP Numbers.
-------------
The Trust in issuing the Capital Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
--------
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
--------------------
(a) The Trust shall automatically terminate:
(i) upon the bankruptcy of the Sponsor;
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(ii) upon the filing of a certificate of dissolution or liquidation or
its equivalent with respect to the Sponsor; or the revocation of the Sponsor's
charter and the expiration of 90 days after the date of revocation without a
reinstatement thereof;
(iii) following the distribution of a Like Amount of the Debentures to the
Holders, provided that, the Property Trustee has received written notice from
-------- ----
the Sponsor directing the Property Trustee to terminate the Trust (which
direction is optional, and except as otherwise expressly provided below, within
the discretion of the Sponsor) and provided, further, that such direction and
-------- -------
such distribution is conditioned on (i) the receipt by the Sponsor or the Trust,
as the case requires, of any required regulatory approval, (ii) the
Administrative Trustees' receipt of an opinion of an independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on published rulings of the Internal Revenue Service, to the effect that the
Holders will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of
Debentures;
(iv) upon the entry of a decree of judicial dissolution of the Trust by a
court of competent jurisdiction;
(v) 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 in accordance with the terms of the Securities;
(vi) upon the repayment of the Debentures or at such time as no Debentures
are outstanding; or
(vii) the expiration of the term of the Trust provided in Section 3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Administrative Trustees shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
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ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 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. 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 IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
security not made in accordance with this Declaration shall be null and void.
(c) The Sponsor may not transfer the Common Securities.
(d) The Administrative Trustees shall provide for the registration of
Securities and of the transfer of Securities, which will be effected without
charge but only upon payment (with such indemnity as the Administrative Trustees
may require) in respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of transfer of any
Securities, the Administrative Trustees shall cause one or more new Securities
to be issued in the name of the designated transferee or transferees. Every
Security surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Administrative
Trustees duly executed by the Holder or such Holder's attorney duly authorized
in writing. Each Security surrendered for registration of transfer shall be
canceled by the Administrative Trustees. A transferee of a Security shall be
entitled to the rights and subject to the obligations of a Holder hereunder upon
the receipt by such transferee of a Security. By acceptance of a Security, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.2 Transfer Procedures and Restrictions
------------------------------------
(a) General. Except as otherwise provided in Section 9.2(b), if
-------
Capital Securities are issued upon the transfer, exchange or replacement of
Capital Securities bearing the Restricted Securities Legend set forth in
Exhibit A-1 hereto, or if a request is made to remove such Restricted Securities
Legend on Capital Securities, the Capital Securities so issued shall bear the
Restricted Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Trust and the
Property Trustee such satisfactory evidence, which shall include an Opinion of
Counsel licensed to
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practice law in the State of New York, as may be reasonably required by the
Sponsor and the Property Trustee, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers thereof are
made pursuant to an exception from the registration requirements of the
Securities Act or, with respect to Restricted Securities, that such Securities
are not "restricted" within the meaning of Rule 144. Upon provision of such
satisfactory evidence, the Property Trustee, at the written direction of the
Trust, shall authenticate and deliver Capital Securities that do not bear the
legend.
(b) Transfers After Effectiveness of a Registration Statement. After
---------------------------------------------------------
the effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply, and beneficial interests in a Capital Security in global
form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring holder's Restricted Definitive
Capital Security or directions to transfer such Holder's beneficial interest in
the Global Capital Security. No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Global Capital Security
shall be effective unless the transferor delivers to the Trust a certificate in
a form substantially similar to that attached hereto as the "Form of Assignment"
in Exhibit A-1. Except as otherwise provided in Section 9.2(m), after the
effectiveness of a Registration Statement, the Trust shall issue and the
Property Trustee, upon a written order of the Trust signed by one
Administrative Trustee, shall authenticate a Capital Security in global form
without the Restricted Securities Legend (the "Unrestricted Global Capital
Security") to deposit with the Clearing Agency to evidence transfers of
beneficial interests from the (i) Global Capital Security and (ii) Restricted
Definitive Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities. When
------------------------------------------------------
Definitive Capital Securities are presented to the Registrar or co-Registrar
(x) to register the transfer of such Definitive Capital Securities; or
(y) to exchange such Definitive Capital Securities which became mutilated,
destroyed, defaced, stolen or lost, for an equal number of Definitive Capital
Securities,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Capital Securities surrendered for
- -------- -------
transfer or exchange:
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(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Trust and the Registrar or co-
registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing; and
(ii) in the case of Definitive Capital Securities that are Restricted
Definitive Capital Securities:
(A) if such Restricted Capital Securities are being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
(B) if such Restricted Capital Securities are being transferred:
(i) a certification from the transferor in a form substantially similar to
that attached hereto as the "Form of Assignment" in Exhibit A-1, and (ii)
if the Trust or Registrar so requests, evidence reasonably satisfactory to
them as to the compliance with the restrictions set forth in the Restricted
Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security for a
---------------------------------------------------------------
Beneficial Interest in a Global Capital Security. A Definitive Capital Security
- ------------------------------------------------
may not be exchanged for a beneficial interest in a Global Capital Security
except upon satisfaction of the requirements set forth below. Upon receipt by
the Property Trustee of a Definitive Capital Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Property Trustee, together with:
(i) if such Definitive Capital Security is a Restricted Capital Security,
certification (in a form substantially similar to that attached hereto as the
"Form of Assignment" in Exhibit A-1); and
(ii) whether or not such Definitive Capital Security is a Restricted
Capital Security, written instructions directing the Property Trustee to make,
or to direct the Clearing Agency to make, an adjustment on its books and
records with respect to the appropriate Global Capital Security to reflect an
increase in the number of the Capital Securities represented by such Global
Capital Security,
then the Property Trustee shall cancel such Definitive Capital Security and
cause, or direct the Clearing Agency to cause, the aggregate number of Capital
Securities represented by the appropriate Global Capital Security to be
increased accordingly. If no Global Capital Securities are then outstanding,
the Trust shall issue and the Property Trustee shall authenticate, upon
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written order of any Administrative Trustee, an appropriate number of Capital
Securities in global form.
(e) Transfer and Exchange of Global Capital Securities. Subject to
---------------------------------------------------
Section 9.02(f), the transfer and exchange of Global Capital Securities or
beneficial interests therein shall be effected through the Clearing Agency, in
accordance with this Declaration (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Global Capital Security
--------------------------------------------------------------
for a Definitive Capital Security.
- ---------------------------------
(i) Any person having a beneficial interest in a Global Capital Security
may upon request, but only upon 20 days prior notice to the Property Trustee,
and if accompanied by the information specified below, exchange such beneficial
interest for a Definitive Capital Security representing the same number of
Capital Securities. Upon receipt by the Property Trustee from the Clearing
Agency or its nominee on behalf of any Person having a beneficial interest in a
Global Capital Security of written instructions or such other form of
instructions as is customary for the Clearing Agency or the person designated by
the Clearing Agency as having such a beneficial interest in a Restricted Capital
Security and a certification from the transferor (in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1),
which may be submitted by facsimile, then the Property Trustee will cause the
aggregate number of Capital Securities represented by Global Capital Securities
to be reduced on its books and records and, following such reduction, the Trust
will execute and the Property Trustee will authenticate and make available for
delivery to the transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a beneficial
interest in a Global Capital Security pursuant to this Section 9.2(f) shall be
registered in such names and in such authorized denominations as the Clearing
Agency, pursuant to instructions from its Participants or indirect participants
or otherwise, shall instruct the Property Trustee in writing. The Property
Trustee shall deliver such Capital Securities to the persons in whose names such
Capital Securities are so registered in accordance with such instructions of
the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
-------------------------------------------------------
Securities. Notwithstanding any other provisions of this Declaration (other
than the provisions set forth in subsection (h) of this Section 9.2), a Global
Capital Security may not be transferred as a whole except by the Clearing Agency
to a nominee
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of the Clearing Agency or another nominee of the Clearing Agency or by the
Clearing Agency or any such nominee to a successor Clearing Agency or a nominee
of such successor Clearing Agency.
(h) Authentication of Definitive Capital Securities. If at any time:
-----------------------------------------------
(i) there occurs a Default or an Event of Default which is continuing, or
(ii) the Trust, in its sole discretion, notifies the Property Trustee in
writing that it elects to cause the issuance of Definitive Capital Securities
under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of a
written order of the Trust signed by one Administrative Trustee requesting the
authentication and delivery of Definitive Capital Securities to the Persons
designated by the Trust, will authenticate and make available for delivery
Definitive Capital Securities, equal in number to the number of Capital
Securities represented by the Global Capital Securities, in exchange for such
Global Capital Securities.
(i) Legend.
------
(i) Except as permitted by the following paragraph (ii), each Capital
Security certificate evidencing the Global Capital Securities and the Definitive
Capital Securities (and all Capital Securities issued in exchange therefor or
substitution thereof) shall bear a legend (the "Restricted Securities Legend")
in substantially the following form:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLCABLE SECURITIES LAW. NEITHER THIS
CAPITAL SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE
CORPORATION OR
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ANY "AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS CAPITAL SECURITY
(OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE CORPORATION,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO
A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3)
OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF
THE TRUST AND THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS CAPITAL SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
(ii) Upon any sale or transfer of a Restricted Capital Security (including
any Restricted Capital Security represented by a Global Capital Security)
pursuant to an effective registration statement under the Securities Act or pur
suant to Rule 144 under the Securities Act after such registration statement
ceases to be effective:
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(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Registrar shall permit the Holder thereof
to exchange such Restricted Capital Security for a Definitive Capital
Security that does not bear the Restricted Securities Legend and rescind
any restriction on the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security that is
represented by a Global Capital Security, the Registrar shall permit the
Holder of such Global Capital Security to exchange such Global Capital
Security for another Global Capital Security that does not bear the
Restricted Securities Legend.
(j) Cancellation or Adjustment of Global Capital Security. At such
-----------------------------------------------------
time as all beneficial interests in a Global Capital Security have either been
exchanged for Definitive Capital Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be returned to the Clearing
Agency for cancellation or retained and canceled by the Property Trustee. At
any time prior to such cancellation, if any beneficial interest in a Global
Capital Security is exchanged for Definitive Capital Securities, Capital
Securities represented by such Global Capital Security shall be reduced and an
adjustment shall be made on the books and records of the Property Trustee (if
it is then the custodian for such Global Capital Security) with respect to such
Global Capital Security, by the Property Trustee or the Securities Custodian, to
reflect such reduction.
(k) Obligations with Respect to Transfers and Exchanges of Capital
---------------------------------------------------------------
Securities.
- ----------
(i) To permit registrations of transfers and exchanges, the Trust shall
execute and the Property Trustee shall authenticate Definitive Capital
Securities and Global Capital Securities at the Registrar's or co-Registrar's
request in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Trust or the Sponsor
may require) in respect of any tax or other governmental charge that may be
imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to register the
transfer of or exchange of (a) Capital Securities during a period beginning at
the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Capital Securities
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for redemption and ending at the close of business on the day of such mailing;
or (b) any Capital Security so selected for redemption in whole or in part,
except the unredeemed portion of any Capital Security being redeemed in part.
(iv) Prior to the due presentation for registrations of transfer of any
Capital Security, the Trust, the Property Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose name a
Capital Security is registered as the absolute owner of such Capital Security
for the purpose of receiving Distributions on such Capital Security and for all
other purposes whatsoever, and none of the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(v) All Capital Securities issued upon any transfer or exchange pursuant to
the terms of this Declaration shall evidence the same security and shall be
entitled to the same benefits under this Declaration as the Capital Securities
surrendered upon such transfer or exchange.
(l) No Obligation of the Property Trustee.
-------------------------------------
(i) The Property Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Capital Security, a Participant in the Clearing
Agency or other Person with respect to the accuracy of the records of the
Clearing Agency or its nominee or of any Participant thereof, with respect to
any ownership interest in the Capital Securities or with respect to the delivery
to any Participant, beneficial owner or other Person (other than the Clearing
Agency) of any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Capital Securities. All notices and
communications to be given to the Holders and all payments to be made to
Holders under the Capital Securities shall be given or made only to or upon the
order of the registered Holders (which shall be the Clearing Agency or its
nominee in the case of a Global Capital Security). The rights of beneficial
owners in any Global Capital Security shall be exercised only through the
Clearing Agency subject to the applicable rules and procedures of the Clearing
Agency. The Property Trustee may conclusively rely and shall be fully protected
in relying upon information furnished by the Clearing Agency or any agent
thereof with respect to its Participants and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on transfer
imposed under this Declaration or under applicable law with respect to any
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transfer of any interest in any Capital Security (including any transfers
between or among Clearing Agency Participants or beneficial owners in any Global
Capital Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
(m) Exchange of Series A Capital Securities for Series B Capital
------------------------------------------------------------
Securities. The Series A Capital Securities may be exchanged for Series B
- ----------
Securities pursuant to the terms of the Exchange Offer. The Trustee shall make
the exchange as follows:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities, the
transactions contemplated by the Exchange Offer have been
consummated; and
(B) the number of Series A Capital Securities properly tendered in
the Exchange Offer that are represented by a Global Capital
Security and the number of Series A Capital Securities properly
tendered in the Exchange Offer that are represented by
Definitive Capital Securities, the name of each Holder of such
Definitive Capital Securities, the liquidation amount of
Capital Securities properly tendered in the Exchange Offer by
each such Holder and the name and address to which Definitive
Capital Securities for Series B Capital Securities shall be
registered and sent for each such Holder.
The Property Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series B Capital
Securities have been registered under Section 5 of the Securities Act and the
Indenture has been qualified under the Trust Indenture Act and (y) with respect
to the matters set forth in Section 3(p) of the Registration Rights Agreement
and (iii) a Company Order, shall authenticate (A) a Global Capital Security for
Series B Capital Securities in aggregate liquidation amount equal to the
aggregate liquidation amount of Series A Capital Securities represented by a
Global Capital Security indicated in such Officers' Certificate as having been
properly tendered and (B) Definitive Capital Securities representing Series B
Capital Securities registered in the names of,
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and in the liquidation amounts indicated in such Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securties shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security for Series A Capital Securities indicating the reduction in the
number and aggregate liquidation amount represented thereby as a result of the
Exchange Offer.
The Trust shall deliver such Definitive Capital Securities for Series
B Capital Securities to the Holders thereof as indicated in such Officers'
Certificate.
(n) Minimum Transfers. Series A Capital Securities may only be
-----------------
transferred in minimum blocks of $100,000 aggregate liquidation amount until
such Series A Capital Securities are registered pursuant to an effective
registration statement filed under the Securities Act.
SECTION 9.3 Deemed Security Holders.
-----------------------
The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner of such
Security 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 Security on the part of any Person, whether
or not the Trust shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
--------------------
Global Capital Securities shall initially be registered on the books
and records of the Trust in the name of Cede & Co., the nominee of the Clearing
Agency, and no Capital Security Beneficial Owner will receive a definitive
Capital Security Certificate representing such Capital Security Beneficial
Owner's interests in such Global Capital Securities, except as provided in
Section 9.2. Unless and until definitive, fully registered Capital Securities
certificates have been issued to the Capital Security Beneficial Owners pursuant
to Section 9.2:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) 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 Capital Securities and receiving approvals, votes or
consents hereunder) as the Holder of the Capital Securities
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and the sole holder of the Global Certificates and shall have no obligation to
the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Declaration, the provisions of this Section 9.4
shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be exercised
only through the Clearing Agency and shall be limited to those established by
law and agreements between such Capital Security Beneficial Owners and the
Clearing Agency and/or the Clearing Agency Participants and receive and transmit
payments of Distributions on the Global Certificates to such Clearing Agency
Participants. DTC will make book entry transfers among the Clearing Agency
Participants.
SECTION 9.5 Notices to Clearing Agency.
--------------------------
Whenever a notice or other communication to the Capital Security
Holders is required under this Declaration, the Trustees shall give all such
notices and communications specified herein to be given to the Holders of Global
Capital Securities to the Clearing Agency, and shall have no notice obligations
to the Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Administrative
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
---------
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities which
shall be made solely from assets of the Trust; and
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(ii) be required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not
satisfied out of the Trust's assets.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of
the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed 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 willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on
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the Property Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any Covered
Persons; or
(ii) whenever this Declaration or any other agreement contemplated herein
or therein provides that an Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the Trust or any Holder of
Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the
Indemnified Person, the resolution, action or term so made, taken or provided by
the Indemnified Person shall not constitute a breach of this Declaration or any
other agreement contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors as
it desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Trust or any
other Person; or
(ii) in its "good faith" or under another express standard, the Indemnified
Person shall act under such express standard and shall not be subject to any
other or different standard imposed by this Declaration or by applicable law.
SECTION 10.4 Indemnification.
---------------
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the
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Trust) by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Trust, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason of the fact that
he is or was a Company Indemnified Person against expenses (including attorneys'
fees and expenses) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Trust and except that no such indemnification shall be made in respect of
any claim, issue or matter as to which such Company Indemnified Person shall
have been adjudged to be liable to the Trust unless and only to the extent that
the Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such Court
of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be successful
on the merits or otherwise (including dismissal of an action without prejudice
or the settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (i) and (ii) of this
Section 10.4(a), or in defense of any claim, issue or matter therein, he shall
be indemnified, to the full extent permitted by law, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
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(iv) Any indemnification under paragraphs (i) and (ii) of this Section
10.4(a) (unless ordered by a court) shall be made by the Debenture Issuer only
as authorized in the specific case upon a determination that indemnification of
the Company Indemnified Person is proper in the circumstances because he has
met the applicable standard of conduct set forth in paragraphs (i) and (ii).
Such determination shall be made (1) by the Administrative Trustees by a
majority vote of a quorum consisting of such Administrative Trustees who were
not parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested Administrative
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by a
Company Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Debenture Issuer in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the Debenture Issuer
if a determination is reasonably and promptly made (i) by the Administrative
Trustees by a majority vote of a quorum of disinterested Administrative
Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a
quorum of disinterested Administrative Trustees so directs, by independent
legal counsel in a written opinion or (iii) the Common Security Holder of the
Trust, that, based upon the facts known to the Administrative Trustees, counsel
or the Common Security Holder at the time such determination is made, such
Company Indemnified Person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the Trust, or,
with respect to any criminal proceeding, that such Company Indemnified Person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the Administrative Trustees,
independent legal counsel or Common Security Holder reasonably determine that
such person deliberately breached his duty to the Trust or its Common or Capital
Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
ad-
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vancement of expenses may be entitled under any agreement, vote of stockholders
or disinterested directors of the Debenture Issuer or Capital Security Holders
of the Trust or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a
contract between the Debenture Issuer and each Company Indemnified Person who
serves in such capacity at any time while this Section 10.4(a) is in effect.
Any repeal or modification of this Section 10.4(a) shall not affect any rights
or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and maintain insurance
on behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the provisions of
this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of
another entity, shall stand in the same position under the provisions of this
Section 10.4(a) with respect to the resulting or surviving entity as he would
have with respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense including taxes (other than taxes based on
the income of
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such Fiduciary Indemnified Person) incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in
this Section 10.4(b) shall survive the satisfaction and discharge of this
Declaration.
SECTION 10.5 Outside Businesses.
------------------
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders shall have no rights by
virtue of this Declaration in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the Administrative
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
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accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be prepared and
delivered to each of the Holders, within 90 days after the end of each Fiscal
Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss;
(c) The Administrative Trustees shall cause to be duly prepared and
delivered to each of the Holders, 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 Administrative Trustees shall endeavor to
deliver all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Administrative Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Administrative Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 Banking.
-------
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
-------- -------
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall
be designated by the Administrative Trustees; provided, however, that the
-------- -------
Property Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 11.4 Withholding.
-----------
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are
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necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Administrative Trustees 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 over withholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Administrative Trustees (or if there are more than two
Administrative Trustees a majority of the Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations or
immunities of the Property Trustee, the Property Trustee; and
(iii) if the amendment affects the rights, powers, duties, obligations or
immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property Trustee
shall have first received an Officers' Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and conforms to, the terms of
this Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or
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immunities of the Property Trustee, the Property Trustee shall have first
received:
(A) an Officers' Certificate from each of the Trust and the Sponsor
that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or the
Trust) that such amendment is permitted by, and conforms to, the terms of
this Declaration (including the terms of the Securities),
provided, however, that the Property Trustee shall not be required to sign
-------- -------
any such amendment, and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for purposes
of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the Property
Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges
or preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;
(e) Article Four shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities and;
(f) The rights of the holders of the Common Securities under Article
Five to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities; and
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(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any provision in this
Declaration that may be inconsistent with any other provision of this
Declaration or to make any other provisions with respect to matters or questions
arising under this Declaration which shall not be inconsistent with the other
provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of the 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.
provided, however, that in the case of clause (i), such action shall not
- -------- -------
adversely affect in any material respect the interests of the Holders, and any
amendments of this Declaration shall become effective when notice thereof is
given to the Holders.
SECTION 12.2 Meetings of the Holders; Action by Written Consent.
--------------------------------------------------
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Administrative Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Administrative Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrative Trustees one or
more notice in a writing stating that the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holders calling a meeting shall specify in writing
the Security Certificates held by the Holders exercising the right to call a
meeting and only those Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
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(i) notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least seven days and not more than
60 days before the date of such meeting. Whenever a vote, consent or approval
of the Holders is permitted or required under this Declaration or the rules of
any stock exchange on which the Capital Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of the
Holders. Any action that may be taken at a meeting of the Holders of Securities
may be taken without a meeting if a con sent in writing setting forth the action
so taken is signed by the Holders of Securities owning not less than the mini
mum amount of Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all Holders 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 entitled to vote who have not
consented in writing. The Administrative Trustees may specify that any written
ballot submitted to the Security Holder for the purpose of taking any action
without a meeting shall be returned to the Trust within the time specified by
the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by proxy on all
matters in which a Holder is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No proxy shall be
valid after the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein, all
matters relating to the giving, voting or validity of proxies shall be governed
by the General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders were stockholders of a Delaware corporation;
(iii) each meeting of the Holders shall be conducted by the Administrative
Trustees or by such other Person that the Administrative Trustees may designate;
and
(iv) unless the Business Trust Act, this Declaration, the terms of the
Securities, the Trust Indenture Act or the listing rules of any stock exchange
on which the Capital Securities are then listed or trading, otherwise provides,
the Administrative Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders, 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, quo-
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rum requirements, voting in person or by proxy or any other matter with respect
to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
--------------------------------------------------
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation with trust
powers and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Property Trustee of
the Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. The Declaration has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) The execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
--------------------------------------------------
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the
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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 Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration;
(b) The execution, delivery and performance by the Delaware Trustee of
this Declaration has 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);
(c) No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution, delivery
or performance by the Delaware Trustee of this Declaration; and
(d) 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.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement; Liquidated Damages.
-------------------------------------------------
The Holders of the Capital Securities, the Debentures and the Capital
Securities Guarantee (collectively, the "Registrable Securities") are entitled
to the benefits of a Registration Rights Agreement. Pursuant to the
Registration Rights Agreement, the Sponsor and the Trust have agreed for the
benefit of the Holders of Registrable Securities that (i) they will, at the
Sponsor's cost, within 150 days after December 20, 1996 (the "Issue Date"), file
a registration statement (the "Exchange Registration Statement") relating an
Exchange Offer pursuant to which each issuer of such respective Registrable
Securities would issue amounts of such Registrable Securities as are accepted in
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the Exchange Offer which shall be identical in all respects to those exchanged,
except they will have been registered under the Securities Act and will no
longer be subject to transfer restrictions under the Securities Act or the
$100,000 minimum aggregate principal or liquidation amount transfer restriction
and, if required pursuant to the terms of the Registration Rights Agreement,
file a shelf registration statement (the "Shelf Registration Statement") with
the Commission with respect to resales of the Registrable Securities, (ii) they
will use their best efforts to cause such Exchange Registration Statement and/or
Shelf Registration Statement, as the case requires, to be declared effective by
the Commission within 180 days after the Issue Date and (iii) they will use
their best efforts to maintain the Shelf Registration Statement, if any,
continuously effective under the Securities Act until the third anniversary of
the effectiveness of the Shelf Registration Statement or such earlier date as is
provided in the Registration Rights Agreement (the "Effectiveness Period").
All references herein to such Registrable Securities shall be deemed to include,
as the context may require, the Registrable Securities into which such
Securities have been exchanged pursuant to the Exchange Registration ("Exchange
Securities") and all reference to numbers or amounts of such Securities shall be
deemed to include, as the context may require, such Exchanged Securities.
If (i) (A) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is filed with the Commission on or prior to the 150th day
after the Issue Date or (B) notwithstanding that the Debenture Issuer and the
Trust have consummated or will consummate an Exchange Offer, the Debenture
Issuer and the Trust are required to file a Shelf Registration Statement and
such Shelf Registration Statement is not filed on or prior to the date required
by the Registration Rights Agreement, then commencing on the day after the
applicable required filing date, additional Distributions shall accumulate on
the liquidation amount of the Capital Securities at a rate of 0.25% per annum;
or
(ii) (A) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is declared effective by the Commission on or prior to
the 30th day after the applicable required filing date or (B) notwithstanding
that the Debenture Issuer and the Trust have consummated or will consummate an
Exchange Offer, the Debenture Issuer and the Trust are required to file a Shelf
Registration Statement and such Shelf Registration Statement is not declared
effective by the Commission on or prior to the 30th day after the date such
Shelf Registration Statement was required to be file, then, commencing on the
31st day after the applicable required filing date, additional Distributions
shall accumulate on the liquidation amount of the Capital Securities at a rate
of 0.25% per annum; or
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(iii) (A) the Trust has not exchanged Exchange Capital Securities for all
Capital Securities or the Debenture Issuer has not exchanged Exchange Guarantees
or Exchange Subordinated Debentures for all Guarantees or Subordinated
Debentures validly tendered, in accordance with the terms of the Exchange Offer
on or prior to the 30th day after the date on which the Exchange Offer
Registration Statement was declared effective or (B) if applicable, the Shelf
Registration Statement has been declared effective and such Shelf Registration
Statement ceases to be effective at any time prior to the third anniversary of
the Issue Date (other than after such time as all Capital Securities have been
disposed of thereunder or otherwise cease to be Registrable Securities),
additional Distributions shall accumulate on the liquidation amount of the
Capital Securities at a rate of 0.25% per annum commencing on (x) the 31st day
after such effective date, in the case of (A) above, or (y) the day such Shelf
Registration Statement ceases to be effective in the case of (B) above;
provided, however, that the additional Distributions rate on the liquidation
- -------- -------
amount of the Capital Securities may not exceed in the aggregate 0.25% per
annum; provided, further, however, that (1) upon the filing of the Exchange
Offer Registration Statement or a Shelf Registration Statement (in the case of
clause (i) above), (2) upon the effectiveness of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of clause
(ii) above), or (3) upon the exchange of Exchange Capital Securities, Exchange
Guarantees and Exchange Subordinated Debentures for all Capital Securities,
Guarantees and Subordinated Debentures tendered (in the case of clause (iii)(A)
above), or upon the effectiveness of the Shelf Registration Statement which had
ceased to remain effective (in the case of clause (iii)(B) above), additional
Distributions on the liquidation amount of the Capital Securities as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accumulate.
Any amounts of additional Distributions due pursuant to clauses (i),
(ii) or (iii) above will be payable in cash on January 15 and July 15 of each
year to the Holders on the first day of the month in which the relevant
Distribution date falls.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
-------
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and
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shall be delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative Trustees at
the Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders):
First USA Capital Trust I
1601 Elm Street,
47th Floor
Dallas, Texas 75201
Attention: Jack M. Antonini, Administrative Trustee
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property Trustee
may give notice of to the Holders):
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10283
Attention: Corporate Trust
Trustee Administration
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
First USA, Inc.
1601 Elm Street
47th Floor
Dallas, Texas 75201
Attention: Philip E. Taken, General Counsel
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
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All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
-------------
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
------------------------
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 15.4 Headings.
--------
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.5 Successors and Assigns.
----------------------
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
----------------------
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
------------
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature
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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.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ Jack M. Antonini
-----------------------------------
Jack M. Antonini, as Administrative
Trustee
/s/ Peter W. Atwater
-----------------------------------
Peter W. Atwater, as Administrative
Trustee
/s/ Philip E. Taken
----------------------------------
Philip E. Taken, as Administrative
Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Joseph G. Ernst
--------------------------------
Name: Joseph G. Ernst
Title: Assistant Vice President
THE BANK OF NEW YORK,
as Property Trustee
By:/s/ Stephen J. Giurlando
--------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
FIRST USA, INC.
as Sponsor
By: /s/ Philip E. Taken
--------------------------------
Name:
Title:
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<PAGE>
ANNEX I
TERMS OF
9.33% SERIES A/SERIES B CAPITAL SECURITIES
9.33% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of December 20, 1996 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Offering
Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
----------------------
(a) Capital Securities. 200,000 Series A Capital Securities of the
------------------
Trust and 200,000 Series B Capital Securities of the Trust, each series with an
aggregate liquidation amount with respect to the assets of the Trust of two
hundred million dollars ($200,000,000), plus up to an additional 30,000 Series A
Capital Securities of the Trust and 30,000 Series B Capital Securities, each
series with an aggregate liquidation amount with respect to the assets of the
Trust of thirty million dollars ($30,000,000) solely to cover overallotments, as
provided in the Purchase Agreement, and each with a liquidation amount with
respect to the assets of the Trust of $1,000 per security, are hereby designated
for the purposes of identification only as "9.33% Series A Capital Securities"
and "9.33% Series B Capital Securities", respectively (collectively, the
"Capital Securities"). The certificates evidencing the Capital Securities
shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Capital Securities are listed.
(b) Common Securities. 6,186 Common Securities of the Trust with an
-----------------
aggregate liquidation amount with respect to the assets of the Trust of six
million one hundred eighty six thousand dollars ($6,186,000) (or up to an
additional 928 Common Securities with an aggregate liquidation amount with
respect to the assets of the Trust of nine hundred twenty eight thousand dollars
($928,000) in the event the overallotment option referred to above is exercised)
and a liquidation amount with respect to the assets of the Trust of $1,000 per
security, are hereby designated for the purposes of identification only as
"9.33% Common Securities" (the "Common Securities"). The certificates evidenc-
I-1
<PAGE>
ing the Common Securities shall be substantially in the form of Exhibit A-2 to
the Declaration, with such changes and additions thereto or deletions therefrom
as may be required by ordinary usage, custom or practice.
2. Distributions.
-------------
(a) Distributions payable on each Security will be fixed at a rate per
annum of 9.33% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security (the "Liquidation Amount"), 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 semi-annual period will bear additional distributions
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes distributions
of any such interest and Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from December 20, 1996, and will be payable
semi-annually in arrears on January 15 and July 15 of each year, commencing on
July 15, 1997 (each, a "Distribution Date"), except as otherwise de scribed
below. Distributions will be computed on the basis of a 360-day year consisting
of twelve 30-day months and for any period less than a full calendar month on
the basis of the actual number of days elapsed in such month. As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period at any time and from time to time on
the Debentures for a period not exceeding 10 consecutive semi-annual periods,
including the first such semi-annual period during such period (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period shall extend beyond
-------- ----
the Maturity Date of the Debentures. As a consequence of such deferral,
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 Debentures) at the Coupon Rate compounded semi-
annually during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest by
I-2
<PAGE>
further extending such Extension Period; provided that such Extension Period,
-------- ----
together with all such previous and further extensions within such Extension
Period, may not exceed 10 consecutive semi-annual periods, including the first
semi-annual period during such Extension Period, or extend beyond the Maturity
Date of the Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the first day of
the month in which the relevant Distribution Date occurs, which Distribution
Dates correspond to the interest payment dates on the Debentures. Subject to
any applicable laws and regulations and the provisions of the Declaration, each
such payment in respect of the Capital Securities will be made as described
under the heading "Description of the Capital Securities -- Form, Denomination,
Book-Entry Procedures and Transfer" in the Offering Memorandum dated December
17, 1996, of the Debenture Issuer and the Trust relating to the Securities and
the Debentures. The relevant record dates for the Common Securities shall be
the same as the record dates for the Capital Securities. Distributions payable
on any Securities that are not punctually paid on any Distribution Date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Holder on the relevant record date,
and such defaulted Distribution will instead be payable to the Person in whose
name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), with the same force and effect as if made on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any termination of the Trust or the Sponsor otherwise
gives notice of its election to liquidate the Trust pursuant to Section
8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the Holders a Like
Amount (as defined below) of the Debentures,
I-3
<PAGE>
unless such distribution is determined by the Property Trustee not to be
practicable, in which event such Holders will be entitled to receive out of the
assets of the Trust legally available for distribution to Holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the aggregate of the liquidation amount of $1,000 per
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal amount
of Debentures to be paid in accordance with their terms and (ii) with respect to
a distribution of Debentures upon the liquidation of the Trust, Debentures
having a principal amount equal to the Liquidation Amount of the Securities of
the Holder to whom such Debentures are distributed.
If, upon any such liquidation, 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 Securities shall be paid on a Pro
Rata basis.
4. Redemption and Distribution.
---------------------------
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or upon early redemption (either at the option of the Debenture Issuer
or pursuant to a Special Event, as described below), the proceeds from such
repayment shall be simultaneously applied by the Property Trustee (subject to
the Property Trustee having received notice no later than 45 days prior to such
repayment) to redeem a Like Amount of the Securities at a redemption price
equal to (i) in the case of the repayment of the Debentures at maturity, the
Maturity Redemption Price (as defined below), (ii) in the case of the optional
redemption of the Debentures upon the occurrence and continuation of a Special
Event, the Special Event Redemption Price (as defined below) and (iii) in the
case of the optional redemption of the Debentures other than as a result of the
occurrence and continuance of a Special Event, the Optional Redemption Price (as
defined below). The Maturity Redemption Price, the Special Event Redemption
Price and the Optional Redemption Price are referred to collectively as the
"Redemption Price". Holders will be given not less than 30 nor more than 60
days notice of such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued and unpaid interest on the Debentures as of the maturity date thereof.
I-4
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(ii) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Capital Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be determined
as described in Section 4(f)(ii) below. Upon the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction, the Debentures
thereafter will be subject to optional repayment, in whole, but not in part, on
or after January 15, 2007 (the "Initial Optional Redemption Date").
The Debenture Issuer shall have the right (subject to the conditions
in the Indenture) to elect to redeem the Debentures in whole or in part at any
time on or after the Initial Optional Redemption Date, upon not less than 30
days and not more than 60 days notice, at the Optional Redemption Price and,
simultaneous with such redemption, to cause a Like Amount of the Securities to
be redeemed by the Trust at the Optional Redemption Price on a Pro Rata basis.
"Optional Redemption Price" shall mean a price equal to the percentage of the
liquidation amount of Securities to be redeemed plus accumulated and unpaid
Distributions thereon, if any, to the date of such redemption if redeemed
during the 12-month period beginning January 15 of the years indicated below:
Year Percentage
---- ----------
2007 104.6650%
2008 104.1985%
2009 103.7320%
2010 103.2655%
2011 102.7990%
2012 102.3325%
2013 101.8660%
2014 101.3995%
2015 100.9330%
2016 100.4665%
2017 and thereafter 100.0000%
(c) If at any time a Tax Event or a Regulatory Capital Event (each as
defined below, and each a "Special Event") occurs, the Debenture Issuer shall
have the right (subject to the conditions set forth in the Indenture) at any
time prior to the Initial Optional Redemption Date, upon not less than 30 nor
more than 60 days notice, to redeem the Debentures in whole, but not in part,
within the 90 days following the occurrence of such Special Event (the "90 Day
Period"), and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Special Event Redemption Price on
a Pro Rata basis.
"Tax Event" shall occur upon receipt by the Administrative Trustee of
an opinion of a nationally recognized tax counsel
I-5
<PAGE>
(a "Tax Event Opinion") experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after December 17, 1996,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of such opinion, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Debenture Issuer on the Debentures is not, or within 90
days of the date of such opinion, will not be, deductible by the Debenture
Issuer, in whole or in part, for United States federal income tax purposes, or
(iii) the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Regulatory Capital Event" shall occur at any time, following the date
(the "Election Date") on which the Debenture Issuer shall effectively elect to
treat the Capital Securities as Tier 1 Capital (or its equivalent), that the
Debenture Issuer shall have received an opinion of independent bank regulatory
counsel experienced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any rules,
guidelines or policies of the Federal Reserve Board or, if applicable, the
Office of Thrift Supervision or, in each case, its successors, or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the Election Date, the
Capital Securities do not constitute, or within 90 days of the date thereof,
will not constitute, Tier I Capital (or its then equivalent).
"Special Event Redemption Price" shall mean, with respect to a
redemption of Securities, a price equal to the greater of (i) 100% of the
principal of a Like Amount of Debentures to be redeemed or (ii) the sum, as
determined by a Quotation Agent (as defined in the Indenture), of the present
values of the principal amount and premium payable with respect to an optional
redemption of a Like Amount of the Debentures on the Initial Optional Redemption
Date, together with scheduled payments of interest on the Debentures from the
redemption date to and including the Initial Optional Redemption Date,
discounted to the redemption date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as
defined in the Indenture), plus, in each case, accumu-
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<PAGE>
lated and unpaid Distributions thereon, if any, to the date of such redemption.
(d) On and from the date fixed by the Administrative Trustees for any
distribution of Debentures and liquidation of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of the
Capital Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and any
certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
(e) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions have been paid on
all Securities for all semi-annual Distribution periods terminating on or before
the date of redemption.
(f) The procedure with respect to redemptions or distributions of
Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption,
will be the date fixed for redemption of the Debentures. For purposes of
the calculation of the date of redemption or exchange and the dates on
which notices are given pursuant to this Section 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. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or
in the mailing of either thereof with respect to any Holder shall affect
the validity of the redemption or exchange proceedings with respect to
any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Capital Securities, it being understood that, in
respect of Capital Securities registered in the name of and held of record
by the Clearing Agency or its nominee (or any successor Clear-
I-7
<PAGE>
ing Agency or its nominee) or any nominee, the distribution of the
proceeds of such redemption will be made to the Clearing Agency and
disbursed by such Clearing Agency in accordance with the procedures
applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then
(A) with respect to Capital Securities issued in book-entry form, by 12:00
noon, New York City time, on the redemption date, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of cash
in connection with the related redemption or maturity of the Debentures by
10:00 a.m., New York City time, on the maturity date or the date of
redemption, as the case requires, the Property Trustee will deposit
irrevocably with the Clearing Agency or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the applicable Redemption
Price with respect to such Capital Securities and will give the Clearing
Agency irrevocable instructions and authority to pay the Redemption Price
to the relevant Clearing Agency Participants, and (B) with respect to
Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will pay the relevant
Redemption Price to the Holders 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 date of such deposit, or on the redemption
date, as applicable, Distributions will cease to accumulate on the
Securities so called for redemption and all rights of Holders so called
for redemption will cease, except the right of the Holders of such
Securities to receive the Redemption Price, but without interest on such
Redemption Price, and such Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the Redemption
Date of the Securities will be subject to the rights of Holders of
Securities on the close of business on a regular record date in respect of
a Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities beginning
on the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Securities for redemption or (ii) any
Securities selected for redemption except the unredeemed portion of any
I-8
<PAGE>
Security being redeemed. If any date fixed for redemption of 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), with the same force and
effect as if made on such date fixed for redemption. If payment of the
Redemption Price in respect of any Securities is improperly withheld or refused
and not paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accumulate from the original redemption date to the actual
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.
(v) Redemption/Distribution Notices shall be sent by the Property Trustee
on behalf of the Trust to (A) in respect of the Capital Securities, the
Clearing Agency or its nominee (or any successor Clearing Agency or its nominee)
if the Global Certificates have been issued or, if Definitive Capital Security
Certificates have been issued, to the Holder thereof, and (B) in respect of the
Common Securities to the Holder thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws), provided
the acquiror is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from time
to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Capital Securities; provided, however, that
-------- -------
I-9
<PAGE>
where a consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each Holder of the Capital Securities.
The Trustees shall not revoke any action previously authorized or approved by a
vote of the Holders of the Capital Securities except by subsequent vote of such
Holders. The Property Trustee shall notify each Holder of Capital Securities of
any notice of default with respect to the Debentures. In addition to obtaining
the foregoing approvals of such Holders of the Capital 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 the Trust will not be
classified as an association taxable as a corporation for United States federal
income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on a
Like Amount of Debentures (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder will be subrogated to the rights of such
Holder of Capital Securities to the extent of any payment made by the Debenture
Issuer to such Holder of Capital Securities in such Direct Action. Except as
provided in the second preceding sentence, the Holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Debentures.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written con sent. The Property Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Capital Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel
I-10
<PAGE>
Capital Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), 6(c), and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the Common
Securities. If a Debenture Event of Default has occurred and is continuing, the
Property Trustee and the Delaware Trustee may be removed at such time by the
holders of a majority in liquidation amount of the outstanding Capital
Securities. In no event will the holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the Sponsor as the holder of the Common
Securities. No resignation or removal of a Trustee and no appointment of a
successor trustee shall be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Common Securities; provided, however, that where a consent
-------- -------
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Common 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
I-11
<PAGE>
Debentures. In addition to obtaining the foregoing approvals of such Holders of
the 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 the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement of payment to
such Holder of the principal of or premium, if any, or interest on a Like Amount
of Debentures on or after the respective due date specified in the Debentures.
In connection with Direct Action, the rights of the Common Securities Holder
will be subordinated to the rights of such Holder of Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of Common
Securities in such Direct Action. Except as provided in the second preceding
sentence, the Holders of Common Securities will not be able to exercise directly
any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of record of Common Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of the
Holders of the Securities
I-12
<PAGE>
(i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provisions, or to 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, or (ii) to modify, eliminate or add to any provisions of the
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; provided, however, that in the case of clause (i), such action
-------- -------
shall not adversely affect in any material respect the interests of any Holder
of Securities, and any amendments of the Declaration shall become effective when
notice thereof is given to the holders of the Securities. The Declaration may
be amended by the Trustees and the Sponsor with (i) the consent of Holders
representing a majority in liquidation amount of all outstanding Securities, and
(ii) receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption from status
as an Investment Company under the Investment Company Act, provided that,
-------- ----
without the consent of each Holder of Trust Securities, the Declaration may not
be amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a holder of Trust Securities to institute suit for
the enforcement of any such payment on or after such date.
8. Pro Rata.
--------
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
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
under the 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 Capital
Securities pro rata according to the aggregate liquidation amount of Capital
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Capital Securities outstanding, and only after satisfaction of all
amounts owed to the Holders of the Capital 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.
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<PAGE>
9. Ranking.
-------
The Capital Securities rank pari passu with the Common Securities and
---- -----
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
------------------------------------------------
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities Guarantee
and the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
--------------------
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
the Indenture (including any supplemental indenture) to a Holder without charge
on written request to the Sponsor at its principal place of business.
I-14
<PAGE>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL 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.]
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
A1-1
<PAGE>
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS CAPITAL SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A1-2
<PAGE>
Certificate Number Number of Capital Securities
CUSIP NO. __________
Certificate Evidencing Capital Securities
of
First USA Capital Trust I
9.33% Series __ Capital Securities
(liquidation amount $1,000 per Capital Security)
First USA Capital Trust I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of __________ securities
of the Trust representing undivided beneficial interests in the assets of the
Trust designated the 9.33% Series __ Capital Securities (liquidation amount
$1,000 per Capital Security) (the "Capital Securities"). The Capital Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of December 20, 1996, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The
Sponsor will provide a copy of the Declaration, the Capital Securities Guarantee
and the Indenture to a Holder without charge upon written request to the Trust
at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
A1-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of __________, ____.
FIRST USA CAPITAL TRUST I
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-
mentioned Declaration.
Dated: __________, ___
THE BANK OF NEW YORK,
as Property Trustee
By: __________________________
Authorized Signatory
A1-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 9.33% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital 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
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if any Distributions have been paid, from December 20, 1996 and will be payable
semi-annually in arrears, on January 15 and July 15 of each year, commencing on
July 15, 1997, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods, including the first such semi-annual period during
such extension period (each an "Extension Period"), provided that no Extension
-------- ----
Period shall extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite
such deferral, semi-annual Distributions will continue to accumulate with
interest thereon (to the extent permitted by applicable law, but not at a rate
exceeding the rate of interest then accruing on the Debentures) at the Coupon
Rate compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
-------- ----
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or extend
beyond the Maturity Date of the Debentures. Payments of accumulated
Distributions will be payable to Holders as they appear on the books and
records of the
A1-5
<PAGE>
Trust on the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
Subject to the prior obtaining of any regulatory approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-6
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital 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 Capital 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 Capital Security
Certificate)
Signature Guarantee/*/: ___________________________________
________
/*/ Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A1-7
<PAGE>
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend --
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without
transfer; or
(2) [ ] transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
(4) [ ] to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act of 1933 that is acquiring the Capital Securities
for its own account, or for the account of such an institutional
"accredited investor," for investment purposes and not with a
view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act of 1933; or
(5) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) [ ] transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Capital Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if box
-------- -------
(3), (4) or (5) is checked, the Exchange Agent may require, prior to
registering any such transfer of the Capital Securities such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, such as the exemption provided by Rule 144 under such Act; provided,
--------
further, that (i) if box 2 is checked, the transferee must also certify that it
- -------
is a qualified institutional buyer as defined in Rule 144A or (ii) if box (4) is
checked, the transfer-
A1-8
<PAGE>
ee must also provide to the Exchange Agent a Transferee Letter of Representation
in the form attached to the Offering Memorandum of the Trust dated December 17,
1996; provided, further, that after the date that a Registration Statement has
been filed and so long as such Registration Statement continues to be effective,
the Exchange Agent may only permit transfers for which box (5) has been checked.
_______________________________
Signature
A1-9
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
PURSUANT TO CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE REVERSE OF THIS COMMON SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEREE TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS COMMON SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND.
A2-1
<PAGE>
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
First USA Capital Trust I
9.33% Common Securities
(liquidation amount $1,000 per Common Security)
First USA Capital Trust I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that First USA,
Inc. (the "Holder") is the registered owner of __________ common securities of
the Trust representing undivided beneficial interests in the assets of the Trust
designated the 9.33% Common Securities (liquidation amount $1,000 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. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of December 20, 1996, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I to the
Declaration. Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declaration, the Common Securities Guarantee and the Indenture (including any
supplemental indenture) to a Holder without charge upon written request to the
Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities
as evidence of indirect beneficial ownership in the Debentures.
A2-2
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of ____________, ____.
FIRST USA CAPITAL TRUST I
By:________________________________
Name:
Administrative Trustee
A2-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 9.33% (the "Coupon Rate") of the liquidation amount of $1,000 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
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will
accrue from the most recent date to which Distributions have been paid or, if
no Distributions have been paid, from December 20, 1996 and will be payable
semi-annually in arrears, on January 15 and July 15 of each year, commencing on
July 15, 1997, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods, including the first such semi-annual period during
such extension period (each an "Extension Period"), provided that no Extension
-------- ----
Period shall extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite
such deferral, Distributions will continue to accumulate with interest thereon
(to the extent permitted by applicable law, but not at a rate exceeding the rate
of interest then accruing on the Debentures) at the Coupon Rate compounded semi-
annually during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest by
further extending such Extension Period; provided that such Extension Period,
-------- ----
together with all such previous and further extensions within such Extension
Period, may not exceed 10 consecutive semi-annual periods, including the first
semi-annual period during such Extension Period, or extend beyond the Maturity
Date of the Debentures. Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first record
date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all
A2-4
<PAGE>
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to the Sponsor obtaining any regulatory prior approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders to the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Common Securities shall be redeemable as provided in the
Declaration.
A2-5
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints ______________________________________________________
______________________________________________ agent to transfer this Common
Security Certificate on the books of the Trust. The agent may substitute
another to act for him or her.
Date: _______________________
Signature: _________________________
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee/*/: ___________________________________
__________
/*/ Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
A2-6
<PAGE>
[Include the following if the Common Security bears a Restricted Common
Securities Legend --
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account with
out transfer; or
(2) [ ] transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
(4) [ ] to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act that is acquiring the Preferred Security for its
own account, or for the account of such an institutional
"accredited investor," for investment purposes and not with a
view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act; or
(5) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) [ ] transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Common Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if box
-------- -------
(3), (4) or (5) is checked, the Exchange Agent may require, prior to registering
any such transfer of the Preferred Securities such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, such as the exemption provided by Rule 144 under such Act; provided,
--------
further, that (i) if box 2 is checked, the transferee must also certify that it
- -------
is a qualified institutional buyer as defined in Rule 144A or (ii) if box 4 is
checked, the transferee must also
A2-7
<PAGE>
provide a Transferee Representation Letter in the form attached to the Offering
Memorandum of the Trust, dated December 17, 1996, after the date that a
Registration Statement has been filed and so long as such Registration Statement
continues to be effective, the Exchange Agent may only permit transfers for
which box (5) has been checked.
_____________________________________
Signature
A2-8
<PAGE>
EXHIBIT 10.9
====================================
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
First USA, Inc.
Dated as of December 20, 1996
====================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation.............. 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application............ 6
SECTION 2.2 Lists of Holders of Securities.............. 6
SECTION 2.3 Reports by the Capital Securities
antee Trustee............................... 6
SECTION 2.4 Periodic Reports to Capital Securities
Guarantee Trustee........................... 7
SECTION 2.5 Evidence of Compliance with Conditions
Precedent................................... 7
SECTION 2.6 Events of Default; Waiver................... 7
SECTION 2.7 Event of Default; Notice.................... 8
SECTION 2.8 Conflicting Interests....................... 8
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securi-
ties Guarantee Trustee...................... 8
SECTION 3.2 Certain Rights of Capital Securities
Guarantee Trustee.......................... 11
SECTION 3.3. Not Responsible for Recitals or Issuance
of Series A Capital Securities Guarantee.... 13
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee;
Eligibility................................. 13
SECTION 4.2 Appointment, Removal and Resignation of
Capital Securities Guarantee Trustee........ 14
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................... 15
SECTION 5.2 Waiver of Notice and Demand................. 15
SECTION 5.3 Obligations Not Affected.................... 15
SECTION 5.4 Rights of Holders........................... 16
SECTION 5.5 Guarantee of Payment........................ 17
<PAGE>
SECTION 5.6 Subrogation................................. 17
SECTION 5.7 Independent Obligations..................... 17
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.................. 18
SECTION 6.2 Ranking..................................... 19
ARTICLE VII
TERMINATION
SECTION 7.1 Termination................................. 19
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation................................. 19
SECTION 8.2 Indemnification............................. 20
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns...................... 20
SECTION 9.2 Amendments.................................. 21
SECTION 9.3 Notices..................................... 21
SECTION 9.4 Exchange Offer.............................. 22
SECTION 9.5 Benefit..................................... 22
SECTION 9.6 Governing Law............................... 22
ii
<PAGE>
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series A Capital Securities
Guarantee"), dated as of December 20, 1996 is executed and delivered by First
USA, Inc., a Delaware corporation (the "Guarantor"), and The Bank of New York,
a New York banking corporation, as trustee (the "Capital Securities Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Series A Capital Securities (as defined herein) of First USA 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 December 20, 1996 among the trustees of the
Issuer, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer (i) is
issuing on the date hereof 200,000 capital securities, having an aggregate
liquidation amount of $200,000,000 and (ii) may issue in the future up to a
further 30,000 capital securities, having an aggregate liquidation amount of
$30,000,000 following the exercise of an over-allotment option pursuant to the
Purchase Agreement (as defined in the Declaration), such capital securities
being designated the 9.33% Series A Capital Securities (collectively the
"Series A Capital Securities") and, in connection with an Exchange Offer (as
defined in the Declaration) to execute and deliver the Series B Capital
Securities Guarantee (as defined in the Declaration) for the benefit of holders
of the Series B Capital Securities (as defined in the Declaration).
WHEREAS, as incentive for the Holders to purchase the Series A Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Series A Capital Securities Guarantee, to pay to
the Holders the Guarantee Payments (as defined below). The Guarantor agrees to
make certain other payments on the terms and conditions set forth herein.
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Series A Capital Securities Guarantee, for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated, to the extent and in the
manner set forth in the Common Securities Guarantee, to the rights of holders
of Series A Capital Securities and the Series B Capital Securities to receive
Guarantee Payments under this Series A Capital Securities Guarantee and the
Series B Capital Securities Guarantee, as the case may be.
<PAGE>
NOW, THEREFORE, in consideration of the purchase by each Holder, which
purchase the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Series A Capital Securities Guarantee for
the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
------------------------------
In this Series A Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Series A Capital Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of execution of
this Series A Capital Securities Guarantee have the same meaning
when used in this Series A Capital Securities Guarantee unless
otherwise defined in this Series A Capital Securities Guarantee;
(c) a term defined anywhere in this Series A Capital Securities
Guarantee has the same meaning throughout;
(d) all references to "the Series A Capital Securities Guarantee" or
"this Series A Capital Securities Guarantee" are to this Series A
Capital Securities Guarantee as modified, supplemented or amended
from time to time;
(e) all references in this Series A Capital Securities Guarantee to
Articles and Sections are to Articles and Sections of this Series
A Capital Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Series A Capital Securities Guarantee, unless
otherwise defined in this Series A Capital Securities Guarantee or
unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice versa.
2
<PAGE>
"Affiliate" has the same meaning as given to that term in Rule 405
---------
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday or a Sunday, or a
------------
day on which banking institutions in The City of New York or Wilmington,
Delaware are authorized or required by law or executive order to close.
"Capital Securities Guarantee Trustee" means The Bank of New York,
------------------------------------
until a Successor Capital Securities Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Series A Capital
Securities Guarantee and thereafter means each such Successor Capital
Securities Guarantee Trustee.
"Common Securities" means the securities representing common undivided
-----------------
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Securities
----------------------
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is located
at 101 Barclay Street, 21 West, New York, New York 10286.
"Covered Person" means any Holder or beneficial owner of Series A
--------------
Capital Securities.
"Debentures" means the series of subordinated debt securities of the
----------
Guarantor designated the 9.33% Series A Junior Subordinated Deferrable Interest
Debentures due January 15, 2027 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
----------------
payment or other obligations under this Series A Capital Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
------------------
without duplication, with respect to the Series A Capital Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Series A Capital Securities to the extent the Issuer has funds on hand
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally available
therefor at such time, with respect to any Series A Capital Securities called
for redemption by the Issuer, and (iii) upon a voluntary or involuntary termina-
3
<PAGE>
tion and liquidation of the Issuer (other than in connection with the
distribution of Debentures to the Holders in exchange for Series A Capital
Securities as provided in the Declaration), the lesser of (a) the aggregate of
the liquidation amount and all accumulated and unpaid Distributions on the
Series A Capital Securities to the date of payment, to the extent the Issuer has
funds on hand legally available therefor, and (b) the amount of assets of the
Issuer remaining available for distribution to Holders in liquidation of the
Issuer. If an Event of Default has occurred and is continuing, no Guarantee
Payments under the Common Securities Guarantee with respect to the Common
Securities or any guarantee payment under any Other Common Securities Guarantees
shall be made until the Holders shall be paid in full the Guarantee Payments to
which they are entitled under this Series A Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records
------
of the Issuer, of any Series A Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Series A Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Capital Securities Guarantee Trustee,
------------------
any Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
"Indenture" means the Indenture dated as of December 20, 1996, among
---------
the Guarantor (the "Debenture Issuer") and The Bank of New York, as trustee,
pursuant to which the Debentures are to be issued to the Property Trustee of the
Issuer.
"Majority in liquidation amount of the Series A Capital Securities"
-----------------------------------------------------------------
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
Series A Capital Securities, voting separately as a class, of more than 50% of
the aggregate 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) of
all Series A Capital Securities.
"Officers' Certificate" means, with respect to any person, a
---------------------
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Group Director,
Asset/Liability Management, the Clerk or an Assistant Clerk, the Secretary or an
Assistant Secre tary of the Guarantor. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this Series A
Capital Securities Guarantee shall include:
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(h) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(i) 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
(j) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as
----------------------------------
"Other Guarantees" in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued by
----------------
the Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees issued by the Guarantor with
----------------
respect to capital securities (if any) similar to the Series A Capital
Securities issued by other trusts to be established by the Guarantor (if any),
in each case similar to the Issuer.
"Person" means a legal person, including any individual, corporation,
------
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, dated as of December 20, 1996, by and among the Guarantor, the Issuer
and the Initial Purchasers named therein as such agreement may be amended,
modified or supplemented from time to time.
"Responsible Officer" means, with respect to the Capital Securities
-------------------
Guarantee Trustee, any officer within the Corporate Trust Office of the Capital
Securities Guarantee Trustee, including any vice president, any assistant vice
president, any assistant secretary, the treasurer, any assistant treasurer or
other officer of the Corporate Trust Office of the Capital Securities Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is
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referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Capital Securities Guarantee Trustee" means a successor
----------------------------------------------
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended.
"Trust Securities" means the Common Securities and the Series A
----------------
Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
--------------------------------
(a) This Series A Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Series A Capital Securities Guarantee and shall, to the extent applicable, be
governed by such provisions; and
(b) if and to the extent that any provision of this Series A Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
------------------------------
(a) The Guarantor shall provide the Capital Securities Guarantee
Trustee (unless the Capital Securities Guarantee Trustee is otherwise the
registrar of the Capital Securities) with a list, in such form as the Capital
Securities Guarantee Trustee may reasonably require, of the names and addresses
of the Holders of the Series A Capital Securities ("List of Holders") as of such
date, (i) within one Business Day after June 1 and December 1 of each year, and
(ii) at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Capital Securities Guarantee Trustee provided, that
--------
the Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Capital Securities Guarantee Trustee by the Guarantor. The Capital
Securities Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.
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(b) The Capital Securities Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Capital Securities Guarantee Trustee
----------------------------------------------------
Within 60 days after December 15 of each year, commencing December
15, 1997, the Capital Securities Guarantee Trustee shall provide to the Holders
such reports as are required by Section 313 of the Trust Indenture Act, if any,
in the form and in the manner provided by Section 313 of the Trust Indenture
Act. The Capital Securities Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Securities Guarantee Trustee
--------------------------------------------------------
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such documents, reports and information as required by Section 314 (if
any) and the compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act. Delivery of such reports, information and
documents to the Capital Securities Guarantee Trustee is for informational
purposes only and the Capital Securities Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Capital
Securities Guarantee Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
------------------------------------------------
The Guarantor shall provide to the Capital Securities Guarantee
Trustee such evidence of compliance with any conditions precedent, if any,
provided for in this Series A Capital Securities Guarantee that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
-------------------------
The Holders of a Majority in liquidation amount of Series A Capital
Securities may, by vote, on behalf of all 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 Series A Capital Securities
Guarantee, but no such waiver shall extend to any
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subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
------------------------
(a) The Capital Securities Guarantee Trustee shall, within 90 days
after the occurrence of a default with respect to this Capital Securities
Guarantee, mail by first class postage prepaid, to all Holders, notices of all
defaults actually known to a Responsible Officer of the Capital Securities
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, except in the case of default in the payment of any
Guarantee Payment, the Capital Securities Guarantee Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or Responsible
Officer in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Capital Securities Guarantee Trustee shall not be deemed to
have knowledge of any Event of Default unless the Capital Securities Guarantee
Trustee shall have received written notice, or a Responsible Officer charged
with the administration of the Declaration shall have obtained actual knowledge,
of such Event of Default.
SECTION 2.8 Conflicting Interests
---------------------
The Declaration shall be deemed to be specifically described in this
Series A Capital Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Securities Guarantee Trustee
--------------------------------------------------------------
(a) This Series A Capital Securities Guarantee shall be held by the
Capital Securities Guarantee Trustee for the benefit of the Holders, and the
Capital Securities Guarantee Trustee shall not transfer this Series A Capital
Securities Guarantee to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Capital Securities Guarantee
Trustee on acceptance by such Successor Capital Securities Guarantee Trustee of
its appointment to act as Successor Capital Securities Guarantee Trustee. The
right, title and interest of the Capital Securities Guarantee Trustee shall
automatically vest in any Successor Capital Securities Guarantee Trustee, and
such
8
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vesting and succession of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Capital Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
has occurred and is continuing, the Capital Securities Guarantee Trustee shall
enforce this Series A Capital Securities Guarantee for the benefit of the
Holders.
(c) The Capital Securities Guarantee Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Series A Capital Securities Guarantee, and no implied covenants
shall be read into this Series A Capital Securities Guarantee against the
Capital Securities Guarantee Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) and is actually
known to a Responsible Officer, the Capital Securities Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Series A Capital
Securities Guarantee, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Series A Capital Securities Guarantee shall
be construed to relieve the Capital Securities Guarantee Trustee from liability
for its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the curing or
waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Securities Guarantee
Trustee shall be determined solely by the express provisions of this Series
A Capital Securities Guarantee, and the Capital Securities Guarantee
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Series A Capital
Securities Guarantee, and no implied covenants or obligations shall be read
into this Series A Capital Securities Guarantee against the Capital
Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Capital Securities
Guarantee Trustee, the Capital Securities Guarantee Trustee may
conclusively rely, as to the truth of the statements and the correctness of
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the opinions expressed therein, upon any certificates or opinions furnished
to the Capital Securities Guarantee Trustee and conforming to the
requirements of this Series A Capital Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Capital Securities Guarantee
Trustee, the Capital Securities Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Series A Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Capital Securities Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Securities Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in liquidation
amount of the Series A Capital Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee, or exercising any trust or power conferred upon the Capital
Securities Guarantee Trustee under this Series A Capital Securities Guarantee;
and
(iv) no provision of this Series A Capital Securities Guarantee shall
require the Capital Securities Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if the Capital
Securities Guarantee Trustee shall have reasonable grounds for believing that
the repayment of such funds or liability is not reasonably assured to it under
the terms of this Series A Capital Securities Guarantee or indemnity, reasonably
satisfactory to the Capital Securities Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Securities Guarantee Trustee
------------------------------------------------------
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request,
10
<PAGE>
direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Series A
Capital Securities Guarantee may be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Series A Capital Securities
Guarantee, the Capital Securities Guarantee Trustee shall deem it desirable
that a matter be proved or established before taking, suffering or omitting any
action hereunder, the Capital Securities Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Capital Securities Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof).
(v) The Capital Securities Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its employees. The
Capital Securities Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Series A Capital Securities
Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Series A Capital
Securities Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the Capital Securities Guarantee Trustee such
security and indemnity, reasonably satisfactory to the Capital Securities
Guarantee Trustee, against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Capital Securities Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable advances as
may be requested by the Capital Securities Guarantee Trustee; provided that,
nothing contained in this Section 3.2(a)(vi)
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<PAGE>
shall be taken to relieve the Capital Securities Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Series A Capital Securities Guarantee.
(vii) The Capital Securities Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Capital Securities Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit.
(viii) The Capital Securities Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Capital
Securities Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(ix) Any action taken by the Capital Securities Guarantee Trustee or its
agents hereunder shall bind the Holders, and the signature of the Capital
Securities Guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action. No third party shall be required to
inquire as to the authority of the Capital Securities Guarantee Trustee to so
act or as to its compliance with any of the terms and provisions of this Series
A Capital Securities Guarantee, both of which shall be conclusively evidenced
by the Capital Securities Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Series A Capital Securities
Guarantee the Capital Securities Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Capital Securities Guarantee Trustee (i) may request
instructions from the Holders of a Majority in liquidation amount of the Series
A Capital Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be protected in conclusively relying on or acting in accordance with such
instructions.
(xi) The Capital Securities Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within the dis-
12
<PAGE>
cretion or rights or powers conferred upon it by this Series A Capital
Securities Guarantee.
(b) No provision of this Series A Capital Securities Guarantee shall
be deemed to impose any duty or obligation on the Capital Securities Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Capital Securities Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Series A Capital
------------------------------------------------------------
Securities Guarantee
--------------------
The recitals contained in this Series A Capital Securities Guarantee
shall be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Securities Guarantee Trustee makes no representation as to the validity
or sufficiency of this Series A Capital Securities Guarantee.
ARTICLE IV
CAPITAL SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 Capital Securities Guarantee Trustee; Eligibility
-------------------------------------------------
(a) There shall at all times be a Capital Securities Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of the
United States of America or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such corporation shall be
13
<PAGE>
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Capital Securities Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Capital Securities
Guarantee Trustee shall immediately resign in the manner and with the effect
set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Securities Guarantee Trustee and Guarantor shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital Securities
----------------------------------------------------------
Guarantee Trustee
-----------------
(a) Subject to Section 4.2(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor
except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Securities Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Capital Securities Guarantee Trustee and
delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office until a
Successor Capital Securities Guarantee Trustee shall have been appointed or
until its removal or resignation. The Capital Securities Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Securities Guarantee Trustee and
delivered to the Guarantor, which resignation shall not take effect until a
Successor Capital Securities Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Capital Securities Guarantee Trustee and delivered to the Guarantor and the
resigning Capital Securities Guarantee Trustee.
(d) If no Successor Capital Securities Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2 within
60 days after delivery of an instrument of removal or resignation, the Capital
Securities Guarantee Trustee resigning or being removed may petition any court
of competent jurisdiction for appointment of a Successor Capital Securities
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Capital Securities Guarantee
Trustee.
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(e) No Capital Securities Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Capital Securities Guarantee Trustee.
(f) Upon termination of this Series A Capital Securities Guarantee or
removal or resignation of the Capital Securities Guarantee Trustee pursuant to
this Section 4.2, the Guarantor shall pay to the Capital Securities Guarantee
Trustee all amounts due to the Capital Securities Guarantee Trustee accrued to
the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
---------
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
---------------------------
The Guarantor hereby waives notice of acceptance of this Series A
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Series A Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Series A Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under
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<PAGE>
the terms of the Series A Capital Securities or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Series A Capital Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Series A Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Series A
Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor with respect to the
Guarantee Payments shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
-----------------
(a) The Holders of a Majority in liquidation amount of the Series A
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Capital Securities
Guarantee Trustee in respect of this Series A Capital Securities Guarantee or
exercising any trust or power conferred upon the Capital Securities Guarantee
Trustee under this Series A Capital Securities Guarantee.
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<PAGE>
(b) If the Capital Securities Guarantee Trustee fails to enforce such
Series A Capital Securities Guarantee, any Holder may institute a legal
proceeding directly against the Guarantor to enforce the Capital Securities
Guarantee Trustee's rights under this Series A Capital Securities Guarantee,
without first instituting a legal proceeding against the Issuer, the Capital
Securities Guarantee Trustee or any other person or entity. The Guarantor
waives any right or remedy to require that any action be brought first against
the Issuer or any other person or entity before proceeding directly against the
Guarantor.
SECTION 5.5 Guarantee of Payment
--------------------
This Series A Capital Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
-----------
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Series A Capital Securities Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Series A Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Series A Capital Securities Guarantee. If any amount shall
be paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series A
Capital Securities, and that the Guarantor shall be liable as principal and as
debtor hereunder to make Guarantee Payments pursuant to the terms of this Series
A Capital Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (h), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
--------------------------
So long as any Capital Securities remain outstanding, the Guarantor
shall not (i) declare or pay any dividends or
17
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distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor's capital stock (which includes common and
preferred stock) or (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Guarantor
(including any Other Debentures) that rank pari passu with or junior in right of
payment to the Debentures or (iii) make any guarantee payments with respect to
any guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor (including Other Guarantees) if such guarantee ranks pari passu or
junior in right of payment to the Debentures (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 stockholder's rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Capital
Securities Guarantee, (d) 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, (e) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, and (f) purchases of common
stock related to the issuance of common stock or rights under any of the
Guarantor's benefit plans for its directors, officers or employees or any of the
Guarantor's dividend reinvestment plans) if at such time (i) there shall have
occurred any event of which the Guarantor has actual knowledge that (a) is, or
with the giving of notice or the lapse of time, or both, would be an Event of
Default and (b) in respect of which the Guarantor shall not have taken
reasonable steps to cure, (ii) if such Debentures are held by the Property
Trustee, the Guarantor shall be in default with respect to its payment of any
obligations under this Series A Capital Securities Guarantee or (iii) the
Guarantor shall have given notice of its election of the exercise of its right
to extend the interest payment period pursuant to Section 16.01 of the Indenture
and any such extension shall be continuing.
SECTION 6.2 Ranking
-------
This Series A Capital Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to Senior Indebtedness (as defined in the Indenture), to
the same extent and in the same manner that the Debentures are subordinated to
Senior Indebtedness pursuant to the Indenture (except as indicated below), it
being understood that the terms of Article XV of the Indenture shall apply to
the obligations of the Guarantor under this Series A Capital Securities
Guarantee as if (x) such Article
18
<PAGE>
XV were set forth herein in full and (y) such obligations were substituted for
the term "Securities" appearing in such Article XV, except that with respect to
Section 15.03 of the Indenture only, the term "Senior Indebtedness" shall mean
all liabilities of the Guarantor, whether or not for money borrowed (other than
obligations in respect of Other Guarantees), (ii) pari passu with the most
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any Other Guarantee (as defined herein) and any Other Common Securities
Guarantee and any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the Guarantor,
and (iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
-----------
This Series A Capital Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Series A Capital Securities, or (ii) upon liquidation of the Issuer, the full
payment of the amounts payable in accordance with the Declaration or the
distribution of the Debentures to all of the Holders. Notwithstanding the
foregoing, this Series A Capital Securities Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid under the Series A Capital Securities or
under this Series A Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Series A
Capital Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Series A Capital Securities Guarantee or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon
19
<PAGE>
such information, opinions, reports or statements presented to the Guarantor by
any Person as to matters the Indemnified Person reasonably believes are within
such other Person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Series A Capital
Securities might properly be paid.
SECTION 8.2 Indemnification
---------------
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Series A Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
----------------------
All guarantees and agreements contained in this Series A Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Series A Capital Securities then outstanding.
SECTION 9.2 Amendments
----------
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Series A Capital Securities Guarantee may only be amended with
the prior approval of the Holders of a Majority in liquidation amount of the
Securities (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined). The provisions of Section
12.2 of the Declaration with respect to meetings of Holders of the Securities
apply to the giving of such approval.
20
<PAGE>
SECTION 9.3 Notices
-------
All notices provided for in this Series A Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative Trustee at
the Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders):
First USA Capital Trust I
c/o First USA, Inc.
1601 Elm Street
47th Floor
Dallas, Texas 75201
Attention: Jack M. Antonini
Telecopy: (214) 849-2950
(b) If given to the Capital Securities Guarantee Trustee, at the
Capital Securities Guarantee Trustee's mailing address set forth below (or such
other address as the Capital Securities Guarantee Trustee may give notice of to
the Holders):
The Bank of New York
101 Barclay Street, 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
Telecopy: (212) 815-5915
(c) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders):
First USA, Inc.
1601 Elm Street
47th Floor
Dallas, Texas 75201
Attention: Philip E. Taken
Telecopy: (214) 849-2068
(d) If given to any Holder, at the address set forth on the books and
records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be deliv-
21
<PAGE>
ered because of a changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 9.4 Exchange Offer
--------------
In the event an Exchange Offer Registration Statement (as defined in
the Registration Rights Agreement) becomes effective and the Issuer issues any
Series B Capital Securities in the Exchange Offer, the Guarantor will enter into
a new capital securities guarantee agreement, in substantially the same form as
this Series A Capital Securities Guarantee, with respect to the Series B Capital
Securities.
SECTION 9.5 Benefit
-------
This Series A Capital Securities Guarantee is solely for the benefit
of the Holders and, subject to Section 3.1(a), is not separately transferable
from the Series A Capital Securities.
SECTION 9.6 Governing Law
-------------
THIS SERIES A CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
22
<PAGE>
THIS SERIES A CAPITAL SECURITIES GUARANTEE is executed as of the day
and year first above written.
FIRST USA, INC. as
Guarantor
By:/s/ Philip E. Taken
------------------------
Name:
Title:
The Bank of New York, as Capital
Securities Guarantee Trustee
By:/s/ Stephen J. Giurlando
------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
23
<PAGE>
EXHIBIT 10.10
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated December 20, 1996
among
FIRST USA, INC.,
FIRST USA CAPITAL TRUST I
and
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
J. P. MORGAN SECURITIES INC.
as Initial Purchasers
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
---------
into as of December 20, 1996 among FIRST USA, INC., a Delaware corporation (the
"Company"), FIRST USA CAPITAL TRUST I, a business trust formed under the laws of
-------
the state of Delaware (the "Trust"), and MERRILL LYNCH, PIERCE, FENNER & SMITH
-----
INCORPORATED ("Merrill Lynch") and J. P. MORGAN SECURITIES INC. (together with
-------------
Merrill Lynch, the "Initial Purchasers").
------------------
This Agreement is made pursuant to the Purchase Agreement dated December
17, 1996 (the "Purchase Agreement"), among the Company, as issuer of the Series
------------------
A 9.33% Junior Subordinated Deferrable Interest Debentures due 2027 (the
"Subordinated Debentures"), the Trust and the Initial Purchasers, which provides
- ------------------------
for among other things, the sale by the Trust to the Initial Purchasers of
200,000 of the Trust's Series A 9.33% Capital Securities, liquidation amount
$1,000 per Capital Security and, subject to the exercise of an overallotment
option by the Initial Purchasers under the Purchase Agreement, up to an
additional 30,000 of the Trust's Series A 9.33%, Capital Securities, liquidation
amount $1,000 per Capital Securities (collectively, the "Capital Securities")
------------------
the proceeds of which will be used by the Trust to purchase Subordinated
Debentures. The Capital Securities, together with the Subordinated Debentures
and the Company's guarantee of the Capital Securities (the "Capital Securities
------------------
Guarantee") are collectively referred to as the "Securities". In order to
- ---------
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
and the Trust have agreed to provide to the Initial Purchasers and their direct
and indirect transferees the registration rights set forth in this Agreement.
The execution and delivery of this Agreement is a condition to the closing under
the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized
-----------
defined terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of Section
------
3 hereof.
"Applicable Period" shall have the meaning set forth in Section 3(t)
-----------------
hereof.
2
<PAGE>
"Business Day" means any day other than a Saturday, a Sunday, or a day on
------------
which banking institutions in The City of New York or in Wilmington, Delaware
are authorized or required by law or executive order to close.
"Closing Time" shall mean the Closing Time as defined in the Purchase
------------
Agreement.
"Company" shall have the meaning set forth in the preamble to this
-------
Agreement and also includes the Company's successors and permitted assigns.
"Declaration" or "Declaration of Trust" shall mean the Amended and Restated
----------- --------------------
Declaration of Trust, dated as of December 20, 1996, by the trustees named
therein and the Company as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Trust; provided, however, that such depositary must
-------- -------
have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section 2(b)
--------------------
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
------------
from time to time.
"Exchange Offer" shall mean the offer by the Company and the Trust to the
--------------
Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange Securities pursuant
to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
---------------------------
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a) hereof.
---------------
"Exchange Securities" shall mean (i) with respect to the Subordinated
-------------------
Debentures, the Series B 9.33% Junior Subordinated Deferrable Interest
Debentures due January 15, 2027 (the "Exchange Debentures") containing terms
-------------------
identical to the Subordinated Debentures (except that they will not contain
terms with respect to the transfer restrictions under the Securities Act, will
not require transfers thereof to be in minimum blocks of $100,000 principal
3
<PAGE>
amount and will not provide for any increase in the interest rate thereon), (ii)
with respect to the Capital Securities, the Trust's Series B 9.33% Capital
Securities, liquidation amount $1,000 per Capital Security (the "Exchange
--------
Capital Securities") which will have terms identical to the Capital Securities
- ------------------
(except they will not contain terms with respect to transfer restrictions under
the Securities Act, will not require minimum transfers thereof to be in blocks
of $100,000 liquidation amount and will not provide for any increase in the
Distribution rate thereon) and (iii) with respect to the Capital Securities
Guarantee, the Company's guarantee (the "Exchange Capital Securities Guarantee")
-------------------------------------
of the Exchange Capital Securities which will have terms identical to the
Capital Securities Guarantee.
"Holder" shall mean the Initial Purchasers, for so long as they own any
------
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subordinated
---------
Debentures and the Exchange Debentures dated as of December 20, 1996 among the
Company, as issuer, and The Bank of New York, as trustee, as the same may be
amended from time to time in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble to
------------------
this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n) hereof.
----------
"Issue Date" shall mean the date of original issuance of the Securities.
----------
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
------------------
hereof.
"Majority Holders" shall mean the Holders of a majority of the aggregate
----------------
liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set forth in Section
---------------------------
3(t) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
------
unincorporated organization, limited liability Company, or a government or
agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a) hereof.
----------------
4
<PAGE>
"Private Exchange Securities" shall have the meaning set forth in Section
---------------------------
2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble to
------------------
this Agreement.
"Records" shall have the meaning set forth in Section 3(n) hereof.
-------
"Registration Default" shall have the meaning set forth in Section 2(e)
--------------------
hereof.
"Registrable Securities" shall mean the Securities and, if issued, the
----------------------
Private Exchange Securities; provided, however, that Securities or Private
-------- -------
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities or
Private Exchange Securities for the exchange or resale thereof, as the case may
be, shall have been declared effective under the Securities Act and such
Securities or Private Exchange Securities, as the case may be, shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities or
Private Exchange Securities, as the case may be, shall have been sold to the
public pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act, (iii) such Securities or Private Exchange
Securities, as the case may be, shall have ceased to be outstanding or (iv) with
respect to the Securities, such Securities have been exchanged for Exchange
Securities upon consummation of the Exchange Offer and are thereafter freely
tradeable by the holder thereof (other than an affiliate of the Company).
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, including, if applicable, the
----
fees and expenses of any "qualified independent underwriter" (and its counsel)
that is required to be retained by any Holder of Registrable Securities in
accordance with the rules and regulations of the NASD, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in
5
<PAGE>
connection with blue sky qualification of any of the Exchange Securities or
Registrable Securities) and compliance with the rules of the NASD, (iii) all
expenses of any Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus and any
amendments or supplements thereto, and in preparing or assisting in preparing,
printing and distributing any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, (v) the fees and disbursements
of counsel for the Company and of the independent certified public accountants
of the Company, including the expenses of any "cold comfort" letters required by
or incident to such performance and compliance, (vi) the fees and expenses of
the Trustee, and any exchange agent or custodian, (vii) all fees and expenses
incurred in connection with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges, and (viii) the reasonable
fees and expenses of any special experts retained by the Company in connection
with any Registration Statement.
"Registration Statement" shall mean any registration statement of the
----------------------
Company and the Trust which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Rule 144(k) Period" shall mean the period of three years (or such shorter
------------------
period as may hereafter be referred to in Rule 144(k) under the Securities Act
(or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities" shall have the meaning set forth in the preamble to this
----------
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended from
--------------
time to time.
"Shelf Registration" shall mean a registration effected pursuant to Section
------------------
2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section 2(b)
------------------------
hereof.
"Shelf Registration Event Date" shall have the meaning set forth in Section
-----------------------------
2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration statement
----------------------------
of the Company and the Trust pursuant to the
6
<PAGE>
provisions of Section 2(b) hereof which covers all of the Registrable
Securities or all of the Private Exchange Securities, as the case may be, on an
appropriate form under Rule 415 under the Securities Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
---
"Trustees" shall mean any and all trustees with respect to (i) the Capital
--------
Securities under the Declaration, (ii) the Subordinated Debentures under the
Indenture and (iii) the Capital Securities Guarantee.
2. Registration Under the Securities Act.
-------------------------------------
(a) Exchange Offer. To the extent not prohibited by any applicable law or
--------------
applicable interpretation of the staff of the SEC, the Company and the Trust
shall, for the benefit of the Holders, at the Company's cost, use its best
efforts to (i) cause to be filed with the SEC within 150 days after the Issue
Date an Exchange Offer Registration Statement on an appropriate form under the
Securities Act covering the Exchange Offer, (ii) cause such Exchange Offer
Registration Statement to be declared effective under the Securities Act by the
SEC not later than the date which is 180 days after the Issue Date, and (iii)
keep such Exchange Offer Registration Statement effective for not less than 30
calendar days (or longer if required by applicable law) after the date notice of
the Exchange Offer is mailed to the Holders. Upon the effectiveness of the
Exchange Offer Registration Statement, the Company and the Trust shall promptly
commence the Exchange Offer, it being the objective of such Exchange Offer to
enable each Holder eligible and electing to exchange Registrable Securities for
a like principal amount of Exchange Debentures or a like liquidation amount of
Exchange Capital Securities, together with the Exchange Guarantee, as applicable
(assuming that such Holder is not an affiliate of the Company within the meaning
of Rule 405 under the Securities Act and is not a broker-dealer tendering
Registrable Securities acquired directly from the Company for its own account,
acquires the Exchange Securities in the ordinary course of such Holder's
business and has no arrangements or understandings with any Person to
participate in the Exchange Offer for the purpose of distributing the Exchange
Securities) to transfer such Exchange Securities from and after their receipt
without any limitations or restrictions under the Securities Act and under state
securities or blue sky laws.
In connection with the Exchange Offer, the Company and the Trust shall:
7
<PAGE>
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not less
than 30 days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law) (such period referred to herein as the "Exchange
--------
Period");
- ------
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Securities at any time prior to
the close of business, New York time, on the last Business Day of the Exchange
Period, by sending to the institution specified in the notice, a telegram,
telex, facsimile transmission or letter setting forth the name of such Holder,
the principal amount of Securities delivered for exchange, and a statement that
such Holder is withdrawing his election to have such Securities exchanged;
(v) notify each Holder that any Security not tendered by such Holder in
the Exchange Offer will remain outstanding and continue to accrue interest or
accumulate distributions, as the case may be, but will not retain any rights
under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws relating to
the Exchange Offer.
If any Initial Purchaser determines upon advice of its outside counsel that
it is not eligible to participate in the Exchange Offer with respect to the
exchange of Securities constituting any portion of an unsold allotment in the
initial distribution, as soon as practicable upon receipt by the Company and
the Trust of a written request from such Initial Purchaser, the Company and the
Trust, as applicable, shall issue and deliver to such Initial Purchaser in
exchange (the "Private Exchange") for the Securities held by such Initial
----------------
Purchaser, a like liquidation amount of Capital Securities of the Trust,
together with the Exchange Guarantee, or a like principal amount of the
Subordinated Debentures of the Company, as applicable, that are identical
(except that such securities may bear a customary legend with respect to
restrictions on transfer pursuant to the Securities Act) to the Exchange
Securities (the "Private Exchange Securities") and which are issued pursuant to
---------------------------
the Indenture, the Declaration or the Guarantee (which provides that the
Exchange Securities will not be subject to the transfer restrictions set forth
in the Indenture or the Declaration, as applicable, and that the Exchange
Securities,
8
<PAGE>
the Private Exchange Securities and the Securities will vote and consent
together on all matters as one class and that neither the Exchange Securities,
the Private Exchange Securities nor the Securities will have the right to vote
or consent as a separate class on any matter). The Private Exchange Securities
shall be of the same series as the Exchange Securities and the Company and the
Trust will seek to cause the CUSIP Service Bureau to issue the same CUSIP
Numbers for the Private Exchange Securities as for the Exchange Securities
issued pursuant to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer and, if
applicable, the Private Exchange, the Company and the Trust, as the case
requires, shall:
(i) accept for exchange all Securities or portions thereof tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee for
cancellation all Securities or portions thereof so accepted for exchange by the
Company; and
(iii) issue, and cause the applicable Trustee under the Indenture, the
Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange Securities,
as applicable, equal in principal amount to the principal amount of the
Subordinated Debentures or equal in liquidation amount to the liquidation amount
to the Capital Securities (together with the guarantee thereof) as are
surrendered by such Holder.
Distributions on each Exchange Capital Security and interest on each
Exchange Debenture and Private Exchange Security issued pursuant to the
Registered Exchange Offer and in the Private Exchange will accrue from the last
date on which a Distribution or interest was paid on the Capital Security or the
Subordinated Debenture surrendered in exchange therefore or, if no Distribution
or interest has been paid on such Capital Security or Subordinated Debenture,
from the Issue Date. To the extent not prohibited by any law or applicable
interpretation of the staff of the SEC, the Company and the Trust shall use
their best efforts to complete the Exchange Offer as provided above, and shall
comply with the applicable requirements of the Securities Act, the Exchange Act
and other applicable laws in connection with the Exchange Offer. The Exchange
Offer shall not be subject to any conditions, other than that the Exchange Offer
does not violate applicable law or any applicable interpretation of the staff of
the SEC. Each Holder of Registrable Securities who wishes to exchange such
Registrable Securities for Exchange Securities in the Exchange Offer will be
required to make certain customary representations in connection therewith,
including, in the case of any Holder of Capital Securities, representations that
(i) it is not an affiliate of the
9
<PAGE>
Trust or the Company, (ii) the Exchange Securities to be received by it were
acquired in the ordinary course of its business and (iii) at the time of the
Exchange Offer, it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Capital
Securities. The Company and the Trust shall inform the Initial Purchasers,
after consultation with the Trustee, of the names and addresses of the Holders
to whom the Exchange Offer is made, and the Initial Purchasers shall have the
right to contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this Section
2(a), the provisions of this Agreement shall continue to apply, mutatis
-------
mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities and Exchange Securities held by Participating Broker-
Dealers, and the Company and the Trust shall have no further obligation to
register the Registrable Securities (other than Private Exchange Securities)
pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. In the event that (i) the Company, the Trust or
------------------
the Majority Holders reasonably determine, after conferring with counsel (which
may be in-house counsel), that the Exchange Offer Registration provided in
Section 2(a) above is not available because of any change in law or in currently
prevailing interpretations of the staff of the SEC, (ii) the Company shall
determine in good faith that there is a reasonable likelihood that, or a
material uncertainty exists as to whether, consummation of the Exchange Offer
would result in a material adverse tax consequence to the Company, (iii) the
Exchange Offer Registration Statement is not declared effective within 180 days
of the Issue Date or (iv) upon the request of any Initial Purchaser with respect
to any Registrable Securities held by it, if such Initial Purchaser is not
permitted, in the reasonable opinion of Brown & Wood LLP, pursuant to applicable
law or applicable interpretations of the staff of the SEC, to participate in
the Exchange Offer and thereby receive securities that are freely tradeable
without restriction under the Securities Act and applicable blue sky or state
securities laws (any of the events specified in (i)-(iii) being a "Shelf
-----
Registration Event" and the date of occurrence thereof, the "Shelf Registration
- ------------------ ------------------
Event Date"), the Company and the Trust shall, at their cost, use their best
- ----------
efforts to cause to be filed as promptly as practicable after such Shelf
Registration Event Date, as the case may be, and, in any event, within 45 days
after such Shelf Registration Event Date (which shall be no earlier than 75 days
after the Closing Time), a Shelf Registration Statement providing for the sale
by the Holders of all of the Registrable Securities, and shall use its best
efforts to have such Shelf Registration Statement declared effective by the SEC
as soon as practicable. No Holder of Registrable Securities shall be entitled
to include any of its Registrable Securities in any Shelf
10
<PAGE>
Registration pursuant to this Agreement unless and until such Holder agrees in
writing to be bound by all of the provisions of this Agreement applicable to
such Holder and furnishes to the Company and the Trust in writing, within 15
days after receipt of a request therefor, such information as the Company and
the Trust may, after conferring with counsel with regard to information relating
to Holders that would be required by the SEC to be included in such Shelf
Registration Statement or Prospectus included therein, reasonably request for
inclusion in any Shelf Registration Statement or Prospectus included therein.
Each Holder as to which any Shelf Registration is being effected agrees to
furnish to the Company and the Trust all information with respect to such Holder
necessary to make the information previously furnished to the Company by such
Holder not materially misleading.
The Company and the Trust agree to use their best efforts to keep the Shelf
Registration Statement continuously effective for the Rule 144(k) Period
(subject to extension pursuant to the last paragraph of Section 3 hereof) or for
such shorter period which will terminate when all of the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding (the "Effectiveness Period").
--------------------
The Company and the Trust shall not permit any securities other than Registrable
Securities to be included in the Shelf Registration. The Company and the Trust
will, in the event a Shelf Registration Statement is declared effective, provide
to each Holder a reasonable number of copies of the Prospectus which is a part
of the Shelf Registration Statement, notify each such Holder when the Shelf
Registration has become effective and use its best efforts to take certain other
actions as are required to permit certain unrestricted resales of the
Registrable Securities. The Company and the Trust further agree, if necessary,
to supplement or amend the Shelf Registration Statement, if required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Shelf Registration Statement or by the Securities Act or by
any other rules and regulations thereunder for shelf registrations, and the
Company and the Trust agree to furnish to the Holders of Registrable Securities
copies of any such supplement or amendment promptly after its being used or
filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
--------
connection with the registration pursuant to Section 2(a) or 2(b) hereof and
will reimburse the Initial Purchasers for the reasonable fees and disbursements
of Brown & WoodLLP, counsel for the Initial Purchasers, incurred in connection
with the Exchange Offer and, if applicable, the Private Exchange Offer, and
either Brown & WoodLLP or any one other counsel designated in writing by the
Majority Holders to act as counsel for the Holders of the Registrable Securities
in connection with a Shelf Registration Statement, which other counsel shall be
reasonably satisfactory to the Company. Except as provided herein, each Holder
11
<PAGE>
shall pay all expenses of its counsel, underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer Registration
--------------------------------
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
-------- -------
after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
effective during the period of such interference, until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume. The Company and the Trust will be deemed not to have used their best
efforts to cause the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, to become, or to remain, effective
during the requisite period if either of them voluntarily take any action that
would result in any such Registration Statement not being declared effective or
in the Holders of Registrable Securities covered thereby not being able to
exchange or offer and sell such Registrable Securities during that period unless
such action is required by applicable law.
(e) Liquidated Damages. In the event that (i) (A) neither the Exchange
------------------
Offer Registration Statement nor a Shelf Registration Statement is filed with
the SEC on or prior to the 150th day after the Issue Date or (B) notwithstanding
that the Company and the Trust have consummated or will consummate an Exchange
Offer, the Company and the Trust are required to file a Shelf Registration
Statement and such Shelf Registration Statement is not filed on or prior to the
date required by Section 2(b) hereof, then commencing on the day after the
applicable required filing date, additional interest shall accrue on the
principal amount of the Subordinated Debentures, and additional Distributions
shall accumulate on the liquidation amount of the Capital Securities, each at a
rate of 0.25% per annum; or
(ii) (A) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is declared effective by the SEC on or prior to the 30th
day after the applicable required filing date or (B) notwithstanding that the
Company and the Trust have consummated an Exchange Offer, the Company and the
Trust are required to file a Shelf Registration Statement and such Shelf
Registration Statement is not declared effective by the SEC on or prior to the
30th day after the date such Shelf Registration Statement was required to be
filed, then, commencing on the 31st day after the applicable required filing
date, additional interest shall accrue on the principal amount of the
Subordinated Deben-
12
<PAGE>
tures, and additional distributions shall accumulate on the liquidation amount
of the Capital Securities, each at a rate of 0.25% per annum; or
(iii) (A) the Trust has not exchanged Exchange Capital Securities for all
Capital Securities or the Company has not exchanged Exchange Guarantees or
Exchange Subordinated Debentures for all Guarantees or Subordinated Debentures
validly tendered, in accordance with the terms of the Exchange Offer on or prior
to the 30th day after the date on which the Exchange Offer Registration
Statement was declared effective or (B) if applicable, the Shelf Registration
Statement has been declared effective and such Shelf Registration Statement
ceases to be effective at any time prior to the expiration of the Rule 144(k)
Period (other than after such time as all Capital Securities have been disposed
of thereunder or otherwise cease to be Registrable Securities), then additional
interest shall accrue on the principal amount of Subordinated Debentures, and
additional distributions shall accumulate on the liquidation amount of the
Capital Securities, each at a rate of 0.25% per annum commencing on (x) the 31st
day after such effective date, in the case of (A) above, or (y) the day such
Shelf Registration Statement ceases to be effective in the case of (B) above;
provided, however, that neither the additional interest rate on the Subordinated
Debentures, nor the additional distribution rate on the liquidation amount of
the Capital Securities, may exceed in the aggregate 0.25% per annum; provided,
further, however, that (1) upon the filing of the Exchange Offer Registration
Statement or a Shelf Registration Statement (in the case of clause (i) above),
(2) upon the effectiveness of the Exchange Offer Registration Statement or a
Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Capital Securities, Exchange Guarantees and Exchange
Subordinated Debentures for all Capital Securities, Guarantees and Subordinated
Debentures tendered (in the case of clause (iii)(A) above), or upon the
effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the case of clause (iii)(B) above), additional interest on the
Subordinated Debentures, and additional distributions on the liquidation amount
of the Capital Securities as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue or accumulate, as the case
may be.
Any amounts of additional interest and additional Distribu tions due
pursuant to Section 2(e)(i), (ii) or (iii) above will be payable in cash on the
relevant record dates for the payment of interest and Distributions pursuant to
the Indenture and the Declaration, respectively.
(f) Specific Enforcement. Without limiting the remedies available to the
--------------------
Holders, the Company and the Trust acknowledge that any failure by the Company
or the Trust to comply with its
13
<PAGE>
obligations under Section 2(a) and Section 2(b) hereof may result in material
irreparable injury to the Holders for which there is no adequate remedy at law,
that it would not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, any Holder may obtain such relief as may
be required to specifically enforce the Company's and the Trust's obligations
under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the obligations of the
-----------------------
Company and the Trust with respect to the Registration Statements pursuant to
Sections 2(a) and 2(b) hereof, the Company and the Trust shall use their best
efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Company and the Trust, (ii) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable Securities by
the selling Holders thereof and (iii) shall comply as to form in all
material respects with the requirements of the applicable form and include
all financial statements required by the SEC to be filed therewith; and use
its best efforts to cause such Registration Statement to become effective
and remain effective in accordance with Section 2 hereof; provided,
--------
however, that if (1) such filing is pursuant to Section 2(b), or (2) a
-------
Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2(a) is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company and the Trust shall furnish
to and afford the Holders of the Registrable Securities and each such
Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if
any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein
and all exhibits thereto) proposed to be filed. The Company and the Trust
shall not file any Registration State ment or Prospectus or any amendments
or supplements thereto in respect of which the Holders must be afforded an
opportunity to review prior to the filing of such document if the Majority
Holders or such Participating Broker-Dealer, as the case may be, their
counsel or the managing underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the Effectiveness Period or the
Applicable Period, as the
14
<PAGE>
case may be; and cause each Prospectus to be supplemented, if so determined
by the Company or the Trust or requested by the SEC, by any required
prospectus supplement and as so supplemented to be filed pursuant to Rule
424 (or any similar provision then in force) under the Securities Act, and
comply with the provisions of the Securities Act, the Exchange Act and the
rules and regulations promulgated thereunder applica ble to it with respect
to the disposition of all securities covered by each Registration Statement
during the Effectiveness Period or the Applicable Period, as the case may
be, in accordance with the intended method or methods of distribution by
the selling Holders thereof described in this Agreement (including sales by
any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities included in the Shelf Registration Statement, at
least three Business Days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and
advising such Holder that the distribution of Registrable Securities will
be made in accordance with the method selected by the Majority Holders; and
(ii) furnish to each Holder of Registrable Securities included in the Shelf
Registration Statement and to each underwriter of an underwritten offering
of Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) consent to the use of
the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities included in the Shelf
Registration Statement in connection with the offering and sale of the
Registrable Securities covered by the Prospec tus or any amendment or
supplement thereto;
(d) in the case of a Shelf Registration, use its best efforts to
register or qualify the Registrable Securities under all applicable state
securities or "blue sky" laws of such jurisdictions by the time the
applicable Registration Statement is declared effective by the SEC as any
Holder of Registrable Securities covered by a Registration Statement and
each underwriter of an underwritten offering of Registrable Securities
shall reasonably request in writing in advance of such date of
effectiveness, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder and underwriter to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that the Company and
-------- -------
the Trust shall not be required to (i) qualify as a foreign corporation or
as a dealer in securities in any jurisdiction where it would not otherwise
be required to qualify but for
15
<PAGE>
this Section 3(d), (ii) file any general consent to service of process in
any jurisdiction where it would not otherwise be subject to such service of
process or (iii) subject itself to taxation in any such jurisdiction if it
is not then so subject;
(e) in the case of (1) a Shelf Registration or (2) Participating
Broker-Dealers from whom the Company or the Trust has received prior
written notice that they will be utilizing the Prospectus contained in the
Exchange Offer Registration Statement as provided in Section 3(t) hereof,
are seeking to sell Exchange Securities and are required to deliver
Prospectuses, notify each Holder of Registrable Securities, or such
Participating Broker-Dealers, as the case may be, their counsel and the
managing underwriters, if any, promptly and promptly confirm such notice in
writing (i) when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective, (ii) of
any request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement or Prospectus or for additional
information after the Registration Statement has become effective, (iii) of
the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the
qualification of the Registrable Securities or the Exchange Securities to
be offered or sold by any Participating Broker-Dealer in any jurisdiction
described in paragraph 3(d) hereof or the initiation of any proceedings for
that purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties
of the Company and the Trust contained in any purchase agreement,
securities sales agreement or other similar agreement, if any cease to be
true and correct in all material respects, and (v) of the happening of any
event or the failure of any event to occur or the discovery of any facts or
otherwise, during the Effectiveness Period which makes any statement made
in such Registration Statement or the related Prospectus untrue in any
material respect or which causes such Registration Statement or Prospectus
to omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and (vi) the Company and the Trust's reasonable determination
that a post-effective amendment to the Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
16
<PAGE>
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities included within the coverage of such Shelf
Registration Statement, without charge, at least one conformed copy of each
Registration Statement relating to such Shelf Registration and any post-
effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold
and not bearing any restrictive legends and in such denominations
(consistent with the provisions of the Indenture and the Declaration) and
registered in such names as the selling Holders or the underwriters may
reasonably request at least two Business Days prior to the closing of any
sale of Registrable Securities pursuant to such Shelf Registration
Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use its best
efforts to prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any 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 under which they were
made, not misleading; and to notify each Holder to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an
event, and each Holder hereby agrees to suspend use of the Prospectus until
the Company has amended or supplemented the Prospectus to correct such
misstatement or omission;
(j) in the case of a Shelf Registration, a reasonable time prior to
the filing of any document which is to be incorporated by reference into a
Registration Statement or a Prospectus after the initial filing of a
Registration Statement, provide a reasonable number of copies of such
document to the Holders; and make such of the representatives of the
Company and the Trust as shall be reasonably requested by the Holders of
Registrable Securities or the Initial Purchasers on behalf of such Holders
available for discussion of such document;
(k) obtain a CUSIP number for all Exchange Capital Securities and the
Capital Securities (and if the Trust has made a distribution of the
Subordinated Debentures to the Holders of the Capital Securities, the
Subordinated Debentures
17
<PAGE>
or the Exchange Subordinated Debentures) as the case may be, not later than
the effective date of a Registration Statement, and provide the Trustee
with printed certificates for the Exchange Securities or the Registrable
Securities, as the case may be, in a form eligible for deposit with the
Depositary;
(l) cause the Indenture, the Declaration, the Guarantee and the
Exchange Guarantee to be qualified under the Trust Indenture Act of 1939
(the "TIA") in connection with the registration of the Exchange Securities
---
or Registrable Securities, as the case may be, and effect such changes to
such documents as may be required for them to be so qualified in accordance
with the terms of the TIA and execute, and use its best efforts to cause
the relevant trustee to execute, all documents as may be required to effect
such changes, and all other forms and documents required to be filed with
the SEC to enable such documents to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) as are customary in underwritten
offerings and take all such other appropriate actions as are reasonably
requested in order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, if requested by (x) any
Initial Purchaser, in the case where an Initial Purchaser holds Securities
acquired by it as part of its initial distribution and (y) other Holders of
Securities covered thereby: (i) make such representations and warranties
to Holders of such Registrable Securities and the underwriters (if any),
with respect to the business of the Trust, the Company and its subsidiaries
as then conducted and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein, in
each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii)
obtain opinions of counsel to the Company and the Trust and updates thereof
(which may be in the form of a reliance letter) in form and substance
reasonably satisfactory to the managing underwriters (if any) and the
Holders of a majority in principal amount of the Registrable Securities
being sold, addressed to each selling Holder and the underwriters (if any)
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such underwriters (it being agreed that the matters to be
covered by such opinion may be subject to customary qualifications and
exceptions); (iii) obtain "cold comfort" letters and updates thereof in
form and substance reasonably satisfactory to the managing underwriters
from the independent certified public accountants of the Company and the
Trust (and, if necessary,
18
<PAGE>
any other independent certified public accountants of any subsidiary of the
Company and the Trust or of any business acquired by the Company and the
Trust for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
of the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold com fort" letters in
connection with underwritten offerings and such other matters as reasonably
requested by such underwriters in accordance with Statement on Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered into,
the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 4 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Securities covered by such Registration
Statement and the managing underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section (including, without
limitation, such underwriters and selling Holders). The above shall be
done at each closing under such underwriting agreement, or as and to the
extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section 2(b) or
(2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section 2(a) is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, make reasonably available
for inspection by any selling Holder of such Registrable Securities being
sold, or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Registrable
Securities, if any, and any attorney, accountant or other agent retained by
any such selling Holder or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the "Inspectors"), at the
-----------
offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and properties
of the Trust, the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise any
-------
applicable due diligence responsibilities, and cause the officers,
directors and employees of the Trust, the Company and its subsidiaries to
supply all relevant information in each case reasonably requested by any
such Inspector in connection with such Registration Statement provided,
--------
however, that the foregoing inspection and information gathering shall be
-------
coordinated on behalf of the Purchasers by you and on behalf of the other
parties, by one counsel designated by you and on behalf of such other
parties as described in Section 2(c) hereof. Records which the Company and
the Trust determine, in good faith, to be confidential and any records
which it notifies the Inspectors are confidential shall not be dis-
19
<PAGE>
closed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a material misstate ment or omission in such
Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction or is necessary in connection with any action, suit or
proceeding or (iii) the information in such Records has been made generally
available to the public. Each selling Holder of such Regis trable
Securities and each such Participating Broker-Dealer will be required to
agree in writing that information obtained by it as a result of such
inspections shall be deemed confi dential and shall not be used by it as
the basis for any market transactions in the securities of the Trust or the
Company unless and until such is made generally available to the public.
Each selling Holder of such Registrable Securi ties and each such
Participating Broker-Dealer will be required to further agree in writing
that it will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company at its expense to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(o) comply with all applicable rules and regulations of the SEC so
long as any provision of this Agreement shall be applicable and make
generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days after
the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private Exchange, if
requested by a Trustee, obtain an opinion of counsel to the Company
addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or the Private Exchange, as
the case may be, and which includes an opinion that (i) the Company and the
Trust, as the case requires, has duly authorized, executed and delivered
the Exchange Securities and Private Exchange Securities, and (ii) each of
the Exchange Securities or the Private Exchange Securities, as the case may
be, constitute a legal, valid and binding obligation of the Company or the
Trust, as the case requires, enforceable against the Company or the
20
<PAGE>
Trust, as the case requires, in accordance with its respective terms (in
each case, with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company or
the Trust, as applicable (or to such other Person as directed by the
Company or the Trust, respectively), in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the
Company or the Trust, as applicable, shall mark, or cause to be marked, on
such Registrable Securities delivered by such Holders that such Registrable
Securities are being cancelled in exchange for the Exchange Securities or
the Private Exchange Securities, as the case may be; in no event shall
such Registrable Securities be marked as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective counsel
in connection with any filings required to be made with the NASD;
(s) use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution," which section shall be reasonably acceptable to the
Initial Purchasers or another representative of the Participating Broker-
Dealers, and which shall contain a summary statement of the positions taken
or policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer (a "Participating Broker-Dealer")
---------------------------
that holds Registrable Securities acquired for its own account as a result
of market-making activities or other trading activities and that will be
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Securities to be received by such broker-dealer in the Exchange
Offer, whether such positions or policies have been publicly disseminated
by the staff of the SEC or such positions or policies, in the reasonable
judgment of the Initial Purchasers or such other representative, represent
the prevailing views of the staff of the SEC, including a statement that
any such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory
underwriter and must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Securities,
(ii) furnish to each Participating Broker-Dealer who has delivered to the
Company the notice
21
<PAGE>
referred to in Section 3(e), without charge, as many copies of each
Prospectus included in the Exchange Offer Registration Statement, including
any preliminary prospectus, and any amendment or supplement thereto, as
such Participating Broker-Dealer may reasonably request (each of the
Company and the Trust hereby consents to the use of the Prospectus forming
part of the Exchange Offer Registration Statement or any amendment or
supplement thereto by any Person subject to the prospectus delivery
requirements of the Securities Act, including all Participating Broker-
Dealers, in connection with the sale or transfer of the Exchange Securities
covered by the Prospectus or any amendment or supplement thereto), (iii)
use its best efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus contained therein in
order to permit such Prospectus to be lawfully delivered by all Persons
subject to the prospectus delivery requirements of the Securities Act for
such period of time as such Persons must comply with such requirements
under the Securities Act and applicable rules and regulations in order to
resell the Exchange Securities; provided, however, that such period shall
-------- -------
not be required to exceed 90 days (or such longer period if extended
pursuant to the last sentence of Section 3 hereof) (the "Applicable
----------
Period"), and (iv) include in the transmittal letter or similar
documentation to be executed by an exchange offeree in order to participate
in the Exchange Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities, it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any
resale of Exchange Securities received in respect of such Registrable
Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securi ties, the broker-dealer will
not be deemed to admit that it is an underwriter within the meaning of the
Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Company and the Trust agree to deliver to the Initial Purchasers or to
another representative of the Participating Broker-Dealers, if requested
by any such Initial Purchasers or such other representative of the
Participating Broker-Dealers, on behalf of the Participating Broker-Dealers
upon consummation of the Exchange Offer (i) an opinion of counsel in form
and substance reasonably satisfactory to the Initial Purchasers or such
other representative of the
22
<PAGE>
Participating Broker-Dealers, covering the matters customarily covered in
opinions requested in connection with Exchange Offer Registration
Statements and such other matters as may be reasonably requested (it being
agreed that the matters to be covered by such opinion may be subject to
customary qualifications and exceptions), (ii) an officers' certificate
containing certifications substantially similar to those set forth in
Section 5(g) of the Purchase Agreement and such additional certifications
as are customarily delivered in a public offering of debt securities and
(iii) as well as upon the effectiveness of the Exchange Offer Registration
Statement, a comfort letter, in each case, in customary form if permitted
by Statement on Auditing Standards No. 72.
The Company or the Trust may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Company or the Trust, as applicable, such information regarding such seller as
may be required by the staff of the SEC to be included in a Registration
Statement. The Company or the Trust may exclude from such registration the
Registrable Securities of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request. The Company
shall have no obligation to register under the Securities Act the Registrable
Securities of a seller who so fails to furnish such information.
In the case of (1) a Shelf Registration Statement or (2) Participating
Broker-Dealers who have notified the Company and the Trust that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in Section 3(t) hereof, are seeking to sell Exchange Securities and
are required to deliver Prospectuses each Holder agrees that, upon receipt of
any notice from the Company or the Trust of the happening of any event of the
kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof or until
it is advised in writing (the "Advice") by the Company and the Trust that the
------
use of the applicable Prospectus may be resumed, and, if so directed by the
Company and the Trust, such Holder will deliver to the Company or the Trust (at
the Company's or the Trust's expense, as the case requires) all copies in such
Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities or Exchange
Securities, as the case may be, current at the time of receipt of such notice.
If the Company or the Trust shall give any such notice to suspend the
disposition of Registrable Securities or Exchange Securities, as the case may
be, pursuant to a Registration Statement, the Company and the Trust shall use
their best efforts to file and have declared effective (if an amendment) as soon
as practicable an amendment or supplement
23
<PAGE>
to the Registration Statement and shall extend the period during which such
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days in the period from and including the date of the giving of
such notice to and including the date when the Company and the Trust shall have
made available to the Holders (x) copies of the supplemented or amended
Prospectus necessary to resume such dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection with any
--------------------------------
Registration Statement, the Company and the Trust shall, jointly and severally,
indemnify and hold harmless each Initial Purchaser, each Holder, each
underwriter who participates in an offering of the Registrable Securities, each
Participating Broker-Dealer, each Person, if any, who controls any of such
parties within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and each of their respective directors, officers, employees and
agents, as follows:
(i) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement (or any amendment thereto), covering
Registrable Securities or Exchange Securities, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) from and against any and all loss, liability, claim, damage and
expense whatsoever, joint or several, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any court or governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the prior written consent of
the Company; and
(iii) from and against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by such
Holder, such Participating Broker-Dealer, or any underwriter (except to the
extent otherwise expressly provided in Section 4(c) hereof)), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or any
24
<PAGE>
claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) of this Section 4(b);
provided, however, that (i) this indemnity does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished in writing to the
Company or the Trust by such Holder, such Participating Broker-Dealer or any
underwriter with respect to such Holder, Participating Broker-Dealer or any
underwriter, as the case may be, expressly for use in the Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) and (ii) the Company and the Trust shall not be liable to
any such Holder, Participating Broker-Dealer, any underwriter or controlling
person, with respect to any untrue statement or alleged untrue statement or
omission or alleged omission in any preliminary Prospectus to the extent that
any such loss, liability, claim, damage or expense of any Holder, Participating
Broker-Dealer, any underwriter or controlling person results from the fact that
such Holder, any underwriter or Participating Broker-Dealer sold Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the final Prospectus as then amended or
supplemented if the Company had previously furnished copies thereof to such
Holder, underwriter or Participating Broker-Dealer and the loss, liability,
claim, damage or expense of such Holder, underwriter, Participating Broker-
Dealer or controlling person results from an untrue statement or omission of a
material fact contained in the preliminary Prospectus which was corrected in the
final Prospectus. Any amounts advanced by the Company or the Trust to an
indemnified party pursuant to this Section 4 as a result of such losses shall be
returned to the Company or the Trust if it shall be finally determined by such a
court in a judgment not subject to appeal or final review that such indemnified
party was not entitled to indemnification by the Company or the Trust.
(c) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Trust, any underwriter and the other selling
Holders and each of their respective directors, officers (including each officer
of the Company and the Trust who signed the Registration Statement), employees
and agents and each Person, if any, who controls the Company, the Trust, any
underwriter or any other selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
loss, liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance
25
<PAGE>
upon and in conformity with written information furnished to the Company or the
Trust by such selling Holder with respect to such Holder expressly for use in
the Registration Statement (or any amendment thereto), or any such Prospectus
(or any amendment or supplement thereto); provided, however, that, in the case
-------- -------
of Shelf Registration Statement, no such Holder shall be liable for any claims
hereunder in excess of the amount of net proceeds received by such Holder from
the sale of Registrable Securities pursuant to such Shelf Registration
Statement.
(d) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it may have
under this Section 4, except to the extent that it is materially prejudiced by
such failure. An indemnifying party may participate at its own expense in the
defense of such action. If an indemnifying party so elects within a reasonable
time after receipt of such notice, an indemnifying party, severally or jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and reasonably acceptable to
the indemnified parties defendant in such action, provided, however, that if (i)
-------- -------
representation of such indemnified party by the same counsel would present a
conflict of interest or (ii) the actual or potential defendants in, or targets
of, any such action include both the indemnified party and the indemnifying
party and any such indemnified party reasonably determines that there may be
legal defenses available to such indemnified party which are different from or
in addition to those available to such indemnifying party, then in the case of
clauses (i) and (ii) of this Section 4(c) such indemnifying party and counsel
for each indemnifying party or parties shall not be entitled to assume such
defense. If an indemnifying party is not entitled to assume the defense of such
action as a result of the proviso to the preceding sentence, counsel for such
indemnifying party and counsel for each indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties. If an
indemnifying party assumes the defense of such action, in accordance with and as
permitted by the provisions of this paragraph, such indemnifying parties shall
not be liable for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to local counsel), separate from its own counsel, for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by
26
<PAGE>
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 4 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional written release in form and substance satisfactory to
the indemnified parties of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(e) Notwithstanding the last sentence of Section 4(c), if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel pursuant to
Section 4(a)(iii) above, such indemnifying party agrees that it shall be liable
for any settlement effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement; provided that an indemnifying party shall not be liable for any such
--------
settlement effected without its consent if such indemnifying party (1)
reimburses such indemnified party in accordance with such request to the extent
it considers reasonable and (2) provides written notice to the indemnified party
substantiating the unpaid balance as unreasonable, in each case prior to the
date of such settlement.
(f) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Trust, and
the Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, the Trust, and the Holders, as incurred; provided 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
that was not guilty of such fraudulent misrepresentation. As between the
Company, the Trust, and the Holders, such parties shall contribute to such
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect the relative fault of the Company and Trust, on the one
hand, and the Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or expense, or
action in respect thereof, as well as any other relevant equitable consider-
27
<PAGE>
ations. The relative fault of the Company and the Trust, on the one hand, and
of the Holders, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Trust, on the one hand, or by or on
behalf of the Holders, on the other, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Trust and the Holders of the
Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 4 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this Section 4, each
affiliate of a Holder, and each director, officer, employee, agent and Person,
if any, who controls a Holder or such affiliate within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Holder, and each director of each of the Company
or the Trust, each officer of each of the Company or the Trust who signed the
Registration Statement, and each Person, if any, who controls each of the
Company and the Trust within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
each of the Company or the Trust.
5. Participation in Underwritten Registrations. No Holder may
-------------------------------------------
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents reasonably required under the terms of such underwriting
arrangements.
6. Selection of Underwriters. The Holders of Registrable
-------------------------
Securities covered by the Shelf Registration Statement who desire to do so may
sell the securities covered by such Shelf Registration in an underwritten
offering. In any such underwritten offering, the underwriter or underwriters
and manager or managers that will administer the offering will be selected by
the Holders of a majority in aggregate principal amount of the Registrable
Securities included in such offering; provided, however, that such underwriters
-------- -------
and managers must be reasonably satisfactory to the Company and the Trust.
7. Miscellaneous.
-------------
(a) Rule 144 and Rule 144A. For so long as the Company or the Trust
----------------------
is subject to the reporting requirements of Section 13 or 15 of the Exchange Act
and any Registrable Securities remain outstanding, the Company and the Trust, as
the case may be, will
28
<PAGE>
their its best efforts to file the reports required to be filed by it under the
Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to be so required
to file such reports, it will, upon the request of any Holder of Registrable
Securities (a) make publicly available such information as is necessary to
permit sales of their securities pursuant to Rule 144 under the Securities Act,
(b) deliver such information to a prospective purchaser as is necessary to
permit sales of their securities pursuant to Rule 144A under the Securities Act
and it will take such further action as any Holder of Registrable Securities may
reasonably request, and (c) take such further action that is reasonable in the
circumstances, in each case, to the extent required from time to time to enable
such Holder to sell its Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such rule may be amended from time to time, (ii)
Rule 144A under the Securities Act, as such rule may be amended from time to
time, or (iii) any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Securities, the Company and the
Trusts will deliver to such Holder a written statement as to whether it has
complied with such requirements.
(b) No Inconsistent Agreements. The Company or the Trust has not
--------------------------
entered into nor will the Company or the Trust on or after the date of this
Agreement enter into any agreement which is inconsistent with the rights granted
to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's or the Trust's other issued and
outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company and the Trust has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided no amendment, modification or
--------
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities. Notwithstanding the foregoing sentence, (i) this Agreement may be
amended, without the consent of any Holder of Registrable Securities, by
written agreement signed by the Company, the Trust and Merrill Lynch, to cure
any ambiguity, correct or supplement any provision of this Agreement that may be
inconsistent with any other provision of this Agreement or to make any other
provisions with
29
<PAGE>
respect to matters or questions arising under this Agreement which shall not be
inconsistent with other provisions of this Agreement, (ii) this Agreement may be
amended, modified or supplemented, and waivers and consents to departures from
the provisions hereof may be given, by written agreement signed by the Company,
the Trust and Merrill Lynch to the extent that any such amendment, modification,
supplement, waiver or consent is, in their reasonable judgment, necessary or
appropriate to comply with applicable law (including any interpretation of the
Staff of the SEC) or any change therein and (iii) to the extent any provision of
this Agreement relates to the Initial Purchasers, such provision may be amended,
modified or supplemented, and waivers or consents to departures from such
provisions may be given, by written agreement signed by Merrill Lynch, the
Company and the Trust.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is, with respect to the
Initial Purchasers, the address set forth in the Purchase Agreement; and (ii) if
to the Company or the Trust, initially at the Company's address set forth in the
Purchase Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchasers, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
-------- -------
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Purchase Agreement or
the Indenture. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to
30
<PAGE>
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Initial Purchasers shall be
-----------------------
a third party beneficiary of the agreements made hereunder between the Company
and the Trust, on the one hand, and the Holders, on the other hand, and shall
have the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE
-------------
IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Securities Held by the Company, the Trust or its Affiliates.
-----------------------------------------------------------
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company, the Trust or its affiliates (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
31
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FIRST USA, INC.
By: /s/ Philip E. Taken
-------------------
Name:
Title:
FIRST USA CAPITAL TRUST I
By: /s/ Peter W. Atwater
--------------------
Name:
Title:
By: /s/ Jack M. Antonini
--------------------
Name:
Title:
<PAGE>
Confirmed and accepted as of
the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
J.P. MORGAN SECURITIES INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
as the Several Initial Purchasers
By: /s/ Patricia Verrilli
---------------------
Name:
Title:
<PAGE>
EXHIBIT 11
FIRST USA, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
Three and Six Months Ended December 31, 1996 and 1995
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------ ------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Primary
- -------
Net income $ 79,132 $ 58,929 $ 143,188 $ 113,824
============== ============== ============== ==============
Weighted average common and common
equivalent shares outstanding
Average common shares outstanding 122,439,385 118,498,574 121,957,937 118,199,336
Common stock equivalents:
Stock options 4,938,644 5,213,466 4,515,807 5,248,458
Mandatory convertible preferred stock 9,582,950 9,582,950 9,582,950 9,582,950
-------------- -------------- -------------- --------------
Weighted average common and common
equivalent shares 136,960,979 133,294,990 136,056,694 133,030,744
============== ============== ============== ==============
Net income per share $ 0.58 $ 0.44 $ 1.05 $ 0.86
============== ============== ============== ==============
Fully diluted
- -------------
Net income $ 79,132 $ 58,929 $ 143,188 $ 113,824
============== ============== ============== ==============
Weighted average common and common
equivalent shares outstanding
Average common shares outstanding 122,439,385 118,498,574 121,957,937 118,199,336
Common stock equivalents:
Stock options 5,421,013 5,212,922 5,246,728 5,251,870
Mandatory convertible preferred stock 9,582,950 9,582,950 9,582,950 9,582,950
-------------- -------------- -------------- --------------
Weighted average common and common
equivalent shares 137,443,348 133,294,446 136,787,615 133,034,156
============== ============== ============== ==============
Net income per share assuming full dilution $ 0.58 $ 0.44 $ 1.05 $ 0.86
============== ============== ============== ==============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 506,299
<SECURITIES> 3,608,418
<RECEIVABLES> 5,195,859
<ALLOWANCES> 122,587
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 162,201
<DEPRECIATION> 48,879
<TOTAL-ASSETS> 10,205,579
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 6,826,807
0
58
<COMMON> 1,231
<OTHER-SE> 1,229,641
<TOTAL-LIABILITY-AND-EQUITY> 10,205,579
<SALES> 0
<TOTAL-REVENUES> 1,034,405
<CGS> 0
<TOTAL-COSTS> 705,201
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 105,377
<INTEREST-EXPENSE> 0<F2>
<INCOME-PRETAX> 223,827
<INCOME-TAX> 80,269
<INCOME-CONTINUING> 143,188
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143,188
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 0<F3>
<FN>
<F1>THE CONSOLIDATED BALANCE SHEET INCLUDED IN THE REGISTRANT'S QUARTERLY REPORT ON
FORM 10-Q IS UNCLASSIFIED.
<F2>INTEREST EXPENSE IS CONSIDERED AN OPERATING EXPENSE FOR THE REGISTRANT AS THE
REGISTRANT'S PRIMARY SOURCE OF INCOME IS INTEREST EARNED ON CREDIT CARD LOANS.
<F3>EPS ON A FULLY DILUTED BASIS IS NOT PRESENTED.
</FN>
</TABLE>
