<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1997
REGISTRATION NO. 333- AND NO. 333- -01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE PMI GROUP, INC. PMI CAPITAL I
(EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF REGISTRANT AS SPECIFIED
IN ITS CHARTER) IN ITS TRUST AGREEMENT)
DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION OF (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) INCORPORATION OR ORGANIZATION)
6719 6719
(PRIMARY STANDARD INDUSTRIAL (PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER)
94-3199675 94-6705190
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NO.)
601 MONTGOMERY STREET C/O THE PMI GROUP, INC.
SAN FRANCISCO, CALIFORNIA 94111 601 MONTGOMERY STREET
(415) 788-7878 SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS, INCLUDING ZIP CODE, AND (415) 788-7878
TELEPHONE NUMBER, INCLUDING (ADDRESS, INCLUDING ZIP CODE, AND
AREA CODE, OF REGISTRANT'S PRINCIPAL TELEPHONE NUMBER, INCLUDING
EXECUTIVE OFFICES) AREA CODE, OF REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES)
--------------
VICTOR J. BACIGALUPI
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
THE PMI GROUP, INC., 601 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 788-7878
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
<TABLE>
<S> <C> <C>
COPIES TO:
GEOFFREY P. LEONARD JOHN SAVVA DWIGHT D. SMITH
ORRICK, HERRINGTON & SUTCLIFFE LLP SULLIVAN & CROMWELL THE PMI GROUP, INC.
400 SANSOME STREET 444 SOUTH FLOWER STREET, 601 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111 12TH FLOOR SAN FRANCISCO, CALIFORNIA 94111
(415) 392-1122 LOS ANGELES, CALIFORNIA 90071 (415) 788-7878
(213) 955-8000
</TABLE>
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================
PROPOSED
MAXIMUM PROPOSED
TITLE OF EACH CLASS OF OFFERING MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE PRICE PER AGGREGATE REGISTRATION
REGISTERED REGISTERED UNIT(2) OFFERING PRICE FEE
==================================================================================================
<S> <C> <C> <C> <C>
8.309% Junior Subordinated
Deferrable Interest
Debentures of The PMI
Group, Inc. (2)................... $100,000,000 $1,000.00 $100,000,000 N/A
- --------------------------------------------------------------------------------------------------
8.309% Capital Securities of
PMI Capital I(3).................. $100,000,000 $1,000.00 $100,000,000 $30,304
- --------------------------------------------------------------------------------------------------
The PMI Group Inc. Guarantee
with respect to Capital
Securities(3)(4)................... N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------
Total.............................. $100,000,000(5) 100% $100,000,000(5) $30,304
==================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures were purchased by
PMI Capital I with the proceeds of the sale of the Capital Securities. No
separate consideration will be received from purchasers of Capital
Securities for the Junior Subordinated Deferrable Interest Debentures.
(3) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of The PMI Group, Inc., the rights of
holders of Junior Subordinated Deferrable Interest Debentures of The PMI
Group, Inc. under the Indenture, the rights of holders of Capital
Securities of PMI Capital I under the Trust Agreement, the rights of
holders of the Capital Securities under the Guarantee of The PMI Group,
Inc. and the Expense Agreement entered into by The PMI Group, Inc., which
taken together fully and unconditionally guarantee the obligations of PMI
Capital I under the Capital Securities.
(4) No separate consideration will be received for The PMI Group, Inc.
Guarantee.
(5) Such amounts represent the aggregate liquidation amount of Capital
Securities to be issued and exchanged hereunder and the principal amount
of Junior Subordinated Deferrable Interest Debentures that may be
distributed upon liquidation of PMI Capital I.
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE OR UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 20, 1997
PROSPECTUS
[LOGO]
$100,000,000
PMI CAPITAL I
OFFER TO EXCHANGE ITS 8.309% CAPITAL SECURITIES, SERIES A
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY
AND ALL OF ITS OUTSTANDING 8.309% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT OF $1,000 PER CAPITAL SECURITY)
GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
THE PMI GROUP, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
PMI Capital I, a statutory business trust created under the laws of the State
of Delaware (the "Issuer Trust"), hereby offers, upon the terms and subject to
the conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange up to $100,000,000 aggregate Liquidation Amount (as defined herein) of
its 8.309% Capital Securities, Series A (Liquidation Amount $1,000 per Capital
Security) (the "New Capital Securities"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement (as defined herein) of which this Prospectus constitutes
a part, for a like Liquidation Amount of its outstanding 8.309% Capital
Securities, Series A (Liquidation Amount $1,000 per Capital Security) (the "Old
Capital Securities"), of which $100,000,000 aggregate Liquidation Amount is
outstanding. Pursuant to the Exchange Offer, The PMI Group, Inc., a Delaware
corporation (the "Company"), is also exchanging (i) its guarantee with respect
to the payment of Distributions (as defined herein) and other payments on
liquidation or redemption of the Old Capital Securities (the "Old Guarantee")
for a like guarantee with respect to the New Capital Securities (the "New
Guarantee"), and (ii) all of its outstanding 8.309% Junior Subordinated
Deferrable Interest Debentures, Series A (the "Old Junior Subordinated
Debentures"), of which $103,093,000 aggregate principal amount is outstanding,
for a like aggregate principal amount of its 8.309% Junior Subordinated
Deferrable Interest Debentures, Series A (the "New Junior Subordinated
Debentures"), which New Guarantee and New Junior Subordinated Debentures also
have been registered under the Securities Act. The Old Capital Securities, the
Old Guarantee and the Old Junior Subordinated Debentures are collectively
referred to herein as the "Old Securities" and the New Capital Securities, the
New Guarantee and the New Junior Subordinated Debentures are collectively
referred to herein as the "New Securities."
The terms of the New Securities are identical in all material respects to the
respective terms of the Old Securities, except that (i) the New Securities have
been registered under the Securities Act and therefore will not be subject to
certain restrictions on transfer applicable to the Old Securities, (ii) the New
Capital Securities will not provide for any increase in the Distribution rate
thereon, and (iii) the New Junior Subordinated Debentures will not provide for
any increase in the interest rate thereon. See "Description of New Securities"
and "Description of Old Securities." The New Capital Securities are being
offered for exchange in order to satisfy certain obligations of the Company and
the Issuer Trust under the Exchange and Registration Rights Agreement, dated as
of February 4, 1997 (the "Registration Rights Agreement"), among the Company,
the Issuer Trust and
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR CERTAIN INFORMATION RELEVANT TO
AN INVESTMENT IN THE NEW CAPITAL SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT OF DISTRIBUTIONS ON THE NEW
CAPITAL SECURITIES MAY BE DEFERRED AND CERTAIN RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE>
(cover page continued)
the Initial Purchaser (as defined herein) of the Old Capital Securities. In
the event that the Exchange Offer is consummated, any Old Capital Securities
which remain outstanding after consummation of the Exchange Offer and the New
Capital Securities issued in the Exchange Offer will vote together as a single
class for purposes of determining whether holders of the requisite percentage
in outstanding Liquidation Amount thereof have taken certain actions or
exercised certain rights under the Trust Agreement (as defined herein).
The New Capital Securities offered hereby represent beneficial interests in
the Issuer Trust. The Company is the owner of all of the beneficial interests
represented by common securities of the Issuer Trust (the "Common Securities"
and, collectively with the Capital Securities (as defined herein), the "Trust
Securities"). The Issuer Trust exists for the sole purpose of issuing the
Trust Securities and investing the proceeds thereof in 8.309% Junior
Subordinated Deferrable Interest Debentures, Series A (the "Junior
Subordinated Debentures"), issued by the Company. The Junior Subordinated
Debentures will mature on February 1, 2027 (the "Stated Maturity"). The
Capital Securities will have a preference under certain circumstances with
respect to cash distributions and amounts payable on liquidation, redemption
or otherwise over the Common Securities. See "Description of New Securities--
Description of Capital Securities--Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Junior Subordinated Indenture
relating to the Junior Subordinated Debentures, as amended and supplemented
from time to time, between the Company and The Bank of New York, as trustee
(the "Debenture Trustee"), (ii) the "Trust Agreement" means the Amended and
Restated Trust Agreement relating to the Issuer Trust among the Company, as
Depositor, The Bank of New York, as Property Trustee (the "Property Trustee"),
The Bank of New York (Delaware), as Delaware Trustee (the "Delaware Trustee")
(the Property Trustee and Delaware Trustee collectively, the "Issuer
Trustees"), and the holders from time to time of the undivided beneficial
interests in the assets of the Issuer Trust, (iii) the "Guarantee" means the
Guarantee Agreement between the Company and The Bank of New York, as trustee
(the "Guarantee Trustee"), providing a guarantee, on the terms and conditions
described herein, for the benefit of holders of the Capital Securities, and
(iv) the "Expense Agreement" means the Expense Agreement between the Company
and the Issuer Trust. In addition, as the context may require, unless
expressly stated otherwise, (i) the "Capital Securities" means the Old Capital
Securities and the New Capital Securities, (ii) the "Junior Subordinated
Debentures" means the Old Junior Subordinated Debentures and the New Junior
Subordinated Debentures, and (iii) the "Guarantee" means the Old Guarantee and
the New Guarantee.
Except as provided below, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian
for and registered in the name of a nominee of The Depository Trust Company
("DTC"). Beneficial interests in such Capital Securities will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. Beneficial interests in such Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity
in such interests will therefore settle in immediately available funds. The
Capital Securities will be issued, and may be transferred only in blocks
having a Liquidation Amount of not less than $100,000 (100 Capital
Securities). See "Description of New Securities--Description of Capital
Securities--Book-Entry Delivery and Form."
Holders of the Capital Securities will be entitled to receive preferential
cumulative cash distributions accumulating from the date of original issuance
and payable semi-annually in arrears on February 1 and August 1 of each year,
commencing August 1, 1997, at the annual rate of 8.309% of the Liquidation
Amount of $1,000 per Capital Security ("Distributions"). The Company has the
right to defer payment of interest on the Junior Subordinated Debentures at
any time or from time to time for a period not exceeding 10 consecutive semi-
annual periods with respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any
such Extension Period and the payment of all amounts then due, the Company may
elect to begin a new Extension Period subject to the requirements set forth
herein. If interest payments on the Junior Subordinated Debentures are so
deferred, Distributions on the Capital Securities will also be deferred and
the Company will not be permitted, subject to certain exceptions described
herein, to declare or pay any cash distributions with respect to
2
<PAGE>
(cover page continued)
the Company's capital stock or debt securities of the Company that rank pari
passu in all respects with or junior to the Junior Subordinated Debentures.
During an Extension Period, interest on the Junior Subordinated Debentures
will continue to accrue (and the amount of Distributions to which holders of
the Capital Securities are entitled will accumulate) at the rate of 8.309% per
annum, compounded semi-annually, and holders of Capital Securities will be
required to recognize interest income for United States federal income tax
purposes. See "Description of New Securities--Description of Junior
Subordinated Debentures--Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement (each as
defined herein), taken together, fully, irrevocably and unconditionally
guaranteed all of the Issuer Trust's obligations under the Capital Securities.
See "Relationship Among the Capital Securities, the Junior Subordinated
Debentures and the Guarantee--Full and Unconditional Guarantee." The Guarantee
of the Company guarantees the payment of Distributions and payments on
liquidation or redemption of the Capital Securities, but only in each case to
the extent of funds held by the Issuer Trust, as described herein (the
"Guarantee"). See "Description of New Securities--Description of Guarantee."
If the Company does not make interest payments on the Junior Subordinated
Debentures held by the Issuer Trust, the Issuer Trust will have insufficient
funds to pay Distributions on the Capital Securities. The Guarantee does not
cover payment of Distributions when the Issuer Trust does not have sufficient
funds to pay such Distributions. In such event, a holder of Capital Securities
may institute a legal proceeding directly against the Company to enforce
payment of such Distributions to such holder. See "Description of New
Securities--Description of Junior Subordinated Debentures--Enforcement of
Certain Rights by Holders of Capital Securities." The Company is a holding
company which conducts its operations through its subsidiaries. The
obligations of the Company under the Guarantee and the Junior Subordinated
Debentures are subordinate and junior in right of payment to all Senior
Indebtedness (as defined in "Description of New Securities--Description of
Junior Subordinated Debentures--Subordination") of the Company and are also
effectively subordinate to all existing and future liabilities of the
Company's subsidiaries. The Company will be substantially dependent on
dividends from its subsidiaries to meet its obligations under the Junior
Subordinated Debentures and the Guarantee. See "The PMI Group, Inc."
At March 31, 1997, the aggregate principal amount of Senior Indebtedness and
debt of the Company's subsidiaries was approximately $99.4 million.
The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Junior Subordinated Debentures at Stated Maturity
or their earlier redemption. The Junior Subordinated Debentures are redeemable
prior to their Stated Maturity at the option of the Company (i) on or after
February 1, 2007, in whole at any time or in part from time to time, or (ii)
in whole (but not in part) prior to February 1, 2007 and within 90 days
following the occurrence of a Tax Event (as defined herein), in each case at a
redemption price set forth herein plus the accrued and unpaid interest on the
Junior Subordinated Debentures so redeemed to the date fixed for redemption.
See "Description of New Securities--Description of Junior Subordinated
Debentures--Redemption."
The Company, as the holder of the outstanding Common Securities, has the
right at any time to terminate the Issuer Trust and, after satisfaction of the
liabilities of creditors of the Issuer Trust as provided by applicable law,
cause the Junior Subordinated Debentures to be distributed to the holders of
the Capital Securities and Common Securities in liquidation of the Issuer
Trust, subject to the Property Trustee having received an opinion of counsel
to the effect that such distribution will not be a taxable event to holders of
Capital Securities. See "Description of New Securities--Description of Capital
Securities--Liquidation Distribution Upon Termination."
In the event of the termination of the Issuer Trust, after satisfaction of
liabilities to creditors of the Issuer Trust as required by applicable law,
the holders of the Capital Securities will be entitled to receive a
Liquidation
3
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(cover page continued)
Amount of $1,000 per Capital Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in Junior Subordinated Debentures, subject to
certain exceptions. See "Description of New Securities--Description of Capital
Securities--Liquidation Distribution Upon Termination."
The Issuer Trust is making the Exchange Offer of the New Capital Securities
in reliance on the position of the staff of the Division of Corporation
Finance of the Securities and Exchange Commission (the "Commission") as set
forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Company nor the Issuer Trust has sought its
own interpretive letter, and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Company and the Issuer Trust believe that
New Capital Securities issued pursuant to this Exchange Offer in exchange for
Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of such New Capital Securities. However, any holder of Old Capital
Securities who is an "affiliate" of the Company or the Issuer Trust within the
meaning of Rule 405 under the Securities Act (an "Affiliate") or who intends
to participate in the Exchange Offer for the purpose of distributing New
Capital Securities, or any broker-dealer who purchased Old Capital Securities
from the Issuer Trust to resell pursuant to Rule 144A under the Securities Act
("Rule 144A") or any other available exemption under the Securities Act, (i)
will not be able to rely on the interpretations of the staff of the Division
of Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (ii) will not be permitted or entitled to tender such
Old Capital Securities in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer (a "Participating Broker-
Dealer") holds Old Capital Securities, then such Participating Broker-Dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
such New Capital Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations.
Each Participating Broker-Dealer that receives New Capital Securities for its
own account pursuant to the Exchange Offer will be deemed to have acknowledged
by execution of the Letter of Transmittal or delivery of an Agent's Message
(as defined herein) that it acquired the Old Capital Securities for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Capital
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Company and the Issuer Trust believe that Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to the New Capital
Securities received upon exchange of such Old Capital Securities (other than
Old Capital Securities which represent an unsold allotment from the original
sale of the Old Capital Securities) with a prospectus meeting the requirements
of the Securities Act, which may be the prospectus prepared for an
4
<PAGE>
(cover page continued)
exchange offer so long as it contains a description of the plan of
distribution with respect to the resale of such New Capital Securities.
Accordingly, this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities where such Old Capital
Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the Company
and the Issuer Trust have agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a period ending
90 days after the Expiration Date (as defined herein) or, if earlier, when all
such New Capital Securities have been disposed of by such Participating
Broker-Dealer. See "Plan of Distribution." Any person, including any
Participating Broker-Dealer, who is an Affiliate may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer--Resales of New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message, that
upon receipt of notice from the Company or the Issuer Trust of the occurrence
of any event or the discovery of any fact which makes any statement contained
or incorporated by reference in this Prospectus untrue in any material respect
or which causes this Prospectus to omit to state a material fact necessary in
order to make the statements contained or incorporated by reference herein, in
the light of the circumstances under which they were made, not misleading, or
of the occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of New
Securities pursuant to this Prospectus until the Company or the Issuer Trust
has amended or supplemented this Prospectus to correct such misstatement or
omission and has furnished copies of the amended or supplemented Prospectus to
such Participating Broker-Dealer, or the Company or the Issuer Trust has given
notice that the sale of the New Securities may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital
Securities will be a new issue of securities for which there currently is no
market. There can be no assurance as to the development or liquidity of any
market for the New Capital Securities. The Company currently does not intend
to apply for listing of the New Capital Securities on any securities exchange
or for quotation through the National Association of Securities Dealers
Automated Quotation System.
Any Old Capital Securities not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to all the same rights and will
be subject to the same limitations applicable thereto under the Trust
Agreement (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Old Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Company nor the Issuer
Trust will have any further obligation to such holders (other than under
certain limited circumstances) to provide for registration under the
Securities Act of the Old Capital Securities held by them. To the extent that
Old Capital Securities are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Old Capital
Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
5
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(cover page continued)
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, , 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is
extended by the Company and the Issuer Trust (in which case the term
"Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended). Tenders of Old Capital Securities may be withdrawn at any
time on or prior to the Expiration Date. The Exchange Offer is not conditioned
upon any minimum Liquidation Amount of Old Capital Securities being tendered
for exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Company or the Issuer Trust and to the
terms and provisions of the Registration Rights Agreement. Old Capital
Securities may be tendered in whole or in part having a Liquidation Amount of
not less than $100,000 (100 Capital Securities) and or any integral multiple
of $1,000 Liquidation Amount (1 Capital Security) in excess thereof. The
Company has agreed to pay all expenses of the Exchange Offer, except as
otherwise specified herein. See "The Exchange Offer--Fees and Expenses." Each
New Capital Security will pay cumulative Distributions from the most recent
Distribution Date (as defined herein) on the Old Capital Securities
surrendered in exchange for such New Capital Securities or, if no
Distributions have been paid on such Old Capital Securities, from February 4,
1997. Holders of the Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated Distributions on such Old
Capital Securities for any period from and after the last Distribution Date on
such Old Capital Securities prior to the original issue date of the New
Capital Securities or, if no such Distributions have been paid, will not
receive any accumulated Distributions on such Old Capital Securities, and will
be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and after such Distribution Date or, if no
such interest has been paid or duly provided for, from and after February 4,
1997. This Prospectus, together with the Letter of Transmittal, is being sent
to all registered holders of Old Capital Securities as of , 1997.
Neither the Company nor the Issuer Trust will receive any proceeds from the
issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
INVESTOR RELATIONS, THE PMI GROUP, INC., 601 MONTGOMERY STREET, SAN FRANCISCO,
CALIFORNIA 94111, TELEPHONE NUMBER (800) 876-4764. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1997.
THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND MAY BE TRANSFERRED, ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. ANY TRANSFER,
SALE OR OTHER DISPOSITION OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED
TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
Prospective purchasers must carefully consider the restrictions on purchase
set forth in "Notice to Investors" and "Certain ERISA Considerations."
6
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----------------
FOR NORTH CAROLINA RESIDENTS ONLY
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT
APPROVED OR DISAPPROVED THIS OFFERING, NOR HAS THE COMMISSIONER PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
----------------
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A
"PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF
ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON
INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL
SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR
84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR
HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF
THAT IT EITHER (A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING
SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR
HOLDING. SEE "NOTICE TO INVESTORS" AND "CERTAIN ERISA CONSIDERATIONS."
----------------
NOTICE TO INVESTORS
Each purchaser of Capital Securities will be deemed to have represented and
agreed as follows:
The purchaser (A) is not itself, and is not acquiring Capital Securities
with "plan assets" of, an employee benefit or other plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code")
(each, a "Plan"), or an entity whose underlying assets include "plan assets"
by reason of any Plan's investment in the entity (a "Plan Asset Entity") or
(B)(1) is itself, or is acquiring Capital Securities with the assets of, an
"investment fund" (within the meaning of Part V(b) of PTCE 84-14) managed by a
"qualified professional asset manager" (within the meaning of Part V(a) of
PTCE 84-14) which has made or properly authorized the decision for such fund
to purchase Capital Securities, under circumstances such that PTCE 84-14 is
applicable to the purchase and holding of such Capital Securities, (2) is
itself, or is acquiring Capital Securities with the assets of, a Plan managed
by an "in-house asset manager" (within the meaning of Part IV(a) of PTCE 96-
23) which has made or properly authorized the decision for such Plan to
purchase Capital Securities, under circumstances such that PTCE 96-23 is
applicable to the purchase and holding of such Capital Securities, (3) is an
insurance company pooled separate account purchasing Capital Securities
pursuant to Part I of PTCE 90-1 or a bank collective investment fund
purchasing Capital Securities pursuant to Part I of PTCE 91-38, and, in either
case, no Plan owns more than 10% of the assets of such account or collective
fund (when aggregated with other Plans of the same employer (or its
affiliates) or employee organization), (4) is an insurance company using the
assets of its general account to purchase the Capital Securities pursuant to
Part I of PTCE 95-60, in which case the reserves and liabilities for the
general account contracts held by or on behalf of any Plan, together with any
other Plans maintained by the same employer (or its affiliates) or employee
organization, do not exceed 10% of the total reserves and liabilities of the
insurance company general account (exclusive of separate account liabilities),
plus surplus as set forth in the National Association of Insurance
Commissioners Annual Statement filed with the state of domicile of the
insurer, or (5) is itself, or is acquiring Capital Securities with the assets
of, a Plan that is otherwise eligible for exemptive relief with respect to its
purchase and holding of the Capital Securities. The Capital Securities will
bear legends reflecting the above restrictions.
7
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 9
Incorporation of Certain Documents by Reference........................... 9
Summary................................................................... 10
Risk Factors.............................................................. 14
The PMI Group, Inc........................................................ 19
PMI Capital I............................................................. 20
Use of Proceeds........................................................... 20
Capitalization............................................................ 21
Accounting Treatment...................................................... 21
Ratio of Earnings to Fixed Charges........................................ 22
The Exchange Offer........................................................ 22
Description of New Securities............................................. 31
Description of Old Securities............................................. 55
Relationship Among The Capital Securities, The Junior Subordinated
Debentures and The Guarantee............................................. 55
Certain Federal Income Tax Consequences................................... 57
Certain ERISA Considerations.............................................. 60
Plan of Distribution...................................................... 61
Validity of New Capital Securities........................................ 62
Experts................................................................... 62
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE ISSUER TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD
BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY OR THE ISSUER TRUST
SINCE THE DATE HEREOF.
8
<PAGE>
AVAILABLE INFORMATION
The Company and the Issuer Trust have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-4 (of which
this Prospectus is a part) (together with all amendments thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements contained
in this Prospectus as to the contents of any contract or other document are
not necessarily complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference and the exhibits and schedules thereto. For further information
regarding the Company and the securities offered hereby, reference is hereby
made to the Registration Statement and the exhibits and schedules thereto
which may be obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement, the exhibits and schedules forming a
part thereof and the reports, proxy statements and other information filed by
the Company with the Commission in accordance with the Exchange Act can be
inspected and copied at the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington D.C. 20549, and at the following regional
offices of the Commission: Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a World Wide Web site that contains reports,
proxy and information statements and other information that are filed through
the Commission's Electronic Data Gathering, Analysis and Retrieval System.
This Web site can be accessed at http://www.sec.gov. In addition, the
Company's common stock is listed on the New York Stock Exchange and similar
information concerning the Company can be inspected and copied at the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
No separate financial statements of the Issuer Trust have been included
herein. The Company and the Issuer Trust do not consider that such financial
statements would be material to holders of the Capital Securities because the
Issuer Trust is a newly formed special purpose entity, has no operating
history or independent operations and is not engaged in and does not propose
to engage in any activity other than holding as trust assets the Junior
Subordinated Debentures of the Company and issuing the Trust Securities. The
Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, fully and unconditionally guaranteed all of the Issuer Trust's
obligations under the Capital Securities. See "PMI Capital I" and "Description
of New Securities." In addition, the Company does not expect that the Issuer
Trust will be filing reports under the Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Company with the Commission are
incorporated by reference in this Prospectus:
(a) Annual Report on Form 10-K for the year ended December 31, 1996;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
and
(c) Current Report on Form 8-K dated February 21, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the New Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
respective dates of filing of
9
<PAGE>
such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or so superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of Securities, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any or all of the documents
that have been incorporated by reference in this Prospectus (not including
exhibits to such documents unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to The PMI
Group, Inc., 601 Montgomery Street, San Francisco, CA 94111, Attention:
Investor Relations; telephone: (800) 876-4764.
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED HEREIN AND
SHOULD BE READ IN CONJUNCTION WITH SUCH INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS AND IS SUBJECT TO, AND QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO, SUCH INFORMATION. CAPITALIZED TERMS USED HEREIN HAVE THE RESPECTIVE
MEANINGS ASCRIBED TO THEM ELSEWHERE IN THIS PROSPECTUS.
EXCHANGE OFFER
Up to $100,000,000 aggregate Liquidation Amount of New Capital Securities
are being offered in exchange for a like aggregate Liquidation Amount of Old
Capital Securities. Old Capital Securities may be tendered for exchange in
whole or in part in a Liquidation Amount of $100,000 (100 Capital Securities)
or any integral multiple of $1,000 in excess thereof, provided that if any Old
Capital Securities are tendered in exchange for part, the untendered
Liquidation Amount must be $100,000 or any integral multiple of $1,000 in
excess thereof. The Company and the Issuer Trust are making the Exchange Offer
in order to satisfy their obligations under the Registration Rights Agreement
relating to the Old Capital Securities. For a description of the procedures
for tendering Old Capital Securities, see "The Exchange Offer--Procedures for
Tendering Old Capital Securities."
EXPIRATION DATE. The Expiration Date of the Exchange Offer will be 5:00
p.m., New York City time, on , 1997, unless the Exchange Offer is
extended by the Company and the Issuer Trust. See "The Exchange Offer--
Expiration Date; Extensions; Amendments."
CONDITIONS TO EXCHANGE OFFER. The Exchange Offer is subject to certain
conditions, which may be waived by the Company and the Issuer Trust in their
sole discretion. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered. See "The Exchange
Offer--Conditions to Exchange Offer." The Company and the Issuer Trust reserve
the right in their sole discretion, subject to applicable law, at any time and
from time to time, (i) to delay the acceptance of the Old Capital Securities
for exchange, (ii) to terminate the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right of holders of Old Capital
Securities to withdraw their tendered Old Capital Securities, or (iv) to waive
any condition or otherwise amend the terms of the Exchange Offer in any
respect. See "The Exchange Offer--Expiration Date; Extensions; Amendments."
WITHDRAWAL RIGHTS. Tenders of Old Capital Securities may be withdrawn at any
time on or prior to the Expiration Date by delivering a written notice of such
withdrawal to The Bank of New York, as Exchange Agent (the "Exchange Agent"),
in conformity with certain procedures set forth below under "The Exchange
Offer--Withdrawal Rights."
10
<PAGE>
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES. Tendering holders of Old
Capital Securities must complete and sign a Letter of Transmittal in
accordance with the instructions contained therein and forward the same by
mail, facsimile or hand delivery, together with any other required documents,
to the Exchange Agent, either with the Old Capital Securities to be tendered
or in compliance with the specified procedures for guaranteed delivery of Old
Capital Securities. Certain brokers, dealers, commercial banks, trust
companies and other nominees may also effect tenders by book-entry transfer,
including an Agent's Message in lieu of the Letter of Transmittal. Holders of
Old Capital Securities registered in the name of a broker, dealer, commercial
bank, trust company or other nominee are urged to contact such person promptly
if they wish to tender Old Capital Securities pursuant to the Exchange Offer.
See "The Exchange Offer--Procedures for Tendering Old Capital Securities."
Letters of Transmittal and certificates representing Old Capital Securities
should not be sent to the Company or the Issuer Trust. Such documents should
only be sent to the Exchange Agent. Questions regarding how to tender and
requests for information should be directed to the Exchange Agent. See "The
Exchange Offer--Exchange Agent."
RESALES OF NEW CAPITAL SECURITIES. The Company and the Issuer Trust are
making the Exchange Offer in reliance on the position of the staff of the
Division of Corporation Finance of the Commission as set forth in certain
interpretive letters addressed to third parties in other transactions.
However, neither the Company nor the Issuer Trust has sought its own
interpretive letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Company and the Issuer Trust believe that
New Capital Securities issued pursuant to this Exchange Offer in exchange for
Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of such New Capital Securities. However, any holder of Old Capital
Securities who is an Affiliate or who intends to participate in the Exchange
Offer for the purpose of distributing the New Capital Securities, or any
broker-dealer who purchased the Old Capital Securities from the Issuer Trust
to resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (i) will not be able to rely on the interpretations of the
staff of the Division of Corporation Finance of the Commission set forth in
the above-mentioned interpretive letters, (ii) will not be permitted or
entitled to tender such Old Capital Securities in the Exchange Offer, and
(iii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any sale or other transfer of such
Old Capital Securities unless such sale is made pursuant to an exemption from
such requirements. In addition, as described below, any Participating Broker-
Dealer must deliver a prospectus meeting the requirements of the Securities
Act in connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities that wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
such New Capital Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations.
Each Participating Broker-Dealer will be deemed to have acknowledged by
execution of the Letter of Transmittal or delivery of an Agent's Message that
it acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Company
11
<PAGE>
and the Issuer Trust believe that Participating Broker-Dealers may fulfill
their prospectus delivery requirements with respect to the New Capital
Securities received upon exchange of such Old Capital Securities (other than
Old Capital Securities which represent an unsold allotment from the original
sale of the Old Capital Securities) with a prospectus meeting the requirements
of the Securities Act, which may be the prospectus prepared for an exchange
offer so long as it contains a description of the plan of distribution with
respect to the resale of such New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of New
Capital Securities received in exchange for Old Capital Securities where such
Old Capital Securities were acquired by such Participating Broker-Dealer for
its own account as a result of market-making or other trading activities.
Subject to certain provisions set forth in the Registration Rights Agreement
and to the limitations described below under "The Exchange Offer--Resale of
New Capital Securities," the Company and the Issuer Trust have agreed that
this Prospectus, as it may be amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in connection with resales of such
New Capital Securities for a period ending 90 days after the Expiration Date
or, if earlier, when all such New Capital Securities have been disposed of by
such Participating Broker-Dealer. See "Plan of Distribution." Any person,
including any Participating Broker-Dealer, who is an Affiliate may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer--Resales of New Capital Securities."
EXCHANGE AGENT. The Exchange Agent is The Bank of New York. The address and
telephone and facsimile numbers of the Exchange Agent are set forth under "The
Exchange Offer--Exchange Agent" and in the Letter of Transmittal.
USE OF PROCEEDS
Neither the Company nor the Issuer Trust will receive any proceeds from the
issuance of the New Capital Securities offered hereby. See "Use of Proceeds."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS; CERTAIN ERISA CONSIDERATIONS
Holders of Old Capital Securities should review the information set forth
under "Certain Federal Income Tax Considerations" and "Certain ERISA
Considerations" prior to tendering Old Capital Securities in the Exchange
Offer.
NEW SECURITIES
GENERAL. The Capital Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust and will have a preference under
certain circumstances with respect to Distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. See
"Description of New Securities--Description of Capital Securities;
Subordination of Common Securities." The sole assets of the Issuer Trust are
the Junior Subordinated Debentures, and payments under the Junior Subordinated
Debentures will be the sole revenue of the Issuer Trust. The Junior
Subordinated Debentures are unsecured subordinated debt securities issued
under the Indenture between the Company and The Bank of New York, as trustee.
SECURITIES OFFERED. The Issuer Trust is offering up to $100,000,000
aggregate Liquidation Amount of the Issuer Trust's New Capital Securities,
which have been registered under the Securities Act (Liquidation Amount $1,000
per Capital Security). The New Capital Securities will be issued, and the Old
Capital Securities were issued, under the Trust Agreement. The New Capital
Securities and any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer will constitute a single series of Capital
Securities under the Trust Agreement and, accordingly, will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain
actions or
12
<PAGE>
exercised certain rights under the Trust Agreement. See "Description of New
Securities--Description of Capital Securities; General." The terms of the New
Capital Securities are identical in all material respects to the terms of the
Old Capital Securities, except that the New Capital Securities have been
registered under the Securities Act and therefore are not subject to certain
restrictions on transfer applicable to the Old Capital Securities and will not
provide for any increase in the Distribution rate thereon. See "The Exchange
Offer--Purpose of Exchange Offer," "Description of New Securities" and
"Description of Old Securities."
DISTRIBUTIONS. Holders of the Capital Securities will be entitled to receive
as a preference cumulative Distributions accruing from the date of original
issuance of the Old Capital Securities and payable semi-annually in arrears on
February 1 and August 1 of each year (the "Distribution Dates"), commencing
August 1, 1997, at the rate of 8.309% per annum, to the persons in whose names
the Capital Securities are registered at the close of business on the relevant
record dates. See "Description of New Securities--Description of Capital
Securities; Distributions."
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date with
respect to such Old Capital Securities prior to the original issue date of the
New Capital Securities or, if no such Distributions have been made, will not
receive any accumulated Distributions on such Old Capital Securities, and will
be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and after such Distribution Date or, if no
such Distributions have been made, from and after February 4, 1997.
RANKING. The Capital Securities will rank pari passu, and payments thereon
will be made pro rata, with the Common Securities except as described under
"Description of Capital Securities--Subordination of Common Securities." The
Junior Subordinated Debentures will rank pari passu with all other junior
subordinated debentures to be issued by the Company with substantially similar
subordination terms and which may be issued and sold (if at all) to other
trusts to be established by the Company (if any) ("Other Trusts"), and will be
unsecured and subordinate and junior in right of payment to the extent and in
the manner set forth in the Indenture to all Senior Indebtedness. See
"Description of New Securities--Description of Junior Subordinated
Debentures--Subordination." The Guarantee will rank pari passu with all other
guarantees (if any), to be issued by the Company with respect to capital
securities (if any), to be issued by Other Trusts and will constitute an
unsecured obligation of the Company and will rank subordinate and junior in
right of payment to the extent and in the manner set forth in the Guarantee
Agreement to all Senior Indebtedness of the Company. See "Description of New
Securities--Description of Guarantee."
EXTENSION PERIODS. Distributions on Capital Securities may be deferred for
the duration of any Extension Period selected by the Company with respect to
the payment of interest on the Junior Subordinated Debentures. No Extension
Period will exceed 10 consecutive semi-annual periods or extend beyond the
Stated Maturity. See "Description of New Securities--Description of Junior
Subordinated Debentures--Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount." So long as no Debenture Event of Default (as defined herein) has
occurred and is continuing, the Company has the right to defer payments of
interest on the Junior Subordinated Debentures at any time or from time to
time by extending the interest payment period thereon for Extension Periods of
up to 10 consecutive semi-annual periods with respect to each deferral period;
provided, however, that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures.
REDEMPTION. The Capital Securities are subject to mandatory redemption (i)
at the Stated Maturity upon repayment of the Junior Subordinated Debentures,
(ii) in whole but not in part prior to February 1, 2007 and contemporaneously
with the optional prepayment by the Company of the Junior Subordinated
Debentures upon the occurrence and continuation of a Tax Event and (iii) in
whole or in part at any time on or after February 1, 2007 contemporaneously
with the optional prepayment by the Company of the Junior Subordinated
Debentures, in each case at the applicable Redemption Price. See "Description
of New Securities--Description of Capital Securities--Redemption."
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<PAGE>
TRANSFER RESTRICTIONS. The Capital Securities will be issued, and may be
transferred, only in blocks having a Liquidation Amount of not less than
$100,000 (100 Capital Securities). Any transfer, sale or other disposition of
Capital Securities resulting in a block having a Liquidation Amount of less
than $100,000 shall be deemed to be void and of no legal effect whatsoever.
ERISA CONSIDERATIONS. Prospective purchasers must carefully consider the
restrictions on purchase set forth under "Notice to Investors" and "Certain
ERISA Considerations."
ABSENCE OF MARKET FOR OLD AND NEW CAPITAL SECURITIES. The New Capital
Securities will be a new issue of securities for which there currently is no
market. Goldman Sachs & Co., the initial purchaser of the Old Capital
Securities (the "Initial Purchaser"), informed the Company and the Issuer
Trust in connection with the offering of the Old Capital Securities that the
Initial Purchaser intended to make a market in the Old Capital Securities.
However, the Initial Purchaser is not obligated to make a market in the Old
Capital Securities or the New Capital Securities, and any such market making
activity with respect to the Old Capital Securities or the New Capital
Securities may be discontinued at any time without notice. Accordingly, no
assurance can be given that an active public or other market will develop for
the Old Capital Securities or the New Capital Securities or as to the
liquidity of or the trading market for the New Capital Securities or the Old
Capital Securities. The Company and the Issuer Trust do not intend to apply
for listing the Old Capital Securities or the New Capital Securities on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System.
RISK FACTORS
Holders of the Old Capital Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters prior to tendering Old Capital Securities in
the Exchange Offer.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Company under the Guarantee issued by the Company for
the benefit of the holders of Capital Securities and under the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Senior Indebtedness of the Company. At March 31, 1997, the aggregate
outstanding Senior Indebtedness of the Company was approximately $99.4
million. Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary, including PMI
Mortgage Insurance Co. ("PMI"), upon such subsidiary's liquidation or
reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution), is subject to the
prior claims of creditors of that subsidiary, except to the extent that the
Company may itself be recognized as a creditor of that subsidiary. In
addition, there are also various limitations on the extent to which the
Company's subsidiaries may pay dividends to the Company. See "The PMI Group,
Inc." Accordingly, the Junior Subordinated Debentures and the Guarantee will
be effectively subordinated to all existing and future liabilities of the
Company's subsidiaries, and holders of Junior Subordinated Debentures and the
Guarantee should look only to the assets of the Company for payments on the
Junior Subordinated Debentures and the Guarantee. See "The PMI Group, Inc."
None of the Indenture, the Guarantee or the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior
Indebtedness, that may be incurred by the Company. See "Description of New
Securities--Description of Guarantee--Status of the Guarantee" and
"Description of Junior Subordinated Debentures--Subordination."
The ability of the Issuer Trust to pay amounts due on the Capital Securities
is solely dependent upon the Company making payments on the Junior
Subordinated Debentures as and when required.
14
<PAGE>
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Event of Default under the Indenture (a "Debenture Event of
Default") has occurred or is continuing, the Company has the right under the
Indenture to defer the payment of interest on the Junior Subordinated
Debentures at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period,
provided that no Extension Period may extend beyond the Stated Maturity of the
Junior Subordinated Debentures. As a consequence of any such deferral, semi-
annual Distributions on the Capital Securities by the Issuer Trust will be
deferred (and the amount of Distributions to which holders of the Capital
Securities are entitled will accumulate additional Distributions thereon at
the rate of 8.309% per annum, compounded semi-annually from the relevant
payment date for such Distributions) during any such Extension Period. During
any such Extension Period, the Company may not, and may not permit any
subsidiary of the Company to, (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 or (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company (including other junior subordinated
debentures) that rank pari passu in all respects with or junior in interest to
the Junior Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) purchases of common stock related to the issuance of common
stock or rights under any of the Company's or its subsidiaries' benefit plans
for their directors, officers or employees and (e) purchases of fractional
interests of common stock in connection with a stock split, stock dividend or
a similar reclassification or combination). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period may exceed 10 consecutive semi-annual
periods or extend beyond the Stated Maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of
all interest then accrued and unpaid (together with interest thereon at the
annual rate of 8.309%, compounded semi-annually, to the extent permitted by
applicable law), the Company may elect to begin a new Extension Period subject
to the above requirements. There is no limitation on the number of times that
the Company may elect to begin an Extension Period. See "Description of New
Securities--Description of Capital Securities--Distributions" and "Description
of New Securities--Description of Junior Subordinated Debentures--Option to
Extend Interest Payment Period."
Should an Extension Period occur, a holder of Capital Securities will
continue to accrue income (in the form of original issue discount) in respect
of its pro rata share of the Junior Subordinated Debentures held by the Issuer
Trust for United States federal income tax purposes. As a result, a holder of
Capital Securities will include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Issuer Trust if the holder
disposes of the Capital Securities prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences--Interest Income
and Original Issue Discount" and "--Sales or Redemption of Capital
Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Capital Securities is likely to
be affected. A holder that disposes of its Capital Securities during an
Extension Period, therefore, might not receive the same return on its
investment as a holder that continues to hold its Capital Securities. In
addition, as a result of the existence of the Company's right to defer
interest payments, the market price of the Capital Securities (which represent
preferred beneficial interests in the Issuer Trust) may be more volatile than
the market prices of other securities on which original issue discount accrues
that are not subject to such deferrals.
15
<PAGE>
TAX EVENT REDEMPTION
Upon the occurrence and during the continuation of a Tax Event, the Company
has the right, but not the obligation, to redeem the Junior Subordinated
Debentures in whole (but not in part) prior to February 1, 2007 and within 90
days following the occurrence of such Tax Event and therefore cause a
mandatory redemption of the Trust Securities before February 1, 2007. Any such
redemption shall be at a price equal to the Make-Whole Amount (as defined in
"Description of New Securities--Description of Capital Securities--
Redemption").
A "Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company 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 the date of issuance
of the Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Issuer 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 Junior Subordinated Debentures,
(ii) interest payable by the Company on the Junior Subordinated Debentures is
not, or within 90 days of such opinion, will not be, deductible by the
Company, in whole or in part, for United States federal income tax purposes or
(iii) the Issuer Trust is, or will be within 90 days of the date of the
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
See "--Possible Tax Law Changes Affecting the Capital Securities" for a
discussion of certain legislative proposals that, if adopted, could give rise
to a Tax Event, which may permit the Company to cause a redemption of the
Capital Securities prior to February 1, 2007.
EXCHANGE OF CAPITAL SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The holders of all of the outstanding Common Securities have the right at
any time to terminate the Issuer Trust and, after satisfaction of the
liabilities of creditors of the Issuer Trust as provided by applicable law,
cause the Junior Subordinated Debentures to be distributed to the holders of
the Capital Securities and Common Securities in liquidation of the Issuer
Trust, subject to the Property Trustee having received an opinion of counsel
to the effect that such distribution will not be a taxable event to holders of
Capital Securities. See "Description of New Securities--Description of Capital
Securities--Liquidation Distribution Upon Termination."
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or
Junior Subordinated Debentures that may be distributed in exchange for Capital
Securities if a liquidation of the Issuer Trust occurs. Accordingly, the
Capital Securities that an investor may purchase, whether pursuant to the
offer made hereby or in the secondary market, or the Junior Subordinated
Debentures that a holder of Capital Securities may receive on liquidation of
the Issuer Trust, may trade at a discount to the price that the investor paid
to purchase the Capital Securities offered hereby. Because holders of Capital
Securities may receive Junior Subordinated Debentures on termination of the
Issuer Trust, prospective purchasers of Capital Securities are also making an
investment decision with regard to the Junior Subordinated Debentures and
should carefully review all the information regarding the Junior Subordinated
Debentures contained herein. See "Description of New Securities--Description
of Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
The Bank of New York will act as the trustee under the Guarantee (the
"Guarantee Trustee") and will hold the Guarantee for the benefit of the
holders of the Capital Securities. The Bank of New York will also act as
Debenture Trustee for the Junior Subordinated Debentures and as Property
Trustee and The Bank of New York (Delaware) will act as Delaware Trustee under
the Trust Agreement. The Guarantee guarantees to the holders of
16
<PAGE>
the Capital Securities the following payments, to the extent not paid by the
Issuer Trust: (i) any accumulated and unpaid Distributions required to be paid
on the Capital Securities, to the extent that the Issuer Trust has funds on
hand available therefor at such time, (ii) the Redemption Price with respect
to any Capital Securities called for redemption, to the extent that the Issuer
Trust has funds on hand available therefor at such time, and (iii) upon a
voluntary or involuntary termination, winding-up or liquidation of the Issuer
Trust (unless the Junior Subordinated Debentures are distributed to holders of
the Capital Securities), the lesser of (a) the aggregate of the Liquidation
Amount and all accumulated and unpaid Distributions to the date of payment to
the extent that the Issuer Trust has funds on hand available therefor at such
time and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Capital Securities on liquidation of the Issuer
Trust. The Guarantee is subordinate as described under "--Ranking of
Subordinated Obligations Under the Guarantee and the Junior Subordinated
Debentures." The holders of not less than a majority in aggregate Liquidation
Amount of the Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust
power conferred upon the Guarantee Trustee under the Guarantee. Any holder of
the Capital Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Issuer Trust, the Guarantee Trustee or any other
person or entity. If the Company were to default on its obligation to pay
amounts payable under the Junior Subordinated Debentures, the Issuer Trust
would lack funds for the payment of Distributions or amounts payable on
redemption of the Capital Securities or otherwise, and, in such event, holders
of the Capital Securities would not be able to rely upon the Guarantee for
payment of such amounts. Instead, in the event a Debenture Event of Default
shall have occurred and be continuing and such event is attributable to the
failure of the Company to pay interest on or principal of the Junior
Subordinated Debentures on the payment date on which such payment is due and
payable, then a holder of Capital Securities may institute a legal proceeding
directly against the Company for enforcement of payment to such holder of the
principal of or interest on such Junior Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Capital
Securities of such holder (a "Direct Action"). In connection with such Direct
Action, the Company will have a right of set-off under the Indenture to the
extent of any payment made by the Company to such holder of Capital Securities
in the Direct Action. Except as described herein, holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures or assert directly any other
rights in respect of the Junior Subordinated Debentures. See "Description of
New Securities--Description of Junior Subordinated Debentures--Enforcement of
Certain Rights by Holders of Capital Securities," "--Debenture Events of
Default" and "Description of New Securities--Description of Guarantee." The
Trust Agreement provides that each holder of Capital Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will generally have limited voting rights
relating only to the modification of the Capital Securities and the exercise
of the Issuer Trust's rights as holder of Junior Subordinated Debentures.
Holders of Capital Securities will not be entitled to appoint, remove or
replace the Property Trustee or the Delaware Trustee except upon the
occurrence of certain events described herein. The Property Trustee and the
holders of all of the Common Securities may amend the Trust Agreement without
the consent of holders of Capital Securities to ensure that the Issuer Trust
will be classified for United States federal income tax purposes as a grantor
trust. See "Description of New Securities--Description of Capital Securities--
Voting Rights; Amendment of Trust Agreement" and "--Removal of Issuer
Trustees; Appointment of Successors."
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the United States Treasury Department proposed legislation that
would, among other things, deny an issuer a deduction for United States
federal income tax purposes for the payment of interest on instruments with
characteristics similar to the Junior Subordinated Debentures. If the proposed
legislation were enacted in its current form, it is not expected to apply
17
<PAGE>
to the Junior Subordinated Debentures because the proposed effective date for
this provision is the date of first committee action. Under current law, the
Company will be able to deduct interest on the Junior Subordinated Debentures.
There can be no assurance, however, that current or future legislative
proposals or final legislation will not affect the ability of the Company to
deduct interest on the Junior Subordinated Debentures. Such a change could
give rise to a Tax Event, which may permit the Company to cause a redemption
of the Capital Securities before February 1, 2007. See "Description of New
Securities--Description of Junior Subordinated Debentures--Redemption" and
"Description of New Securities--Description of Capital Securities--
Redemption." See also "Certain Federal Income Tax Consequences--Possible Tax
Law Changes."
CONSEQUENCES OF FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities Act
or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements
of the Securities Act and any other applicable securities laws, or pursuant to
an exemption therefrom or in a transaction not subject thereto, and in each
case in compliance with certain other conditions and restrictions. Old Capital
Securities which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Company and the Issuer Trust do not intend to
register under the Securities Act any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer (subject to such limited
exceptions, if applicable).
To the extent that Old Capital Securities are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, although the Old Capital Securities
have been designated for trading in the Private Offerings, Resale and Trading
through Automatic Linkages ("PORTAL") market, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer,
any trading market for Old Capital Securities which remain outstanding after
the Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Trust Agreement and, accordingly, will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding Liquidation Amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement. See
"Description of New Securities--Description of Capital Securities--General."
The Old Capital Securities provide that, if the Exchange Offer is not
consummated by , 1997, the Distribution rate borne by the Old Capital
Securities will increase by 0.25% per annum commencing on , 1997, until
the Exchange Offer is consummated. See "Description of Old Securities."
Following consummation of the Exchange Offer, the Old Capital Securities will
not be entitled to any increase in the Distribution rate thereon. The New
Capital Securities will not be entitled to any such increase in the
Distribution rate thereon.
ABSENCE OF PUBLIC MARKET
The Old Capital Securities have not been registered under the Securities Act
and will be subject to restrictions on transferability to the extent that they
are not exchanged for the New Capital Securities. Although the New Capital
Securities will generally be permitted to be resold or otherwise transferred
by the holders (who are not Affiliates) without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. Capital Securities may
be transferred by the holders thereof only in blocks having a Liquidation
Amount of not less than $100,000 (100 Capital Securities). The Company and the
Issuer Trust were advised by the Initial Purchaser in connection with the
offering of the Old Capital Securities that the Initial Purchaser intended to
make a market in the Old Capital
18
<PAGE>
Securities. However, the Initial Purchaser is not obligated to make a market
in the Old Capital Securities or the New Capital Securities and any such
market-making activity with respect to the Old Capital Securities or the New
Capital Securities may be discontinued at any time without notice. In
addition, such market-making activity will be subject to the limits imposed by
the Securities Act and the Exchange Act and may be limited during the Exchange
Offer. Accordingly, no assurance can be given that an active public or other
market will develop for the New Capital Securities or the Old Capital
Securities or as to the liquidity of or the trading market for the New Capital
Securities or the Old Capital Securities. If an active public market does not
develop, the market price and liquidity of the New Capital Securities may be
adversely affected.
If a public trading market develops for the New Capital Securities, future
trading prices of such securities will depend on many factors, including,
among other things, prevailing interest rates, results of operations and the
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are Affiliates may publicly offer for sale or
resell the New Capital Securities only in compliance with the provisions of
Rule 144 under the Securities Act.
Each Participating Broker-Dealer that receives New Capital Securities for
its own account must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
EXCHANGE OFFER PROCEDURES
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Exchange Agent of such Old Capital Securities, a properly
completed and duly executed Letter of Transmittal or Agent's Message in lieu
thereof and all other required documents. Therefore, holders of the Old
Capital Securities desiring to tender such Old Capital Securities in exchange
for New Capital Securities should allow sufficient time to ensure timely
delivery. Neither the Company, the Issuer Trust, nor the Exchange Agent is
under any duty to give notification of defects or irregularities with respect
to the tenders of Old Capital Securities for exchange.
THE PMI GROUP, INC.
The Company is a holding company which conducts its business through its
direct wholly-owned subsidiaries, PMI, an Arizona corporation, and American
Pioneer Title Insurance Company, a Florida title insurance company, and
various other direct or indirect reinsurance and service subsidiaries. PMI
also owns 45% of the outstanding shares of common stock of CMG Mortgage
Insurance Company, a Wisconsin insurance company.
The Company, through PMI, is the third largest private mortgage insurer in
the United States with new primary insurance written of $17.9 billion and
$14.5 billion for the years ended December 31, 1996 and 1995, respectively,
and $3.1 billion and $3.9 billion for the first quarter of 1997 and 1996,
respectively. Direct primary insurance in force was $77.3 billion at December
31, 1996. In addition to primary mortgage insurance, the Company, through its
subsidiaries, provides title insurance and various services and products for
the home mortgage finance industry.
Because the Company is a holding company, the right of the Company to
participate in the assets of any subsidiary upon the latter's liquidation or
reorganization or otherwise (and thus the ability of holders of the Capital
Securities to benefit indirectly from such distribution) will be subject to
the claims of the subsidiary's creditors, which will take priority except to
the extent that the Company may itself be a creditor with recognized
19
<PAGE>
claims against that subsidiary. There are also various limitations on the
extent to which the Company's subsidiaries may pay dividends to the Company.
PMI's ability to pay dividends is limited under Arizona law. The insurance
laws of Arizona provide that (i) PMI may pay dividends out of available
surplus and (ii) without prior approval of the Arizona Insurance Director,
such dividends during any 12-month period shall not exceed the lesser of 10%
of policyholders' surplus as of the preceding year end or the last calendar
year's net investment income. Available surplus includes paid-in surplus and
accordingly, at December 31, 1996, the most constraining limitation of Arizona
law was the limitation based on 10% of policyholders' surplus. In accordance
with Arizona law, PMI is permitted to pay ordinary dividends to the Company of
$30.7 million in 1997. In addition, PMI received permission from the Arizona
Insurance Director to pay an extraordinary cash dividend of $45 million to the
Company, which is scheduled to be paid on July 16, 1997.
PMI was founded in 1972 and was acquired by Allstate Insurance Company
("Allstate") in 1973. In April 1995, Allstate sold a majority of the Company
in an initial public offering. Allstate continues to own approximately 30% of
the outstanding capital stock of the Company. The principal executive offices
of the Company are located at 601 Montgomery Street, San Francisco, California
94111, telephone (415) 788-7878.
PMI CAPITAL I
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to (i) the Trust Agreement executed by the Company, as Depositor, The
Bank of New York, as Property Trustee and The Bank of New York (Delaware), as
Delaware Trustee, and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on January 24, 1997. The Issuer Trust's business
and affairs are conducted by its trustees: initially, The Bank of New York, as
Property Trustee, and The Bank of New York (Delaware), as Delaware Trustee. In
addition, three individuals who are employees or officers of or affiliated
with the holder of a majority of the Common Securities, will act as
administrative trustees with respect to the Issuer Trust (the "Administrative
Trustees"). The Issuer Trust exists for the exclusive purposes of (i) issuing
and selling the Trust Securities, (ii) using the proceeds from the sale of
Trust Securities to acquire Junior Subordinated Debentures issued by the
Company and (iii) engaging in only those other activities necessary or
incidental thereto (such as registering the transfer of the Trust Securities).
Accordingly, the Junior Subordinated Debentures and the right to reimbursement
of expenses under the related Expense Agreement will be the sole assets of the
Issuer Trust, and payments under the Junior Subordinated Debentures and the
related Expense Agreement will be the sole revenue of the Issuer Trust.
All of the Common Securities will be owned by the Company. The Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Capital Securities, except that upon the occurrence and continuance
of an event of default under the Trust Agreement resulting from an event of
default under the Indenture, the rights of the holders of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise will be subordinated to the rights of the
holders of the Capital Securities. See "Description of Capital Securities--
Subordination of Common Securities." The Company will acquire Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of the Issuer Trust. The Issuer Trust has a term of 31 years, but may
terminate earlier as provided in the Trust Agreement. The principal executive
office of the Issuer Trust is 601 Montgomery Street, San Francisco, California
94111, Attention: Administrative Trustees, and its telephone number is (415)
788-7878.
USE OF PROCEEDS
Neither the Company nor the Issuer Trust will receive any proceeds from the
issuance of the New Capital Securities offered hereby. The Old Capital
Securities surrendered in exchange for the New Capital Securities will be
retired and cancelled.
20
<PAGE>
The proceeds from the sale of the Old Capital Securities were invested by
the Issuer Trust in the Old Junior Subordinated Debentures. The net proceeds
from the sale of the Old Junior Subordinated Debentures were added by the
Company to its general corporate funds and have been or will be used for
general corporate purposes, which may include, without limitation,
repurchasing the Company's common stock, financing possible future
acquisitions and funding investments in, or extension of credit to, the
Company's subsidiaries. Pending such use, the Company may temporarily invest
the net proceeds in investment grade marketable securities.
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of March 31, 1997 which reflects the sale of the Capital
Securities and the use of proceeds therefrom. The information set forth below
should be read in conjunction with the historical financial statements
incorporated herein by reference. The Exchange Offer will have no effect on
the capitalization of the Company.
<TABLE>
<CAPTION>
AT MARCH 31,
1997
------------
(DOLLARS IN
THOUSANDS)
<S> <C>
Long-Term Debt................................................. $ 99,359
----------
Company Obligated Mandatorily Redeemable Capital Securities of
Subsidiary Trust Holding Solely Junior Subordinated Deferrable
Interest Debentures of the Company(a)......................... 100,000
----------
Shareholders' Equity
Preferred Stock, par value $0.01 per share--5,000,000 shares
authorized, no shares issued and outstanding................ --
Common Stock, par value $0.01 per share--125,000,000 shares
authorized, 35,052,600 shares issued........................ 351
Additional Paid-In Capital................................... 258,225
Unrealized Net Gains on Investments.......................... 26,442
Retained Earnings............................................ 755,332
Treasury Stock, 1,104,300 shares............................. (60,363)
----------
Total Shareholders' Equity................................. 979,987
----------
Total Capitalization..................................... $1,179,346
==========
</TABLE>
- --------
(a) The Capital Securities are issued by the Issuer Trust. The sole assets of
the Issuer Trust consist of approximately $103,093,000 principal amount of
Junior Subordinated Debentures issued by the Company to the Issuer Trust
and the Expense Agreement. The Junior Subordinated Debentures bear
interest at the rate of 8.309% per annum and will mature on February 1,
2027. The Company owns all of the Common Securities of the Issuer Trust.
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust is treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
are included in the consolidated financial statements of the Company. The
Capital Securities will be presented as a separate line item in the
consolidated balance sheets of the Company, entitled "Company Obligated
Mandatorily Redeemable Capital Securities of Subsidiary Trust Holding Solely
Junior Subordinated Deferrable Interest Debentures of the Company" and
appropriate disclosures about the Capital Securities, the Guarantee and the
Junior Subordinated Debentures will be included in the notes to the
consolidated financial statements. For financial reporting purposes, the
Company will record Distributions payable on the Capital Securities as an
expense in the consolidated statements of income.
21
<PAGE>
The Company expects that future reports of the Company will: (i) present the
capital securities issued by any trusts created by the Company on the
Company's balance sheet in the separate line item entitled "Company Obligated
Mandatorily Redeemable Capital Securities of Subsidiary Trusts Holding Solely
Junior Subordinated Deferrable Interest Debentures of the Company"; (ii)
include in a footnote to the financial statements disclosure that the sole
assets of the trusts are the junior subordinated debentures and the related
expense agreement (specifying as to each trust the principal amount, interest
rate and maturity date of junior subordinated debentures held); and (iii) if
Staff Accounting Bulletin 53 treatment is sought, include, in an audited
footnote to the financial statements, disclosures that (a) the trusts are
wholly owned, (b) the sole assets of the trusts are the junior subordinated
debentures held and the related expense agreement, and (c) the obligations of
the Company under the junior subordinated debentures, the relevant indenture,
trust agreement and guarantee, in the aggregate, constitute a full and
unconditional guarantee by the Company of such trust's obligations under the
capital securities issued by such trust.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company and its consolidated subsidiaries for the periods indicated. For
purposes of computing the ratio of earnings to fixed charges, "earnings"
represent consolidated earnings from continuing operations before income taxes
plus fixed charges. "Fixed charges" consist of interest (and the portion of
rental expense deemed representative of the interest factor).
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------- ----------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges......................... 20.3x 89.9x 67.0x 89.3x 88.5x 73.5x 73.4x
</TABLE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Company and
the Issuer Trust entered into the Registration Rights Agreement with the
Initial Purchaser, pursuant to which the Company and the Issuer Trust agreed
to use their reasonable efforts to file and cause to be declared effective by
the Commission a registration statement with respect to the exchange of the
Old Capital Securities for capital securities with terms identical in all
material respects to the terms of the Old Capital Securities. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company and the Issuer Trust under the Registration Rights Agreement. The
form and terms of the New Capital Securities are the same as the form and
terms of the Old Capital Securities, except that the New Capital Securities
(i) have been registered under the Securities Act and therefore will not be
subject to certain restrictions on transfer applicable to the Old Capital
Securities, and (ii) will not provide for any increase in the Distribution
rate thereon. In that regard, the Old Capital Securities provide, among other
things, that, if the Exchange Offer is not consummated by , 1997, the
Distribution rate borne by the Old Capital Securities will increase by 0.25%
per annum until the Exchange Offer is consummated. Upon consummation of the
Exchange Offer, holders of Old Capital Securities will not be entitled to any
increase in the Distribution rate thereon or any further registration rights
under the Registration Rights Agreement, except under limited circumstances.
See "Risk Factors--Consequences of a Failure to Exchange Old Capital
Securities" and "Description of Old Securities."
The Exchange Offer is not being made to, nor will the Issuer Trust or the
Company accept tenders for exchange from, holders of Old Capital Securities in
any jurisdiction in which the Exchange Offer or the acceptance thereof would
not be in compliance with the securities or blue sky laws of such
jurisdiction.
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Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Old Capital Securities are
registered on the books of the Issuer Trust or any other person who has
obtained a properly completed bond power from the registered holder, or any
person whose Old Capital Securities are held of record by DTC who desires to
deliver such Old Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Company will exchange as soon as
practicable after the date hereof, the Old Guarantee for the New Guarantee and
all of the Old Junior Subordinated Debentures, of which $103,093,000 aggregate
principal amount is outstanding, for a like aggregate principal amount of the
New Junior Subordinated Debentures. The New Guarantee and New Junior
Subordinated Debentures have been registered under the Securities Act.
TERMS OF EXCHANGE
The Issuer Trust hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $100,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with the procedures described below. The Issuer Trust
will issue, promptly after the Expiration Date, an aggregate Liquidation
Amount of up to $100,000,000 of New Capital Securities in exchange for a like
aggregate Liquidation Amount of outstanding Old Capital Securities tendered
and accepted in connection with the Exchange Offer. Holders may tender their
Old Capital Securities in whole or in part in a Liquidation Amount of not less
than $100,000 or any integral multiple of $1,000 in excess thereof, provided
that if any Old Capital Securities are tendered in exchange for part, the
untendered Liquidation Amount must be $100,000 or any integral multiple of
$1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount of
Old Capital Securities being tendered. As of the date of this Prospectus,
$100,000,000 aggregate Liquidation Amount of the Old Capital Securities is
outstanding.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Old Capital Securities which are
not tendered for or are tendered but not accepted in connection with the
Exchange Offer will remain outstanding and be entitled to the benefits of the
Trust Agreement, but will not be entitled to any further registration rights
under the Registration Rights Agreement, except under limited circumstances.
See "Risk Factors--Consequences of a Failure to Exchange Old Capital
Securities" and "Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein
or otherwise, certificates for any such unaccepted Old Capital Securities will
be returned, without expense, to the tendering holder thereof promptly after
the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Company will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "--Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR ANY ADMINISTRATIVE TRUSTEE
OR ANY TRUSTEE OF THE ISSUER TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD
CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR
ANY PORTION OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN
ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS
OF OLD CAPITAL SECURITIES MUST MAKE THEIR
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OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE
AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER READING THIS
PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS,
IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on ,
1997, unless the Exchange Offer is extended by the Company and the Issuer
Trust (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended).
The Company and the Issuer Trust expressly reserve the right in their sole
discretion, subject to applicable law, at any time and from time to time, (i)
to delay the acceptance of the Old Capital Securities for exchange, (ii) to
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) if the Company and the Issuer Trust
determine, in their sole discretion, that any of the events or conditions
referred to under "--Conditions to the Exchange Offer" have occurred or exist
or have not been satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right of holders of Old Capital
Securities to withdraw their tendered Old Capital Securities as described
under "--Withdrawal Rights," and (iv) to waive any condition or otherwise
amend the terms of the Exchange Offer in any respect. If the Exchange Offer is
amended in a manner determined by the Company and the Issuer Trust to
constitute a material change, or if the Company and the Issuer Trust waive a
material condition of the Exchange Offer, the Company and the Issuer Trust
will promptly disclose such amendment by means of an amended or supplemented
Prospectus that will be distributed to the registered holders of the Old
Capital Securities, and the Company and the Issuer Trust will extend the
Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Company and the Issuer Trust may choose to
make any public announcement and subject to applicable law, the Company and
the Issuer Trust shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to an
appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Issuer Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "--Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old Capital
Securities tendered and accepted for exchange pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of
Old Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a Letter of
Transmittal, (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees or (in the
case of a book-entry transfer) an Agent's Message in lieu of the Letter of
Transmittal, and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely confirmation of a book-
entry transfer of Old Capital Securities into the Exchange Agent's account at
DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgement
from the tendering participant, which
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acknowledgement states that such participant has received and agrees to be
bound by the Letter of Transmittal and that the Issuer Trust and the Company
may enforce such Letter of Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the Company and
the Issuer Trust will be deemed to have accepted for exchange, and thereby
exchanged, Old Capital Securities validly tendered and not withdrawn as, if
and when the Issuer Trust gives oral or written notice to the Exchange Agent
of the Company's and the Issuer Trust's acceptance of such Old Capital
Securities for exchange pursuant to the Exchange Offer. The Exchange Agent
will act as agent for the Company and the Issuer Trust for the purpose of
receiving tenders of Old Capital Securities, Letters of Transmittal and
related documents, and as agent for tendering holders for the purpose of
receiving Old Capital Securities, Letters of Transmittal and related documents
and transmitting New Capital Securities to validly tendering holders. Such
exchange will be made promptly after the Expiration Date. If for any reason
whatsoever, acceptance for exchange or the exchange of any Old Capital
Securities tendered pursuant to the Exchange Offer is delayed (whether before
or after the Company's and the Issuer Trust's acceptance for exchange of Old
Capital Securities) or the Company and the Issuer Trust extend the Exchange
Offer or are unable to accept for exchange or exchange Old Capital Securities
tendered pursuant to the Exchange Offer, then, without prejudice to the
Company's and the Issuer Trust's rights set forth herein, the Exchange Agent
may, nevertheless, on behalf of the Company and the Issuer Trust and subject
to Rule 14e-l(c) under the Exchange Act, retain tendered Old Capital
Securities and such Old Capital Securities may not be withdrawn except to the
extent tendering holders are entitled to withdrawal rights as described under
"--Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Old Capital Securities, that the Issuer Trust will acquire
good, marketable and unencumbered title to the tendered Old Capital
Securities, free and clear of all liens, restrictions, charges and
encumbrances, and the Old Capital Securities tendered for exchange are not
subject to any adverse claims or proxies. The holder also will warrant and
agree that it will, upon request, execute and deliver any additional documents
deemed by the Company, the Issuer Trust or the Exchange Agent to be necessary
or desirable to complete the exchange, sale, assignment, and transfer of the
Old Capital Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
VALID TENDER. Except as set forth below, in order for Old Capital Securities
to be validly tendered pursuant to the Exchange Offer, a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or (in the case of a book-entry tender) an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at its address set forth
under "--Exchange Agent," and either (i) tendered Old Capital Securities must
be received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation, including an Agent's Message if the tendering
holder has not delivered a Letter of Transmittal, must be received by the
Exchange Agent, in each case on or prior to the Expiration Date, or (iii) the
guaranteed delivery procedures set forth below must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in
the appropriate box on the Letter of Transmittal and the untendered
Liquidation Amount must be $100,000 or any integral multiple of $1,000 in
excess thereof. The entire amount of Old Capital Securities delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL,
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RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE
IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE
TIMELY DELIVERY.
BOOK ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Old Capital Securities
by causing DTC to transfer such Old Capital Securities into the Exchange
Agent's account at DTC in accordance with DTC's procedures for transfers.
However, although delivery of Old Capital Securities may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in lieu of the Letter
of Transmittal, and any other required documents, must in any case be
delivered to and received by the Exchange Agent at its address set forth under
"--Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Old Capital Securities need not
be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (i) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the
certificate or (ii) such registered holder completes the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal. In the case of (i) or (ii) above, such certificates for Old
Capital Securities must be duly endorsed or accompanied by a properly executed
bond power, with the endorsement or signature on the bond power and on the
Letter of Transmittal guaranteed by a firm or other entity identified in Rule
17Ad-15 under the Exchange Act as an "eligible guarantor institution,"
including (as such terms are defined therein): (i) a bank; (ii) a broker,
dealer, municipal securities broker or dealer or government securities broker
or dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (an
"Eligible Institution"), unless surrendered on behalf of such Eligible
Institution. See Instruction 1 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Old Capital Securities
pursuant to the Exchange Offer and the certificates for such Old Capital
Securities are not immediately available or time will not permit all required
documents to reach the Exchange Agent on or before the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Old Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to
Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof), with any required signature
guarantees and any other documents required by the Letter of Transmittal
are received by the Exchange Agent within three New York Stock Exchange
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made
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<PAGE>
only after timely receipt by the Exchange Agent of Old Capital Securities, or
of a book-entry confirmation with respect to such Old Capital Securities, and
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof), together with any required
signature guarantees and any other documents required by the Letter of
Transmittal. Accordingly, the delivery of New Capital Securities might not be
made to all tendering holders at the same time, and will depend upon when Old
Capital Securities, book-entry confirmations with respect to Old Capital
Securities and other required documents are received by the Exchange Agent.
The Company's and the Issuer Trust's acceptance for exchange of Old Capital
Securities tendered pursuant to any of the procedures described above will
constitute a binding agreement among the tendering holder, the Company and the
Issuer Trust upon the terms and subject to the conditions of the Exchange
Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange
of any tendered Old Capital Securities will be determined by the Company and
the Issuer Trust, in their sole discretion, whose determination shall be final
and binding on all parties. The Company and the Issuer Trust reserve the
absolute right, in their sole discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of which, or
exchange for, may, in the view of counsel to the Company or the Issuer Trust,
be unlawful. The Company and the Issuer Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange
Offer as set forth under "--Conditions to the Exchange Offer" or any condition
or irregularity in any tender of Old Capital Securities of any particular
holder whether or not similar conditions or irregularities are waived in the
case of other holders.
The Company's and the Issuer Trust's interpretation of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the Company,
the Issuer Trust, any affiliates or assigns of the Company or the Issuer
Trust, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in tenders or incur any liability for
failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Issuer
Trust, proper evidence satisfactory to the Company and the Issuer Trust, in
their sole discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Issuer Trust is making the Exchange Offer for the Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Company nor the
Issuer Trust sought its own interpretive letter, and there can be no assurance
that the staff of the Division of Corporation Finance of the Commission would
make a similar determination with respect to the Exchange Offer as it has in
such interpretive letters to third parties. Based on these interpretations by
the staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Company and the Issuer Trust believe that
New Capital Securities issued pursuant to this Exchange Offer in exchange for
Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is
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not participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an Affiliate or who intends to participate in the Exchange Offer for the
purpose of distributing New Capital Securities, or any broker-dealer who
purchased Old Capital Securities from the Issuer Trust to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, (i) will
not be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (ii) will not be permitted or entitled to tender such
Old Capital Securities in the Exchange Offer, and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, Participating Broker-Dealers must deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resales of New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
such New Capital Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations.
Each Participating Broker-Dealer will be deemed to have acknowledged by
execution of the Letter of Transmittal or delivery of an Agent's Message that
it acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the interpretive letters referred to above, the Company and the Issuer Trust
believe that Participating Broker-Dealers may fulfill their prospectus
delivery requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital Securities
which represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale
of such New Capital Securities. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales
of New Capital Securities received in exchange for Old Capital Securities
where such Old Capital Securities were acquired by such Participating Broker-
Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration Rights
Agreement, the Company and the Issuer Trust have agreed that this Prospectus,
as it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending 90 days after the Expiration Date or, if
earlier, when all such New Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of Distribution." Any person, including
any Participating Broker-Dealer, who is an Affiliate may not rely on such
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal or delivery of an Agent's Message in
lieu thereof, that, upon receipt of notice from the Company or the Issuer
Trust of the occurrence of any event or the discovery of any fact which makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or which causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which
they were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such Participating Broker-
Dealer will suspend the sale of New
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Securities pursuant to this Prospectus until the Company or the Issuer Trust
has amended or supplemented this Prospectus to correct such misstatement or
omission and has furnished copies of the amended or supplemented Prospectus to
such Participating Broker-Dealer or the Company or the Issuer Trust has given
notice that the sale of the New Securities may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities may
be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under "--Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate principal amount of Old Capital Securities to be withdrawn, and
(if certificates for such Old Capital Securities have been tendered) the name
of the registered holder of the Old Capital Securities as set forth on the Old
Capital Securities, if different from that of the person who tendered such Old
Capital Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such
Old Capital Securities, the tendering holder must submit the certificate
numbers shown on the particular Old Capital Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth in "--
Procedures for Tendering Old Capital Securities," the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of Old Capital Securities, in which case a notice of withdrawal
will be effective if delivered to the Exchange Agent by written, telegraphic,
telex or facsimile transmission. Withdrawals of tenders of Old Capital
Securities may not be rescinded. Old Capital Securities properly withdrawn
will not be deemed validly tendered for purposes of the Exchange Offer, but
may be retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company and the
Issuer Trust, in their sole discretion, whose determination shall be final and
binding on all parties. Neither the Company, the Issuer Trust, any affiliates
or assigns of the Company or the Issuer Trust, the Exchange Agent nor any
other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any Old Capital Securities which have been
tendered but which are withdrawn will be returned to the holder thereof
promptly after withdrawal.
DISTRIBUTIONS ON NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date with
respect to such Old Capital Securities prior to the original issue date of the
New Capital Securities or, if no such Distributions have been made, will not
receive any accumulated Distributions on such Old Capital Securities, and will
be deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and after such Distribution Date or, if no
such Distributions have been made, from and after February 4, 1997.
CONDITIONS TO EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, the Company and the Issuer Trust will not be required
to accept for exchange, or to exchange, any Old Capital Securities for any New
Capital Securities, and, as described below, may terminate the Exchange Offer
(whether
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<PAGE>
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if any of the
following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the staff
of the Commission which permits the New Capital Securities issued pursuant
to the Exchange Offer in exchange for Old Capital Securities to be offered
for resale, resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder which is an Affiliate) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Capital Securities are acquired in
the ordinary course of such holders' business and such holders have no
arrangement or understanding with any person to participate in the
distribution of such New Capital Securities;
(b) any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with respect to
the Exchange Offer which, in the Company's and the Issuer Trust's judgment,
would reasonably be expected to impair the ability of the Issuer Trust or
the Company to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted or
enacted which, in the Company's and the Issuer Trust's judgment, would
reasonably be expected to impair the ability of the Issuer Trust or the
Company to proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or New York State authorities which, in the Company's and the
Issuer Trust's judgment, would reasonably be expected to impair the ability
of the Issuer Trust or the Company to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Company's and
the Issuer Trust's judgment, would reasonably be expected to impair the
ability of the Issuer Trust or the Company to proceed with the Exchange
Offer;
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Company or the Issuer Trust, threatened for that purpose or any
governmental approval has not been obtained, which approval the Company and
the Issuer Trust shall deem necessary for the consummation of the Exchange
Offer as contemplated hereby; or
(g) any change, or any development involving a prospective change, in the
business or financial affairs of the Issuer Trust or the Company or any of
its subsidiaries has occurred which, in the judgment of the Company and the
Issuer Trust, might materially impair the ability of the Issuer Trust or
the Company to proceed with the Exchange Offer.
If the Company and the Issuer Trust determine in their sole discretion that
any of the foregoing events or conditions has occurred or exists or has not
been satisfied, the Company and the Issuer Trust may, subject to applicable
law, terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) or may waive any such condition
or otherwise amend the terms of the Exchange Offer in any respect. If such
waiver or amendment constitutes a material change to the Exchange Offer, the
Company and the Issuer Trust will promptly disclose such waiver by means of an
amended or supplemented Prospectus that will be distributed to the registered
holders of the Old Capital Securities, and the Company and the Issuer Trust
will extend the Exchange Offer to the extent required by Rule 14e-1 under the
Exchange Act.
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<PAGE>
EXCHANGE AGENT
The Bank of New York been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed
to the Exchange Agent as follows:
The Bank of New York
101 Barclay Street-7E
New York, NY 10286
Attention: Shilpa Privedi
Telephone: (212) 815-5789
Facsimile: (212) 815-6339
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses
and other custodians, nominees and fiduciaries the reasonable out-of-pocket
expenses incurred by them in forwarding copies of this Prospectus and related
documents to the beneficial owners of Old Capital Securities, and in handling
or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Capital Securities in connection with the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
Neither the Company nor the Issuer Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust have issued the Old Capital
Securities and the Common Securities and will issue the New Capital
Securities. The New Capital Securities will represent preferred undivided
beneficial interests in the assets of the Issuer Trust and the holders thereof
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the Common
Securities of the Issuer Trust, as well as other benefits as described in the
Trust Agreement. The Trust Agreement has been qualified under the Trust
Indenture Act. This summary of certain provisions of the Capital Securities,
the Common Securities and the Trust Agreement describes the material terms
thereof but does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Trust
Agreement, including the definitions therein of certain terms
GENERAL
The Capital Securities (including the Old Capital Securities and the New
Capital Securities) will be limited to $100,000,000 aggregate Liquidation
Amount outstanding. The Capital Securities will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities except as described
under "--Subordination of
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Common Securities." Legal title to the Junior Subordinated Debentures will be
held by the Issuer Trust in trust for the benefit of the holders of the
Capital Securities and Common Securities. The Guarantee Agreement executed by
the Company for the benefit of the holders of the Capital Securities will be a
guarantee on a subordinated basis with respect to the Capital Securities but
will not guarantee payment of Distributions or amounts payable on redemption
or liquidation of such Capital Securities when the Issuer Trust does not have
funds on hand available to make such payments. See "--Description of
Guarantee."
DISTRIBUTIONS
Distributions on the Capital Securities are cumulative from the date of
original issuance of the Old Capital Securities and are payable as a
preference at the annual rate of 8.309% of the stated Liquidation Amount of
$1,000, payable semi-annually in arrears on February 1 and August 1 of each
year (each a "Distribution Date"), to the holders of the Capital Securities at
the close of business on the January 15 or July 15, as the case may be, next
preceding the relevant Distribution Date. The first Distribution Date for the
Capital Securities will be August 1, 1997. The amount of Distributions payable
for any period less than a full Distribution period will be computed on the
basis of a 360-day year of twelve 30-day months. Distributions payable for
each full Distribution period will be computed by dividing the rate per annum
by two. In the event that any date on which Distributions are payable on the
Capital Securities is not a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business (a "Business Day"), then payment of
the Distributions payable on such date will be made on the next succeeding day
that is a Business Day (and without any additional Distributions or other
payment in respect of any such delay).
So long as no Event of Default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture to defer the payment
of interest on the Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such election, semi-annual Distributions on the Capital
Securities will be deferred by the Issuer Trust during any such Extension
Period. Distributions to which holders of the Capital Securities are entitled
will accumulate additional Distributions thereon at the rate per annum of
8.309% thereof, compounded semi-annually from the relevant payment date for
such Distributions, computed on the basis of a 360-day year of twelve 30-day
months. Additional Distributions payable for each full Distribution period
will be computed by dividing the rate per annum by two. The term
"Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Company may not, and may
not permit any subsidiary of the Company to (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, (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu in all respects
with or junior in interest to the Junior Subordinated Debentures or (iii) make
any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee ranks pari
passu with or junior in interest to the Junior Subordinated Debentures (other
than (a) dividends or distributions in common stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee, (d) purchases of common stock related to the
issuance of common stock or rights under any of the Company's or its
subsidiaries' benefit plans for their directors, officers or employees and (e)
purchases of fractional interests of common stock in connection with a stock
split, stock dividend or a similar reclassification or combination). Prior to
the termination of any such Extension Period, the Company may further defer
the payment of interest, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due, the Company may elect to begin
a new Extension Period. There is no limitation on the number of times that the
Company may elect to begin an Extension Period. See "--Description of Junior
Subordinated Debentures--Option To Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
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The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures." If the
Company does not make interest payments on the Junior Subordinated Debentures,
the Issuer Trust will not have funds available to pay Distributions on the
Capital Securities. The payment of Distributions (if and to the extent the
Issuer Trust has funds legally available for the payment of such Distributions
and cash sufficient to make such payments) is guaranteed by the Company on a
limited basis as set forth herein under "--Description of Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at their Stated Maturity or upon earlier
redemption as provided in the Indenture, the proceeds from such repayment or
redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Trust Securities, upon not less than 30 nor more
than 60 days' notice, at a redemption price (the "Redemption Price") equal to
the aggregate Liquidation Amount of such Trust Securities plus accumulated but
unpaid Distributions thereon to the date of redemption (the "Redemption Date")
and the related amount of the premium, if any, paid by the Company upon the
concurrent redemption of such Junior Subordinated Debentures. See "--
Description of Junior Subordinated Debentures--Redemption." If less than all
of the Junior Subordinated Debentures are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption pro rata of the Capital Securities and the Common
Securities. The amount of premium, if any, paid by the Company upon the
redemption of all or any part of Junior Subordinated Debentures to be repaid
or redeemed on a Redemption Date shall be allocated to the redemption pro rata
of the Capital Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures (i)
on or after February 1, 2007, in whole at any time or in part from time to
time, or (ii) in whole (but not in part) prior to February 1, 2007 and within
90 days following the occurrence of a Tax Event (as defined below). A
redemption of the Junior Subordinated Debentures would cause a mandatory
redemption of the Capital Securities and Common Securities.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices expressed in percentages of the Liquidation Amount
(as defined below) together with accrued Distributions to but excluding the
date fixed for redemption. If redeemed during the 12-month period beginning
February 1:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007.......................................... 104.1545%
2008.......................................... 103.7391
2009.......................................... 103.3236
2010.......................................... 102.9082
2011.......................................... 102.4927
2012.......................................... 102.0773
2013.......................................... 101.6618
2014.......................................... 101.2464
2015.......................................... 100.8309
2016.......................................... 100.4155
</TABLE>
and at 100% on or after February 1, 2017.
The Redemption Price, in the case of a redemption following a Tax Event as
described under (ii) above, shall equal for each Trust Security the Make-Whole
Amount for a corresponding $1,000 principal amount of Junior Subordinated
Debentures together with accrued Distributions to but excluding the date fixed
for
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<PAGE>
redemption. The "Make-Whole Amount" shall be equal to the greater of (i) 100%
of the principal amount of such Junior Subordinated Debentures or (ii) as
determined by a Quotation Agent (as defined below), the sum of the present
values of the principal amount and premium payable as part of the Redemption
Price with respect to an optional redemption of such Junior Subordinated
Debentures on February 1, 2007, together with scheduled payments of interest
from the prepayment date to February 1, 2007 (the "Remaining Life"), in each
case discounted to the Redemption Date on a semi-annual basis (assuming a 360-
day year consisting of 30-day months) at the Adjusted Treasury Rate.
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate plus (i) 1.15% if such Redemption Date occurs on or before
February 1, 1998 or (ii) 0.50% if such Redemption Date occurs after February
1, 1998.
"Treasury Rate" means (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 Remaining Life, yields for
the two published maturities most closely corresponding to the Remaining Life
shall be determined and the 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. The Treasury
Rate shall be calculated on the third Business Day preceding the Redemption
Date.
"Comparable Treasury Issue" means with respect to any Redemption Date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life 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. If no United States Treasury security has a maturity which is
within a period from three months before to three months after February 1,
2007, the two most closely corresponding United States Treasury securities
shall be used as the Comparable Treasury Issue, and the 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, (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 Debenture Trustee obtains fewer than five such
Reference Treasury Dealer Quotations, the average of all such Quotations.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of the Trust Securities and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities
in connection with a dissolution or liquidation of the Issuer Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust Security.
"Quotation Agent" means Goldman, Sachs & Co. and their respective
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.
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<PAGE>
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any other
Primary Treasury Dealer selected by the Debenture Trustee after consultation
with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the
Debenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted
in writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00
p.m., New York City time, on the third Business Day preceding such Redemption
Date.
"Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company 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 the date of issuance
of such Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Issuer 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 Junior Subordinated Debentures,
(ii) interest payable by the Company on the Junior Subordinated Debentures 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) the Issuer 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.
PAYMENT OF ADDITIONAL SUMS. In the event a Tax Event has occurred and is
continuing and the Issuer Trust is the holder of all of the Junior
Subordinated Debentures, the Company will pay Additional Sums, if any (as
defined below), on the Junior Subordinated Debentures.
"Additional Sums" means such additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer Trust on
the outstanding Capital Securities and Common Securities of the Issuer Trust
shall not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result
of a Tax Event.
REDEMPTION PROCEDURES
Capital Securities redeemed on each Redemption Date shall be redeemed at the
Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Capital
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds on hand
available for the payment of such Redemption Price. See also "--Subordination
of Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are available, in the case of Capital Securities held in
book-entry form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Capital Securities. With respect to Capital Securities not held
in book-entry form, the Property Trustee, to the extent funds are available,
will irrevocably deposit with the paying agent for the Capital Securities
funds sufficient to pay the applicable Redemption Price and will give such
paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing
the Capital Securities. Notwithstanding the foregoing, Distributions payable
on or prior to the Redemption Date for any Capital Securities called for
redemption shall be payable to the holders of the Capital Securities on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon
the date of such deposit, all rights of the holders of such Capital Securities
so called for redemption will cease, except the right of the holders of such
Capital Securities to receive the Redemption Price, but without interest on
such Redemption Price, and such Capital Securities will cease to
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<PAGE>
be outstanding. In the event that any date fixed for redemption of Capital
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price in respect of Capital Securities called
for redemption is improperly withheld or refused and not paid either by the
Issuer Trust or by the Company pursuant to the Guarantee as described under
"Description of Guarantee," Distributions on such Capital Securities will
continue to accrue at the then applicable rate, from the Redemption Date
originally established by the Issuer Trust for such Capital Securities to the
date such Redemption Price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or 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.
If less than all of the Capital Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Capital Securities and Common Securities to be redeemed shall be allocated pro
rata to the Capital Securities and the Common Securities based upon the
relative Liquidation Amounts of such classes. The particular Capital
Securities to be redeemed shall be selected on a pro rata basis not more than
60 days prior to the Redemption Date by the Property Trustee from the
outstanding Capital Securities not previously called for redemption by such
method as the Property Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions of Capital Securities
provided that the holder of such Capital Securities has at least 100 Capital
Securities remaining after the redemption or if the Capital Securities are
then held in the form of a Global Capital Security (as defined below), in
accordance with DTC's customary procedures. The Property Trustee shall
promptly notify the Securities Registrar in writing of the Capital Securities
selected for redemption and, in the case of any Capital Securities selected
for partial redemption, the Liquidation Amount thereof to be redeemed. For all
purposes of the Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Capital Securities shall relate, in
the case of any Capital Securities redeemed or to be redeemed only in part, to
the portion of the aggregate Liquidation Amount of Capital Securities which
has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Capital Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Capital Securities is withheld or refused and not paid either
by the Issuer Trust or the Company pursuant to the Guarantee, Distributions
will cease to accumulate on the Capital Securities or portions thereof) called
for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Issuer Trust's
Capital Securities and Common Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of such Capital Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all of the outstanding Capital Securities
then called for redemption, shall have been made or provided for, and all
funds available to the Property Trustee shall first be applied to the payment
in full in cash of all Distributions on, or the Redemption Price of, the
Capital Securities then due and payable.
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<PAGE>
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be
deemed to have waived any right to act with respect to any such Event of
Default under the Trust Agreement until the effect of all such Events of
Default with respect to such Capital Securities have been cured, waived or
otherwise eliminated. Until any such Events of Default under the Trust
Agreement with respect to the Capital Securities have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of such Capital Securities and not on behalf of the holders of the
Common Securities, and only the holders of such Capital Securities will have
the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
The amount payable on the Capital Securities in the event of any liquidation
of the Issuer Trust is $1,000 per Capital Security plus accumulated and unpaid
Distributions, which may be in the form of a distribution of such amount in
Junior Subordinated Debentures, subject to certain exceptions.
The holders of all of the outstanding Common Securities have the right at
any time to terminate the Issuer Trust and, after satisfaction of the
liabilities of creditors of the Issuer Trust as provided by applicable law,
cause the Junior Subordinated Debentures to be distributed to the holders of
the Capital Securities and Common Securities in liquidation of the Issuer
Trust, subject to the Property Trustee having received an opinion of counsel
to the effect that such distribution will not be a taxable event to holders of
Capital Securities.
Pursuant to the Trust Agreement, the Issuer Trust shall automatically
terminate upon expiration of its term and shall terminate on the first to
occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
holders of the Common Securities; (ii) the distribution of a Like Amount of
the Junior Subordinated Debentures to the holders of its Trust Securities, if
the holders of Common Securities have given written direction to the Property
Trustee to terminate the Issuer Trust (which direction is optional and wholly
within the discretion of the holders of Common Securities); (iii) redemption
of all of the Trust Securities as described under "Description of Capital
Securities--Redemption" and (iv) the entry of an order for the dissolution of
the Issuer Trust by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer Trust shall be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Issuer
Trust as provided by applicable law, to the holders of such Trust Securities a
Like Amount of the Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Issuer Trust
available for distribution to holders, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, an amount equal
to, in the case of holders of Capital Securities, the aggregate of the
Liquidation Amount plus accumulated and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Issuer Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Issuer Trust on its
Capital Securities shall be paid on a pro rata basis. The holders of the
Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Capital Securities, except that
if a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a priority over the Common Securities.
After the liquidation date fixed for any distribution of Junior Subordinated
Debentures (i) the Capital Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee, as the record holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Capital Securities held by DTC or its nominee and
(iii) any certificates representing the Capital Securities not held by DTC or
its nominee will be deemed to represent the Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the
Capital Securities and bearing accrued and unpaid interest in an amount equal
to the accumulated and unpaid Distributions on the Capital Securities until
such certificates are presented to the Security Registrar for transfer or
reissuance.
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<PAGE>
If the Company does not redeem the Junior Subordinated Debentures prior to
maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Capital Securities, the
Capital Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures.
There can be no assurance as to the market prices for the Capital Securities
or the Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a dissolution and liquidation of the Issuer Trust were
to occur. Accordingly, the Capital Securities that an investor may purchase,
or the Junior Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Issuer Trust, may trade at a discount to
the price that the investor paid to purchase the Capital Securities offered
hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Capital Securities
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures--Debenture Events of
Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period
of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees by
the holders of at least 25% in aggregate Liquidation Amount of the
outstanding Capital Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrative Trustees, unless such Event of Default shall have been cured or
waived. The Company, as Depositor, and the Administrative Trustees are
required to file annually with the Property Trustee a certificate as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Capital
Securities shall have a preference over the Common Securities upon termination
of the Issuer Trust as described above. See "--Liquidation Distribution Upon
Termination." The existence of an Event of Default does not entitle the
holders of Capital Securities to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of a majority in Liquidation Amount of Capital Securities may
remove an Issuer Trustee for cause or, if an Event of Default has occurred and
is continuing, with or without cause. Unless an Event of Default described in
(i), (ii) or (iii) of the definition thereof or an event which with notice
and/or lapse of time would constitute such an Event of Default (collectively,
an "Issuer Trust Default") shall have occurred and be continuing, any Issuer
Trustee may be removed at any time by the holder of the Common Securities. If
an Issuer
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Trustee shall resign, be removed by the holder of the Common Securities or the
holders of a majority in Liquidation Amount of the Capital Securities, become
incapable of acting as trustee, or if a vacancy shall occur in the office of
any Issuer Trustee for any cause, (i) unless an Issuer Trust Default has
occurred and is continuing, the holder of the Common Securities, or (ii) if an
Issuer Trust Default has occurred and is continuing, the applicable Issuer
Trustee (except if such Issuer Trustee was removed by the holder of the Common
Securities or the holders of a majority in Liquidation Amount of Capital
Securities or if a Debenture Event of Default has occurred and is continuing),
or the holders of at least 25% in Liquidation Amount of Capital Securities,
shall appoint a successor. If a successor has not been appointed, any holder
of Capital Securities or Common Securities or the Property Trustee may
petition a court in the State of Delaware to appoint a successor. Any Delaware
Trustee must meet the applicable requirements of Delaware law. Any Property
Trustee must be a national or state-chartered bank and at the time of
appointment have capital and surplus of at least $50,000,000. No resignation
or removal of an Issuer Trustee and no appointment of a successor trustee
shall be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the Trust Agreement.
In no event will the holders of the Capital Securities have the right to
appoint, remove or replace the Administrative Trustees, which voting rights
are vested exclusively in the holders of the Common Securities.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Trustee
shall be a party, or any entity succeeding to all or substantially all the
corporate trust business of such Trustee, shall be the successor of such
Trustee under the Trust Agreement, provided such entity shall be otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THJE ISSUER TRUST
The Issuer 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 entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the
request of the holders of the Common Securities and with the consent of the
holders of a majority based on Liquidation Amount of the Capital Securities,
merge with or into, consolidate, amalgamate, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an entirety to, a
trust organized as such under the laws of any State; provided, that (i) such
successor entity either (a) expressly assumes all of the obligations of the
Issuer Trust with respect to the Capital Securities or (b) substitutes for the
Capital Securities other securities having substantially the same terms as the
Capital Securities (the "Successor Securities") so long as the Successor
Securities have the same priority as the Capital Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) a
trustee of such successor entity is appointed possessing the same powers and
duties as the Property Trustee as the holder of the Junior Subordinated
Debentures, (iii) 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, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Capital
Securities (including any Successor Securities) in any material respect, (v)
such successor entity has a purpose substantially identical to that of the
Issuer Trust, (vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Issuer Trust has received an
opinion from independent counsel 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 of the Capital Securities (including any Successor
Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Issuer Trust nor such successor entity will be required to
register as an investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and (vii) the Company or any permitted
successor or assignee owns all of the common securities of such successor
entity and guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Issuer Trust shall not, except with the
consent of holders of 100% in Liquidation Amount of the Capital Securities,
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consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an entirety to,
any 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 Issuer Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Capital Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of a
majority of the Common Securities and the Property Trustee, without the
consent of the holders of the Capital Securities (i) to cure any ambiguity,
correct or supplement any provisions in the Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, which shall
not be inconsistent with the other provisions of the Trust Agreement, or (ii)
to modify, eliminate or add to any provisions of the Trust Agreement to such
extent as shall be necessary to ensure that the Issuer Trust will be
classified for United States federal income tax purposes as a grantor trust at
all times that any Trust Securities are outstanding or to ensure that the
Issuer Trust will not be required to register as an "investment company" under
the Investment Company Act; provided, however, such action shall not adversely
affect in any material respect the interests of any holder of Trust
Securities, and any amendments of the Trust Agreement shall become effective
when notice thereof is given to the holders of Trust Securities. The Trust
Agreement may be amended by the holders of a majority of the Common Securities
and the Property Trustee with (i) the consent of holders representing not less
than a majority (based upon Liquidation Amounts) of the outstanding Capital
Securities and (ii) receipt by the Issuer Trustees of an opinion of counsel to
the effect that such amendment or the exercise of any power granted to the
Issuer Trustees in accordance with such amendment will not affect the Issuer
Trust's status as a grantor trust for United States federal income tax
purposes or the Issuer Trust's exemption from status as an "investment
company" under the Investment Company Act. Notwithstanding the foregoing,
without the consent of each holder of Trust Securities, the Trust Agreement
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.
So long as any Junior Subordinated Debentures are held by the Issuer Trust,
the Issuer Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee,
or executing any trust or power conferred on the Debenture Trustee with
respect to the Junior Subordinated Debentures, (ii) waive any past default
that is waivable under Section 5.13 of the Indenture, (iii) exercise any right
to rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, where such consent shall be required, without, in
each case, obtaining the prior approval of the holders of a majority in
aggregate Liquidation Amount of all outstanding Capital Securities; provided,
however, that where a consent under the Indenture would require the consent of
each holder of Junior Subordinated Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior consent of
each holder of the Capital Securities. The Issuer 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 the holders of the Capital
Securities. The Property Trustee shall notify each holder of Capital
Securities of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the holders of
the Capital Securities, prior to taking any of the foregoing actions, the
Issuer Trustees shall obtain an opinion of counsel experienced in such matters
to the effect that the Issuer Trust will not be classified as an association
taxable as a corporation for United States federal income tax purposes on
account of such action.
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Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Property Trustee 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
given to each holder of record of Capital Securities in the manner set forth
in the Trust Agreement.
No vote or consent of the holders of Capital Securities will be required to
redeem and cancel Capital Securities in accordance with the Trust Agreement.
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 Company, the Issuer Trustees or any affiliate
of the Company or any Issuer Trustees shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
BOOK ENTRY, DELIVERY AND FORM
The Capital Securities will be issued in fully registered form, in minimum
blocks of at least 100 (representing a minimum of $100,000 Liquidation
Amount).
New Capital Securities initially will be represented by one or more Capital
Securities in registered, global form (collectively, the "Global Capital
Securities"). The Global Capital Securities will be deposited on issuance with
the Property Trustee as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee. Beneficial interests in the Global Capital Securities may
not be exchanged for Capital Securities in certificated form except in the
limited circumstances described below. See "--Exchange of Book-Entry Capital
Securities for Certificated Capital Securities."
DEPOSITARY PROCEDURES. DTC has advised the Issuer Trust and the Company that
DTC is a limited-purpose trust company created to hold securities for its
participating organizations (collectively, the "Participants") and to
facilitate the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers
(including the Initial Purchaser), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership
interest of each actual purchaser of each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Issuer Trust and the Company that, pursuant to
procedures established by it, ownership of interests in the Global Capital
Securities will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Investors in the Global Capital Securities may hold their interests therein
directly through DTC if they are Participants in such system, or indirectly
through organizations (including the Euroclear System ("Euroclear") and Cedel
Bank, S.A. ("CEDEL")) which are Participants in such system. All interests in
a Global Capital Security, including those held through Euroclear or CEDEL,
may be subject to the procedures and requirements of DTC. Those interests held
through Euroclear or CEDEL may also be subject to the procedures and
requirements of such system. The laws of some states require that certain
persons take physical delivery in certificated form of securities that they
own. Consequently, the ability to transfer beneficial interests in a Global
Capital Security to such persons will be limited to that extent. Because DTC
can act only on behalf of
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Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in a Global Capital
Security to pledge such interests to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing
such interests. For certain other restrictions on the transferability of the
Capital Securities, see "--Exchange of Book-Entry Capital Securities for
Certificated Capital Securities."
Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their names, will
not receive physical delivery of Capital Securities in certificated form and
will not be considered the registered owners or holders thereof under the
Trust Agreement for any purpose.
Payments in respect of the Global Capital Security registered in the name of
DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms
of the Trust Agreement, the Property Trustee will treat the persons in whose
names the Capital Securities, including the Global Capital Securities, are
registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither the
Property Trustee nor any agent thereof has or will have any responsibility or
liability for (i) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Capital Securities, or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Capital Securities or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Issuer Trust and the Company that its current practice, upon
receipt of any payment in respect of securities such as the Capital
Securities, is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in Liquidation Amount of beneficial interests in the relevant
security as shown on the records of DTC unless DTC has reason to believe it
will not receive payment on such payment date. Payments by the Participants
and the Indirect Participants to the beneficial owners of the Capital
Securities will be governed by standing instructions and customary practices
and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee,
the Issuer Trust or the Company. Neither the Issuer Trust nor the Company nor
the Property Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Capital Securities,
and the Issuer, the Company and the Property Trustee may conclusively rely on
and will be protected in relying on instructions from DTC or its nominee for
all purposes.
Except for trades involving only Euroclear and CEDEL participants, interests
in the Global Capital Securities will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and its Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear and CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
Capital Securities described herein, cross-market transfers between the
Participants in DTC, on the one hand, and Euroclear or CEDEL participants, on
the other hand, will be effected through DTC in accordance with DTC's rules on
behalf of Euroclear or CEDEL, as the case may be, by its respective
depositary; however, such cross-market transactions will require delivery of
instructions to Euroclear or CEDEL, as the case may be, by the counterparty in
such system in accordance with the rules and procedures and within the
established deadlines (Brussels time) of such system. Euroclear or CEDEL, as
the case may be, will, if the transaction meets its settlement requirements,
deliver instructions to its respective depositary or take action to effect
final settlement on its behalf by delivering or receiving interests in the
relevant Global Capital Securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Euroclear participants and CEDEL participants may not deliver
instructions directly to the depositaries for Euroclear or CEDEL.
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Because of the time zone differences, the securities account of a Euroclear
or CEDEL participant purchasing an interest in a Global Capital Security from
a Participant in DTC will be credited, and any such crediting will be reported
to the relevant Euroclear or CEDEL participant, during the securities
settlement processing day (which must be a business day for Euroclear and
CEDEL) immediately following the settlement date of DTC. Cash received in
Euroclear or CEDEL as a result of sales of interest in a Global Capital
Security by or through a Euroclear or CEDEL participant to a Participant in
DTC will be received with value on the settlement date of DTC but will be
available in the relevant Euroclear or CEDEL cash account only as of the
business day for Euroclear or CEDEL following DTC's settlement date.
DTC has advised the Issuer Trust and the Company that it will take any
action permitted to be taken by a holder of Capital Securities only at the
direction of one or more Participants to whose account with DTC interests in
the Global Capital Securities are credited and only in respect to such portion
of the Liquidation Amount of the Capital Securities as to which such
Participant or Participants has or have given such direction. However, if
there is an Event of Default under the Trust Agreement, DTC reserves the right
to exchange the Global Capital Securities for Capital Securities in
certificated form and to distribute such Capital Securities to its
Participants.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Issuer Trust
and the Company believe to be reliable, but neither the Issuer Trust nor the
Company takes responsibility for the accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures to
facilitate transfers of interest in the Global Capital Securities among
participants in DTC, Euroclear and CEDEL, they are under no obligation to
perform or to continue to perform such Procedures, and such procedures may be
discontinued at any time. Neither the Issuer Trust or the Company nor the
Property Trustee will have any responsibility for the performance by DTC,
Euroclear or CEDEL or their respective participants or indirect participants
of their respective obligations under the rules and procedures governing their
operations.
EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL
SECURITIES. A Global Capital Security is exchangeable for Capital Securities
in registered certificated form if (i) DTC notifies the Property Trustee that
it is unwilling or unable to continue as depositary for the Global Capital
Security (the "Depositary") and the Property Trustee is unable to locate a
qualified successor Depositary, (ii) the Issuer Trust elects to terminate the
book-entry system through DTC, or (iii) there shall have occurred a Debenture
Event of Default.
PAYMENT AND PAYING AGENCY. Payments in respect of the Capital Securities
held in global form shall be made to the Depositary, which shall credit the
relevant accounts at the Depositary on the applicable Distribution Dates.
Payments in respect of Capital Securities that are not held by the Depositary
shall be made by check mailed to the address of the holder entitled thereto as
such address shall appear on the register maintained by the Securities
Registrar appointed under the Trust Agreement. The paying agent (the "Paying
Agent") shall initially be the Property Trustee and any co-paying agent chosen
by the Property Trustee and acceptable to the Administrative Trustees. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Property Trustee and the Administrative Trustees. In the
event that the Property Trustee shall no longer be the Paying Agent, the
Property Trustee shall appoint a successor (which shall be a bank or trust
company acceptable to the Administrative Trustees) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT. The Property Trustee will act as registrar and
transfer agent for the Capital Securities. Registration of transfers of
Capital Securities will be effected without charge by or on behalf of the
Issuer Trust, but upon payment of any tax or other governmental charges that
may be imposed in connection with any transfer or exchange. The Issuer Trust
will not be require to register or cause to be registered the transfer of any
Capital Securities after such Capital Securities have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his
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or her own affairs. Subject to this provision, the Property Trustee is under
no obligation to exercise any of the powers vested in it by the Trust
Agreement at the request of any holder of Capital Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is
continuing and the Property Trustee is required to decide between alternative
courses of action, construe ambiguous provisions in the Trust Agreement or is
unsure of the application of any provision of the Trust Agreement, and the
matter is not one on which holders of Capital Securities are entitled under
the Trust Agreement to vote, then the Property Trustee shall take such action
as it deems advisable and in the best interests of the holders of the Trust
Securities and will have no liability except for its own bad faith, negligence
or willful misconduct.
For information concerning the relationships between The Bank of New York,
the Property Trustee and the Company, see "Description of Junior Subordinated
Debentures--Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrative Trustees and the Property Trustee are authorized and
directed to conduct the affairs of and to operate the Issuer Trust in such a
way that the Issuer Trust will not be deemed to be an "investment company"
required to be registered under the Investment Company Act or classified as an
association taxable as a corporation for United States federal income tax
purposes and so that the Junior Subordinated Debentures will be treated as
indebtedness of the Company for United States federal income tax purposes. In
this connection, the Administrative Trustees and the Property Trustee are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Issuer Trust or the Trust Agreement, that the
Property Trustee and the holders of Common Securities determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of
the Capital Securities.
Holders of the Capital Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures are to be issued under the Junior Subordinated
Indenture dated as of February 4, 1997 as supplemented from time to time (as
so supplemented, the "Indenture"), between the Company and The Bank of New
York, as Debenture Trustee. The Indenture has been qualified under the Trust
Indenture Act. This summary of certain terms and provisions of the
Subordinated Debentures and the Indenture describes the material terms thereof
but does not purport to be complete, and where reference is made to particular
provisions of the Indenture, such provisions, including the definitions of
certain terms, some of which are not otherwise defined herein, are qualified
in their entirety by reference to all of the provisions of the Indenture and
those terms made a part of the Indenture by the Trust Indenture Act.
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Issuer
Trust invested the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Old Junior Subordinated
Debentures issued by the Company.
Pursuant to the Exchange Offer, the Company will exchange the Old Junior
Subordinated Debentures, in an amount corresponding to the Old Capital
Securities accepted for exchange, for a like aggregate principal amount of the
New Junior Subordinated Debentures as soon as practicable after the Expiration
Date. The Junior Subordinated Debentures will bear interest at the annual rate
of 8.309% of the principal amount thereof, payable semi-annually in arrears on
February 1 and August 1 of each year (each, an "Interest Payment Date"),
commencing August 1, 1997, to the person in whose name each Junior
Subordinated Debenture is registered at the close of business on the January
15 and July 15 next preceding such Interest Payment Date. It is anticipated
that, until the liquidation, if any, of the Issuer Trust, each Junior
Subordinated Debenture will be held in the
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name of the Issuer Trust in trust for the benefit of the holders of the Trust
Securities. The amount of interest payable for any period less than a full
interest period will be computed on the basis of a 360-day year of twelve 30-
day months. The amount of interest payable for any full interest period will
be computed by dividing the rate per annum by two. In the event that any date
on which interest is payable on the Junior Subordinated Debentures is not a
Business Day, then payment of the interest payable on such date will be made
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable. Accrued
interest that is not paid on the applicable Interest Payment Date will bear
additional interest on the amount thereof (to the extent permitted by law) at
the rate per annum of 8.309% thereof, compounded semi-annually and computed on
the basis of a 360-day year of twelve 30- day months. The amount of additional
interest payable for any full interest period will be computed by dividing the
rate per annum by two. The term "interest" as used herein shall include semi-
annual interest payments, interest on semi-annual interest payments not paid
on the applicable Interest Payment Date and Additional Sums (as defined under
"--Description of New Securities--Redemption"), as applicable.
The Junior Subordinated Debentures will mature on February 1, 2027 (the
"Stated Maturity").
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Company. Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary, including PMI,
upon such subsidiary's liquidation or reorganization or otherwise (and thus
the ability of holders of the Capital Securities to benefit indirectly from
such distribution), is subject to the prior claims of creditors of that
subsidiary, except to the extent that the Company may itself be recognized as
a creditor of that subsidiary. In addition, there are various limitations on
the extent to which the Company's subsidiaries may pay dividends to the
Company. Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of Junior Subordinated Debentures should look only
to the assets of the Company for payments on the Junior Subordinated
Debentures. See "The PMI Group, Inc." The Indenture does not limit the
incurrence or issuance of other secured or unsecured debt of the Company,
including Senior Indebtedness, whether under the Indenture or any existing or
other indenture that the Company may enter into in the future or otherwise.
See "--Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Event of Default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture at any time during
the term of the Junior Subordinated Debentures to defer the payment of
interest at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period,
provided that no Extension Period may extend beyond the Stated Maturity of the
Junior Subordinated Debentures. At the end of such Extension Period, the
Company must pay all interest then accrued and unpaid (together with interest
thereon at the annual rate of 8.309%, compounded semi-annually and computed on
the basis of a 360-day year of twelve 30-day months, to the extent permitted
by applicable law). The amount of additional interest payable for any full
interest period will be computed by dividing the rate per annum by two. During
an Extension Period, interest will continue to accrue and holders of Junior
Subordinated Debentures (or holders of Capital Securities while outstanding)
will be required to accrue interest income for United States federal income
tax purposes. See "Certain Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (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, (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu in all respects with or
junior in interest to the Junior Subordinated Debentures or (iii) make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
with or junior in interest to the Junior Subordinated Debentures (other than
(a) dividends or distributions in common stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
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stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guarantee, (d) purchases of common stock related to the
issuance of common stock or rights under any of the Company's or its
subsidiaries' benefit plans for their directors, officers or employees, and
(e) purchases of fractional interests of common stock in connection with a
stock split, stock dividend or a similar reclassification or combination).
Prior to the termination of any such Extension Period, the Company may further
defer the payment of interest, provided that no Extension Period may exceed 10
consecutive semi-annual periods or extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due on any Interest Payment Date,
the Company may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company must give the Property Trustee and the
Debenture Trustee notice of its election of such Extension Period at least one
Business Day prior to the earlier of (i) the date the Distributions on the
Capital Securities would have been payable except for the election to begin
such Extension Period, (ii) the date the Property Trustee is required to give
notice to any applicable self-regulatory organization or to holders of the
Capital Securities of the record date and (iii) the date such Distributions
are payable, but in any event not less than one Business Day prior to such
record date. The Property Trustee is required to give notice of the Company's
election to begin a new Extension Period to the holders of the Capital
Securities. There is no limitation on the number of times that the Company may
elect to begin an Extension Period.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after February 1, 2007, in whole at any time
or in part from time to time, or (ii) in whole (but not in part) prior to
February 1, 2007 and within 90 days following the occurrence of a Tax Event
(as defined under "-- Description of Capital Securities--Redemption"), in each
case at the redemption price described below. The proceeds of any such
redemption will be used by the Issuer Trust to redeem the Trust Securities.
The redemption price in the case of a redemption under (i) above shall equal
the following prices, expressed in percentages of the principal amount
together with accrued interest to but excluding the date fixed for redemption.
If redeemed during the 12-month period beginning February 1:
<TABLE>
<CAPTION>
REDEMPTION
PRICE
YEAR ----------
<S> <C>
2007............................................................ 104.1545%
2008............................................................ 103.7391
2009............................................................ 103.3236
2010............................................................ 102.9082
2011............................................................ 102.4927
2012............................................................ 102.0773
2013............................................................ 101.6618
2014............................................................ 101.2464
2015............................................................ 100.8309
2016............................................................ 100.4155
</TABLE>
and at 100% on or after February 1, 2017.
The redemption price, in the case of a redemption following a Tax Event as
described under (ii) above, shall equal the Make-Whole Amount (as defined
under "--Description of New Securities--Redemption"), together with accrued
interest to but excluding the date fixed for redemption.
ADDITIONAL SUMS
If the Issuer Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the Junior Subordinated Debentures such amounts as shall
be required so that the Distributions payable by the Issuer Trust shall not be
reduced as a result
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of any such additional taxes, duties or other governmental charges. The
Company has covenanted in the Indenture that, if and so long as (i) the Issuer
Trust is the holder of all Junior Subordinated Debentures and (ii) a Tax Event
in respect of the Issuer Trust has occurred and is continuing, the Company
will pay to the Issuer Trust such Additional Sums (as defined under "--
Description of New Securities--Redemption").
REGISTRATION, DENOMINATION AND TRANSFER
The Junior Subordinated Debentures will be registered in the name of the
Issuer Trust. In the event that the Junior Subordinated Debentures are
distributed to holders of Capital Securities, it is anticipated that the
depositary arrangements for the Junior Subordinated Debentures will be
substantially identical to those in effect for the Capital Securities. See "--
Description of New Securities--Book Entry, Delivery and Form."
Payments on Junior Subordinated Debentures represented by a global security
will be made to DTC, as the depository for the Junior Subordinated Debentures.
In the event Junior Subordinated Debentures are issued in definitive
registered form, principal and interest will be payable, the transfer of the
Junior Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate trust
office of the Debenture Trustee in New York, New York, or at the offices of
any paying agent or transfer agent, as applicable, appointed by the Company,
provided that payment of interest may be made at the option of the Company by
check mailed to the address of the persons entitled thereto or by wire
transfer.
The Junior Subordinated Debentures will be issuable only in registered form
without coupons in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof. Junior Subordinated Debentures will be exchangeable
for other Junior Subordinated Debentures, of any authorized denominations, of
a like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the Securities Registrar or at the office of
any transfer agent designated by the Company for such purpose without service
charge and upon payment of any taxes and other governmental charges as
described in the Indenture. The Company will appoint the Debenture Trustee as
Securities Registrar under the Indenture. The Company may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of Junior
Subordinated Debentures and ending at the close of business on the day of
mailing of the relevant notice of redemption or (ii) transfer or exchange any
Junior Subordinated Debentures so selected for redemption, except, in the case
of any Junior Subordinated Debentures being redeemed in part, any portion
thereof not to be redeemed.
Any moneys deposited with the Debenture Trustee or any paying agent, or then
held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall, at the request of the Company,
be repaid to the Company and the holder of such Junior Subordinated Debenture
shall thereafter look, as a general unsecured creditor, only to the Company
for payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted, that it will not, and will not permit any
subsidiary of the Company to, (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 or (ii) make any payment
of principal of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu in all respects
with or junior in interest to the Junior Subordinated Debentures or (iii) make
any guarantee payments
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with respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) purchases of common stock related to the issuance of common
stock or rights under any of the Company's or its subsidiaries' benefit plans
for their directors, officers or employees, and (e) purchases of fractional
interests of common stock in connection with a stock split, stock dividend or
a similar reclassification or combination), 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 a
Debenture Event of Default under the Indenture with respect to the Junior
Subordinated Debentures and (b) in respect of which the Company shall not have
taken reasonable steps to cure, (ii) if such Junior Subordinated Debentures
are held by the Issuer Trust, the Company shall be in default with respect to
its payment of any obligations under the Guarantee or (iii) the Company shall
have given notice of its selection of an Extension Period as provided in the
Indenture with respect to the Junior Subordinated Debentures and shall not
have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
The Company has covenanted in the Indenture, (i) to maintain directly or
indirectly 100% ownership of the Common Securities of the Issuer Trust,
provided that certain successors which are permitted pursuant to the Indenture
may succeed to the Company's ownership of the Common Securities, (ii) as
holder of the Common Securities, not to voluntarily terminate, wind-up or
liquidate the Issuer Trust, except (a) in connection with a distribution of
Junior Subordinated Debentures to the holders of the Capital Securities in
liquidation of the Issuer Trust or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
Trust Agreement, to cause the Issuer Trust to remain classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes.
MODIFICATION OF INDENTURE
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially adversely affect the interests of the holders of
the Junior Subordinated Debentures or the holders of the Capital Securities so
long as they remain outstanding) and qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Company and the Debenture Trustee, with the
consent of the holders of not less than a majority in principal amount of the
Junior Subordinated Debentures, to modify the Indenture in a manner affecting
the rights of the holders of the Junior Subordinated Debentures; provided,
that no such modification may, without the consent of the holder of each
outstanding Junior Subordinated Debenture so affected, (i) change the Stated
Maturity of the Junior Subordinated Debentures, or reduce the principal amount
thereof or any premium payable upon redemption, or reduce the rate or extend
the time of payment of interest thereon or (ii) reduce the percentage of
principal amount of Junior Subordinated Debentures, the holders of which are
required to consent to any such modification of the Indenture, provided that,
so long as any of the Capital Securities remain outstanding, no such
modification may be made that adversely affects the holders of such Capital
Securities in any material respect, and no termination of the Indenture may
occur, and no waiver of any Debenture Event of Default or compliance with any
covenant under the Indenture may be effective, without the prior consent of
the holders of at least a majority of the aggregate Liquidation Amount of such
Capital Securities unless and until the principal of the Junior Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions are satisfied.
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<PAGE>
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred
and is continuing constitutes a "Debenture Event of Default" with respect to
the Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to
the Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the outstanding Junior
Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of Junior Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the Capital Securities shall have such
right. The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures may annul such declaration and waive the
default if the default (other than the non-payment of the principal of Junior
Subordinated Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee. Should the holders of Junior Subordinated Debentures fail
to annul such declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount of the Capital Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures affected thereby may, on behalf of the holders
of all the Junior Subordinated Debentures, waive any past default, except a
default in the payment of principal or interest (unless such default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Junior Subordinated Debenture. Should the holders
of such Junior Subordinated Debentures fail to waive any such past default,
the holders of a majority in aggregate Liquidation Amount of the Capital
Securities shall have such right. The Company is required to file annually
with the Debenture Trustee a certificate as to whether or not the Company is
in compliance with all the conditions and covenants applicable to it under the
Indenture.
In case a Debenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on the Junior Subordinated Debentures, and any other amounts payable
under the Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debentures on the date such interest or
principal is otherwise payable, a holder of Capital Securities may institute a
legal proceeding directly against the Company for enforcement of payment to
such holder of the principal of or interest on such Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the related Capital
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Securities of such holder (a "Direct Action"). The Company may not amend the
Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Capital Securities. The
Company shall have the right under the Indenture to set-off any payment made
to such holder of Capital Securities by the Company in connection with a
Direct Action.
The holders of the Capital Securities would not be able to exercise directly
any remedies available to the holders of the Junior Subordinated Debentures
other than those set forth in the preceding paragraph unless there shall have
been an Event of Default under the Trust Agreement. See "--Description of
Capital Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate
with or merge into the Company or convey, transfer or lease its properties and
assets substantially as an entirety to the Company, unless (i) in case the
Company consolidates with or merges into another Person or conveys, transfers
or leases its properties and assets substantially as an entirety to any
Person, the successor Person is organized under the laws of the United States
or any state or the District of Columbia, and such successor Person expressly
assumes the Company's obligations on the Junior Subordinated Debentures issued
under the Indenture; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time,
or both, would become a Debenture Event of Default, shall have occurred and be
continuing; (iii) such transaction is permitted under the Trust Agreement and
Guarantee and does not give rise to any breach or violation of the Trust
Agreement or Guarantee; and (iv) certain other conditions as prescribed in the
Indenture are met.
The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Debenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and
payable at their Stated Maturity within one year, and the Company deposits or
causes to be deposited with the Debenture Trustee funds, in trust, for the
purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if
any) and interest and Additional Sums to the date of the deposit or to the
Stated Maturity, as the case may be, then the Indenture will cease to be of
further effect (except as to the Company's obligations to pay all other sums
due pursuant to the Indenture and to provide the officers' certificates and
opinions of counsel described therein), and the Company will be deemed to have
satisfied and discharged the Indenture.
SUBORDINATION
The Junior Subordinated Debentures shall be subordinate and junior in right
of payment, to the extent set forth in the Indenture, to all Senior
Indebtedness (as defined below) of the Company. In the event that the Company
shall default in the payment of any principal, premium, if any, or interest,
if any, on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration of
acceleration or otherwise, then, unless and until such default shall have been
cured or waived or shall have ceased to exist or all Senior Indebtedness shall
have been paid, no direct or indirect payment (in cash, property, securities,
by set-off or otherwise) shall be made or agreed to be made for principal,
premium, if any, or interest, if any, on the Junior Subordinated Debentures,
or in respect of any redemption, repayment, retirement, purchase or other
acquisition of any of the Junior Subordinated Debentures.
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"Debt" means with respect to the Company, whether recourse is to all or a
portion of the assets of the Company and whether or not contingent, (i) every
obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of the Company; (iv) every obligation of the Company
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business); (v) every capital lease obligation of the
Company; (vi) all indebtedness of the Company whether incurred on or prior to
the date of the Indenture or thereafter incurred, for claims in respect of
derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps and similar arrangements; and
(vii) every obligation of the type referred to in clauses (i) through (vi) of
another Person and all dividends of another Person the payment of which, in
either case, the Company has guaranteed or is responsible or liable, directly
or indirectly, as obligor or otherwise.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether
or not such claim for post-petition interest is allowed in such proceeding),
on Debt of the Company, whether incurred on or prior to the date of the
Indenture or thereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are not superior in right of payment to the
Junior Subordinated Debentures; provided, however, that Senior Indebtedness
shall not be deemed to include (i) any Debt of the Company which when incurred
and without respect to any election under Section 1111(b) of the United States
Bankruptcy Code of 1978, as amended, was without recourse to the Company, (ii)
any Debt of the Company to any of its subsidiaries, (iii) Debt to any employee
of the Company and (iv) any other debt securities issued pursuant to the
Indenture.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshalling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
principal of or premium, if any, or interest, if any, on the Junior
Subordinated Debentures. In such event, any payment or distribution on account
of the principal of or premium, if any, or interest, if any, on the Junior
Subordinated Debentures, whether in cash, securities or other property (other
than securities of the Company or any other corporation provided for by a plan
of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in the subordination provisions with respect to
the Junior Subordinated Debentures, to the payment of all Senior Indebtedness
at the time outstanding, and to any securities issued in respect thereof under
any such plan of reorganization or readjustment), which would otherwise (but
for the subordination provisions) be payable or deliverable in respect of the
Junior Subordinated Debentures shall be paid or delivered directly to the
holders of Senior Indebtedness in accordance with the priorities then existing
among such holders until all Senior Indebtedness (including any interest
thereon accruing after the commencement of any such proceedings) shall have
been paid in full.
In the event of any such proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company
ranking on a parity with the Junior Subordinated Debentures, shall be entitled
to be paid from the remaining assets of the Company the amounts at the time
due and owing on account of unpaid principal of and premium, if any, and
interest, if any, on the Junior Subordinated Debentures and such other
obligations before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any capital stock or
obligations of the Company ranking junior to the Junior Subordinated
Debentures and such other obligations. If any payment or distribution on
account of the principal of and premium, if any, or interest, if any, on the
Junior Subordinated Debentures of any character or any security, whether in
cash, securities or other
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property (other than securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which
is subordinate, at least to the extent provided in the subordination
provisions with respect to the Junior Subordinated Debentures, to the payment
of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment) shall be received by any holder of any Junior Subordinated
Debentures in contravention of any of the terms hereof and before all the
Senior Indebtedness shall have been paid in full, such payment or distribution
or security shall be received in trust for the benefit of, and shall be paid
over or delivered and transferred to, the holders of the Senior Indebtedness
at the time outstanding in accordance with the priorities then existing among
such holders for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all such Senior Indebtedness
in full. By reason of such subordination, in the event of the insolvency of
the Company, holders of Senior Indebtedness may receive more, ratably, and
holders of the Junior Subordinated Debentures having a claim pursuant to such
securities may receive less, ratably, than the other creditors of the Company.
Such subordination will not prevent the occurrence of any Event of Default in
respect of the Junior Subordinated Debentures.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Company. The Company expects from
time to time to incur additional indebtedness constituting Senior
Indebtedness.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of Junior
Subordinated Debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby.
The Debenture Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties
if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
The Bank of New York, the Debenture Trustee, also serves as trustee under an
indenture for Senior Indebtedness (the "2006 Indenture"), pursuant to which
$100,000,000 aggregate principal amount of the Company's 6 3/4% Notes Due
November 15, 2006 are outstanding. In the event of a default under the
Indenture, due to The Bank of New York's relationship with the Company as
trustee under the 2006 Indenture, The Bank of New York would be deemed, under
the Trust Indenture Act, to have a conflicting interest and would be required
to eliminate such conflict within 90 days, apply to the Commission for
permission to continue as Trustee or resign as Trustee or resign as trustee
under the 2006 Indenture. In addition, the Company and certain of its
affiliates maintain deposit accounts and/or conduct other banking transactions
with The Bank of New York.
DESCRIPTION OF GUARANTEE
The Old Guarantee was entered into by the Company concurrently with the
issuance by the Issuer Trust of the Old Capital Securities, for the benefit of
the holders from time to time of the Old Capital Securities. As soon as
practicable after the date hereof, the Old Guarantee will be exchanged by the
Company for the New Guarantee. The New Guarantee has been qualified under the
Trust Indenture Act. This summary of certain provisions of the Guarantee
describes the material terms of the Guarantee but does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of the Guarantee Agreement, including the definitions
therein of certain terms, and the Trust Indenture Act. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Capital
Securities.
GENERAL
The Company has agreed (and under the New Guarantee will agree) to pay in
full on a subordinated basis, to the extent set forth herein, the Guarantee
Payments (as defined below) to the holders of the Capital Securities,
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as and when due, regardless of any defense, right of set-off or counterclaim
that such Issuer Trust may have or assert other than the defense of payment.
The following payments with respect to the Capital Securities, to the extent
not paid by or on behalf of the Issuer Trust (the "Guarantee Payments"), will
be subject to the Guarantee: (i) any accrued and unpaid Distributions required
to be paid on such Capital Securities, to the extent that the Issuer Trust has
funds on hand available therefor at such time, (ii) the Redemption Price with
respect to any Capital Securities called for redemption, to the extent that
the Issuer Trust has funds on hand available therefor at such time, and (iii)
upon a voluntary or involuntary termination, winding up or liquidation of the
Issuer Trust (unless the Junior Subordinated Debentures are distributed to
holders of the Capital Securities), the lesser of (a) the sum of the
Liquidation Amount of $1,000 per Capital Security plus accumulated and unpaid
Distributions plus any unpaid premium and (b) the amount of assets of the
Issuer Trust remaining available for distribution to holders of Capital
Securities on liquidation of the Issuer Trust. The Company's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of the Capital Securities or by causing
the Issuer Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer Trust's obligations under the Capital Securities, but will apply
only to the extent that the Issuer Trust has funds sufficient to make such
payments, and is not a guarantee of collection.
If the Company does not make interest payments on the Junior Subordinated
Debentures held by the Issuer Trust, the Issuer Trust will not be able to pay
Distributions on the Capital Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Company. See "--Status of the
Guarantee." Because the Company is a holding company, the right of the Company
to participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the
prior claims of creditors of that subsidiary, except to the extent the Company
may itself be recognized as a creditor of that subsidiary. In addition, there
are various limitations on the extent to which the Company's subsidiaries may
pay dividends to the Company. See "The PMI Group, Inc." Accordingly, the
Company's obligations under the Guarantee will be effectively subordinated to
all existing and future liabilities of the Company's subsidiaries, and
claimants should look only to the assets of the Company for payments
thereunder. See "The PMI Group, Inc." The Guarantee does not limit the
incurrence or issuance of other secured or unsecured debt of the Company,
including Senior Indebtedness, whether under the Indenture or any other
indenture that the Company may enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of the Issuer
Trust's obligations under the Capital Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations under the Capital
Securities. See "Relationship Among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company in the same manner as Junior Subordinated
Debentures.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held for the benefit of the holders of the Capital
Securities. The Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer Trust or upon
distribution to the holders of the Capital Securities of the Junior
Subordinated Debentures. The Guarantee does not place a limitation on the
amount of additional Senior Indebtedness that may be incurred by the Company.
The Company expects from time to time to incur additional indebtedness
constituting Senior Indebtedness.
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Capital Securities. The manner of obtaining any such approval will
be as set forth under "--Description of the New Securities--Voting Rights;
Amendment of Trust Agreement." All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders
of the Capital Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Issuer Trust, the Guarantee
Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with
all the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or
her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of any Capital Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
For information concerning the relationship between The Bank of New York,
the Guarantee Trustee, and the Company, see "Description of Junior
Subordinated Debentures--Information Concerning the Debenture Trustee."
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the Redemption Price of the Capital Securities, upon full payment
of the amounts payable upon liquidation of the Issuer Trust or upon
distribution of Junior Subordinated Debentures to the holders of the Capital
Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Capital Securities must restore payment of any sums
paid under the Capital Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by the Company under the
Trust Agreement (the "Expense Agreement"), the Company has irrevocably and
unconditionally guaranteed to each person or entity to whom the Issuer Trust
becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Issuer
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Trust, other than obligations of the Issuer Trust to pay to the holders of the
Capital Securities or other similar interests in the Issuer Trust the amounts
due such holders pursuant to the terms of the Capital Securities or such other
similar interests, as the case may be.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respect to the
New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the Registration Rights Agreement (which
rights will terminate upon consummation of the Exchange Offer, except under
limited circumstances); (ii) the New Capital Securities will not provide for
any increase in the Distribution rate thereon; and (iii) the New Junior
Subordinated Debentures will not provide for any increase in the interest rate
thereon. The Registration Rights Agreement provides, that, in the event that
the Exchange Offer is not consummated on or prior to [ ], 1997, or, in
certain limited circumstances, in the event a shelf registration statement
(the "Shelf Registration Statement") with respect to the resale of the Old
Capital Securities is not filed or declared effective within a specified time,
then interest will accrue (in addition to the interest rate on the Junior
Subordinated Debentures) at the rate of 0.25% per annum on the principal
amount of the Junior Subordinated Debentures, and Distributions will accrue
(in addition to the stated Distribution rate on the Capital Securities) at the
rate of 0.25% per annum on the Liquidation Amount of the Capital Securities,
for the period from the occurrence of such event until such time as the
Exchange Offer is consummated or any required Shelf Registration Statement is
filed or declared effective. The New Securities are not, and upon consummation
of the Exchange Offer the Old Securities will not be, entitled to any such
additional interest or Distributions. Accordingly, holders of Old Capital
Securities should review the information set forth under "Risk Factors--
Certain Consequences of Failure to Exchange Old Capital Securities" and
"Description of New Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Issuer Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of Guarantee." Taken together, the Company's
obligations under the Junior Subordinated Debentures, the Indenture, the Trust
Agreement, the Expense Agreement and the Guarantee provide, in the aggregate,
a full, irrevocable and unconditional guarantee of payments of Distributions
and other amounts due on the Capital Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations under the Capital
Securities. If and to the extent that the Company does not make payments on
the Junior Subordinated Debentures, the Issuer Trust will not pay
Distributions or other payments due on the Capital Securities. The Guarantee
does not cover payment of Distributions when the Issuer Trust does not have
sufficient funds to pay such Distributions or other payments. In such event,
the remedy of a holder of the Capital Securities is to institute a legal
proceeding directly against the Company for enforcement of payment of such
Distributions or other payments to such holder. The obligations of the Company
under the Guarantee are subordinate and junior in right of payment to all
Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount of the Junior Subordinated
Debentures will be equal to the sum of the aggregate stated Liquidation Amount
of the Capital Securities and Common Securities, (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate and Distribution and other payment dates for the
Capital Securities, (iii) the Company shall pay
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for all and any costs, expenses and liabilities of the Issuer Trust except the
Issuer Trust's obligations to holders of its Capital Securities, and (iv) the
Trust Agreement further provides that the Issuer Trust will not engage in any
activity that is not consistent with the limited purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with, and to the extent the Company has theretofore made or is concurrently on
the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer Trust
or any other person or entity.
A default or event of default under any Senior Indebtedness of the Company
would not constitute a default under the Trust Agreement or an Event of
Default. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness of the Company, the subordination provisions of the
Indenture provide that no payments may be made in respect of the Junior
Subordinated Debentures until such Senior Indebtedness has been paid in full
or any payment default thereunder has been cured or waived. Failure to make
required payments on the Junior Subordinated Debentures would constitute an
Event of Default.
LIMITED PURPOSE OF ISSUER TRUST
The Issuer Trust's Capital Securities evidence undivided beneficial
interests in the assets of the Issuer Trust, and the Issuer Trust exists for
the sole purpose of issuing its Capital Securities and Common Securities and
investing the proceeds thereof in the Junior Subordinated Debentures. A
principal difference between the rights of a holder of a Capital Security and
a holder of Junior Subordinated Debentures is that a holder of Junior
Subordinated Debentures is entitled to receive from the Company the principal
amount of and interest accrued on Junior Subordinated Debentures held, while a
holder of Capital Securities is entitled to receive Distributions from the
Issuer Trust (or from the Company under the Guarantee) if and to the extent
the Issuer Trust has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Issuer Trust involving the liquidation of the Junior Subordinated
Debentures, after satisfaction of the liabilities of creditors of the Issuer
Trust as required by applicable law, the holders of the Capital Securities
will be entitled to receive, out of assets held by the Issuer Trust, the
Liquidation Distribution in cash. See "Description of New Securities--
Liquidation Distribution Upon Termination." Upon any voluntary or involuntary
liquidation or bankruptcy of the Company, the Issuer Trust, as holder of the
Junior Subordinated Debentures, would be a subordinated creditor of the
Company, subordinated in right of payment to all Senior Indebtedness as set
forth in the Indenture, but entitled to receive payment in full of principal
and interest, before any stockholders of the Company receive payments or
distributions. Since the Company is the guarantor under the Guarantee and has
agreed to pay for all costs, expenses and liabilities of the Issuer Trust
(other than the Issuer Trust's obligations to the holders of its Capital
Securities), the positions of a holder of the Capital Securities and a holder
of such Junior Subordinated Debentures relative to other creditors and to
stockholders of the Company in the event of liquidation or bankruptcy of the
Company are expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of Capital Securities.
This summary only addresses the tax consequences to a person that acquires
Capital Securities on their original issue at their original offering price
and that is (i) an individual citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any state thereof or the District of Columbia or (iii) an estate or trust
the income of which is subject to United States federal income tax regardless
of source (a "United States Person"). This summary does not address all tax
consequences that may be applicable to a United States Person that is a
beneficial owner of Capital Securities, nor does it address the tax
consequences to (i) persons that are not United States Persons, (ii) persons
that may be subject to special treatment under United States federal income
tax law, such as banks, insurance companies, thrift institutions, regulated
investment companies, real estate investment trusts, tax-exempt organizations
and dealers in securities or currencies, (iii) persons that will hold Capital
Securities as part of a position in a "straddle" or as part of a "hedging,"
"conversion" or other integrated investment transaction for federal income tax
purposes, (iv) persons whose functional currency is not the United States
dollar or (v) persons that do not hold Capital Securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Orrick, Herrington & Sutcliffe LLP, special counsel
to the Company and the Issuer Trust. This summary is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, Internal
Revenue Service rulings and pronouncements and judicial decisions now in
effect, all of which are subject to change at any time. Such changes may be
applied retroactively in a manner that could cause the tax consequences to
vary substantially from the consequences described below, possibly adversely
affecting a beneficial owner of Capital Securities. In particular, legislation
has been proposed that could adversely affect the Company's ability to deduct
interest on the Junior Subordinated Debentures, which may in turn permit the
Company to cause a redemption of the Capital Securities. See "--Possible Tax
Law Changes." An opinion of counsel is not binding on the Internal Revenue
Service or the courts, and the authorities on which this summary is based are
subject to various interpretations. It is therefore possible that the federal
income tax treatment of the purchase, ownership and disposition of Capital
Securities may differ from the treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES, AS WELL AS
THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE ISSUER TRUST
In connection with the issuance of the Old Capital Securities, Orrick,
Herrington & Sutcliffe LLP has rendered its opinion to the effect that, under
then current law and assuming compliance with the terms of the Trust
Agreement, and based on certain facts and assumptions contained in such
opinion, the Issuer Trust will be classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes. As a result, each beneficial owner of Capital Securities (a
"Securityholder") will be treated as owning an undivided beneficial interest
in the Junior Subordinated Debentures. Accordingly, each Securityholder will
be required to include in its gross income its pro rata share of the items of
income realized with respect to the Junior Subordinated Debentures whether or
not cash is actually distributed to the Securityholders. See "--Interest
Income and Original Issue Discount." No amount included in income with respect
to the Capital Securities will be eligible for the dividends-received
deduction.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Final Treasury Regulations issued on June 11, 1996 generally provide that
stated interest on a debt instrument is not "qualified stated interest" and,
therefore, will give rise to original issue discount ("OID") unless such
interest is unconditionally payable in cash or in property (other than debt
instruments of the issuer)
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at least annually at a single fixed rate. Interest is considered to be
unconditionally payable only if reasonable legal remedies exist to compel
timely payment or the debt instrument otherwise provides terms and conditions
that make the likelihood of late payment (other than late payment that occurs
within a reasonable grace period) or non-payment a "remote contingency."
Under the Indenture, the Company has the right, at any time and from time to
time during the term of the Junior Subordinated Debentures to defer payments
of interest by extending the interest payment period for a period not
exceeding 10 consecutive semi-annual periods with respect to each Extension
Period. Unless the likelihood of exercise of such right to defer is remote,
the Junior Subordinated Debentures would be issued with OID. During any
Extension Period, (a) the Company will not be permitted to declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock, and (b) the
Company will not be permitted to make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company that rank pari passu with or
junior to the Junior Subordinated Debentures (although these restrictions will
not apply to dividends or distributions in common stock of the Company and in
certain other limited situations). See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Period." The Company currently
believes that the adverse impact that the imposition of such restrictions
would have on the Company and the value of the equity securities of the
Company makes the likelihood of the Company exercising its right to defer
payments of interest on the Junior Subordinated Debentures remote.
Accordingly, the Company believes that the stated interest on the Junior
Subordinated Debentures should be considered unconditionally payable for
purposes of the OID provisions of the Code and that the Junior Subordinated
Debentures should not be considered to have been issued with OID. As a result,
each Securityholder will be required to include interest payments in taxable
income at the time accrued or received in accordance with its own method of
accounting. There can be no assurance, however, that the Internal Revenue
Service will agree with such determination.
However, if the Company does exercise its right to defer payments of
interest thereon, the Junior Subordinated Debentures will be considered to be
retired and reissued for their adjusted issue price at such time, and the
Junior Subordinated Debentures thereafter will be considered to have been
issued with OID. In such case, all the interest payments thereafter payable
will be treated as OID. If the payments were treated as OID (either because
the Company exercises the right to defer interest payments or because the
exercise of such right was not remote at the time of issuance), holders must
include that discount in income on an economic accrual basis before the
receipt of cash attributable to the interest, regardless of their method of
tax accounting. The amount of OID that accrues in any semi-annual period will
approximately equal the amount of the interest that accrues in that semi-
annual period at the stated interest rate. In the event that the interest
payment period is extended, holders will continue to accrue OID approximately
equal to the amount of the interest payment due at the end of the extended
interest payment period on an economic accrual basis over the length of the
extended interest period. A Securityholder that disposes of the Capital
Securities during an Extension Period may suffer a loss because the market
value of the Capital Securities likely will fall if the Company exercises its
option to defer payments of interest on the Junior Subordinated Debentures. To
the extent the selling price is less than the Securityholder's adjusted tax
basis (which will include all accrued but unpaid interest), a Securityholder
will recognize a capital loss.
EXCHANGE OFFER
The exchange of an Old Capital Security for a New Capital Security pursuant
to the terms and conditions of the Exchange Offer should have no United States
federal income tax consequences. The New Capital Security received in exchange
for the Old Capital Security should be treated for United States federal
income tax purposes as a continuation of the exchanged Old Capital Security.
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DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF CAPITAL
SECURITIES
Under current law, a distribution by the Issuer Trust of the Junior
Subordinated Debentures, as described under the caption "Description of
Capital Securities--Liquidation Distribution Upon Termination" will be non-
taxable and will result in the Securityholder receiving directly his pro rata
share of the Junior Subordinated Debentures previously held indirectly through
the Issuer Trust, with a holding period and aggregate tax basis equal to the
holding period and aggregate tax basis such Securityholder had in its Capital
Securities before such distribution.
SALES OR REDEMPTION OF CAPITAL SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of Capital
Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized and the Securityholder's adjusted tax
basis in the Capital Securities sold or so redeemed. A Securityholder's
adjusted tax basis in the Capital Securities will be increased by any OID
included in gross income and decreased by any interest payments not treated as
"qualified stated interest" (as defined above). See "--Interest Income and
Original Issue Discount." Gain or loss recognized by a Securityholder on
Capital Securities held for more than one year generally will be taxable as
long-term capital gain or loss. Amounts attributable to accrued interest with
respect to a Securityholder's pro rata share of the Junior Subordinated
Debentures not previously included in income will be taxable as ordinary
income.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest paid or OID accrued on the Capital Securities held of
record by United States Persons (other than corporations and other exempt
Securityholders) will be reported to the Internal Revenue Service. "Backup"
withholding at a rate of 31% will apply to payments of interest to non-exempt
United States Persons unless the Securityholder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Capital Securities to or
through the United States office of a broker is subject to information
reporting and backup withholding unless the holder or beneficial owner
establishes an exemption from information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information
is furnished to the Internal Revenue Service.
It is anticipated that income on the Capital Securities will be reported to
holders on Form 1099 and mailed to holders of the Capital Securities by
January 31 following each calendar year.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, as part of President Clinton's Fiscal 1998 Budget
Proposal, the United States Treasury Department proposed legislation that
would, among other things, deny an issuer a deduction for United States
federal income tax purposes for the payment of interest on instruments with
characteristics similar to the Junior Subordinated Debentures. If the proposed
legislation were enacted in its current form, it is not expected to apply to
the Junior Subordinated Debentures because the proposed effective date for
this provision is the date of first committee action. Under current law, the
Company will be able to deduct interest on the Junior Subordinated Debentures.
There can be no assurance, however, that current or future legislative
proposals or final legislation will not affect the ability of the Company to
deduct interest on the Junior Subordinated Debentures. Such a change could
give rise to a Tax Event, which may permit the Company to cause a redemption
of the Capital Securities. See "Description of Capital Securities--
Redemption."
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CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an
investment in the Capital Securities. Accordingly, among other factors, the
fiduciary should consider whether the investment would satisfy the prudence
and diversification requirements of ERISA and would be consistent with the
documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well as
individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or
"disqualified persons" under the Code ("Parties in Interest") with respect to
such Plan. A violation of these "prohibited transaction" rules may result in
an excise tax or other liabilities under ERISA and/or Section 4975 of the Code
for such persons, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church
plans (as defined in Section 3(33) of ERISA) and foreign plans (as described
in Section 4(b)(4) of ERISA) are not subject to the requirements of ERISA or
Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Issuer Trust would be
deemed to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of
the Code if "plan assets" of the Plan were used to acquire an equity interest
in the Trust and no exception were applicable under the Plan Assets
Regulation. An "equity interest" is defined under the Plan Assets Regulation
as any interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features and specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the assets
of the Issuer Trust would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity interest in
the Trust, less than 25% of the value of each class of equity interests in the
Trust were held by Plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church and foreign plans), and
entities holding assets deemed to be "plan assets" of any Plan (collectively,
"Benefit Plan Investors"). No assurance can be given by the Initial Purchasers
that the value of the Capital Securities held by Benefit Plan Investors will
be less than 25% of the total value of such Capital Securities at the
completion of the initial offering or thereafter, and no monitoring or other
measures will be taken with respect to the satisfaction of the conditions to
this exception. All of the Common Securities will be purchased and held by the
Company.
Certain transactions involving the Issuer Trust could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Capital Securities were
acquired with "plan assets" of such Plan and assets of the Issuer Trust were
deemed to be "plan assets" of Plans investing in the Issuer Trust. For
example, if the Company is a Party in Interest with respect to an investing
Plan (either directly or indirectly by reason of its subsidiaries'
activities), extensions of credit between the Company and the Issuer Trust (as
represented by the Junior Subordinated Debentures and the Guarantee) would
likely be prohibited by Section 406(a)(1)(B) of ERISA and Section
4975(c)(1)(B) of the Code, unless exemptive relief were available under an
applicable administrative exemption (see below). In addition, if the Company
were considered to be a fiduciary with respect to the Issuer Trust as a result
of certain powers it holds (such as the powers to remove and replace the
Property Trustee and the Administrative Trustees), the optional redemption or
acceleration of the Junior Subordinated Debentures could be considered to be
prohibited transactions under Section 406(b) of ERISA and Section
4975(c)(1)(E) of the Code.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited
transactions resulting from the purchase or holding of the Capital Securities,
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assuming that assets of the Issuer Trust were deemed to be "plan assets" of
Plans investing in the Trust (see above). Those class exemptions are PTCE 96-
23 (for certain transactions determined by in-house asset managers), PTCE 95-
60 (for certain transactions involving insurance company general accounts),
PTCE 91-38 (for certain transactions involving bank collective investment
funds), PTCE 90-1 (for certain transactions involving insurance company
separate accounts), and PTCE 84-14 (for certain transactions determined by
independent qualified professional asset managers).
Because the Capital Securities may be deemed to be equity interests in the
Issuer Trust for purposes of applying ERISA and Section 4975 of the Code, the
Capital Securities may not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in
the entity (a "Plan Asset Entity") or any person investing "plan assets" of
any Plan, unless such purchaser or holder is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable
exemption. Any purchaser or holder of the Capital Securities or any interest
therein will be deemed to have represented by its purchase and holding thereof
that it either (a) is not a Plan or a Plan Asset Entity and is not purchasing
such securities on behalf of or with "plan assets" of any Plan or (b) is
eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38,
90-1 or 84-14 or another applicable exemption with respect to such purchase or
holding. See "Notice to Investors" herein.
In order to seek to avoid the prohibited transactions discussed above if the
Company were considered to be a fiduciary with respect to the Issuer Trust, as
well as to delineate fiduciary responsibility appropriately, each investing
Plan, by purchasing the Capital Securities, will be deemed to have (i)
directed the Issuer Trust to invest in the Junior Subordinated Debentures and
(ii) appointed The Bank of New York as Property Trustee under the Trust
Agreement responsible for certain administrative functions with respect to the
Capital Securities. The appointment of The Bank of New York as Property
Trustee does not extend its duties beyond those set forth in the Trust
Agreement and The Bank of New York expressly assumes no other fiduciary
responsibilities to an investing Plan, including without limitation any duty
with respect to the prudence or diversification of investments under the Plan.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is
particularly important that fiduciaries or other persons considering
purchasing the Capital Securities on behalf of or with "plan assets" of any
Plan consult with their counsel regarding the potential consequences if the
assets of the Issuer Trust were deemed to be "plan assets" and the
availability of exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14
or any other applicable exemption.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own account
in connection with the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Capital Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by Participating Broker-Dealers during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-
making activities or other trading activities. The Company and the Issuer
Trust have agreed that this Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating Broker-Dealer in connection
with resales of such New Capital Securities for a period ending 90 days after
the Expiration Date (subject to extension under certain limited circumstances
described herein) or, if earlier, when all such New Capital Securities have
been disposed of by such Participating Broker-Dealer. See "The Exchange
Offer--Resales of New Capital Securities." The Company and the Issuer Trust
will not receive any proceeds from the issuance of the New Capital Securities
offered hereby. New Capital Securities received by broker-dealers for their
own accounts in connection with the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Capital Securities or
a
61
<PAGE>
combination of such methods of resale, at market prices prevailing at the time
of resale at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Capital Securities. Any broker-dealer that resells New Capital Securities that
were received by it for its own account in connection with the Exchange Offer
and any broker or dealer that participates in a distribution of such New
Capital Securities may be deemed to be an "underwriter" within the meaning of
the Securities Act, and any profit on any such resale of New Capital
Securities and any commissions or concessions received by any such persons may
be deemed to be underwriting compensation under the Securities Act. The Letter
of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
VALIDITY OF NEW CAPITAL SECURITIES
Certain matters of Delaware law relating to the validity of the New Capital
Securities, the enforceability of the Trust Agreement and the creation of the
Issuer Trust will be passed upon by Richards, Layton & Finger, special
Delaware Counsel to the Company and the Issuer Trust. The validity of the New
Guarantee and the New Junior Subordinated Debentures will be passed upon for
the Company by Orrick, Herrington & Sutcliffe LLP, San Francisco, California.
Certain matters relating to United States federal income tax considerations
will be passed upon for the Company by Orrick, Herrington & Sutcliffe LLP.
EXPERTS
The consolidated financial statements and schedules of the Company and
subsidiaries incorporated in this Prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
62
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS.
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, inter alia, empowers a
Delaware corporation to indemnify any 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 (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. Similar indemnity
is authorized for such person against expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement
of any such threatened, pending or completed action or suit if such person
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the corporation, and provided further
that (unless a court of competent jurisdiction otherwise provides) such person
shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as authorized in each specific case upon a
determination by the stockholders or disinterested directors or, if there are
no disinterested directors, or if such disinterested directors so direct, by
independent legal counsel in a written opinion that indemnification is proper
because the indemnitee has met the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or enterprise, 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
corporation would otherwise have the power to indemnify him under Section 145.
The Company maintains policies insuring its and its subsidiaries' officers and
directors against certain liabilities for actions taken in such capacities,
including liabilities under the Securities Act of 1933.
Article V of the By-laws of the Company provides for indemnification of the
directors and officers of the Company to the fullest extent permitted by law,
as now in effect or later amended. In addition, the By-laws provide for
indemnification against expenses incurred by a director or officer to be paid
by the Company in advance of the final disposition of such action, suit or
proceeding; provided, however, that if required by the Delaware eneral
Corporation Law, an advancement of expenses will be made only upon receipt of
an undertaking by or on behalf of the director or officer to repay such amount
if it shall be ultimately determined that he is not entitled to be indemnified
by the Company. The By-laws further provide for a contractual cause of action
on the part of directors and officers of the Company with respect to
indemnification claims which have not been paid by the Company.
The Company also has provided liability insurance for each director and
officer for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers of the Company.
The Company has entered into indemnification agreements with its directors
and executive officers that require the Company to indemnify such persons
against all expenses (including attorneys' fees and amounts paid in
settlement), judgments, fines and penalties which are actually incurred in
connection with any threatened, pending or completed action, suit or other
proceeding (including an action by or in the right of the Company) to which
such person is, was or is threatened to be made a party, by reason of the fact
that such person is or was a director or officer of the Company, or is or was
serving at the request of the Company as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, to the fullest extent permitted by
applicable law and the Company's Restated Certificate of Incorporation and By-
laws. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
II-1
<PAGE>
Article Nine of the Company's Restated Certificate of Incorporation limits
to the fullest extent permitted by the Delaware General Corporation Law, as
the same exists or may have been amended, the personal liability of the
Company's directors to the Company or its stockholders for monetary damages
for a breach of their fiduciary duty as directors. Section 102(b)(7) of the
Delaware General Corporation Law currently provides that such provisions do
not eliminate or limit the liability of a director (i) for a breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law (relating to the declaration of dividends and purchase or
redemption of shares in violation of the Delaware General Corporation Law), or
(iv) for any transaction from which the director derived an improper personal
benefit.
Under the Amended and Restated Trust Agreement, the Company has agreed to
indemnify each of the Issuer Trustees and Administrative Trustees, and to hold
such Issuer Trustees and Administrative Trustees harmless, against any loss,
damage, claims, liability or expense incurred without negligence or willful
misconduct on their part, arising out of or in connection with the acceptance
of administration of such Trust Agreement, including the costs and expenses of
defense against any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Amended and Restated
Trust Agreement, which is filed as an exhibit to this Registration Statement.
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<C> <S>
4.1 Indenture, dated as of February 4, 1997, between the Company and
The Bank of New York, as Debenture Trustee
4.2 Form of 8.309% Junior Subordinated Deferrable Interest Debenture
(included in Exhibit 4.1)
4.3 Certificate of Trust of PMI Capital I (included in Exhibit 4.4)
4.4 Amended and Restated Trust Agreement of PMI Capital I (including
the related Form of Expense Agreement) (incorporated by reference
from Exhibit 10.30 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996)
4.5 Form of Capital Security Certificate for PMI Capital I (included
in Exhibit 4.4)
4.6 Form of Guarantee Agreement
4.7 Exchange and Registration Rights Agreement, dated as of February
4, 1997, among the Company, PMI Capital I and Goldman Sachs & Co.
4.8 All instruments defining the rights of holders of long-term debt
of the Company and its subsidiaries (Not filed pursuant to clause
4 (iii) of Item 601(b) of Regulation S-X; to be furnished upon
request of the Commission)
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP as to validity of
the New Junior Subordinated Debentures and the New Guarantee to be
issued by the Company
5.2 Opinion of Richards, Layton & Finger as to validity of the New
Capital Securities
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP as to certain
federal income tax matters
12.1 Computation of Ratios of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Orrick, Herrington & Sutcliffe LLP (Included in Exhibit
5.1)
23.3 Consent of Richards, Layton & Finger (Included in Exhibit 5.2)
23.4 Consent of Orrick, Herrington & Sutcliffe LLP (Included in Exhibit
8.1)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Amended and Restated Trust Agreement
25.3 Form T-1 Statement of Eligibility of The Bank of New York under
the Guarantee for the benefit of the holders of Capital Securities
27.1 The Company's Financial Data Schedule (incorporated by reference
from Exhibit (27.1) to the Company's 1997 First Quarter Report on
Form 10-Q)
99.1 Form of Letter of Transmittal and instructions thereto
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<C> <S>
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Exchange Agent Agreement
</TABLE>
ITEM 22. UNDERTAKINGS.
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Each of the undersigned Registrants hereby also undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-
effective amendment thereto) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (l)(i) and (l)(ii) do not apply if this
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by a Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a
registrant pursuant to the foregoing provisions, or otherwise each of the
undersigned registrants has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
a registrant of expenses incurred by a director, officer or controlling person
of a registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, each of the undersigned registrants will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
Each of the undersigned registrants hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
Each of the undersigned registrants hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, The
PMI Group, Inc. has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 20th day of June, 1997.
THE PMI GROUP, INC.
By: /s/ W. Roger Haughton
------------------------------------
W. Roger Haughton President and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints John M. Lorenzen, Bradley
M. Shuster and Phyllis A. Wilson and each of them, as his or her true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Stateme t or any subsequent registration
statements pursuant to Rule 462 (including any amendments thereto), and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the foregoing, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURES TITLE DATE
/s/ W. Roger Haughton President, Chief
- ------------------------------- Executive Officer and June 20, 1997
W. Roger Haughton Director (Principal
Executive Officer)
/s/ John M. Lorenzen, Jr. Executive Vice
- ------------------------------- President, Chief June 20, 1997
John M. Lorenzen, Jr. Financial Officer and
Assistant Secretary
(Principal Financial
Officer)
/s/ William A. Seymore Vice President,
- ------------------------------- Controller (Controller June 20, 1997
William A. Seymore and Principal Accounting
Officer)
/s/ Edward M. Liddy
- ------------------------------- Chairman and Director June 20, 1997
Edward M. Liddy
/s/ Donald C. Clark
- ------------------------------- Director June 20, 1997
Donald C. Clark
II-5
<PAGE>
SIGNATURES TITLE DATE
/s/ Wayne E. Hedien Director June 20, 1997
- -------------------------------
Wayne E. Hedien
/s/ Kenneth T. Rosen Director June 20, 1997
- -------------------------------
Kenneth T. Rosen
/s/ James C. Castle Director June 20, 1997
- -------------------------------
James C. Castle
/s/ Mary Lee Widener Director June 20, 1997
- -------------------------------
Mary Lee Widener
Pursuant to the requirements of the Securities Act of 1933, as amended, PMI
Capital I has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of San
Francisco, State of California, on the 20th day of June, 1997.
PMI CAPITAL I
By: THE PMI GROUP, INC., as Depositor
By: /s/ W. Roger Haughton
Name: W. Roger Haughton Title:
President and Chief Executive
Officer
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S> <C>
4.1 Indenture, dated as of February 4, 1997, between the Company
and The Bank of New York, as Debenture Trustee
4.2 Form of 8.309% Junior Subordinated Deferrable Interest
Debenture (included in Exhibit 4.1)
4.3 Certificate of Trust of PMI Capital I (included in Exhibit
4.4)
4.4 Amended and Restated Trust Agreement of PMI Capital I
(including the related Form of Expense Agreement)
(incorporated by reference from Exhibit 10.30 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996)
4.5 Form of Capital Security Certificate for PMI Capital I
(included in Exhibit 4.4)
4.6 Form of Guarantee Agreement
4.7 Exchange and Registration Rights Agreement, dated as of
February 4, 1997, among the Company, PMI Capital I and
Goldman Sachs & Co.
4.8 All instruments defining the rights of holders of long-term
debt of the Company and its subsidiaries (Not filed pursuant
to clause 4 (iii) of Item 601(b) of Regulation S-X; to be
furnished upon request of the Commission)
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP as to validity
of the New Junior Subordinated Debentures and the New
Guarantee to be issued by the Company
5.2 Opinion of Richards, Layton & Finger as to validity of the
New Capital Securities
8.1 Opinion of Orrick, Herrington & Sutcliffe LLP as to certain
federal income tax matters
12.1 Computation of Ratios of Earnings to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Orrick, Herrington & Sutcliffe LLP (Included in
Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger (Included in Exhibit
5.2)
23.4 Consent of Orrick, Herrington & Sutcliffe LLP (Included in
Exhibit 8.1)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the Amended and Restated Trust
Agreement
25.3 Form T-1 Statement of Eligibility of The Bank of New York
under the Guarantee for the benefit of the holders of
Capital Securities
27.1 The Company's Financial Data Schedule (incorporated by
reference from Exhibit (27.1) to the Company's 1997 First
Quarter Report on Form 10-Q)
99.1 Form of Letter of Transmittal and instructions thereto
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Exchange Agent Agreement
</TABLE>
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
THE PMI GROUP, INC.
to
THE BANK OF NEW YORK
Trustee
----------------
JUNIOR SUBORDINATED INDENTURE
Dated as of February 4, 1997
----------------
- --------------------------------------------------------------------------------
<PAGE>
THE PMI GROUP, INC.
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 317 which,
pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the
Trust Reform Act of 1990, are a part of and govern the Indenture whether or not
physically contained therein) and the Junior Subordinated Indenture, dated as of
February 4, 1997.
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
<S> <C> <C>
ss.310 (a) (1), (2) and (5)...............................................................6.9
(a) (3)............................................................................Not Applicable
(a) (4)............................................................................Not Applicable
(b)................................................................................6.8
...................................................................................6.10
(c)................................................................................Not Applicable
ss.311 (a)................................................................................6.13(a)
(b)................................................................................6.13(b)
(b) (2)............................................................................7.3(a) (2)
...................................................................................7.3(a) (2)
ss.312 (a)................................................................................7.1
...................................................................................7.2(a)
(b)................................................................................7.2(b)
(c)................................................................................7.2(c)
ss.313 (a)................................................................................7.3(a)
(b)................................................................................7.3(b)
(c)................................................................................7.3(a), 7.3(b)
(d)................................................................................7.3(c)
ss.314 (a) (1), (2) and (3)...............................................................7.4
(a) (4)............................................................................10.5
(b)................................................................................Not Applicable
(c) (1)............................................................................1.2
(c) (2)............................................................................1.2
(c) (3)............................................................................Not Applicable
(d)................................................................................Not Applicable
(e)................................................................................1.2
(f)................................................................................Not Applicable
ss.315 (a)................................................................................6.1(a)
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(b)................................................................................6.2
...................................................................................7.3(a) (6)
(c)................................................................................6.1(b)
(d)................................................................................6.1(c)
(d) (1)............................................................................6.1(a) (1)
(d) (2)............................................................................6.1(c) (2)
(d) (3)............................................................................6.1(c) (3)
(e)................................................................................5.14
ss.316 (a)................................................................................1.1
(a) (1) (A)........................................................................5.12
(a) (1) (B)........................................................................5.13
(a) (2)............................................................................Not Applicable
(b)................................................................................5.8
(c)................................................................................1.4(f)
ss.317 (a) (1)............................................................................5.3
(a) (2)............................................................................5.4
(b)................................................................................10.3
ss.318 (a)................................................................................1.7
-----------------------------------------------------
</TABLE>
- ------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Junior Subordinated Indenture.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL
APPLICATION
Section 1.1. Definitions. ........................................................................1
Section 1.2. Compliance Certificate and Opinions.................................................10
Section 1.3. Forms of Documents Delivered to Trustee ............................................11
Section 1.4. Acts of Holders.....................................................................11
Section 1.5. Notices, Etc. to Trustee and Company................................................13
Section 1.6. Notice to Holders; Waiver. .........................................................14
Section 1.7. Conflict with Trust Indenture Act. .................................................14
Section 1.8. Effect of Headings and Table of Contents. ..........................................14
Section 1.9. Successors and Assigns. ............................................................14
Section 1.10. Separability Clause. ...............................................................14
Section 1.11 Benefits of Indenture. .............................................................15
Section 1.12. Governing Law. .....................................................................15
Section 1.13. Non-Business Days. .................................................................15
ARTICLE II
SECURITY FORMS
Section 2.1. Forms Generally. ...................................................................15
Section 2.2. Form of Face of Security. ..........................................................16
Section 2.3. Form of Reverse of Security. .......................................................21
Section 2.4. Additional Provisions Required in Global Security. .................................25
Section 2.5. Form of Trustee's Certificate of Authentication. ...................................25
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms. ...................................................................25
Section 3.2. Denominations. .....................................................................28
Section 3.3. Execution, Authentication, Delivery and Dating. ....................................28
Section 3.4. Temporary Securities. ..............................................................30
Section 3.5. Global Securities...................................................................30
Section 3.6. Registration, Transfer and Exchange Generally, Certain
Transfers and Exchanges; Securities Act Legends. .........................32
Section 3.7. Mutilated, Destroyed, Lost and Stolen Securities. ..................................35
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 3.8. Payment of Interest; Interest Rights Preserved. ....................................35
Section 3.9. Persons Deemed Owners. .............................................................37
Section 3.10. Cancellation. ......................................................................37
Section 3.11. Computation of Interest. ...........................................................37
Section 3.12. Deferrals of Interest Payment Dates. ...............................................38
Section 3.13. Right of Set-Off. ..................................................................39
Section 3.14. Agreed Tax Treatment. ..............................................................39
Section 3.15. CUSIP Numbers. .....................................................................39
Section 3.16. References to Interest..............................................................39
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture. ...........................................40
Section 4.2. Application of Trust Money. ........................................................41
ARTICLE V
REMEDIES
Section 5.1. Events of Default. .................................................................41
Section 5.2. Acceleration of Maturity; Rescission and Annulment. ................................42
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. ...................44
Section 5.4. Trustee May File Proofs of Claim. ..................................................44
Section 5.5. Trustee May Enforce Claim Without Possession of Securities. ........................45
Section 5.6. Application of Money Collected. ....................................................45
Section 5.7. Limitation on Suits. ...............................................................46
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Capital Securities. ............47
Section 5.9. Restoration of Rights and Remedies. ................................................47
Section 5.10. Rights and Remedies Cumulative. ....................................................47
Section 5.11. Delay or Omission Not Waiver. ......................................................48
Section 5.12. Control by Holders. ................................................................48
Section 5.13. Waiver of Past Defaults. ...........................................................48
Section 5.14. Undertaking for Costs. .............................................................49
Section 5.15. Waiver of Usury, Stay or Extension Laws. ...........................................49
ARTICLE VI
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities. ...............................................49
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 6.2. Notice of Defaults. ................................................................51
Section 6.3. Certain Rights of Trustee. .........................................................51
Section 6.4. Not Responsible for Recitals or Issuance of Securities. ............................52
Section 6.5. May Hold Securities. ...............................................................52
Section 6.6. Money Held in Trust. ...............................................................53
Section 6.7. Compensation and Reimbursement. ....................................................53
Section 6.8. Disqualification; Conflicting Interests. ...........................................53
Section 6.9. Corporate Trustee Required; Eligibility. ...........................................54
Section 6.10. Resignation and Removal; Appointment of Successor. .................................54
Section 6.11. Acceptance of Appointment by Successor. ............................................56
Section 6.12. Merger, Conversion, Consolidation or Succession to Business. .......................57
Section 6.13. Preferential Collection of Claims Against Company. .................................57
Section 6.14. Appointment of Authenticating Agent. ...............................................57
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders...........................59
Section 7.2. Preservation of Information, Communications to Holders. ............................59
Section 7.3. Reports by Trustee. ................................................................60
Section 7.4. Reports by Company. ................................................................60
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms. ..............................61
Section 8.2. Successor Corporation Substituted. .................................................61
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures without Consent of Holders. ................................62
Section 9.2. Supplemental Indentures with Consent of Holders. ...................................63
Section 9.3. Execution of Supplemental Indentures................................................65
Section 9.4. Effect of Supplemental Indentures. .................................................65
Section 9.5. Conformity with Trust Indenture Act. ...............................................65
Section 9.6. Reference in Securities to Supplemental Indentures. ................................65
</TABLE>
v
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<TABLE>
<CAPTION>
ARTICLE X
COVENANTS
<S> <C> <C>
Section 10.1. Payment of Principal, Premium and Interest. ........................................65
Section 10.2. Maintenance of Office or Agency. ...................................................66
Section 10.3. Money for Security Payments to be Held in Trust. ...................................66
Section 10.4. Statement as to Compliance. ........................................................67
Section 10.5. Waiver of Certain Covenants. .......................................................68
Section 10.6. Additional Sums. ...................................................................68
Section 10.7. Additional Covenants. ..............................................................68
Section 10.8. Original Issue Discount. ...........................................................69
Section 10.9. Delivery of Certain Information.....................................................70
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Applicability of This Article. .....................................................70
Section 11.2. Election to Redeem; Notice to Trustee. .............................................70
Section 11.3. Selection of Securities to be Redeemed. ............................................71
Section 11.4. Notice of Redemption. ..............................................................71
Section 11.5. Deposit of Redemption Price. .......................................................72
Section 11.6. Payment of Securities Called for Redemption. .......................................72
Section 11.7. Right of Redemption of Securities Initially Issued to a PMI Trust. .................73
ARTICLE XII
SINKING FUNDS
Section 12.1. Applicability of Article. ..........................................................73
Section 12.2. Satisfaction of Sinking Fund Payments with Securities. .............................74
Section 12.3. Redemption of Securities for Sinking Fund. .........................................74
ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Indebtedness. .....................................76
Section 13.2. No Payment When Senior Indebtedness in Default; Payment
Over Proceeds Upon Dissolution, Etc.........................................76
Section 13.3. Payment Permitted If No Default.....................................................77
Section 13.4. Subrogation to Rights of Holders of Senior Indebtedness.............................78
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 13.5. Provisions Solely to Define Relative Rights. .......................................78
Section 13.6. Trustee to Effectuate Subordination. ...............................................79
Section 13.7. No Waiver of Subordination Provisions. .............................................79
Section 13.8. Notice to Trustee. .................................................................79
Section 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent. ....................80
Section 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness. ..........................80
Section 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. ................................................80
Section 13.12. Article Applicable to Paying Agents. ...............................................81
</TABLE>
ANNEX A - Form of Trust Agreement
ANNEX B - Form of Amended and Restated Trust Agreement
ANNEX C - Form of Guarantee Agreement
ANNEX D - Form of Restricted Securities Certificate
ANNEX E - Form of Unrestricted Securities Certificate
vii
<PAGE>
JUNIOR SUBORDINATED INDENTURE, dated as of February 4, 1997, between
THE PMI GROUP, INC., a Delaware corporation (hereinafter called the "Company")
having its principal office at 601 Montgomery Street, San Francisco, California
94111, and THE BANK OF NEW YORK, INC., a New York banking corporation, as
Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in series (hereinafter called the "Securities") of
substantially the tenor hereinafter provided, including, without limitation,
Securities issued to evidence loans made to the Company of the proceeds from the
issuance from time to time by one or more business trusts (each a "PMI Trust,"
and, collectively, the "PMI Trusts") of preferred trust interests in such Trusts
(the "Capital Securities") and common interests in such Trusts (the "Common
Securities" and, collectively with the Capital Securities, the "Trust
Securities"), and to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered.
All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the
premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.
--------------------------
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
(2) All other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
<PAGE>
(3) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such computation;
provided, that when two or more principles are so generally accepted, it shall
mean that set of principles consistent with those in use by the Company; and
(4) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means the sum of any additional taxes, duties and other
governmental charges to which a PMI Trust has become subject from time to time
as a result of a Tax Event.
"Administrative Trustee" means, in respect of any PMI Trust, each Person
appointed by the Company to serve as administrative trustee of such PMI Trust,
solely in such Person's capacity as Administrative Trustee of such PMI Trust
under such Trust Agreement and not in such Person's individual capacity, or any
successor administrative trustee appointed as therein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, no PMI Trust to which
Securities have been issued shall be deemed to be an Affiliate of the Company.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the Depository.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depository for such Security, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities of
one or more series.
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<PAGE>
"Board of Directors" means either the board of directors of the Company or
any committee of that board duly authorized to act hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee, or, with respect to the Securities of a
series initially issued to a PMI Trust, the principal office of the Property
Trustee under the related Trust Agreement, is closed for business.
"Capital Securities" has the meaning specified in the first recital of this
Indenture.
"Commission" means 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 instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
"Common Stock" means the common stock, par value $0.01 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by its Chairman of the Board,
its Vice Chairman of the Board, its President or a Vice President, and by its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
office as of the date of this Indenture is located at 101 Barclay Street, Floor
21 West, New York, New York 10286.
"corporation" includes a corporation, association, company, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.8.
3
<PAGE>
"Debt" means with respect to the Company, whether recourse is to all or a
portion of the assets of the Company and whether or not contingent, (i) every
obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (iv) every obligation of the Company issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Company; (vi) all
indebtedness of the Company, whether incurred on or prior to the date of this
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, the Company has
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Depository" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depository by the Company pursuant to Section 3.1 with
respect to such series (or any successor thereto).
"Discount Security" means any security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Distributions," with respect to the Trust Securities issued by a PMI
Trust, means amounts payable in respect of such Trust Securities as provided in
the related Trust Agreement and referred to therein as "Distributions."
"Dollar" means the currency of the United States of America that, as at the
time of payment, is legal tender for the payment of public and private debts.
"DTC" means The Depository Trust Company.
"Event of Default" unless otherwise specified in the supplemental indenture
creating a series of Securities has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
4
<PAGE>
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of a series of Securities, issued to the Depository or
its nominee for such series, and registered in the name of such Depository or
its nominee.
"Guarantee Agreement" means the Guarantee Agreement substantially in the
form attached hereto as Annex C, or substantially in such form as may be
specified as contemplated by Section 3.1 with respect to the Securities of any
series, in each case as amended from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of each particular series of Securities established as
contemplated by Section 3.1.
"Institutional Accredited Investor" means an institution that is an
accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act.
"Interest Payment Date" means as to each series of Securities the Stated
Maturity of an installment of interest on such Securities.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 10.4 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Date" means the date of issuance specified as such in each
Security.
"Other Securities" means Securities transferred, upon exchange or
otherwise, to holders of "Other Capital Securities" as defined in the related
Trust Agreement.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
5
<PAGE>
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the
Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other Securities
have been authenticated and delivered or which have been paid pursuant to
Section 3.7, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor. Upon the written request of the Trustee, the Company shall furnish to
the Trustee promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held by or for the
account of the Company, or any other obligor on the Securities or any Affiliate
of the Company or such obligor, and, subject to the provisions of Section 6.1,
the Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Securities not
listed therein are Outstanding for the purpose of any such determination.
"PMI Guarantee" means the guarantee by the Company of distributions on the
Capital Securities of a PMI Trust to the extent provided in the applicable
Guarantee Agreement.
"PMI Trust" has the meaning specified in the first recital of this
Indenture.
"Paying Agent" means the Trustee or any Person authorized by the Company to
pay the principal of (and premium, if any) or interest on any Securities on
behalf of the Company.
"Performance Notes" means any of the Performance Notes issued by the
Company pursuant to a Note Purchase Agreement to originators of residential
mortgage loans on which PMI Mortgage Insurance Co., a wholly-owned subsidiary of
the Company, has issued mortgage guarantee insurance policies.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
6
<PAGE>
"Place of Payment" means, with respect to the Securities of any series, the
place or places where the principal of (and premium, if any) and interest on the
Securities of such series are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any security
authenticated and delivered under Section 3.7 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, in respect of any PMI Trust, the commercial bank
or trust company identified as the "Property Trustee" in the related Trust
Agreement, solely in its capacity as Property Trustee of such PMI Trust under
such Trust Agreement and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as
therein provided.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
with respect to the Securities of a series means, unless otherwise provided
pursuant to Section 3.1 with respect to Securities of a series, the date which
is fifteen days next preceding such Interest Payment Date (whether or not a
Business Day).
"Regulation D" means Regulation D under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Responsible Officer" means, when used with respect to the Trustee, any
vice president, any assistant vice president, any assistant treasurer, any trust
officer or assistant trust officer or any other officer of the corporate trust
department of the Trustee customarily performing functions similar to those
performed by any of the above designated officers, and also, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex D.
7
<PAGE>
"Restricted Securities Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Restricted Security.
"Rights Plan" means a plan of the Company providing for the issuance by the
Company to all holders of its Common Stock of rights entitling the holders
thereof to subscribe for or purchase shares of Common Stock or any class or
series of preferred stock, which rights (i) are deemed to be transferred with
such shares of Common Stock, (ii) are not exercisable and (iii) are also issued
in respect of future issuances of Common Stock, in each case until the
occurrence of a specified event or events.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Information" has the meaning specified in Section 10.9.
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 (or any successor
statute), as it may be amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt of the Company, whether incurred on or prior to the date of this Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Securities or to other
Debt which is pari passu with, or subordinated to, the Securities; provided,
however, that Senior Indebtedness shall not be deemed to include (i) any Debt of
the Company which, when incurred and without respect to any election under
Section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was
without recourse to the Company, (ii) any Debt of the Company to any of its
Subsidiaries, (iii) Debt to any employee of the Company, (iv) any Securities and
(v) any Performance Notes issued by the Company.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8.
"Stated Maturity" when used with respect to any Security or any installment
of principal thereof or interest thereon means the date specified pursuant to
the terms of such Security as the date on which the principal of such Security
or such installment of interest is due and payable, in the case
8
<PAGE>
of such principal, as such date may be shortened or extended as provided
pursuant to the terms of such Security and this Indenture.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Successor Security" of any particular Security means every Security issued
after, and evidencing all or a portion of the same debt as that evidenced by,
such particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.7 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Tax Event" means the receipt by a PMI Trust of an Opinion of Counsel (as
defined in the relevant Trust Agreement) 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 the date
of issuance of the Capital Securities of such PMI Trust under the relevant Trust
Agreement, there is more than an insubstantial risk that (i) such PMI Trust is,
or will be within 90 days of the date of such Opinion of Counsel, subject to
United States Federal income tax with respect to income received or accrued on
the corresponding series of Securities issued by the Company to such PMI Trust,
(ii) interest payable by the Company on such corresponding series of Securities
is not, or within 90 days of the date of such Opinion of Counsel, will not be,
deductible by the Company, in whole or in part, for United States Federal income
tax purposes or (iii) such PMI Trust is, or will be within 90 days of the date
of such Opinion of Counsel, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Trust Agreement" means the Trust Agreement substantially in the form
attached hereto as Annex A, as amended by the form of Amended and Restated Trust
Agreement substantially in the form attached hereto as Annex B, or substantially
in such form as may be specified as contemplated by Section 3.1 with respect to
the Securities of any series, in each case as amended from time to time.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
9
<PAGE>
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss. 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Unrestricted Securities Certificate" means a certificate substantially in
the form set forth in Annex E.
"Vice President" when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
Section 1.2. Compliance Certificate and Opinions.
---------------------------------------------------
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants, compliance with which constitutes a condition 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 (including covenants compliance with which
constitute a condition precedent), if any, have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.4) shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
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Section 1.3. Forms of Documents Delivered to Trustee.
-------------------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders.
-------------------------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments is or are delivered to the
Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a Person acting in other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority.
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(c) The fact and date of the execution by any Person of any such instrument
or writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient and in accordance
with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
(as hereinafter in this Section 1.4(f) provided) by Holders of the requisite
principal amount of Outstanding Securities of such series on such record date.
Nothing in this paragraph shall be construed to prevent the Company from setting
a new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Trustee in writing and to
each Holder of Securities of the relevant series in the manner set forth in
Section 1.6.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2) or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date, provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of
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Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Trustee from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 10.6, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 1.5. Notices, Etc. to Trustee and Company.
----------------------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Capital Securities or the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, or
(2) the Company by the Trustee, any Holder or any holder of Capital
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
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Section 1.6. Notice to Holders; Waiver.
-----------------------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. In case, by reason of
the suspension of or irregularities in regular mail service or for any other
reason, it shall be impossible or impracticable to mail notice of any event to
Holders when said notice is required to be given pursuant to any provision of
this Indenture or of the relevant Securities, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
Section 1.7. Conflict with Trust Indenture Act.
-------------------------------------------------
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture
Act through operation of Section 318(c) thereof, such imposed duties shall
control. This Indenture, the Company and the Trustee shall be deemed for all
purposes hereof to be subject to and governed by the Trust Indenture Act to the
same extent as would be the case if this Indenture were so qualified on the date
hereof.
Section 1.8. Effect of Headings and Table of Contents.
--------------------------------------------------------
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.9. Successors and Assigns.
--------------------------------------
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause.
------------------------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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Section 1.11 Benefits of Indenture.
-------------------------------------
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Capital Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 1.12. Governing Law.
------------------------------
This 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
laws principles.
Section 1.13. Non-Business Days.
----------------------------------
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, until such next succeeding Business Day) except that, if
such Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day (in each case with the same force
and effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity).
ARTICLE II
SECURITY FORMS
Section 2.1. Forms Generally.
-------------------------------
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article, or
in such other form or forms as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with applicable tax laws or the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company
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and delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.3 with respect to the authentication and delivery of
such Securities.
The Trustee's certificate of authentication shall be substantially in the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
Securities distributed to holders of Book-Entry Capital Securities upon the
dissolution of a PMI Trust shall be distributed in the form of one or more
Global Securities registered in the name of a Depository or its nominee, and
deposited with the Security Registrar, as custodian for such Depository, or held
by such Depository, for credit by the Depository to the respective accounts of
the beneficial owners of the Securities represented thereby (or such other
accounts as they may direct). Securities distributed to holders of Capital
Securities other than Book-Entry Capital Securities upon the dissolution of a
PMI Trust shall not be issued in the form of a Global Security or any other form
intended to facilitate book-entry trading in beneficial interests in such
Securities.
Section 2.2. Form of Face of Security.
----------------------------------------
If the Security is a Restricted Security, then insert - THIS
-----------------------------------------------------
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY [THE INITIAL INVESTOR][AN INVESTOR WHO
WAS PRIOR TO THE DISTRIBUTION OF THIS SECURITY HOLDING RELATED CAPITAL
SECURITIES AS AN INITIAL INVESTOR THEREOF] (1) TO A PERSON WHO THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) ACQUIRING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (B) BY SUBSEQUENT INVESTORS HOLDING THIS SECURITY IN
BOOK-ENTRY FORM AS SET FORTH IN (A) ABOVE OR TO AN INSTITUTIONAL INVESTOR
THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 OF REGULATION
D
16
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UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE
UNITED STATES. IF THIS SECURITY IS OWNED BY AN INITIAL INVESTOR THAT IS NOT
A QUALIFIED INSTITUTIONAL BUYER, IT MAY NOT BE HELD IN BOOK-ENTRY FORM AND
MAY NOT BE TRANSFERRED WITHOUT CERTIFICATION THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS AS PROVIDED IN THE INDENTURE REFERRED TO
BELOW. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.]
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE")(EACH, A
"PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO
PERSON INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THIS
SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1
OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR
HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT
IT EITHER (A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING
THIS SECURITY ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE
OR HOLDING.
[If applicable, insert -THE RECEIPT AND ACCEPTANCE OF THIS SECURITY OR
---------------------
ANY INTEREST HEREIN BY OR ON BEHALF OF THE HOLDER HEREOF OR ANY BENEFICIAL
OWNER SHALL CONSTITUTE THE ACCEPTANCE BY THE HOLDER HEREOF AND ALL OTHERS
HAVING A BENEFICIAL INTEREST IN THIS SECURITY OF ALL OF THE TERMS AND
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT REFERRED TO HEREIN.]
17
<PAGE>
THE PMI GROUP, INC.
(Title of Security)
No. $
THE PMI GROUP, INC., a corporation organized and existing under the laws of
Delaware (hereinafter called the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to _______________, or registered assigns, the principal
sum of __________ Dollars [if the Security is a Global Security, then insert, if
applicable--, or such other principal amount as may be set forth in the records
of the Securities Registrar hereinafter referred to in accordance with the
Indenture,] on _______, . The Company further promises to pay interest on said
principal sum from __________, or from the most recent interest payment date
(each such date, an "Interest Payment Date") on which interest has been paid or
duly provided for, [monthly] [quarterly] [semi-annually] [if applicable,
insert--(subject to deferral as set forth herein)] in arrears on [insert
applicable Interest Payment Dates] of each year, commencing _______, _____, at
the rate of ____% per annum [if applicable, insert - , provided that such rate
is subject to increase as provided in the Registration Rights Agreement
hereinafter referred to,] [if applicable, insert-- plus Additional Sums, if
any,] until the principal hereof shall have become due and payable [if
applicable, insert-- , plus Additional Interest, if any, at the rate of ___% per
annum,] and interest on any overdue principal, premium or Additional Sums and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest [if
applicable, insert-- (including Additional Interest)] at the rate of ___% per
annum, compounded [monthly] [quarterly] [semi-annually] from the dates such
amounts are due until they are paid or made available for payment, and such
interest on overdue amounts shall be payable on demand. The amount of interest
payable for any period less than a full interest period shall be computed on the
basis of twelve 30-day months and a 360-day year. The amount of interest payable
for any full interest period shall be computed by dividing the rate per annum by
[twelve][four][two]. In the event that any date on which interest is payable on
this Security is not a Business Day, then a payment of the interest payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay)[, except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case] with the
same force and effect as if made on the date the payment was originally payable.
A "Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Trustee [if applicable, insert-- , or the
principal office of the Property Trustee under the Trust Agreement hereinafter
referred to for [PMI Capital ___,]] is closed for business. 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 is registered
at the close of business on the Regular Record Date for such interest
installment, which shall be the [insert definition of Regular Record Dates]. Any
such interest installment not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this
18
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Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
[If applicable, insert - So long as no Event of Default has occurred and is
continuing, the Company shall have the right at any time during the term of this
Security to defer payment of interest on this Security, at any time or from time
to time, for up to _____ consecutive [monthly] [quarterly] [semi-annual]
interest payment periods with respect to each deferral period (each an
"Extension Period"), during which Extension Periods the Company shall have the
right to make partial payments of interest on any Interest Payment Date, and] at
the end of which the Company shall pay all interest then accrued and unpaid [if
applicable, insert - (together with Additional Interest thereon to the extent
permitted by applicable law)]; provided, however, that no Extension Period shall
extend beyond the Stated Maturity of the principal of this Security; provided,
further, that during any such Extension Period, the Company shall not, and shall
not permit any Subsidiary of the Company to, (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 or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu in all respects with or
junior in interest to this Security or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any Subsidiary
of the Company if such guarantee ranks pari passu with or junior in interest to
this Security (other than (a) dividends or distributions in Common Stock, (b)
any declaration of a dividend in connection with the implementation of a Rights
Plan, or the issuance of any Common Stock or any class or series of preferred
stock of the Company under any Rights Plan in the future, or the redemption or
repurchase of any such rights pursuant to a Rights Plan, (c) payments under any
PMI Guarantee, (d) purchases of Common Stock related to the issuance of Common
Stock or rights under any of the Company's or its subsidiaries' benefit plans
for their directors, officers or employees and (e) purchases of fractional
interests of Common Stock in connection with a stock split, stock dividend or a
similar reclassification or combination). Prior to the termination of any such
Extension Period, the Company may further extend the interest payment period,
provided that no Extension Period shall exceed ______ consecutive [months]
[quarters] [semi-annual periods] or extend beyond the Stated Maturity of the
principal of this Security. Upon the termination of any such Extension Period
and upon the payment of all amounts then due on any Interest Payment Date, the
Company may elect to begin a new Extension Period, subject to the above
requirements. No interest shall be due and payable during an Extension Period
except at the end thereof, but each installment of interest that would otherwise
have been due and payable during such Extension shall bear Additional Interest
(to the extent that the payment of such interest shall be legally enforceable)
at the rate of ___% per annum, compounded [monthly] [quarterly] [semi-annually]
and calculated as set forth in the first paragraph of this Security, from the
dates on which amounts would otherwise have been due and payable until paid or
made available for payment. The Company shall give the Holder of this Security
and the Trustee notice of its election to begin any Extension Period at least
one Business Day prior to the next succeeding
19
<PAGE>
Interest Payment Date on which interest on this Security would be payable but
for such deferral [if applicable, insert - or so long as this Security is held
by [insert name of applicable PMI Trust], at least one Business Day prior to the
earlier of (i) the date on which Distributions on the Capital Securities would
have been payable but for such deferral or (ii) the date the Property Trustee is
required to give notice to any applicable self-regulatory organization or to
holders of such Capital Securities of the record date and (iii) the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date].
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts [if applicable, insert - ;provided, however, that at the option of
the Company payment of interest may be made (i) by check mailed to the address
of the Person entitled thereto as such address shall appear in the Securities
Register or (ii) by wire transfer in immediately available funds at such place
and to such account as may be designated by the Person entitled thereto as
specified in the Securities Register].
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and junior in right of payments to the prior payment
in full of all Senior Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, 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.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
THE PMI GROUP, INC.
By:
------------------------
20
<PAGE>
Name:
-------------------------
Title:
-------------------------
Attest:
- --------------------------------
Section 2.3. Form of Reverse of Security.
------------------------------------------
This Security is one of a duly authorized issue of securities of the Company
(herein called the "Securities"), issued and to be issued in one or more series
under a Junior Subordinated Indenture, dated as of February 4, 1997 (herein
called the "Indenture"), between the Company and The Bank of New York, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Trustee, the Company and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof [if applicable, insert - limited in aggregate
principal amount to $ ].
All terms used in this Security that are defined in the Indenture [if
applicable, insert - or in the Amended and Restated Trust Agreement, dated as of
___________, ____, as amended (the "Trust Agreement"), for [PMI Capital ___ ,]
among THE PMI GROUP, INC., as Depositor, and the Trustees named therein, shall
have the meanings assigned to them in the Indenture [if applicable, insert - or
the Trust Agreement, as the case may be].
[If applicable, insert - The Company may at any time, at its option, on or
------------------
after _________, ____, and subject to the terms and conditions of Article XI of
the Indenture, redeem this Security in whole at any time or in part from time to
time, without premium or penalty, at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest [if applicable, insert
---------------------
including Additional Interest, if any,] to the Redemption Date.]
[If applicable, insert - The Company may, at its option, on or after
---------------------
_________, ____, and subject to the terms and conditions of Article XI of the
Indenture, redeem this Security in whole at any time or in part from time to
time, at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed during the 12-month period beginning __________,
Redemption
Year Price
--------- -----------------
21
<PAGE>
and at 100% on or after _________, ____, together in the case of any such
redemption with accrued interest to but excluding the Redemption Date.]
[If applicable, insert - Upon the occurrence and during the continuation of a
---------------------
Tax Event in respect of the PMI Trust, the Company may, at its option, [if
applicable, insert - at any time] [if applicable, insert - before _________,
-------------
____ and] within 90 days of the occurrence of such Tax Event redeem this
Security, in whole but not in part, subject to the provisions of Article XI of
the Indenture, at a redemption price equal to [describe formulation].]
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
[If applicable, insert - Subject to certain limitations in the Indenture, at
---------------------
any time when the Company is not subject to Section 13 or 15(d) of the United
States Securities Exchange Act of 1934, as amended, upon the request of a Holder
of this Security, the Company will promptly furnish or cause to be furnished
Rule 144A Information (as defined below) to such Holder, or to a prospective
purchaser of this Security designated by any such Holder to the extent required
to permit compliance by such Holder with Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), in connection with the resale of this
Security. "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provisions thereto).]
[If applicable, insert - Whenever there is a reference, in any context, to the
---------------------
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
[Registration Default Interest] [insert applicable defined term] as defined in
the Exchange and Registration Rights Agreement among the Company, [insert name
of applicable PMI Trust] and [insert name(s) of applicable initial
purchaser(s)], dated ________, _____, (the "Registration Rights Agreement") to
the extent that, in such context, [Registration Default Interest] [insert
applicable defined term] is, was or would be payable in respect of this Security
and express mention of the payment of Registration Default Interest [insert
applicable defined term] (if applicable) in any provision of this Security shall
not be construed as excluding Registration Default Interest [insert applicable
defined term] in those provisions of this Security where such express mention is
not made.]
The Indenture contains provisions for satisfaction and discharge of the entire
indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the
22
<PAGE>
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
[If the Security is not a Discount Security, insert - As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in principal amount of the Outstanding Securities of this series may
declare the principal amount of all the Securities of this series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided that, in the case of the Securities of this
series issued to a PMI Trust, if upon an Event of Default, the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of this series fails to declare the principal of all the Securities of this
series to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount of the Capital Securities of such PMI Trust then
outstanding shall have such right by a notice in writing to the Company and the
Trustee; and upon any such declaration the principal amount of and the accrued
interest [if applicable, insert (including any Additional Interest)] on all the
Securities of this series shall become immediately due and payable, provided
that the payment of principal and interest [if applicable, insert - (including
any Additional Interest)] on such Securities shall remain subordinated to the
extent provided in Article XIII of the Indenture.]
[If the Security is a Discount Security, insert - As provided in and subject
to the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than such portion
of the principal amount as may be specified in the terms of this series may
declare an amount of principal of the Securities of this series to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), provided that, in the case of the Securities of this
series issued to a PMI Trust, if upon an Event of Default, the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of this series fails to declare the principal of all the Securities of this
series to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount of the Capital Securities of such PMI Trust then
outstanding shall have such right by a notice in writing to the Company and the
Trustee. Such amount shall be equal to [insert formula for determining the
amount]. Upon any such declaration, such amount of the principal of and the
accrued interest [if applicable, insert - (including any Additional Interest)]
on all the Securities of this series shall become immediately due and payable,
provided that the payment of principal and interest [if applicable, insert -
(including any Additional Interest)] on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture. Upon
23
<PAGE>
payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal and overdue interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
interest, if any, on this Security shall terminate.]
[If the Security is entitled to registration rights, insert - The Holder of
----------------------------------------------------------
this Security (and any Person that has a beneficial interest in this Security)
is entitled to the benefits of and agrees to be bound by the terms of the
Registration Rights Agreement, as the same may be amended from time to time,
executed by the Company and the PMI Trust.]
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 [if applicable, insert - (including any Additional Interest)] on this
---------------------
Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee shall treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form without
coupons in denominations of $_________ and any integral multiple [if applicable,
-------------
insert - of $_____] in excess thereof. As provided in the Indenture and subject
- ------
to certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of such series
of a different authorized denomination, as requested by the Holder surrendering
the same.
The Company and, by its acceptance of this Security or a beneficial interest
therein, the Holder of, and any Person that acquires a beneficial interest in,
this Security agree that for United States Federal, state and local tax purposes
it is intended that this Security constitute indebtedness.
24
<PAGE>
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
Section 2.4. Additional Provisions Required in Global Security.
-----------------------------------------------------------------
Any Global Security issued hereunder shall, in addition to the provisions
contained in Sections 2.2 and 2.3, bear a legend in substantially the following
form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY."
Section 2.5. Form of Trustee's 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
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms.
-------------------------------
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto, prior
to the issuance of Securities of a series:
25
<PAGE>
(a) the title of the securities of such series, which shall distinguish the
Securities of the series from all other Securities;
(b) the limit, if any, upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 3.7, 9.6 or 11.6 and except for any
Securities that, pursuant to Section 3.3, are deemed never to have been
authenticated and delivered hereunder); provided, however, that the authorized
-----------------
aggregate principal amount of such series may be increased above such amount by
a Board Resolution to such effect;
(c) the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof;
(d) the rate or rates, if any, at which the Securities of such series shall
bear interest, if any, the rate or rates and extent to which Additional
Interest, if any, shall be payable in respect of any Securities of such series,
the Interest Payment Dates on which such interest shall be payable, the right,
pursuant to Section 3.11 or as otherwise set forth therein, of the Company to
defer or extend an Interest Payment Date, and the Regular Record Date for the
interest payable on any Interest Payment Date or the method by which any of the
foregoing shall be determined;
(e) the place or places where the principal of (and premium, if any) and
interest on the Securities of such series shall be payable, the place or places
where the Securities of such series may be presented for registration of
transfer or exchange, and the place or places where notices and demands to or
upon the Company in respect of the Securities of such series may be made;
(f) the period or periods within or the date or dates on which, if any, the
price or prices at which and the terms and conditions upon which the Securities
of such series may be redeemed, in whole or in part, at the option of the
Company;
(g) the obligation or the right, if any, of the Company to redeem, repay or
purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions, or at the option of a Holder thereof, and
the period or periods within which, the price or prices at which, the currency
or currencies (including currency unit or units) in which and the other terms
and conditions upon which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(h) the denominations in which any Securities of such series shall be
issuable, if other than denominations of $1,000 and any integral multiple
thereof;
(i) if other than Dollars, the currency or currencies (including currency
unit or units) in which the principal of (and premium, if any) and interest, if
any, on the Securities of the series shall be
26
<PAGE>
payable, or in which the Securities of the series shall be denominated and the
manner of determining the equivalent thereof in Dollars for purposes of the
definition of Outstanding;
(j) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
(k) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(l) the additions or changes, if any, to this Indenture with respect to the
Securities of such series as shall be necessary to permit or facilitate the
issuance of the Securities of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
(m) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Securities of such series or the manner
in which such amounts will be determined;
(n) whether the Securities of the series, or any portion thereof, shall
initially be issuable in the form of a temporary Global Security representing
all or such portion of the Securities of such series and provisions for the
exchange of such temporary Global Security for definitive Securities of such
series;
(o) if applicable, that any Securities of the series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such case,
the respective Depositories for such Global Securities, the form of any legend
or legends which shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 2.4 and any circumstances in addition to or in
lieu of those set forth in Section 3.6 in which any such Global Security may be
exchanged in whole or in part for Securities registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or names
of Persons other than the Depository for such Global Security or a nominee
thereof;
(p) the appointment of any Paying Agent or Agents for the Securities of
such series;
(q) the terms of any right to convert or exchange Securities of such series
into any other securities or property of the Company, and the additions or
changes, if any, to this Indenture with respect to the Securities of such series
to permit or facilitate such conversion or exchange;
(r) the form or forms of the Trust Agreement, Amended and Restated Trust
Agreement and Guarantee Agreement, if different from the forms attached hereto
as Annexes A, B and C, respectively;
27
<PAGE>
(s) the relative degree, if any, to which the Securities of the series
shall be senior to or be subordinated to other series of Securities in right of
payment, whether such other series of Securities are Outstanding or not; and
(t) whether the Securities of the series shall be entitled to the benefits
of a registration rights agreement.
(u) any other terms of the Securities of such series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided herein or in or pursuant
to such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
Unless otherwise provided with respect to the Securities of any series, at
the option of the Company, interest on the Securities of any series that bears
interest may be paid (i) by mailing a check to the address of the person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer in immediately available funds at such place and to such
account as may be designated by the person entitled thereto as specified in the
Security Register.
Section 3.2. Denominations.
-----------------------------
The Securities of each series shall be in registered form without coupons
and shall be issuable in denominations of $1,000 and any integral multiple
thereof, unless otherwise specified as contemplated by Section 3.1.
Section 3.3. Execution, Authentication, Delivery and Dating.
--------------------------------------------------------------
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced or impressed thereon and
attested by its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or
28
<PAGE>
any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such
Securities. At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established by or pursuant to one or more Board Resolutions as permitted by
Sections 2.1 and 3.1, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant to
Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant
to Board Resolution as permitted by Section 3.1, that such terms have been
established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
29
<PAGE>
signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for can
cellation as provided in Section 3.10, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 3.4. Temporary Securities.
------------------------------------
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Securities of such series 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 evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
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 one or more
definitive Securities of the same series, of any authorized denominations having
the same Original Issue Date and Stated Maturity and having the same terms as
such temporary Securities. Until so exchanged, the temporary Securities of any
series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.
Section 3.5. Global Securities.
-------------------------------
(a) Each Global Security issued under this Agreement shall be registered in
the name of the Depository designated by the Company for such Global Security or
a nominee thereof and delivered to such Depository or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Agreement.
(b) Notwithstanding any other provision in this Agreement, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depository for such Global Security or a nominee
thereof unless (a) such Depository advises the Trustee in writing that such
Depository is no longer willing or able to properly discharge its
responsibilities as Depository with respect to such Global Security, and the
Company is unable to locate a qualified successor, (b) the Company executes and
delivers to the Trustee a Company Order stating that the Company elects to
30
<PAGE>
terminate the book-entry system through the Depository, or (c) there shall have
occurred and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depository or
its nominee to the Security Registrar for exchange or cancellation as provided
in this Article III. If any Global Security is to be exchanged for other
Securities or cancelled in part, or if another Security is to be exchanged in
whole or in part for a beneficial interest in any Global Security, then either
(i) such Global Security shall be so surrendered for exchange or cancellation as
provided in this Article III or (ii) the principal amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or cancelled, or equal to the principal amount of such other Security
to be so exchanged for a beneficial interest therein, as the case may be, by
means of an appropriate adjustment made on the records of the Security
Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depository or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Security by the Depository, accompanied by registration
instructions, the Trustee shall, subject to Section 3.5(b) and as otherwise
provided in this Article III, authenticate and make available for delivery any
Securities issuable in exchange for such Global Security (or any portion
thereof) in accordance with the instructions of the Depository. The Trustee
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person other than
the Depository for such Global Security or a nominee thereof.
(e) The Depository or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security shall be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depository or its nominee or its Agent Members.
Neither the Trustee nor the Securities Registrar shall have any liability in
respect of any transfers effected by the Depository.
(f) The rights of owners of beneficial interests in a Global Security shall
be exercised only through the Depository and shall be limited to those
established by law and agreements between such owners and the Depository and/or
its Agent Members.
31
<PAGE>
Section 3.6. Registration, Transfer and Exchange Generally, Certain
-------------------------------------------------------------------
Transfers and Exchanges; Securities Act Legends.
- ------------------------------------------------
(a) The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and make available for delivery, in the name
of the designated transferee or transferees, one or more new Securities of the
same series of any authorized denominations, of a like aggregate principal
amount, of the same Original Issue Date and Stated Maturity and having the same
terms and bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and having the same terms and bearing such restrictive legends as may be
required by this Indenture, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Securities Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Security of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of notice of redemption or
(b) to transfer or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Security to be redeemed in part, any portion
thereof not to be redeemed.
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(b) Certain Transfers and Exchanges. Notwithstanding any other provision of
-------------------------------
this Indenture, transfers and exchanges of Securities and beneficial interests
in a Global Security of the kinds specified in this Section 3.6(b) shall be made
only in accordance with this Section 3.6(b).
(i) Restricted Non-Global Security to Global Security. If the Holder
-------------------------------------------------
of a Restricted Security (other than a Global Security) wishes at any time to
transfer all or any portion of such Security to a Person who wishes to take
delivery thereof in the form of a beneficial interest in a Global Security, such
transfer may be effected only in accordance with the provisions of this Clause
(b)(i) and subject to the Applicable Procedures. Upon receipt by the Security
Registrar of (A) such Security as provided in Section 3.6(a) and written
instructions satisfactory to the Security Registrar directing that a beneficial
interest in the Global Security in a specified principal amount not greater than
the principal amount of such Security be credited to a specified Agent Member's
account and (B) a Restricted Securities Certificate duly executed by such Holder
or his attorney duly authorized in writing, then the Security Registrar shall
cancel such Security (and issue a new Security in respect of any untransferred
portion thereof) as provided in Section 3.6(a) and increase the aggregate
principal amount of the Global Security by the specified principal amount as
provided as provided in Section 3.5(c).
(ii) Non-Global Security to Non-Global Security. A Security that is
------------------------------------------
not a Global Security may be transferred, in whole or in part, to a Person who
takes delivery in the form of another Security that is not a Global Security as
provided in Section 3.6(a), provided that if the Security to be transferred in
whole or in part is a Restricted Security, then the Security Registrar shall
have received a Restricted Securities Certificate duly executed by the
transferor Holder or his attorney duly authorized in writing.
(iii) Exchanges between Global Security and Non-Global Security. A
---------------------------------------------------------
beneficial interest in a Global Security may be exchanged for a Security that is
not a Global Security as provided in Section 3.5.
(iv) Certain Initial Transfers of Non-Global Securities. In the case
--------------------------------------------------
of Securities initially issued other than in global form, an initial transfer or
exchange of such Securities that does not involve any change in beneficial
ownership may be made to an Institutional Accredited Investor or Investors as if
such transfer or exchange were not an initial transfer or exchange; provided
that written certification shall be provided by a Holder of such Securities to
the Securities Registrar that such transfer or exchange does not involve a
change in beneficial ownership.
(c) Restricted Securities Legend. Except as set forth below, all
----------------------------
Securities shall bear a Restricted Securities Legend:
(i) subject to the following Clauses of this Section 3.6(c), a
Security or any portion thereof which is exchanged, upon transfer or otherwise,
for a Global Security or any portion thereof shall bear the Restricted
Securities Legend;
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(ii) subject to the following Clauses of this Section 3.6(c), a new
Security which is not a Global Security and is issued in exchange for another
Security (including a Global Security) or any portion thereof, upon transfer or
otherwise, shall bear a Restricted Securities Legend;
(iii) after the date which is three years following the Original Issue
Date of a Security, a new Security (other than a Global Security) which does not
bear a Restricted Securities Legend shall, unless the Securities Registrar is
otherwise instructed by the Company in writing, be issued in exchange for or in
lieu of a Restricted Security or any portion thereof which bears such a legend
if the Trustee has received an Unrestricted Securities Certificate, in the form
of Exhibit E hereto, duly executed by the Holder of such legended Restricted
Security or his attorney duly authorized in writing, and after such date and
receipt of such certificate, the Trustee shall authenticate and deliver such a
new Security in exchange for or in lieu of such other Security as provided in
this Article III;
(iv) any Securities issued pursuant to an effective registration
statement under the Securities Act in exchange for Outstanding Securities and
any Securities which are sold or otherwise disposed of pursuant to an effective
registration statement under the Securities Act (including a shelf registration
statement), together with their Successor Securities shall not bear a Restricted
Securities Legend; the Company shall inform the Trustee in writing of the
effective date of any such registration statement registering Securities under
the Securities Act and shall notify the Trustee at any time when prospectuses
may not be delivered with respect to Securities to be sold pursuant to such
registration statement;
(v) a new Security (other than a Global Security) which does not bear
a Restricted Securities Legend may be issued in exchange for or in lieu of a
Restricted Security or any portion thereof which bears such a legend if, in the
Company's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the written direction of the Company in the
form of an Officers' Certificate, shall authenticate and deliver such a new
Security as provided in this Article III;
(vi) notwithstanding the foregoing provisions of this Section 3.6(c),
a Successor Security of a Security that does not bear a Restricted Securities
Legend shall not bear such form of legend unless the Company has reasonable
cause to believe that such Successor Security is a "restricted security" within
the meaning of Rule 144, in which case the Trustee, at the written direction of
the Company in the form of an Officer's Certificate, shall authenticate and
deliver a new Security bearing a Restricted Securities Legend in exchange for
such Successor Security as provided in this Article III; and
(vii) Securities distributed to a holder of Capital Securities upon
dissolution of a PMI Trust shall bear a Restricted Securities Legend if the
Capital Securities so held bear a similar legend.
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Section 3.7. Mutilated, Destroyed, Lost and Stolen Securities.
----------------------------------------------------------------
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same issue
and series of like tenor and principal amount, having the same Original Issue
Date and Stated Maturity, and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and make available for
delivery, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same issue and series of like tenor and principal amount, having the same
Original Issue Date and Stated Maturity as such destroyed, lost or stolen
Security, and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.8. Payment of Interest; Interest Rights Preserved.
--------------------------------------------------------------
Interest on any Security of any series which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date, shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
in respect of Securities of such series, except that, unless otherwise provided
in the Securities of such series, interest payable on the Stated Maturity of the
principal of a Security shall
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be paid to the Person to whom principal is paid. The initial payment of interest
on any Security of any series which is issued between a Regular Record Date and
the related Interest Payment Date shall be payable as provided in such Security
or in the Board Resolution pursuant to Section 3.1 with respect to the related
series of Securities.
Any interest on any Security which is payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities of such series in respect of which
interest is in default (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 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 be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first class, postage prepaid, to each Holder of a
Security of such series at the address of such Holder as it appears in the
Securities Register not less than 10 days prior to such Special Record Date. The
Trustee may, in its discretion, in the name and at the expense of the Company,
cause a similar notice to be published at least once in a newspaper, customarily
published in the English language on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, but such
publication shall not be a condition precedent to the establishment of 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 the Securities of
such series (or their respective Predecessor Securities) are registered on such
Special Record Date and shall no longer be payable pursuant to the following
Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of the series in respect of which interest is in default
may be listed and, upon such notice as may be required by such exchange (or by
the Trustee if the Securities are not listed), if, after notice given by the
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Company to the Trustee of the proposed payment pursuant to this Clause, such
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 3.9. Persons Deemed Owners.
-------------------------------------
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.8) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depository shall have any rights under this Indenture with respect
to such Global Security, and such Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by a Depository or impair, as between a Depository and
such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depository (or its nominee) as
Holder of any Security.
Section 3.10. Cancellation.
-----------------------------
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture.
Section 3.11. Computation of Interest.
----------------------------------------
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series for any partial period
shall be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period, and interest on the
Securities of each series for a full period shall be computed by dividing the
rate per annum by the number of interest periods that together constitute a full
twelve months.
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Section 3.12. Deferrals of Interest Payment Dates.
----------------------------------------------------
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time during
the term of such series, from time to time to defer the payment of interest on
such Securities for such period or periods as may be specified as contemplated
by Section 3.1 (each, an "Extension Period") during which Extension Periods the
Company shall have the right to make partial payments of interest on any
Interest Payment Date. No Extension Period shall end on a date other than an
Interest Payment Date. At the end of any such Extension Period the Company shall
pay all interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at the rate specified for the Securities of
such series to the extent permitted by applicable law); provided, however, that
no Extension Period shall extend beyond the Stated Maturity of the principal of
the Securities of such series; provided, further, that during any such Extension
Period, the Company shall not, and shall not permit any Subsidiary to, (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, or (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu in all respects with or junior in interest to the Securities of such
series or (iii) make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any Subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Securities of such
series (other than (a) dividends or distributions in Common Stock, (b) any
declaration of a dividend in connection with the implementation of a Rights
Plan, or the issuance of any Common Stock of any class or series of preferred
stock of the Company under any Rights Plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under any PMI
Guarantee, (d) purchases of Common Stock related to the issuance of Common Stock
or rights under any of the Company's or its subsidiaries' benefit plans for
their directors, officers or employees and (e) purchases of fractional interests
of Common Stock in connection with a stock split, stock dividend or a similar
reclassification or combination). Prior to the termination of any such Extension
Period, the Company may further extend the interest payment period, provided
that no Extension Period shall exceed the period or periods specified in such
Securities or extend beyond the Stated Maturity of the principal of such
Securities. Upon the termination of any Extension Period and upon the payment of
all amounts then due on any Interest Payment Date, the Company may elect to
begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, subject to the above
requirements, but each installment of interest that would otherwise have been
due and payable during such Extension Period shall bear Additional Interest as
and to the extent as may be specified as contemplated by Section 3.1. The
Company shall give the Holders of the Securities of such series and the Trustee
notice of its election to begin any such Extension Period at least one Business
Day prior to the next succeeding Interest Payment Date on which interest on
Securities of such series would be payable but for such deferral or, with
respect to any Securities of a series issued to PMI Trust, so long as any such
Securities are held by such PMI Trust, at least one Business Day prior to the
earlier of (i) the date the Distributions on the Capital Securities of such PMI
Trust would have been payable but for such deferral, (ii) the date the Property
Trustee of such PMI Trust is required to give notice to any applicable
self-
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regulatory organization or to holders of such Capital Securities of the
record date and (iii) the date such Distributions are payable, but in any event
not less than one Business Day prior to such record date.
The Trustee shall promptly give notice of the Company's election to begin
any such Extension Period to the Holders of the Outstanding Securities of such
series.
Section 3.13. Right of Set-Off.
---------------------------------
With respect to the Securities of a series issued to a PMI Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set-off any payment it is otherwise required to make thereunder in
respect of any such Security to the extent the Company has theretofore made, or
is concurrently on the date of such payment making, a payment under the PMI
Guarantee relating to such Security or under Section 5.8 hereof.
Section 3.14. Agreed Tax Treatment.
-------------------------------------
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security agree that for
United States Federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
Section 3.15. 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 or other related material as a convenience to Holders; provided
that any such notice or other related material 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 redemption or other related material
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 number.
Section 3.16. References to Interest.
---------------------------------------
Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of, premium, if any, or interest on, or in respect of, any
Security of any series that is issued in connection with, and subject to the
benefits of, any registration rights agreement, such mention shall be deemed to
include mention of the payment of registration default interest or any other
liquidated damages specified in such registration rights agreement to the extent
that, in such context, such registration default interest or other liquidated
damages is, was or would be payable in respect thereof pursuant to the
provisions of such registration rights agreement and express mention of the
payment of registration default interest or other liquidated damages (if
applicable) in any provision hereof shall
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not be construed as excluding registration default interest or other liquidated
damages in those provisions hereof where such express mention is not made.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
-------------------------------------------------------
This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.7 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year of the date of deposit, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at
the expense, of the Company,
and the Company, in the case of Clause (B) (i), (ii) or (iii)
above, has deposited or caused to be deposited with the Trustee
as trust funds in trust for such purpose an amount in the
currency or currencies in which the Securities of such series are
payable sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest
(including any Additional Interest) to the date of such deposit
(in the case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;
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(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, or the earlier
resignation or removal of the Trustee or any Authenticating Agent, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
Section 4.2. Application of Trust Money.
------------------------------------------
Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V
REMEDIES
Section 5.1. Events of Default.
---------------------------------
"Event of Default," wherever used herein with respect to the Securities of
any series, means any one of the following events that has occurred and is
continuing (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it becomes
due and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension Period); or
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(2) default in the payment of the principal of (or premium, if any, on) any
Security of that series at its Maturity; or
(3) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Company in this Indenture (other than a covenant or
warranty a default in the performance of which or the breach of which 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
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such default
or breach and requiring it to be remedied; or
(4) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(5) the commencement by the Company of a voluntary case or proceeding under
any applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, or the
consent by it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or any substantial part of its
property, or the making by it of an assignment for the benefit of creditors, or
the admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in furtherance
of any such action; or
(6) any other Event of Default provided with respect to Securities of that
series.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
------------------------------------------------------------------
If an Event of Default (other than an Event of Default specified in Section
5.1(4) or 5.1(5)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Discount Securities, such portion of the principal
amount as may be specified in the terms of that
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series) of all the Securities of that series to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if given by Holders),
provided that, in the case of the Securities of a series issued to a PMI Trust,
if, upon an Event of Default, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series fail to declare
the principal of all the Securities of that series to be immediately due and
payable, the holders of at least 25% in aggregate Liquidation Amount (as defined
in the related Trust Agreement) of the corresponding series of Capital
Securities then outstanding shall have such right by a notice in writing to the
Company and the Trustee; and upon any such declaration such principal amount (or
specified portion thereof) of and the accrued interest (including any Additional
Interest) on all the Securities of such series shall become immediately due and
payable. Payment of principal and interest (including any Additional Interest)
on such Securities shall remain subordinated to the extent provided in Article
XIII notwithstanding that such amount shall become immediately due and payable
as herein provided. If an Event of Default specified in Section 5.1(4) or 5.1(5)
with respect to Securities of any series at the time Outstanding occurs, the
principal amount of all the Securities of that series (or, if the Securities of
that series are Discount Securities, such portion of the principal amount of
such Securities as may be specified by the terms of that series) shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay:
(A) all overdue installments of interest (including any Additional
Interest) on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of acceleration
and interest thereon at the rate borne by the Securities, and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(2) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series which has
become due solely by such acceleration, have been cured or waived as provided in
Section 5.13.
In the case of Securities of a series issued to a PMI Trust, the holders of
a majority in aggregate Liquidation Amount (as defined in the related Trust
Agreement) of the related series of Capital
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Securities issued by such PMI Trust shall also have the right to rescind and
annul such declaration and its consequences by written notice to the Company and
the Trustee, subject to the satisfaction of the conditions set forth in Clauses
(1) and (2) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3. Collection of Indebtedness and Suits for Enforcement
-------------------------------------------------------------------
by Trustee.
- ----------
The Company covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest becomes
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (and premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest); and, in addition thereto, all amounts owing the Trustee
under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
------------------------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
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(a) the Trustee (irrespective of whether the principal of the Securities of
any series 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
on the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing and
unpaid in respect to the Securities and to file such other papers or documents
as may be necessary or advisable and to take any and all actions as are
authorized under the Trust Indenture Act in order to have the claims of the
Holders and any predecessor to the Trustee under Section 6.7 allowed in any such
judicial proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it and any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
Section 5.5. Trustee May Enforce Claim Without Possession of Securities.
--------------------------------------------------------------------------
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of all the amounts owing the Trustee and any predecessor Trustee
under Section 6.7, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
Section 5.6. Application of Money Collected.
----------------------------------------------
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed
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by the Trustee and, in case of the distribution of such money or property on
account of principal (or premium, if any) or interest (including any Additional
Interest), upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due and
unpaid upon such series of Securities for principal (and premium, if any) and
interest (including any Additional Interest), in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such series of
Securities for principal (and premium, if any) and interest (including any
Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
Section 5.7. Limitation on Suits.
-----------------------------------
No Holder of any Securities of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or for the
appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other
similar official) or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance with
such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain
46
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priority or preference over any other of such Holders or to enforce any right
under this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all such Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium
-------------------------------------------------------------------------
and Interest; Direct Action by Holders of Capital Securities.
- -------------------------------------------------------------
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Sections 3.8
and 3.12) interest (including any Additional Interest) on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent of
such Holder. In the case of Securities of a series issued to a PMI Trust, any
holder of the corresponding series of Capital Securities issued by such PMI
Trust shall have the right, upon the occurrence of an Event of Default described
in Section 5.1(1) or 5.1(2), to institute a suit directly against the Company
for enforcement of payment to such holder of principal of (premium, if any) and
(subject to Sections 3.8 and 3.12) interest (including any Additional Interest)
on the Securities having a principal amount equal to the aggregate Liquidation
Amount (as defined in the related Trust Agreement) of such Capital Securities of
the corresponding series held by such holder.
Section 5.9. Restoration of Rights and Remedies.
--------------------------------------------------
If the Trustee, any Holder or any holder of Capital Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee, such Holder or such holder of Capital
Securities, then and in every such case the Company, the Trustee, the Holders
and such holder of Capital Securities shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee, the
Holders and the holders of Capital Securities shall continue as though no such
proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
-----------------------------------------------
Except as otherwise provided in the last paragraph of Section 3.7, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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Section 5.11. Delay or Omission Not Waiver.
---------------------------------------------
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Capital Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders and the right and remedy given to the holders of Capital Securities
by Section 5.8 may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Holders or the holders of Capital Securities, as
the case may be.
Section 5.12. Control by Holders.
-----------------------------------
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, determine that the proceeding so directed
would be unjustly prejudicial to the Holders not joining in any such direction
or would involve the Trustee in personal liability.
Section 5.13. Waiver of Past Defaults.
----------------------------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series affected thereby and, in the case of any
Securities of a series issued to a PMI Trust, the holders of a majority in
aggregate Liquidation Amount (as defined in the related Trust Agreement) Capital
Securities issued by such PMI Trust, may waive any past default hereunder and
its consequences with respect to such series except a default:
(1) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
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<PAGE>
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities of such series or, in the case of a waiver by holders of Capital
Securities issued by such PMI Trust, by all holders of Capital Securities issued
by such PMI Trust.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 5.14. Undertaking for 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,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security on or after the respective Stated
Maturities expressed in such Security.
Section 5.15. Waiver of Usury, Stay or Extension Laws.
--------------------------------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities.
---------------------------------------------------
(a) Except during the continuance of an Event of Default,
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<PAGE>
(1) the Trustee undertakes to perform such duties and only such duties
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 its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon 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 provisions 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, but need not confirm or investigate the accuracy
of mathematical calculations or other facts stated therein.
(b) In case an Event of Default has occurred and is continuing, 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 person
would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the 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 Trustee
was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
Holders pursuant to Section 5.12 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture with respect
to the Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
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Section 6.2. Notice of Defaults.
----------------------------------
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the Securities
Register, notice of such default, unless such default shall have been cured or
waived; provided, however, that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest (including any Additional
Interest) on any Security of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of Securities of such series; and provided, further,
that, in the case of any default of the character specified in Section 5.1(3),
no such notice to Holders of Securities of such series shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Securities of such
series.
Section 6.3. Certain Rights of Trustee.
-----------------------------------------
Subject to the provisions of Section 6.1:
(a) the Trustee may conclusively rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
Security or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
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(f) the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture; and
(i) the Trustee shall not be deemed to have notice of any Event of Default
unless a Responsible Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Securities and this Indenture.
Section 6.4. Not Responsible for Recitals or Issuance of Securities.
----------------------------------------------------------------------
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
-----------------------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
52
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Section 6.6. Money Held in Trust.
-----------------------------------
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
Section 6.7. Compensation and Reimbursement.
----------------------------------------------
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for all
services rendered by it hereunder in such amounts as the Company and the Trustee
shall agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify each of the Trustees or any predecessor Trustee for, and
to hold it harmless against, any loss, liability or expense (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel) incurred without negligence or bad faith, arising out of or in
connection with the acceptance or administration of this trust or the
performance of its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The obligations of the
Company under this Section 6.7 shall survive the termination of this Indenture
or the earlier resignation or removal of the Trustee.
To secure the Company's payment obligations in this Section, the Company
and the Holders agree that the Trustee shall have a lien prior to the Securities
on all money or property held or collected by the Trustee. Such lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor statute.
Section 6.8. Disqualification; Conflicting Interests.
-------------------------------------------------------
The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the Trustee from filing
53
<PAGE>
with the Commission the application referred to in the second to last paragraph
of said Section 310(b).
Section 6.9. Corporate Trustee Required; Eligibility.
-------------------------------------------------------
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the United
States of America or of any State or Territory or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by Federal, State, Territorial or District of
Columbia authority, or
(b) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant to a
rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State 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, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article. Neither the Company nor any Person directly or indirectly
controlling, controlled by or under common control with the Company shall serve
as Trustee for the Securities of any series issued hereunder.
Section 6.10. Resignation and Removal; Appointment of Successor.
------------------------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
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(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and shall fail
to resign after written request therefor by the Company or by any such Holder,
or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to all Securities, or (ii)
subject to Section 5.14, any Holder 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 with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee with respect to the Securities of
that or those series. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and supersede
the successor Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage
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prepaid, to the Holders of Securities of such series as their names and
addresses appear in the Securities Register. Each notice shall include the name
of the successor Trustee with respect to the Securities of such series and the
address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
-------------------------------------------------------
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an instrument in writing or an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment
and which (1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such instrument in writing or supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such instrument in writing or supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts, and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
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(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in paragraph
(a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
Section 6.12. Merger, Conversion, Consolidation or Succession to
-------------------------------------------------------------------
Business.
- --------
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
Section 6.13. Preferential Collection of Claims Against Company.
------------------------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 6.14. Appointment of Authenticating Agent.
----------------------------------------------------
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, or of any State or Territory or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or
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examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof 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 such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provision of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 6.7.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
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This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
The Bank of New York,
As Trustee
By:
------------------------
As Authenticating Agent
By:
-----------------------
Authorized Signatory
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders.
-------------------------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each Regular Record Date in
each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular 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,
excluding from any such list names and addresses received by the Trustee in its
capacity as Securities Registrar.
Section 7.2. Preservation of Information, Communications to Holders.
----------------------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
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Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided in the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
Section 7.3. Reports by Trustee.
----------------------------------
(a) The Trustee shall transmit to Holders 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.
(b) Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than 60 days after December 31 in
each calendar year, commencing 60 days after the first December 31 after the
first issuance of Securities under this Indenture.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed and also with the Commission. The Company will notify the
Trustee when any Securities are listed on any securities exchange.
Section 7.4. Reports by Company.
----------------------------------
The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with
the Trustee within 15 days after the same is required to be filed with the
Commission. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall continue to file with the Commission and provide the
Trustee with the annual reports and the information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act. The Company
also shall comply with the other provisions of Trust Indenture Act Section
314(a).
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ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.
--------------------------------------------------------------------
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(1) in case the Company shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or any
State or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, the due and punctual payment of the principal of (and premium,
if any) and interest (including any Additional Interest) on all the Securities
and the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(3) in the case of the Securities of a series issued to a PMI Trust, such
consolidation, merger, conveyance, transfer or lease is permitted under the
related Trust Agreement and PMI Guarantee and does not give rise to any breach
or violation of the related Trust Agreement or PMI Guarantee; and
(4) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and any such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee, subject to Section 6.1,
may rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 8.1.
Section 8.2. Successor Corporation Substituted.
-------------------------------------------------
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with Section
8.1, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease
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is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and in the event of any
such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities and may be
dissolved and liquidated.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor Person instead
of the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the officers
of the Company to the Trustee for authentication pursuant to such provisions and
any Securities which such successor Person thereafter shall cause to be signed
and delivered to the Trustee on its behalf for the purpose pursuant to such
provisions. 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 Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures without Consent of Holders.
------------------------------------------------------------------
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to or with
the Trustee or to surrender any right or power herein conferred upon the
Company; or
(3) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 or 3.1; or
(4) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating
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that such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the Company; or
(5) to add any additional Events of Default for the benefit of the Holders
of all or any series of Securities (and if such additional Events of Default are
to be for the benefit of less than all series of Securities, stating that such
additional Events of Default are expressly being included solely for the benefit
of such series); or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination (a) shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision or (b) shall not apply to any Outstanding Securities; or
(7) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (7) shall not
adversely affect the interest of the Holders of Securities of any series in any
material respect or, in the case of the Securities of a series issued to a PMI
Trust and for so long as any of the corresponding series of Capital Securities
issued by such PMI Trust shall remain outstanding, the holders of such Capital
Securities; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.11(b); or
(9) to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act.
Section 9.2. Supplemental Indentures with Consent of Holders.
---------------------------------------------------------------
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) except to the extent permitted by Section 3.12 or as otherwise
specified as contemplated by Section 2.1 or Section 3.1 with respect to the
deferral of the payment of interest on the Securities of any series, change the
Stated Maturity of the principal of, or any installment of interest (including
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any Additional Interest) on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or reduce any premium payable upon the
redemption thereof, or reduce the amount of principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2, or change the place of payment where, or the
coin or currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding Securities
of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or Section
10.5, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Security affected thereby;
provided, further, that, in the case of the Securities of a series issued to a
- -----------------
PMI Trust, so long as any of the corresponding series of Capital Securities
issued by such PMI Trust remains outstanding, (i) no such amendment shall be
made that adversely affects the holders of such Capital Securities in any
material respect, and no termination of this Indenture shall occur, and no
waiver of any Event of Default or compliance with any covenant under this
Indenture shall be effective, without the prior consent of the holders of at
least a majority of the aggregate Liquidation Amount of such Capital Securities
then outstanding unless and until the principal (and premium, if any) of the
Securities of such series and all accrued and, subject to Section 3.8, unpaid
interest (including any Additional Interest) thereon have been paid in full and
(ii) no amendment shall be made to Section 5.8 of this Indenture that would
impair the rights of the holders of Capital Securities provided therein without
the prior consent of the holders of each Capital Security then outstanding
unless and until the principal (and premium, if any) of the Securities of such
series and all accrued and (subject to Section 3.8) unpaid interest (including
any Additional Interest) thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or Capital Securities, or
which modifies the rights of the Holders of Securities or holders of Capital
Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under this Indenture of the Holders of
Securities or holders of Capital Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
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Section 9.3. Execution of Supplemental Indentures.
----------------------------------------------------
In executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent have been complied with. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise or
that may subject it to any liability.
Section 9.4. Effect of Supplemental Indentures.
-------------------------------------------------
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
---------------------------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6. Reference in Securities to Supplemental Indentures.
------------------------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
ARTICLE X
COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.
-----------------------------------------------------------
The Company covenants and agrees for the benefit of each series of
securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of such Securities and this Indenture.
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Section 10.2. Maintenance of Office or Agency.
------------------------------------------------
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be presented
or surrendered for payment and an office or agency where Securities of that
series may be surrendered for transfer or exchange and where notices and demands
to or upon the Company in respect of the Securities of that series and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation and any change in
the location of any such office or agency.
Section 10.3. Money for Security Payments to be Held in Trust.
----------------------------------------------------------------
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of such
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided, and will promptly notify the Trustee of its
failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 a.m. New York City time on each due date of the principal of or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal and
premium (if any) or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
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(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest;
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(4) comply with the provisions of the Trust Indenture Act applicable to it
as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request to the Company,
or (if then held by the Company) shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 10.4. Statement as to Compliance.
-------------------------------------------
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate covering the preceding calendar year, stating whether or not to the
best knowledge of the signers thereof the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company shall
be in default, specifying all
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such defaults and the nature and status thereof of which they may have
knowledge. For the purpose of this Section 10.4, compliance shall be determined
without regard to any grace period (other than an Extension Period) or
requirement of notice provided pursuant to the terms of this Indenture.
Section 10.5. Waiver of Certain Covenants.
--------------------------------------------
The Company may omit in any particular instance to comply with any covenant
or condition provided pursuant to Section 3.1, 9.1(3) or 9.1(4) with respect to
the Securities of any series, if before or after the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company in respect of any such covenant
or condition shall remain in full force and effect.
Section 10.6. Additional Sums.
--------------------------------
In the case of the Securities of a series issued to a PMI Trust, so long as
no Event of Default has occurred and is continuing and except as otherwise
specified as contemplated by Section 2.1 or Section 3.1, in the event that (i) a
PMI Trust is the Holder of all of the Outstanding Securities of such series and
(ii) a Tax Event in respect of such PMI Trust shall have occurred and be
continuing, the Company shall pay to such PMI Trust (and its permitted
successors or assigns under the related Trust Agreement) as Holder of the
Securities of such series for so long as such PMI Trust (or its permitted
successor or assignee) is the registered holder of any Securities of such
series, such additional sums as may be necessary in order that the amount of
Distributions (including any Additional Amounts (as defined in such Trust
Agreement)) paid by such PMI Trust on the related Capital Securities and Common
Securities that at any time remain outstanding in accordance with the terms
thereof shall not be reduced as a result of any Additional Taxes (the
"Additional Sums"). Whenever in this Indenture or the Securities there is a
reference in any context to the payment of principal of or interest on the
Securities, such mention shall be deemed to include mention of the payments of
the Additional Sums provided for in this paragraph to the extent that, in such
context, Additional Sums are, were or would be payable in respect thereof
pursuant to the provisions of this paragraph and express mention of the payment
of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made.
Section 10.7. Additional Covenants.
-------------------------------------
The Company covenants and agrees with each Holder of Securities of each
series that it shall not, and it shall not permit any Subsidiary of the Company
to, (a) 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, or (b) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
that rank pari passu in all
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respects with or junior in interest to the Securities of such series or (c) make
any guarantee payments with respect to any guarantee by the Company of debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
with or junior in interest to the Securities (other than (a) dividends or
distributions in Common Stock, (b) any declaration of a dividend in connection
with the implementation of a Rights Plan, the issuance of any Common Stock of
any class or series of preferred stock of the Company under any Rights Plan in
the future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under any PMI Guarantee, (d) purchases of Common Stock related to
the issuance of Common Stock or rights under any of the Company's or its
subsidiaries' benefit plans for their directors, officers or employees and (e)
purchases of fractional interests of Common Stock in connection with a stock
split, stock dividend or a similar reclassification or combination) 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 with respect to the Securities of such
series and (B) in respect of which the Company shall not have taken reasonable
steps to cure, (ii) if the Securities of such series are held by a PMI Trust,
the Company shall be in default with respect to its payment of any obligations
under the PMI Guarantee relating to the Capital Securities issued by such PMI
Trust or (iii) the Company shall have given notice of its election to begin an
Extension Period with respect to the Securities of such series as provided
herein and shall not have rescinded such notice, or such Extension Period, or
any extension thereof, shall be continuing.
The Company also covenants with each Holder of Securities of a series
issued to a PMI Trust (i) to maintain directly or indirectly 100% ownership of
the Common Securities of such PMI Trust; provided, however, that any permitted
successor of the Company hereunder may succeed to the Company's ownership of
such Common Securities, (ii) as holder of the Common Securities not to
voluntarily terminate, wind-up or liquidate such PMI Trust, except (a) in
connection with a distribution of the Securities of such series to the holders
of Capital Securities in liquidation of such PMI Trust or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the related Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of such Trust Agreement, to cause such PMI Trust to remain classified
as a grantor trust and not an association taxable as a corporation for United
States federal income tax purposes.
Section 10.8. Original Issue Discount.
----------------------------------------
On or before December 15 of each year during which any Securities are
outstanding, the Company shall furnish to each Paying Agent such information as
may be reasonably requested by each Paying Agent in order that each Paying Agent
may prepare the information which it is required to report for such year on
Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the
Internal Revenue Code of 1986, as amended. Such information shall include the
amount of original issue discount includible in income for each $1,000 of
principal amount at Stated Maturity of outstanding Securities during such year.
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Section 10.9. Delivery of Certain Information.
------------------------------------------------
At any time when the Company is not subject to Section 13 or 15(d) of the
Exchange Act, upon the request of a Holder of a Security, the Company will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder, or to a prospective purchaser of any such Security
designated by any such Holder to the extent required to permit compliance by
such Holder with Rule 144A under the Securities Act (or any successor provision
thereto) in connection with the resale of any such Security; provided, however,
that the Company shall not be required to furnish such information in connection
with any request made on or after the date which is three years from the later
of (i) the date such a Security (or any such Predecessor Security) was last
acquired from the Company or (ii) the date such Security (or any such
Predecessor Security) was last acquired from an "affiliate" of the Company
within the meaning of Rule 144 under the Securities Act (or any successor
provision thereto). "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto).
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Applicability of This Article.
----------------------------------------------
Redemption of Securities of any series (whether by operation of a sinking
fund or otherwise) as permitted or required by any form of Security issued
pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security for such series, each Security of such series shall be
subject to partial redemption only in the amount of $1,000 or integral multiples
thereof.
Section 11.2. Election to Redeem; Notice to Trustee.
------------------------------------------------------
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company of any of the Securities of any particular series and having the
same terms, the Company shall, not less than 30 nor more than 60 days prior to
the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities of a series held by
a PMI Trust, the related Property Trustee of such date and of the principal
amount of Securities of that series to be redeemed and provide the additional
information required to be included in the notice or notices contemplated by
Section 11.4. In the case of any redemption of Securities prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities, the Company shall furnish the Trustee with an Officers' Certificate
and an Opinion of Counsel evidencing compliance with such restriction.
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Section 11.3. Selection of Securities to be Redeemed.
-------------------------------------------------------
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any Security of such series to be redeemed.
If less than all the Securities of such series and of a specified tenor are to
be redeemed (unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series and specified tenor not previously called for redemption in
accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed. If the
Company shall so direct, Securities registered in the name of the Company, any
Affiliate or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
Section 11.4. Notice of Redemption.
-------------------------------------
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the sixtieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities of each series to be redeemed, each notice of
redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price or if the Redemption Price cannot be calculated
prior to the time the notice is required to be sent, the estimate of the
Redemption Price provided pursuant to the Indenture together with a statement
that it is an estimate and that the actual Redemption Price will be calculated
on the third Business Day prior to the Redemption Date (if such an estimate of
the Redemption Price is given, a subsequent notice shall be given as set forth
above setting forth the Redemption Price promptly following the calculation
thereof);
(c) if less than all Outstanding Securities of such particular series and
having the same terms are to be redeemed, the identification (and, in the case
of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;
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(d) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Security or portion thereof, and that interest thereon,
if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(f) that the redemption is for a sinking fund, if such is the case; and
(g) such other provisions as may be required in respect of the terms of a
particular series of Securities.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall not be
irrevocable. 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, a 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.
Section 11.5. Deposit of Redemption Price.
--------------------------------------------
Prior to 10:00 a.m. New York City time on the Redemption Date specified in
the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company is
acting as its own Paying Agent, the Company will segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and any accrued interest (including Additional Interest) on, all the
Securities which are to be redeemed on that date.
Section 11.6. Payment of Securities Called for Redemption.
------------------------------------------------------------
If any notice of redemption has been given as provided in Section 11.4, the
Securities or portion 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 accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable Redemption Price, together
with accrued interest (including any Additional Interest) to the Redemption
Date; provided, however, that, unless otherwise specified as contemplated by
Section 3.1, installments of interest whose Stated Maturity is on or prior to
the Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
3.8.
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Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof, at
the expense of the Company, a new Security or Securities of the same series, of
authorized denominations, in aggregate principal amount equal to the unredeemed
portion of the Security so presented and having the same Original Issue Date,
Stated Maturity and terms. If a Global Security is so surrendered, such new
Security (subject to Section 3.5) will also be a new Global Security.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 11.7. Right of Redemption of Securities Initially Issued to a
------------------------------------------------------------------------
PMI Trust.
- ---------
In the case of the Securities of a series initially issued to a PMI Trust,
except as otherwise specified as contemplated by Section 3.1, the Company, at
its option, may redeem such Securities (i) on or after the date specified in
such Security, in whole at any time or in part from time to time, or (ii) upon
the occurrence and during the continuation of a Tax Event, at any time within 90
days following the occurrence of such Tax Event in respect of such PMI Trust, in
whole (but not in part), in each case at a Redemption Price specified as
contemplated by Section 3.1.
ARTICLE XII
SINKING FUNDS
Section 12.1. Applicability of Article.
-----------------------------------------
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any sinking fund payment in excess of such minimum amount which is
permitted to be made by the terms of such Securities of any series is herein
referred to as an "optional sinking fund payment." If provided for by the terms
of any Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 12.2. Each sinking fund payment
shall be applied to the redemption (or purchase by tender or otherwise) of
Securities of any series as provided for by the terms of such Securities.
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Section 12.2. Satisfaction of Sinking Fund Payments with Securities.
----------------------------------------------------------------------
In lieu of making all or any part of a mandatory sinking fund payment with
respect to any Securities of a series in cash, the Company may at its option, at
any time no more than 16 months and no less than 30 days prior to the date on
which such sinking fund payment is due, deliver to the Trustee Securities of
such series (together with the unmatured coupons, if any, appertaining thereto)
theretofore purchased or otherwise acquired by the Company, except Securities of
such series that have been redeemed through the application of mandatory or
optional sinking fund payments pursuant to the terms of the Securities of such
series, accompanied by a Company Order instructing the Trustee to credit such
obligations and stating that the Securities of such series were originally
issued by the Company by way of bona fide sale or other negotiation for value;
provided that the Securities to be so credited have not been previously so
credited. The Securities to be so credited shall be received and credited for
such purpose by the Trustee at the redemption price for such Securities, as
specified in the Securities so to be redeemed, for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
Section 12.3. Redemption of Securities for Sinking Fund.
----------------------------------------------------------
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which the
Securities of such series are payable (except as provided pursuant to Section
3.1) and the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities pursuant to Section 12.2 and will also deliver to the
Trustee any Securities to be so delivered. Such Officers' Certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the
succeeding sinking fund payment date. In the case of the failure of the Company
to deliver such Officers' Certificate (or, as required by this Indenture, the
Securities and coupons, if any, specified in such Officers' Certificate) by the
due date therefor, the sinking fund payment due on the succeeding sinking fund
payment date for such series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of the Securities of such series
subject to a mandatory sinking fund payment without the right to deliver or
credit securities as provided in Section 12.2 and without the right to make the
optional sinking fund payment with respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made with respect
to the Securities of any particular series shall be applied by the Trustee (or
by the Company if the Company is acting as its own Paying Agent) on the sinking
fund payment date on which such payment is made (or, if such payment is made
before a sinking fund payment date, on the sinking fund payment date immediately
following the date of such payment) to the redemption of Securities of such
series at the Redemption Price specified in such Securities with respect to the
sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee
(or, if the Company is acting as its own Paying Agent, segregated and
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held in trust by the Company as provided in Section 10.3) for such series and
together with such payment (or such amount so segregated) shall be applied in
accordance with the provisions of this Section 12.3. Any and all sinking fund
moneys with respect to the Securities of any particular series held by the
Trustee (or if the Company is acting as its own Paying Agent, segregated and
held in trust as provided in Section 10.3) on the last sinking fund payment date
with respect to Securities of such series and not held for the payment or
redemption of particular Securities of such series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent),
together with other moneys, if necessary, to be deposited (or segregated)
sufficient for the purpose, to the payment of the principal of the Securities of
such series at Maturity. The Trustee shall select the Securities to be redeemed
upon such sinking fund payment date in the manner specified in Section 11.3 and
cause notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 11.4. Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Section 11.6. On or before each sinking fund
payment date, the Company shall pay to the Trustee (or, if the Company is acting
as its own Paying Agent, the Company shall segregate and hold in trust as
provided in Section 10.3) in cash a sum in the currency in which Securities of
such series are payable (except as provided pursuant to Section 3.1) equal to
the principal, premium, if any, and any interest accrued to the Redemption Date
for Securities or portions thereof to be redeemed on such sinking fund payment
date pursuant to this Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a series
with sinking fund moneys or mail any notice of redemption of Securities of such
series by operation of the sinking fund for such series during the continuance
of a default in payment of interest, if any, on any Securities of such series or
of any Event of Default (other than an Event of Default occurring as a
consequence of this paragraph) with respect to the Securities of such series,
except that if the notice of redemption shall have been provided in accordance
with the provisions hereof, the Trustee (or the Company, if the Company is then
acting as its own Paying Agent) shall redeem such Securities if cash sufficient
for that purpose shall be deposited with the Trustee (or segregated by the
Company) for that purpose in accordance with the terms of this Article XII.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such default or
Event of Default, be held as security for the payment of the Securities and
coupons, if any, of such series; provided, however, that in case such default or
-----------------
Event of Default shall have been cured or waived herein, such moneys shall
thereafter be applied on the next sinking fund payment date for the Securities
of such series on which such moneys may be applied pursuant to the provisions of
this Section 12.3.
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ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Indebtedness.
------------------------------------------------------------
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and premium, if any) and interest (including any Additional Interest) on
each and all of the Securities are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness.
Section 13.2. No Payment When Senior Indebtedness in Default;__Payment Over
---------------------------------------------------------------------------
of Proceeds Upon Dissolution, Etc.
- ----------------------------------
In the event that the Company shall default in the payment of any principal
of (or premium, if any) or interest on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, upon written notice of
such default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of (or premium, if any) or interest on any of the
Securities, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the Securities.
In the event of (a) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceedings relating
to the Company, its creditors or its property, (b) any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings, (c)
any assignment by the Company for the benefit of creditors or (d) any other
marshalling of the assets of the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), all Senior Indebtedness due or to
become due (including any interest thereon accruing after the commencement of
any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property (other than
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment) ("Junior
Securities"), shall be made to any Holder of any of the Securities on account of
the principal of (and premium, if any) on any Securities. Any payment or
distribution, whether in cash, securities or other property (other than Junior
Securities) which would otherwise (but for these subordination provisions) be
payable or deliverable in respect of the Securities of any series shall be paid
or delivered directly to the holders of Senior Indebtedness in accordance with
the priorities then
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existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any Proceeding) shall have
been paid in full.
In the event of any Proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holders of the Securities, together
with the holders of any obligations of the Company ranking on a parity with the
Securities, shall be entitled to be paid from the remaining assets of the
Company the amounts at the time due and owing on account of unpaid principal of
(and premium, if any) and interest on the Securities and such other obligations
before any payment or other distribution, whether in cash, property or
otherwise, shall be made on account of any capital stock or any obligations of
the Company ranking junior to the Securities and such other obligations.
In the event that, notwithstanding the foregoing, any payment or
distribution of any character or any security, whether in cash, securities or
other property (other than Junior Securities), shall be received by the Trustee
or any Holder in contravention of any of the terms hereof and before all Senior
Indebtedness shall have been paid in full, and if such fact shall, at or prior
to the time of such payment, distribution or security, have been made known to
the Trustee or such Holder, as the case may be, such payment or distribution or
security shall be received in trust for the benefit of, and shall be paid over
or delivered and transferred to, the holders of the Senior Indebtedness at the
time outstanding in accordance with the priorities then existing among such
holders for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay all such Senior Indebtedness in full. In
the event of the failure of the Trustee or any Holder to endorse or assign any
such payment, distribution or security, each holder of Senior Indebtedness is
hereby irrevocably authorized to endorse or assign the same.
The Trustee and Holders will take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of Senior
Indebtedness or consent to the filing of a financing statement with respect
hereto) as may, in the opinion of counsel designated by the holders of a
majority in principal amount of the Senior Indebtedness at the time outstanding,
be necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
The provisions of this Section 13.2 shall not impair any rights, interests,
remedies or powers of any secured creditor of the Company in respect of any
security interest the creation of which is not prohibited by the provisions of
this Indenture.
The securing of any obligations of the Company, otherwise ranking on a
parity with the Securities or ranking junior to the Securities, shall not be
deemed to prevent such obligations from constituting, respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.
Section 13.3. Payment Permitted If No Default.
------------------------------------------------
Nothing contained in this Article or elsewhere in this Indenture, or in any
of the Securities, shall prevent (a) the Company at any time, except during the
conditions described in the first paragraph
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of Section 13.2 or the pendency of any Proceeding referred to in Section 13.2,
from making payments at any time of principal of (and premium, if any) or
interest (including Additional Interest) on the Securities, or (b) the
application by the Trustee of any moneys deposited with it hereunder to the
payment of or on account of the principal of (and premium, if any) or interest
(including any Additional Interest) on the Securities or the retention of such
payment by the Holders, if, at the time of such application by the Trustee, it
did not have knowledge that such payment would have been prohibited by the
provisions of this Article.
Section 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
------------------------------------------------------------------------
Subject to the payment in full of all amounts due or to become due on all
Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company which by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities are subordinated to the Senior Indebtedness and is entitled to like
rights of subrogation by reason of any payments or distributions made to holders
of such Senior Indebtedness) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
Section 13.5. Provisions Solely to Define Relative Rights.
-----------------------------------------------------------
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as between the Company and the Holders of the Securities,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture including, without limitation, filing and voting claims in
any Proceeding, subject to the rights, if any, under this Article of the holders
of Senior
78
<PAGE>
Indebtedness to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
Section 13.6. Trustee to Effectuate Subordination.
---------------------------------------------------
Each Holder of a Security by his or her acceptance thereof 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 provided in this
Article and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
Section 13.7. No Waiver of Subordination Provisions.
-----------------------------------------------------
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
Section 13.8. Notice to Trustee.
----------------------------------
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least three Business Days
prior to the date upon which by the terms hereof any monies may become payable
for any purpose (including, without limitation, the payment of the principal of
(and premium, if any) interest (including any Additional
79
<PAGE>
Interest) on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
monies and to apply the same to the purpose for which they were received and
shall not be affected by any notice to the contrary which may be received by it
within three Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee or attorney-in-fact therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of 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, and if
such evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 13.9. Reliance on Judicial Order or Certificate of Liquidating
-------------------------------------------------------------------------
Agent.
- -----
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the 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.
Section 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
--------------------------------------------------------------------------
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise.
Section 13.11. Rights of Trustee as Holder of Senior Indebtedness;
---------------------------------------------------------------------------
Preservation of Trustee's Rights.
- ---------------------------------
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as
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<PAGE>
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Section 13.12. Article Applicable to Paying Agents.
-----------------------------------------------------
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee; provided, however, that
Section 13.11 shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as Paying Agent.
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<PAGE>
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[PMI Seal] THE PMI GROUP, INC.
By: /s/ John M. Lorenzen
--------------------
John M. Lorenzen
Executive Vice President
Attest: /s/ Victor J. Bacigalupi
- --------------------------------
Victor J. Bacigalupi
Secretary
THE BANK OF NEW YORK,
as Trustee
[BNY Seal]
By: /s/ Vivian Georges
------------------
Attest: /s/ The Bank of New York
- --------------------------------
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<PAGE>
EXHIBIT 4.6
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
BETWEEN
THE PMI GROUP, INC.
(AS GUARANTOR)
AND
THE BANK OF NEW YORK
(AS TRUSTEE)
DATED AS OF
_________________, 1997
- --------------------------------------------------------------------------------
<PAGE>
PMI CAPITAL I
Certain Sections of this Guarantee Agreement relating to Sections 310
through 318 of the Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Act
Section Guarantee Agreement Section
- ------------------- ---------------------------
<S> <C> <C>
310 (a)....................................... 4.1(a)
(b)....................................... 4.1(c), 2.8
(c)....................................... Inapplicable
311 (a)....................................... 2.2(b)
(b)....................................... 2.2(b)
(c)....................................... Inapplicable
312 (a)....................................... 2.2(a)
(b)....................................... 2.2(b)
313 ......................................... 2.3
314 (a)....................................... 2.4
(b)....................................... Inapplicable
(c)....................................... 2.5
(d)....................................... Inapplicable
(e)....................................... 1.1, 2.5, 3.2
(f)....................................... 2.1, 3.2
315 (a)....................................... 3.1(d)
(b)....................................... 2.7
(c)....................................... 3.1
(d)....................................... 3.1(d)
(e)....................................... Inapplicable
316 (a)....................................... 1.1, 2.6, 5.4
(b)....................................... 5.3
(c)....................................... Inapplicable
317 (a)....................................... Inapplicable
(b)....................................... Inapplicable
318 (a)....................................... 2.1(b)
(b)....................................... 2.1
(c)....................................... 2.1(a)
</TABLE>
- ------------
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Guarantee.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I. DEFINITIONS.................................................. 4
Section 1.1. Definitions.................................................. 4
ARTICLE II. TRUST INDENTURE ACT.......................................... 6
Section 2.1. Trust Indenture Act; Application............................. 6
Section 2.2. List of Holders.............................................. 6
Section 2.3. Reports by the Guarantee Trustee............................. 7
Section 2.4. Periodic Reports to the Guarantee Trustee.................... 7
Section 2.5. Evidence of Compliance with Conditions Precedent............. 7
Section 2.6. Events of Default; Waiver.................................... 7
Section 2.7. Event of Default; Notice..................................... 7
Section 2.8. Conflicting Interests........................................ 8
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE........... 8
Section 3.1. Powers and Duties of the Guarantee Trustee................... 8
Section 3.2. Certain Rights of Guarantee Trustee.......................... 9
Section 3.3. Compensation; Indemnity; Fees................................ 10
ARTICLE IV. GUARANTEE TRUSTEE............................................ 10
Section 4.1. Guarantee Trustee: Eligibility............................... 10
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee 11
ARTICLE V. GUARANTEE.................................................... 11
Section 5.1. Guarantee.................................................... 11
Section 5.2. Waiver of Notice and Demand.................................. 12
Section 5.3. Obligations Not Affected..................................... 12
Section 5.4. Rights of Holders............................................ 12
Section 5.5. Guarantee of Payment......................................... 13
Section 5.6. Subrogation.................................................. 13
Section 5.7. Independent Obligations...................................... 13
ARTICLE VI. COVENANTS AND SUBORDINATION.................................. 13
Section 6.1. Subordination................................................ 13
Section 6.2. Pari Passu Guarantees........................................ 13
ARTICLE VII. TERMINATION.................................................. 13
Section 7.1. Termination.................................................. 13
ARTICLE VIII. MISCELLANEOUS................................................ 14
Section 8.1. Successors and Assigns....................................... 14
Section 8.2. Amendments................................................... 14
Section 8.3. Notices...................................................... 14
Section 8.4. Benefit...................................................... 15
Section 8.5. Interpretation............................................... 15
Section 8.6. Governing Law................................................ 15
</TABLE>
3
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of ________________, 1997, is executed
and delivered by THE PMI GROUP, INC., a Delaware corporation (the "Guarantor")
having its principal office at 601 Montgomery Street, San Francisco, California
94111, and THE BANK OF NEW YORK, a New York banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of PMI Capital I, a
Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of
February 4, 1997 (the "Trust Agreement"), among the Guarantor, as Depositor, the
Property Trustee and the Delaware Trustee named therein and the Holders from
time to time of undivided beneficial interests in the assets of the Issuer, the
Issuer issued $100,000,000 aggregate Liquidation Amount (as defined in the Trust
Agreement) of its 8.309% Capital Securities, Series A (Liquidation Amount $1,000
per capital security) (the "Old Capital Securities") representing preferred
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in the Trust Agreement;
WHEREAS, the Old Capital Securities were issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), were used to purchase the Debentures (as
defined in the Trust Agreement) of the Guarantor which were deposited with The
Bank of New York, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Old Capital Securities
the Guarantor irrevocably and unconditionally agreed, to the extent set forth in
the Guarantee Agreement dated as of February 4, 1997 among the Guarantor and the
Guarantee Trustee, for the benefit of the Old Capital Securities (the "Old
Guarantee Agreement") to pay to the Holders of the Capital Securities the
Guarantee Payments set forth therein and to make certain other payments on the
terms and conditions set forth herein.
WHEREAS, pursuant to the Registration Rights Agreement, dated as of
February 4, 1997 among the Guarantor, the Issuer and the Initial Purchaser named
therein (the "Registration Rights Agreement"), the Guarantor and the Issuer
agreed to file a registration statement (the "Registration Statement") to
exchange, inter alia, the Old Capital Securities for a like amount of new
capital securities (the "New Capital Securities," and together with the Old
Capital Securities, the "Capital Securities") and the Old Guarantee Agreement
for this Guarantee Agreement for the benefit of the Holders of the Capital
Securities;
WHEREAS, this Guarantee Agreement will be substantially identical to the
Old Guarantee Agreement except that the guarantee issued hereunder will be
registered pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), and this Guarantee Agreement
will not contain provisions restricting transfer in the absence of registration
under the Securities Act;
NOW, THEREFORE, in consideration of the purchase or retention by each
Holder of Capital Securities, which purchase or retention the Guarantor hereby
agrees shall benefit the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for the benefit of the Holders from time to time of the
Capital Securities.
ARTICLE I. DEFINITIONS
Section 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the date
hereof.
1
<PAGE>
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board of Directors" means either the board of directors of the Guarantor
or any committee of that board duly authorized to act hereunder.
"Capital Securities" has the meaning specified in the recitals to this
Guarantee Agreement.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Debentures" means the 8.309% Junior Subordinated Deferrable Interest
Debentures, Series A of the Guarantor issued pursuant to the Indenture.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions (as
defined in the Trust Agreement) required to be paid on the Capital Securities,
to the extent the Issuer shall have funds on hand available therefor at such
time; (ii) the redemption price (as specified in the Trust Agreement), including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price"), with respect to any Capital Securities called for
redemption by the Issuer, to the extent the Issuer shall have funds on hand
available therefor at such time; and (iii) upon a voluntary or involuntary
termination, winding-up or liquidation of the Issuer, unless Debentures are
distributed to the Holders, the lesser of (a) the sum of the Liquidation Amount
of $1,000 per Capital Security plus accumulated and unpaid Distributions on the
Capital Securities to the date of payment plus any accrued but unpaid premium
and (b) the amount of assets of the Issuer remaining available for distribution
to Holders on liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Guarantee Trustee" means The Bank of New York, until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Guarantee Agreement, and thereafter means each such Successor
Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Capital Securities; provided, however, that in determining
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor, the Guarantee Trustee, or any Affiliate of the Guarantor or the
Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of February 4,
1997, as supplemented and amended, between the Guarantor and The Bank of New
York, as trustee.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount of the Capital Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the Liquidation Amount of all then Outstanding
(as defined in the Trust Agreement) Capital Securities.
2
<PAGE>
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief
Executive Officer, the President or a Vice President of such Person, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each 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 officer, such
condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any other entity of whatever nature.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers, and also, with respect to a particular matter, any other
officer, to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" has the meaning specified in the recitals to this
Guarantee Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by any of Sections 310 to
317, inclusive, of the Trust Indenture Act, such imposed duties shall control.
Section 2.2. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (a) semiannually, on or before February 1 and August 1 of each year, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of a date not more than 15
days prior to the delivery thereof, and (b) at such other times as the Guarantee
Trustee may request in writing, within 30 days after the receipt by the
Guarantor of any such request, a List of Holders as of a date not more than 15
days prior to the
3
<PAGE>
time such list is furnished, in each case to the extent such information is in
the possession or control of the Guarantor and is not identical to a previously
supplied list of Holders or has not otherwise been received by the Guarantee
Trustee in its capacity as such. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Guarantee Trustee.
Not later than 60 days after December 31 of each year, commencing 60 days
after December 31, 1997, the Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Guarantee Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.
Section 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information, if
any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act, in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
Section 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
Section 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Capital Securities
may, by vote, on behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Guarantee Agreement, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent therefrom.
Section 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default known to the Guarantee Trustee, unless such
Events of Default have been cured before the giving of such notice, provided,
that, except in the case of a default in the payment of a Guarantee Payment, the
Guarantee Trustee shall be protected in withholding such notice if and so long
as the Board of Directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless a Responsible Officer charged with the administration of
this Guarantee Agreement shall have obtained written notice, of such Event of
Default.
4
<PAGE>
Section 2.8. Conflicting Interests.
The Trust Agreement and the Indenture shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by
such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or opinions that
by any provision hereof or of the Trust Indenture Act are specifically
required to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
5
<PAGE>
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Amount of the Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not assured to it under the terms of this Guarantee Agreement
or indemnity satisfactory to it against such risk or liability is not
assured to it.
Section 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate.
(iv) The Guarantee Trustee may consult with legal counsel, and the
advice or opinion of such legal counsel with respect to legal matters shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted to be taken by it hereunder in good faith and in
accordance with such advice or opinion. Such legal counsel may be legal
counsel to the Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement from
any court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee such security and indemnity satisfactory to it,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys, and the Guarantee Trustee shall
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not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request and shall be entitled to
receive instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (C) shall be fully protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
Section 3.3. Compensation; Indemnity; Fees.
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time reasonable
compensation for all services rendered by it hereunder as may be agreed by the
Guarantor and the Guarantee Trustee from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by the Guarantee Trustee in accordance with any
provision of this Guarantee Agreement (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Guarantee Trustee and its directors, officers, agents
and employees for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Guarantee
Trustee, arising out of or in connection with the acceptance or administration
of this Guarantee Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantee Trustee will
not claim or exact any lien or charge on any Guarantee Payments as a result of
any amount due to it under this Guarantee Agreement.
The provisions of this Section 3.3 shall survive the termination of this
Guarantee Agreement or the earlier resignation or removal of the Guarantee
Trustee.
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee: Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section
310(a) of the Trust Indenture Act. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority, then, for the
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purposes of this Section and to the extent permitted by the Trust Indenture
Act, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
Section 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the action of (i) if an Issuer Trust
Default has not occurred or has occurred and is not continuing, the holders of a
majority (based on Liquidation Amounts) of the outstanding Common Securities or
(ii) if an Issuer Trust Default has occurred and is continuing, or for cause,
the Holders of a Majority in Liquidation Amount of the Capital Securities.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor. The Successor Guarantee Trustee shall be appointed by the same
action which removed the Guarantee Trustee.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed by the
holders of a majority (based on Liquidation Amounts) of the outstanding Common
Securities (or if an Issuer Trust Default has occurred and is continuing, the
Holders of a Majority in Liquidation Amount of the Capital Securities) and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
Section 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees, subject to Section
6.1, to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due,
regardless of any defense, right of set-off or counterclaim which the Issuer may
have or assert other than the defense of payment. 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. The Guarantor shall notify the Guarantee Trustee of any
such payment.
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Section 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the 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 (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures as provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital Securities
or the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the 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 Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of not less than a
Majority in Liquidation Amount of the Capital Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of this Guarantee Agreement or
exercising any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and (iv) any Holder may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the Issuer or
any other Person.
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Section 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer) or upon distribution of Debentures to Holders as provided in the
Trust Agreement.
Section 5.6. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 5.1; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
Section 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the 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 Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the
Indenture) to the extent and in the manner set forth in the Indenture. The
obligations of the Guarantor under this Guarantee Agreement do not constitute
Senior Indebtedness (as defined in the Indenture).
Section 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall rank
pari passu with the obligations of the Guarantor under (i) any similar guarantee
agreements issued by the Guarantor on behalf of the holders of preferred or
capital securities issued by any PMI Trust (as defined in the Indenture), (ii)
the Indenture and the Securities (as defined therein) issued thereunder, and
(iii) any other security, guarantee or other agreement or obligation that is
expressly stated to rank pari passu with the obligations of the Guarantor under
this Guarantee Agreement or with any obligation that ranks pari passu with the
obligations of the Guarantor under this Guarantee Agreement.
ARTICLE VII. TERMINATION
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Capital Securities,
(ii) the distribution of Debentures to the Holders in exchange for all of the
Capital Securities or (iii) full payment of the amounts payable in accordance
with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the
foregoing, this Guarantee Agreement will continue to be effective or
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will be reinstated, as the case may be, if at any time any Holder must repay any
sums paid with respect to Capital Securities or this Guarantee Agreement.
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its obligations hereunder.
Section 8.2. Amendments.
Except with respect to any changes which do not adversely affect the rights
of the Holders in any material respect (in which case no consent of the Holders
will be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of the
Capital Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
Section 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or such other
address, facsimile number or to the attention of such other Person as the
Guarantor may give notice to the Holders:
The PMI Group, Inc.
601 Montgomery Street
San Francisco, California 94111
Facsimile No.: 415 291-6175
Attention: Victor J. Bacigalupi
(b) if given to the Guarantee Trustee or the Issuer, in care of the
Guarantee Trustee, at the Issuer's (and the Guarantee Trustee's) address set
forth below or such other address as the Guarantee Trustee on behalf of the
Issuer may give notice to the Holders:
PMI Capital I
c/o The PMI Group, Inc.
601 Montgomery Street
San Francisco, California 94111
Facsimile No.: 415 291-6175
Attention: Victor J. Bacigalupi
and:
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The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile No.: 212 815-5915
Attention: Vivian Georges
Guarantee Trustee
The Bank of New York
101 Barclay Street
New York, New York 10286
Facsimile No.: 212 815-5915
Attention: Vivian Georges
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Capital Securities.
Section 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined in
the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections are
to Articles and Sections of this Guarantee Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include the
masculine, feminine and neuter genders.
Section 8.6. Governing Law.
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THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
THE PMI GROUP, INC.
By:
----------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Guarantee Trustee
By:
----------------------------
Name:
Title:
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EXHIBIT 4.7
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of February 4, 1997,
among The PMI Group, Inc., a Delaware corporation (the "Company"), PMI Capital
I, a Delaware statutory business trust (the "Trust"), and Goldman, Sachs & Co.
as the initial purchaser (the "Initial Purchaser") of the 8.309% Capital
Securities, Series A of the Trust, which are guaranteed by the Company.
1. Certain Definitions.
-----------------------
For purposes of this Registration Rights Agreement, the following terms
shall have the following respective meanings:
(a) "Administrative Trustees" shall mean the Administrative Trustees
appointed pursuant to the Trust Agreement.
(b) "Capital Securities" shall mean the 8.309% Capital Securities,
Series A, Liquidation Amount $1,000 per Capital Security, to be issued
under the Trust Agreement and sold to the Initial Purchaser, and securities
issued in exchange therefor, other than Debentures, or in lieu thereof
pursuant to the Trust Agreement.
(c) "Closing Date" shall mean the date on which the Capital Securities
are initially issued.
(d) "Commission" shall mean the Securities and Exchange Commission, or
any other Federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular
purpose.
(e) "Debentures" shall mean the 8.309% Junior Subordinated Deferrable
Interest Debentures, Series A due February 1, 2027 of the Company to be
issued under the Indenture, and securities issued in exchange therefor or
in lieu thereof pursuant to the Indenture.
(f) "Effective Time", in the case of (i) an Exchange Offer, shall mean
the time and date as of which the Commission declares the Exchange Offer
Registration Statement effective or as of which the Exchange Offer
Registration Statement otherwise becomes effective, and (ii) a Shelf
Registration, shall mean the time and date as of which the Commission
declares the Shelf Registration effective or as of which the Shelf
Registration otherwise becomes effective.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, or
any successor thereto, as the same shall be amended from time to time.
(h) "Exchange Capital Securities" shall have the meaning assigned
thereto in Section 2(a) hereof.
(i) "Exchange Debentures " shall have the meaning assigned thereto in
Section 2(a) hereof.
(j) "Exchange Guarantee " shall have the meaning assigned thereto in
Section 2(a) hereof.
<PAGE>
(k) "Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
(l) "Exchange Offer Registration Statement" shall have the meaning
assigned thereto in Section 2(a) hereof.
(m) "Exchange Registration" shall have the meaning assigned thereto in
Section 3(f) hereof.
(n) "Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
(o) "Guarantee" shall mean the guarantee of the Capital Securities by
the Company under the Guarantee Agreement, dated as of February 4, 1997,
between the Company and The Bank of New York, as Guarantee Trustee.
(p) The term "holder" shall mean the Initial Purchaser for so long as
it owns any Registrable Securities, and such of its respective successors
and assigns who acquire Registrable Securities, directly or indirectly,
from such person or from any successor or assign of such person, in each
case for so long as such person owns any Registrable Securities.
(q) "Indenture" shall mean the Junior Subordinated Indenture, dated as
of February 4, 1997, between the Company and The Bank of New York, as
Trustee, as the same shall be amended from time to time.
(r) "Initial Purchaser" shall have the meaning assigned thereto in the
introductory paragraph hereto.
(s) "Liquidation Amount" shall mean the stated amount of $1,000 per
Trust Security.
(t) The term "person" shall mean a corporation, association,
partnership, organization, business, individual, government or political
subdivision thereof or governmental agency.
(u) "Private Exchange" shall have the meaning assigned thereto in
Section 2(a) hereof.
(v) "Private Exchange Securities" shall have the meaning assigned
thereto in Section 2(a) hereof.
(w) "Registrable Securities" shall mean the Securities and the Private
Exchange Securities; provided, however, that such Securities shall cease to
-------- -------
be Registrable Securities when (i) in the circumstances contemplated by
Section 2(a) hereof, such Securities have been exchanged for Exchange
Securities in an Exchange Offer as contemplated in Section 2(a) (provided
--------
that any Exchange Securities received by a broker-dealer in an Exchange
Offer in exchange for Registrable Securities that were not acquired by the
broker-dealer directly from the Company will also be Registrable Securities
through and including the earlier of the 90th day after the Exchange Offer
is completed or such time as such broker-dealer no longer owns such
Exchange Securities); (ii) in the circumstances contemplated by Section
2(b) hereof, a registration statement registering such Securities or
Private Exchange Securities under the Securities Act has been declared or
becomes effective and such Securities or Private Exchange Securities have
been sold or otherwise transferred by the holder thereof pursuant to such
effective registration
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statement or, in the case of the Private Exchange Securities, such
registration statement has been kept effective for 60 days; (iii) such
Securities or Private Exchange Securities are or may be sold pursuant to
Rule 144 or any successor provision under circumstances in which any legend
borne by such Securities or Private Exchange Securities relating to
restrictions on transferability thereof, under the Securities Act or
otherwise, is removed or such Securities or Private Exchange Securities are
eligible to be sold pursuant to paragraph (k) of Rule 144; or (iv) such
Securities or Private Exchange Securities shall cease to be outstanding.
When used in connection with a Shelf Registration effected pursuant to
Section 2(b)(iv) hereof, the term Registrable Securities shall in such
context be deemed to refer only to the Private Exchange Securities.
(x) "Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
(y) "Registration Default Interest" shall have the meaning assigned
thereto in Section 2(c) hereof.
(z) "Registration Default Distributions" shall have the meaning
assigned thereto in Section 2(c) hereof.
(aa) "Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
(bb) "Resale Period" shall have the meaning assigned thereto in Section
2(a) hereof.
(cc) "Restricted Holder" shall mean (i) a holder that is an affiliate
of the Company within the meaning of Rule 405, (ii) a holder who acquires
Exchange Securities outside the ordinary course of such holder's business
or (iii) a holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Securities.
(dd) "Rule 144," "Rule 405" and "Rule 415" shall mean, in each case,
such rule promulgated under the Securities Act.
(ee) "Securities" shall mean, collectively, the Capital Securities,
the Guarantee and the Debentures.
(ff) "Securities Act" shall mean the Securities Act of 1933.
(gg) "Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
(hh) "Trust Agreement" shall mean the Amended and Restated Trust
Agreement, dated as of February 4, 1997, among the Company, as Depositor,
The Bank of New York, as Property Trustee, and The Bank of New York
(Delaware), as Delaware Trustee.
(ii) "Trust Indenture Act" shall mean the Trust Indenture Act of 1939,
or any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
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<PAGE>
(jj) "Trust Securities" shall mean collectively the Capital Securities
and the Common Securities to be issued under the Trust Agreement to the
Company.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Registration Rights Agreement, and the words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Registration Rights Agreement as
a whole and not to any particular Section or other subdivision. Unless the
context otherwise requires, any reference to a statute, rule or regulation
refers to the same (including any successor statute, rule or regulation thereto)
as it may be amended from time to time.
2. Registration Under the Securities Act.
-----------------------------------------
(a) Except as set forth in Section 2(b) below, the Company and the Trust
agree to use their reasonable efforts to file under the Securities Act within
150 days after the Closing Date, a registration statement (the "Exchange Offer
Registration Statement") relating to an offer to exchange (the "Exchange Offer")
any and all of the Securities for a like aggregate amount of capital securities
issued by the Trust and guaranteed by the Company and underlying junior
subordinated deferrable interest debentures of the Company, which capital
securities, guarantee and debentures are identical to the Capital Securities,
the Guarantee and the Debentures, respectively (and are entitled to the benefits
of trust indentures which have been qualified under the Trust Indenture Act)
except that (other than the Private Exchange Securities (as defined below), if
any) they have been registered pursuant to an effective registration statement
under the Securities Act, do not contain restrictions on transfers and, in the
case of such capital securities and debentures, do not contain provisions for
the additional distributions and additional interest, as the case may be,
contemplated in Section 2(c) below (such new securities hereinafter called the
"Exchange Capital Securities", the "Exchange Guarantee" and the "Exchange
Debentures", respectively, and together the "Exchange Securities"). The Company
and the Trust agree to use their reasonable efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act within 180
days after the Closing Date. The Exchange Offer will be registered under the
Securities Act on the appropriate form and will comply with all applicable
tender offer rules and regulations under the Exchange Act. The Company and the
Trust further agree to use their reasonable efforts to commence and complete the
Exchange Offer promptly after the Exchange Offer Registration Statement has
become effective, hold the Exchange Offer open for not less than 30 days and
exchange Exchange Securities for all Securities that have been properly tendered
and not validly withdrawn on or prior to the expiration of the Exchange Offer.
The Exchange Offer will be deemed to have been completed only if the Exchange
Securities received by holders other than Restricted Holders in the Exchange
Offer for Securities are, upon receipt, transferable by each such holder without
restriction under the Securities Act and the Exchange Act and without material
restrictions under the Blue Sky or securities laws of a substantial majority of
the States of the United States of America. The Exchange Offer shall be deemed
to have been completed upon the earlier to occur of (i) the Company and the
Trust having exchanged the Exchange Securities or Private Exchange Securities
for all outstanding Securities pursuant to the Exchange Offer and (ii) the
Company having exchanged, pursuant to the Exchange Offer, Exchange Securities or
Private Exchange Securities for all Securities that have been properly tendered
and not validly withdrawn before the expiration of the Exchange Offer, which
shall be on a date that is at least 30 days following the commencement of the
Exchange Offer. The Company and the Trust agree (x) to include in the
registration statement a prospectus for use in connection with any resales of
Exchange Securities by a holder that is a broker-dealer, other than resales of
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<PAGE>
Exchange Securities received by a broker-dealer pursuant to the Exchange Offer
in exchange for Registrable Securities acquired by such broker-dealer directly
from the Trust, and (y) to keep the Exchange Offer Registration Statement
effective for a period (the "Resale Period") beginning when Exchange Securities
are first issued in the Exchange Offer and ending upon the earlier of (i) either
(a) the expiration of the 90th day after the Exchange Offer has been completed
or (b) in the event the Company and the Trust have at any time notified any
broker-dealers pursuant to Section 3(f)(iii) hereof, the day beyond the 90th day
after the Exchange Offer has been completed that reflects an additional period
of days equal to the number of days during all of the periods from and including
the dates the Company and the Trust give notice pursuant to Section 3(f)(ii)
hereof to and including the date when broker-dealers receive an amended or
supplemented prospectus necessary to permit resales of Exchange Securities or to
and including the date on which the Company and the Trust give notice that the
resale of Exchange Securities under the Exchange Offer Registration Statement
may resume or (ii) such time as such broker-dealers no longer own any
Registrable Securities. With respect to such registration statement, each
broker-dealer that holds Exchange Securities received in an Exchange Offer in
exchange for Registrable Securities not acquired by it directly from the Trust
shall have the benefit of the rights of indemnification and contribution set
forth in Section 6 hereof.
If, prior to consummation of the Exchange Offer, the Initial Purchaser
holds any Securities acquired by it and having the status of an unsold allotment
in the initial distribution, the Company shall, upon the request of the Initial
Purchaser, simultaneously with the delivery of the Exchange Securities in the
Exchange Offer issue and deliver to the Initial Purchaser in exchange (the
"Private Exchange") for such Securities held by the Initial Purchaser a like
aggregate amount of capital securities issued by the Trust and guaranteed by the
Company and underlying junior subordinated deferrable interest debentures of the
Company that are identical in all material respects to the Exchange Securities
(the "Private Exchange Securities") (and which are issued pursuant to the same
indenture and trust agreement as the Exchange Securities) except for the
placement of a restrictive legend on such Private Exchange Securities. The
Private Exchange Securities shall bear the same CUSIP number as the Exchange
Securities.
(b) If (i) prior to the consummation of the Exchange Offer existing
applicable law or Commission interpretations are changed such that the Exchange
Capital Securities, Exchange Guarantee and Exchange Debentures to be received by
holders other than Restricted Holders in the Exchange Offer for Registrable
Securities are not or would not be, upon receipt, transferable by each such
holder without restriction under the Securities Act, (ii) the Exchange Offer
Registration Statement is not declared effective within 180 days of the Closing
Date, (iii) the Company has received an opinion of counsel, rendered by a law
firm having a recognized national tax practice, to the effect that, as a result
of the consummation of the Exchange Offer, there is more than an insubstantial
risk that (a) the Trust is, or will be, subject to United States Federal income
tax with respect to income received or accrued on the Debentures, (b) interest
payable by the Company on the Debentures is not, or will not be, deductible by
the Company, in whole or in part, for United States Federal income tax purposes,
or (c) the Trust is, or will be, subject to more than a de minimis amount of
-- -------
other taxes, duties or other governmental charges, or (iv) the Exchange Offer is
commenced prior to the date that is 90 days after the Closing Date and any
holder of Private Exchange Securities so requests at any time after the
consummation of the Private Exchange, then in addition to or in lieu of
conducting the Exchange Offer contemplated by Section 2(a), the Company and the
Trust shall file, at the Company's sole expense, under the Securities Act as
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<PAGE>
promptly as practicable a "shelf" registration statement providing for the
registration of, and the sale on a continuous or delayed basis by the holders
of, all of the Registrable Securities (except that in the case of clause (iv)
such registration statement shall provide for the registration of only the
Private Exchange Securities), pursuant to Rule 415 or any similar rule that may
be adopted by the Commission (the "Shelf Registration"). In the case of clauses
(i), (ii) and (iii) the Administrative Trustees will promptly deliver to the
holders of the Capital Securities, the Property Trustee and the Delaware
Trustee, or the Company will promptly deliver to the holders of the Debentures,
if not the Trust, and in the case of clause (iv) the Administrative Trustees or
the Company will promptly deliver to the holders of the Private Exchange
Securities, written notice that the Company and the Trust will be complying with
the provisions of this Section 2(b). The Company and the Trust agree to use
their reasonable efforts to cause the Shelf Registration to become or be
declared effective and to keep such Shelf Registration continuously effective
for a period ending on (A) in the case of a Shelf Registration effected pursuant
to clause (i), (ii) or (iii) above, the earlier of (i) either (x) such date as
all of the Securities and Private Exchange Securities have ceased to be
Registrable Securities or (y) in the event the Company or the Trust have at any
time suspended the use of the prospectus contained in the Shelf Registration
pursuant to Section 3(c) hereof, the date beyond the date specified in clause
(x) that reflects an additional period of days equal to the number of days
during all of the periods from and including the dates the Company and the Trust
give notice of such suspension pursuant to Section 3(c) to and including the
date when holders of Registrable Securities receive an amended or supplemented
prospectus necessary to permit resales of Registrable Securities under the Shelf
Registration or to and including the date on which the Company and Trust give
notice that the resale to Registrable Securities may resume or (ii) such time as
there are no longer any Registrable Securities outstanding, and (B) in the case
of a Shelf Registration effected pursuant to clause (iv) above, the earlier of
(i) either (x) the date that is 60 days after the Effective Time with respect to
such Shelf Registration or (y) in the event the Company or the Trust have at any
time suspended the use of the prospectus contained in the Shelf Registration
pursuant to Section 3(c) hereof, the date beyond the date specified in clause
(x) that reflects an additional period of days equal to the number of days
during all of the periods from and including the dates the Company and the Trust
give notice of such suspension pursuant to Section 3(c) to and including the
date when holders of Private Exchange Securities receive an amended or
supplemented prospectus necessary to permit resales of Private Exchange
Securities under the Shelf Registration or to and including the date on which
the Company and Trust give notice that the resale to Private Exchange Securities
may resume or (ii) such time as the holders of Private Exchange Securities shall
notify the Company and the Trust that they have sold all of the outstanding
Private Exchange Securities under such Shelf Registration. The Company and the
Trust further agree to supplement or make amendments to the Shelf Registration,
as and when required by the rules, regulations or instructions applicable to the
registration form used by the Company and the Trust for such Shelf Registration
or by the Securities Act or rules and regulations thereunder for shelf
registration, and the Company and the Trust agree to furnish to the holders of
the Registrable Securities copies of any such supplement or amendment prior to
its being used or promptly following its filing with the Commission.
(c) If the Company or the Trust fail to comply with this Registration
Rights Agreement or if the Exchange Offer Registration Statement or the Shelf
Registration fails to become effective (any such event a "Registration
Default"), then, as liquidated damages (which shall be the sole remedy of
holders of the Trust Securities and the Debentures), registration default
interest (the "Registration Default Interest") shall become payable in respect
of the Debentures, and corresponding registration
-6-
<PAGE>
default Distributions (the "Registration Default Distributions"), shall become
payable on the Trust Securities as follows:
(i) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration is filed with the Commission on or prior to the 150th
day after the Closing 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 and such Shelf
Registration is not filed on or prior to the date required by this
Registration Rights Agreement, then commencing on the day after either such
required filing date, Registration Default Interest shall accrue on the
principal amount of the Debentures, and Registration Default Distributions
shall accumulate on the Liquidation Amount of the Trust Securities, each at
a rate of 0.25% per annum; or
(ii) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration is declared effective by the Commission on or prior to
the 30th day after the applicable required filing date or (B)
notwithstanding that the Company and the Trust have consummated or will
consummate an Exchange Offer, the Company and the Issuer are required to
file a Shelf Registration and such Shelf Registration is not declared
effective by the Commission on or prior to the 30th day after the date such
Shelf Registration was required to be filed, then commencing on the 31st
day after the applicable required filing date, Registration Default
Interest shall accrue on the principal amount of the Debentures, and
Registration Default Distributions shall accumulate on the Liquidation
Amount of the Trust Securities, each at a rate of 0.25% per annum; or
(iii) if (A) the Trust and the Company have not exchanged Exchange
Securities for all Securities 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 has been declared effective and
such Shelf Registration ceases to be effective at any time prior to the
date on which all Securities and Private Exchange Securities have been
disposed of thereunder or otherwise cease to be Registrable Securities,
then Registration Default Interest shall accrue on the principal amount of
Debentures, and Registration Default Distributions shall accumulate on the
Liquidation Amount of the Trust 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 ceases to be effective
in the case of (B) above;
provided, however, that neither the Registration Default Interest rate on the
- -----------------
Debentures nor the Registration Default Distributions rate on the Liquidation
Amount of the Trust Securities shall 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 (in the case of clause (i)
above), (2) upon the effectiveness of the Exchange Offer Registration Statement
or a Shelf Registration (in the case of clause (ii) above), (3) upon the
exchange of Exchange Securities for all Securities tendered (in the case of
clause (iii) (A) above) or upon the effectiveness of the Shelf Registration
which had ceased to remain effective (in the case of clause (iii) (B) above), or
(4) upon such date as all of the Securities have ceased to be Registrable
Securities, Registration Default Interest on the Debentures, and Registration
Default Distributions on the Liquidation Amount of the Trust Securities as a
result of such clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue; provided
--------
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<PAGE>
further, however, that in the event of a Registration Default resulting from the
- ----------------
failure by the Company and the Trust to comply with its obligations with respect
to a Shelf Registration pursuant to Section 2(b)(iv), and if it would not cause
the Trust to be classified as an association taxable as a corporation for United
States federal income tax purposes, then Registration Default Distributions
shall accumulate only on the Private Exchange Securities.
(d) Any reference herein to a registration statement shall be deemed to
include any document incorporated therein by reference as of the applicable
Effective Time and any reference herein to any post-effective amendment to a
registration statement shall be deemed to include any document incorporated
therein by reference as of a time after such Effective Time.
(e) Notwithstanding any other provisions of this Registration Rights
Agreement, in the event that Debentures are distributed to holders of Capital
Securities in liquidation of the Trust pursuant to the Trust Agreement (a) all
references in this Section 2 and Section 3 to Securities, Registrable Securities
and Exchange Securities shall not include the Capital Securities and Guarantee
or Exchange Capital Securities and Exchange Guarantee issued or to be issued in
exchange therefor in the Exchange Offer, (ii) all requirements for action to be
taken by the Trust in this Section 2 and Section 3 shall cease to apply and all
requirements for action to be taken by the Company in this Section 2 and Section
3 shall apply to Debentures and Exchange Debentures issued or to be issued in
exchange therefor in the Exchange Offer.
3. Registration Procedures.
---------------------------
The following provisions shall apply to registration statements filed
pursuant to Section 2:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company and the Trust shall qualify the
Indenture, the Trust Agreement and the Guarantee under the Trust Indenture Act.
(b) In connection with the Company's and the Trust's obligations with
respect to the Shelf Registration, if applicable, the Company and the Trust
shall, as soon as reasonably practicable (or as otherwise specified herein):
(i) prepare and file with the Commission a registration statement with
respect to the Shelf Registration on any form which may be utilized by the
Trust and the Company and which shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods
thereof, as specified in writing by the holders of the Registrable
Securities (except that in connection with a Shelf Registration effected
pursuant to Section 2(b)(iv) hereof, such methods shall not include an
underwritten offering unless the Company shall consent in its sole
discretion), and use their reasonable efforts to cause such registration
statement to become effective as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus included
therein as may be necessary to effect and maintain the effectiveness of
such registration statement for the period specified in Section 2(b) hereof
and as may be required by the applicable rules and regulations of the
Commission and the instructions applicable to the form of such registration
statement, and furnish to the holders
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<PAGE>
of the Registrable Securities copies of any such supplement or amendment
simultaneously with or prior to its being used or filed with the
Commission;
(iii) comply, as to all matters within the Company's and the Trust's
control, with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Securities covered by such
registration statement in accordance with the intended methods of
disposition by the holders thereof provided for in such registration
statement;
(iv) provide to any of (A) the underwriters (which term, for purposes
of this Registration Rights Agreement, shall include a person deemed to be
an underwriter within the meaning of Section 2(11) of the Securities Act),
if any, thereof, (B) the sales or placement agent, if any, therefor, (C)
counsel for such underwriters or agent and (D) not more than one counsel
for all the holders of such Registrable Securities who so request of the
Company in writing the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with
the Commission and each amendment or supplement thereto;
(v) for a reasonable period prior to the filing of such registration
statement, and throughout the period specified in Section 2(b), make
available at reasonable times at the Company's principal place of business
or such other reasonable place for inspection by the persons referred to in
Section 3(b)(iv) who shall certify to the Company and the Trust that they
have a current intention to sell the Registrable Securities pursuant to the
Shelf Registration such financial and other information and books and
records of the Company, and cause the officers, employees, counsel and
independent certified public accountants of the Company to respond to such
inquiries, as shall be reasonably necessary, in the judgment of the
respective counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
provided, however, that each such party shall be required to maintain in
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confidence and not to disclose to any other person any information or
records reasonably designated by the Company in writing as being
confidential, until such time as (A) such information becomes a matter of
public record (whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court or
other governmental agency or body having jurisdiction over the matter
(subject to the requirements of such order, and only after such person
shall have given the Company prompt prior written notice of such
requirement), or (C) such information is required to be set forth in such
registration statement or the prospectus included therein or in an
amendment to such registration statement or an amendment or supplement to
such prospectus in order that such registration statement, prospectus,
amendment or supplement, as the case may be, does not contain an untrue
statement of a material fact or omit to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(vi) promptly notify the managing underwriter or underwriters, if any,
thereof and, except in the case of clause (B) below, the sales or placement
agent, if any, therefor and the selling holders of Registrable Securities,
provided in each case that the Company has received written notice of the
names and addresses of such persons, and confirm such advice in writing,
(A) when the prospectus or any prospectus amendment or supplement or
post-effective amendment has been filed, and, with respect to any
registration statement or any post-effective amendment, when the same has
become effective, (B) of any comments by the Commission and by the Blue
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<PAGE>
Sky or securities commissioner or regulator of any state with respect
thereto or any request by the Commission for amendments or supplements to
such registration statement or prospectus or for additional information,
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation or
threatening of any proceedings for that purpose, (D) if at any time the
representations and warranties of the Company or the Trust contemplated by
Section 3(b)(xv) or Section 5 cease to be true and correct in all material
respects, (E) of the receipt by the Company or the Trust of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose or (F) at any time when a
prospectus is required to be delivered under the Securities Act, that such
registration statement, prospectus, prospectus amendment or supplement or
post-effective amendment does not conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture Act
and the rules and regulations of the Commission thereunder or contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(vii) use their reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(viii) if requested by any managing underwriter or underwriters or any
placement or sales agent, promptly incorporate in a prospectus supplement
or post-effective amendment such information as is required by the
applicable rules and regulations of the Commission and as such managing
underwriter or underwriters or such agent specifies should be included
therein relating to the terms of the sale of such Registrable Securities,
including information with respect to the liquidation amount or principal
amount, as the case may be, of Registrable Securities being sold by any
holder or agent or to any underwriters, the name and description of such
holder, agent or underwriter, the offering price of such Registrable
Securities and any discount, commission or other compensation payable in
respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold by such holder or agent or to such
underwriters; and make all required filings of such prospectus supplement
or post-effective amendment promptly after notification of the matters to
be incorporated in such prospectus supplement or post-effective amendment;
(ix) furnish upon request to each holder of Registrable Securities,
each placement or sales agent, if any, therefor, each underwriter, if any,
thereof and the respective counsel referred to in Section 3(b)(iv) an
executed copy (or, in the case of a holder of Registrable Securities, a
conformed copy) of such registration statement, each such amendment and
supplement thereto (in each case including all exhibits thereto (in the
case of a holder of Registrable Securities, upon request) and documents
incorporated by reference therein) and such number of copies of such
registration statement (excluding exhibits thereto and documents
incorporated by reference therein unless specifically so requested by such
holder, agent or underwriter, as the case may be) and of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity in all material
respects with the applicable requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the Commission
thereunder, and such other documents, as such holder, agent, if
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<PAGE>
any, and underwriter, if any, may reasonably request in order to facilitate
the offering and disposition of the Registrable Securities owned by such
holder, offered or sold by such agent or underwritten by such underwriter
and to permit such holder, agent and underwriter to satisfy the prospectus
delivery requirements of the Securities Act; and the Company and the Trust
hereby consent to the use of such prospectus (including such preliminary
and summary prospectus) and any amendment or supplement thereto by each
such holder and by any such agent and underwriter, in each case in the form
most recently provided to such person by the Company or the Trust, in
connection with the offering and sale of the Registrable Securities covered
by the prospectus (including such preliminary and summary prospectus) or
any supplement or amendment thereto;
(x) use their reasonable efforts to (A) register or qualify the
Registrable Securities to be included in such registration statement under
such securities laws or Blue Sky laws of such United States jurisdictions
as any holder of such Registrable Securities and each placement or sales
agent, if any, therefor and underwriter, if any, thereof shall reasonably
request, (B) keep such registrations or qualifications in effect and comply
with such laws so as to permit the continuance of offers, sales and
dealings therein in such jurisdictions during the period the Shelf
Registration is required to remain effective under Section 2(b) above and
for so long as may be necessary to enable any such holder, agent or
underwriter to complete its distribution of Securities pursuant to such
registration statement but in any event not later than the date through
which the Company and the Trust are required to keep the Shelf Registration
effective pursuant to Section 2(b) and (C) take any and all other actions
as may be reasonably requested to enable each such holder, agent, if any,
and underwriter, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities; provided, however, that
-----------------
neither the Company nor the Trust shall be required for any such purpose to
(1) qualify as a foreign corporation in any jurisdiction wherein it would
not otherwise be required to qualify but for the requirements of this
Section 3(b)(x), (2) consent to general service of process in any such
jurisdiction or (3) make any changes to its certificate of incorporation or
by-laws or any agreement between it and its stockholders;
(xi) use its reasonable efforts to obtain the consent or approval of
each governmental agency or authority, whether Federal, state or local,
which may be required to be obtained by the Company or the Trust to effect
the Shelf Registration or the offering or sale in connection therewith or
to enable the selling holder or holders to offer, or to consummate the
disposition of, their Registrable Securities;
(xii) cooperate with the holders of the Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall be printed, lithographed or engraved, or produced
by any combination of such methods, and which shall not bear any
restrictive legends, except as may be required by applicable law; and, in
the case of an underwritten offering, enable such Registrable Securities to
be in such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
the Registrable Securities;
(xiii) provide a CUSIP number for all applicable Registrable
Securities, not later than the Effective Time;
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<PAGE>
(xiv) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including customary provision relating
to indemnification and contribution, and take such other actions in
connection therewith as any holders of Registrable Securities aggregating
at least a majority in aggregate liquidation amount or principal amount, as
the case may be, of the Registrable Securities at the time outstanding
shall reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities; provided, that the Company and the Trust
--------
shall not be required to enter into any such agreement more than once with
respect to all of the Registrable Securities and may delay entering into
such agreement until the consummation of any underwritten public offering
which the Company shall have then undertaken;
(xv) if the offering contemplated by such registration statement is an
underwritten offering, (A) make such representations and warranties to the
holders of such Registrable Securities and the underwriters thereof in
form, substance and scope as are customarily made in connection with an
offering of similar capital securities or debt securities, as the case may
be pursuant to any agreement or to a registration statement filed on the
form applicable to the Shelf Registration; (B) obtain an opinion or
opinions of counsel to the Company and an opinion or opinions of counsel to
the Trust in each case in customary form and covering such matters, of the
type customarily covered by such an opinion in connection with an offering
of similar capital securities or debt securities, as the case may be, as
the managing underwriters may reasonably request, addressed to the
underwriters thereof and dated the date of the closing under the
underwriting agreement relating thereto (it being agreed that the matters
to be covered by such opinion shall include but not be limited to the due
incorporation and valid existence of the Company and certain subsidiaries;
the qualification of the Company and certain subsidiaries to transact
business as foreign corporations, other than such jurisdictions in which
the failure to be so qualified would not result in a material adverse
effect; the due authorization, execution and delivery of the underwriting
agreement; the due authorization, execution, authentication and issuance,
and the validity and enforceability, of the Securities; the absence of
material legal or governmental proceedings involving the Company; the
absence of governmental approvals required to be obtained in connection
with the Shelf Registration, the offering and sale of the Registrable
Securities, this Registration Rights Agreement or the underwriting
agreement, except such approvals as may be required by the Securities Act
or the Trust Indenture Act or under state securities or Blue Sky laws; the
compliance as to form of such registration statement and any documents
incorporated by reference therein and of the Indenture with the
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder, respectively; and, a
statement by such counsel to the effect that nothing has come to their
attention that would cause them to believe that as of the date of the
opinion and of the registration statement or most recent post-effective
amendment thereto, as the case may be, such registration statement and the
prospectus included therein, as then amended or supplemented, and the
documents incorporated by reference therein (in each case other than the
financial statements and other financial information contained therein)
contain an untrue statement of a material fact or omit to state therein a
material fact necessary to make the statements therein not misleading (in
the case of such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the
Exchange Act); (C) obtain a "cold comfort" letter or letters from the
independent certified public accountants of the Company addressed to the
underwriters thereof, dated (i) the effective date of such registration
statement and (ii) the effective date of any prospectus supplement to the
prospectus included in such
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<PAGE>
registration statement or post-effective amendment to such registration
statement which includes audited financial statements as of a date or for a
period subsequent to that of the latest such statements included in such
prospectus (and, if such registration statement contemplates an
underwritten offering pursuant to any prospectus supplement to the
prospectus included in such registration statement or post-effective
amendment to such registration statement which includes unaudited or
audited financial statements as of a date or for a period subsequent to
that of the latest such statements included in such prospectus, dated the
date of the closing under the underwriting agreement relating thereto),
such letter or letters to be in customary form and covering such matters of
the type customarily covered by letters of such type in public offerings of
debt securities; (D) deliver such documents and certificates, including
officers' or trustees' or Administrative Trustees' certificates, as
applicable, as may be reasonably requested by the managing underwriters
thereof to evidence the accuracy of the representations and warranties made
pursuant to clause (A) above or those contained in Section 5(a) hereof and
the compliance with or satisfaction of any agreements or conditions
contained in the underwriting agreement entered into by the Company or the
Trust; and (E) undertake such obligations relating to expense
reimbursement, indemnification and contribution as are provided in Section
6 hereof;
(xvi) notify in writing each holder of Registrable Securities of any
proposal by the Company and/or the Trust to amend or waive any provision of
this Registration Rights Agreement pursuant to Section 9(h) hereof and of
any amendment or waiver effected pursuant thereto, each of which notices
shall contain the text of the amendment or waiver proposed or effected, as
the case may be; and
(xvii) comply with all applicable rules and regulations of the
Commission and make generally available to the Company's security holders
as soon as practicable but in any event not later than eighteen months
after the effective date of such registration statement, an earning
statement of the Company and its subsidiaries complying with Section 11(a)
of the Securities Act (including, at the option of the Company, Rule 158
thereunder).
In case any of the foregoing obligations is dependent upon information provided
or to be provided by a party other than the Company or the Trust, such
obligation shall be subject to the provision of such information.
(c) In the event that the Company and the Trust would be required, pursuant
to Section 3(b)(vi)(F) above, to notify the selling holders of Registrable
Securities, the placement or sales agent, if any, therefor and the managing
underwriters, if any, thereof, the Company and the Trust shall promptly prepare
and furnish to each such holder, to each placement or sales agent, if any, and
to each such underwriter, if any, a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of
Registrable Securities, such prospectus shall conform in all material respects
to the applicable requirements of the Securities Act and the Trust Indenture Act
and the rules and regulations of the Commission thereunder and shall not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances then existing. Each holder of Registrable
Securities agrees that upon receipt of any notice from the Company or the Trust,
pursuant to Section 3(b)(vi)(F) hereof, such holder shall forthwith discontinue
the disposition of Registrable Securities pursuant to the registration statement
applicable to such Registrable Securities until such holder (i) shall have
received copies of such amended or
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<PAGE>
supplemented prospectus and, if so directed by the Company or the Trust, such
holder shall deliver to the Company (at the Company's expense) all copies, other
than permanent file copies, then in such holder's possession of the prospectus
covering such Registrable Securities at the time of receipt of such notice or
(ii) shall have received notice from the Company or the Trust that the
disposition of Registrable Securities pursuant to the Shelf Registration may
continue.
(d) The Company and the Trust may require each holder of Registrable
Securities as to which any registration pursuant to Section 2(b) is being
effected to furnish to the Company such information regarding such holder and
such holder's intended method of distribution of such Registrable Securities as
the Company and the Trust may from time to time reasonably request in writing,
but only to the extent that such information is required in order to comply with
the Securities Act. Each such holder agrees to notify the Company and the Trust
as promptly as practicable of any inaccuracy or change in information previously
furnished by such holder to the Company and the Trust or of the occurrence of
any event in either case as a result of which any prospectus relating to such
registration contains or would contain an untrue statement of a material fact
regarding such holder or such holder's intended method of disposition of such
Registrable Securities or omits to state any material fact regarding such holder
or such holder's intended method of disposition of such Registrable Securities
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and promptly to furnish
to the Company and the Trust any additional information required to correct and
update any previously furnished information or required so that such prospectus
shall not contain, with respect to such holder or the disposition of such
Registrable Securities, an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
(e) Until the expiration of three years after the Closing Date, the Company
and the Trust will not, and will not permit any of their "affiliates" (as
defined in Rule 144) to, resell any of the Capital Securities or Debentures that
have been reacquired by any of them except pursuant to an effective registration
statement under the Securities Act.
(f) In connection with the Company's and the Trust's obligations with
respect to the registration of Exchange Securities as contemplated by Section
2(a) (the "Exchange Registration"), if applicable, the Company and the Trust
shall, as soon as reasonably practicable (or as otherwise specified):
(i) prepare and file with the Commission such amendments and
supplements to the Exchange Offer Registration Statement and the prospectus
included therein as may be necessary to effect and maintain the
effectiveness thereof for the periods and purposes contemplated in Section
2(a) hereof and as may be required by the applicable rules and regulations
of the Commission and the instructions applicable to the form of the
Exchange Offer Registration Statement, and promptly provide each
broker-dealer holding Exchange Securities with such number of copies of the
prospectus included therein (as then amended or supplemented), in
conformity in all material respects with the requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder, as such broker-dealer reasonably may request prior
to the expiration of the Resale Period, for use in connection with resales
of Exchange Securities;
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<PAGE>
(ii) promptly notify each broker-dealer that has requested or received
copies of the prospectus included in the Exchange Offer Registration
Statement, and confirm such advice in writing, (A) when the Exchange Offer
Registration Statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and,
with respect to the Exchange Offer Registration Statement or any
post-effective amendment, when the same has become effective, (B) of any
comments by the Commission and by the Blue Sky or securities commissioner
or regulator of any state with respect thereto or any request by the
Commission for amendments or supplements to the Exchange Offer Registration
Statement or prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Exchange Offer Registration Statement or the initiation or threatening of
any proceedings for that purpose, (D) if at any time the representations
and warranties of the Company and/or the Trust contemplated by Section 5
cease to be true and correct in all material respects, (E) of the receipt
by the Company or the Trust of any notification with respect to the
suspension of the qualification of the Exchange Securities for sale in any
United States jurisdiction or the initiation or threatening of any
proceeding for such purpose or (F) at any time during the Resale Period
when a prospectus is required to be delivered under the Securities Act,
that the Exchange Offer Registration Statement, prospectus, prospectus
amendment or supplement or post-effective amendment does not conform in all
material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(iii) in the event that the Company and the Trust would be required,
pursuant to Section 3(f)(ii)(F) above, to notify any broker-dealers holding
Exchange Securities, promptly prepare and furnish to each such holder a
reasonable number of copies of a prospectus supplemented or amended so
that, as thereafter delivered to purchasers of such Exchange Securities
during the Resale Period, such prospectus shall conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing or notify such broker-dealers that the date of Exchange Securities
pursuant to the Exchange Offer Registration Statement may continue;
(iv) use their reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of the Exchange Offer Registration
Statement or any post-effective amendment thereto at the earliest
practicable date;
(v) use their reasonable best efforts to (A) register or qualify the
Exchange Securities under the securities laws or Blue Sky laws of such
jurisdictions as are contemplated by Section 2(a) no later than the
commencement of the Exchange Offer, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
until the expiration of the Resale Period and (C) take any and all other
actions as may be reasonably necessary or advisable to enable each
broker-dealer holding Exchange Securities to consummate the disposition
thereof in such jurisdictions; provided, however, that neither the Company
-------- -------
nor the Trust shall be required for any such
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<PAGE>
purpose to (1) qualify as a foreign corporation in any jurisdiction wherein
it would not otherwise be required to qualify but for the requirements of
this Section 3(f)(v), (2) consent to general service of process in any such
jurisdiction or (3) make any changes to its certificate of incorporation or
by-laws or any agreement between it and its stockholders;
(vi) use their reasonable best efforts to obtain the consent or
approval of each United States governmental agency or authority, whether
Federal, state or local, which may be required to be obtained by the
Company or the Trust to effect the Exchange Registration, the Exchange
Offer and the offering and sale of Exchange Securities by broker-dealers
during the Resale Period;
(vii) provide a CUSIP number for all applicable Exchange Securities and
Private Exchange Securities, not later than the applicable Effective Time;
(viii) make generally available to the Company's security holders as
soon as practicable but no later than eighteen months after the effective
date of such registration statement, an earning statement of the Company
and its subsidiaries complying with Section 11(a) of the Securities Act
(including, at the option of the Company, Rule 158 thereunder).
In case any of the foregoing obligations is dependent upon information provided
or to be provided by a party other than the Company or the Trust, such
obligation shall be subject to the provision of such information.
4. Registration Expenses.
-------------------------
The Company agrees to bear and to pay or cause to be paid promptly upon
request being made therefor all expenses incident to the Company's and the
Trust's performance of or compliance with this Registration Rights Agreement,
including (a) all Commission and any NASD registration and filing fees and
expenses, (b) all fees and expenses in connection with the qualification of the
Securities or Exchange Securities for offering and sale under the state
securities and Blue Sky laws referred to in Section 3(b)(x) and Section 3(f)(v)
hereof, including (other than in connection with a Shelf Registration effected
pursuant to Section 2(b)(iv) hereof) reasonable fees and disbursements of one
counsel for the placement or sales agent or underwriters in connection with such
qualifications, (c) all expenses relating to the preparation, printing,
distribution and reproduction of each registration statement required to be
filed hereunder, each prospectus included therein or prepared for distribution
pursuant hereto, each amendment or supplement to the foregoing, the certificates
representing the Securities and all other documents relating hereto, (d)
messenger and delivery expenses incurred by the Company or the Trust, (e) fees
and expenses of the Trustee under the Indenture, the Property Trustee and
Debenture Trustee under the Trust Agreement and the Guarantee Trustee under the
Guarantee and of any escrow agent or custodian, (f) internal expenses (including
all salaries and expenses of the Company's or its subsidiaries' officers and
employees performing legal or accounting duties), (g) fees, disbursements and
expenses of counsel and independent certified public accountants of the Company
and/or the Trust (including the expenses of any opinions or "cold comfort"
letters required by or incident to such performance and compliance), (h) except
in connection with a Shelf Registration effected pursuant to Section 2(b)(iv)
hereof, reasonable fees, disbursements and expenses of one counsel for the
holders of Registrable Securities retained in connection with a Shelf
Registration, as selected by the holders of at least a majority in aggregate
liquidation amount or principal amount, as the case may be, of the Registrable
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<PAGE>
Securities being registered, and (i) fees, expenses and disbursements of any
other persons, including special experts, retained by the Company in connection
with such registration (collectively, the "Registration Expenses"). To the
extent that any Registration Expenses are incurred, assumed or paid by any
holder of Registrable Securities or any placement or sales agent therefor or
underwriter thereof, the Company shall reimburse such person for the full amount
of the Registration Expenses so incurred, assumed or paid promptly after receipt
of a request therefor. Notwithstanding the foregoing, the holders of the
Registrable Securities being registered shall pay all agency fees and
commissions and underwriting discounts and commissions attributable to the sale
of such Registrable Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above.
5. Representations and Warranties.
- -----------------------------------
Each of the Company and the Trust represents and warrants to, and agrees
with, the Initial Purchaser and each of the holders from time to time of
Registrable Securities that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus)
contained therein or furnished pursuant to Section 3(c) or Section 3(f)
hereof and any further amendments or supplements to any such registration
statement or prospectus, when it becomes effective or is filed with the
Commission, as the case may be, and, in the case of an underwritten
offering of Registrable Securities, at the time of the closing under the
underwriting agreement relating thereto, will conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and at all times subsequent to the
Effective Time when a prospectus would be required to be delivered under
the Securities Act, other than from (i) such time as a notice has been
given to holders of Registrable Securities pursuant to Section 3(b)(vi)(F)
or Section 3(f)(ii)(F) hereof until (ii) such time as the Company furnishes
an amended or supplemented prospectus pursuant to Section 3(c) or Section
3(f)(iii) hereof, each such registration statement, and each prospectus
(including any summary prospectus) contained therein or furnished pursuant
to Section 3(b) or Section 3(f) hereof, as then amended or supple mented,
will conform in all material respects to the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and regulations of
the Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; provided, however, that this
-----------------
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company and the Trust by a holder of Registrable Securities
expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or
were filed with the Commission, as the case may be, will conform or
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and none of such documents will
contain or contained an untrue statement of a material fact or will omit or
omitted to state a material fact
-17-
<PAGE>
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
-----------------
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company and the
Trust by a holder of Registrable Securities expressly for use therein.
(c) The compliance by the Company and the Trust with all of the
provisions of this Registration Rights Agreement and the consummation of
the transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement,
other agreement or instrument to which the Trust, the Company or any
subsidiary of the Company is a party, or by which the Trust, the Company or
any of its subsidiaries is bound, or to which any of the property or assets
of the Trust, the Company or any subsidiary of the Company is subject, nor
will such action result in a violation of the provisions of the Certificate
of Incorporation or the By-Laws of the Company or any of its subsidiaries
or the Trust Agreement of the Trust or any statute or any order, rule or
regulation of any court or insurance regulatory authority or other
governmental agency or authority having jurisdiction over the Company or
the Trust or any property of the Company or the Trust, in each case other
than such breaches, conflicts, violations or defaults which, individually
or in the aggregate, (x) would not have a material adverse effect on the
Company and its subsidiaries considered as a whole and (y) would not affect
the validity, performance or consummation of the transactions contemplated
by this Agreement; and no authorization, approval, order, consent, license,
certificate, permit, registration or qualification of or with, any such
court or insurance regulatory authority or other governmental agency or
authority is required for the consummation by the Company or the Trust, as
applicable, of the transactions contemplated by this Registration Rights
Agreement, except (v) those which have been obtained, (w) the registration
under the Securities Act contemplated hereby, (x) qualification of the
Indenture, the Guarantee and the Trust Agreement under the Trust Indenture
Act, (y) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws
and (z) such authorizations, approvals, orders, consents, licenses,
certificates, permits, registrations or qualifications which (individually
or in the aggregate) the failure to make, obtain or comply with (a) would
not have a material adverse effect on the Company and its subsidiaries
considered as a whole and (b) would not affect the validity, performance or
consummation of the transactions contemplated by this Registration Rights
Agreement.
(d) This Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and the Trust.
6. Indemnification.
-------------------
(a) Indemnification by the Company and the Trust. Upon the registration of
--------------------------------------------
the Registrable Securities pursuant to Section 2(a) or 2(b) hereof, and in
consideration of the agreements of the Initial Purchaser contained herein, and
as an inducement to the Initial Purchaser to purchase the Capital Securities,
each of the Company and the Trust shall, and they hereby agree jointly and
severally to, indemnify and hold harmless each of the holders of Registrable
Securities to be included in such registration, and each person who participates
as a placement or sales agent or as an underwriter in any offering or sale of
such Registrable Securities and each person who controls any such person against
any losses, claims, damages or liabilities, joint or several, to which such
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<PAGE>
holder, agent or underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration statement
under which such Registrable Securities were registered under the Securities
Act, or any preliminary, final or summary prospectus contained therein or
furnished by the Company or the Trust to any such holder, agent or underwriter,
or any amendment or supplement (when considered together with the document to
which such supplement relates) thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
each of the Company and the Trust shall, and they hereby agree jointly and
severally to, reimburse each such holder, such agent and such underwriter for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company and the Trust shall not be liable to any
- -----------------
such person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
or preliminary, final or summary prospectus, or amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company and the Trust by such person or by holders of Registrable Securities
expressly for use therein; and provided further, that the Company shall not be
----------------
liable to any such person for any settlement of any action effected without its
written consent.
(b) Indemnification by the Holders and any Agents and Underwriters. The
--------------------------------------------------------------
Company and the Trust may require, as a condition to including any Registrable
Securities in any registration statement filed pursuant to Section 2(b) hereof
and to entering into any underwriting agreement with respect thereto, that the
Company and the Trust shall have received an undertaking reasonably satisfactory
to it from the holder of such Registrable Securities and from each underwriter
named in any such underwriting agreement, severally and not jointly, to
indemnify and hold harmless the Company and the Trust, each of the Company's
directors and each person who controls the Company or the Trust within the
meaning of either the Securities Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company and the Trust, but only with reference
to written information furnished to the Company and the Trust by or on behalf of
such person specifically for use in any registration statement, or any
preliminary or final or summary prospectus contained therein or any amendment or
supplement thereto.
(c) Promptly after receipt by an indemnified party under Section 6(a)
or (b) of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
such subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than under Section 6(a) or (b). In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party, and who may act
in respect of actions involving more than one indemnified party), and, after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense of such
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<PAGE>
action, unless the indemnified party shall have reasonably objected to the
selected counsel, the indemnifying party will not be liable to such indemnified
party under Section 6(a) or (b) for any legal expenses of other counsel or any
other expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. Notwithstanding anything to the contrary in this Section 6, an
indemnifying party shall only be liable for the legal fees and expenses of one
national counsel and appropriate local counsel for all of the indemnified
parties with respect to any proceeding or related proceedings.
(d) Contribution. Each party hereto agrees that, if for any reason the
------------
indemnification provisions contemplated by Section 6(a) or Section 6(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 6(d) were determined by pro rata allocation (even if the holders or any
agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 6(d), no holder shall
be required to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such holder from the sale of any Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) exceeds the amount of any damages which such holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The holders' and any underwriters' obligations in this
Section 6(d) to contribute shall be several in proportion to the principal
amount of Registrable Securities registered or underwritten, as the case may be,
by them and not joint.
(e) The obligations of the Company and the Trust under this Section 6 shall
be in addition to any liability which the Company and the Trust may otherwise
have and shall extend, upon the same terms and conditions, to each officer,
director and partner of each holder, agent and underwriter and
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<PAGE>
each person, if any, who controls any holder, agent or underwriter within the
meaning of the Securities Act; and the obligations of the holders and any agents
or underwriters contemplated by this Section 6 shall be in addition to any
liability which the respective holder, agent or underwriter may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company (including any person who, with his consent, is named in
any registration statement as about to become a director of the Company), to
each Trustee and Administrative Trustee under the Trust Agreement and to each
person, if any, who controls the Company and the Trust within the meaning of the
Securities Act.
7. Underwritten Offerings.
-------------------------
(a) Selection of Underwriters. If any of the Registrable Securities covered
-------------------------
by the Shelf Registration are to be sold pursuant to an underwritten offering,
the managing underwriter or underwriters thereof shall be designated by the
holders of at least a majority in aggregate liquidation amount of Capital
Securities, in the case of an underwritten offering of Capital Securities, or
principal amount of the Debentures, in the case of an underwritten offering of
Debentures, to be included in such offering, provided that such designated
managing underwriter or underwriters is or are reasonably acceptable to the
Company. Notwithstanding any other provision of this Registration Rights
Agreement, the Company shall not be required to permit an underwritten offering
in connection with a Shelf Registration effected pursuant to Section 2(b)(iv)
hereof.
(b) Participation by Holders. Each holder of Registrable Securities hereby
------------------------
agrees with each other such holder that no such holder may participate in any
underwritten offering hereunder unless such holder (i) 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 (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
------------
The Company covenants to the holders of Registrable Securities that the
Company shall use its reasonable efforts to timely file the reports required to
be filed by it under the Exchange Act or the Securities Act (including the
reports under Section 13 and 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144 adopted by the Commission under the Securities
Act) and the rules and regulations adopted by the Commission thereunder, and
shall take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitations of the exemption provided by Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or any similar or
successor rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities in connection with that holder's
sale pursuant to Rule 144, the Company shall deliver to such holder a written
statement as to whether it has complied with such requirements.
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<PAGE>
9. Miscellaneous.
-----------------
(a) No Inconsistent Agreements. Each of the Company and the Trust
--------------------------
represents, warrants, covenants and agrees that it has not granted, and shall
not grant, registration rights with respect to Registrable Securities which
would be inconsistent with the terms contained in this Registration Rights
Agreement.
(b) Notices. All notices, requests, claims, demands, waivers and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: If to the Company, to it
at The PMI Group, Inc., 601 Montgomery Street, San Francisco, California 94111,
Attention: General Counsel; if to the Trust, to it at The Bank of New York
(Delaware), White Clay Center, Route 273, Newark, Delaware 19711, Attention:
Corporate Trust Department; and if to a holder, to the address of such holder
set forth in the security register or other records of the Trust or the Company,
as the case may be, or to such other address as the Company, the Trust or any
such holder may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
(c) Parties in Interest. All the terms and provisions of this Registration
-------------------
Rights Agreement shall be binding upon, shall inure to the benefit of and shall
be enforceable by the respective successors and assigns of the parties hereto.
In the event that any transferee of any holder of Registrable Securities shall
acquire Registrable Securities, in any manner, whether by gift, bequest,
purchase, operation of law or otherwise, such transferee shall, without any
further writing or action of any kind, be deemed a party hereto for all purposes
and such Registrable Securities shall be held subject to all of the terms of
this Registration Rights Agreement, and by taking and holding such Registrable
Securities such transferee shall be entitled to receive the benefits of, and be
conclusively deemed to have agreed to be bound by and to perform, all of the
applicable terms and provisions of this Registration Rights Agreement.
(d) Survival. The respective indemnities, agreements, representations,
--------
warranties and each other provision set forth in this Registration Rights
Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof) made by
or on behalf of any holder of Registrable Securities, any director, officer or
partner of such holder, any agent or underwriter or any director, officer or
partner thereof, or any controlling person of any of the foregoing, and shall
survive delivery of and payment for the Registrable Securities pursuant to the
Purchase Agreement and the transfer and registration of Registrable Securities
by such holder and the consummation of an Exchange Offer.
(f) LAW GOVERNING. THIS REGISTRATION RIGHTS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections and
--------
paragraphs of this Registration Rights Agreement are inserted for convenience
only, do not constitute a part of this Registration Rights Agreement and shall
not affect in any way the meaning or interpretation of this Registration Rights
Agreement.
-22-
<PAGE>
(h) Entire Agreement; Amendments. This Registration Rights Agreement and
----------------------------
the other writings referred to herein (including the Trust Agreement, the
Guarantee and the Indenture) or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Registration Rights Agreement supersedes all prior
agreements and under standings between the parties with respect to its subject
matter. This Registration Rights Agreement may be amended and the observance of
any term of this Registration Rights Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only by a
written instrument duly executed by the Company, the Trust and the holders of at
least a majority in aggregate liquidation amount or principal amount, as the
case may be, of the Registrable Securities at the time outstanding. Each holder
of any Registrable Securities at the time or thereafter outstanding shall be
bound by any amendment or waiver effected pursuant to this Section 9(h), whether
or not any notice, writing or marking indicating such amendment or waiver
appears on such Registrable Securities or is delivered to such holder.
(i) Inspection. For so long as this Registration Rights Agreement shall be
----------
in effect, this Registration Rights Agreement and a complete list of the names
and addresses of all the holders of Registrable Securities shall be made
available for inspection and copying on any business day by any holder of
Registrable Securities for proper purposes only (which shall include any purpose
related to the rights of the holders of Registrable Securities under the
Securities, the Indenture and this Registration Rights Agreement) at the offices
of the Company at the address thereof set forth in Section 9(c) above, at the
office of the Property Trustee or at the office of the Trustee under the
Indenture.
(j) Counterparts. This agreement may be executed by the parties in
------------
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
-23-
<PAGE>
Agreed to and accepted as of the date referred to above.
PMI CAPITAL I
By: /s/ William A. Seymore
-------------------------
Administrative Trustee
THE PMI GROUP, INC.
By: /s/ Bradley M. Shuster
-------------------------
Name: Bradley M. Shuster
Title: Senior Vice President
GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
-------------------------
(Goldman, Sachs, & Co.)
-24-
<PAGE>
EXHIBIT 5.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
June 20, 1997
The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
Ladies and Gentlemen:
This opinion is delivered in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed under the Securities
Act of 1933, as amended (the "Act"), by The PMI Group, Inc., a Delaware
corporation ("PMI"), and PMI Capital I, a business trust formed under the
Business Trust Act of the State of Delaware (the "Issuer Trust" and together
with PMI, the "Registrants"), with the Securities and Exchange Commission (the
"Commission") in connection with the registration by the Registrants under the
Act, of an aggregate of $100,000,000 of (i) 8.309% Junior Subordinated
Deferrable Interest Debentures, Series A of PMI (the "Junior Subordinated
Debentures"), (ii) 8.309% Capital Securities, Series A of the Issuer Trust (the
"Capital Securities") and (iii) the Guarantee of PMI of obligations of the
Issuer Trust under the Capital Securities (the "Guarantee").
We have examined (i) the Registration Statement, (ii) the Junior
Subordinated Indenture (the "Junior Subordinated Indenture") between PMI and The
Bank of New York, as Debenture Trustee (the "Debenture Trustee"), pursuant to
which the Junior Subordinated Debentures are to be issued, (iii) the form of
Guarantee Agreement (the "Guarantee Agreement") to be executed by PMI and The
Bank of New York, as Guarantee Trustee (the "Guarantee Trustee"), (iv) the
Exchange and Registration Rights Agreement (the "Registration Rights Agreement")
among PMI, the Issuer Trust and Goldman Sachs & Co., and (v) the Amended and
Restated Trust Agreement (the "Trust Agreement") between PMI and The Bank of New
York, as Property Trustee. In addition, we have examined such other
instruments, documents and records as we deemed relevant and necessary as a
basis for our opinion hereinafter expressed. In such examination, we have
assumed the following: (a) the authenticity of original documents and the
genuineness of all signatures; (b) the conformity to the originals of all
documents submitted to us as copies; and (c) the truth, accuracy and
completeness of the information, representations and warranties contained in the
records, documents, instruments and certificates we have reviewed. We have also
assumed that the Registration Statement, and any applicable amendments thereto
(including post-effective amendments), will have become effective under the Act
at the time of issuance, offering and sale of any such Junior Subordinated
Debentures, Capital Securities or Guarantees.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. With respect to the Junior Subordinated Debentures to be issued
under the Junior Subordinated Indenture, when such Junior Subordinated
Debentures have been duly executed
<PAGE>
The PMI Group, Inc.
June 20, 1997
Page 2
and authenticated in accordance with the Junior Subordinated Indenture and
issued and delivered as contemplated by the Registration Statement, such Junior
Subordinated Debentures will constitute valid and legally binding obligations of
PMI, and the holders of such Junior Subordinated Debentures will be entitled to
the benefits of the Junior Subordinated Indenture.
2. With respect to the Guarantee evidenced by the Guarantee
Agreement, when such Guarantee Agreement has been duly executed and delivered by
PMI and the Guarantee Trustee, and the Junior Subordinated Debentures and the
Capital Securities of the Issuer Trust have been duly executed, issued and
delivered in accordance with the Trust Agreement, such Guarantee will constitute
a valid and legally binding obligation of PMI, enforceable against PMI in
accordance with its terms.
Our opinions set forth in paragraphs 1 and 2 above are qualified as to
(i) limitations imposed by applicable bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws relating to or
affecting the rights of creditors generally and (ii) general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealing, and the possible unavailability of specific performance or injunctive
relief, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever it appears in the
Registration Statement and the prospectus contained therein. In giving such
consent, we do not consider that we are "experts," within the meaning of the
term as used in the Act or the rules and regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this opinion as an exhibit or otherwise.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
EXHIBIT 5.2
[Letterhead of Richards, Layton & Finger]
June 20, 1997
PMI Capital I
c/o The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
Re: PMI Capital I
-------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for The PMI Group, Inc., a
Delaware corporation ("PMI"), and PMI Capital I, a Delaware business trust (the
"Trust"), in connection with the matters set forth herein. At your request,
this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of January 24,
1997 (the "Certificate"), as filed in the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on January 24, 1997;
(b) The Trust Agreement of the Trust, dated January 24, 1997, between
PMI and the trustee of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-4, including a preliminary prospectus (the "Prospectus"), relating to an offer
to exchange (the "Exchange Offer") up to $100,000,000 aggregate liquidation
amount of its New Capital Securities for a like amount of its Original Capital
Securities, as filed by PMI and the Trust with the Securities and Exchange
Commission on June 20, 1997;
(d) The Amended and Restated Trust Agreement, dated as of February 4,
1997 among PMI, as Depositor, and the trustees named therein, and the holders,
from time to time, of undivided beneficial interests in the assets of the Trust
(the "Trust Agreement") filed as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated June 20, 1997,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
<PAGE>
PMI Capital I
c/o The PMI Group, Inc.
June 20, 1997
Page 2
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a New Capital Security is to be issued by the Trust (collectively, the "New
Capital Security Holders") of a New Capital Security Certificate for such New
Capital Security and the acceptance by the Trust of the outstanding Original
Capital Security validly tendered for such New Capital Security pursuant to the
Exchange Offer, all in accordance with the Trust Agreement and the Prospectus,
and (vii) that the New Capital Securities are issued and sold to the New Capital
Security Holders in accordance with the Trust Agreement and the Prospectus. We
have not participated in the preparation of the Prospectus and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
<PAGE>
PMI Capital I
c/o The PMI Group, Inc.
June 20, 1997
Page 3
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C.
-------
(S) 3801, et seq.
-- ---
2. The New Capital Securities to be issued to the New Capital
Security Holders have been duly authorized by the Trust Agreement and will be
duly and validly issued and, subject to the qualifications set forth in
paragraph 3 below, fully paid and nonassessable undivided beneficial interests
in the assets of the Trust.
3. The New Capital Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the New Capital Security
Holders may be obligated, pursuant to the Trust Agreement, to (i) provide
indemnity and security in connection with requests or directions to the Property
Trustee under the Trust Agreement to exercise its rights and remedies under the
Trust Agreement, (ii) provide indemnity and security in connection with and pay
taxes or governmental charges arising from transfers of New Capital Securities
and the issuance of replacement New Capital Security Certificates, and (iii)
undertake as a party litigant to pay costs in any suit for the enforcement of
any right or remedy under the Trust Agreement or against the Property Trustee
under the Trust Agreement, to the extent provided in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Validity of New
Capital Securities" in the Prospectus. In giving the foregoing consents, we do
not thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder. We also
consent to the reliance by Orrick, Herrington & Sutcliffe LLP as to matters of
Delaware law in connection with opinions to be rendered by it pursuant to the
Exchange Offer. Except as stated above, without our prior written consent, this
opinion may not be furnished or quoted to, or relied upon by, any other Person
for any purpose.
Very truly yours,
Richards, Layton & Finger
<PAGE>
EXHIBIT 8.1
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
June 20, 1997
The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
Ladies and Gentlemen:
As special counsel to PMI Capital I (the "Issuer Trust") and The PMI
Group, Inc. in connection with the exchange offer by the Issuer Trust of
$100,000,000 of its 8.309% Capital Securities, Series A (the "Capital
Securities") pursuant to a Preliminary Prospectus dated ______, 1997 (the
"Prospectus"), and assuming that the operative documents described in the
Prospectus are enforceable and have been or will be performed in accordance with
the terms described therein, we hereby confirm to you our opinion as set forth
under the heading "Certain Federal Income Tax Consequences" in the Prospectus,
subject to the limitations set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement of which the Prospectus is a part and to the reference to
us under the heading "Certain Federal Income Tax Consequences" in the
Prospectus. In giving this consent, we do not thereby admit that we came within
the category of a person whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission issued thereunder, with respect to any part
of the Registration Statement, including this opinion as an exhibit or
otherwise.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
EXHIBIT 12.1
THE PMI GROUP, INC.
STATEMENT SETTING FORTH COMPUTATION OF RATIO
OF PROFIT TO FIXED CHARGES
<TABLE>
<CAPTION>
(Dollars in Thousands) THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------------------------- ---------------------
1996 1995 1994 1993 1992 1991 1997 1996
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income from continuing
operations $157,918 $135,231 $106,132 $ 88,668 $105,571 $ 52,392 $ 49,172 $ 36,990
Add: 64,188 45,310 32,419 24,305 (10,911) 69,661 21,371 14,552
-------- -------- -------- -------- -------- -------- -------- --------
Provision for Income tax
Profit before taxes $222,106 $180,541 $138,551 $112,973 $ 94,660 $122,053 $ 70,543 $ 51,542
======== ======== ======== ======== ======== ======== ======== ========
Fixed charges
Rentals--at computed
interest * $ 2,459 $ 2,046 $ 1,584 $ 1,558 $ 1,308 $ 1,033 $ 591 $ 580
Interest expense 907 -- -- -- -- -- 1,688 --
Distributions on
redeemable capital
securities -- minority
interest -- -- -- -- -- 1,385 --
-------- -------- -------- -------- -------- -------- -------- --------
Total fixed charges $ 3,366 $ 2,046 $ 1,584 $ 1,558 $ 1,308 $ 1,033 $ 3,664 $ 580
======== ======== ======== ======== ======== ======== ======== ========
Profit before taxes plus
fixed charges $225,472 $182,587 $140,135 $114,531 $ 95,968 $123,086 $ 74,207 $ 52,122
======== ======== ======== ======== ======== ======== ======== ========
RATIO OF PROFIT BEFORE TAXES
PLUS FIXED CHARGES TO FIXED
CHARGES 67.0 x 89.3 x 88.5 x 73.5 x 73.4 x 119.2 x 20.3 x 89.9 x
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
- ---------------
* Those portions of rent expense that are representative of interest cost.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The PMI Group, Inc. on Form S-4 of our report dated January 22, 1997
(February 4, 1997 as to Note 16), incorporated by reference in the Annual Report
on Form 10-K of The PMI Group, Inc. for the year ended December 31, 1996 and of
our report dated January 22, 1997 relating to the financial statement schedules
appearing in such Form 10-K.
We also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
San Francisco, California
June 19, 1997
<PAGE>
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
----------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
----------------------------------
THE PMI GROUP, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 94-3199675
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
601 Montgomery Street 94111
San Francisco, California (Zip code)
(Address of principal executive offices)
</TABLE>
----------------------------------
8.309% Junior Subordinated Deferrable Interest Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- ------------------------------------- -------------------------------------
Name Address
- ------------------------------------- -------------------------------------
<S> <C>
Superintendent of Banks of the State 2 Rector Street
of New York New York, New York 10006
and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
2
<PAGE>
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 18th day of June, 1997.
THE BANK OF NEW YORK
By: /S/STEPHEN J. GIURLANDO
-----------------------
Name: STEPHEN J. GIURLANDO
Title: ASSISTANT VICE PRESIDENT
3
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin ........................................... $ 6,024,605
Interest-bearing balances ................................... 808,821
Securities:
Held-to-maturity securities ...................................... 1,071,747
Available-for-sale securities .................................... 3,105,207
Federal funds sold in domestic offices
of the bank: ......................................................... 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned income ......................... 31,962,915
LESS: Allowance for loan and lease losses ........................ 635,084
LESS: Allocated transfer risk reserve ............................ 429
Loans and leases, net of unearned income, allowance, and reserve.. 31,327,402
Assets held in trading accounts ...................................... 1,539,612
Premises and fixed assets (including capitalized leases).............. 692,317
Other real estate owned .............................................. 22,123
Investments in unconsolidated subsidiaries and associated companies... 213,512
Customers' liability to this bank on acceptances outstanding.......... 985,297
Intangible assets .................................................... 590,973
Other assets ......................................................... 1,487,903
-----------
Total assets ......................................................... $52,120,460
===========
LIABILITIES
Deposits:
In domestic offices .............................................. $25,929,642
Noninterest-bearing .............................................. 11,245,050
Interest-bearing ................................................. 14,684,592
In foreign offices, Edge and Agreement subsidiaries, and IBFs..... 12,852,809
Noninterest-bearing .............................................. 552,203
Interest-bearing ................................................. 12,300,606
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds purchased .......................................... 1,360,877
Securities sold under agreements to repurchase ....................... 226,158
Demand notes issued to the U.S. Treasury ............................. 204,987
Trading liabilities .................................................. 1,437,445
Other borrowed money:
With original maturity of one year or less ....................... 2,312,556
With original maturity of more than one year ..................... 20,766
Bank's liability on acceptances executed and outstanding ............. 1,014,717
Subordinated notes and debentures .................................... 1,014,400
Other liabilities .................................................... 1,721,291
-----------
Total liabilities .................................................... 48,095,648
-----------
EQUITY CAPITAL
Common stock ......................................................... 942,284
Surplus .............................................................. 731,319
Undivided profits and capital reserves ............................... 2,354,095
Net unrealized holding gains (losses) on available-for-sale
securities ....................................................... 7,030
Cumulative foreign currency translation adjustments .................. ( 9,916)
-----------
Total equity capital ................................................. 4,024,812
-----------
Total liabilities and equity capital ................................. $52,120,460
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
2
<PAGE>
EXHIBIT 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
---------------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
---------------------------------------
PMI CAPITAL I
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 94-6705190
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
c/o The PMI Group, Inc.
601 Montgomery Street 94111
San Francisco, California (Zip code)
(Address of principal executive offices)
</TABLE>
---------------------------------------
8.309% Capital Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- ------------------------------------- -------------------------------------
Name Address
- ------------------------------------- -------------------------------------
<S> <C>
Superintendent of Banks of the State 2 Rector Street
of New York New York, New York 10006
and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
2
<PAGE>
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 18th day of June, 1997.
THE BANK OF NEW YORK
By: /S/STEPHEN J. GIURLANDO
-------------------------------
Name: STEPHEN J. GIURLANDO
Title: ASSISTANT VICE PRESIDENT
3
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin ........................................... $ 6,024,605
Interest-bearing balances ................................... 808,821
Securities:
Held-to-maturity securities ...................................... 1,071,747
Available-for-sale securities .................................... 3,105,207
Federal funds sold in domestic offices
of the bank: ......................................................... 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned income ......................... 31,962,915
LESS: Allowance for loan and lease losses ........................ 635,084
LESS: Allocated transfer risk reserve ............................ 429
Loans and leases, net of unearned income, allowance, and reserve.. 31,327,402
Assets held in trading accounts ...................................... 1,539,612
Premises and fixed assets (including capitalized leases).............. 692,317
Other real estate owned .............................................. 22,123
Investments in unconsolidated subsidiaries and associated companies... 213,512
Customers' liability to this bank on acceptances outstanding.......... 985,297
Intangible assets .................................................... 590,973
Other assets ......................................................... 1,487,903
-----------
Total assets ......................................................... $52,120,460
===========
LIABILITIES
Deposits:
In domestic offices .............................................. $25,929,642
Noninterest-bearing .............................................. 11,245,050
Interest-bearing ................................................. 14,684,592
In foreign offices, Edge and Agreement subsidiaries, and IBFs..... 12,852,809
Noninterest-bearing .............................................. 552,203
Interest-bearing ................................................. 12,300,606
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds purchased .......................................... 1,360,877
Securities sold under agreements to repurchase ....................... 226,158
Demand notes issued to the U.S. Treasury ............................. 204,987
Trading liabilities .................................................. 1,437,445
Other borrowed money:
With original maturity of one year or less ....................... 2,312,556
With original maturity of more than one year ..................... 20,766
Bank's liability on acceptances executed and outstanding ............. 1,014,717
Subordinated notes and debentures .................................... 1,014,400
Other liabilities .................................................... 1,721,291
-----------
Total liabilities .................................................... 48,095,648
-----------
EQUITY CAPITAL
Common stock ......................................................... 942,284
Surplus .............................................................. 731,319
Undivided profits and capital reserves ............................... 2,354,095
Net unrealized holding gains (losses) on available-for-sale
securities ....................................................... 7,030
Cumulative foreign currency translation adjustments .................. ( 9,916)
-----------
Total equity capital ................................................. 4,024,812
-----------
Total liabilities and equity capital ................................. $52,120,460
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
2
<PAGE>
EXHIBIT 25.3
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [_]
------------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
------------------------------------
THE PMI GROUP, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
Delaware 94-3199675
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
601 Montgomery Street 94111
San Francisco, California (Zip code)
(Address of principal executive offices)
</TABLE>
------------------------------------
Guarantee of Capital Securities of PMI Capital I
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- ------------------------------------- -------------------------------------
Name Address
- ------------------------------------- -------------------------------------
<S> <C>
Superintendent of Banks of the State 2 Rector Street
of New York New York, New York 10006
and
Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza
New York, N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
2
<PAGE>
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 18th day of June, 1997.
THE BANK OF NEW YORK
By: /S/STEPHEN J. GIURLANDO
-------------------------------
Name: STEPHEN J. GIURLANDO
Title: ASSISTANT VICE PRESIDENT
3
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin ........................................... $ 6,024,605
Interest-bearing balances ................................... 808,821
Securities:
Held-to-maturity securities ...................................... 1,071,747
Available-for-sale securities .................................... 3,105,207
Federal funds sold in domestic offices
of the bank: ......................................................... 4,250,941
Loans and lease financing
receivables:
Loans and leases, net of unearned income ......................... 31,962,915
LESS: Allowance for loan and lease losses ........................ 635,084
LESS: Allocated transfer risk reserve ............................ 429
Loans and leases, net of unearned income, allowance, and reserve.. 31,327,402
Assets held in trading accounts ...................................... 1,539,612
Premises and fixed assets (including capitalized leases).............. 692,317
Other real estate owned .............................................. 22,123
Investments in unconsolidated subsidiaries and associated companies... 213,512
Customers' liability to this bank on acceptances outstanding.......... 985,297
Intangible assets .................................................... 590,973
Other assets ......................................................... 1,487,903
-----------
Total assets ......................................................... $52,120,460
===========
LIABILITIES
Deposits:
In domestic offices .............................................. $25,929,642
Noninterest-bearing .............................................. 11,245,050
Interest-bearing ................................................. 14,684,592
In foreign offices, Edge and Agreement subsidiaries, and IBFs..... 12,852,809
Noninterest-bearing .............................................. 552,203
Interest-bearing ................................................. 12,300,606
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds purchased .......................................... 1,360,877
Securities sold under agreements to repurchase ....................... 226,158
Demand notes issued to the U.S. Treasury ............................. 204,987
Trading liabilities .................................................. 1,437,445
Other borrowed money:
With original maturity of one year or less ....................... 2,312,556
With original maturity of more than one year ..................... 20,766
Bank's liability on acceptances executed and outstanding ............. 1,014,717
Subordinated notes and debentures .................................... 1,014,400
Other liabilities .................................................... 1,721,291
-----------
Total liabilities .................................................... 48,095,648
-----------
EQUITY CAPITAL
Common stock ......................................................... 942,284
Surplus .............................................................. 731,319
Undivided profits and capital reserves ............................... 2,354,095
Net unrealized holding gains (losses) on available-for-sale
securities ....................................................... 7,030
Cumulative foreign currency translation adjustments .................. ( 9,916)
-----------
Total equity capital ................................................. 4,024,812
-----------
Total liabilities and equity capital ................................. $52,120,460
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
2
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
PMI CAPITAL I
OFFER TO EXCHANGE ITS
8.309% CAPITAL SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.309% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
PURSUANT TO THE PROSPECTUS
DATED _______, 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________,
1997, UNLESS EXTENDED.
To: The Bank of New York, as Exchange Agent
BY MAIL: BY HAND OR OVERNIGHT MAIL:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
New York, NY 10286 Corporate Trust Services Window
Attn: Shilpa Privedi Ground Level
Reorganization Section New York, NY 10286
Attn: Shilpa Privedi
Reorganization Section
FOR INFORMATION CALL:
Confirm: (212) 815-5789
Facsimile: (212) 815-6339
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
The undersigned acknowledges that he or she has received the Prospectus, dated
_________, 1997 (the "Prospectus"), of PMI Capital I (the "Issuer") and The PMI
Group, Inc. (the "Corporation") and this Letter of Transmittal (the "Letter of
Transmittal"), which together constitute together, the Issuer's offer (the
"Exchange Offer") to exchange its 8.309% Capital Securities (the "New Capital
Securities") for a like Liquidation Amount of its outstanding 8.309% Capital
Securities (the "Old Capital Securities" and, together with the New Capital
Securities, the "Capital Securities"). The terms of the New Capital Securities
are identical in all material respects to the Old Capital Securities except that
the New Capital Securities have
<PAGE>
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and, therefore, will not bear legends restricting their transfer and will
not contain certain provisions providing for an increase in the Distribution
rate thereon. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on ________, 1997, unless the Exchange Offer is extended as provided in
the Prospectus, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. Capitalized terms used
but not defined herein have the meaning given to them in the Prospectus.
Holders who wish to tender their Old Capital Securities and (i) whose Old
Capital Securities are not immediately available or (ii) time will not permit
their Old Capital Securities, this Letter of Transmittal or an Agent's Message
(as defined in the Prospectus) and any other documents required by this Letter
of Transmittal to be delivered to the Exchange Agent prior to the Expiration
Date must tender their Old Capital Securities according to the guaranteed
delivery procedures set forth under the caption "The Exchange Offer --
Procedures for Tendering Old Capital Securities -- Guaranteed Delivery" in the
Prospectus. See Instruction 5.
The term "Holder" with respect to the Exchange Offer means any person in whose
name Old Capital Securities are registered on the books of the Issuer or any
other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Old
Capital Securities must complete this Letter of Transmittal in its entirety.
2
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING THIS LETTER OF TRANSMITTAL
--------------------------------------------
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
----------------------------------------------
<TABLE>
<CAPTION>
OLD CAPITAL LIQUIDATION NUMBER OF
NAME AND ADDRESS OF SECURITIES AMOUNT OF BENEFICIAL HOLDERS
REGISTERED HOLDER TENDERED (ATTACH OLD CAPITAL FOR WHOM OLD
(PLEASE FILL IN IF CERTIFICATE ADDITIONAL LIST SECURITIES TENDERED CAPITAL SECURITIES
BLANK) NUMBERS* IF NECESSARY) (IF LESS THAN ALL)** ARE HELD
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT TENDERED
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*Need not be completed by book-entry holders.
**Old Capital Securities may be tendered in whole or in part in
denominations of $100,000 and integral multiples of $1,000 in excess
thereof, provided that if any Old Capital Securities are tendered for
exchange in part, the untendered Liquidation Amount thereof must be
$100,000 or any integral multiple of $1,000 in excess thereof. All Old
Capital Securities held shall be deemed tendered unless a lesser number
is specified in this column.
[ ] CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED BY BOOK-
ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH
DTC AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN DTC MAY DELIVER
CAPITAL SECURITIES BY BOOK-ENTRY TRANSFER) (SEE INSTRUCTION 1):
Name of Tendering Institution
-------------------------------------------------
DTC Account Number
-------------------------------------------------------------
Transaction Code Number
--------------------------------------------------------
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (SEE INSTRUCTION 5):
Name of Registered Holder
------------------------------------------------------
Window Ticket Number (if any)
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
-----------------------------
Name of Institution which Guaranteed Delivery
----------------------------------
If Guaranteed Delivery is to be made By Book-Entry Transfer:
-------------------
Name of Tendering Institution
--------------------------------------------------
DTC Account Number
-------------------------------------------------------------
3
<PAGE>
Transaction Code Number
-------------------------------------------------------
[ ] CHECK HERE IF OLD CAPITAL SECURITIES TENDERED BY BOOK-ENTRY TRANSFER BUT
NOT EXCHANGED ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH
ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
4
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuer and the Corporation the above-
described aggregate Liquidation Amount of the Old Capital Securities in exchange
for a like aggregate Liquidation Amount of the New Capital Securities.
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Capital Securities tendered herewith in accordance with the
terms and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Issuer all right, title and interest in and to such Old Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-at-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Corporation and the Issuer in connection with the Exchange Offer) with respect
to the tendered Old Capital Securities, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), subject only to the right of withdrawal described in the Prospectus,
to (i) deliver Certificates for Old Capital Securities to the Issuer together
with all accompanying evidences of transfer and authenticity to, or upon the
order of, the Issuer, upon receipt by the Exchange Agent, as the undersigned's
agent, of the New Capital Securities to be issued in exchange for such Old
Capital Securities, (ii) present Certificates for such Old Capital Securities
for transfer, and to transfer the Old Capital Securities on the book of the
Issuer, and (iii) receive for the account of the Issuer all benefits and
otherwise exercise all rights of beneficial ownership of such Old Capital
Securities, all in accordance with the terms and conditions of the Exchange
Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL
POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE ISSUER WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OLD CAPITAL SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE CORPORATION, THE ISSUER OR THE
EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT
AND TRANSFER OF THE OLD CAPITAL SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED
WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE
UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name and address of the registered holder of the Old Capital Securities
tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Old Capital
Securities. The Certificate numbers and the Old Capital Securities that the
undersigned wishes to tender should be indicated in the appropriate boxes above.
If any tendered Old Capital Securities are not exchanged pursuant to the
Exchange Offer for any reason, or if Certificates are submitted for more Old
Capital Securities than are tendered or accepted for exchange, Certificates for
such nonexchanged or nontendered Old Capital Securities will be returned (or, in
the case of Old Capital Securities tendered by book-entry transfer, such Old
Capital Securities will be credited to an account maintained at DTC), without
expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tenders of Old Capital Securities pursuant to
any one of the procedures described under "The Exchange Offer -- Procedures for
Tendering Old Capital Securities" in the Prospectus and in the instructions
herein will, upon the Corporation's and the Issuer's acceptance for exchange of
such tendered Old Capital Securities, constitute a binding agreement between the
undersigned, the Corporation and the Issuer upon the terms and subject to the
conditions of the Exchange Offer. The undersigned recognizes that, under
certain circumstances set forth in the Prospectus, the Corporation and the
Issuer may not be required to accept for exchange any of the Old Capital
Securities tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Capital
Securities be issued in the name of the undersigned or, in the case of a book-
entry transfer of Old Capital Securities, that such New Capital Securities be
credited to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, will be credited to the account
indicated above
5
<PAGE>
maintained at DTC. Similarly, unless otherwise indicated under "Special
Delivery Instructions" below, please deliver New Capital Securities to the
undersigned at the address shown below the undersigned's signature.
BY TENDERING OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF TRANSMITTAL,
THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN
"AFFILIATE" OF THE CORPORATION OR THE ISSUER WITHIN THE MEANING OF RULE 405
UNDER THE SECURITIES ACT, (II) ANY NEW CAPITAL SECURITIES TO BE RECEIVED BY THE
UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE
UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE
IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW CAPITAL
SECURITIES TO BE RECEIVED IN THE EXCHANGE OFFER, AND (IV) IF THE UNDERSIGNED IS
NOT A BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO
ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW
CAPITAL SECURITIES. BY TENDERING OLD CAPITAL SECURITIES PURSUANT TO THE
EXCHANGE OFFER AND EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER OF OLD CAPITAL
SECURITIES WHICH IS A BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT WITH
CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE DIVISION OF CORPORATION
FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A)
SUCH OLD CAPITAL SECURITIES HELD BY THE BROKER-DEALER ARE HELD ONLY AS A
NOMINEE, OR (B) SUCH OLD CAPITAL SECURITIES WERE ACQUIRED BY SUCH BROKER-DEALER
FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING
ACTIVITIES AND IT WILL DELIVER A PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM
TIME TO TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH
ANY RESALE OF SUCH NEW CAPITAL SECURITIES (PROVIDED THAT, BY SO ACKNOWLEDGING
AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT
THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE CORPORATION AND THE ISSUER HAVE AGREED THAT, SUBJECT TO THE PROVISIONS OF
THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER IN
CONNECTION WITH RESALES OF NEW CAPITAL SECURITIES RECEIVED IN EXCHANGE FOR OLD
CAPITAL SECURITIES, WHERE SUCH OLD CAPITAL SECURITIES WERE ACQUIRED BY SUCH
PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING
ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 90 DAYS AFTER THE
EXPIRATION DATE (SUBJECT TO EXTENSION UNDER CERTAIN LIMITED CIRCUMSTANCES
DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH NEW CAPITAL
SECURITIES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN THAT
REGARD, EACH PARTICIPATING BROKER-DEALER WHO ACQUIRED OLD CAPITAL SECURITIES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES, BY
TENDERING SUCH OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF TRANSMITTAL,
AGREES THAT, UPON RECEIPT OF NOTICE FROM THE CORPORATION OR THE ISSUER OF THE
OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT
CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL
RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT
NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE
REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE
SALE OF NEW CAPITAL SECURITIES PURSUANT TO THE PROSPECTUS UNTIL THE CORPORATION
OR THE ISSUER HAS AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH
MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED
PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE CORPORATION OR THE ISSUER
HAS GIVEN NOTICE THAT THE SALE OF THE NEW CAPITAL SECURITIES MAY BE RESUMED, AS
THE CASE MAY BE. IF THE CORPORATION OR THE ISSUER GIVES SUCH NOTICE TO SUSPEND
THE SALE OF THE NEW CAPITAL SECURITIES, IT SHALL EXTEND THE 90-DAY PERIOD
REFERRED TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE
THE PROSPECTUS IN CONNECTION WITH THE RESALE OF NEW CAPITAL SECURITIES BY THE
NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF
SUCH NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL
HAVE RECEIVED COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO
PERMIT RESALES OF THE NEW CAPITAL SECURITIES OR TO AND
6
<PAGE>
INCLUDING THE DATE ON WHICH THE CORPORATION OR THE ISSUER HAS GIVEN NOTICE THAT
THE SALE OF NEW CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution date to which
Distributions have been paid or duly provided for on such Old Capital Securities
prior to the original issue date of the New Capital Securities or, if no such
Distributions have been paid or duly provided for, will not receive any accrued
Distributions on such Old Capital Securities, and the undersigned waives the
right to receive any interest on such Old Capital Securities accrued from and
after such Distribution date or, if no such Distributions have been paid or duly
provided for, from and after February 4, 1997.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
7
<PAGE>
HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 14)
(NOTE: SIGNATURES MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder exactly as name appears on Certificates
for the Old Capital Securities hereby tendered or on a security position
listing, or by any person authorized to become the registered holder by
endorsements and documents transmitted herewith (including such opinions of
counsel, certifications and other information as may be required by the Issuer
or the Exchange Agent for the Old Capital Securities to comply with the
restrictions on transfer applicable to the Old Capital Securities). If
signature is by an attorney-in-fact, executor, administrator, trustee, guardian,
officer of a corporation or another acting in a fiduciary capacity or
representative capacity, please set forth the signer's full title. See
Instruction 5.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(SIGNATURE OF HOLDER)
Date: , 1997
-------------------
Name
----------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
-----------------------------------------------------------
Address
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-------------------------------------------------
Tax Identification or Social Security Number
-----------------------------------
GUARANTEE OF SIGNATURE
(SEE INSTRUCTIONS 2 AND 5)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Date: , 1997
--------------------------
Name of Firm
------------------------------------------------------------------
Capacity (full title)
----------------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-------------------------------------------------
8
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Capital Securities or any Old Capital
Securities that are not tendered are to be issued in the name of someone other
than the registered holder of the Old Capital Securities whose name appears
above.
Issue
[ ] New Capital Securities and/or
[ ] Old Capital Securities not tendered to:
Name
---------------------------------------------------------------------------
Address
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-------------------------------------------------
Tax Identification or Social Security Number
-----------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Capital Securities or any Old Capital
Securities that are not tendered are to be sent to someone other than the
registered holder of the Old Capital Securities whose name appears above, or
such registered holder at an address other than that shown above.
Mail
[ ] New Capital Securities
[ ] Old Capital Securities not tendered
to:
Name
----------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-------------------------------------------------
Tax Identification or Social Security Number
-----------------------------------
9
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth under "The
Exchange Offer --Procedures for Tendering Old Capital Securities" in the
Prospectus and an Agent's Message is not delivered. Certificates, or timely
book-entry confirmation of a book-entry transfer of such Old Capital Securities
into the Exchange Agent's account at DTC, as well as this Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its address set forth
herein on or prior to the Expiration Date. Tenders by book-entry transfer may
also be made by delivering an Agent's Message in lieu of this Letter of
Transmittal. The term "book-entry confirmation" means a timely confirmation of
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by the Letter of Transmittal (including the representations
contained herein) and that the Issuer and the Corporation may enforce the Letter
of Transmittal against such participant. Old Capital Securities may be tendered
in whole or in part in the Liquidation Amount of $100,000 (100 Capital
Securities) and integral multiples of $1,000 in excess thereof, provided that,
if any Old Capital Securities are tendered for exchange in part, the untendered
Liquidation Amount thereof must be $100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Capital Securities and (i) whose Old
Capital Securities are not immediately available or (ii) who cannot deliver
their Old Capital Securities, this Letter of Transmittal and all other required
documents to the Exchange Agent on or prior to the Expiration Date or (iii) who
cannot complete the procedures for delivery by book-entry transfer on a timely
basis, may tender their Old Capital Securities by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth under in "The Exchange Offer -- Procedures for Tendering
Old Capital Securities" in the Prospectus. Pursuant to such procedures: (i)
such tender must be made by or through an Eligible Institution (as defined
below); (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Corporation and the
Issuer, must be received by the Exchange Agent on or prior to the Expiration
Date; and (iii) the Certificates (or a book-entry confirmation (as defined in
the Prospectus)) representing all tendered Old Capital Securities, in proper
form for transfer, together with a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent within three New York Stock Exchange Inc. trading days after
the date of execution of such Notice of Guaranteed Delivery, all as provided in
"The Exchange Offer -- Procedures for Tendering Old Capital Securities" in the
Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Old Capital
Securities to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or
prior to the Expiration Date. As used herein and in the Prospectus, "Eligible
Institution" means a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as "an eligible guarantor institution," including (as such terms
are defined therein) (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Neither the Corporation nor the Issuer will accept any alternative,
conditional or contingent tenders. Each tendering holder, by execution of a
Letter of Transmittal (or facsimile thereof), waives any right to receive any
notice of the acceptance of such tender.
10
<PAGE>
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any participant in
DTC whose name appears on a security position listing as the owner of the Old
Capital Securities) of Old Capital Securities tendered herewith, unless such
holder has completed either the box entitled "Special Issuance Instructions"
or the box entitled "Special Delivery Instructions" above, or
(ii) such Old Capital Securities are tendered for the account of a
firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature on
this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned "Description
of Old Capital Securities" is inadequate, the Certificate numbers and/or the
Liquidation Amount of Old Capital Securities and any other required information
should be listed on a separate signed schedule which is attached to this Letter
of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Capital Securities
will be accepted only in the Liquidation Amount of $100,000 (100 Capital
Securities) and integral multiples of $1,000 in excess thereof, provided that if
any Old Capital Securities are tendered for exchange in part, the untendered
Liquidation Amount thereof must be $100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess thereof. If less than all the Old Capital
Securities evidenced by any Certificate submitted are to be tendered, fill in
the Liquidation Amount of Old Capital Securities which are to be tendered in the
box entitled "Liquidation Amount of Old Capital Securities Tendered (if less
than all)." In such case, a new Certificate for the remainder of the Old
Capital Securities that were evidenced by the Old Certificate will be sent to
the holder of the Old Capital Security, promptly after the Expiration Date
unless the appropriate boxes on this Letter of Transmittal are completed. All
Old Capital Securities represented by Certificates delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Capital Securities may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth above or in the
Prospectus on or prior to the Expiration Date. Any such notice of withdrawal
must specify the name of the person who tendered the Old Capital Securities to
be withdrawn, the aggregate Liquidation Amount of Old Capital Securities to be
withdrawn, and (if Certificates for Old Capital Securities have been tendered)
the name of the registered holder of the Old Capital Securities as set forth on
the Certificates for the Old Capital Securities, if different from that of the
person who tendered such Old Capital Securities. If Certificates for the Old
Capital Securities have been delivered or otherwise identified to the Exchange
Agent, then prior to the physical release of such Certificates for the Old
Capital Securities, the tendering holder must submit the serial numbers shown on
the particular Certificates for the Old Capital Securities to be withdrawn and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set forth under "The
Exchange Offer -- Procedures for Tendering Old Capital Securities," the notice
of withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawal of Old Capital Securities, in which case a notice
of withdrawal will be effective if delivered to the Exchange Agent by written,
telegraphic, telex or facsimile transmission. Withdrawals of tenders of Old
Capital Securities may not be rescinded. Old Capital Securities properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer -- Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Corporation and
the Issuer, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Issuer, any affiliates or
assigns of the Corporation and the Issuer, the Exchange Agent or any other
person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Capital Securities which have been tendered
but which are withdrawn will be returned to the holder thereof without cost to
such holder promptly after withdrawal.
11
<PAGE>
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If this
Letter of Transmittal is signed by the registered holder of the Old Capital
Securities tendered hereby, the signature must correspond exactly with the name
as written on the face of the Certificates without alteration, enlargement or
any change whatsoever.
If any of the Old Capital Securities tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Capital Securities are registered in different names on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Corporation and the Issuer, in their sole discretion, of
such persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner of the Old
Capital Securities listed and transmitted hereby, no endorsement of Certificates
or separate bond powers are required unless New Capital Securities are to be
issued in the name of a person other than the registered holder. Signatures on
such Certificates or bond powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the registered
owner of the Old Capital Securities listed, the Certificates must be endorsed or
accompanied by appropriate bond powers, signed exactly as the name of the
registered owner appears on the Certificates, and also must be accompanied by
such opinions of counsel, certifications and other information as the
Corporation, the Issuer or the Exchange Agent may require in accordance with the
restrictions on transfer applicable to the Old Capital Securities. Signatures
on such Certificates or bond powers must be guaranteed by an Eligible
Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Capital Securities are
to be issued in the name of a person other than the signer of this Letter of
Transmittal, or if New Capital Securities are to be sent to someone other than
the signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Capital Securities not exchanged will be returned by mail
or, if tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC unless the appropriate boxes on this Letter of Transmittal are
completed. See Instruction 4.
7. IRREGULARITIES. The Corporation and the Issuer will determine, in their
sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities, which determination shall be final and binding
on all parties. The Corporation and the Issuer reserve the absolute right to
reject any and all tenders determined by either of them not to be in proper form
or the acceptance of which, or exchange for, may, in the view of counsel to the
Corporation or the Issuer, be unlawful. The Corporation and the Issuer also
reserve the absolute right, subject to applicable law, to waive any of the
conditions of the Exchange Offer set forth in the Prospectus under "The Exchange
Offer -- Conditions to Exchange Offer" or any conditions or irregularity in any
tender of Old Capital Securities of any particular holder whether or not similar
conditions or irregularities are waived in the case of other holders. The
Corporation's and the Issuer's interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) will be final and binding. No tender of Old Capital Securities will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. The Corporation, the Issuer, any affiliates or
assigns of the Corporation, the Issuer, the Exchange Agent, or any other person
shall not be under any duty to give notification of any irregularities in
tenders or incur any liability for failure to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax
law, a holder whose tendered Old Capital Securities are accepted for exchange is
required to provide the Exchange Agent with such holder's correct
12
<PAGE>
taxpayer identification number ("TIN") on the Substitute Form W-9 below. If the
Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a $50 penalty. In
addition, payments to such holders or other payees with respect to Old Capital
Securities exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In
addition, 31% of all payments made thereafter will be withheld and remitted to
the IRS until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Capital Securities or of the last transferee appearing on the transfers
attached to, or endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain holders (including, among others, corporations, financial institutions
and certain foreign persons) may not be subject to these backup withholding and
reporting requirements. Such holders should nevertheless complete the attached
Substitute Form W-9 below, and write "exempt" on the face thereof, to avoid
possible erroneous backup withholding. A foreign person may qualify as an
exempt recipient by submitting a properly completed IRS Form W-8, signed under
penalties of perjury, attesting to that holder's exempt status. Please consult
the enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional guidance on which holders are exempt from
backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather, the
U.S. Federal income tax liability of a person subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificates representing
Old Capital Securities have been lost, destroyed or stolen, the holder should
promptly notify the Exchange Agent. The holder will then be instructed as to
the steps that must be taken in order to replace the Certificates. This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost, destroyed or stolen Certificates have been followed.
11. SECURITY TRANSFER TAXES. Holders who tender their Old Capital Securities
for exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, New Capital Securities are to be delivered to, or are
to be issued in the name of, any person other than the registered holder of the
Old Capital Securities tendered, or if a transfer tax is imposed for any reason
other than the exchange of Old Capital Securities in connection with the
Exchange Offer, then the amount of any such transfer tax (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
13
<PAGE>
- -------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN Social Security Number OR
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number
DEPARTMENT OF THE SIGNING AND DATING BELOW.
TREASURY
INTERNAL REVENUE SERVICE
-------------------------------------------------------------------------------------------
<S> <C>
PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or
PAYER'S REQUEST FOR I am waiting for a number to be issued to me) and
TAXPAYER IDENTIFICATION (2) I am not subject to backup withholding either because: (a) I am exempt from
NUMBER backup withholding, or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding.
-------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item PART 3 --
(2) above if you have been notified by the IRS that you are Awaiting TIN [ ]
currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you are subject
to backup withholding, you received another notification from
the IRS that you are no longer subject to backup withholding, do
not cross out such item (2).
THE INTERNAL REVENUE SERVICE DOES NOT
REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS
DOCUMENT OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
SIGNATURE ____________________________ DATE __________________
NAME (Please Print)____________________________________________
ADDRESS (Please Print)_________________________________________
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
--
SUBSTITUTE FORM W-9.
- ----------
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a taxpayer identification number by the time of
payment, 31% of all reportable payments made to me will be withheld, but that
such amounts will be refunded to me if I then provide a Taxpayer Identification
Number within sixty (60) days.
Signature Date
----------------------------------- -------------------------
Name (Please Print)
-----------------------------------------------------------
Address (Please Print)
--------------------------------------------------------
14
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
8.309% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
PMI CAPITAL I
As set forth in the Prospectus dated _______, 1997 (the "Prospectus"), of
PMI Capital I (the "Issuer") and The PMI Group, Inc. (the "Corporation") under
the caption "The Exchange Offer --Procedures for Tendering Old Capital
Securities -- Guaranteed Delivery," this form must be used to accept the
Issuer's offer to exchange its 8.309% Capital Securities (the "New Capital
Securities") for a like Liquidation Amount of its outstanding 8.309% Capital
Securities (the "Old Capital Securities"), by Holders who wish to tender their
Old Capital Securities and (i) whose Old Capital Securities are not immediately
available or (ii) who cannot deliver their Old Capital Securities, the Letter of
Transmittal or an Agent's Message (as defined in the Prospectus) and any other
documents required by the Letter of Transmittal to the Exchange Agent prior to
the Expiration Date. This form must be delivered by mail or hand delivery or
transmitted, via facsimile, to the Exchange Agent at its address set forth below
not later than the Expiration Date. All capitalized terms used herein but not
defined herein shall have the meanings ascribed to them in the Prospectus.
THE EXCHANGE AGENT IS:
THE BANK OF NEW YORK
BY MAIL: BY HAND OR OVERNIGHT MAIL:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
New York, NY 10286 Corporate Trust Services Window
Attn: Shilpa Privedi Ground Level
Reorganization Section New York, NY 10286
Attn: Shilpa Privedi
Reorganization Section
FOR INFORMATION CALL:
Confirm: (212) 815-5789
Facsimile: (212) 815-6339
<PAGE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders for exchange to the Issuer upon the terms
and subject to the conditions set forth in the Prospectus and the Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate Liquidation
Amount of Old Capital Securities set forth below pursuant to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer --Procedures for Tendering Old Capital Securities -- Guaranteed Delivery."
The undersigned understands and acknowledges that the Exchange Offer will
expire at 5:00 p.m., New York City time, on ________, 1997, unless extended by
the Issuer. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on _______, 1997, unless the Exchange Offer is extended as provided in the
Prospectus, in which case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offer is extended.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
SIGNATURE
X Date:
------------------------------------- -----------------------
X Date:
------------------------------------- -----------------------
Signature(s) of Registered
Holders(s) or Authorized Signatory
Area Code and Telephone Number:
-----------------------------------------------
Name(s)
-----------------------------------------------------------------------
(Please Print)
Capacity (full title, if signing in a fiduciary or representative capacity):
- ------------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
(Including Zip Code)
<PAGE>
Taxpayer Identification or
Social Security No:
------------------------------------------------------------
Aggregate Liquidation Amount of
Old Capital Securities Tendered
(must be in integral
multiples of $1,000): $
--------------------------------------------------------
Certificate Number(s) of Old Capital Securities (if available):
Aggregate Liquidation Amount
Represented by Certificates(s): $
----------------------------------------------
IF TENDERED OLD CAPITAL SECURITIES WILL BE DELIVERED BY BOOK-ENTRY TRANSFER,
PROVIDE THE DEPOSITORY TRUST COMPANY ("DTC") ACCOUNT NO. AND TRANSACTION CODE
NUMBER (IF AVAILABLE):
Account No.
--------------------------------------------------------------------
Transaction No.
----------------------------------------------------------------
GUARANTY OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or entity identified as an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended, guarantees deposit with the Exchange Agent of
a properly completed and executed Letter of Transmittal (or facsimile thereof),
or an Agent's Message, as well as the certificate(s) representing all tendered
Old Capital Securities in proper form for transfer, or confirmation of the book-
entry transfer of such Old Capital Securities into the Exchange Agent's account
at the Book-Entry Transfer Facility described in the Prospectus under the
caption "The Exchange Offer -- Procedures for Tendering Old Capital Securities
- -- Book-Entry Transfer" and other documents required by the Letter of
Transmittal, all by 5:00 p.m., New York City time, on the third New York Stock
Exchange trading day following the Expiration Date.
Name of Eligible Institution:
--------------------------------------------------
AUTHORIZED SIGNATURE
Address: Name:
---------------------- ------------------------------
Title:
---------------------- -----------------------------
Area Code and Telephone No.: Date:
-----------------------------
- ------------------------------
NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE. ACTUAL
SURRENDER OF OLD CAPITAL SECURITIES MUST BE PURSUANT TO, AND BE ACCOMPANIED BY,
A PROPERLY EXECUTED LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99.3
THE BANK OF NEW YORK
EXCHANGE AGENT AGREEMENT
June ___, 1997
The Bank of New York
101 Barclay Street
New York, NY 10286
Attention: _______________
Ladies and Gentlemen:
The PMI Group, Inc., a Delaware corporation ("PMI"), and PMI Capital
I, a business trust created under the laws of Delaware (the "Issuer"), are
offering to exchange (the "Exchange Offer"), the 8.309% Capital Securities of
the Issuer which are being registered under the U.S. Securities Act of 1933 (the
"New Capital Securities") for a like aggregate liquidation amount of the
outstanding 8.309% Capital Securities of the Issuer (the "Old Capital
Securities" and, together with the New Capital Securities, the "Capital
Securities"), pursuant to a prospectus (the "Prospectus") included in a
Registration Statement on Form S-4 (File Nos. 333-______ and 333-______-01),
as amended (the "Registration Statement"), filed with the Securities and
Exchange Commission (the "SEC"). The term "Expiration Date" shall mean 5:00
p.m., New York City time, on _______, 1997, unless the Exchange Offer is
extended as provided in the Prospectus, in which case the term "Expiration Date"
shall mean the latest date and time to which the Exchange Offer is extended.
Upon execution of this Agreement, The Bank of New York will act as the Exchange
Agent for the Exchange Offer (the "Exchange Agent"). A copy of the Prospectus
is attached hereto as EXHIBIT A. Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed thereto in the
Prospectus.
A copy of each of the form of the letter of transmittal (the "Letter
of Transmittal") and the form of the notice of guaranteed delivery (the "Notice
of Guaranteed Delivery") to be used by Holders of Old Capital Securities to
surrender Old Capital Securities in order to receive New Capital Securities
pursuant to the Exchange Offer, and the form of letter to brokers and the form
of letter to clients (together, with the Letter of Transmittal and the Notice of
Guaranteed Delivery, the "Tender Documents") are attached hereto as EXHIBIT B.
PMI and the Issuer hereby appoint you to act as Exchange Agent in
connection with the Exchange Offer. In carrying out your duties as Exchange
Agent, you are to act in good faith and in accordance with the following
provisions of this Agreement:
1. You are to mail the Prospectus and the Tender Documents to all of
the Holders on the day that you are notified, in writing, by PMI and the Issuer
that the Registration Statement has become effective under the Securities Act of
1933, as amended, or as soon as practicable thereafter, and to make subsequent
mailings thereof to any persons who become Holders prior to the Expiration Date
and to any persons as may from time to time be requested by PMI. All mailings
pursuant to this Section 1 shall be by first-class mail, postage prepaid, unless
otherwise specified by PMI or the Issuer. You shall also accept and comply with
telephone requests for information relating to the Exchange Offer, provided that
such information
<PAGE>
shall relate only to the procedures for tendering Old Capital Securities in (or
withdrawing tenders of old Capital Securities from) the Exchange Offer. All
other requests for information relating to the Exchange Offer shall be directed
to PMI, Attention: __________.
2. You are to examine the Letters of Transmittal and the Old Capital
Securities and other documents delivered or received by you, by or for the
Holders (including any book-entry confirmations, as such term is defined in the
Prospectus), to ascertain whether (i) the Letters of Transmittal and any other
Tender Documents are duly executed and properly completed in accordance with the
instructions set forth therein and that the book-entry confirmations are in due
and proper form and contain the information required to be set forth therein,
(ii) the Old Capital Securities have otherwise been properly tendered, (iii) the
Old Capital Securities tendered in part are tendered in principal amounts of
$100,000 (100 Capital Securities) and integral multiples of $1,000 in excess
thereof and that if any Old Capital Securities are tendered for exchange in
part, the untendered principal amount thereof is $100,000 (100 Capital
Securities) or any integral multiple of $1,000 in excess thereof, and (iv)
Holders have provided their correct Tax Identification Number or required
certification. In each case where a Letter of Transmittal or other document has
been improperly executed or completed or, for any other reason, is not in proper
form, or some other irregularity exists, you will take such action as you
consider appropriate to notify the tendering Holder of such irregularity and as
to the appropriate means of resolving the same. Determination of questions as
to the proper completion or execution of the Letters of Transmittal, or as to
the proper form for transfer of the Old Capital Securities or as to any other
irregularity in connection with the submission of Letters of Transmittal and/or
Old Capital Securities and other documents in connection with the Exchange
Offer, shall be made by the officers of, or counsel for, PMI and the Issuer at
their written instructions or oral direction confirmed by facsimile. Any
determination made by PMI and the Issuer on such questions shall be final and
binding.
3. At the written request of PMI and the Issuer or their counsel,
you shall notify tendering Holders of Old Capital Securities in the event of any
extension, termination or amendment of the Exchange Offer. In the event of any
such termination, you will return all tendered Old Capital Securities to the
persons entitled thereto, at the request and expense of PMI.
4. Tenders of the Old Capital Securities may be made only as set
forth in the Letter of Transmittal and in the section of the Prospectus entitled
"The Exchange Offer". Notwithstanding the foregoing, tenders which PMI or the
Issuer shall approve in writing as having been properly tendered shall be
considered to be properly tendered. Letters of Transmittal and Notices of
Guaranteed Delivery shall be recorded by you as to the date and time of receipt
and shall be preserved and retained by you at PMI's expense for six years. New
Capital Securities are to be issued in exchange for Old Capital Securities
pursuant to the Exchange Offer only (i) against deposit with you prior to the
Expiration Date or, in the case of a tender in accordance with the guaranteed
delivery procedures outlined in Instruction 1 of the Letter of Transmittal,
within three New York Stock Exchange trading days after the Expiration Date of
the Exchange Offer, together with executed Letters of Transmittal and any other
documents required by the Exchange Offer or (ii) in the event that the Holder is
a participant in The Depository Trust Company ("DTC") system, by the utilization
of DTC's Automated Tender Offer Program ("ATOP") and any evidence required by
the Exchange Offer.
You are hereby directed to establish an account with respect to the
Old Capital Securities at DTC (the "Book Entry Transfer Facility") within two
days after the Effective Date (as defined below) of the Exchange Offer in
accordance with Section 17A(d) of the Securities Exchange Act of 1934, and the
rules and regulations thereunder. For purposes hereof, the "Effective Date"
shall mean the date the Registration Statement shall have been declared
effective by the SEC. Any financial institution that is a participant in the
2
<PAGE>
Book Entry Transfer Facility system may, until the Expiration Date, make book-
entry delivery of the Old Capital Securities by causing the Book Entry Transfer
Facility to transfer such Old Capital Securities into your account in accordance
with the procedure for such transfer established by the Book Entry Transfer
Facility. In every case, however, a Letter of Transmittal (or a manually
executed facsimile thereof) or an Agent's Message, property completed and duly
executed, with any required signature guarantees and any other required
documents must be transmitted to and received by you prior to the Expiration
Date or the guaranteed delivery procedures described in the Exchange Offer must
be complied with.
5. Upon the oral or written request of PMI or the Issuer (with
written confirmation of any such oral request thereafter), you will transmit by
telephone, and promptly thereafter confirm in writing, to __________ or such
other persons as PMI or the Issuer may reasonably request at the address and
phone number set forth in Section 23 hereof, the aggregate number and principal
amount of Old Capital Securities tendered to you and the number and principal
amount of Old Capital Securities properly tendered that day. In addition, you
will also inform the aforementioned persons, upon oral request made from time to
time (with written confirmation of such request thereafter) prior to the
Expiration Date, of such information as they or any of them may reasonably
request.
6. Upon acceptance by PMI and the Issuer of any old Capital
Securities duly tendered by PMI and the Issuer pursuant to the Exchange Offer
(such acceptance if given orally, to be confirmed in writing), PMI and the
Issuer will cause New Capital Securities in exchange therefor to be issued as
promptly as possible and you will deliver such New Capital Securities on behalf
of PMI and the Issuer at the rate of $100,000 (100 Capital Securities) principal
amount of New Capital Securities for each $100,000 principal amount of Old
Capital Securities tendered as promptly as possible after the Expiration Date.
Unless otherwise instructed by PMI or the Issuer, you shall issue New Capital
Securities only in denominations of $100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess thereof.
7. Tenders pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and the conditions set forth in the Prospectus and
the Letter of Transmittal, Old Capital Securities tendered pursuant to the
Exchange Offer may be withdrawn at any time on or prior to the Expiration Date
in accordance with the terms of the Exchange Offer.
8. Notice of any decision by PMI and the Issuer not to exchange any
Old Capital Securities tendered shall be given to you by PMI or the Issuer
either orally (if given orally, to be confirmed in writing) or in a written
notice.
9. If, pursuant to the Exchange Offer, PMI and the Issuer do not
accept for exchange all or part of the Old Capital Securities tendered because
of an invalid tender, the occurrence of certain other events set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions to Exchange
Offer" or otherwise, you shall, upon notice from PMI and the Issuer (such notice
if given orally, to be confirmed in writing), promptly after the expiration or
termination of the Exchange Offer, return the certificates evidencing unaccepted
Old Capital Securities (or effect appropriate book-entry transfer), together
with any related required documents and the Letters of Transmittal relating
thereto that are in your possession, to the persons who deposited such
certificates or effected such book-entry transfer.
10. Certificates for reissued Old Capital Securities, unaccepted Old
Capital Securities or New Capital Securities shall be forwarded by (a) first-
class certified mail, return receipt requested under a blanket surety bond
obtained by you protecting you, PMI and the Issuer from loss or liability
arising out of the
3
<PAGE>
non-receipt or non-delivery of such certificates or (b) by registered mail
insured by you separately for the replacement value of each such certificate.
11. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, commercial bank, trust
company or other nominee or to engage or use any person to solicit tenders.
12. If any Holder shall report to you that his or her failure to
surrender old Capital Securities registered in his or her name is due to the
loss or destruction of a certificate or certificates, you shall request such
Holder (i) to furnish to you an affidavit of loss and, if required by PMI and
the Issuer, a bond of indemnity in an amount and evidenced by such certificate
or certificates of a surety, as may be satisfactory to you, PMI and the Issuer,
and (ii) to execute and deliver an agreement to indemnify PMI and the Issuer and
you, in such form as is acceptable to you, PMI and the Issuer. The obligees to
be named in each such indemnity bond shall include you, PMI and the Issuer. You
shall report to PMI the names of all Holders who claim that their Old Capital
Securities have been lost or destroyed and the principal amount of such Old
Capital Securities.
13. As soon as practicable after the Expiration Date, you shall
arrange for cancellation of the Old Capital Securities submitted to you or
returned by DTC in connection with ATOP. Such Old Capital Securities shall be
cancelled and retired by you in your capacity as Trustee (the "Trustee") under
the Indenture, dated February 4, 1997, governing the Capital Securities, as you
are instructed by PMI (or a representative designated by PMI) in writing.
14. For your services as the Exchange Agent hereunder, PMI shall pay
you in accordance with the schedule of fees attached hereto as EXHIBIT C. PMI
also will reimburse you for your reasonable out-of-pocket expenses (including,
but not limited to, reasonable attorneys' fees not previously paid to you as set
forth in EXHIBIT C) in connection with your services promptly after submission
to PMI of itemized statements.
15. As the Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or in the Exhibits attached hereto or as
may be subsequently requested in writing of you by PMI or the Issuer
and agreed to by you in writing with respect to the Exchange Offer;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, accuracy, sufficiency, value or
genuineness of any Old Capital Securities deposited with you hereunder
or any New Capital Securities, any Tender Documents or other documents
prepared by PMI or the Issuer in connection with the Exchange Offer or
any signatures or endorsements other than your own, and will not be
required to make and will not make any representations as to the
validity, sufficiency, value or genuineness of the Exchange Offer or
any other disclosure materials in connection therewith; PROVIDED,
HOWEVER, that in no way will your general duty to act in good faith be
discharged by the foregoing;
(c) shall not be obligated to take any legal action hereunder
which might in your judgment involve any expense or liability unless
you shall have been furnished with an indemnity reasonably
satisfactory to you;
4
<PAGE>
(d) may rely on, and shall be fully protected and indemnified as
provided in Section 16 hereof in acting upon, the written or oral
instructions with respect to any matter relating to your acting as
Exchange Agent specifically covered by this Agreement or supplementing
or qualifying any such action of any officer or agent of such other
person or persons as may be designated by PMI or the Issuer;
(e) may consult with counsel satisfactory to you, including
counsel for PMI, and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by you hereunder in good faith and in accordance
with such advice of such counsel;
(f) shall not at any time advise any person whether to tender or
to refrain from tendering all or any portion of their Old Capital
Securities in the Exchange Offer or as to the market value or decline
or appreciation in market value of any Old Capital Securities or New
Capital Securities; and
(g) shall not be liable for any action which you may do or
refrain from doing in connection with this Agreement except for your
negligence, willful misconduct or bad faith.
16. (a) PMI and the Issuer covenant and agree to indemnify and hold
harmless The Bank of New York and its officers, directors, employees, agents and
affiliates (collectively, the "Indemnified Parties" and each an "Indemnified
Party") against any loss, liability or reasonable expense of any nature
(including reasonable attorneys' and other fees and expenses) incurred in
connection with the administration of the duties of the Indemnified Parties
hereunder in accordance with this Agreement; PROVIDED, HOWEVER, such Indemnified
Party shall use its best efforts to notify PMI and the Issuer by letter, or by
cable, telex or telecopier confirmed by letter, of the written assertion of a
claim against such Indemnified Party, or of any action commenced against such
Indemnified Party, promptly after but in any event within 10 days of the date
such Indemnified Party shall have received any such written assertion of a claim
or shall have been served with a summons, or other legal process, giving
information as to the nature and basis of the claim; PROVIDED, HOWEVER, that
failure to so notify PMI and the Issuer shall not relieve PMI and the Issuer of
any liability which they may otherwise have hereunder. Anything in this
Agreement to the contrary notwithstanding, neither PMI nor the Issuer shall be
liable for indemnification or otherwise for any loss, liability, cost or expense
to the extent arising out of an Indemnified Person's bad faith, gross negligence
or willful misconduct. PMI and the Issuer shall be entitled to participate at
its own expense in the defense of any such claim or legal action and if PMI or
the Issuer so elects or if the Indemnified Party in such notice to PMI and the
Issuer so directs, PMI or the Issuer shall assume the defense of any suit
brought to enforce any such claim. In the event PMI or the Issuer assumes such
defense, neither PMI nor the Issuer shall be liable for any fees and expenses
thereafter incurred by such Indemnified Party, except for any reasonable fees
and expenses of such Indemnified Party incurred as a result of the need to have
separate representation because of a conflict of interest between such
Indemnified Party and PMI or the Issuer.
(b) The Bank of New York agrees that, without the prior written
consent of PMI and the Issuer (which consent shall not be unreasonably
withheld), it will not settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding in respect of
which indemnification could be sought in accordance with the indemnification
provision of this Agreement (whether The Bank of New York, PMI or the Issuer or
any of their directors, officers and controlling persons is an actual or
potential party to such claim, action or proceeding), unless such settlement,
compromise or consent includes an unconditional
5
<PAGE>
release of PMI, the Issuer and their directors, officers and controlling persons
from all liability arising out of such claim, action or proceeding.
17. This Agreement and your appointment as the Exchange Agent shall
be construed and enforced in accordance with the laws of the State of New York
and shall inure to the benefit of, and the obligations created hereby shall be
binding upon, the successors and assigns of the parties hereto. No other person
shall acquire or have any rights under or by virtue of this Agreement.
18. The parties hereto hereby irrevocably submit to the venue and
jurisdiction of any New York State or federal court sitting in the Borough of
Manhattan in New York City in any action or proceeding arising out of or
relating to this Agreement, and the parties hereby irrevocably agree that all
claims in respect of such action, or proceeding arising out of or relating to
this Agreement, shall be heard and determined in such a New York State or
federal court. The parties hereby consent to and grant to any such court
jurisdiction over the persons of such parties and over the subject matter of any
such dispute and agree that delivery or mailing of any process or other papers
in the manner provided herein, or in such other manner as may be permitted by
law, shall be valid and sufficient service thereof.
19. This Agreement may not be modified, amended or supplemented
without an express written agreement executed by the parties hereto. Any
inconsistency between this Agreement and the Tender Documents, as they may from
time to time be supplemented or amended, shall be resolved in favor of the
latter, except with respect to the duties, liabilities and indemnification of
you as Exchange Agent.
20. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
21. In case any provision of this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
22. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Sections 14 and 16 shall survive the termination of this Agreement.
23. All notices and communications hereunder shall be in writing and
shall be deemed to be duly given if delivered or mailed first class certified or
registered mail, postage prepaid, or telecopies as follows:
If to PMI: The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
Facsimile No.: (415) 291-6175
Attention: General Counsel
If to the Issuer: PMI Capital I
c/o The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
6
<PAGE>
Facsimile No.: (415) 291-6175
Attention: General Counsel
If to you: The Bank of New York
101 Barclay Street
New York, NY 10286
Facsimile No.: (212) __________
Attention: _____________
or such other address or telecopy number as any of the above may have furnished
to the other parties in writing for such purpose.
24. This Letter Agreement and all of the obligations hereunder shall
be assumed by any and all successors and assigns of the Issuer and PMI.
If the foregoing is in accordance with your understanding, would you
please indicate your agreement by signing and returning the enclosed copy of
this Agreement to PMI.
Very truly yours,
THE PMI GROUP, INC.
By:
------------------------------
Name:
Title:
PMI CAPITAL I
By:
------------------------------
Name:
Title: Administrative Trustee
Agreed to this ____ day of June, 1997
THE BANK OF NEW YORK
By:
--------------------------
Name:
Title:
7
<PAGE>
Exhibit A
---------
Prospectus
----------
A-1
<PAGE>
Exhibit B
---------
Tender Documents
----------------
B-1
<PAGE>
Exhibit C
---------
Schedule of Fees
----------------
Covers review of the Letter of Transmittal, DTC ATOP Voluntary
Offering Instruction, the Exchange Agent Agreement and other related
documentation, if any, as required by the Exchange Offer; set-up of records and
accounts; distribution of materials; all operational and administrative charges
and time in connection with the review, receipt and processing of Letters of
Transmittal/VOI, Processing Delivery of Guarantees, Legal items, Withdrawals,
record keeping, and answering securityholders' inquiries pertaining to the
Exchange Offer.
Flat Fee: $ ,000.00
NOTE
These fees are also subject to change should circumstances warrant.
Reimbursement for all out-of-pocket expenses, disbursements (including
postage, telex, fax, photocopying and advertising costs), and fees of
counsel (including their disbursements and expenses) incurred in the
performance of our duties will be added to the billed fees. Once
appointed, if the Exchange Offer should fail to close for reasons
beyond our control, we reserve the right to charge a fee not to exceed
the amount of our acceptance fee and we will require reimbursement in
full for our legal fees and any out-of-pocket expenses related to our
responsibilities under the Exchange Agent Agreement.
Fees for any services not specifically covered in this or any other
applicable schedule will be based on the appraisal of services
rendered.
C-1
