EXHIBIT 4.2
AMENDED AND RESTATED DECLARATION
OF TRUST
Hallmark Statutory Trust I
Dated as of June 21, 2005
TABLE OF CONTENTS
Page
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Definitions..................................... 1
ARTICLE II
ORGANIZATION
SECTION 2.1. Name............................................ 8
SECTION 2.2. Office.......................................... 8
SECTION 2.3. Purpose......................................... 8
SECTION 2.4. Authority....................................... 8
SECTION 2.5. Title to Property of the Trust.................. 9
SECTION 2.6. Powers and Duties of the Trustees and the
Administrators.................................. 9
SECTION 2.7. Prohibition of Actions by the Trust and the
Trustees........................................ 14
SECTION 2.8. Powers and Duties of the Institutional Trustee.. 14
SECTION 2.9. Certain Duties and Responsibilities of the
Trustees and the Administrators................. 16
SECTION 2.10. Certain Rights of Institutional Trustee......... 18
SECTION 2.11. Delaware Trustee................................ 20
SECTION 2.12. Execution of Documents.......................... 20
SECTION 2.13. Not Responsible for Recitals or Issuance of
Securities...................................... 20
SECTION 2.14. Duration of Trust............................... 21
SECTION 2.15. Mergers......................................... 21
ARTICLE III
SPONSOR
SECTION 3.1. Sponsor's Purchase of Common Securities......... 23
SECTION 3.2. Responsibilities of the Sponsor................. 23
ARTICLE IV
TRUSTEES AND ADMINISTRATORS
SECTION 4.1. Number of Trustees.............................. 23
SECTION 4.2. Delaware Trustee................................ 23
SECTION 4.3. Institutional Trustee; Eligibility.............. 24
SECTION 4.4. Certain Qualifications of the Delaware Trustee
Generally....................................... 24
SECTION 4.5. Administrators.................................. 24
SECTION 4.6. Initial Delaware Trustee........................ 25
SECTION 4.7. Appointment, Removal and Resignation of the
Trustees and the Administrators................. 25
SECTION 4.8. Vacancies Among Trustees........................ 27
SECTION 4.9. Effect of Vacancies............................. 27
SECTION 4.10. Meetings of the Trustees and the Administrators. 27
SECTION 4.11. Delegation of Power............................. 27
SECTION 4.12. Merger, Conversion, Consolidation or Succession
to Business..................................... 28
ARTICLE V
DISTRIBUTIONS
SECTION 5.1. Distributions................................... 28
ARTICLE VI
ISSUANCE OF SECURITIES
SECTION 6.1. General Provisions Regarding Securities......... 28
SECTION 6.2. Paying Agent, Transfer Agent, Calculation Agent
and Registrar................................... 29
SECTION 6.3. Form and Dating................................. 30
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen
Certificates.................................... 30
SECTION 6.5. Temporary Securities............................ 31
SECTION 6.6. Cancellation.................................... 31
SECTION 6.7. Rights of Holders; Waivers of Past Defaults..... 31
ARTICLE VII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1. Dissolution and Termination of Trust............ 33
ARTICLE VIII
TRANSFER OF INTERESTS
SECTION 8.1. General......................................... 34
SECTION 8.2. Transfer Procedures and Restrictions............ 35
SECTION 8.3. Deemed Security Holders......................... 37
ARTICLE IX
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1. Liability....................................... 37
SECTION 9.2. Exculpation..................................... 38
SECTION 9.3. Fiduciary Duty.................................. 38
SECTION 9.4. Indemnification................................. 39
SECTION 9.5. Outside Businesses.............................. 42
SECTION 9.6. Compensation; Fee............................... 42
ARTICLE X
ACCOUNTING
SECTION 10.1. Fiscal Year..................................... 43
SECTION 10.2. Certain Accounting Matters...................... 43
SECTION 10.3. Banking......................................... 43
SECTION 10.4. Withholding..................................... 44
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1. Amendments...................................... 44
SECTION 11.2. Meetings of the Holders of the Securities;
Action by Written Consent....................... 46
ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1. Representations and Warranties of Institutional
Trustee......................................... 47
SECTION 12.2. Representations and Warranties of Delaware
Trustee......................................... 48
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices......................................... 49
SECTION 13.2. Governing Law................................... 50
SECTION 13.3. Submission to Jurisdiction...................... 50
SECTION 13.4. Intention of the Parties........................ 52
SECTION 13.5. Headings........................................ 52
SECTION 13.6. Successors and Assigns.......................... 52
SECTION 13.7. Partial Enforceability.......................... 52
SECTION 13.8. Counterparts.................................... 52
ANNEXES AND EXHIBITS
ANNEX I Terms of Capital Securities and Common Securities
EXHIBIT A-1 Form of Capital Security Certificate
EXHIBIT A-2 Form of Common Security Certificate
EXHIBIT B Form of Transferee Certificate to be Executed
by Accredited Investors
EXHIBIT C Form of Transferor Certificate to be Executed
for QIBs
EXHIBIT D Form of Transferor Certificate to be Executed
in connection with an "Offshore Transaction"
AMENDED AND RESTATED DECLARATION OF TRUST
OF
Hallmark Statutory Trust I
June 21, 2005
AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration"), dated
and effective as of June 21, 2005, by the Trustees (as defined herein), the
Administrators (as defined herein), the Sponsor (as defined herein) and the
holders from time to time of undivided beneficial interests in the assets of
the Trust (as defined herein) to be issued pursuant to this Declaration.
WHEREAS, the Delaware Trustee and the Sponsor established Hallmark
Statutory Trust I (the "Trust"), a statutory trust under the Statutory Trust
Act (as defined herein), pursuant to a Declaration of Trust, dated as of
June 13, 2005 (the "Original Declaration"), and a Certificate of Trust filed
with the Secretary of State of the State of Delaware on June 13, 2005, for
the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain debentures of the Debenture Issuer (as defined
herein);
WHEREAS, as of the date hereof, no interests in the assets of the Trust
have been issued; and
WHEREAS, all of the Trustees, the Administrators and the Sponsor, by
this Declaration, amend and restate each and every term and provision of the
Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and
that this Declaration constitutes the governing instrument of such statutory
trust, and that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration and in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties, intending to be legally bound hereby, amend and
restate in its entirety the Original Declaration and agree as follows:
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Definitions. Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above or elsewhere herein have the respective meanings assigned
to them in this Section 1.1 or, if not defined in this Section 1.1 or
elsewhere herein, in the Indenture;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act (as defined herein)
has the same meaning when used in this Declaration unless otherwise defined
in this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Additional Interest" has the meaning set forth in Section 3.06 of the
Indenture.
"Administrative Action" has the meaning set forth in paragraph 4(a) of
Annex I.
"Administrators" means each of Mark Schwartz and Mark Morrison, solely
in such Person's capacity as Administrator of the Trust continued hereunder
and not in such Person's individual capacity, or such Administrator's
successor in interest in such capacity, or any successor appointed as herein
provided.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises enters a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appoints a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or for any substantial part
of its property, or orders the winding-up or liquidation of its affairs, and
such decree, appointment or order remains unstayed and in effect for a
period of 90 consecutive days; or
(b) such Person commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
consents to the entry of an order for relief in an involuntary case under
any such law, or consents to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of such Person of any substantial part of its property, or
makes any general assignment for the benefit of creditors, or fails
generally to pay its debts as they become due.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in Wilmington, Delaware, New York City or
the city of the Principal Office of the Trustee (as defined in the
Indenture) are permitted or required by any applicable law or executive
order to close.
"Calculation Agent" has the meaning set forth in Section 1.01 of the
Indenture.
"Capital Securities" has the meaning set forth in Section 6.1(a).
"Capital Securities Purchase Agreement" means the Capital Securities
Purchase Agreement dated as of June 21, 2005 among the Trust, the Sponsor
and Merrill Lynch International.
"Capital Security Certificate" means a definitive Certificate
registered in the name of the Holder representing a Capital Security
substantially in the form of Exhibit A 1.
"Certificate" means any certificate evidencing Securities.
"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended and restated from time to time.
"Closing Date" has the meaning set forth in the Placement Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission.
"Common Securities" has the meaning set forth in Section 6.1(a).
"Common Security Certificate" means a definitive Certificate registered
in the name of the Holder representing a Common Security substantially in
the form of Exhibit A-2.
"Company Indemnified Person" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any
Administrator; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Corporate Trust Office" means the office of the Institutional Trustee
at which the corporate trust business of the Institutional Trustee shall, at
any particular time, be principally administered, which office shall at all
times be located in the United States and at the date of execution of this
Declaration is located at 600 Travis Street, 50th Floor, Houston, Texas
77002, Attention: Worldwide Securities Services, Hallmark Statutory Trust I.
"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.
"Covered Person" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Hallmark Financial Services, Inc.,
incorporated in Nevada, in its capacity as issuer of the Debentures under
the Indenture.
"Debenture Trustee" means JPMorgan Chase Bank, National Association,
not in its individual capacity but solely as trustee under the Indenture,
until a successor is appointed thereunder and thereafter, means such
successor trustee.
"Debentures" means the Junior Subordinated Debt Securities due June 15,
2035 to be issued by the Debenture Issuer under the Indenture.
"Deferred Interest" has the meaning set forth in paragraph 2(e) of
Annex I.
"Definitive Capital Securities" means any Capital Securities in
definitive form issued by the Trust.
"Delaware Trustee" has the meaning set forth in Section 4.2.
"Direct Action" has the meaning set forth in Section 2.8(e).
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 5.1.
"Distribution Payment Date" has the meaning set forth in paragraph 2(e)
of Annex I.
"Distribution Period" has the meaning set forth in Paragraph 2(a) of
Annex I.
"Event of Default" means the occurrence of an Indenture Event of
Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Extension Period" has the meaning set forth in paragraph 2(e) of Annex
I.
"Fiduciary Indemnified Person" shall mean each of the Institutional
Trustee (including in its individual capacity), the Delaware Trustee
(including in its individual capacity), any Affiliate of the Institutional
Trustee or the Delaware Trustee, and any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or
agents of the Institutional Trustee or the Delaware Trustee.
"Fiscal Year" has the meaning set forth in Section 10.1.
"Fixed Rate" has the meaning set forth in paragraph 2(a) of Annex I.
"Fixed Rate Period" has the meaning set forth in paragraph 2(a) of
Annex I.
"Guarantee" means the Guarantee Agreement, dated as of June 21, 2005,
between the Sponsor, as Guarantor and JPMorgan Chase Bank, National
Association, as Guarantee Trustee in respect of the Capital Securities.
"Holder" means a Person in whose name a Certificate representing a
Security is registered on the register maintained by or on behalf of the
Registrar, such Person being a beneficial owner within the meaning of the
Statutory Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture, dated as of June 21, 2005, among the
Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Initial Securities" has the meaning set forth in Section 8.4.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 4.3.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Legal Action" has the meaning set forth in Section 2.8(e).
"LIBOR" means the London Interbank Offered Rate for U.S. Dollar
deposits in Europe as determined by the Calculation Agent according to
paragraph 2(b) of Annex I.
"LIBOR Banking Day" has the meaning set forth in paragraph 2(b)(1) of
Annex I.
"LIBOR Business Day" has the meaning set forth in paragraph 2(b)(1) of
Annex I.
"LIBOR Determination Date" has the meaning set forth in paragraph
2(b)(1) of Annex I.
"Liquidation" has the meaning set forth in paragraph 3 of Annex I.
"Liquidation Distribution" has the meaning set forth in paragraph 3 of
Annex I.
"Majority in liquidation amount of the Securities" means Holders of
outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who are the
record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation
or otherwise, plus accrued and unpaid Distributions to the date upon which
the voting percentages are determined) of all outstanding Securities of the
relevant class.
"Maturity Date" has the meaning set forth in paragraph 4(a) of Annex I.
"Maturity Redemption Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Notice" has the meaning set forth in Section 2.11 of the Indenture.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or
covenant provided for in this Declaration shall include:
(c) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(d) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(e) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(f) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Paying Agent" has the meaning set forth in Section 6.2.
"Payment Amount" has the meaning set forth in Section 5.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company,
limited liability company, trust, unincorporated association, or government
or any agency or political subdivision thereof, or any other entity of
whatever nature.
"Placement Agreement" means the Placement Agreement, dated June 21,
2005 among the Sponsor, the Trust and Cohen Bros. & Company relating to the
offering and sale of Capital Securities.
"PORTAL" has the meaning set forth in Section 2.6(a)(i)(E).
"Property Account" has the meaning set forth in Section 2.8(c)(i).
"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
"QIB" means a "qualified institutional buyer" as defined under Rule
144A.
"Quorum" means a majority of the Administrators or, if there are only
two Administrators, both of them.
"Redemption Date" has the meaning set forth in paragraph 4(a) of Annex
I.
"Redemption/Distribution Notice" has the meaning set forth in paragraph
4(e) of Annex I.
"Redemption Price" has the meaning set forth in paragraph 4(a) of Annex
I.
"Registrar" has the meaning set forth in Section 6.2.
"Relevant Trustee" has the meaning set forth in Section 4.7(a).
"Resale Restriction Termination Date" means, with respect to any
Capital Security, the date which is the later of (i) two years (or such
shorter period of time as permitted by Rule 144(k) under the Securities Act)
after the later of (y) the date of original issuance of such Capital
Security and (z) the last date on which the Trust or any Affiliate of the
Trust was the Holder of such Capital Security (or any predecessor thereto)
and (ii) such later date, if any, as may be required by any subsequent
change in applicable law.
"Responsible Officer" means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee
with direct responsibility for the administration of this Declaration,
including any vice-president, any assistant vice-president, any secretary,
any assistant secretary, the treasurer, any assistant treasurer, any trust
officer or other officer of the Corporate Trust Office of the Institutional
Trustee customarily performing functions similar to those performed by any
of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Restricted Securities Legend" has the meaning set forth in Section
8.2(c).
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act. "Rule 3a-
7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Capital Securities
collectively.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Special Event" has the meaning set forth in paragraph 4(a) of Annex I.
"Special Redemption Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Sponsor" means Hallmark Financial Services, Inc., a corporation that
is a U.S. Person incorporated in Nevada, or any successor entity in a
merger, consolidation or amalgamation that is a U.S. Person, in its capacity
as sponsor of the Trust.
"Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code S 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Successor Delaware Trustee" has the meaning set forth in Section
4.7(e).
"Successor Entity" has the meaning set forth in Section 2.15(b)(i).
"Successor Institutional Trustee" has the meaning set forth in Section
4.7(b).
"Successor Securities" has the meaning set forth in Section
2.15(b)(i)(B).
"Super Majority" has the meaning set forth in paragraph 5(b) of Annex
I.
"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.
"10% in liquidation amount of the Securities" means Holders of
outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Capital Securities or Holders of
outstanding Common Securities voting separately as a class, who are the
record owners of 10% or more of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the
relevant class.
"Transfer Agent" has the meaning set forth in Section 6.2.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time-to-time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees
shall refer to such Person or Persons solely in their capacity as trustees
hereunder.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Property Account and (c) all proceeds and rights in respect
of the foregoing and any other property and assets for the time being held
or deemed to be held by the Institutional Trustee pursuant to the trusts of
this Declaration.
"U.S. Person" means a United States Person as defined in Section
7701(a)(30) of the Code.
"Variable Rate" has the meaning set forth in paragraph 2(a) of Annex I.
ARTICLE II
ORGANIZATION
SECTION 2.1. Name. The Trust is named "Hallmark Statutory Trust I," as
such name may be modified from time to time by the Administrators following
written notice to the Institutional Trustee and the Holders of the
Securities. The Trust's activities may be conducted under the name of the
Trust or any other name deemed advisable by the Administrators.
SECTION 2.2. Office. The address of the principal office of the Trust,
which shall be in a state of the United States or the District of Columbia,
is 777 Main Street, Suite 1000, Fort Worth, TX 76102. On ten Business Days'
written notice to the Institutional Trustee and the Holders of the
Securities, the Administrators may designate another principal office, which
shall be in a state of the United States or the District of Columbia.
SECTION 2.3. Purpose. The exclusive purposes and functions of the Trust
are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from
such sale in the Debentures and (c) except as otherwise limited herein, to
engage in only those other activities incidental thereto that are deemed
necessary or advisable by the Institutional Trustee, including, without
limitation, those activities specified in this Declaration. The Trust shall
not borrow money, issue debt or reinvest proceeds derived from investments,
pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 2.4. Authority. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by a
Trustee on behalf of the Trust and in accordance with such Trustee's powers
shall constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no Person shall be required to
inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power
and authority of the Trustees as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein
with respect to accomplishing the purposes of the Trust and are not
intended to be trustees or fiduciaries with respect to the Trust or the
Holders. The Institutional Trustee shall have the right, but shall not be
obligated except as provided in Section 2.6, to perform those duties
assigned to the Administrators.
SECTION 2.5. Title to Property of the Trust. Except as provided in
Section 2.6(g) and Section 2.8 with respect to the Debentures and the
Property Account or as otherwise provided in this Declaration, legal title
to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 2.6. Powers and Duties of the Trustees and the Administrators.
(a) The Trustees and the Administrators shall conduct the affairs
of the Trust in accordance with the terms of this Declaration. Subject to
the limitations set forth in paragraph (b) of this Section, and in
accordance with the following provisions (i) and (ii), the Administrators
and, at the direction of the Administrators, the Trustees, shall have the
authority to enter into all transactions and agreements determined by the
Administrators to be appropriate in exercising the authority, express or
implied, otherwise granted to the Trustees or the Administrators, as the
case may be, under this Declaration, and to perform all acts in furtherance
thereof, including without limitation, the following:
(i) Each Administrator shall have the power, duty and
authority, and is hereby authorized, to act on behalf of the Trust
with respect to the following matters:
(A) the issuance and sale of the Securities;
(B) to acquire the Debentures with the proceeds of the
sale of the Securities; provided, however, that the
Administrators shall cause legal title to the Debentures to
be held of record in the name of the Institutional Trustee
for the benefit of the Holders;
(C) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, such agreements
as may be necessary or desirable in connection with the
purposes and function of the Trust, including agreements with
the Paying Agent, a Debenture purchase agreement between the
Trust and the Sponsor and a Common Securities subscription
agreement between the Trust and the Sponsor;
(D) ensuring compliance with the Securities Act and
applicable state securities or blue sky laws;
(E) if and at such time determined solely by the Sponsor
at the request of the Holders, assisting in the designation
of the Capital Securities for trading in the Private
Offering, Resales and Trading through the Automatic Linkages
("PORTAL") system if available;
(F) the sending of notices (other than notices of
default) and other information regarding the Securities and
the Debentures to the Holders in accordance with this
Declaration, including notice of any notice received from the
Debenture Issuer of its election to defer payments of
interest on the Debentures by extending the interest payment
period under the Indenture;
(G) the appointment of a Paying Agent, Transfer Agent
and Registrar in accordance with this Declaration;
(H) execution and delivery of the Securities in
accordance with this Declaration;
(I) execution and delivery of closing certificates
pursuant to the Placement Agreement and the application for a
taxpayer identification number;
(J) unless otherwise determined by the Holders of a
Majority in liquidation amount of the Securities or as
otherwise required by the Statutory Trust Act, to execute on
behalf of the Trust (either acting alone or together with any
or all of the Administrators) any documents that the
Administrators have the power to execute pursuant to this
Declaration;
(K) the taking of any action incidental to the foregoing
as the Sponsor or an Administrator may from time to time
determine is necessary or advisable to give effect to the
terms of this Declaration for the benefit of the Holders
(without consideration of the effect of any such action on
any particular Holder);
(L) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including Distributions, voting rights,
redemptions and exchanges, and to issue relevant notices to
the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
(M) to duly prepare and file on behalf of the Trust all
applicable tax returns and tax information reports that are
required to be filed with respect to the Trust;
(N) to negotiate the terms of, and the execution and
delivery of, the Placement Agreement and the Capital
Securities Purchase Agreement related thereto providing for
the sale of the Capital Securities;
(O) to employ or otherwise engage employees, agents (who
may be designated as officers with titles), managers,
contractors, advisors, attorneys and consultants and pay
reasonable compensation for such services;
(P) to incur expenses that are necessary or incidental
to carry out any of the purposes of the Trust;
(Q) to give the certificate required by S 314(a)(4) of
the Trust Indenture Act to the Institutional Trustee, which
certificate may be executed by an Administrator; and
(R) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as
a statutory trust under the laws of each jurisdiction (other
than the State of Delaware) in which such existence is
necessary to protect the limited liability of the Holders of
the Capital Securities or to enable the Trust to effect the
purposes for which the Trust was created.
(ii) As among the Trustees and the Administrators, the
Institutional Trustee shall have the power, duty and authority,
and is hereby authorized, to act on behalf of the Trust with
respect to the following matters:
(A) the establishment of the Property Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Property
Account;
(D) the distribution through the Paying Agent of amounts
owed to the Holders in respect of the Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default and other
information regarding the Securities and the Debentures to
the Holders in accordance with this Declaration;
(G) the distribution of the Trust Property in accordance
with the terms of this Declaration;
(H) to the extent provided in this Declaration, the
winding up of the affairs of and liquidation of the Trust and
the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of
Delaware;
(I) after any Event of Default (of which the
Institutional Trustee has knowledge (as provided in Section
2.10(m) hereof)) (provided, that such Event of Default is not
by or with respect to the Institutional Trustee), the taking
of any action incidental to the foregoing as the
Institutional Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this
Declaration and protect and conserve the Trust Property for
the benefit of the Holders (without consideration of the
effect of any such action on any particular Holder);
(J) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as
a statutory trust under the laws of the State of Delaware to
protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for
which the Trust was created; and
(K) to undertake any actions set forth in S 317(a) of
the Trust Indenture Act.
(iii) The Institutional Trustee shall have the power and
authority, and is hereby authorized, to act on behalf of the Trust
with respect to any of the duties, liabilities, powers or the
authority of the Administrators set forth in Section 2.6(a)(i)(E)
and (F) herein but shall not have a duty to do any such act unless
specifically requested to do so in writing by the Sponsor, and
shall then be fully protected in acting pursuant to such written
request; and in the event of a conflict between the action of the
Administrators and the action of the Institutional Trustee, the
action of the Institutional Trustee shall prevail.
(b) So long as this Declaration remains in effect, the Trust (or
the Trustees or Administrators acting on behalf of the Trust) shall not
undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the Trustees
nor the Administrators may cause the Trust to (i) acquire any investments or
engage in any activities not authorized by this Declaration, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose
of any of the Trust Property or interests therein, including to Holders,
except as expressly provided herein, (iii) take any action that would cause
(or in the case of the Institutional Trustee, to the actual knowledge of a
Responsible Officer would cause) the Trust to fail or cease to qualify as a
"grantor trust" for United States federal income tax purposes, (iv) incur
any indebtedness for borrowed money or issue any other debt or (v) take or
consent to any action that would result in the placement of a lien on any of
the Trust Property. The Institutional Trustee shall, at the sole cost and
expense of the Trust, defend all claims and demands of all Persons at any
time claiming any lien on any of the Trust Property adverse to the interest
of the Trust or the Holders in their capacity as Holders.
(c) In connection with the issuance and sale of the Capital
Securities, the Sponsor shall have the right and responsibility to assist
the Trust with respect to, or effect on behalf of the Trust, the following
(and any actions taken by the Sponsor in furtherance of the following prior
to the date of this Declaration are hereby ratified and confirmed in all
respects):
(i) the taking of any action necessary to obtain an exemption
from the Securities Act;
(ii) the determination of the States in which to take
appropriate action to qualify or register for sale all or part of
the Capital Securities and the determination of any and all such
acts, other than actions which must be taken by or on behalf of
the Trust, and the advisement of and direction to the Trustees of
actions they must take on behalf of the Trust, and the preparation
for execution and filing of any documents to be executed and filed
by the Trust or on behalf of the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws
of any such States in connection with the sale of the Capital
Securities; and
(iii) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators, the Institutional Trustee and the Holders of a Majority in
liquidation amount of the Common Securities are authorized and directed to
conduct the affairs of the Trust and to operate the Trust so that (i) the
Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act (in the case of the
Institutional Trustee, to the actual knowledge of a Responsible Officer),
(ii) the Trust will not fail to be classified as a grantor trust for United
States federal income tax purposes (in the case of the Institutional
Trustee, to the actual knowledge of a Responsible Officer) and (iii) the
Trust will not take any action inconsistent with the treatment of the
Debentures as indebtedness of the Debenture Issuer for United States federal
income tax purposes (in the case of the Institutional Trustee, to the actual
knowledge of a Responsible Officer). In this regard, the Institutional
Trustee, the Administrators and the Holders of a Majority in liquidation
amount of the Common Securities are authorized to take any action, not
inconsistent with applicable laws or this Declaration, as amended from time
to time, that each of the Institutional Trustee, the Administrators and such
Holders determine in their discretion to be necessary or desirable for such
purposes, even if such action adversely affects the interests of the Holders
of the Capital Securities.
(e) All expenses incurred by the Administrators or the Trustees
pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the
Trustees shall have no obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
(g) Legal title to all Trust Property shall be vested at all times
in the Institutional Trustee (in its capacity as such) and shall be held and
administered by the Institutional Trustee for the benefit of the Trust in
accordance with this Declaration.
(h) If the Institutional Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Declaration and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Institutional Trustee or to such Holder, then
and in every such case the Sponsor, the Institutional Trustee and the
Holders 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 Institutional Trustee and the
Holders shall continue as though no such proceeding had been instituted.
SECTION 2.7. Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Institutional Trustee and the
Administrators shall not, and the Administrators shall cause the Trust not
to, engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not, and the Institutional
Trustee and the Administrators shall not cause the Trust to:
(a) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of the
Securities pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust Property for other than a Trust purpose;
(d) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary
the Trust Property or the terms of the Securities;
(f) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(g) other than as provided in this Declaration (including Annex
I), (i) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (ii)
waive any past default that is waivable under the Indenture, (iii) exercise
any right to rescind or annul any declaration that the principal of all the
Debentures shall be due and payable, or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures where such
consent shall be required unless the Trust shall have received a written
opinion of counsel experienced in such matters to the effect that such
amendment, modification or termination will not cause the Trust to cease to
be classified as a grantor trust for United States federal income tax
purposes.
SECTION 2.8. Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Institutional Trustee in trust for the benefit
of the Trust. The right, title and interest of the Institutional Trustee to
the Debentures shall vest automatically in each Person who may hereafter be
appointed as Institutional Trustee in accordance with Section 4.7. Such
vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Administrators or to the Delaware
Trustee.
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Account") in the United States (as
defined in Treasury Regulations S 301.7701-7), in the name of and
under the exclusive control of the Institutional Trustee, and
maintained in the Institutional Trustee's trust department, on
behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the
Institutional Trustee, deposit such funds into the Property
Account and make payments to the Holders of the Capital Securities
and Holders of the Common Securities from the Property Account in
accordance with Section 5.1. Funds in the Property Account shall
be held uninvested until disbursed in accordance with this
Declaration;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Capital
Securities and the Common Securities to the extent the Debentures
are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to
Holders of Securities upon the occurrence of certain circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust (a "Legal Action") which
arise out of or in connection with an Event of Default of which a
Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act; provided, however, that if an Event of Default has
occurred and is continuing and such event is attributable to the failure of
the Debenture Issuer to pay interest or premium, if any, on or principal of
the Debentures on the date such interest, premium, if any, or principal is
otherwise due and payable (or in the case of redemption, on the redemption
date), then a Holder of the Capital Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest on the Debentures having a principal amount
equal to the aggregate liquidation amount of the Capital Securities of such
Holder (a "Direct Action") on or after the respective due date (or, in the
case of redemption, on the date of redemption) specified in the Debentures.
In connection with such Direct Action, the rights of the Holders of the
Common Securities will be subrogated to the rights of such Holder of the
Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of the Capital Securities in such Direct Action; provided,
however, that a Holder of the Common Securities may exercise such right of
subrogation only if no Event of Default with respect to the Capital
Securities has occurred and is continuing.
(f) The Institutional Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of the Securities
pursuant to the terms of the Securities and this Declaration
(including Annex I) and the certificate of cancellation referenced
in Section 7.1(b) has been filed; or
(ii) a Successor Institutional Trustee has been appointed and
has accepted that appointment in accordance with Section 4.7.
(g) The Institutional Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of the
Debentures under the Indenture and, if an Event of Default occurs and is
continuing, the Institutional Trustee may, for the benefit of Holders of the
Securities, enforce its rights as holder of the Debentures subject to the
rights of the Holders pursuant to this Declaration (including Annex I) and
the terms of the Securities.
(h) The Institutional Trustee must exercise the powers set forth
in this Section 2.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 2.3, and the Institutional Trustee
shall not take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 2.3.
SECTION 2.9. Certain Duties and Responsibilities of the Trustees and the
Administrators.
(a) The Institutional Trustee, before the occurrence of any Event
of Default (of which the Institutional Trustee has knowledge (as provided in
Section 2.10(m) hereof)) and after the curing of all Events of Default that
may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Institutional Trustee. In case an
Event of Default (of which the Institutional Trustee has knowledge (as
provided in Section 2.10(m) hereof)), has occurred (that has not been cured
or waived pursuant to Section 6.7), the Institutional Trustee shall exercise
such of the rights and powers vested in it by this Declaration, and use the
same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) The duties and responsibilities of the Trustees and the
Administrators shall be as provided by this Declaration and, in the case of
the Institutional Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Declaration shall require any Trustee or
Administrator to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
satisfactory to it against such risk or liability is not reasonably assured
to it. Whether or not therein expressly so provided, every provision of this
Declaration relating to the conduct or affecting the liability of or
affording protection to the Trustees or the Administrators shall be subject
to the provisions of this Article. Nothing in this Declaration shall be
construed to release a Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct or bad
faith. Nothing in this Declaration shall be construed to release an
Administrator from liability for its own gross negligent action, its own
gross negligent failure to act, or its own willful misconduct or bad faith.
To the extent that, at law or in equity, a Trustee or an Administrator has
duties and liabilities relating to the Trust or to the Holders, such Trustee
or Administrator shall not be liable to the Trust or to any Holder for such
Trustee's or Administrator's good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of the Administrators or the Trustees
otherwise existing at law or in equity, are agreed by the Sponsor and the
Holders to replace such other duties and liabilities of the Administrators
or the Trustees.
(c) All payments made by the Institutional Trustee or a Paying
Agent in respect of the Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the
Institutional Trustee or a Paying Agent to make payments in accordance with
the terms hereof. Each Holder, by its acceptance of a Security, agrees that
it will look solely to the revenue and proceeds from the Trust Property to
the extent legally available for distribution to it as herein provided and
that the Trustees and the Administrators are not personally liable to it for
any amount distributable in respect of any Security or for any other
liability in respect of any Security. This Section 2.9(c) does not limit the
liability of the Trustees expressly set forth elsewhere in this Declaration
or, in the case of the Institutional Trustee, in the Trust Indenture Act.
(d) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct or bad faith
with respect to matters that are within the authority of the Institutional
Trustee under this Declaration, except that:
(i) the Institutional Trustee shall not be liable for any
error or judgment made in good faith by an Authorized Officer of
the Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(ii) the Institutional 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 or
the Common Securities, as applicable, relating to the time, method
and place of conducting any proceeding for any remedy available to
the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this Declaration;
(iii) the Institutional Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the
Debentures and the Property Account shall be to deal with such
property in a similar manner as the Institutional Trustee deals
with similar property for its own account, subject to the
protections and limitations on liability afforded to the
Institutional Trustee under this Declaration and the Trust
Indenture Act;
(iv) the Institutional Trustee shall not be liable for any
interest on any money received by it except as it may otherwise
agree in writing with the Sponsor; and money held by the
Institutional Trustee need not be segregated from other funds held
by it except in relation to the Property Account maintained by the
Institutional Trustee pursuant to Section 2.8(c)(i) and except to
the extent otherwise required by law; and
(v) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Sponsor
with their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of
the Administrators or the Sponsor.
SECTION 2.10. Certain Rights of Institutional Trustee. Subject to the
provisions of Section 2.9.
(a) the Institutional Trustee may conclusively rely and shall
fully be protected in acting or refraining from acting in good faith upon
any resolution, written opinion of counsel, certificate, written
representation of a Holder or transferee, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, appraisal, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(b) if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any
other provisions contained herein, or (iii) the Institutional Trustee is
unsure of the application of any provision of this Declaration, then, except
as to any matter as to which the Holders of Capital Securities are entitled
to vote under the terms of this Declaration, the Institutional Trustee may
deliver a notice to the Sponsor requesting the Sponsor's opinion as to the
course of action to be taken and the Institutional Trustee shall take such
action, or refrain from taking such action, as the Institutional Trustee in
its sole discretion shall deem advisable and in the best interests of the
Holders, in which event the Institutional Trustee shall have no liability
except for its own negligence or willful misconduct;
(c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate;
(d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before undertaking, suffering or omitting any action hereunder,
the Institutional Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Sponsor or the Administrators;
(e) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing
or continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Institutional Trustee may consult with counsel of its
selection (which counsel may be counsel to the Sponsor or any of its
Affiliates) and the advice of such 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 and in
accordance with such advice; the Institutional Trustee shall have the right
at any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(g) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any of the Holders pursuant to this Declaration,
unless such Holders shall have offered to the Institutional Trustee security
or indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction; provided, that nothing contained in this Section 2.10(g) shall be
taken to relieve the Institutional Trustee, upon the occurrence of an Event
of Default (of which the Institutional Trustee has knowledge (as provided in
Section 2.10(m) hereof)) that has not been cured or waived, of its
obligation to exercise the rights and powers vested in it by this
Declaration;
(h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, note or other evidence of
indebtedness or other paper or document, unless requested in writing to do
so by one or more Holders, but the Institutional Trustee may make such
further inquiry or investigation into such facts or matters as it may see
fit;
(i) the Institutional 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 Institutional Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent or attorney appointed with due care by it
hereunder;
(j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Institutional Trustee (i) may request instructions from the
Holders of the Common Securities and the Capital Securities, which
instructions may be given only by the Holders of the same proportion in
liquidation amount of the Common Securities and the Capital Securities as
would be entitled to direct the Institutional Trustee under the terms of the
Common Securities and the Capital Securities in respect of such remedy,
right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii)
shall be fully protected in acting in accordance with such instructions;
(k) except as otherwise expressly provided in this Declaration,
the Institutional Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Declaration;
(l) when the Institutional Trustee incurs expenses or renders
services in connection with a Bankruptcy Event, such expenses (including the
fees and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law
or law relating to creditors rights generally;
(m) the Institutional Trustee shall not be charged with knowledge
of an Event of Default unless a Responsible Officer of the Institutional
Trustee has actual knowledge of such event or the Institutional Trustee
receives written notice of such event from any Holder, except with respect
to an Event of Default pursuant to Sections 5.01 (a) or 5.01 (b) of the
Indenture (other than an Event of Default resulting from the default in the
payment of Additional Interest if the Institutional Trustee does not have
actual knowledge or written notice that such payment is due and payable), of
which the Institutional Trustee shall be deemed to have knowledge;
(n) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party shall
be required to inquire as to the authority of the Institutional Trustee to
so act or as to its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the
Institutional Trustee's or its agent's taking such action; and
(o) no provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional 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
Institutional 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 Institutional Trustee shall be construed to be a duty.
SECTION 2.11. Delaware Trustee. Notwithstanding any other provision of
this Declaration other than Section 4.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities of any of the Trustees or the Administrators
described in this Declaration (except as may be required under the Statutory
Trust Act). Except as set forth in Section 4.2, the Delaware Trustee shall
be a Trustee for the sole and limited purpose of fulfilling the requirements
of S 3807 of the Statutory Trust Act.
SECTION 2.12. Execution of Documents. Unless otherwise determined in
writing by the Institutional Trustee, and except as otherwise required
by the Statutory Trust Act, the Institutional Trustee, or any one or more
of the Administrators, as the case may be, is authorized to execute and
deliver on behalf of the Trust any documents, agreements, instruments or
certificates that the Trustees or the Administrators, as the case may be,
have the power and authority to execute pursuant to Section 2.6.
SECTION 2.13. Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be taken
as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration, the Debentures or the Securities.
SECTION 2.14. Duration of Trust. The Trust, unless dissolved pursuant
to the provisions of Article VII hereof, shall have existence for thirty-
five (35) years from the Closing Date.
SECTION 2.15. Mergers. (a) The Trust may not consolidate, amalgamate,
merge with or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any corporation or
other Person, except as described in this Section 2.15 and except with
respect to the distribution of Debentures to Holders of Securities pursuant
to Section 7.1(a)(iv) of the Declaration or Section 4 of Annex I.
(b) The Trust may, with the consent of the Administrators (which
consent will not be unreasonably withheld) and without the consent of the
Institutional Trustee, the Delaware Trustee or the Holders of the Capital
Securities, consolidate, amalgamate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of
any state; provided, that:
(i) if the Trust is not the survivor, such successor entity
(the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Securities (the
"Successor Securities") so that the Successor Securities rank
the same as the Securities rank with respect to Distributions
and payments upon Liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints, as the holder of the
Common Securities, a trustee of the Successor Entity that
possesses the same powers and duties as the Institutional Trustee;
(iii) the Capital Securities or any Successor Securities
(excluding any securities substituted for the Common Securities)
are listed or quoted, or any Successor Securities will be listed
or quoted upon notification of issuance, on any national
securities exchange or with another organization on which the
Capital Securities are then listed or quoted, if any;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the rating, if any,
on the Capital Securities (including any Successor Securities) to
be downgraded or withdrawn by any nationally recognized
statistical rating organization, if the Capital Securities are
then rated;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders'
interests in the Successor Entity as a result of such merger,
consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust has received
a written opinion of a nationally recognized independent counsel
to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of
the Holders' interests in the Successor Entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust
nor the Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust (or the
Successor Entity) will continue to be classified as a grantor
trust for United States federal income tax purposes;
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities to the same extent
provided by the Guarantee, the Debentures and this Declaration;
and
(ix) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Institutional
Trustee shall have received an Officers' Certificate of the
Administrators and an opinion of counsel, each to the effect that
all conditions precedent of this paragraph (b) to such transaction
have been satisfied.
(c) Notwithstanding Section 2.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially
as an entirety to, any other Person or permit any other Person to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE III
SPONSOR
SECTION 3.1. Sponsor's Purchase of Common Securities. On the Closing
Date, the Sponsor will purchase all of the Common Securities issued by the
Trust, in an amount equal to at least 3% of the capital of the Trust, at the
same time as the Capital Securities are sold.
SECTION 3.2. Responsibilities of the Sponsor. In connection with the
issue and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility and sole decision to engage in, or
direct the Administrators to engage in, the following activities:
(a) to determine the States in which to take appropriate action to
qualify or register for sale of all or part of the Capital Securities and to
do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(b) to prepare for filing and request the Administrators to cause
the filing by the Trust, as may be appropriate, of an application to the
PORTAL system, for listing or quotation upon notice of issuance of any
Capital Securities, as requested by the Holders of a Majority in liquidation
amount of the Capital Securities; and
(c) to negotiate the terms of and/or execute and deliver on behalf
of the Trust, the Placement Agreement and other related agreements providing
for the sale of the Capital Securities.
ARTICLE IV
TRUSTEES AND ADMINISTRATORS
SECTION 4.1. Number of Trustees. The number of Trustees initially
shall be two, and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities; provided, however, that there shall
be a Delaware Trustee if required by Section 4.2; and there shall always be
one Trustee who shall be the Institutional Trustee, and such Trustee may
also serve as Delaware Trustee if it meets the applicable requirements, in
which case Section 2.11 shall have no application to such entity in its
capacity as Institutional Trustee.
SECTION 4.2. Delaware Trustee. If required by the Statutory Trust
Act, one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware;
or
(b) if not a natural person, an entity which is organized under
the laws of the United States or any state thereof or the District of
Columbia, has its principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law, including S3807 of the
Statutory Trust Act.
SECTION 4.3. Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) not offer or provide credit or credit enhancement to the
Trust; and
(iii) be a banking corporation or national association
organized and doing business under the laws of the United States
of America or any state thereof or of the District of Columbia and
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least fifty million
U.S. dollars ($50,000,000), and subject to supervision or
examination by federal, state or District of Columbia authority.
If such corporation or national association publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 4.3(a)(iii), the
combined capital and surplus of such corporation or national
association 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 Institutional Trustee shall cease to be
eligible to so act under Section 4.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
4.7.
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of S 310(b) of the Trust Indenture
Act, the Institutional Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to this
Declaration.
(d) The initial Institutional Trustee shall be JPMorgan Chase
Bank, National Association.
SECTION 4.4. Certain Qualifications of the Delaware Trustee Generally.
The Delaware Trustee shall be a U.S. Person and either a natural person who
is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
SECTION 4.5. Administrators. Each Administrator shall be a U.S. Person.
There shall at all times be at least one Administrator. Except where a
requirement for action by a specific number of Administrators is expressly
set forth in this Declaration and except with respect to any action the
taking of which is the subject of a meeting of the Administrators, any
action required or permitted to be taken by the Administrators may be taken
by, and any power of the Administrators may be exercised by, or with the
consent of, any one such Administrator acting alone.
SECTION 4.6. Initial Delaware Trustee. The initial Delaware Trustee
shall be Chase Bank USA, National Association.
SECTION 4.7. Appointment, Removal and Resignation of the Trustees and
the Administrators.
(a) No resignation or removal of any Trustee (the "Relevant
Trustee") and no appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of this Section 4.7.
(b) Subject to Section 4.7(a), a Relevant Trustee may resign at
any time by giving written notice thereof to the Holders of the Securities
and by appointing a successor Relevant Trustee, except in the case of the
Delaware Trustee's successor which shall be appointed by Holders of a
Majority in liquidation amount of the Common Securities. Upon the
resignation of the Institutional Trustee, the Institutional Trustee shall
appoint a successor by requesting from at least three Persons meeting the
eligibility requirements their expenses and charges to serve as the
successor Institutional Trustee on a form provided by the Administrators,
and selecting the Person who agrees to the lowest reasonable expense and
charges (the "Successor Institutional Trustee"). If the instrument of
acceptance by the successor Relevant Trustee required by this Section 4.7
shall not have been delivered to the Relevant Trustee within 60 days after
the giving of such notice of resignation or delivery of the instrument of
removal, the Relevant Trustee may petition, at the expense of the Trust, any
federal, state or District of Columbia court of competent jurisdiction for
the appointment of a successor Relevant Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Relevant Trustee. The Institutional Trustee shall have no liability for the
selection of such successor pursuant to this Section 4.7.
(c) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by an act of the Holders
of a Majority in liquidation amount of the Common Securities. If any Trustee
shall be so removed, the Holders of the Common Securities, by act of the
Holders of a Majority in liquidation amount of the Common Securities
delivered to the Relevant Trustee, shall promptly appoint a successor
Relevant Trustee, and such successor Relevant Trustee shall comply with the
applicable requirements of this Section 4.7. If an Event of Default shall
have occurred and be continuing, the Institutional Trustee or the Delaware
Trustee, or both of them, may be removed by the act of the Holders of a
Majority in liquidation amount of the Capital Securities, delivered to the
Relevant Trustee (in its individual capacity and on behalf of the Trust). If
any Trustee shall be so removed, the Holders of Capital Securities, by act
of the Holders of a Majority in liquidation amount of the Capital Securities
then outstanding delivered to the Relevant Trustee, shall promptly appoint a
successor Relevant Trustee or Trustees, and such successor Relevant Trustee
shall comply with the applicable requirements of this Section 4.7. If no
successor Relevant Trustee shall have been so appointed by the Holders of a
Majority in liquidation amount of the Capital Securities and accepted
appointment in the manner required by this Section 4.7 within 30 days after
delivery of an instrument of removal, the Relevant Trustee or any Holder who
has been a Holder of the Securities for at least six months may, on behalf
of himself and all others similarly situated, petition any federal, state or
District of Columbia court of competent jurisdiction for the appointment of
a successor Relevant Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a successor Relevant
Trustee or Trustees.
(d) The Institutional Trustee shall give notice of each
resignation and each removal of a Trustee and each appointment of a
successor Trustee to all Holders and to the Sponsor. Each notice shall
include the name of the successor Relevant Trustee and the address of its
Corporate Trust Office if it is the Institutional Trustee.
(e) Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or
is adjudged by a court to have become incompetent or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by
the Institutional Trustee (provided the Institutional Trustee satisfies the
requirements of a Delaware Trustee as set forth in Section 4.2) following
the procedures in this Section 4.7 (with the successor being a Person who
satisfies the eligibility requirement for a Delaware Trustee set forth in
this Declaration) (the "Successor Delaware Trustee").
(f) In case of the appointment hereunder of a successor Relevant
Trustee, the retiring Relevant Trustee and each successor Relevant Trustee
with respect to the Securities shall execute and deliver an amendment hereto
wherein each successor Relevant Trustee shall accept such appointment and
which (a) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Relevant Trustee
all the rights, powers, trusts and duties of the retiring Relevant Trustee
with respect to the Securities and the Trust and (b) shall add to or change
any of the provisions of this Declaration as shall be necessary to provide
for or facilitate the administration of the Trust by more than one Relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring
Relevant Trustee shall become effective to the extent provided therein and
each such successor Relevant Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Relevant Trustee; but, on request of the Trust or any
successor Relevant Trustee, such retiring Relevant Trustee shall duly
assign, transfer and deliver to such successor Relevant Trustee all Trust
Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder with respect to the Securities and the Trust subject to
the payment of all unpaid fees, expenses and indemnities of such retiring
Relevant Trustee.
(g) No Institutional Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Institutional Trustee or
Successor Delaware Trustee, as the case may be.
(h) The Holders of the Capital Securities will have no right to
vote to appoint, remove or replace the Administrators, which voting rights
are vested exclusively in the Holders of the Common Securities.
(i) Any successor Delaware Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of Delaware
identifying the name and principal place of business of such Delaware
Trustee in the State of Delaware.
SECTION 4.8. Vacancies Among Trustees. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant
to Section 4.1, or if the number of Trustees is increased pursuant to
Section 4.1, a vacancy shall occur. A resolution certifying the existence
of such vacancy by the Trustees or, if there are more than two, a majority
of the Trustees shall be conclusive evidence of the existence of such
vacancy. The vacancy shall be filled with a Trustee appointed in accordance
with Section 4.7.
SECTION 4.9. Effect of Vacancies. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee shall not operate to dissolve, terminate or
annul the Trust or terminate this Declaration. Whenever a vacancy in
the number of Trustees shall occur, until such vacancy is filled by the
appointment of a Trustee in accordance with Section 4.7, the Institutional
Trustee shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration.
SECTION 4.10. Meetings of the Trustees and the Administrators. Meetings
of the Trustees or the Administrators shall be held from time to time upon
the call of any Trustee or Administrator, as applicable. Regular meetings
of the Trustees and the Administrators, respectively, may be in person
in the United States or by telephone, at a place (if applicable) and time
fixed by resolution of the Trustees or the Administrators, as applicable.
Notice of any in-person meetings of the Trustees or the Administrators shall
be hand delivered or otherwise delivered in writing (including by facsimile,
with a hard copy by overnight courier) not less than 48 hours before
such meeting. Notice of any telephonic meetings of the Trustees or the
Administrators or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a
brief statement of the time, place and anticipated purposes of the meeting.
The presence (whether in person or by telephone) of a Trustee or an
Administrator, as the case may be, at a meeting shall constitute a waiver
of notice of such meeting except where a Trustee or an Administrator, as the
case may be, attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Declaration,
any action of the Trustees or the Administrators, as the case may be,
may be taken at a meeting by vote of a majority of the Trustees or the
Administrators present (whether in person or by telephone) and eligible
to vote with respect to such matter; provided, that, in the case of the
Administrators, a Quorum is present, or without a meeting by the unanimous
written consent of the Trustees or the Administrators, as the case may be.
Meetings of the Trustees and the Administrators together shall be held from
time to time upon the call of any Trustee or Administrator.
SECTION 4.11. Delegation of Power. (a) Any Trustee or any Administrator,
as the case may be, may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 that is a U.S.
Person his or her power for the purpose of executing any documents,
instruments or other writings contemplated in Section 2.6.
(b) The Trustees shall have power to delegate from time to time to
such of their number or to any officer of the Trust that is a U.S. Person,
the doing of such things and the execution of such instruments or other
writings either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient, to the extent such delegation
is not prohibited by applicable law or contrary to the provisions of the
Trust, as set forth herein.
SECTION 4.12. Merger, Conversion, Consolidation or Succession to
Business. Any Person into which the Institutional Trustee or the Delaware
Trustee, as the case maybe, may be merged or converted or with which either
may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as
the case may be, shall be a party, or any Person succeeding to all or
substantially all the corporate trust business of the Institutional Trustee
or the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be,
hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided such Person shall be
otherwise qualified and eligible under this Article and, provided, further,
that such Person shall file an amendment to the Certificate of Trust with
the Secretary of State of the State of Delaware as contemplated in Section
4.7(i).
ARTICLE V
DISTRIBUTIONS
SECTION 5.1. Distributions. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common
Securities in accordance with the preferences set forth herein. If and to
the extent that the Debenture Issuer makes a payment of interest (including
any Additional Interest or Deferred Interest) or premium, if any, on and/or
principal on the Debentures held by the Institutional Trustee (the amount of
any such payment being a "Payment Amount"), the Institutional Trustee shall
and is directed, to the extent funds are available in the Property Account
for that purpose, to make a distribution (a "Distribution") of the Payment
Amount to Holders. For the avoidance of doubt, funds in the Property
Account shall not be distributed to Holders to the extent of any taxes
payable by the Trust, in the case of withholding taxes, as determined by
the Institutional Trustee or any Paying Agent and, in the case of taxes
other than withholding tax taxes, as determined by the Administrators in a
written notice to the Institutional Trustee.
ARTICLE VI
ISSUANCE OF SECURITIES
SECTION 6.1. General Provisions Regarding Securities.
(a) The Administrators shall on behalf of the Trust issue one
series of capital securities, evidenced by a certificate substantially in
the form of Exhibit A-1, representing undivided beneficial interests in the
assets of the Trust and having such terms as are set forth in Annex I (the
"Capital Securities"), and one series of common securities, evidenced by a
certificate substantially in the form of Exhibit A-2, representing undivided
beneficial interests in the assets of the Trust and having such terms as are
set forth in Annex I (the "Common Securities"). The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Capital Securities and the Common Securities. The Capital Securities rank
pari passu and payment thereon shall be made Pro Rata with the Common
Securities except that, when an Event of Default has occurred and is
continuing, the rights of Holders of the Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption and
otherwise are subordinated to the rights to payment of the Holders of the
Capital Securities.
(b) The Certificates shall be signed on behalf of the Trust by one
or more Administrators. Such signature shall be the facsimile or manual
signature of any Administrator. In case any Administrator of the Trust who
shall have signed any of the Securities shall cease to be such Administrator
before the Certificates so signed shall be delivered by the Trust, such
Certificates nevertheless may be delivered as though the person who signed
such Certificates had not ceased to be such Administrator. Any Certificate
may be signed on behalf of the Trust by such person who, at the actual date
of execution of such Security, shall be an Administrator of the Trust,
although at the date of the execution and delivery of the Declaration any
such person was not such an Administrator. A Capital Security shall not be
valid until authenticated by the manual signature of an Authorized Officer
of the Institutional Trustee. Such signature shall be conclusive evidence
that the Capital Security has been authenticated under this Declaration.
Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate the Capital Securities for original
issue. The Institutional Trustee may appoint an authenticating agent that is
a U.S. Person acceptable to the Trust to authenticate the Capital
Securities. A Common Security need not be so authenticated and shall be
valid upon execution by one or more Administrators.
(c) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable, and each Holder thereof shall be entitled to
the benefits provided by this Declaration.
(e) Every Person, by virtue of having become a Holder in
accordance with the terms of this Declaration, shall be deemed to have
expressly assented and agreed to the terms of, and shall be bound by, this
Declaration and the Guarantee.
SECTION 6.2. Paying Agent, Transfer Agent, Calculation Agent and
Registrar.
(a) The Trust shall maintain in New York, New York, an office or
agency where the Securities may be presented for payment (the "Paying
Agent"), and an office or agency where Securities may be presented for
registration of transfer or exchange (the "Transfer Agent"). The Trust shall
keep or cause to be kept at such office or agency a register for the purpose
of registering Securities and transfers and exchanges of Securities, such
register to be held by a registrar (the "Registrar"). The Administrators may
appoint the Paying Agent, the Registrar and the Transfer Agent, and may
appoint one or more additional Paying Agents, one or more co-Registrars, or
one or more co-Transfer Agents in such other locations as it shall
determine. The term "Paying Agent" includes any additional Paying Agent, the
term "Registrar" includes any additional Registrar or co-Registrar and the
term "Transfer Agent" includes any additional Transfer Agent or co-Transfer
Agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Paying Agent, Transfer Agent and Registrar for the Capital Securities and
the Common Securities at its Corporate Trust Office. The Institutional
Trustee or any of its Affiliates in the United States may act as Paying
Agent, Transfer Agent or Registrar.
(b) The Trust shall also appoint a Calculation Agent, which shall
determine the Coupon Rate in accordance with the terms of the Securities.
The Trust initially appoints the Institutional Trustee as Calculation Agent.
SECTION 6.3. Form and Dating.
(a) The Capital Securities and the Institutional Trustee's
certificate of authentication thereon shall be substantially in the form of
Exhibit A-1, and the Common Securities shall be substantially in the form of
Exhibit A-2, each of which is hereby incorporated in and expressly made a
part of this Declaration. Certificates may be typed, printed, lithographed
or engraved or may be produced in any other manner as is reasonably
acceptable to the Administrators, as conclusively evidenced by their
execution thereof. The Securities may have letters, numbers, notations or
other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the
Trust is subject, if any, or usage (provided, that any such notation, legend
or endorsement is in a form acceptable to the Sponsor). The Trust at the
direction of the Sponsor shall furnish any such legend not contained in
Exhibit A-1 to the Institutional Trustee in writing. Each Capital Security
shall be dated the date of its authentication. The terms and provisions of
the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the
extent applicable, the Institutional Trustee, the Delaware Trustee, the
Administrators and the Sponsor, by their execution and delivery of this
Declaration, expressly agree to such terms and provisions and to be bound
thereby. Capital Securities will be issued only in blocks having an
aggregate liquidation amount of not less than $100,000.
(b) The Capital Securities are being offered and sold by the Trust
pursuant to the Placement Agreement and the Capital Securities Purchase
Agreement in definitive form, registered in the name of the Holder thereof,
without coupons and with the Restricted Securities Legend.
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certificates. If:
(a) any mutilated Certificates should be surrendered to the
Registrar, or if the Registrar shall receive evidence to its satisfaction of
the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Registrar, the Administrators
and the Institutional Trustee such security or indemnity as may be required
by them to hold each of them harmless; then, in the absence of notice that
such Certificate shall have been acquired by a bona fide purchaser, an
Administrator on behalf of the Trust shall execute (and in the case of a
Capital Security Certificate, the Institutional Trustee shall authenticate)
and deliver, in exchange for or in lieu of any such mutilated, destroyed,
lost or stolen Certificate, a new Certificate of like denomination. In
connection with the issuance of any new Certificate under this Section 6.4,
the Registrar or the Administrators may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
SECTION 6.5. Temporary Securities. Until definitive Securities are ready
for delivery, the Administrators may prepare and, in the case of the Capital
Securities, the Institutional Trustee shall authenticate, temporary
Securities. Temporary Securities shall be substantially in form of
definitive Securities but may have variations that the Administrators
consider appropriate for temporary Securities. Without unreasonable delay,
the Administrators shall prepare and, in the case of the Capital Securities,
the Institutional Trustee shall authenticate definitive Securities in
exchange for temporary Securities.
SECTION 6.6. Cancellation. The Administrators at any time may deliver
Securities to the Institutional Trustee for cancellation. The Registrar
shall forward to the Institutional Trustee any Securities surrendered to it
for registration of transfer, redemption or payment. The Institutional
Trustee shall promptly cancel all Securities surrendered for registration of
transfer, payment, replacement or cancellation and shall dispose of such
canceled Securities in accordance with its standard procedures or otherwise
as the Administrators direct. The Administrators may not issue new
Securities to replace Securities that have been paid or that have been
delivered to the Institutional Trustee for cancellation.
SECTION 6.7. Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested exclusively in
the Institutional Trustee (in its capacity as such) in accordance with
Section 2.6(g), and the Holders shall not have any right or title therein
other than the undivided beneficial interest in the assets of the Trust
conferred by their Securities and they shall have no right to call for any
partition or division of property, profits or rights of the Trust except as
described below. The Securities shall be personal property giving only the
rights specifically set forth therein and in this Declaration. The
Securities shall have no, and the issuance of the Securities shall not be
subject to, preemptive or other similar rights and when issued and delivered
to Holders against payment of the purchase price therefor, the Securities
will be fully paid and nonassessable by the Trust.
(b) For so long as any Capital Securities remain outstanding, if,
upon an Indenture Event of Default, the Debenture Trustee fails, or the
holders of not less than 25% in principal amount of the outstanding
Debentures fail, to declare the principal of all of the Debentures to be
immediately due and payable, the Holders of a Majority in liquidation amount
of the Capital Securities then outstanding shall have the right to make such
declaration by a notice in writing to the Institutional Trustee, the Sponsor
and the Debenture Trustee.
(c) At any time after the acceleration of maturity of the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Institutional Trustee, subject to the provisions hereof,
fails to annul any such acceleration and waive such default, the Holders of
a Majority in liquidation amount of the Capital Securities, by written
notice to the Institutional Trustee, the Sponsor and the Debenture Trustee,
may rescind and annul such acceleration and its consequences if:
(i) the Sponsor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of the
Debentures;
(B) any accrued Deferred Interest on all of the
Debentures;
(C) all payments on any Debentures that have become due
otherwise than by such declaration of acceleration and
interest and Deferred Interest thereon at the rate borne by
the Debentures; and
(D) all sums paid or advanced by the Debenture Trustee
under the Indenture and the reasonable compensation,
documented expenses, disbursements and advances of the
Debenture Trustee and the Institutional Trustee, their agents
and counsel; and
(ii) all Events of Default with respect to the Debentures,
other than the non-payment of the principal or premium, if any, of
the Debentures that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.07 of the
Indenture.
(d) The Holders of a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default, except a default or Event of
Default in the payment of principal of or premium, if any, or interest on
the Debentures (unless such default or Event of Default has been cured and a
sum sufficient to pay all matured installments of interest, premium and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default or Event of Default in respect of a covenant
or provision that under the Indenture cannot be modified or amended without
the consent of the holder of each outstanding Debenture. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
(e) Upon receipt by the Institutional Trustee of written notice
declaring such an acceleration, or rescission and annulment thereof, by
Holders of any part of the Capital Securities, a record date shall be
established for determining Holders of outstanding Capital Securities
entitled to join in such notice, which record date shall be at the close of
business on the day the Institutional Trustee receives such notice. The
Holders on such record date, or their duly designated proxies, and only such
Persons, shall be entitled to join in such notice, whether or not such
Holders remain Holders after such record date; provided, that, unless such
declaration of acceleration, or rescission and annulment, as the case may
be, shall have become effective by virtue of the requisite percentage having
joined in such notice prior to the day that is 90 days after such record
date, such notice of declaration of acceleration, or rescission and
annulment, as the case may be, shall automatically and without further
action by any Holder be canceled and of no further effect. Nothing in this
paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after
expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that
is identical to a written notice that has been canceled pursuant to the
proviso to the preceding sentence, in which event a new record date shall be
established pursuant to the provisions of this Section 6.7.
(f) Except as otherwise provided in this Section 6.7, the Holders
of a Majority in liquidation amount of the Capital Securities may, on behalf
of the Holders of all the Capital Securities, waive any past default or
Event of Default and its consequences. Upon such waiver, any such default or
Event of Default shall cease to exist, and any default or Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of
this Declaration, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
ARTICLE VII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1. Dissolution and Termination of Trust. (a) The Trust shall
dissolve on the first to occur of
(i) unless earlier dissolved, on June 15, 2040, the
expiration of the term of the Trust;
(ii) a Bankruptcy Event with respect to the Sponsor, the
Trust or the Debenture Issuer;
(iii) (other than in connection with a merger, consolidation
or similar transaction not prohibited by the Indenture, this
Declaration or the Guarantee, as the case may be) the filing of a
certificate of dissolution or its equivalent with respect to the
Sponsor or upon the revocation of the charter of the Sponsor and
the expiration of 90 days after the date of revocation without a
reinstatement thereof;
(iv) the distribution of the Debentures to the Holders of the
Securities, upon exercise of the right of the Holders of all of
the outstanding Common Securities to dissolve the Trust as
provided in Annex I hereto;
(v) the entry of a decree of judicial dissolution of any
Holder of the Common Securities, the Sponsor, the Trust or the
Debenture Issuer;
(vi) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall
have been paid to the Holders in accordance with the terms of the
Securities; or
(vii) before the issuance of any Securities, with the consent
of all of the Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 7.1(a), and after satisfaction of liabilities to
creditors of the Trust as required by applicable law, including Section 3808
of the Statutory Trust Act, and subject to the terms set forth in Annex I,
the Delaware Trustee, when notified in writing of the completion of the
winding up of the Trust in accordance with the Statutory Trust Act,
Institutional Trustee shall terminate the Trust by filing, at the expense of
the Sponsor, a certificate of cancellation with the Secretary of State of
the State of Delaware.
(c) The provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.
ARTICLE VIII
TRANSFER OF INTERESTS
SECTION 8.1. General. (a) When Capital Securities are presented to the
Registrar with a request to register a transfer or to exchange them for an
equal number of Capital Securities represented by different Certificates,
the Registrar shall register the transfer or make the exchange if the
requirements provided for herein for such transactions are met. To permit
registrations of transfers and exchanges, the Trust shall issue and
the Institutional Trustee shall authenticate Capital Securities at the
Registrar's request.
(b) Upon issuance of the Common Securities, the Sponsor shall
acquire and retain beneficial and record ownership of the Common Securities
and, for so long as the Securities remain outstanding, the Sponsor shall
maintain 100% ownership of the Common Securities; provided, however, that
any permitted successor of the Sponsor under the Indenture that is a U.S.
Person may succeed to the Sponsor's ownership of the Common Securities.
(c) Capital Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this
Declaration and in the terms of the Capital Securities. To the fullest
extent permitted by applicable law, any transfer or purported transfer of
any Security not made in accordance with this Declaration shall be null and
void and will be deemed to be of no legal effect whatsoever and 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.
(d) The Registrar shall provide in the Securities Register for the
registration of Securities and of transfers of Securities, which will be
effected without charge but only upon payment (with such indemnity as the
Registrar may reasonably require) in respect of any tax or other
governmental charges that may be imposed in relation to it. Upon its
receipt of the documents required under this Section 8.1(d) for registration
of transfer of any Securities, the Registrar shall register in the
Securities Register, in the name of the designated transferee or
transferees, the Securities being transferred and thereupon, for all
purposes of this Declaration, such transfer shall be effective and such
transferee or transferees shall be, and such transferor shall no longer be,
the Holder of the transferred Securities. Upon the registration of transfer
of a Security pursuant to the terms of this Declaration in the name of the
new Holder thereof, such Security shall constitute the same Security as the
Security so transferred and shall be entitled to the same benefits under
this Declaration as the Security so transferred. The Registrar shall, and
is authorized to, record and register in the Securities Register the
transfer of a Security upon the Registrar's receipt of originals or copies
(which may be by facsimile or other form of electronic transmission) of a
written instrument of transfer in form reasonably satisfactory to the
Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing, accompanied, if such Security is being transferred
prior to the Resale Restriction Termination Date other than in accordance
with Section 8.4, by a certificate substantially in the form set forth as
Exhibit B, C or D, as applicable, hereto, executed by the transferor or
transferee, as applicable; thereupon, the Registrar is authorized to confirm
in writing to the transferee of such Security that such transfer has been
registered in the Securities Register and that such transferee is the Holder
of such Security. The Certificate evidencing the Security so transferred,
duly endorsed by the transferor, shall be surrendered to the Registrar at
the time the transfer conditions specified in the immediately preceding
sentence are satisfied or within five (5) Business Days after the Registrar
has registered the transfer of such Security on the Securities Register, and
promptly after such surrender, the Trust shall execute and, in the case of a
Capital Security Certificate, the Institutional Trustee shall, and is
authorized to, authenticate a Certificate in the name of the transferee as
the new Holder of the Security evidenced thereby. Until the Certificate
evidencing the Security so transferred is surrendered to the Registrar, such
Security may not be transferred by such new Holder. Each Certificate
surrendered in connection with a registration of transfer shall be canceled
by the Institutional Trustee pursuant to Section 6.6. A transferee of a
Security shall be entitled to the rights and subject to the obligations of a
Holder hereunder upon the registration of such transfer in the Securities
Register. Each such transferee shall be deemed to have agreed to be bound
by this Declaration.
(e) Neither the Trust nor the Registrar shall be required (i) to
issue, register the transfer of, or exchange any Securities during a period
beginning at the opening of business 15 days before the day of any selection
of Securities for redemption and ending at the close of business on the
earliest date on which the relevant notice of redemption is deemed to have
been given to all Holders of the Securities to be redeemed, or (ii) to
register the transfer or exchange of any Security so selected for redemption
in whole or in part, except the unredeemed portion of any Security being
redeemed in part.
SECTION 8.2. Transfer Procedures and Restrictions.
(a) Prior to the Resale Restriction Termination Date, Certificates
evidencing Capital Securities shall bear the Restricted Securities Legend
(as defined below), which shall not be removed unless there is delivered to
the Trust such satisfactory evidence, which may include an opinion of
counsel, reasonably acceptable to the Administrators and the Institutional
Trustee, as may be reasonably required by the Trust or the Institutional
Trustee, that neither the Restricted Securities Legend nor the restrictions
on transfer set forth therein are required to ensure that transfers thereof
comply with the provisions of the Securities Act or that such Securities are
not "restricted" within the meaning of Rule 144 under the Securities Act.
Upon provision of such satisfactory evidence, the Institutional Trustee, at
the written direction of the Administrators, shall authenticate and deliver
Capital Securities that do not bear the Restricted Securities Legend (other
than the legend contemplated by Section 8.2(d).
(b) Prior to the Resale Restriction Date, without the written
consent of Sponsor, Capital Securities may only be transferred as follows:
(i) to a "Qualified Institutional Buyer" (within the meaning of Rule 144A
under the Securities Act) if accompanied by a certificate of the transferor
substantially in the form set forth as Exhibit C hereto; (ii) to an
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3), (7) or
(8) under the Securities Act if accompanied by a certificate of the
transferee substantially in the form set forth as Exhibit B hereto; or (iii)
to a non-"U.S. Person" in an "offshore transaction" under, and within the
meaning of, Regulation S under the Securities Act if accompanied by a
certificate of the transferee substantially in the form set forth as Exhibit
D hereto.
(c) The Capital Securities may not be transferred prior to the
Resale Restriction Termination Date except in compliance with restrictions
on transfer set forth in the legend set forth below (the "Restricted
Securities Legend"), and except as otherwise contemplated in Section 8.2(a),
prior to the Resale Restriction Termination Date, each Certificate
evidencing outstanding Capital Securities shall bear the Restricted
Securities Legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY
PRIOR TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR SUCH SHORTER
PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT) AFTER
THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE LAST DATE
ON WHICH THE TRUST OR ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE
SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF THIS SECURITY OR SUCH
INTEREST OR PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (II) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW,
ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (a)(1), (2), (3), (7) OR (8) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO NON-
U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
DEBENTURE ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (C) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF
TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE
TRUST. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS
AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS
SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT 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 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 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION
OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE 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
EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION
3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A
TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR
PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT
PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT
IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY
BE REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF
$1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY 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 PURPORTED TRANSFEREE SHALL BE
DEEMED NOT TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH
PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS
SECURITY.
(d) Capital Securities may only be transferred in minimum blocks
of $100,000 aggregate liquidation amount (100 Capital Securities) and
multiples of $1,000 in excess thereof. Any attempted transfer of Capital
Securities in a block having an aggregate liquidation amount of less than
$100,000 shall be deemed to be void and of no legal effect whatsoever. Any
such purported transferee shall be deemed not to be a Holder of such Capital
Securities for any purpose, including, but not limited to, the receipt of
Distributions on such Capital Securities, and such purported transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
SECTION 8.3. Deemed Security Holders. The Trust, the Administrators,
the Trustees, the Paying Agent, the Transfer Agent or the Registrar may
treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of
the Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall
not be bound to recognize any equitable or other claim to or interest in
such Certificate or in the Securities represented by such Certificate on the
part of any Person, whether or not the Trust, the Administrators, the
Trustees, the Paying Agent, the Transfer Agent or the Registrar shall have
actual or other notice thereof.
SECTION 8.4. Transfer of Initial Securities. Notwithstanding the
foregoing provisions of this Article VIII or any other provision of this
Declaration (including all Annexes and Exhibits hereto) to the contrary, any
or all of the Capital Securities initially issued to the Purchaser (the
"Initial Securities") may be transferred by the Purchaser to any transferee
selected by it that meets the parameters specified below and, upon delivery
to the Registrar, of originals or copies (which may be by facsimile or other
form of electronic transmission) of a written instrument of transfer in form
reasonably satisfactory to the Registrar duly executed by the Purchaser or
the Purchaser's attorney duly authorized in writing (it being understood
that no signature guarantee shall be required), then the Registrar shall,
and is authorized to, record and register on the Securities Register the
transfer of such Initial Securities to such transferee; thereupon, the
Registrar is authorized to confirm in writing to the transferee of such
Initial Securities that such transfer has been registered in the Securities
Register and that such transferee is the Holder of such Initial Securities;
provided, however, that the Purchaser of the Initial Securities, by its
acceptance thereof, agrees that it may not transfer any Initial Securities
prior to the Resale Restriction Termination Date to any transferee that is
not a "Qualified Institutional Buyer" (within the meaning of Rule 144A under
the Securities Act), an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3), (7) or (8) under the Securities Act or a non-"U.S.
Person" in an "offshore transaction" under, and within the meaning of,
Regulation S under the Securities Act. The Certificate evidencing the
Initial Securities to be transferred, duly endorsed by the Purchaser, shall
be surrendered to the Registrar at the time the transfer conditions
specified in the immediately preceding sentence are satisfied or within five
(5) Business Days after the Registrar has registered the transfer of such
Initial Securities in the Securities Register, and promptly after such
surrender, the Trust shall execute and, in the case of a Capital Security
Certificate, the Institutional Trustee shall, and is authorized to,
authenticate a Certificate in the name of the transferee as the new Holder
of the Initial Securities evidenced thereby. Until the Certificate
evidencing the Initial Securities so transferred is surrendered to the
Registrar, such Initial Securities may not be transferred by such new
Holder.
ARTICLE IX
LIMITATION OF LIABILITY OF HOLDERS
OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1. Liability. (a) Except as expressly set forth in this
Declaration, the Guarantee and the terms of the Securities, the Sponsor
shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the
Trust; and
(ii) required to pay to the Trust or to any Holder of the
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Except to the extent provided in Section 9.1(b), and pursuant
to S 3803(a) of the Statutory Trust Act, the Holders of the Securities shall
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware, except as otherwise specifically
set forth herein.
SECTION 9.2. Exculpation. (a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such
Indemnified Person by this Declaration or by law, except that an Indemnified
Person (other than an Administrator) shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence
or willful misconduct with respect to such acts or omissions and except that
an Administrator shall be liable for any such loss, damage or claim incurred
by reason of such Administrator's gross negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and, if selected by such
Indemnified Person, has been selected by such Indemnified Person with
reasonable care by or on behalf of the Trust, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses or any other facts pertinent to the existence
and amount of assets from which Distributions to Holders of Securities might
properly be paid.
SECTION 9.3. Fiduciary Duty. (a) To the extent that, at law or in
equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person,
an Indemnified Person acting under this Declaration shall not be liable
to the Trust or to any other Covered Person for its good faith reliance on
the provisions of this Declaration. The provisions of this Declaration,
to the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act),
are agreed by the parties hereto to replace such other duties and
liabilities of the Indemnified Person.
(b) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider
such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Trust or
any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and
shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 9.4. Indemnification. (a)(i) The Sponsor shall indemnify, to
the fullest extent permitted by law, any Indemnified Person who was or
is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Trust) by reason of the fact that such Person is or was
an Indemnified Person against expenses (including attorneys' fees and
expenses), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such Person in connection with such action,
suit or proceeding if such Person acted in good faith and in a manner
such Person reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnified Person did
not act in good faith and in a manner which such Person reasonably believed
to be in or not opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that such conduct was unlawful.
(ii) The Sponsor shall indemnify, to the fullest extent
permitted by law, any Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to
procure a judgment in its favor by reason of the fact that such
Person is or was an Indemnified Person against expenses (including
attorneys' fees and expenses) actually and reasonably incurred by
such Person in connection with the defense or settlement of such
action or suit if such Person acted in good faith and in a manner
such Person reasonably believed to be in or not opposed to the
best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or
matter as to which such Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent
that the Court of Chancery of Delaware or the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such Person is fairly and reasonably
entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that an Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or
proceeding referred to in paragraphs (i) and (ii) of this Section
9.4(a), or in defense of any claim, issue or matter therein, such
Person shall be indemnified, to the fullest extent permitted by
law, against expenses (including attorneys' fees and expenses)
actually and reasonably incurred by such Person in connection
therewith.
(iv) Any indemnification of an Administrator under
paragraphs (i) and (ii) of this Section 9.4(a) (unless ordered by
a court) shall be made by the Sponsor only as authorized in the
specific case upon a determination that indemnification of the
Indemnified Person is proper in the circumstances because such
Person has met the applicable standard of conduct set forth in
paragraphs (i) and (ii). Such determination shall be made (A) by
the Administrators by a majority vote of a Quorum consisting of
such Administrators who were not parties to such action, suit or
proceeding, (B) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrators so
directs, by independent legal counsel in a written opinion, or (C)
by the Common Security Holder of the Trust.
(v) To the fullest extent permitted by law, expenses
(including attorneys' fees and expenses) incurred by an
Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 9.4(a) shall be paid by
the Sponsor in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf
of such Indemnified Person to repay such amount if it shall
ultimately be determined that such Person is not entitled to be
indemnified by the Sponsor as authorized in this Section 9.4(a).
Notwithstanding the foregoing, no advance shall be made by the
Sponsor if a determination is reasonably and promptly made (1) in
the case of a Company Indemnified Person (A) by the Administrators
by a majority vote of a Quorum of disinterested Administrators,
(B) if such a Quorum is not obtainable, or, even if obtainable, if
a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion or (C) by the
Common Security Holder of the Trust, that, based upon the facts
known to the Administrators, counsel or the Common Security Holder
at the time such determination is made, such Indemnified Person
acted in bad faith or in a manner that such Person either believed
to be opposed to or did not believe to be in the best interests of
the Trust, or, with respect to any criminal proceeding, that such
Indemnified Person believed or had reasonable cause to believe
such conduct was unlawful, or (2) in the case of a Fiduciary
Indemnified Person, by independent legal counsel in a written
opinion that, based upon the facts known to the counsel at the
time such determination is made, such Indemnified Person acted in
bad faith or in a manner that such Indemnified Person either
believed to be opposed to or did not believe to be in the best
interests of the Trust, or, with respect to any criminal
proceeding, that such Indemnified Person believed or had
reasonable cause to believe such conduct was unlawful. In no event
shall any advance be made (i) to a Company Indemnified Person in
instances where the Administrators, independent legal counsel or
the Common Security Holder reasonably determine that such Person
deliberately breached such Person's duty to the Trust or its
Common or Capital Security Holders or (ii) to a Fiduciary
Indemnified Person in instances where independent legal counsel
promptly and reasonably determines in a written opinion that such
Person deliberately breached such Person's duty to the Trust or
its Common or Capital Security Holders.
(b) The Sponsor shall indemnify, to the fullest extent permitted
by applicable law, each Indemnified Person from and against any and all
loss, damage, liability, tax (other than taxes based on the income of such
Indemnified Person), penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person arising out of or in
connection with or by reason of the creation, administration or termination
of the Trust, or any act or omission of such Indemnified Person in good
faith on behalf of the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Declaration, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage,
liability, tax, penalty, expense or claim incurred by such Indemnified
Person by reason of negligence, willful misconduct or bad faith with respect
to such acts or omissions.
(c) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 9.4 shall not
be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Sponsor or
Capital Security Holders of the Trust or otherwise, both as to action in
such Person's official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section 9.4
shall be deemed to be provided by a contract between the Sponsor and each
Indemnified Person who serves in such capacity at any time while this
Section 9.4 is in effect. Any repeal or modification of this Section 9.4
shall not affect any rights or obligations then existing.
(d) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any Person who is or was an Indemnified Person against any
liability asserted against such Person and incurred by such Person in any
such capacity, or arising out of such Person's status as such, whether or
not the Sponsor would have the power to indemnify such Person against such
liability under the provisions of this Section 9.4.
(e) For purposes of this Section 9.4, references to "the Trust"
shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any Person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same
position under the provisions of this Section 9.4 with respect to the
resulting or surviving entity as such Person would have with respect to such
constituent entity if its separate existence had continued.
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 9.4 shall, unless otherwise provided
when authorized or ratified, continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the benefit of the heirs, executors
and administrators of such a Person.
(g) The provisions of this Section 9.4 shall survive the
termination of this Declaration or the earlier resignation or removal of the
Institutional Trustee. The obligations of the Sponsor under this Section 9.4
to compensate and indemnify the Trustees and to pay or reimburse the
Trustees for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness shall be
secured by a lien prior to that of the Securities upon all property and
funds held or collected by the Trustees as such, except funds held in trust
for the benefit of the holders of particular Capital Securities, provided,
that the Sponsor is the holder of the Common Securities.
SECTION 9.5. Outside Businesses. Any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee (subject to Section 4.3(c))
may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar
to the business of the Trust, and the Trust and the Holders of Securities
shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. None of any Covered Person,
the Sponsor, the Delaware Trustee or the Institutional Trustee shall be
obligated to present any particular investment or other opportunity to the
Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee shall have the right to take
for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity.
Any Covered Person, the Delaware Trustee and the Institutional Trustee may
engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for, or act on any committee or body of holders of,
securities or other obligations of the Sponsor or its Affiliates.
SECTION 9.6. Compensation; Fee. (a) The Sponsor agrees:
(i) to pay to the Trustees from time to time such
compensation for all services rendered by them hereunder as the
parties shall agree in writing 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); and
(ii) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable, documented
expenses, disbursements and advances incurred or made by the
Trustees in accordance with any provision of this Declaration
(including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any
such expense, disbursement or advance attributable to their
negligence or willful misconduct.
(b) The provisions of this Section 9.6 shall survive the
dissolution of the Trust and the termination of this Declaration and the
removal or resignation of any Trustee.
ARTICLE X
ACCOUNTING
SECTION 10.1. Fiscal Year. The fiscal year (the "Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the
Code.
SECTION 10.2. Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrators shall keep, or cause to be kept at the principal office of
the Trust in the United States, as defined for purposes of Treasury
Regulations S 301.7701-7, full books of account, records and supporting
documents, which shall reflect in reasonable detail each transaction of the
Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied.
(b) The Sponsor shall cause the Administrators to deliver to each
Holder of Securities: (1) within 45 days after the end of each quarterly
fiscal period other than year end, unaudited consolidated financial
statements of the Sponsor (including balance sheet and income statement)
covering such period; (2) within 60 days after the end of each year end,
unaudited consolidated financial statements of the Sponsor (including
balance sheet and income statement) covering the related annual period; (3)
within the earlier of (y) 90 days after the end of each year end and (z)
such earlier number of days prescribed by the Commission for the filing with
it of a Form 10-K by companies subject to the informational reporting
requirements of the Exchange Act, (i) audited consolidated financial
statements of the Sponsor (including balance sheet and income statement)
covering the related annual period, (ii) the report of the independent
accountants with respect to such financial statements and (iii) an Officer's
Certificate of the Sponsor detailing any material differences between the
unaudited financial statements for such annual period delivered pursuant to
clause (2) above and those delivered pursuant to this clause; (4) within 7
days after the filing thereof, each Form 10-K Form 10-Q and Form 8-K that is
prepared by the Sponsor in respect of the Sponsor or the Trust and filed
with the Commission in accordance with the Exchange Act, if any; and (5) if
the Sponsor is not then (y) subject to Section 13 or 15(d) of the Exchange
Act or (z) exempt from reporting pursuant to Rule 12g3-2(b) thereunder, the
information required to be provided by Rule 144A(d)(4) under the Securities
Act unless all of such information has been previously delivered to Holders
under clause (1), (2) or (3) above.
(c) The Administrators shall cause to be duly prepared and
delivered to each of the Holders of Securities Form 1099 or such other
annual United States federal income tax information statement required by
the Code, containing such information with regard to the Securities held by
each Holder as is required by the Code and the Treasury Regulations.
Notwithstanding any right under the Code to deliver any such statement at a
later date, the Administrators shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(d) The Administrators shall cause to be duly prepared in the
United States, as defined for purposes of Treasury Regulations S 301.7701-7,
and filed an annual United States federal income tax return on a Form 1041
or such other form required by United States federal income tax law, and any
other annual income tax returns required to be filed by the Administrators
on behalf of the Trust with any state or local taxing authority.
(e) The Administrators will cause the Sponsor's reports filed with
all state and federal agencies to be delivered to Holder promptly after such
filing.
SECTION 10.3. Banking. The Trust shall maintain one or more bank
accounts in the United States, as defined for purposes of Treasury
Regulations S 301.7701-7, in the name and for the sole benefit of the
Trust; provided, however, that all payments of funds in respect of the
Debentures held by the Institutional Trustee shall be made directly to the
Property Account and no other funds of the Trust shall be deposited in the
Property Account. The sole signatories for such accounts (including the
Property Account) shall be designated by the Institutional Trustee.
SECTION 10.4. Withholding. The Institutional Trustee or any Paying
Agent and the Administrators shall comply with all withholding requirements
under United States federal, state and local law. The Institutional Trustee
or any Paying Agent shall request, and each Holder shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the
Holder, and any representations and forms as shall reasonably be requested
by the Institutional Trustee or any Paying Agent to assist it in determining
the extent of, and in fulfilling, its withholding obligations. The
Administrators shall file required forms with applicable jurisdictions and,
unless an exemption from withholding is properly established by a Holder,
shall remit amounts withheld with respect to the Holder to applicable
jurisdictions. To the extent that the Institutional Trustee or any Paying
Agent is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a Distribution to the Holder in the amount of the
withholding. In the event of any claimed overwithholding, Holders shall be
limited to an action against the applicable jurisdiction. If the amount
required to be withheld was not withheld from actual Distributions made, the
Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1. Amendments. (a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities, this Declaration
may only be amended by a written instrument approved and executed by:
(i) the Institutional Trustee,
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee,
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Administrators, the
Administrators, and
(iv) the Holders of a Majority in liquidation amount of the
Common Securities.
(b) Notwithstanding any other provision of this Article XI, no
amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless the Institutional Trustee shall have first
received
(A) an Officers' Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and conforms
to, the terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by,
and conforms to, the terms of this Declaration (including the
terms of the Securities) and that all conditions precedent to
the execution and delivery of such amendment have been
satisfied; or
(ii) if the result of such amendment would be to
(A) cause the Trust to cease to be classified for
purposes of United States federal income taxation as a
grantor trust;
(B) reduce or otherwise adversely affect the powers of
the Institutional Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment
Company Act.
(c) Except as provided in Section 11.1(d), (e) or (g), no
amendment shall be made, and any such purported amendment shall be void and
ineffective, unless the Holders of a Majority in liquidation amount of the
Capital Securities shall have consented to such amendment.
(d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration
may not be amended to (i) change the amount or timing of any Distribution on
the Securities or any redemption or liquidation provisions applicable to the
Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Securities as of a specified date or
(ii) restrict the right of a Holder to institute suit for the enforcement of
any Distributions or other amounts on or after their due date.
(e) Sections 9.1 (b) and 9.1 (c) and this Section 11.1 shall not
be amended without the consent of all of the Holders of the Securities.
(f) The rights of the Holders of the Capital Securities and Common
Securities, as applicable, under Article IV to increase or decrease the
number of, and appoint and remove, Trustees shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the Capital
Securities or Common Securities, as applicable.
(g) This Declaration may be amended by the Institutional Trustee
and the Holder of a Majority in liquidation amount of the Common Securities
without the consent of the Holders of the Capital Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of
this Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor; or
(iv) modify, eliminate or add to any provision of this
Declaration to such extent as may be necessary or desirable,
including, without limitation, to ensure that the Trust will be
classified for United States federal income tax purposes at all
times as a grantor trust and will not be required to register as
an Investment Company under the Investment Company Act (including
without limitation to conform to any change in Rule 3a-5, Rule 3a-
7 or any other applicable rule under the Investment Company Act or
written change in interpretation or application thereof by any
legislative body, court, government agency or regulatory
authority) which amendment does not have a material adverse effect
on the right, preferences or privileges of the Holders of
Securities;
provided, however, that no such modification, elimination or addition
referred to in clauses (i), (ii), (iii) or (iv) shall adversely affect the
powers, preferences or rights or interests of Holders of Capital Securities.
SECTION 11.2. Meetings of the Holders of the Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrators (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class
of Securities are entitled to act under the terms of this Declaration, the
terms of the Securities or the rules of any stock exchange on which the
Capital Securities are listed or admitted for trading, if any. The
Administrators shall call a meeting of the Holders of such class if directed
to do so by the Holders of not less than 10% in liquidation amount of such
class of Securities. Such direction shall be given by delivering to the
Administrators one or more notices in a writing stating that the signing
Holders of the Securities wish to call a meeting and indicating the general
or specific purpose for which the meeting is to be called. Any Holders of
the Securities calling a meeting shall specify in writing the Certificates
held by the Holders of the Securities exercising the right to call a meeting
and only those Securities represented by such Certificates shall be counted
for purposes of determining whether the required percentage set forth in the
second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
the Securities:
(i) notice of any such meeting shall be given to all the
Holders of the Securities having a right to vote thereat at least
7 days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of the
Securities is permitted or required under this Declaration or the
rules of any stock exchange on which the Capital Securities are
listed or admitted for trading, if any, such vote, consent or
approval may be given at a meeting of the Holders of the
Securities. Any action that may be taken at a meeting of the
Holders of the Securities may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by
the Holders of the Securities owning not less than the minimum
amount of Securities that would be necessary to authorize or take
such action at a meeting at which all Holders of the Securities
having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to
the Holders of the Securities entitled to vote who have not
consented in writing. The Administrators may specify that any
written ballot submitted to the Holders of the Securities for the
purpose of taking any action without a meeting shall be returned
to the Trust within the time specified by the Administrators;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of Securities
is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. No proxy shall
be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder of the Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation; each
meeting of the Holders of the Securities shall be conducted by the
Administrators or by such other Person that the Administrators may
designate; and
(iii) unless the Statutory Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Capital Securities are
then listed for trading, if any, otherwise provides, the
Administrators, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any meeting at
which any matter is to be voted on by any Holders of the
Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to
the exercise of any such right to vote; provided, however, that
each meeting shall be conducted in the United States (as that term
is defined in Treasury Regulations S 301.7701-7).
ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 12.1. Representations and Warranties of Institutional Trustee.
The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Institutional Trustee represents and warrants to the
Trust and the Sponsor at the time of the Successor Institutional Trustee's
acceptance of its appointment as Institutional Trustee, that:
(a) the Institutional Trustee is a banking corporation or national
association with trust powers, duly organized, validly existing and in good
standing under the laws of the State of New York or the United States of
America, respectively, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of,
this Declaration;
(b) the Institutional Trustee has a combined capital and surplus
of at least fifty million U.S. dollars ($50,000,000);
(c) the Institutional Trustee is not an affiliate of the Sponsor,
nor does the Institutional Trustee offer or provide credit or credit
enhancement to the Trust;
(d) the execution, delivery and performance by the Institutional
Trustee of this Declaration has been duly authorized by all necessary action
on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and under Delaware law
(excluding any securities laws) constitutes a legal, valid and binding
obligation of the Institutional Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether considered in a proceeding in equity or at
law);
(e) the execution, delivery and performance of this Declaration by
the Institutional Trustee does not conflict with or constitute a breach of
the charter or by-laws of the Institutional Trustee; and
(f) no consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority governing the trust
powers of the Institutional Trustee is required for the execution, delivery
or performance by the Institutional Trustee of this Declaration.
SECTION 12.2. Representations and Warranties of Delaware Trustee. The
Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) if it is not a natural person, the Delaware Trustee is duly
organized, validly existing and in good standing under the laws of the State
of Delaware;
(b) if it is not a natural person, the execution, delivery and
performance by the Delaware Trustee of this Declaration has been duly
authorized by all necessary corporate action on the part of the Delaware
Trustee. This Declaration has been duly executed and delivered by the
Delaware Trustee, and under Delaware law (excluding any securities laws)
constitutes a legal, valid and binding obligation of the Delaware Trustee,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency and other similar laws
affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether considered in a
proceeding in equity or at law);
(c) if it is not a natural person, the execution, delivery and
performance of this Declaration by the Delaware Trustee does not conflict
with or constitute a breach of the charter or by-laws of the Delaware
Trustee;
(d) it has trust power and authority to execute and deliver, and
to carry out and perform its obligations under the terms of, this
Declaration;
(e) no consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority governing the trust
powers of the Delaware Trustee is required for the execution, delivery or
performance by the Delaware Trustee of this Declaration; and
(f) the Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, it is an entity which has
its principal place of business in the State of Delaware and, in either
case, a Person that satisfies for the Trust the requirements of Section 3807
of the Statutory Trust Act.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied (which telecopy shall be followed by notice
delivered or mailed by first class mail) or mailed by first class mail, as
follows:
(a) if given to the Trust, in care of the Administrators at the
Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders of the Securities):
Hallmark Statutory Trust I
c/o Hallmark Financial Services, Inc.
777 Main Street, Suite 1000
Fort Worth, TX 76102
Attention: Mark J. Morrison
Telecopy: 817-348-1815
Telephone: 817-348-1728
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice
of to the Holders of the Securities):
Chase Bank USA, National Association
500 Stanton Christiana Rd., FL3/OPS4
Newark, DE 19713
Attention: Worldwide Securities Services -
Hallmark Statutory Trust I
Telecopy: 302-552-6280
Telephone: 302-552-6279
(c) if given to the Institutional Trustee, at the Institutional
Trustee's mailing address set forth below (or such other address as the
Institutional Trustee may give notice of to the Holders of the Securities):
JPMorgan Chase Bank, National Association
600 Travis Street, 50th Floor
Houston, Texas 77002
Attention: Worldwide Securities Services -
Hallmark Statutory Trust I
Telecopy: 713-216-2101
Telephone: 713-216-4781
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
Hallmark Financial Services, Inc.
777 Main Street, Suite 1000
Fort Worth, TX 76102
Attention: Mark J. Morrison
Telecopy: 817-348-1815
Telephone: 817-348-1728
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in person,
telecopied with receipt confirmed, or mailed by first class mail, postage
prepaid, except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 13.2. Governing Law. This Declaration and the rights and
obligations of the parties hereunder shall be governed by and interpreted
in accordance with the law of the State of Delaware and all rights,
obligations and remedies shall be governed by such laws without regard to
the principles of conflict of laws of the State of Delaware or any other
jurisdiction that would call for the application of the law of any
jurisdiction other than the State of Delaware.
SECTION 13.3. Submission to Jurisdiction.
(a) Each of the parties hereto agrees that any suit, action or
proceeding arising out of or based upon this Declaration, or the
transactions contemplated hereby, may be instituted in any of the courts of
the State of New York located in the Borough of Manhattan, City and State of
New York, and further agrees to submit to the jurisdiction of Delaware, and
to any actions that are instituted in state or Federal court in Wilmington,
Delaware and any competent court in the place of its corporate domicile in
respect of actions brought against it as a defendant. In addition, each such
party irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of
such suit, action or proceeding brought in any such court and irrevocably
waives any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum and irrevocably waives
any right to which it may be entitled on account of its place of corporate
domicile. Each such party hereby irrevocably waives any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Declaration or the transactions contemplated hereby. Each such party agrees
that final judgment in any proceedings brought in such a court shall be
conclusive and binding upon it and may be enforced in any court to the
jurisdiction of which it is subject by a suit upon such judgment.
(b) Each of the Sponsor, the Trustees, the Administrators and the
Holder of the Common Securities irrevocably consents to the service of
process on it in any such suit, action or proceeding by the mailing thereof
by registered or certified mail, postage prepaid, to it at its address given
in or pursuant to Section 13.1 hereof.
(c) To the extent permitted by law, nothing herein contained shall
preclude any party from effecting service of process in any lawful manner or
from bringing any suit, action or proceeding in respect of this Declaration
in any other state, country or place.
SECTION 13.4. Intention of the Parties. It is the intention of the
parties hereto that the Trust be classified for United States federal income
tax purposes as a grantor trust. The provisions of this Declaration shall
be interpreted to further this intention of the parties.
SECTION 13.5. Headings. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
SECTION 13.6. Successors and Assigns. Whenever in this Declaration any
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements
in this Declaration by the Sponsor and the Trustees shall bind and inure to
the benefit of their respective successors and assigns, whether or not so
expressed.
SECTION 13.7. Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or
the application of such provision to persons or circumstances other than
those to which it is held invalid, shall not be affected thereby.
SECTION 13.8. Counterparts. This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees and Administrators to
any of such counterpart signature pages. All of such counterpart signature
pages shall be read as though one, and they shall have the same force and
effect as though all of the signers had signed a single signature page.
* * *
IN WITNESS WHEREOF, the undersigned have caused this Declaration to be
duly executed as of the day and year first above written.
CHASE BANK USA,
NATIONAL ASSOCIATION,
as Delaware Trustee
By:________________________________
Name:______________________________
Title:_____________________________
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Institutional Trustee
By:________________________________
Name:______________________________
Title:_____________________________
Hallmark Financial Services, Inc.,
as Sponsor
By:________________________________
Name:______________________________
Title:_____________________________
By:________________________________
Administrator
By:________________________________
Administrator
ANNEX I
TERMS OF
CAPITAL SECURITIES AND
COMMON SECURITIES
Pursuant to Section 6.1 of the Amended and Restated Declaration
of Trust, dated as of June 21, 2005 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities and the
Common Securities are set out below (each capitalized term used but not
defined herein has the meaning set forth in the Declaration):
1. Designation and Number.
(a) Capital Securities. 30,000 Capital Securities of Hallmark Statutory
Trust I (the "Trust"), with an aggregate stated liquidation amount with
respect to the assets of the Trust of Thirty Million Dollars ($30,000,000)
and a stated liquidation amount with respect to the assets of the Trust of
$1,000 per Capital Security (the "Capital Securities"). The Capital Security
Certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom
or practice or to conform to the rules of any stock exchange on which the
Capital Securities are listed, if any.
(b) Common Securities. 928 Common Securities of the Trust (the "Common
Securities") will be evidenced by Common Security Certificates substantially
in the form of Exhibit A-2 to the Declaration, with such changes and
additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice. In the absence of an Event of Default, the Common
Securities will have an aggregate stated liquidation amount with respect to
the assets of the Trust of Nine Hundred Twenty-Eight Thousand Dollars
($928,000) and a stated liquidation amount with respect to the assets of the
Trust of $1,000 per Common Security.
2. Distributions. (a) Distributions payable on each Security will
be payable at a fixed rate of 7.725% (the "Fixed Rate") per annum
from the date hereof until June 15, 2015 (the "Fixed Rate Period") and
thereafter at a variable per annum rate of interest, reset quarterly,
equal to LIBOR, as determined on the LIBOR Determination Date for
such Distribution Period, plus 3.25% (the "Variable Rate") of the stated
liquidation amount of $1,000 per Security (provided, however, that the
Variable Rate for any Distribution Period may not exceed the highest rate
permitted by New York law, as the same may be modified by United States law
of general applicability). The Coupon Rate (defined to include the Fixed
Rate and Variable Rate, as applicable, shall equal the rate of interest
payable on the Debentures to be held by the Institutional Trustee. Except as
set forth below in respect of an Extension Period, Distributions in arrears
for more than one quarterly period will bear interest thereon compounded
quarterly at the applicable Coupon Rate for each such quarterly period (to
the extent permitted by applicable law). The term "Distributions" as used
herein includes cash distributions, any such compounded distributions and
any Additional Interest payable on the Debentures unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect
of the Debentures held by the Institutional Trustee and to the extent the
Institutional Trustee has funds legally available in the Property Account
therefor. During the Fixed Rate Period, the amount of Distributions payable
for any Distribution Period will be computed for any full quarterly
Distribution Period on the basis of a 360-day year of twelve 30-day months
and the amount payable for any partial period shall be computed on the basis
of the number of days elapsed in a 360-day year of twelve 30-day months.
Upon expiration of the Fixed Rate Period, Distributions will be computed on
the basis of a 360-day year and the actual number of days elapsed in the
relevant Distribution Period; provided, however, that upon the occurrence of
a Special Event Redemption pursuant to paragraph 4(a) below the amounts
payable pursuant to this Declaration shall be calculated as set forth in the
definition of Special Redemption Price.
The term "Distribution Period," as used herein, means (i) in the case
of the first Distribution Period, the period from, and including, the date
of original issuance of the Securities to, but excluding, the initial
Distribution Payment Date and (ii) thereafter, from, and including, the
first day following the end of the preceding Distribution Period to, but
excluding, the applicable Distribution Payment Date or, in the case of the
last Distribution Period, the related date of redemption.
(b) Upon expiration of the Fixed Rate Period, LIBOR shall be determined
by the Calculation Agent for each Distribution Period in accordance with the
following provisions:
(1) On the second LIBOR Business Day (provided, that on such
day commercial banks are open for business (including dealings in
foreign currency deposits) in London (a "LIBOR Banking Day"), and
otherwise the next preceding LIBOR Business Day that is also a
LIBOR Banking Day) prior to March 15, June 15, September 15 and
December 15, as the case may be, (except, with respect to the
first Distribution Period, upon expiration of the Fixed Rate
Period, on June 15, 2015), (each such day, a "LIBOR Determination
Date"), LIBOR shall equal the rate, as obtained by the Calculation
Agent for three-month U.S. Dollar deposits in Europe, which
appears on Telerate Page 3750 (as defined in the International
Swaps and Derivatives Association, Inc. 2000 Interest Rate and
Currency Exchange Definitions) or such other page as may replace
such Telerate Page 3750, as of 11:00 a.m. (London time) on such
LIBOR Determination Date, as reported by Bloomberg Financial
Markets Commodities News or any successor service. "LIBOR Business
Day" means any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in New York, New York or
Wilmington, Delaware are authorized or obligated by law or
executive order to be closed. If such rate is superseded on
Telerate Page 3750 by a corrected rate before 12:00 noon (London
time) on the same LIBOR Determination Date, the corrected rate as
so substituted will be the applicable LIBOR for that LIBOR
Determination Date.
(2) If, on any LIBOR Determination Date, such rate does not
appear on Telerate Page 3750 as reported by Bloomberg Financial
Markets Commodities News or such other page as may replace such
Telerate Page 3750, the Calculation Agent shall determine the
arithmetic mean of the offered quotations of the Reference Banks
(as defined below) to leading banks in the London interbank market
for three-month U.S. Dollar deposits in Europe (in an amount
determined by the Calculation Agent) by reference to requests for
quotations as of approximately 11:00 a.m. (London time) on the
LIBOR Determination Date made by the Calculation Agent to the
Reference Banks. If, on any LIBOR Determination Date, at least two
of the Reference Banks provide such quotations, LIBOR shall equal
the arithmetic mean of such quotations. If, on any LIBOR
Determination Date, only one or none of the Reference Banks
provide such a quotation, LIBOR shall be deemed to be the
arithmetic mean of the offered quotations that at least two
leading banks in the City of New York (as selected by the
Calculation Agent) are quoting on the relevant LIBOR Determination
Date for three-month U.S. Dollar deposits in Europe at
approximately 11:00 a.m. (London time) (in an amount determined by
the Calculation Agent). As used herein, "Reference Banks" means
four major banks in the London interbank market selected by the
Calculation Agent.
(3) If the Calculation Agent is required but is unable to
determine a rate in accordance with at least one of the procedures
provided above, LIBOR for such Distribution Period shall be LIBOR
in effect for the immediately preceding Distribution Period.
(c) All percentages resulting from any calculations on the Securities
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from such
calculation will be rounded to the nearest cent (with one-half cent being
rounded upward).
(d) On each LIBOR Determination Date, the Calculation Agent shall
notify, in writing, the Sponsor and the Paying Agent of the applicable
Coupon Rate in effect for the related Distribution Period. The Calculation
Agent shall, upon the request of the Holder of any Securities, provide the
Coupon Rate then in effect. All calculations made by the Calculation Agent
in the absence of manifest error shall be conclusive for all purposes and
binding on the Sponsor and the Holders of the Securities. The Paying Agent
shall be entitled to rely on information received from the Calculation Agent
or the Sponsor as to the Coupon Rate. The Sponsor shall, from time to time,
provide any necessary information to the Paying Agent relating to any
original issue discount and interest on the Securities that is included in
any payment and reportable for taxable income calculation purposes.
(e) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance, and will be payable, subject to
extension of Distribution Periods as described herein, quarterly in arrears
on March 15, June 15, September 15 and December 15 of each year, commencing
September 15, 2005 (each, a "Distribution Payment Date"). Subject to prior
submission of Notice (as defined in the Indenture), the Debenture Issuer has
the right under the Indenture to defer payments of interest on the
Debentures by extending the interest payment period for up to 20 consecutive
quarterly periods (each such extended interest payment period together with
all previous and future consecutive extensions thereof, is referred to
herein as an "Extension Period") at any time and from time to time on the
Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable (except any Additional
Interest that may be due and payable). During any Extension Period, interest
will continue to accrue on the Debentures, and interest on such accrued
interest (such accrued interest and interest thereon referred to herein as
"Deferred Interest") will accrue at an annual rate equal to the Coupon Rate
in effect for each such Extension Period, compounded quarterly from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by law. No Extension Period may end on a
date other than a Distribution Payment Date. At the end of any such
Extension Period, the Debenture Issuer shall pay all Deferred Interest then
accrued and unpaid on the Debentures; provided, however, that no Extension
Period may extend beyond the Maturity Date any Redemption Date or Special
Redemption Date and provided, further, that, during any such Extension
Period, the Debenture Issuer may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Debenture Issuer's capital stock, (ii)
make any payment due on or repay, repurchase or redeem any debt securities
of the Debenture Issuer that rank pari passu in all respects with or junior
in interest to the Debentures or (iii) make any payment under any guarantees
of the Debenture Issuer that rank in all respects pari passu with or junior
in interest to the Guarantee (other than (a) repurchases, redemptions or
other acquisitions of shares of capital stock of the Debenture Issuer (A) in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, (B) in connection with a dividend reinvestment or
stockholder stock purchase plan or (C) in connection with the issuance of
capital stock of the Debenture Issuer (or securities convertible into or
exercisable for such capital stock), as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of any exchange, reclassification, combination or conversion of any
class or series of the Debenture Issuer's capital stock (or any capital
stock of a subsidiary of the Debenture Issuer) for any class or series of
the Debenture Issuer's capital stock or of any class or series of the
Debenture Issuer's indebtedness for any class or series of the Debenture
Issuer's capital stock, (c) the purchase of fractional interests in shares
of the Debenture Issuer's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other
property under any stockholder's rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is
the same stock as that on which the dividend is being paid or ranks pari
passu with or junior to such stock). Prior to the termination of any
Extension Period, the Debenture Issuer may further extend such period,
provided, that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest, the
Debenture Issuer may commence a new Extension Period, subject to the
requirements herein and in the Indenture. No interest or Deferred Interest
(except any Additional Interest that may be due and payable) shall be due
and payable during an Extension Period, except at the end thereof, but
Deferred Interest shall accrue upon each installment of interest that would
otherwise have been due and payable during such Extension Period until such
installment is paid. If Distributions are deferred, the Distributions due
shall be paid on the date that the related Extension Period terminates, to
Holders of the Securities as they appear on the books and records of the
Trust on the record date immediately preceding such date. Distributions on
the Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust has funds legally available
for the payment of such distributions in the Property Account of the Trust.
The Trust's funds available for distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer.
The payment of Distributions out of moneys held by the Trust is guaranteed
by the Guarantor pursuant to the Guarantee.
(f) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Registrar on the
relevant record dates. The relevant record dates shall be selected by the
Administrators, which dates shall be 15 days before the relevant payment
dates. Distributions payable on any Securities that are not punctually paid
on any Distribution Payment Date, as a result of the Debenture Issuer having
failed to make a payment under the Debentures, as the case may be, when due
(taking into account any Extension Period), will cease to be payable to the
Person in whose name such Securities are registered on the relevant record
date, and such defaulted Distribution will instead be payable to the Person
in whose name such Securities are registered on the special record date or
other specified date determined in accordance with the Indenture.
(g) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed pro rata (as defined herein) among the Holders of the
Securities.
(h) If any Distribution Payment Date, other than any date of
redemption, falls on a day that is not a Business Day, then Distributions
payable will be paid on, and such Distribution Payment Date will be moved
to, the next succeeding Business Day, and additional Distributions will
accrue for each day that such payment is delayed as a result thereof.
3. Liquidation Distribution Upon Dissolution. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination
of the Trust (each, a "Liquidation") other than in connection with a
redemption of the Debentures, the Holders of the Securities will be entitled
to receive out of the assets of the Trust available for distribution to
Holders of the Securities, after satisfaction of liabilities to creditors of
the Trust (to the extent not satisfied by the Debenture Issuer), an amount
in cash equal to the aggregate of the stated liquidation amount of $1,000
per Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless in
connection with such Liquidation, the Debentures in an aggregate principal
amount equal to the aggregate liquidation amount of such Securities, with an
interest rate equal to the Coupon Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, and
having the same record date as, such Securities, after paying or making
reasonable provision to pay all claims and obligations of the Trust in
accordance with Section 3808(e) of the Statutory Trust Act, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities.
The Sponsor, as the Holder of all of the Common Securities, has the
right at any time upon receipt by the Debenture Issuer and the Institutional
Trustee for the benefit of the Trust of an opinion of nationally recognized
tax counsel that Holders will not recognize any gain or loss for United
States Federal income tax purposes as a result of the distribution of
Debentures, to dissolve the Trust (including without limitation upon the
occurrence of a Tax Event or an Investment Company Event) after satisfaction
of liabilities to creditors of the Trust, cause the Debentures to be
distributed to the Holders of the Securities on a Pro Rata basis in
accordance with the aggregate liquidation amount thereof.
The Trust shall dissolve on the first to occur of (i) June 15, 2040,
the expiration of the term of the Trust, (ii) a Bankruptcy Event with
respect to the Sponsor, the Trust or the Debenture Issuer, (iii) (other than
in connection with a merger, consolidation or similar transaction not
prohibited by the Indenture, this Declaration or the Guarantee, as the case
may be) the filing of a certificate of dissolution or its equivalent with
respect to the Sponsor or upon the revocation of the charter of the Sponsor
and the expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) the distribution to the Holders of the
Securities of the Debentures, upon exercise of the right of the Holder of
all of the outstanding Common Securities to dissolve the Trust as described
above, (v) the entry of a decree of a judicial dissolution of the Sponsor or
the Trust, or (vi) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the Securities. As soon
as practicable after the dissolution of the Trust and upon completion of the
winding up of the Trust, the Trust shall terminate upon the filing of a
certificate of cancellation with the Secretary of State of the State of
Delaware.
If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in the immediately preceding paragraph, the Trust shall be
liquidated by the Institutional Trustee of the Trust as expeditiously as
such Trustee determines to be possible by distributing, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, to
the Holders of the Securities, the Debentures on a Pro Rata basis to the
extent not satisfied by the Debenture Issuer, unless such distribution is
determined by the Institutional Trustee not to be practical, in which event
such Holders will be entitled to receive on a Pro Rata basis, out of the
assets of the Trust available for distribution to the Holders, after
satisfaction of liabilities to creditors of the Trust to the extent not
satisfied by the Debenture Issuer, an amount in cash equal to the
Liquidation Distribution. An early Liquidation of the Trust pursuant to
clause (iv) of the immediately preceding paragraph shall occur if the
Institutional Trustee determines that such Liquidation is possible by
distributing, after satisfaction of liabilities to creditors of Trust, to
the Holders of the Securities on a Pro Rata basis, the Debentures, and such
distribution occurs.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on such Capital Securities shall be paid to the
Holders of the Securities on a Pro Rata basis, except that if an Event of
Default has occurred and is continuing, the Capital Securities shall have a
preference over the Common Securities with regard to such distributions.
Upon any such Liquidation of the Trust involving a distribution of the
Debentures, if at the time of such Liquidation, the Capital Securities were
rated by at least one nationally-recognized statistical rating organization,
the Debenture Issuer will use its reasonable best efforts to obtain from at
least one such or other rating organization a rating for the Debentures.
After the date for any distribution of the Debentures upon dissolution
of the Trust, (i) the Securities of the Trust will be deemed to be no longer
outstanding, (ii) any certificates representing the Capital Securities will
be deemed to represent undivided beneficial interests in such of the
Debentures as have an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the
distribution rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates
are presented to the Debenture Issuer or its agent for transfer or
reissuance (and until such certificates are so surrendered, no payments of
interest or principal shall be made to Holders of Securities in respect of
any payments due and payable under the Debentures) and (iii) all rights of
Holders of Securities under the Capital Securities or the Common Securities,
as applicable, shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.
4. Redemption and Distribution.
(a) The Debentures will mature on June 15, 2035 ("Maturity Date") for
an amount equal to 100% of the principal amount thereof plus unpaid interest
accrued thereon to such date, if any ("Maturity Redemption Price"). The
Debentures may be redeemed by the Debenture Issuer, in whole or in part, on
any March 15, June 15, September 15 or December 15 on or after June 15, 2010
at the Redemption Price, upon not less than 30 nor more than 60 days' notice
to Holders of such Debentures. In addition, upon the occurrence and
continuation of a Tax Event or an Investment Company Event, the Debentures
may be redeemed by the Debenture Issuer in whole but not in part, at any
time within 90 days following the occurrence of such Tax Event or Investment
Company Event, as the case may be (the "Special Redemption Date") at the
Special Redemption Price, upon not less than 30 nor more than 60 days'
notice to Holders of the Debentures so long as such Tax Event or Investment
Company Event, as the case may be, is continuing. Additional interest may
also be payable by the Debenture Issuer in connection with such Tax Event or
Investment Company Event as specified in Section 10.02 of the Indenture.
Any such interest received by the Trust will be distributed promptly to
Holders of the Securities on a Pro Rata basis.
"Tax Event" means the receipt by the Debenture Issuer and the Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
change) in the laws or any regulations thereunder of the United States or
any political subdivision or taxing authority thereof or therein, or as
a result of any official administrative pronouncement (including any private
letter ruling, technical advice memorandum, regulatory procedure, notice or
announcement) (an "Administrative Action") or judicial decision interpreting
or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection
with a proceeding involving the Debenture Issuer or the Trust and whether or
not subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in
each case on or after the date of original issuance of the Debentures, there
is more than an insubstantial risk that: (i) the Trust is, or will be within
90 days of the date of such opinion, subject to United States federal income
tax with respect to income received or accrued on the Debentures; (ii)
interest payable by the Debenture Issuer on the Debentures is not, or within
90 days of the date of such opinion, will not be, deductible by the
Debenture Issuer, in whole or in part, for United States federal income tax
purposes; or (iii) the Trust is, or will be within 90 days of the date of
such opinion, subject to more than a de minimis amount of other taxes
(including withholding taxes), duties, assessments or other governmental
charges.
"Investment Company Event" means the receipt by the Debenture Issuer
and the Trust of an opinion of counsel experienced in such matters to the
effect that, as a result of a change in law or regulation or written change
in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, there is more than
an insubstantial risk that the Trust is or, within 90 days of the date of
such opinion will be, considered an "investment company" that is required to
be registered under the Investment Company Act, which change or prospective
change becomes effective or would become effective, as the case may be, on
or after the date of the original issuance of the Debentures.
"Redemption Date" means the date fixed for the redemption of Capital
Securities, which shall be any March 15, June 15, September 15 or December
15 on or after June 15, 2010.
"Redemption Price" means 100% of the principal amount of the Debentures
being redeemed plus accrued and unpaid interest on such Debentures to the
Redemption Date or, in the case of a redemption due to the occurrence of a
Special Event, to the Special Redemption Date if such Special Redemption
Date is on or after June 15, 2010.
"Special Event" means either a Tax Event or an Investment Company
Event.
"Special Redemption Price" means (1) if the Special Redemption Date is
before June 15, 2004, 107.5% of the principal amount to be redeemed plus any
accrued and unpaid interest thereon to the date of such redemption and (2)
if the Special Redemption Date is on or after June 15, 2010, the Redemption
Price for such Special Redemption Date.
(b) Upon the repayment in full at maturity or redemption in whole or in
part of the Debentures (other than following the distribution of the
Debentures to the Holders of the Securities), the proceeds from such
repayment or payment shall concurrently be applied to redeem Pro Rata at the
applicable Maturity Redemption Price, Redemption Price, or Special
Redemption Price for the Debentures, as the case may be, Securities having
an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so repaid or redeemed; provided, however, that holders of
such Securities shall be given not less than 30 nor more than 60 days' prior
written notice of such redemption (other than at the scheduled maturity of
the Debentures on the Maturity Date).
(c) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Capital Securities will be redeemed Pro Rata
and the Capital Securities to be redeemed will be as described in Section
4(e)(ii) below.
(d) The Trust may not redeem fewer than all the outstanding Capital
Securities unless all accrued and unpaid Distributions have been paid on all
Capital Securities for all quarterly Distribution periods terminating on or
before the date of redemption.
(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution
of the Debentures in exchange for, the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder of Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption,
will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange
and the dates on which notices are given pursuant to this Section
4(e)(i), a Redemption/Distribution Notice shall be deemed to be
given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of such Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders
of such Securities at the address of each such Holder appearing on
the books and records of the Registrar. No defect in the
Redemption/Distribution Notice or in the mailing thereof with
respect to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall
be redeemed Pro Rata from each Holder of Capital Securities.
(iii) If the Securities are to be redeemed and the Trust
gives a Redemption/Distribution Notice, which notice may only be
issued if the Debentures are redeemed as set out in this Section 4
(which notice will be irrevocable), then, provided, that the
Institutional Trustee has a sufficient amount of cash in
connection with the related redemption or maturity of the
Debentures, the Institutional Trustee will pay the price payable
upon redemption of the Securities to the Holders of such
Securities by check mailed to the address of each such Holder
appearing on the books and records of the Trust on the redemption
date. If a Redemption/Distribution Notice shall have been given
and funds deposited as required, then immediately prior to the
close of business on the date of such deposit, Distributions will
cease to accrue on the Securities so called for redemption and all
rights of Holders of such Securities so called for redemption will
cease, except the right of the Holders of such Securities to
receive the applicable price specified in Section 4(a). If any
date of redemption of Securities is not a Business Day, then
payment of any such price payable on such date will be made on the
next succeeding day that is a Business Day except that, if such
Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any
Securities is improperly withheld or refused and not paid either
by the Trust or by the Debenture Issuer as guarantor pursuant to
the Guarantee, Distributions on such Securities will continue to
accrue at the then applicable rate from the original redemption
date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for
purposes of calculating the price payable upon redemption of the
Capital Securities. The Trust shall not be required to (i) issue,
register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before any selection
for redemption of the Capital Securities and ending at the close
of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all Holders of the
Capital Securities to be so redeemed or (ii) register the transfer
of or exchange any Capital Securities so selected for redemption,
in whole or in part, except for the unredeemed portion of any
Capital Securities being redeemed in part.
(iv) Redemption/Distribution Notices shall be sent by the
Trust (A) in respect of the Capital Securities, to the Holders
thereof, and (B) in respect of the Common Securities, to the
Holder thereof.
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), and
provided, that the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any
of its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Capital Securities. (a) Except as provided under
Sections 5(b) and 7 and as otherwise required by law and the Declaration,
the Holders of the Capital Securities will have no voting rights. The
Administrators are required to call a meeting of the Holders of the
Capital Securities if directed to do so by Holders of not less than 10% in
liquidation amount of the Capital Securities.
(b) Subject to the requirements of obtaining a tax opinion by the
Institutional Trustee in certain circumstances set forth in the last
sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Capital Securities, voting separately as a class, have the right to
direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any trust or
power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee, as holder of the
Debentures, to (i) exercise the remedies available under the Indenture as
the holder of the Debentures, (ii) waive any past default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and
payable or (iv) consent on behalf of all the Holders of the Capital
Securities to any amendment, modification or termination of the Indenture or
the Debentures where such consent shall be required; provided, however,
that, where a consent or action under the Indenture would require the
consent or act of the holders of greater than a simple majority in principal
amount of Debentures (a "Super Majority") affected thereby, the
Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of not less than the proportion in
liquidation amount of the Capital Securities outstanding which the relevant
Super Majority represents of the aggregate principal amount of the
Debentures outstanding. If the Institutional Trustee fails to enforce its
rights under the Debentures after the Holders of a Majority in liquidation
amount of such Capital Securities have so directed the Institutional
Trustee, to the fullest extent permitted by law, a Holder of the Capital
Securities may institute a legal proceeding directly against the Debenture
Issuer to enforce the Institutional Trustee's rights under the Debentures
without first instituting any legal proceeding against the Institutional
Trustee or any other person or entity. Notwithstanding the foregoing, if an
Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or
premium, if any, on or principal of the Debentures on the date the interest
premium, if any, or principal is payable (or in the case of redemption, the
redemption date), then a Holder of record of the Capital Securities may
directly institute a proceeding for enforcement of payment, on or after the
respective due dates specified in the Debentures, to such Holder directly of
the principal of or premium, if any, or interest on the Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such Holder. The Institutional Trustee shall notify
all Holders of the Capital Securities of any default actually known to the
Institutional Trustee with respect to the Debentures unless (x) such default
has been cured prior to the giving of such notice or (y) the Institutional
Trustee determines in good faith that the withholding of such notice is in
the interest of the Holders of such Capital Securities, except where the
default relates to the payment of principal of or premium, if any, or
interest on any of the Debentures. Such notice shall state that such
Indenture Event of Default also constitutes an Event of Default hereunder.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of the
actions described in clause (i), (ii), (iii) or (iv) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect
that, as a result of such action, the Trust will not be classified as other
than a grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of
the Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the written direction of the Holders of the Securities
with respect to such amendment, modification or termination and shall vote
with respect to such amendment, modification or termination as directed by a
Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would
require the consent of a Super Majority, the Institutional Trustee may only
give such consent at the written direction of the Holders of not less than
the proportion in liquidation amount of such Securities outstanding which
the relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding. The Institutional Trustee shall not take any
such action in accordance with the written directions of the Holders of the
Securities unless the Institutional Trustee has obtained an opinion of tax
counsel to the effect that, as a result of such action, the Trust will not
be classified as other than a grantor trust for United States federal income
tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of
the corresponding Event of Default hereunder. Any required approval or
direction of Holders of the Capital Securities may be given at a separate
meeting of Holders of the Capital Securities convened for such purpose, at a
meeting of all of the Holders of the Securities in the Trust or pursuant to
written consent. The Institutional Trustee will cause a notice of any
meeting at which Holders of the Capital Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of the Capital Securities. Each
such notice will include a statement setting forth the following information
(i) the date of such meeting or the date by which such action is to be
taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon
which written consent is sought and (iii) instructions for the delivery of
proxies or consents. No vote or consent of the Holders of the Capital
Securities will be required for the Trust to redeem and cancel Capital
Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not entitle the Holder thereof to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Capital
Securities were not outstanding.
In no event will Holders of the Capital Securities have the right to
vote to appoint, remove or replace the Administrators, which voting rights
are vested exclusively in the Sponsor as the Holder of all of the Common
Securities of the Trust. Under certain circumstances as more fully described
in the Declaration, Holders of Capital Securities have the right to vote to
appoint, remove or replace the Institutional Trustee and the Delaware
Trustee.
6. Voting Rights - Common Securities. (a) Except as provided under
Sections 6(b), 6(c) and 7 and as otherwise required by law and the
Declaration, the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article IV of the Declaration, to vote to appoint, remove or replace
any Administrators.
(c) Subject to Section 6.7 of the Declaration and only after each Event
of Default (if any) with respect to the Capital Securities has been cured,
waived or otherwise eliminated and subject to the requirements of the second
to last sentence of this paragraph, the Holders of a Majority in liquidation
amount of the Common Securities, voting separately as a class, may direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including
(i) directing the time, method, place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii)
waiving any past default and its consequences that are waivable under the
Indenture, or (iii) exercising any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable, provided,
however, that, where a consent or action under the Indenture would require a
Super Majority, the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of not less than the
proportion in liquidation amount of the Common Securities which the relevant
Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Notwithstanding this Section 6(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a
vote or consent of the Holders of the Capital Securities. Other than with
respect to directing the time, method and place of conducting any proceeding
for any remedy available to the Institutional Trustee or the Debenture
Trustee as set forth above, the Institutional Trustee shall not take any
action described in clause (i), (ii) or (iii) above, unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not
be classified as other than a grantor trust on account of such action. If
the Institutional Trustee fails to enforce its rights under the Declaration,
to the fullest extent permitted by law any Holder of the Common Securities
may institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any
other Person.
Any approval or direction of Holders of the Common Securities may be
given at a separate meeting of Holders of the Common Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the
Trust or pursuant to written consent. The Administrators will cause a notice
of any meeting at which Holders of the Common Securities are entitled to
vote, or of any matter upon which action by written consent of such Holders
is to be taken, to be mailed to each Holder of the Common Securities. Each
such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description
of any resolution proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which written consent is
sought and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms
of the Securities.
7. Amendments to Declaration and Indenture. (a) In addition to
any requirements under Section 11.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Trustees otherwise
propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Securities, whether by
way of amendment to the Declaration or otherwise, or (ii) the Liquidation
of the Trust, other than as described in Section 7.1 of the Declaration,
then the Holders of outstanding Securities, voting together as a single
class, will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval
of the Holders of not less than a Majority in liquidation amount of the
Securities affected thereby; provided, however, if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Capital Securities or only the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.
(a) In the event the consent of the Institutional Trustee as the holder
of the Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders
of the Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification, or
termination as directed by a Majority in liquidation amount of the
Securities voting together as a single class; provided, however, that where
a consent under the Indenture would require a Super Majority, the
Institutional Trustee may only give such consent at the written direction of
the Holders of not less than the proportion in liquidation amount of the
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
(b) Notwithstanding the foregoing, no amendment or modification may be
made to the Declaration if such amendment or modification would (i) cause
the Trust to be classified for purposes of United States federal income
taxation as other than a grantor trust, (ii) reduce or otherwise adversely
affect the powers of the Institutional Trustee or (iii) cause the Trust to
be deemed an "investment company" which is required to be registered under
the Investment Company Act.
(c) Notwithstanding any provision of the Declaration, the right of any
Holder of the Capital Securities to receive payment of Distributions and
other payments upon redemption, Liquidation or otherwise, on or after their
respective due dates, or to institute a suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder. For the protection and enforcement of
the foregoing provision, each and every Holder of the Capital Securities
shall be entitled to such relief as can be given either at law or equity.
8. Pro Rata. A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean pro rata
to each Holder of the Securities according to the aggregate liquidation
amount of the Securities held by the relevant Holder in relation to the
aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing,
in which case any funds available to make such payment shall be paid first
to each Holder of the Capital Securities Pro Rata according to the aggregate
liquidation amount of the Capital Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Capital Securities
outstanding, and only after satisfaction of all amounts owed to the Holders
of the Capital Securities, to each Holder of the Common Securities Pro Rata
according to the aggregate liquidation amount of the Common Securities held
by the relevant Holder relative to the aggregate liquidation amount of all
Common Securities outstanding.
9. Ranking. The Capital Securities rank pari passu with, and payment
thereon shall be made Pro Rata with, the Common Securities except that,
where an Event of Default has occurred and is continuing, the rights of
Holders of the Common Securities to receive payment of Distributions and
payments upon Liquidation, redemption and otherwise are subordinated to the
rights of the Holders of the Capital Securities with the result that no
payment of any Distribution on, or any amount payable upon the redemption
of, any Common Security, and no payment to the Holder of any Common Security
on account of the Liquidation of the Trust, shall be made unless payment in
full in cash of (i) all accrued and unpaid Distributions on all outstanding
Capital Securities for all Distribution Periods terminating on or prior
thereto, (ii) all amounts payable upon Capital Securities then subject to
redemption, and (iii) all amounts payable upon Capital Securities in the
event of the Liquidation of the Trust, in each case, shall have been made or
provided for, and all funds immediately available to the Institutional
Trustee shall first be applied to the payment in full in cash of the amounts
specified in clause (i), (ii) and (iii) above that are then due and payable.
10. Acceptance of Guarantee and Indenture. Each Holder of the Capital
Securities and the Common Securities, by the acceptance of such Securities,
agrees to the provisions of the Guarantee, including the subordination
provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights. The Holders of the Securities shall have no,
and the issuance of the Securities is not subject to, preemptive or similar
rights to subscribe for any additional securities.
12. Miscellaneous. These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Guarantee, and the
Indenture to a Holder without charge on written request to the Sponsor at
its principal place of business.
EXHIBIT A-1
FORM OF CAPITAL SECURITIES CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY
PRIOR TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR SUCH SHORTER
PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT) AFTER
THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE LAST DATE
ON WHICH THE TRUST OR ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE
SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF THIS SECURITY OR SUCH
INTEREST OR PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (ii) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW,
ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (a)(1), (2), (3), (7) OR (8) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES TO NON-
U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
DEBENTURE ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (C) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF
TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE
TRUST. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS
AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS
SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT 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 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 EXEMPTION
RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION
OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE 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
EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION
3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A
TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR
PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT
PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT
IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY
BE REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF
$1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY 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 PURPORTED TRANSFEREE SHALL BE
DEEMED NOT TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH
PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS
SECURITY.
Certificate Number [P-001] Number of Capital Securities 30,000
Certificate Evidencing Capital Securities
of
Hallmark Statutory Trust I
(liquidation amount $1,000 per Capital Security)
Hallmark Statutory Trust I, a statutory trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Holder") is the registered owner
of 30,000 capital securities of the Trust representing undivided beneficial
interests in the assets of the Trust (liquidation amount $1,000 per Capital
Security) (the "Capital Securities"). Subject to the Declaration (as defined
below), the Capital Securities are transferable on the books and records of
the Trust, in person or by a duly authorized attorney, upon surrender of
this Certificate duly endorsed and in proper form for transfer. The Capital
Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions
of the Capital Securities shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust,
dated as of June 21, 2005 (the "Declaration"), among Mark Schwartz and Mark
Morrison, as Administrators, Chase Bank USA, National Association, as
Delaware Trustee, JPMorgan Chase Bank, National Association, as
Institutional Trustee, Hallmark Financial Services, Inc., as Sponsor, and
the holders from time to time of undivided beneficial interests in the
assets of the Trust, including the designation of the terms of the Capital
Securities as set forth in Annex I to the Declaration, as the same may be
amended from time to time. Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled
to the benefits of the Guarantee to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Guarantee, and the Indenture to
the Holder without charge upon written request to the Sponsor at its
principal place of business.
By acceptance of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness
and the Capital Securities as evidence of beneficial ownership in the
Debentures.
This Certificate and the Capital Securities evidenced hereby are
governed by, and shall be construed in accordance with, the laws of the
State of Delaware, without regard to principles of conflict of laws.
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
Hallmark Statutory Trust I
By: ______________________
Name:_____________________
Title: Administrator
Dated: ___________________
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-
mentioned Declaration.
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely
as the Institutional Trustee
By: ______________________
Authorized Officer
Dated ____________________
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be payable at a
fixed rate of 7.725% (the "Fixed Rate") per annum from _______ until June
15, 2015 (the "Fixed Rate Period") and thereafter at a variable per annum
rate of interest, reset quarterly, equal to LIBOR (as defined in the
Declaration) plus 3.25% (the "Variable Rate"), of the stated liquidation
amount of $1,000 per Capital Security (provided, however, that the Coupon
Rate, defined to include the Fixed Rate and Variable Rate, as applicable,
for any Distribution Period, may not exceed the highest rate permitted by
New York law, as the same may be modified by United States law of general
applicability), such Coupon Rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarterly period will bear interest thereon compounded
quarterly at the then applicable Coupon Rate for each such quarterly period
(to the extent permitted by applicable law). The term "Distributions" as
used herein includes cash distributions, any such compounded distributions
and any Additional Interest payable on the Debentures unless otherwise
stated. A Distribution is payable only to the extent that payments are made
in respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has funds legally available in the Property
Account therefor. During the Fixed Rate Period, the amount of Distributions
payable for any period will be computed for any full quarterly Distribution
Period on the basis of a 360-day year of twelve 30-day months and the amount
payable for any partial period shall be computed on the basis of the number
of days elapsed in a 360-day year of twelve 30-day months. Upon expiration
of the Fixed Rate Period, Distributions will be computed on the basis of a
360-day year and the actual number of days elapsed in the relevant
Distribution Period.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears on March 15, June 15,
September 15 and December 15 of each year, commencing on September 15, 2005
(each, a "Distribution Payment Date"). Upon submission of Notice, the
Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period for up
to 20 consecutive quarterly periods (each such extended interest payment
period together with all previous and future consecutive extensions thereof,
is referred to herein as an "Extension Period") at any time and from time to
time on the Debentures, subject to the conditions described below, and in
the Declaration and the Indenture, during which Extension Period no interest
shall be due and payable (except any Additional Interest that may be due and
payable). During any Extension Period, interest will continue to accrue on
the Debentures, and interest on such accrued interest (such accrued interest
and interest thereon referred to herein as "Deferred Interest") will accrue
at an annual rate equal to the Coupon Rate in effect for each such Extension
Period, compounded quarterly from the date such Deferred Interest would have
been payable were it not for the Extension Period, to the extent permitted
by law. No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period, the Debenture Issuer
shall pay all Deferred Interest then accrued and unpaid on the Debentures;
provided, however, that no Extension Period may extend beyond the Maturity
Date, any Redemption Date or Special Redemption Date. Prior to the
termination of any Extension Period, the Debenture Issuer may further extend
such Extension Period, provided, that such period together with all such
previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all Deferred
Interest, the Debenture Issuer may commence a new Extension Period, subject
to the foregoing requirements. No interest or Deferred Interest (except any
Additional Amounts that may be due and payable) shall be due and payable
during an Extension Period, except at the end thereof, but Deferred Interest
shall accrue upon each installment of interest that would otherwise have
been due and payable during such Extension Period until such installment is
paid. If Distributions are deferred, the Distributions due shall be paid on
the date that the related Extension Period terminates to Holders of the
Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date. Distributions on the Securities
must be paid on the dates payable (after giving effect to any Extension
Period) to the extent that the Trust has funds legally available for the
payment of such distributions in the Property Account of the Trust. The
Trust's funds available for Distribution to the Holders of the Securities
will be limited to payments received from the Debenture Issuer. The payment
of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
_______________________
_______________________
_______________________
(Insert assignee's social security or tax identification number)
_______________________
_______________________
_______________________
(Insert address and zip code of assignee),
and irrevocably appoints
as agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for it, him or her.
Date: _____________________
Signature: ________________
(Sign exactly as your name appears on the other side of this Capital
Security Certificate)
Signature Guarantee:1
_______________________________
1 Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Security registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Security registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.
EXHIBIT A-2
FORM OF COMMON SECURITIES CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.
EXCEPT AS SET FORTH IN SECTION 8.1 (b) OF THE DECLARATION (AS DEFINED
BELOW), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.
Certificate Number [C-001] Number of Common Securities 928
Certificate Evidencing Common Securities
of
Hallmark Statutory Trust I
Hallmark Statutory Trust I, a statutory trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Hallmark
Financial Services, Inc. (the "Holder") is the registered owner of 928
common securities of the Trust representing undivided beneficial interests
in the assets of the Trust (liquidation amount $1,000 per Common
Security)(the "Common Securities"). The Common Securities represented hereby
are issued pursuant to, and the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities shall in all respects be subject to, the provisions of the
Amended and Restated Declaration of Trust of the Trust, dated as of June 21,
2005 among Mark Schwartz and Mark Morrison, as Administrators, Chase Bank
USA, National Association, as Delaware Trustee, JP Morgan Chase Bank, as
Institutional Trustee, the Holder, as Sponsor, and the holders from time to
time of undivided beneficial interests in the assets of the Trust, including
the designation of the terms of the Common Securities as set forth in Annex
I to the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of
the Declaration and the Indenture to the Holder without charge upon written
request to the Sponsor at its principal place of business.
As set forth in the Declaration, when an Event of Default has occurred
and is continuing, the rights of Holder of Common Securities to payment in
respect of Distributions and payments upon Liquidation, redemption or
otherwise are subordinated to the rights of payment of holders of the
Capital Securities.
By acceptance of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness
and the Common Securities as evidence of undivided beneficial ownership in
the Debentures.
This Certificate and the Common Securities evidenced hereby are
governed by, and shall be construed in accordance with, the laws of the
State of Delaware, without regard to principles of conflict of laws.
IN WITNESS WHEREOF, the Trust has executed this Certificate June 21,
2005.
Hallmark Statutory Trust I
By:
Name:______________________________
Title: Administrator
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be identical in
amount to the Distributions payable on each Capital Security, which is at a
fixed rate of 7.725% (the "Fixed Rate") per annum until June 15, 2015 (the
"Fixed Rate Period:) and thereafter at a variable per annum rate of
interest, reset quarterly, equal to LIBOR (as defined in the Declaration)
plus 3.25% (the "Variable Rate") of the stated liquidation amount of $1,000
per Capital Security (provided, however, that the Coupon Rate, defined to
include the Fixed Rate and Variable Rate, as applicable, for any
Distribution Period may not exceed the highest rate permitted by New York
law, as the same may be modified by United States law of general
applicability), such Coupon Rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears
for more than one quarterly period will bear interest thereon compounded
quarterly at the then applicable Coupon Rate for each such quarterly period
(to the extent permitted by applicable law). The term "Distributions" as
used herein includes cash distributions, any such compounded distributions
and any Additional Interest payable on the Debentures unless otherwise
stated. A Distribution is payable only to the extent that payments are made
in respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has funds legally available in the Property
Account therefor. During the Fixed Rate Period, the amount of Distributions
payable for any period will be computed for any quarterly Distribution
period on the basis of a 360-day year of twelve 30-day months and the amount
payable for any partial period shall be computed on the basis of the number
of days elapsed in a 360-day year of twelve 30-day months. Upon expiration
of the Fixed Rate Period, the amount of Distributions payable for any full
quarterly Distribution Period will be computed on the basis of a 360-day
year and the actual number of days elapsed in the relevant Distribution
Period.
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original
issuance and will be payable quarterly in arrears on March 15, June 15,
September 15 and December 15 of each year, commencing on September 15, 2005
(each, a "Distribution Payment Date"). Upon submission of Notice, the
Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period for up
to 20 consecutive quarterly periods (each such extended interest payment
period, together with all previous and future consecutive extensions
thereof, is referred to herein as an "Extension Period") at any time and
from time to time on the Debentures, subject to the conditions described
below and in the Declaration and the Indenture, during which Extension
Period no interest shall be due and payable (except any Additional Interest
that may be due and payable). During any Extension Period, interest will
continue to accrue on the Debentures, and interest on such accrued interest
(such accrued interest and interest thereon referred to herein as "Deferred
Interest") will accrue at an annual rate equal to the Coupon Rate in effect
for each such Extension Period, compounded quarterly from the date such
Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by law. No Extension Period may end on a
date other than a Distribution Payment Date. At the end of any such
Extension Period, the Debenture Issuer shall pay all Deferred Interest then
accrued and unpaid on the Debentures; provided, however, that no Extension
Period may extend beyond the Maturity Date, and Redemption Date or Special
Redemption Date. Prior to the termination of any Extension Period, the
Debenture Issuer may further extend such Extension Period, provided, that
such period together with all such previous and further consecutive
extensions thereof shall not exceed 20 consecutive quarterly periods, or
extend beyond the Maturity Date. Upon the termination of any Extension
Period and upon the payment of all Deferred Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing requirements.
No interest or Deferred Interest shall be due and payable during an
Extension Period, except at the end thereof, but Deferred Interest shall
accrue upon each installment of interest that would otherwise have been due
and payable during such Extension Period until such installment is paid. If
Distributions are deferred, the Distributions due shall be paid on the date
that the related Extension Period terminates to Holders of the Securities as
they appear on the books and records of the Trust on the record date
immediately preceding such date.
Distributions on the Securities must be paid on the dates payable
(after giving effect to any Extension Period) to the extent that the Trust
has funds legally available for the payment of such distributions in the
Property Account of the Trust. The Trust's funds legally available for
Distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer. The payment of Distributions out of
moneys held by the Trust is guaranteed by the Guarantor pursuant to the
Guarantee.
The Common Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
_______________________
_______________________
_______________________
(Insert assignee's social security or tax identification number)
_______________________
_______________________
_______________________
(Insert address and zip code of assignee),
and irrevocably appoints ______________________________ as agent to transfer
this Common Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _____________________
Signature: ________________
(Sign exactly as your name appears on the other side of this Common
Security Certificate)
Signature Guarantee:1 _________________
--------------------------------
1 Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit union,
meeting the requirements of the Security registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Security registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act
of 1934, as amended.
EXHIBIT B
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY ACCREDITED INVESTORS
Hallmark Financial Services, Inc.
Hallmark Statutory Trust I
777 Main Street, Suite 1000
Fort Worth, TX 76102
Re: Purchase of $1,000 stated liquidation amount of Capital Securities
of Hallmark Statutory Trust I
---------------------------
Ladies and Gentlemen:
In connection with our purchase of the Capital Securities we confirm
that:
1. We understand that the Capital Securities have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may
not be offered or sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we
are purchasing the Capital Securities that, if we decide to offer, sell or
otherwise transfer any such Capital Securities prior to the date which is
the later of (i) two years (or such shorter period of time as permitted by
Rule 144(k) under the Securities Act) after the later of (Y) the date of
original issuance of the Capital Securities and (Z) the last date on which
the Trust or any Affiliate (as defined in Rule 405 under the Securities Act)
of the Trust was the holder of any such Capital Securities (or any
predecessor thereto) and (ii) such later date, if any, as may be required by
any subsequent change in applicable law (the "Resale Restriction Termination
Date"), then such offer, sale or transfer will be made only (a) to the
Company or the Trust, (b) pursuant to Rule 144A under the Securities Act, to
a person we reasonably believe is a qualified institutional buyer under Rule
144A (a "QIB") that purchases for its own account or for the account of a
QIB and to whom notice is given that the transfer is being made in reliance
on Rule 144A, (c) pursuant to an exemption from registration, to an
"accredited investor" within the meaning of subparagraph (a)(1), (2), (3),
(7) or (8) of Rule 501 under the Securities Act that is acquiring any such
Capital Securities for its own account or for the account of such an
accredited investor for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of
the Securities Act, (d) pursuant to offers and sales to a non-U.S. Person
that occur outside the United States pursuant to Regulation S under the
Securities Act, or (e) pursuant to another available exemption from the
registration requirements of the Securities Act, and in each of the
foregoing cases in accordance with any applicable state securities laws and
any requirements of law that govern the disposition of our property. If any
resale or other transfer of the Capital Securities is proposed to be made
pursuant to clause (c) or (e) above, the transferor shall deliver a letter
from the transferee substantially in the form of this letter to the
Institutional Trustee as Transfer Agent, which shall provide as applicable,
among other things, that the transferee is an "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3), (7) or (8) of Rule 501 under
the Securities Act that is acquiring such Capital Securities for investment
purposes and not for distribution in violation of the Securities Act. We
acknowledge on our behalf and on behalf of any investor account for which we
are purchasing Capital Securities that the Trust and the Company reserve the
right prior to any offer, sale or other transfer pursuant to clause (c) or
(e) to require the delivery of any opinion of counsel, certifications and/or
other information satisfactory to the Trust and the Company. We understand
that the certificates for any Capital Security that we receive prior to the
Resale Restriction Termination Date will bear a legend substantially to the
effect of the foregoing.
2. We are an "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3), (7) or (8) of Rule 501 under the Securities Act purchasing
for our own account or for the account of such an "accredited investor," and
we are acquiring the Capital Securities for investment purposes and not with
view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act, and we have such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of our investment in the Capital Securities, and we and any
account for which we are acting are each able to bear the economic risks of
our or its investment.
3. We are acquiring the Capital Securities purchased by us for our
own account (or for one or more accounts as to each of which we exercise
sole investment discretion and have authority to make, and do make, the
statements contained in this letter) and not with a view to any distribution
of the Capital Securities, subject, nevertheless, to the understanding that
the disposition of our property will at all times be and remain within our
control.
4. In the event that we purchase any Capital Securities, we will
acquire such Capital Securities having an aggregate stated liquidation
amount of not less than $100,000 for our own account and for each separate
account for which we are acting.
5. We acknowledge that we either (A) are not a fiduciary of a
pension, profitsharing or other employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended or to Section
4975 of the Internal Revenue Code of 1986, as amended (a "Plan"), or an
entity whose assets include "plan assets" by reason of any Plan's investment
in the entity and are not purchasing the Capital Securities on behalf of or
with "plan assets" by reason of any Plan's investment in the entity and are
not purchasing the Capital Securities on behalf of or with "plan assets" of
any Plan or (B) are eligible for the exemptive relief available under one or
more of the following prohibited transaction class exemptions ("PTCEs")
issued by the U.S. Department of Labor: PTCE 96-23, 95-60, 91-38, 90-1 or
84-14.
6. We acknowledge that each Plan, by its purchase of the Capital
Securities, will be deemed to have directed the Trust to invest in the
junior subordinated debt securities of the Company, and to have consented to
the appointment of the institutional trustee of the Trust.
7. We acknowledge that the Company, the Trust and others will rely
upon the truth and accuracy of the foregoing acknowledgements,
representations, warranties and agreements and agree that if any of our
acknowledgments, representations, warranties and agreements are no longer
accurate, we shall promptly notify the applicable Placement Agent. If we
are acquiring any Capital Securities as a fiduciary or agent for one or more
investor accounts, we represent that we have sole discretion with respect to
each such investor account and that we have full power to make the foregoing
acknowledgments, representations and agreements on behalf of each such
investor account.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party
in any administrative or legal proceeding or other inquiry with respect to
matters covered hereby.
______________________________
(Name of Purchaser)
By:___________________________
Date:_________________________
Upon transfer, the Capital Securities should be registered in the name
of the new beneficial owner as follows.
Name:___________________________
Address:________________________
Taxpayer ID Number:_____________
EXHIBIT C
FORM OF TRANSFEROR CERTIFICATE
TO BE EXECUTED FOR QIBs
________, [ ]
Hallmark Financial Services, Inc.
Hallmark Statutory Trust I
777 Main Street, Suite 1000
Fort Worth, TX 76102
Re: Purchase of $1,000 stated liquidation amount of Capital Securities
of Hallmark Statutory Trust I
-----------------------------
Reference is hereby made to the Amended and Restated Declaration of
Trust of Hallmark Statutory Trust I, dated as of June 21, 2005 (the
"Declaration"). Capitalized terms used but not defined herein shall have
the meanings given them in the Declaration.
This letter relates to $[__________] aggregate liquidation amount of
Capital Securities which are held in the name of [name of transferor] (the
"Transferor").
In accordance with Section 8.2(b) of the Declaration, the Transferor
does hereby certify that such Capital Securities are being transferred in
accordance with (i) the transfer restrictions set forth in the Capital
Securities and (ii) Rule 144A under the Securities Act ("Rule 144A"), to a
transferee that the Transferor reasonably believes is purchasing the Capital
Securities for its own account or an account with respect to which the
transferee exercises sole investment discretion and the transferee and any
such account is a "qualified institutional buyer" within the meaning of Rule
144A, in a transaction meeting the requirements of Rule 144A and in
accordance with applicable securities laws of any state of the United States
or any other jurisdiction.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
___________________________________
(Name of Transferor)
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
EXHIBIT D
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY NON-U.S. PERSONS
Hallmark Financial Services, Inc.
Hallmark Statutory Trust I
777 Main Street, Suite 1000
Fort Worth, TX 76102
Re: Purchase of $1,000 stated liquidation amount of Capital Securities
of Hallmark Statutory Trust I
-----------------------------
Reference is hereby made to the Amended and Restated Declaration of
Trust of Hallmark Statutory Trust I, dated as of June 21, 2005 (the
"Declaration"). Capitalized terms used but not defined herein shall have
the meanings given them in the Declaration.
This letter relates to $[__________] aggregate liquidation amount of
Capital Securities which are held in the name of [name of transferor].
In accordance with Section 8.2(b) of the Declaration, we do hereby
certify that (i) we are not a "U.S. Person" (as such term is defined in Rule
902 under the Securities Act), (ii) we are not acquiring the Capital
Securities for the account or benefit of any U.S. Person, and (iii) the
offer and sale of Capital Securities to us constitutes an "offshore
transaction" under Regulation S under the Securities Act.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party
in any administrative or legal proceeding or other official inquiry with
respect to matters covered hereby.
___________________________________
(Name of Transferor)
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________