EXHIBIT 2
======================================
AMENDED AND RESTATED DECLARATION
OF TRUST
AFC CAPITAL TRUST I
Dated as of February 3 , 1997
======================================
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I INTERPRETATION AND DEFINITIONS............................................................2
Section 1.1. Definitions...............................................................2
ARTICLE II TRUST INDENTURE ACT.....................................................................9
Section 2.1. Trust Indenture Act; Application..........................................9
Section 2.2. Lists of Holders of Securities...........................................10
Section 2.3. Reports by the Property Trustee..........................................10
Section 2.4. Periodic Reports to Property Trustee.....................................10
Section 2.5. Evidence of Compliance with Conditions Precedent.........................11
Section 2.6. Events of Default; Waiver................................................11
Section 2.7. Event of Default; Notice.................................................13
ARTICLE III ORGANIZATION...........................................................................14
Section 3.1. Name.....................................................................14
Section 3.2. Office...................................................................14
Section 3.3. Purpose..................................................................14
Section 3.4. Authority................................................................14
Section 3.5. Title to Property of the Trust...........................................15
Section 3.6. Powers and Duties of the Administrative Trustees.........................15
Section 3.7. Prohibition of Actions by the Trust and the Trustees.....................18
Section 3.8. Powers and Duties of the Property Trustee................................19
Section 3.9. Certain Duties and Responsibilities of the Property Trustee..............21
Section 3.10. Certain Rights of Property Trustee.......................................23
Section 3.11. Delaware Trustee.........................................................25
Section 3.12. [INTENTIONALLY OMITTED]..................................................25
Section 3.13. Not Responsible for Recitals or Issuance of Securities...................25
Section 3.14. Duration of Trust........................................................26
Section 3.15. Mergers..................................................................26
ARTICLE IV SPONSOR.................................................................................28
Section 4.1. Sponsor's Purchase of Common Securities..................................28
Section 4.2. Responsibilities of the Sponsor..........................................28
Section 4.3. Right to Proceed.........................................................28
-i-
ARTICLE V TRUSTEES.................................................................................29
Section 5.1. Number of Trustees: Appointment of Co-Trustee............................29
Section 5.2. Delaware Trustee.........................................................29
Section 5.3. Property Trustee; Eligibility............................................30
Section 5.4. Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally........................................................31
Section 5.5. Administrative Trustees..................................................31
Section 5.6. Delaware Trustee.........................................................31
Section 5.7. Appointment, Removal and Resignation of Trustees.........................32
Section 5.8. Vacancies among Trustees.................................................33
Section 5.9. Effect of Vacancies......................................................33
Section 5.10. Meetings.................................................................34
Section 5.11. Delegation of Power......................................................34
Section 5.12. Merger, Conversion, Consolidation or Succession to Business..............35
ARTICLE VI DISTRIBUTIONS...........................................................................35
Section 6.1. Distributions............................................................35
ARTICLE VII ISSUANCE OF SECURITIES.................................................................35
Section 7.1. General Provisions Regarding Securities..................................35
Section 7.2. Execution and Authentication.............................................36
Section 7.3. Form and Dating..........................................................37
Section 7.4. Registrar, Paying Agent and Exchange Agent...............................39
Section 7.5. Paying Agent to Hold Money in Trust......................................39
Section 7.6. Replacement Securities...................................................40
Section 7.7. Outstanding Capital Securities...........................................40
Section 7.8. Capital Securities in Treasury...........................................40
Section 7.9. Temporary Securities.....................................................40
Section 7.10. Cancellation.............................................................42
ARTICLE VIII TERMINATION OF TRUST..................................................................42
Section 8.1. Termination of Trust.....................................................42
ARTICLE IX TRANSFER OF INTERESTS...................................................................43
Section 9.1. Transfer of Securities...................................................43
Section 9.2. Transfer Procedures and Restrictions.....................................44
Section 9.3. Book Entry Interests.....................................................52
Section 9.4. Notices to Clearing Agency...............................................53
-ii-
Section 9.5. Appointment of Successor Clearing Agency.................................53
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS................................................................53
Section 10.1. Liability................................................................53
Section 10.2. Exculpation..............................................................54
Section 10.3. Fiduciary Duty...........................................................54
Section 10.4. Indemnification..........................................................55
Section 10.5. Outside Businesses.......................................................58
Section 10.6. Compensation; Fees.......................................................59
ARTICLE XI ACCOUNTING..............................................................................59
Section 11.1. Fiscal Year..............................................................59
Section 11.3. Banking..................................................................60
Section 11.4. Withholding..............................................................60
ARTICLE XII AMENDMENTS AND MEETINGS................................................................61
Section 12.1. Amendments...............................................................61
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND
DELAWARE TRUSTEE.............................................................64
Section 13.1. Representations and Warranties of Property Trustee.......................64
Section 13.2. Representations and Warranties of Delaware Trustee.......................65
ARTICLE XIV REGISTRATION RIGHTS....................................................................66
Section 14.1. Registration Rights Agreement............................................66
ARTICLE XV MISCELLANEOUS...........................................................................66
Section 15.1. Notices..................................................................66
Section 15.2. Governing Law............................................................67
Section 15.3. Intention of the Parties.................................................67
Section 15.4. Headings.................................................................67
Section 15.5. Successors and Assigns...................................................68
Section 15.6. Partial Enforceability...................................................68
Section 15.7. Counterparts.............................................................68
-iii-
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AFC CAPITAL TRUST I
February 3, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of February 3, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Delaware Trustee (as defined herein) and the Sponsor
established AFC Capital Trust I (the "Trust"), a trust created under the
Delaware Business Trust Act pursuant to a Declaration of Trust dated as of
January 24, 1997 (the "Original Declaration"), and a Certificate of Trust filed
with the Secretary of State of the State of Delaware on January 24, 1997, for
the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain Debentures of the Debenture Issuer (each as
hereinafter defined);
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitutes the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the Trust and 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.
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1. Definitions.
-----------
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Administrative Trustee" has the meaning set forth in Section 5.1.
----------------------
"Affiliate" has the same meaning as given to that term in Rule
---------
405 under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
-----
"Authorized Officer" of a Person means any other Person that is
------------------
authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
-------------------
Capital Security Certificate registered in the name of a Clearing Agency or its
nominee, ownership and transfers of which shall be maintained and made through
book entries by a Clearing Agency as described in Section 9.2.
"Business Day" means any day other than a Saturday or a Sunday or
------------
a day on which banking institutions in the City of New York, New York or
Wilmington, Delaware are
-2-
authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
------------------
Code, 12 Del. Code (S)3801 et seq., as it may be amended from time to time, or
------------ -- ---
any successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book
---------------------------------
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
------------------
Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series A
----------------------------
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a "Clearing
---------------
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Capital Security and which shall
undertake to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase
------------
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from
----
time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
----------
Commission as from time to time constituted, or if any time after the execution
of this Declaration such Commission is not existing and performing the duties
now assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
-----------------
"Common Securities Guarantee" means the guarantee agreement dated
---------------------------
as of February 3, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee;
--------------------------
(b) any
-3-
Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Company" means the Debenture Issuer.
-------
"Corporate Trust Office" means the office of the Property Trustee at
----------------------
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 450 West 33rd St., New York, New York
10001.
"Covered Person" means: (a) any officer, director, shareholder,
--------------
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Allmerica Financial Corporation, a Delaware
----------------
corporation, or any successor entity permitted under the Indenture including a
successor entity resulting from any consolidation, amalgamation, merger, sale of
assets as an entirety or substantially as an entirety, transfer, lease, or other
business combination, in its capacity as issuer of the Debentures under the
Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, a New York banking
-----------------
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and the
----------
Series B Debentures.
"Default" means an event, act or condition that with notice of lapse
-------
of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in
-----------------------------
Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
----------------
"Direct Action" shall have the meaning set forth in Section 3.8(e).
-------------
"Distribution" means a distribution payable to Holders in accordance
------------
with Section 6.1 and Annex I.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
---
"Event of Default" in respect of the Securities means an Event of
----------------
Default (as
-4-
defined in the Indenture) that has occurred and is continuing in respect of the
Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.4.
--------------
"Exchange Offer" means the offer that may be made pursuant to the
--------------
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and the Series B Capital
Securities Guarantee for the Series A Capital Securities Guarantee.
"Fiduciary Indemnified Person" has the meaning set forth in
----------------------------
Section 10.4(b).
"Global Capital Securities" has the meaning set forth in
-------------------------
Section 7.3(a).
"Holder" means a Person in whose name a Security is registered on the
------
register for the Securities, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
------------------
Indemnified Person.
"Indenture" means the Indenture dated as of February 3, 1997, among
---------
the Debenture Issuer and The Chase Manhattan Bank, as amended from time to time.
"Investment Company" means an investment company as defined in the
------------------
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
----------------------
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
------------
"liquidation amount" means, with respect to the Trust Securities,
------------------
except as provided in the terms of the Capital Securities or by the Trust
Indenture Act, the liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages or amounts are
determined).
"Majority in liquidation amount" means, with respect to the Trust
------------------------------
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act,
-5-
Holder(s) of outstanding Trust Securities voting together as a single class or,
as the context may require, Holders of outstanding Capital Securities or Holders
of outstanding Common Securities voting separately as a class, who are the
record owners of more than 50% of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"Offering Memorandum" has the meaning set forth in Section 3.6(b).
-------------------
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that the officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by the officer in rendering the Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
------------------
be an employee of the Sponsor, and who shall be, and which opinion shall be,
acceptable to the Property Trustee.
"Paying Agent" has the meaning specified in Section 7.4.
------------
"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.
"Property Trustee" has the meaning set forth in Section 5.3(a).
----------------
"Property Trustee Account" has the meaning set forth in Section
------------------------
3.8(c).
-6-
"Purchase Agreement" means the Purchase Agreement for the initial
------------------
offering and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in Rule
----
144A.
"Quorum" means a majority of the Administrative Trustees or, if there
------
are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
---------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of February 3, 1997, by and among the Trust, the Debenture
Issuer and the Initial Purchaser named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the Registration
----------------------
Rights Agreement.
"Regulation S" means Regulation S under the Securities Act, as such
------------
regulation may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"Regulation S Global Capital Security" has the meaning set forth in
------------------------------------
Section 7.3(a).
"Related Party" means, with respect to the Sponsor, any direct or
-------------
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
-------------------
officer within the Corporate Trust Office of the Property Trustee, including any
vice-president, any assistant vice-president, any secretary, any assistant
secretary, the treasurer, any assistant treasurer, or other officer of the
Corporate Trust Office of the Property Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Restricted Definitive Capital Securities" has the meaning set forth
----------------------------------------
in Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by
---------------------------
Section 9.2 to contain a Restricted Securities Legend.
-7-
"Restricted Securities Legend" has the meaning set forth in Section
----------------------------
9.2.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
---------
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may
--------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule may
---------
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Rule 144A Global Capital Security" has the meaning set forth in
---------------------------------
Section 7.3(a).
"Securities" or "Trust Securities" means the Common Securities and the
---------- ----------------
Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
---------------------
Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section
---------------------------
7.1(a).
"Series B Capital Securities" has the meaning specified in Section
---------------------------
7.1(a).
"Series A Capital Securities Guarantee" means the guarantee agreement
-------------------------------------
dated as of February 3, 1997 of the Sponsor in respect of the Series A Capital
Securities.
"Series B Capital Securities Guarantee" means the guarantee agreement
-------------------------------------
to be entered in connection with the Exchange Offer by the Sponsor in respect of
the Series B Capital Securities.
"Series A Debentures" means the Series A 8.207% Junior Subordinated
-------------------
Deferrable Interest Debentures due February 3, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Series B Debentures" means the Series B 8.207% Junior Subordinated
-------------------
Deferrable Interest Debentures due February 3, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
-8-
"Special Event" has the meaning set forth in Annex I hereto.
-------------
"Sponsor" means Allmerica Financial Corporation, a Delaware
-------
corporation, or any successor entity permitted under the Indenture including a
successor entity resulting from any merger, consolidation, amalgamation sale of
assets as an entirety or substantially as an entirety, transfer, lease or other
business combination, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
--------------
"10% in liquidation amount" means, with respect to the Trust
-------------------------
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Treasury Regulations" means the income tax regulations, including
--------------------
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
------- --------
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended from time to time, or any successor legislation.
"Unrestricted Global Capital Security" has the meaning set forth in
------------------------------------
Section 9.2(b) .
ARTICLE II
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
--------------------------------
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed
-9-
by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 2.2. Lists of Holders of Securities.
------------------------------
(a) Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide the Property Trustee, unless the Property Trustee is
Registrar for the Securities (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, provided that neither the Sponsor nor the
-------- ----
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Property Trustee by the Sponsor and the
Administrative Trustees on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Registrar (if acting in such
capacity), provided that the Property Trustee may destroy any List of Holders
-------- ----
previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Property Trustee.
-------------------------------
Within 90 days after December 31 of each year, commencing December
31, 1997, the Property Trustee shall provide to the Holders of the Capital
Securities such reports as are required by (S) 313(a) of the Trust Indenture
Act, if any, in the form and in the manner provided by (S) 313 of the Trust
Indenture Act. The Property Trustee shall also comply with the other
requirements of (S) 313 of the Trust Indenture Act. The Sponsor shall promptly
notify the Property Trustee when the Capital Securities are listed on any stock
exchange.
Section 2.4. Periodic Reports to Property Trustee.
------------------------------------
-10-
Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such documents, reports and
information as are required by (S) 314 (if any) and the compliance certificate
required by (S) 314 of the Trust Indenture Act in the form, in the manner and at
the times required by (S) 314(a)(4) of the Trust Indenture Act, such compliance
certificate to be delivered annually on or before 120 days after the end of each
fiscal year of the Sponsor.
Section 2.5. Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent provided for in this Declaration that relate to any of
the matters set forth in (S) 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given by an officer pursuant to (S) 314(c) (1) of the
Trust Indenture Act may be given in the form of an Officers' Certificate.
Section 2.6. Events of Default; Waiver.
-------------------------
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
-------- ----
the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super Majority")
to be waived under the Indenture, the Event of Default under the Declaration may
only be waived by the vote of the Holders of at least the proportion in
aggregate liquidation amount of the Capital Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu
of (S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to
-11-
the Common Securities for all purposes of this Declaration without any further
act, vote, or consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee,
including the right to direct the Property Trustee to exercise the remedies
available to it as holder of the Debentures; provided, however, that (subject to
-------- -------
the provisions of Section 3.9) the Property Trustee shall have the right to
decline to follow any such direction if the Property Trustee shall determine
that the action so directed would be unjustly prejudicial to the Holders not
taking part in such direction or if the Property Trustee, being advised by
counsel, determines that the action or proceeding so directed may not lawfully
be taken or if the Property Trustee, in good faith, by its Responsible Officers,
shall determine that the action or proceedings so directed would involve the
Property Trustee in personal liability.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
-------- ----
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be waived by
the vote of the Holders of at least the proportion in aggregate liquidation
amount of the Common Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
- -------- -------
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences if all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
(S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such (S)(S)
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture
-12-
Act are hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act. Subject to the foregoing provisions of
this Section 2.6(b), upon such waiver, any such default shall cease to exist and
any Event of Default with respect to the Common Securities arising therefrom
shall be deemed to have been cured for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or Event of Default
with respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of (S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
Section 2.7. Event of Default; Notice.
------------------------
(a) The Property Trustee shall, within five Business Days after
the occurrence of an Event of Default is actually known to a Responsible Officer
of the Property Trustee, transmit by mail, first class postage prepaid, to the
Holders of the Securities, the Sponsor and the Administrative Trustees, notice
of all defaults with respect to the Securities actually known to a Responsible
Officer of the Property Trustee, unless such defaults have been cured before the
giving of such notice (the term "defaults" for the purposes of this Section
2.7(a) being hereby defined to be an Event of Default as defined in the
Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
-------- ----
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 5.01(a) and 5.01(b) of the
Indenture relating to the Debentures; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of the Declaration shall have actual
knowledge.
(c) Unless the notice under Section 2.7(a) shall not have been
transmitted, within five Business Days after the occurrence of any Event of
Default actually known to the Sponsor, the Sponsor shall transmit notice of such
Event of Default to the holders of the Capital Securities, the Administrative
Trustees and the Property Trustee, unless such Event of
-13-
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee in accordance with
Section 2.4 a certification as to whether or not they are in compliance with all
the conditions and covenants applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
Section 3.1. Name.
----
The Trust is named "AFC Capital Trust I" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the
Administrative Trustees.
Section 3.2. Office.
------
The address of the principal office of the Trust is c/o Allmerica
Financial Corporation, 440 Lincoln Street, Worcester, Massachusetts 01653. On
ten Business Days written notice to the Holders of Securities, the
Administrative Trustees may designate another principal office.
Section 3.3. Purpose.
-------
The exclusive purposes and functions of the Trust are (a) to issue
and sell Securities, (b) use the proceeds from the sale of the Securities to
acquire the Debentures, and (c) except as otherwise limited herein, to engage in
only those other activities necessary, advisable or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, mortgage or pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
Section 3.4. Authority.
---------
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on
-14-
the power and authority of the Trustees as set forth in this Declaration.
Section 3.5. Title to Property of the Trust.
------------------------------
Except as provided in Section 3.8 with respect to the Debentures
and the Property Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
Section 3.6. Powers and Duties of the Administrative Trustees.
------------------------------------------------
The Administrative Trustees shall have the exclusive power, duty
and authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that except, as contemplated in Section 7.1(a),
-------- -------
in the case of (i) and (ii), (i) the Trust may issue no more than one series of
Capital Securities and no more than one series of Common Securities, (ii) there
shall be no interests in the Trust other than the Securities, and (iii) the
issuance of Securities shall be limited to a simultaneous issuance of both
Capital Securities and Common Securities at any Closing Time;
(b) in connection with the issue and sale of the Capital
Securities and the consummation of the Exchange Offer to:
(i) execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by the
Sponsor, in relation to the offering and sale of Series A Capital
Securities to qualified institutional buyers in reliance on Rule 144A
under the Securities Act and to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) and outside the United States to non-U.S. persons in offshore
transactions in reliance on Regulation S under the Securities Act, and
to execute and file with the Commission, at such time as determined by
the Sponsor, any Registration Statement, including any amendments
thereto, as contemplated by the Registration Rights Agreement;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Capital Securities in any State
in which the Sponsor has determined to qualify or register such Capital
Securities for sale;
(iii) at the direction of the Sponsor, execute and file an
application, prepared by the Sponsor, to the New York Stock Exchange or
any other national stock exchange or the Nasdaq Stock Market's National
Market for listing or quotation of the Capital Securities;
-15-
(iv) to execute and deliver letters, documents, or instruments
with DTC and other Clearing Agencies relating to the Capital
Securities;
(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor, relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act; and
(vi) execute and enter into the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Series A Debentures with the proceeds of the
sale of the Series A Capital Securities and the Common Securities and to
exchange the Series A Debentures for a like principal amount of Series B
Debentures, pursuant to the Exchange Offer; provided, however, that the
-------- -------
Administrative Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Trust and the
Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of (S)316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices, which are not or have not been issued by the Property Trustee as
provided herein, to the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Administrative Trustees pursuant to the terms of the Securities set forth
in Annex I hereto;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
-16-
(j) to give the certificate required by (S) 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
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;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Administrative Trustees determine in
their discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including, but
not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes.
(q) to take all action necessary to consummate the Exchange
Offer or
-17-
otherwise cause the Capital Securities to be registered pursuant to an effective
registration statement in accordance with the provisions of the Registration
Rights Agreement; and
(r) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Administrative Trustees, on
behalf of the Trust.
The Administrative Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Administrative Trustees shall not
take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall
have none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant to
this Section 3.6 shall be reimbursed by the Sponsor. The Administrative Trustees
shall take all actions on behalf of the Trust that are not specifically required
by this Declaration to be taken by any other Trustee.
Section 3.7. Prohibition of Actions by the Trust and the Trustees.
----------------------------------------------------
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant
to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures or pledge any assets or enter into any
mortgages;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever
except as otherwise expressly provided herein;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
-18-
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of conducting any proceeding with respect to
any remedy available to the Debenture Trustee, or exercise any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is waivable under the Indenture, (C) exercise any right to
rescind or annul any declaration that the principal of all the Debentures shall
be due and payable, or (D) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that such modification will not cause
more than an insubstantial risk that for United States federal income tax
purposes the Trust will not be classified as a grantor trust.
Section 3.8. Powers and Duties of the Property Trustee.
-----------------------------------------
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Property Trustee in trust for the benefit of the
Trust and the Holders. The right, title and interest of the Property Trustee to
the Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.7. Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the Holders
and, upon the receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds into the
Property Trustee Account and make payments to the Holders of the
Capital Securities and Holders of the Common Securities from the
Property Trustee Account in accordance with Section 6.1. Funds in the
Property Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Property Trustee Account shall be
an account that is maintained with a banking institution the rating on
whose long-term unsecured indebtedness is at least equal to the rating
assigned to the Capital Securities by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Securities to the extent
the Debentures are redeemed or
-19-
mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or appropriate to effect
the distribution of the Debentures to Holders of Securities upon the occurrence
of certain events.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities set forth in Annex I hereto.
(e) Subject to Section 3.9(a), the Property Trustee may take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer of the Property Trustee has actual knowledge or the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act and if such Property Trustee shall have failed to take such Legal
Action, to the fullest extent permitted by law, the Holders of the Capital
Securities may take such Legal Action, to the same extent as if such Holders of
Capital Securities held an aggregate principal amount of Debentures equal to the
aggregate liquidation amount of such Capital Securities, without first
proceeding against the Property Trustee or the Trust; provided however, that if
an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay the principal of or
premium, if any, or interest on the Debentures on the date such principal,
premium, if any, or interest is otherwise payable (or in the case of redemption,
on the redemption date), then a Holder of Capital Securities may pursuant to
Section 5.04 of the Indenture directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on
the Debentures having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such Holder (a "Direct Action") on or after
the respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Holders of the Common Securities will be
subrogated to the rights of such Holder of Capital Securities to the extent of
any payment made by the Debenture Issuer to such Holder of Capital Securities in
such Direct Action. Except as provided in the preceding sentences, the Holders
of Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) Subject to Section 5.7 hereof, the Property Trustee shall not
resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of the Securities
pursuant to the terms of the Securities set forth in Annex I hereto; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7 (a "Successor
Property Trustee").
-20-
(g) The Property Trustee shall have the legal power to exercise all of
the rights, powers and privileges of a holder of Debentures under the Indenture
and, if an Event of Default actually known to a Responsible Officer of the
Property Trustee occurs and is continuing, the Property Trustee may, for the
benefit of Holders, enforce its rights as holder of the Debentures subject to
the rights of the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake any actions
set forth in (S) 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such Paying Agent
shall comply with (S) 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by the
Property Trustee while the Property Trustee is so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Administrative
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
Section 3.9. Certain Duties and Responsibilities of the Property Trustee.
-----------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the Securities and no implied covenants shall be read
into this Declaration against the Property Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) of
which a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
-21-
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration and in
the Securities and the Property Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Declaration and in the Securities, and no implied
covenants or obligations shall be read into this Declaration or the
Securities against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration;
provided, however, that in the case of any such certificates or
-------- -------
opinions that by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee shall be under
a duty to examine the same to determine whether or not they conform to
the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property Trustee,
unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of
the Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Declaration or indemnity satisfactory to the Property Trustee
against such risk or liability is not assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account, subject to the
protections and limitations on
-22-
liability afforded to the Property Trustee under this Declaration and the
Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with the
Sponsor. Money held by the Property Trustee need not be segregated from other
funds held by it except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee be
liable for any default or misconduct of the Administrative Trustees or the
Sponsor.
Section 3.10. Certain Rights of Property Trustee.
----------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and be entitled to
receive and conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the Sponsor or the
Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing
or continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
-23-
(v) the Property Trustee may consult with counsel or other experts
of its selection and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion, such counsel may be counsel to the
Sponsor or any of its Affiliates, and may include any of its employees. The
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request or
direction of any Holder, unless such Holder shall have provided to the Property
Trustee security and indemnity, satisfactory to the Property Trustee, against
the costs, expenses (including reasonable attorneys' fees and expenses and the
expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Property Trustee provided, that, nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of or for the
supervision of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third party shall be required to
inquire as to the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action;
-24-
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders of the
Securities which instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would be entitled to
direct the Property Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in accordance
with such instructions;
(xi) except as otherwise expressly provided by this Declaration, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without negligence, and
reasonably believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation or which would expose the Property Trustee to liability, financial or
otherwise. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
Section 3.11. Delaware Trustee.
-----------------
Notwithstanding any other provision of this Declaration other than
Section 5.2 (and subject to Section 5.2), the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities of the Administrative Trustees or the Property
Trustee described in this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of (S)3807 of the Business Trust Act.
Section 3.12. [INTENTIONALLY OMITTED]
Section 3.13. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property
-25-
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 3.14. Duration of Trust.
-----------------
The Trust, unless terminated pursuant to the provisions of Article
VIII hereof, shall have existence up to February 3, 2028.
Section 3.15. Mergers.
-------
(a) The Trust may not merge with or convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any Person, except as
described in Section 3.15(b) and (c) or Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, with the consent of
the Administrative Trustees or, if there are more than two, a majority of the
Administrative Trustees and without the consent of the Holders of Securities,
the Delaware Trustee or the Property Trustee, merge with or convert into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to, a trust
organized as such under the laws of any State; provided that:
-------- ----
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee as
the holder of the Debentures;
(iii) the Successor Securities that are issued in place of the
Capital Securities are listed, or any such Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
with another organization on which the Capital Securities are then listed or
quoted, if any;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities
(including any Successor
-26-
Securities) to be downgraded by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Sponsor has received an opinion of an
independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of Securities (including any
Successor Securities) in any material respect (other than with respect
to any dilution of the Holders' interest in the new entity); and
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company; and
(viii) the Sponsor or any permitted successor or assignee owns all of
the common securities of such Successor Entity and guarantees the obligations
of such Successor Entity under the Successor Securities at least to the
extent provided by the Capital Securities Guarantee and the Common Securities
Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the Successor Entity not to be classified as a grantor trust for United
States federal income tax purposes.
-27-
ARTICLE IV
SPONSOR
Section 4.1. Sponsor's Purchase of Common Securities.
---------------------------------------
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Series A Capital Securities are
issued and sold.
Section 4.2. Responsibilities of the Sponsor.
-------------------------------
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Memorandum and to prepare for filing by
the Trust with the Commission any Registration Statement, including any
amendments thereto as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market for listing or quotation
of the Capital Securities;
(d) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust with the Commission a registration statement on Form 8-A
relating to the registration of the Capital Securities under Section 12(b) of
the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital Securities.
Section 4.3. Right to Proceed.
----------------
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on the
Capital Securities is attributable to the failure of the Company to pay interest
or principal on the Debentures, to institute a proceeding directly against the
Debenture Issuer for enforcement of its payment obligations on
-28-
the Debentures.
ARTICLE V
TRUSTEES
Section 5.1. Number of Trustees: Appointment of Co-Trustee.
---------------------------------------------
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; provided, however, that, the number of
-------- -------
Trustees shall in no event be less than two (2); provided further that (1) the
-------- -------
Delaware Trustee, in the case of a natural person, shall be a person who is a
resident of the State of Delaware or that, if not a natural person, is an entity
which has its principal place of business in the State of Delaware and otherwise
meets the requirements of applicable law; (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (an
"Administrative Trustee"); and (3) one Trustee shall be the Property Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements. Notwithstanding the above, unless an Event of
Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust's property may at the time be
located, the Holders of a Majority in liquidation amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more Persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of the Trust's property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
any such appointment of a co-trustee.
Section 5.2. Delaware Trustee.
----------------
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
-29-
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law, provided that, if the Property Trustee has its principal
-------- ----
place of business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Property Trustee shall also be the Delaware Trustee
and Section 3.11 shall have no application.
Section 5.3. Property Trustee; Eligibility.
-----------------------------
(a) There shall at all times be one Trustee (the "Property
Trustee") which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee and the Indenture shall be
deemed to be specifically described in this Declaration for purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
-30-
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Section 5.4. Certain Qualifications of Administrative Trustees and Delaware
--------------------------------------------------------------
Trustee Generally.
- -----------------
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
Section 5.5. Administrative Trustees.
-----------------------
The initial Administrative Trustees shall be:
John P. Kavanaugh
John F. Kelly
Edward J. Parry, III
(a) Except as expressly set forth in this Declaration and except
if a meeting of the Administrative Trustees is called with respect to any matter
over which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) Unless otherwise determined by the Administrative Trustees,
and except as otherwise required by the Business Trust Act or applicable law,
any Administrative Trustee is authorized to execute on behalf of the Trust any
documents which the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that, the
-------- ----
registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by all of the Administrative Trustees; and
(c) An Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
Section 5.6. Delaware Trustee.
-----------------
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street, 9th Floor
Wilmington, Delaware 19801
-31-
Section 5.7. Appointment, Removal and Resignation of Trustees.
-------------------------------------------------
(a) Subject to Section 5.7(b) of this Declaration and to Section 6(b)
of Annex I hereto, Trustees may be appointed or removed without cause at any
time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be continuing
after the issuance of any Securities, by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee or
the Delaware Trustee, by vote of Holders of a Majority in liquidation amount
of the Capital Securities voting as a class at a meeting of Holders of the
Capital Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(a) until a successor Property Trustee
(the "Successor Property Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Property Trustee
and delivered to the Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed in
accordance with this Section 5.7(b) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by such Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
-------- -------
that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the Sponsor
and
-32-
the resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
Holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.7 within 60 days after delivery of an instrument of resignation or
removal, the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
Section 5.8. Vacancies among Trustees.
------------------------
If a Trustee ceases to hold office for any reason and the number
of Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees
is increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.7.
Section 5.9. Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever a
vacancy in the number of Administrative
-33-
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 5.7, the Administrative
Trustees in office, regardless of their number, shall have all the powers
granted to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Declaration.
Section 5.10. Meetings.
--------
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 24 hours before such meeting. Notice
of any telephonic meetings of the Administrative Trustees or any committee
thereof shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Administrative Trustees. In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.
Section 5.11. Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
-34-
Section 5.12. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any Person into which the Property Trustee or the Delaware Trustee
or any Administrative Trustee that is not a natural person, as the case may be,
may be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Property
Trustee or the Delaware Trustee or any Administrative Trustee that is not a
natural person, as the case may be, shall be a party, or any Person succeeding
to all or substantially all the corporate trust business of the Property Trustee
or the Delaware Trustee or any Administrative Trustee that is not a natural
person, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee or any Administrative Trustee that is not a natural person,
as the case may be, hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
Section 6.1. Distributions.
-------------
Holders shall receive Distributions in accordance with the
applicable terms of Annex I and the relevant Holder's Securities. If and to the
extent that the Debenture Issuer makes a payment of interest (including
Compounded Interest (as defined in the Indenture) and Additional Interest (as
defined in the Indenture)), premium and/or principal on the Debentures held by
the Property Trustee or Liquidated Damages (as defined in the Registration
Rights Agreement) or any other payments pursuant to the Registration Rights
Agreement with respect to the Debentures held by the Property Trustee (the
amount of any such payment being a "Payment Amount"), the Property Trustee shall
and is directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
Section 7.1. General Provisions Regarding Securities.
---------------------------------------
(a) The Administrative Trustees shall on behalf of the Trust issue
one class of capital securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Annex I (the
"Series A Capital Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities"). The Administrative Trustees
shall on behalf of the Trust issue one class of capital securities representing
undivided
-35-
beneficial interests in the Trust having such terms as set forth in Annex I (the
"Series B Capital Securities") in exchange for Series A Capital Securities
accepted for exchange in the Exchange Offer, which Series B Capital Securities
shall not bear the legends required by Section 9.2(i) unless the Holder of such
Series A Capital Securities is either (A) a broker-dealer who purchased such
Series A Capital Securities directly from the Trust for resale pursuant to Rule
144A or any other available exemption under the Securities Act, (B) a Person
participating in the distribution of the Series A Capital Securities or (C) a
Person who is an affiliate (as defined in Rule 144A) of the Trust. The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Securities.
(b) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable undivided beneficial interests in the assets of
the Trust.
(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
Section 7.2. Execution and Authentication.
----------------------------
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities shall cease to be such Administrative
Trustee before the Securities so signed shall be delivered by the Trust, such
Securities nevertheless may be delivered as though the person who signed such
Securities had not ceased to be such Administrative Trustee; and any Securities
may be signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Administrative Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such an Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital Securities
for the Trust by manual or facsimile signature. Unless otherwise determined by
the Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Capital Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Property Trustee. The signature
shall be conclusive evidence that the Capital Security has been authenticated
under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the
-36-
Property Trustee shall authenticate the Capital Securities for original issue.
The aggregate number of Capital Securities outstanding at any time shall not
exceed the number set forth in the Terms in Annex I hereto except as provided in
Section 7.6.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Capital Securities. An authenticating
agent may authenticate Capital Securities whenever the Property Trustee may do
so. Each reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee to deal with the Sponsor or an Affiliate.
Section 7.3. Form and Dating.
---------------
The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by their execution thereof. The
Securities may have letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in writing. Each
Capital Security shall be dated the date of its authentication. The terms and
provisions of the Securities set forth in Annex I and the forms of Securities
set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and
to the extent applicable, the Property Trustee and the Sponsor, by their
execution and delivery of this Declaration, expressly agree to such terms and
provisions and to be bound thereby.
(a) Global Securities. Securities offered and sold to QIBs in
-----------------
reliance on Rule 144A or offered and sold outside the United States to non-U.S.
persons in offshore transactions in reliance on Regulation S, as provided in the
Purchase Agreement, shall be issued in the form of one or more, permanent global
Securities in definitive, fully registered form without distribution coupons
with the global legend and applicable Restricted Securities Legend set forth in
Exhibit A-1 hereto (respectively, a "Rule 144A Global Capital Security" or
"Regulation S Global Capital Security", each a "Global Capital Security" and
collectively, the "Global Capital Securities"), which shall be deposited on
behalf of the purchasers of the Capital Securities represented thereby with the
Clearing Agency or with the Property Trustee, at its New York office, as
custodian for the Clearing Agency, and registered in the name of the Clearing
Agency or a nominee of the Clearing Agency, duly executed by the Trust and
authenticated by the Property Trustee as hereinafter provided. The number of
Capital Securities represented by the Rule 144A Global Capital Security and the
Regulation S Global
-37-
Capital Security may from time to time be increased or decreased by adjustments
made on the records of the Property Trustee and the Clearing Agency or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to
---------------------
the Rule 144A Global Capital Security, the Regulation S Global Capital
Securities and such other Capital Securities in global form as may be authorized
by the Trust to be deposited with or on behalf of the Clearing Agency.
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for delivery
initially one or more Rule 144A Global Capital Securities and one or more
Regulation S Global Capital Securities that (i) shall be registered in the name
of Cede & Co. or other nominee of such Clearing Agency and (ii) shall be
delivered by the Trustee to such Clearing Agency or pursuant to such Clearing
Agency's written instructions or held by the Property Trustee as custodian for
the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with respect to any
Rule 144A Global Capital Security or any Regulation S Global Capital Security
held on their behalf by the Clearing Agency or by the Property Trustee as the
custodian of the Clearing Agency or under such Rule 144A Global Capital Security
or such Regulation S Global Capital Security, and the Clearing Agency may be
treated by the Trust, the Property Trustee and any agent of the Trust or the
Property Trustee as the absolute owner of such Rule 144A Global Capital Security
or such Regulation S Global Capital Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent or employee of the Trust or the Property Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Clearing Agency or impair, as between the Clearing Agency and
its Participants, the operation of customary practices of such Clearing Agency
governing the exercise of the rights of a holder of a beneficial interest in any
Rule 144A Global Capital Security or any Regulation S Global Capital Security.
(c) Definitive Capital Securities. Except as provided in Section
-----------------------------
7.9, owners of beneficial interests in a Rule 144A Global Capital Security or a
Regulation S Global Capital Security will not be entitled to receive physical
delivery of certificated Capital Securities ("Definitive Capital Securities").
Purchasers of Securities who are "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) and did not purchase
Capital Securities in reliance on Regulation S will receive Capital Securities
in the form of individual certificates in definitive, fully registered form
without distribution coupons and with the applicable Restricted Securities
Legend set forth in Exhibit A-1 hereto ("Restricted Definitive Capital
Securities"); provided, however, that upon transfer of such Restricted
-------- -------
Definitive Capital Securities to a QIB, such Restricted Definitive Capital
Securities will, unless the Rule 144A Global Capital Security has previously
been exchanged, be exchanged for an interest in a
-38-
Rule 144A Global Capital Security pursuant to the provisions of Section 9.2.
Restricted Definitive Capital Securities will bear the applicable Restricted
Securities Legend set forth on Exhibit A-1 unless removed in accordance with
Section 9.2.
(d) Authorized Denominations. The Capital Securities are issuable
------------------------
only in denominations of $1,000 and any integral multiple thereof.
Section 7.4. Registrar, Paying Agent and Exchange Agent.
------------------------------------------
The Trust shall maintain in the Borough of Manhattan, The City of
New York, (i) an office or agency where Capital Securities may be presented for
registration of transfer ("Registrar"), (ii) an office or agency where Capital
Securities may be presented for payment ("Paying Agent") and (iii) an office or
agency where Securities may be presented for exchange ("Exchange Agent"). The
Registrar shall keep a register of the Capital Securities and of their transfer.
The Trust may appoint the Registrar, the Paying Agent and the Exchange Agent and
may appoint one or more co-registrars, one or more additional paying agents and
one or more additional exchange agents in such other locations as it shall
determine which paying agent and/or exchange agent must be acceptable to the
Administrative Trustees and the Company. The term "Registrar" includes any
additional registrar, "Paying Agent" includes any additional paying agent and
the term "Exchange Agent" includes any additional exchange agent. The Trust may
change any Paying Agent, Registrar, or Exchange Agent without prior notice to
any Holder. The Paying Agent shall be permitted to resign as Paying Agent upon
30 days' written notice to the Administrative Trustees. The Trust shall notify
the Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Exchange Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar, or
Exchange Agent. The Trust shall act as Paying Agent, Registrar and Exchange
Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar,
Paying Agent, and Exchange Agent for the Capital Securities. In the event that
the Property Trustee shall no longer be the Registrar, Paying Agent, or Exchange
Agent the Trust shall appoint a successor which successor shall be acceptable to
the Administrative Trustees and the Company.
Section 7.5. Paying Agent to Hold Money in Trust.
-----------------------------------
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of liquidation amounts or Distributions on the Securities, and
will notify the Property Trustee if there are insufficient funds for such
purpose. While any such insufficiency continues, the Property Trustee may
require a Paying Agent to pay all money held by it to the Property Trustee. The
Trust at any time may require a Paying Agent to pay all money held by it to the
Property Trustee and to
-39-
account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or
an Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.
Section 7.6. Replacement Securities.
----------------------
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall
authenticate a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. An indemnity bond must be provided
by the Holder which, in the judgment of the Property Trustee, is sufficient to
protect the Trustees, the Sponsor or any authenticating agent from any loss
which any of them may suffer if a Security is replaced. The Trust may charge
such Holder for its expenses in replacing a Security.
Section 7.7. Outstanding Capital Securities.
------------------------------
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those cancelled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Capital Security is replaced, pursuant to Section 7.6 hereof,
it ceases to be outstanding unless the Property Trustee receives proof
satisfactory to it that the replaced Capital Security is held by a bona fide
purchaser.
If Capital Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of
the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
Section 7.8. Capital Securities in Treasury.
------------------------------
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Securities
which a Responsible Officer of the Property Trustee actually knows are so owned
shall be so disregarded.
-40-
Section 7.9. Temporary Securities.
--------------------
(a) Until definitive Securities are ready for delivery, the
Trust may prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Trust considers appropriate for temporary Securities. Without unreasonable
delay, the Trust shall prepare and, in the case of the Capital Securities, the
Property Trustee shall authenticate definitive Securities in exchange for
temporary Securities.
(b) A Global Capital Security deposited with the Clearing Agency
or with the Property Trustee as custodian for the Clearing Agency pursuant to
Section 7.3 shall be transferred to the beneficial owners thereof in the form of
definitive certificated Capital Securities only if such transfer complies with
Section 9.2 and (i) the Clearing Agency notifies the Company that it is
unwilling or unable to continue as Clearing Agency for such Global Capital
Security or if at any time such Clearing Agency ceases to be a "clearing agency"
registered under the Exchange Act and a clearing agency is not appointed by the
Sponsor within 90 days of such notice, (ii) a Default or an Event of Default has
occurred and is continuing or (iii) the Trust at its sole discretion elects to
cause the issuance of definitive certificated Capital Securities.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of definitive certificated Capital
Securities pursuant to this Section 7.9 shall be surrendered by the Clearing
Agency to the Property Trustee located in the Borough of Manhattan, The City of
New York, to be so transferred, in whole or from time to time in part, without
charge, and the Property Trustee shall authenticate and make available for
delivery, upon such transfer of each portion of such Global Capital Security, an
equal aggregate liquidation amount of Securities of authorized denominations in
the form of certificated Capital Securities. Any portion of a Global Capital
Security transferred pursuant to this Section shall be registered in such names
as the Clearing Agency shall direct. Any Capital Security in the form of
definitive certificated Capital Securities delivered in exchange for an interest
in the Restricted Capital Security in global form shall, except as otherwise
provided by Sections 7.3 and 9.2, bear the applicable Restricted Securities
Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of a
Global Capital Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Declaration
or the Securities.
(e) In the event of the occurrence of any of the events
specified in Section 7.9(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Capital Securities in fully
registered form without distribution coupons.
-41-
Section 7.10. Cancellation.
------------
The Trust at any time may deliver Capital Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and Exchange
Agent shall forward to the Property Trustee any Capital Securities surrendered
to them for registration of transfer, redemption, exchange or payment. The
Property Trustee shall promptly cancel all Capital Securities, surrendered for
registration of transfer, redemption, exchange, payment, replacement or
cancellation and shall dispose of cancelled Capital Securities as the Trust
directs, provided that the Property Trustee shall not be obligated to destroy
Capital Securities. The Trust may not issue new Capital Securities to replace
Capital Securities that it has paid or that have been delivered to the Property
Trustee for cancellation or that any Holder has exchanged.
Section 7.11. CUSIP Numbers.
-------------
The Trust in issuing the Capital Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
--------
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
Section 8.1. Termination of Trust.
--------------------
(a) The Trust shall automatically terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days after the
date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that, the Property Trustee has received
-------- ----
written notice from the Holder of Common Securities directing the Property
Trustee to terminate the Trust (which direction is optional, and except as
otherwise expressly provided below, within the discretion of the Holder of
Common Securities) and provided, further, that such direction and such
-------- -------
distribution is conditioned on the Administrative Trustees' receipt of
-42-
an opinion of an independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published rulings of the
Internal Revenue Service, to the effect that the Holders will not recognize
any gain or loss for United States federal income tax purposes as a result
of the dissolution of the Trust and the distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the Securities;
(vi) upon the repayment of the Debentures or at such time as no
Debentures are outstanding; or
(vii) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Administrative Trustees shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) The provisions of Section 3.9 and Article X shall survive
the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
Section 9.1. Transfer of Securities.
----------------------
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
security not made in accordance with this Declaration shall be null and void.
(c) The Sponsor may not transfer the Common Securities other
than to a directly or indirectly, wholly-owned subsidiary thereof.
-43-
(d) The Administrative Trustees shall provide for the
registration of Capital Securities and of the transfer of Capital Securities,
which will be effected without charge but only upon payment (with such indemnity
as the Administrative Trustees may require) in respect of any tax or other
governmental charges that may be imposed in relation to it. Upon surrender for
registration of transfer of any Capital Securities, the Administrative Trustees
shall cause one or more new Capital Securities to be issued in the name of the
designated transferee or transferees. Every Capital Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Administrative Trustees and the Registrar
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Capital Security surrendered for registration of transfer shall be
canceled by the Property Trustee. A transferee of a Capital Security shall be
entitled to the rights and subject to the obligations of a Holder hereunder upon
the receipt by such transferee of a Capital Security. By acceptance of a Capital
Security, each transferee shall be deemed to have agreed to be bound by this
Declaration.
Section 9.2. Transfer Procedures and Restrictions
------------------------------------
(a) General. Except as otherwise provided in Section 9.2(b), if
-------
Capital Securities are issued upon the transfer, exchange or replacement of
Capital Securities bearing the Restricted Securities Legend set forth in Exhibit
A-1 hereto, or if a request is made to remove such Restricted Securities Legend
on Capital Securities, the Capital Securities so issued shall bear the
Restricted Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Trust and the
Property Trustee such evidence satisfactory to the Sponsor, which shall include
an Opinion of Counsel, as may be reasonably required by the Sponsor, that
neither the legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof are made pursuant to an exception from
the registration requirements of the Securities Act or, with respect to
Restricted Definitive Capital Securities, that such Securities are not
"restricted" within the meaning of Rule 144. Upon provision of such
satisfactory evidence, the Property Trustee, at the written direction of the
Trust, shall authenticate and deliver Capital Securities that do not bear the
legend.
(b) Transfers After Effectiveness of a Registration Statement.
---------------------------------------------------------
After the effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply, and beneficial interests in a Capital Security in global
form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring holder's Restricted Definitive
Capital Security or directions to transfer such Holder's beneficial interest in
the Rule 144A Global Capital Security or the Regulation S Global Capital
Security, as the case may be. No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Rule 144A Global Capital
Security or the Regulation S Global Capital Security shall be effective unless
the transferor delivers to the Trust a certificate in a form substantially
-44-
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1.
Except as otherwise provided in Section 9.2(l), after the effectiveness of a
Registration Statement, the Trust shall issue and the Property Trustee, upon a
written order of the Trust signed by one Administrative Trustee, shall
authenticate a Capital Security in global form without the Restricted Securities
Legend (the "Unrestricted Global Capital Security") for deposit with the
Clearing Agency or its custodian to evidence transfers of beneficial interests
from the (i) Rule 144A Global Capital Security or the Regulation S Global
Capital Security and (ii) Restricted Definitive Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities.
------------------------------------------------------
When Definitive Capital Securities are presented to the Registrar
(x) to register the transfer of such Definitive Capital
Securities; or
(y) to exchange such Definitive Capital Securities for an equal
number of Definitive Capital Securities, the Registrar or co-registrar
shall register the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met; provided, however,
-------- -------
that the Definitive Capital Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Administrative Trustees and the Registrar or co-registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing; and
(ii) in the case of Definitive Capital Securities that are
Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from such
Holder to that effect; or
(B) if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a form
substantially similar to that attached hereto as the "Form of
Assignment" in Exhibit A-1, and (ii) if the Trust so requests,
evidence reasonably satisfactory to it as to the compliance with
the restrictions set forth in the Restricted Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security
---------------------------------------------------------
for a Beneficial Interest in a Global Capital Security. A Definitive Capital
- ------------------------------------------------------
Security may not be exchanged for a beneficial interest in a Global Capital
Security except upon satisfaction of the requirements set forth below. Upon
receipt by the Property Trustee of a Definitive Capital Security, duly endorsed
or accompanied by appropriate instruments of transfer, in form satisfactory to
the
-45-
Property Trustee and Administrative Trustees, together with:
(i) if such Definitive Capital Security is a Restricted Capital
Security, certification (in a form substantially similar to that attached
hereto as the "Form of Assignment" in Exhibit A-1); provided, however, that
such Definitive Capital Security may only be exchanged for an interest in a
Regulation S Global Security where such Definitive Capital Security is
being transferred pursuant to Regulation S or Rule 144 (if available); and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the Property
Trustee to make, or to direct the Clearing Agency to make, an adjustment on
its books and records with respect to the appropriate Global Capital
Security to reflect an increase in the number of the Capital Securities
represented by such Global Capital Security, then the Property Trustee
shall cancel such Definitive Capital Security and cause, or direct the
Clearing Agency to cause, the aggregate number of Capital Securities
represented by the appropriate Global Capital Security to be increased
accordingly. If no Global Capital Securities are then outstanding, the
Trust shall issue and the Property Trustee shall authenticate, upon written
order of any Administrative Trustee, an appropriate number of Capital
Securities in global form.
(e) Transfer and Exchange of Global Capital Securities.
--------------------------------------------------
Subjec to Section 9.2(f), the transfer and exchange of Global Capital Securities
or beneficial interests therein shall be effected through the Clearing Agency,
in accordance with this Declaration (including applicable restrictions on
transfer set forth herein, if any) and the procedures of the Clearing Agency
therefor.
(f) Transfer of a Beneficial Interest in a Global Capital
-----------------------------------------------------
Security for a Definitive Capital Security.
- ------------------------------------------
(i) Any Person having a beneficial interest in a Global Capital
Security may upon request, but only upon 20 days prior notice to the
Property Trustee, and if accompanied by the information specified below,
exchange such beneficial interest for a Definitive Capital Security
representing the same number of Capital Securities. Upon receipt by the
Property Trustee from the Clearing Agency or its nominee on behalf of any
Person having a beneficial interest in a Global Capital Security of written
instructions or such other form of instructions as is customary for the
Clearing Agency or the Person designated by the Clearing Agency as having
such a beneficial interest in a Restricted Capital Security and a
certification from the transferor (in a form substantially similar to that
attached hereto as the "Form of Assignment" in Exhibit A-1), which may be
submitted by facsimile, then the Property Trustee will cause the aggregate
number of Capital Securities represented by Global Capital Securities to be
reduced on its books and records and, following such reduction, the Trust
will execute
-46-
and the Property Trustee will authenticate and make available for delivery
to the transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this Section
9.2(f) shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its
Participants or indirect participants or otherwise, shall instruct the
Property Trustee in writing. The Property Trustee shall deliver such
Capital Securities to the persons in whose names such Capital Securities
are so registered in accordance with such instructions of the Clearing
Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
-------------------------------------------------------
Securities. Notwithstanding any other provisions of this Declaration (other than
- ----------
the provisions set forth in subsection (b) of Section 7.9), a Global Capital
Security may not be transferred as a whole except by the Clearing Agency to a
nominee of the Clearing Agency or another nominee of the Clearing Agency or by
the Clearing Agency or any such nominee to a successor Clearing Agency or a
nominee of such successor Clearing Agency.
Prior to the expiration of the restricted period, as contemplated
by Regulation S, beneficial interests in the Regulation S Global Capital
Security may be exchanged for beneficial interests in the Rule 144A Global
Capital Security only if such exchange occurs in connection with a transfer of
the Capital Securities pursuant to Rule 144A and the transferor first delivers
to the Property Trustee a written certificate (in a form substantially similar
to that attached hereto as the "Form of Assignment" in Exhibit A-1) to the
effect that the Capital Securities are being transferred pursuant to and in
compliance with Rule 144A under the Securities Act of 1933.
Beneficial interests in the Rule 144A Global Capital Security may
be transferred to a person who takes delivery in the form of an interest in the
Regulation S Global Capital Security, whether before or after the expiration of
such restricted period, as contemplated by Regulation S, only if the transferor
first delivers to the Property Trustee a written certificate (in a form
substantially similar to that attached hereto as the "Form of Assignment" in
Exhibit A-1) to the effect that such transfer is pursuant to and in compliance
with Regulation S under the Securities Act.
(h) Legend.
------
(i) Except as permitted by the following paragraph (ii), each
Capital Security certificate evidencing the Global Capital Securities and
the Definitive Capital Securities (and all Capital Securities issued in
exchange therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the following form, as
applicable:
-47-
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, [OR NOT SUBJECT TO], REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY,
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE
HEREOF AND THE LAST DATE ON WHICH ALLMERICA FINANCIAL CORPORATION
(THE "CORPORATION") OR ANY AFFILIATE OF THE CORPORATION WAS THE
OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL
SECURITY) ONLY (A) TO THE CORPORATION, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-
U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, FOR
-48-
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE CORPORATION PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF
THIS CAPITAL SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE
TO THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
and in addition, in the case of the Regulation S Global Capital Security:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.
(ii) Upon any sale or transfer of a Restricted Capital Security
(including any Restricted Capital Security represented by a Global Capital
Security) pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 under the Securities Act after such
registration statement ceases to be effective:
(A) in the case of any Restricted Capital Security that is
a Definitive Capital Security, the Registrar shall permit the
Holder thereof to exchange such Restricted Capital Security for a
Definitive Capital Security that does not bear the Restricted
Securities Legend and rescind any restriction on the transfer of
such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security that is
represented
-49-
by a Global Capital Security, the Registrar shall permit the
Holder of such Global Capital Security to exchange such Global
Capital Security for another Global Capital Security that does not
bear the Restricted Securities Legend.
(i) Cancellation or Adjustment of Global Capital Security. At
-----------------------------------------------------
such time as all beneficial interests in a Global Capital Security have either
been exchanged for Definitive Capital Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be returned to the Property
Trustee for cancellation or retained and canceled by the Property Trustee. At
any time prior to such cancellation, if any beneficial interest in a Global
Capital Security is exchanged for Definitive Capital Securities, Capital
Securities represented by such Global Capital Security shall be reduced and an
adjustment shall be made on the books and records of the Property Trustee (if it
is then the custodian for such Global Capital Security) with respect to such
Global Capital Security, by the Property Trustee or any securities custodian, to
reflect such reduction.
(j) Obligations with Respect to Transfers and Exchanges of
------------------------------------------------------
Capital Securities.
- ------------------
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate Definitive
Capital Securities and Global Capital Securities at the Registrar's request
in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust or
the Sponsor may require) in respect of any tax or other governmental charge
that may be imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) Capital Securities during a
period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption and ending at the close of business on
the day of such mailing; or (b) any Capital Security so selected for
redemption.
(iv) Prior to the due presentation for registrations of transfer
of any Capital Security, the Trust, the Property Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in whose
name a Capital Security is registered as the absolute owner of such Capital
Security for the purpose of receiving Distributions on such Capital
Security (subject to Section 2(c) of Annex I) and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the Paying Agent,
the Registrar or any co-registrar shall be affected by notice to the
contrary.
-50-
(v) All Capital Securities issued upon any transfer or exchange
pursuant to the terms of this Declaration shall evidence the same security
and shall be entitled to the same benefits under this Declaration as the
Capital Securities surrendered upon such transfer or exchange.
(k) No Obligation of the Property Trustee.
-------------------------------------
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Capital Security, a
Participant in the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its nominee or of any
Participant thereof, with respect to any ownership interest in the Capital
Securities or with respect to the delivery to any Participant, beneficial
owner or other Person (other than the Clearing Agency) of any notice
(including any notice of redemption) or the payment of any amount, under or
with respect to such Capital Securities. All notices and communications to
be given to the Holders and all payments to be made to Holders under the
Capital Securities shall be given or made only to or upon the order of the
registered Holders (which shall be the Clearing Agency or its nominee in
the case of a Global Capital Security). The rights of beneficial owners in
any Global Capital Security shall be exercised only through the Clearing
Agency subject to the applicable rules and procedures of the Clearing
Agency. The Property Trustee may conclusively rely and shall be fully
protected in relying upon information furnished by the Clearing Agency or
any agent thereof with respect to its Participants and any beneficial
owners.
(ii) The Property Trustee and Registrar shall have no obligation
or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Declaration or under applicable
law with respect to any transfer of any interest in any Capital Security
(including any transfers between or among Clearing Agency Participants or
beneficial owners in any Global Capital Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the
terms of this Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
(l) Exchange of Series A Capital Securities for Series B Capital
------------------------------------------------------------
Securities. The Series A Capital Securities may, at the option of the Company,
- ----------
be exchanged for Series B Securities pursuant to the terms of the Exchange
Offer. The Trustee shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities, the
transactions
-51-
contemplated by the Exchange Offer have been consummated; and
(B) the number of Series A Capital Securities properly
tendered in the Exchange Offer that are represented by a Global
Capital Security and the number of Series A Capital Securities
properly tendered in the Exchange Offer that are represented by
Definitive Capital Securities, the name of each Holder of such
Definitive Capital Securities, the liquidation amount of Capital
Securities properly tendered in the Exchange Offer by each such
Holder and the name and address to which Definitive Capital
Securities for Series B Capital Securities shall be registered and
sent for each such Holder.
The Property Trustee, upon receipt of (i) such Officers'
Certificate, (ii) an Opinion of Counsel (x) to the effect that the Series B
Capital Securities have been registered under Section 5 of the Securities Act
and the Indenture has been qualified under the Trust Indenture Act and (y) with
respect to the matters set forth in Section 3(p) of the Registration Rights
Agreement and (iii) an order of the Trust as set forth in Section 7.2, shall
authenticate (A) a Global Capital Security for Series B Capital Securities in
aggregate liquidation amount equal to the aggregate liquidation amount of Series
A Capital Securities represented by a Global Capital Security indicated in such
Officers' Certificate as having been properly tendered and (B) Definitive
Capital Securities representing Series B Capital Securities registered in the
names of, and in the liquidation amounts indicated in such Officers'
Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security for Series A Capital Securities indicating the reduction in the
number and aggregate liquidation amount represented thereby as a result of the
Exchange Offer.
The Trust shall deliver such Definitive Capital Securities for
Series B Capital Securities to the Holders thereof as indicated in such
Officers' Certificate.
(m) Minimum Transfers. Series A Capital Securities may only be
-----------------
transferred in minimum blocks of $100,000 aggregate liquidation amount until
such Series A Capital Securities or Series B Capital Securities issued in
exchange therefor are registered pursuant to an effective registration statement
filed under the Securities Act.
Section 9.3. Book Entry Interests.
--------------------
Global Capital Securities shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of the
Clearing Agency, and no Capital Security Beneficial Owner will receive a
definitive Capital Security Certificate representing such Capital Security
Beneficial Owner's interests in such Global Capital Securities, except as
-52-
provided in Section 9.2 and Section 7.9. Unless and until definitive, fully
registered Capital Securities certificates have been issued to the Capital
Security Beneficial Owners pursuant to Section 9.2 or Section 7.9:
(a) the provisions of this Section 9.3 shall be in full force
and effect;
(b) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Capital Securities and receiving approvals, votes
or consents hereunder) as the Holder of the Capital Securities and the sole
holder of the Global Certificates and shall have no obligation to the Capital
Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.3
conflict with any other provisions of this Declaration, the provisions of this
Section 9.3 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and the
Clearing Agency shall receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. The Clearing Agency
will make book entry transfers among the Clearing Agency Participants.
Section 9.4. Notices to Clearing Agency.
--------------------------
Whenever a notice or other communication to the Capital Security
Holders is required under this Declaration, the Trustees shall give all such
notices and communications specified herein to be given to the Holders of Global
Capital Securities to the Clearing Agency, and shall have no notice obligations
to the Capital Security Beneficial Owners.
Section 9.5. Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Administrative
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Capital Securities.
-53-
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section 10.1. Liability.
---------
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution or termination of the Trust or
otherwise.
(b) The Sponsor shall be liable for all of the debts and
obligations of the Trust (other than with respect to the Securities) to the
extent not satisfied out of the Trust's assets.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the
Holders of the Capital Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
Section 10.2. Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care 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
-54-
amount of assets from which Distributions to Holders of Securities might
properly be paid.
Section 10.3. Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provides terms that are, fair and reasonable to
the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
-55-
Section 10.4. Indemnification.
---------------
(a) (i) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Company Indemnified Person against expenses (including
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees and expenses) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust and
except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such
Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a)
-56-
(unless ordered by a court) shall be made by the Sponsor or the Debenture
Issuer, as the case may be, only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person is
proper in the circumstances because he has met the applicable standard of
conduct set forth in paragraphs (i) and (ii). Such determination shall be
made (1) by the Administrative Trustees by a majority vote of a quorum
consisting of such Administrative Trustees who were not parties to such
action, suit or proceeding, (2) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested Administrative Trustees so
directs, by independent legal counsel in a written opinion, or (3) by the
Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred
by a Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Sponsor or the Debenture Issuer, as the case may be, in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to repay
such amount if it shall ultimately be determined that he is not entitled to
be indemnified by the Debenture Issuer as authorized in this Section
10.4(a). Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made (i) by
the Administrative Trustees by a majority vote of a quorum of disinterested
Administrative Trustees, (ii) if such a quorum is not obtainable, or, even
if obtainable, if a quorum of disinterested Administrative Trustees so
directs, by independent legal counsel in a written opinion or (iii) the
Common Security Holder of the Trust, that, based upon the facts known to
the Administrative Trustees, counsel or the Common Security Holder at the
time such determination is made, such Company Indemnified Person acted in
bad faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall any
advance be made in instances where the Administrative Trustees, independent
legal counsel or Common Security Holder reasonably determine that such
person deliberately breached his duty to the Trust or its Common or Capital
Security Holders.
(vi) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 10.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Debenture
Issuer or Capital Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section
10.4(a) shall be deemed to be provided by a contract between the Sponsor or
the Debenture Issuer as the case may be and each Company Indemnified Person
who serves in such capacity at
-57-
any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Sponsor or the Debenture Issuer would have the power to indemnify him
against such liability under the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same
position under the provisions of this Section 10.4(a) with respect to the
resulting or surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit of
the heirs, executors and administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 10.4(b) shall survive the termination of
this Declaration or the earlier resignation or removal of the Property Trustee
or the Delaware Trustee.
Section 10.5. Outside Businesses.
------------------
-58-
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee (subject to Section 5.3(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 shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the Trust,
shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the
Delaware Trustee, or the Property Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the Property
Trustee may engage or be interested in any financial or other transaction with
the Sponsor or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for, or act on any committee or body of holders of, securities
or other obligations of the Sponsor or its Affiliates.
Section 10.6. Compensation; Fees.
------------------
The Sponsor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust); and
(b) except as otherwise expressly provided herein, to reimburse
the Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision of
this Declaration and the offering of the Capital Securities (including the
reasonable compensation and the expenses and disbursements of their respective
agents and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith.
The provisions of this Section 10.6 shall survive the dissolution
of the Trust and the termination of this Declaration and the removal or
resignation of any Trustee.
No Trustee may claim any lien or charge on any property of the
Trust as a result of any amount due pursuant to this Section 10.6
-59-
ARTICLE XI
ACCOUNTING
Section 11.1. Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
Section 11.2. Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes. The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Administrative Trustees.
(b) The Administrative Trustees shall cause to be prepared and
delivered to each of the Holders, within 90 days after the end of each Fiscal
Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss;
(c) The Administrative Trustees shall cause to be duly prepared
and delivered to each of the Holders, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Administrative Trustees shall endeavor
to deliver all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Administrative Trustees shall cause to be duly prepared
and filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Administrative Trustees on behalf of the Trust with any state or
local taxing authority.
Section 11.3. Banking.
-------
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
-------- -------
funds in respect of the
-60-
Debentures held by the Property Trustee shall be made directly to the Property
Trustee Account and no other funds of the Trust shall be deposited in the
Property Trustee Account. The sole signatories for such accounts shall be
designated by the Administrative Trustees; provided, however, that the Property
-------- -------
Trustee shall designate the signatories for the Property Trustee Account.
Section 11.4. Withholding.
-----------
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to Distributions or allocations to any Holder, the amount withheld shall
be deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claim over withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1. Amendments.
----------
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by
a written instrument approved and executed by:
(i) the Administrative Trustees (or if there are more than two
Administrative Trustees a majority of the Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
-61-
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, the Property Trustee shall have first received;
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms
to, the terms of this Declaration (including the terms of the
Securities),
provided, however, that the Property Trustee and the Delaware Trustee shall not
- -------- -------
be required to sign any such amendment which affects the rights, powers, duties,
obligations or immunities of the Property Trustee, and
(ii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified
for purposes of United States federal income taxation as a
grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article Four shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities;
(f) The rights of the holders of the Common Securities under
Article Five to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
-62-
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any provision in
this Declaration that may be inconsistent with any other provision of
this Declaration or to make any other provisions with respect to matters
or questions arising under this Declaration which shall not be
inconsistent with the other provisions of the Declaration; and
(ii)to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or
to ensure that the Trust will not be required to register as an
Investment Company under the Investment Company Act.
provided, however, that in the case of clause (i) and (ii), such action shall
- -------- -------
not adversely affect in any material respect the interests of the Holders of the
Securities, and any amendments of this Declaration pursuant to (i) or (ii) shall
become effective when notice thereof is given to the Holders of the Securities.
Section 12.2. Meetings of the Holders; Action by Written Consent.
--------------------------------------------------
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrative Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration, the
terms of the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Administrative Trustees shall
call a meeting of the Holders of such class if directed to do so by the Holders
of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrative Trustees one or
more notices in a writing stating that the signing Holders of Securities wish to
call a meeting and indicating the general or specific purpose for which the
meeting is to be called. Any Holders calling a meeting shall specify in writing
the certificates evidencing the Securities held by the Holders exercising the
right to call a meeting and only those Securities specified shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders
of Securities having a right to vote thereat at least seven days and not
more than 60 days before the
-63-
date of such meeting. Whenever a vote, consent or approval of the Holders is
permitted or required under this Declaration or the rules of any stock exchange
on which the Capital Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders. Any action that
may be taken at a meeting of the Holders of Securities may be taken without a
meeting if a consent in writing setting forth the action so taken is signed by
the Holders of Securities owning not less than the minimum amount of Securities
in liquidation amount that would be necessary to authorize or take such action
at a meeting at which all Holders having a right to vote thereon were present
and voting. Prompt notice of the taking of action without a meeting shall be
given to the Holders entitled to vote who have not consented in writing. The
Administrative Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by proxy on
all matters in which a Holder is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall
be valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable prior to the
vote by the Holder of Securities executing it. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative Trustees
may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed or trading, otherwise
provides, the Administrative Trustees, in their sole discretion, shall establish
all other provisions relating to meetings of Holders, including notice of the
time, place or purpose of any meeting at which any matter is to be voted on by
any Holders of Securities, waiver of any such notice, action by consent without
a meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any such
right to vote.
-64-
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section 13.1. Representations and Warranties of Property Trustee.
--------------------------------------------------
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation with
trust powers and authority under the laws of the State of New York to execute
and deliver, and to carry out and perform its obligations under the terms of,
this Declaration;
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) The execution, delivery and performance of this Declaration
by the Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration
with or notice to, any New York State or federal banking authority is required
for the execution, delivery or performance by the Property Trustee of this
Declaration.
Section 13.2. Representations and Warranties of Delaware Trustee.
--------------------------------------------------
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a duly organized Delaware banking
corporation, validly existing and in good standing under the laws of the State
of Delaware, with trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration;
-65-
(b) The execution, delivery and performance by the Delaware
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. This Declaration has been duly
executed and delivered by the Delaware Trustee and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration
with or notice to, any federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a resident
of the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
Section 14.1. Registration Rights Agreement.
-----------------------------
The Holders of the Capital Securities, the Debentures and the
Capital Securities Guarantee (collectively, the "Registrable Securities") are
entitled to the benefits of the Registration Rights Agreement.
ARTICLE XV
MISCELLANEOUS
Section 15.1. Notices.
-------
All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative
Trustees at the Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Holders and the Property Trustee):
-66-
AFC Capital Trust I
c/o Allmerica Financial Corporation
440 Lincoln Street
Worcester, Massachusetts 01653
Attention: John F. Kelly, Administrative Trustee
(b) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as Delaware Trustee may give notice of to
the Holders):
Chase Manhattan Bank Delaware
1201 Market Street, 9th Floor
Wilmington, Delaware 19801
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the Property
Trustee's mailing address set forth below (or such other address as the Property
Trustee may give notice of to the Holders):
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Global Trust Services
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust and the Property
Trustee):
Allmerica Financial Corporation
440 Lincoln Street
Worcester, Massachusetts 01653
Attention: John F. Kelly, General Counsel
(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
-67-
address of which no notice was given, such notice or other document shall be
deemed to have been delivered on the date of such refusal or inability to
deliver.
Section 15.2. Governing Law.
-------------
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws, provided that the immunities and
standard of care of the Property Trustee in connection with the administration
of its trusts hereunder shall be governed by the laws of the jurisdiction of its
incorporation. The provisions of Section 3540 and 3561 of Title 12 of the
Delaware Code shall not apply to the Trust.
Section 15.3. Intention of the Parties.
------------------------
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
Section 15.4. Headings.
--------
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
Section 15.5. Successors and Assigns
----------------------
Whenever in this Declaration any of the parties hereto is named
or referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
Section 15.6. Partial Enforceability.
----------------------
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
Section 15.7. Counterparts.
------------
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read
-68-
as though one, and they shall have the same force and effect as though all of
the signers had signed a single signature page.
-69-
IN WITNESS WHEREOF, the undersigned has caused these presents to
be executed as of the day and year first above written.
/s/ John P. Kavanaugh
-----------------------------------------------
John P. Kavanaugh, as Administrative Trustee
/s/ John F. Kelly
-----------------------------------------------
John F. Kelly, as Administrative Trustee
/s/ Edward J. Parry III
-----------------------------------------------
Edward J. Parry III, as Administrative Trustee
CHASE MANHATTAN BANK DELAWARE
as Delaware Trustee
By:/s/ John J. Cashin
-----------------------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
THE CHASE MANHATTAN BANK
as Property Trustee
By:/s/ Andrea Koster-Crain
-----------------------------------------------
Name: Andrea Koster-Crain
Title: Vice President
ALLMERICA FINANCIAL CORPORATION
as Sponsor
By:/s/ Edward J. Parry III
-----------------------------------------------
Name: Edward J. Parry III
Title: Vice President and Chief
Financial Officer
-70-
ANNEX I
TERMS OF
8.207% SERIES A/SERIES B CAPITAL SECURITIES
8.207% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of February 3, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Offering
Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
----------------------
(a) Capital Securities. 300,000 Series A Capital Securities of the
------------------
Trust and 300,000 Series B Capital Securities of the Trust, with an aggregate
liquidation amount at any time outstanding with respect to the assets of the
Trust of three hundred million dollars ($300,000,000), and each Capital Security
with a liquidation amount with respect to the assets of the Trust of $1,000 per
Security, are hereby designated for the purposes of identification only as
"8.207% Series A Capital Securities" and "8.207% Series B Capital Securities",
respectively (collectively, the "Capital Securities"). The certificates
evidencing the Capital Securities shall be substantially in the form of Exhibit
A-1 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Capital Securities are listed.
(b) Common Securities. 9,279 Common Securities of the Trust with an
-----------------
aggregate liquidation amount with respect to the assets of the Trust of nine
million two hundred and seventy-nine thousand dollars ($9,279,000) and each
Common Security with a liquidation amount with respect to the assets of the
Trust of $1,000 per Security, are hereby designated for the purposes of
identification only as "8.207% Common Securities" (the "Common Securities"). The
certificates evidencing the Common Securities shall be substantially in the form
of Exhibit A-2 to the Declaration, with such changes and additions thereto or
deletions therefrom as may be required by ordinary usage, custom or practice.
2. Distributions.
-------------
(a) Distributions payable on each Security will be fixed at a rate
per annum of 8.207% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the
-1-
Property Trustee. Except for Distributions which are deferred as provided in
Section 2(b), Distributions in arrears for more than one semi-annual period will
bear additional distributions thereon compounded semi-annually at the Coupon
Rate (to the extent permitted by applicable law). Pursuant to the Registration
Rights Agreement, in certain limited circumstances the Debenture Issuer will be
required to pay Liquidated Damages (as defined in the Registration Rights
Agreement) with respect to the Debentures. The term "Distributions", as used
herein, includes distributions of any such interest and Liquidated Damages
payable unless otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds on hand legally available
therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided for,
from February 3, 1997, and will be payable semi-annually in arrears on February
15 and August 15 of each year, commencing on August 15, 1997 (each, a
"Distribution Date"), except as otherwise described below. Distributions will
be computed on the basis of a 360-day year consisting of twelve 30-day months
and for any period less than a full calendar month on the basis of the actual
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive semi-annual periods, including the first
such semi-annual period during such period (each an "Extension Period"), during
which Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall end on a day other than an Interest
- -------- ----
Payment Date (as defined in the Indenture) for the Debentures or shall extend
beyond the Maturity Date of the Debentures. As a consequence of such deferral,
Distributions shall not be due and payable and will also be deferred. Despite
such deferral, Distributions will continue to accumulate with additional
Distributions thereon (to the extent permitted by applicable law but not at a
rate greater than the rate at which interest is then accruing on the Debentures)
at the Coupon Rate compounded semi-annually during any such Extension Period.
Prior to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending such Extension Period;
provided that such Extension Period, together with all such previous and further
- -------- ----
extensions within such Extension Period, may not exceed 10 consecutive semi-
annual periods, including the first semi-annual period during such Extension
Period, or extend beyond the Maturity Date of the Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
(c) Except as provided above, Distributions on the Securities will be
payable to the Holders thereof as they appear on the books and records of the
Trust on the first day of the month in which the relevant Distribution Date
occurs, which Distribution Dates correspond to the interest payment dates on the
Debentures. Subject to any applicable laws and regulations and the provisions
of the Declaration, each such payment in respect of the Global Capital
Securities will
-2-
be made as described under the heading "Description of the Capital
Securities -- Form, Denomination, Book-Entry Procedures and Transfer" in the
Offering Memorandum dated January 29, 1997, of the Debenture Issuer and the
Trust relating to the Securities and the Debentures. Payments in respect of
Capital Securities held in certificated form will be made by check mailed to the
Holder entitled thereto. The relevant record dates for the Common Securities
shall be the same as the record dates for the Capital Securities. Distributions
payable on any Securities that are not punctually paid on any Distribution Date,
as a result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Holder on the relevant record date,
and such defaulted Distribution will instead be payable to the Person in whose
name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on
which Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), 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.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any termination of the Trust or the Holder of Common
Securities otherwise gives notice of its election to liquidate the Trust
pursuant to Section 8.1(a)(iii) of the Declaration, the Trust shall be
liquidated by the Administrative Trustees as expeditiously as the Administrative
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
Holders of the Securities a Like Amount (as defined below) of the Debentures, in
which event such Holders will be entitled to receive out of the assets of the
Trust legally available for distribution to Holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an amount
equal to the aggregate of the liquidation amount of $1,000 per Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal amount
of Debentures to be paid in accordance with their terms and (ii) with respect to
a distribution of Debentures upon the liquidation of the Trust, Debentures
having a principal amount equal to the Liquidation Amount of the Securities of
the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets on hand legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall
-3-
be paid on a Pro Rata basis, except that if an Event of Default has occurred and
is continuing, the Capital Securities shall have priority over the Common
Securities.
4. Redemption and Distribution.
---------------------------
(a) Upon the repayment of the Debentures, at maturity or upon early
redemption (pursuant to a Special Event, as described below), the proceeds from
such repayment shall be simultaneously applied by the Property Trustee (subject
to the Property Trustee having received notice no later than 45 days prior to
such repayment) to redeem the Securities at a redemption price equal to (i) in
the case of the repayment of the Debentures at maturity, the Maturity Redemption
Price (as defined below) and (ii) in the case of the optional redemption of the
Debentures upon the occurrence and continuation of a Special Event, the Special
Event Redemption Price (as defined below). The Maturity Redemption Price and
the Special Event Redemption Price are referred to collectively as the
"Redemption Price". Holders will be given not less than 30 nor more than 60
days notice of such redemption.
(b) The "Maturity Redemption Price", with respect to a redemption of
Securities, shall mean an amount equal to the principal of and accrued and
unpaid interest on the Debentures as of the maturity date thereof.
(ii) In the case of an optional redemption, the Capital Securities to
be redeemed will be determined as described in Section 4(f)(ii) below.
(c) If at any time a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") occurs, the Debenture Issuer shall
have the right (subject to the conditions set forth in the Indenture), upon not
less than 30 nor more than 60 days notice, to redeem the Debentures in whole,
but not in part, within the 90 days following the occurrence of such Special
Event (the "90 Day Period"), and, simultaneous with such redemption, to cause a
Like Amount of the Securities to be redeemed by the Trust at the Special Event
Redemption Price on a Pro Rata basis.
"Tax Event" shall occur upon receipt by the Sponsor and the
Administrative Trustee of an opinion (a "Tax Event Opinion") of a nationally
recognized tax counsel experienced in such matters to the effect that, as a
result of (a) any amendment to, or change (including any announced prospective
change) in, the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after January 29, 1997, there
is more than an insubstantial risk that (i) the Trust is, or as a result of the
issuance of the securities pursuant to the Exchange Offer (the "Exchange
Securities") would be 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 or any of the Exchange Securities, (ii) interest
payable by the Debenture Issuer on the Debentures is not or upon the issuance of
any
-4-
of the Exchange Securities would not be, or within 90 days of the date of such
opinion, will not be, deductible by the Debenture Issuer, in whole or in part,
for United States federal income tax purposes, or (iii) the Trust is, or will be
within 90 days of the date of such opinion, subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Trust is or will be considered an "investment company" that is required to
be registered under the Investment Company Act of 1940, as amended (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
issuance of the Capital Securities.
"Special Event Redemption Price" shall mean, with respect to a
redemption of Securities, a price equal to the greater of (i) 100% of the
principal of the Debentures to be redeemed or (ii) the sum, as determined by a
Quotation Agent (as defined in the Indenture), of the present values of the
principal amount and premium payable with respect to the Debentures upon the
maturity thereof, together with scheduled payments of interest thereon from the
redemption date to and including the Debenture maturity date, discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as defined in the
Indenture), plus, in either case, accumulated and unpaid Distributions thereon,
if any, to the date of such redemption.
(d) On and from the date fixed by the Administrative Trustees for any
distribution of Debentures and liquidation of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of the
Capital Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in the Debentures until such certificates are
presented to the Debenture Issuer or its agent for cancellation.
(e) The procedure with respect to redemptions or distributions of
Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will
be the date fixed for redemption of the Debentures. For purposes of
-5-
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. Each
Redemption/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
(ii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then
(A) with respect to Capital Securities issued in book-entry form, by 12:00
noon, New York City time, on the redemption date, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of cash
in connection with the related redemption or maturity of the Debentures by
10:00 a.m., New York City time, on the maturity date or the date of
redemption, as the case requires, the Property Trustee will deposit
irrevocably with the Clearing Agency or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the applicable Redemption
Price with respect to such Capital Securities and will give the Clearing
Agency irrevocable instructions and authority to pay the Redemption Price
to the relevant Clearing Agency Participants, and (B) with respect to
Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will pay the relevant
Redemption Price to the Holders by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been given
and funds deposited as required, if applicable, then immediately prior to
the close of business on the date of such deposit, or on the redemption
date, as applicable, Distributions will cease to accumulate on the
Securities so called for redemption and all rights of Holders so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price, and such Securities shall cease to be outstanding.
(iii) Payment of accumulated and unpaid Distributions on the Redemption
Date of the Securities will be subject to the rights of Holders of
Securities on the close of business on a regular record date in respect of
a Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities beginning
on the opening of business 15 days before the day of mailing of a notice of
redemption and ending at the close of business on the day of such mailing or
(ii) any Securities selected for redemption except the unredeemed portion of any
Security being redeemed. If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next
-6-
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that if such Business Day falls on 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 Property
Trustee or by the Sponsor as guarantor pursuant to the relevant Securities
Guarantee, Distributions on such Securities will continue to accumulate from the
original redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital Securities,
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) if certificates evidencing Global Capital Securities have been
issued or, if certificates evidencing Definitive Capital Securities have
been issued, to the Holder 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), the Sponsor or any of
its subsidiaries may at any time and from time to time purchase outstanding
Capital Securities by tender, in the open market or by private agreement.
5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required to be made by the holders of a
majority in aggregate principal amount of the Debentures then outstanding,
without, in each case, obtaining the prior approval of the Holders of a majority
in liquidation amount of all outstanding Capital Securities; provided, however,
-------- -------
that where a consent under the Indenture would require the consent of each
holder of Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior approval of each Holder of the Capital
Securities. The Trustees shall not revoke any action previously authorized or
approved by a vote of the Holders of the Capital Securities except by subsequent
vote of such Holders. Subject to and except as provided in Section 2.7 of the
Declaration, the Property Trustee shall notify each Holder of Capital Securities
of any notice of default with respect to the Debentures.
-7-
In addition to obtaining the foregoing approvals of such Holders of the Capital
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may pursuant to Section 5.04 of the Indenture institute a
proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest on a Like Amount of Debentures (a "Direct Action")
on or after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Common Securities Holder will be
subrogated to the rights of such Holder of Capital Securities to the extent of
any payment made by the Debenture Issuer to such Holder of Capital Securities in
such Direct Action. Except as provided in the second preceding sentence and in
Section 3.8(e) of the Declaration, the Holders of Capital Securities will not be
able to exercise directly any other remedy available to the holders of the
Debentures.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustee will cause a notice of
any meeting at which Holders of Capital Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of record of Capital Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
-8-
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), 6(c), and 7 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) Unless an Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by the holder of the Common Securities.
If an Event of Default has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed at such time by the holders of a majority in
liquidation amount of the outstanding Capital Securities. In no event will the
holders of the Capital Securities have the right to vote to appoint, remove or
replace the Administrative Trustees, which voting rights are vested exclusively
in the Company as the holder of the Common Securities. No resignation or
removal of a Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required to be made by the holders of a
majority in aggregate principal amount of the Debentures then outstanding,
without, in each case, obtaining the prior approval of the Holders of a majority
in liquidation amount of all outstanding Common Securities; provided, however,
-------- -------
that where a consent under the Indenture would require the consent of each
holder of Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior approval of each Holder of the Common
Securities. The Trustees shall not revoke any action previously authorized or
approved by a vote of the Holders of the Common Securities except by subsequent
vote of such Holders. Subject to Section 2.7 of the Declaration, the Property
Trustee shall notify each Holder of Common Securities of any notice of default
with respect to the Debentures. In addition to obtaining the foregoing
approvals of such Holders of the Common Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an opinion of counsel experienced
in such matters to the effect that the Trust will not be classified as an
association taxable as a corporation for United States federal income tax
purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Common Securities may institute a Direct Action for enforcement of payment to
such Holder of the principal of or premium, if any, or interest on a Like Amount
of Debentures on or after the respective due date specified in the Debentures.
In connection with Direct Action, the rights of the Common Securities Holder
will be subordinated
-9-
to the rights of such Holder of Capital Securities to the extent of any payment
made by the Debenture Issuer to such Holder of Common Securities in such Direct
Action. Except as provided in the second preceding sentence, the Holders of
Common Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Administrative Trustees will cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of the
Holders of the Securities (i) to cure any ambiguity, correct or supplement any
provisions in the Declaration that may be inconsistent with any other
provisions, or to make any other provisions with respect to matters or questions
arising under the Declaration which shall not be inconsistent with the other
provisions of the Declaration, or (ii) to modify, eliminate or add to any
provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or to ensure
that the Trust will not be required to register as an "Investment Company" under
the Investment Company Act; provided, however, that such action shall not
-------- -------
adversely affect in any material respect the interests of any Holder of
Securities, and any amendments of the Declaration shall become effective when
notice thereof is given to the holders of the Securities. Under the
circumstances referred to in Section 12.1(c) of the Declaration, the Declaration
may be amended by the Trustees and the Sponsor with (i) the consent of Holders
representing a majority in liquidation amount of all outstanding Securities, and
or (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption from status
as an Investment Company under the Investment Company Act, provided that, (A)
-------- ----
without the consent of each Holder of Trust Securities, the Declaration may not
be amended to (i) change the amount or timing of any
-10-
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date, (ii) restrict the right of a Holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date and
(B) without the consent of each Holder of Capital Securities, the Declaration
may not be amended to restrict the right of a Holder of Capital Securities to
bring a Direct Action.
8. Pro Rata.
--------
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the Capital
Securities pro rata according to the aggregate liquidation amount of Capital
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Capital Securities outstanding, and only after satisfaction of all
amounts owed to the Holders of the Capital Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding. In any such proration the Trust
may make such adjustments as may be appropriate in order that only Securities in
authorized denominations shall be redeemed (subject to the minimum block
requirement of Section 9.2(m) of the Declaration).
9. Ranking.
-------
The Capital Securities rank pari passu with the Common Securities and
---- -----
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption, repurchase or otherwise with respect to, the Common Securities shall
be made until the Holders of the Capital Securities shall be paid in full in
cash the Distributions, Redemption Price, Liquidation Distribution and other
payments to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
------------------------------------------------
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities Guarantee
and the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
-11-
11. No Preemptive Rights.
--------------------
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture (including any supplemental indenture) to a Holder without
charge on written request to the Sponsor at its principal place of business.
-12-
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[IF THIS CAPITAL SECURITY IS A RESTRICTED CAPITAL SECURITY, INSERT:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
-1-
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH ALLMERICA FINANCIAL
CORPORATION (THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF
THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-
U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OF 1993, AS AMENDED (THE "SECURITIES
ACT"), (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT THE TRANSFEROR DELIVER
TO THE TRUST A LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A
TO THE OFFERING MEMORANDUM DATED JANUARY __, 1997. SUCH HOLDER FURTHER AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.]
[IF THIS CAPITAL SECURITY IS A REGULATION S GLOBAL SECURITY, INSERT: THIS
CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
THE REGISTRATION
-2-
REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.]
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY
BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE
U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH
PROHIBITION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE OF THIS CAPITAL
SECURITY ALSO AGREES TO BE BOUND BY THE PROVISIONS OF A REGISTRATION RIGHTS
AGREEMENT DATED AS OF FEBRUARY 3, 1997 AMONG AFC CAPITAL TRUST I, ALLMERICA
FINANCIAL CORPORATION AND CERTAIN OTHER PARTIES NAMED THEREIN.
-3-
Certificate Number Aggregate Liquidation Amount
of Capital Securities: $300,000,000
CUSIP NO. __________
Certificate Evidencing Capital Securities
of
AFC Capital Trust I
8.207% Series __ Capital Securities
(liquidation amount $1,000 per Capital Security)
AFC Capital Trust I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that ______________
(the "Holder") is the registered owner of [$__________ in aggregate liquidation
amount of Capital Securities of the Trust]/*/ [the aggregate liquidation amount
of Capital Securities of the Trust specified in Schedule A hereto.]/**/
representing undivided beneficial interests in the assets of the Trust
designated the 8.207% Series __ Capital Securities (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
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of February 3, 1997, as the same may
be amended from time to time (the "Declaration"), including the designation of
the terms of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given them
in the Declaration. The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
- ---------------------
* Insert in Definitive Capital Securities only.
** Insert in Global Capital Securities only.
-4-
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
-5-
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of __________, ____.
AFC CAPITAL TRUST I
By:
-----------------------------------
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-
mentioned Declaration.
Dated:
--------, ----
THE CHASE MANHATTAN BANK
as Property Trustee
By:
-----------------------------------
Name:
Authorized Officer
-6-
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 8.207% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Except for Distributions which are deferred
as provided below, Distributions in arrears for more than one semi-annual period
will bear interest thereon compounded semi-annually at the Coupon Rate (to the
extent permitted by applicable law). Pursuant to the Registration Rights
Agreement, in certain limited circumstances the Debenture Issuer will be
required to pay Liquidated Damages (as defined in the Registration Rights
Agreement) with respect to the Debentures. The term "Distributions", as used
herein, includes such cash distributions and any such interest and such
Liquidated Damages payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Property Trustee and to the extent the Property Trustee has funds on hand
legally available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided for,
from February 3, 1997 and will be payable semi-annually in arrears, on February
15 and August 15 of each year, commencing on August 15, 1997, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and, for any period less than a
full calendar month, the number of days elapsed in such month. As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period at any time and from time to time on
the Debentures for a period not exceeding 10 consecutive calendar semi-annual
periods, including the first such semi-annual period during such extension
period (each an "Extension Period"), provided that no Extension Period shall end
-------- ----
on a day other than an Interest Payment Date for the Debentures or shall extend
beyond the Maturity Date of the Debentures. As a consequence of such deferral
of payments of interest on the Debentures, Distributions will also be deferred.
Despite such deferral, semi-annual Distributions will continue to accumulate
with interest thereon (to the extent permitted by applicable law, but not at a
rate exceeding the rate of interest then accruing on the Debentures) at the
Coupon Rate compounded semi-annually during any such Extension Period. Prior to
the termination of any such Extension Period, the Debenture Issuer may further
defer payments of interest by further extending such Extension Period; provided
--------
that such Extension Period, together with all such previous and further
- ----
extensions within such Extension Period, may not exceed 10 consecutive semi-
annual periods, including the first semi-annual period during such Extension
Period, or extend beyond the Maturity Date of the Debentures. Payments of
accumulated Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date preceding the end of the
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
-7-
Subject to certain conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
-8-
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security
certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer
- ------------------------------------------------------------
this Capital Security certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date:
-----------------------
Signature:
------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee/***/:
-----------------------------------------
- -----------------------------
/***/ Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities and Exchange Act of 1934, as
amended.
-9-
-------------------------------------
Signature
-------------------------------------
Name:
-10-
SCHEDULE A/*/
The initial aggregate liquidation amount of Capital Securities
evidenced by the Certificate to which this Schedule is attached is $
----------
(equivalent to Capital Securities). The notations on the following
---------
table evidence decreases and increases in the number of Capital Securities
evidenced by such Certificate.
Liquidation
Amount of
Capital
Increase in Securities
Decrease in Liquidation Liquidation Remaining After
Amount of Capital Amount of Capital Such Decrease or Notation by
Securities Securities Increase Registration
- ------------------------- -------------------- ----------------- --------------
- ---------------------
/*/ Append to Global Capital Securities only.
-11-
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW.
Certificate Number Number of Common Securities: 9,279
Certificate Evidencing Common Securities
of
AFC Capital Trust I
8.207% Common Securities
(liquidation amount $1,000 per Common Security)
AFC Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Allmerica Financial
Corporation (the "Holder") is the registered owner of 9,279 common securities of
the Trust representing undivided beneficial interests in the assets of the Trust
designated the 8.207% Common Securities (liquidation amount $1,000 per Common
Security) (the "Common Securities"). Subject to the limitations in Section
9.1(c) of the Declaration (as defined below), the Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of February 3,
1997, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used but not defined herein shall
have the meaning given them in the Declaration. The Sponsor will provide a copy
of the Declaration, the Common Securities Guarantee and the Indenture (including
any supplemental indenture) to a Holder without charge upon written request to
the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Common
Securities Guarantee to
-1-
the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
-2-
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of ____________, ____.
AFC CAPITAL TRUST I
By:
------------------------------------
Name:
Administrative Trustee
-3-
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 8.207% (the "Coupon Rate") of the liquidation amount of $1,000 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Except for Distributions which are deferred
as provided below, Distributions in arrears for more than one semi-annual period
will bear interest thereon compounded semi-annually at the Coupon Rate (to the
extent permitted by applicable law). Pursuant to the Registration Rights
Agreement, in certain limited circumstances the Debenture Issuer will be
required to pay Liquidated Damages (as defined in the Registration Rights
Agreement) with respect to the Debentures. The term "Distributions", as used
herein, includes such cash distributions and any such interest and such
Liquidated Damages payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Property Trustee and to the extent the Property Trustee has funds legally
available therefor.
Distributions on the Common Securities will be cumulative, will accrue
from the most recent date to which Distributions have been paid or duly provided
for or, if no Distributions have been paid or duly provided for, from February
3, 1997 and will be payable semi-annually in arrears, on February 15 and August
15 of each year, commencing on August 15, 1997, except as otherwise described
below. Distributions will be computed on the basis of a 360-day year consisting
of twelve 30-day months and, for any period less than a full calendar month, the
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 10 consecutive calendar semi-annual periods, including
the first such semi-annual period during such extension period (each an
"Extension Period"), provided that no Extension Period shall end on a day other
-------- ----
than an Interest Payment Date for the Debentures or extend beyond the Maturity
Date of the Debentures. As a consequence of such deferral of payments of
interest on the Debentures, Distributions will also be deferred. Despite such
deferral, Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law, but not at a rate exceeding the rate of
interest then accruing on the Debentures) at the Coupon Rate compounded semi-
annually during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest by
further extending such Extension Period; provided that such Extension Period,
-------- ----
together with all such previous and further extensions within such Extension
Period, may not exceed 10 consecutive semi-annual periods, including the first
semi-annual period during such Extension Period, or extend beyond the Maturity
Date of the Debentures. Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first record
date preceding the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.
Subject to certain conditions set forth in the Declaration and the
Indenture, the
-4-
Property Trustee may, at the direction of the Sponsor, at any time liquidate the
Trust and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any redemption of
the Debentures, cause a Like Amount of the Securities to be redeemed by the
Trust.
The Common Securities shall be redeemable as provided in the
Declaration.
-5-
THIS COMMON SECURITIES GUARANTEE is executed as of the day and year first
above written.
ALLMERICA FINANCIAL CORPORATION
By /s/ Edward J. Parry III
----------------------------
Name: Edward J. Parry III
Title: Vice President and Chief
Financial Officer