AMENDED AND RESTATED DECLARATION OF TRUST
OF
CASCADE CAPITAL TRUST I
Dated as of March 1, 2000
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions......................................................2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................10
SECTION 2.2 Lists of Holders of Securities..................................10
SECTION 2.3 Reports by the Property Trustee.................................11
SECTION 2.4 Periodic Reports to Property Trustee............................11
SECTION 2.5 Evidence of Compliance with Conditions Precedent................11
SECTION 2.6 Events of Default; Waiver.......................................11
SECTION 2.7 Default; Notice.................................................13
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................................13
SECTION 3.2 Office..........................................................14
SECTION 3.3 Purpose.........................................................14
SECTION 3.4 Authority.......................................................14
SECTION 3.5 Title to Property of the Trust..................................14
SECTION 3.6 Powers and Duties of the Administrative Trustees................14
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees............17
SECTION 3.8 Powers and Duties of the Property Trustee.......................18
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.....20
SECTION 3.10 Certain Rights of Property Trustee..............................22
SECTION 3.11 Delaware Trustee................................................24
SECTION 3.12 Execution of Documents..........................................25
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities..........25
SECTION 3.14 Duration of Trust...............................................25
SECTION 3.15 Mergers.........................................................25
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.........................27
SECTION 4.2 Responsibilities of the Sponsor.................................27
SECTION 4.3 Right to Proceed................................................28
SECTION 4.4 Right to Dissolve Trust.........................................28
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ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Appointment of Co-Trustee...................28
SECTION 5.2 Delaware Trustee................................................29
SECTION 5.3 Property Trustee; Eligibility...................................29
SECTION 5.4 Certain Qualifications of Administrative Trustees
and Delaware Trustee Generally...............................30
SECTION 5.5 Administrative Trustees.........................................31
SECTION 5.6 Appointment, Removal and Resignation of Trustees................31
SECTION 5.7 Vacancies among Trustees........................................33
SECTION 5.8 Effect of Vacancies.............................................33
SECTION 5.9 Meetings........................................................33
SECTION 5.10 Delegation of Power.............................................34
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.....34
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions...................................................34
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.........................35
SECTION 7.2 Execution and Authentication....................................35
SECTION 7.3 Form and Dating.................................................36
SECTION 7.4 Registrar, Paying Agent and Exchange Agent......................38
SECTION 7.5 Paying Agent to Hold Money in Trust.............................38
SECTION 7.6 Replacement Securities..........................................38
SECTION 7.7 Outstanding Capital Securities..................................39
SECTION 7.8 Capital Securities in Treasury..................................39
SECTION 7.9 Temporary Securities............................................39
SECTION 7.10 Cancellation....................................................40
SECTION 7.11 CUSIP Numbers...................................................40
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust............................................41
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ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities..........................................42
SECTION 9.2 Transfer Procedures and Restrictions............................43
SECTION 9.3 Deemed Security Holders.........................................52
SECTION 9.4 Book-Entry Interests............................................52
SECTION 9.5 Notices to Clearing Agency......................................53
SECTION 9.6 Appointment of Successor Clearing Agency........................53
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
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
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.....................................................58
SECTION 11.2 Certain Accounting Matters......................................58
SECTION 11.3 Banking.........................................................59
SECTION 11.4 Withholding.....................................................59
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments......................................................59
SECTION 12.2 Meetings of the Holders; Action by Written Consent..............61
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee..............63
SECTION 13.2 Representations and Warranties of Delaware Trustee..............63
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ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement; Liquidated Damages...............64
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.........................................................64
SECTION 15.2 Governing Law...................................................66
SECTION 15.3 Intention of the Parties........................................66
SECTION 15.4 Headings........................................................66
SECTION 15.5 Successors and Assigns..........................................66
SECTION 15.6 Partial Enforceability..........................................66
SECTION 15.7 Counterparts....................................................66
TERMS OF 11.00% CAPITAL SECURITIES, SERIES A/SERIES B
11.00% COMMON SECURITIES...........................................I-1
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE...............................A1-1
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE................................A2-1
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CROSS-REFERENCE TABLE*
Section of
Trust Indenture
Act of 1939, as Section of
amended Declaration
310(a) ...................................... 5.3
310(b) ......................................5.3(c); 5.3(d)
311(a) ...................................... 2.2(b)
311(b) ...................................... 2.2(b)
312(a) ...................................... 2.2(a)
312(b) ...................................... 2.2(b)
313 ...................................... 2.3
314(a) ...................................... 2.4, 2.7(c);
3.6(j)
314(c) ...................................... 2.5
315(a) ...................................... 3.6(j); 3.9
315(b) ...................................... 2.7(a)
315(c) ...................................... 3.9(a)
315(d) ...................................... 3.9(b)
316(a) ...................................... 2.6
316(c) ...................................... 3.6(e)
317(a) ......................................3.8(e); 3.8(h)
317(b) ...................................... 3.8(i); 7.5
318 ...................................... 2.1
* This Cross-Reference Table does not constitute part of this Declaration
and shall not affect the interpretation of any of its terms or
provisions.
v
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CASCADE CAPITAL TRUST I
Dated as of March 1, 2000
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of March 1, 2000, by and among the Trustees (as defined herein),
the Sponsor (as defined herein) and the Holders (as defined herein), 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 Cascade Capital Trust I (the "Trust"), a trust created under the
Delaware Business Trust Act pursuant to a Declaration dated as of February 4,
2000 (the "Original Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on February 7, 2000, for the sole
purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust, investing the proceeds thereof
in certain Debentures of the Debenture Issuer (each as hereinafter defined), and
engaging in only those activities necessary, advisable or incidental thereto;
and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, ratify
the actions of each Trustee taken prior to the date hereof;
NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration and, in consideration
of the mutual covenants contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties,
intending to be legally bound hereby, agree as follows:
1
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above or elsewhere herein have the respective meanings
assigned to them in this Section 1.1;
(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 and each Annex and Exhibit hereto, 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;
(f) a term defined in the Indenture (as defined herein) has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or the context otherwise requires; and
(g) 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 the Global Capital
Security registered in the name of a Clearing Agency or its nominee, ownership
and transfers of which shall be maintained and made through book entries by a
Clearing Agency as described in Section 9.4.
2
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in Wilmington, Delaware, Everett, Washington and New
York, New York, are authorized or required by law or executive order to remain
closed.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss. 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"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.
"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 Security Certificate" has the meaning set forth in Section 9.4.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a global certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Time" means the "Closing Time" as defined in 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 at 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 Security Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit A-2.
3
"Common Securities Guarantee" means the Common Securities Guarantee
Agreement, dated as of the Closing Time, entered into by Cascade Financial
Corporation, with respect to the Common Securities.
"Common Securities Subscription Agreement" means the Common Securities
Subscription Agreement, dated as of the Closing Time, between the Trust and
Cascade Financial Corporation relating to the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee; (b) any
Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at which
the corporate trust business of the Property Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Declaration is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration.
"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 Cascade Financial Corporation, a Delaware
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Subscription Agreement" means the Debenture Subscription
Agreement, dated as of the Closing Time, between the Debenture Issuer and the
Trust in respect of the Series A Debentures.
"Debenture Trustee" means Wilmington Trust Company, a Delaware 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 or lapse of
time, or both, would constitute an Event of Default.
"Definitive Capital Securities" has the meaning set forth in Section
7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.1.
"Direct Action" has the meaning set forth in Section 3.8(e).
4
"Distribution" means a distribution payable to Holders in accordance with
Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" with respect to the Securities means an Event of Default
(as defined in the Indenture) that has occurred and is continuing with respect
to 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 to execute the Series B
Capital Securities Guarantee in respect of the Series B Capital Securities.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Capital Security" has the meaning set forth in Section 7.3(a).
"Holder" means a Person in whose name a Security or Successor Security is
registered on the register maintained by or on behalf of the Registrar, such
Person being a beneficial owner of the Trust 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 the Closing Time, between the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Initial Optional Redemption Date" has the meaning set forth in Section
4(b) of Annex I hereto.
"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.
5
"Investment Company Event" has the meaning set forth in Section 4(c) of
Annex I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Like Amount" has the meaning set forth in Section 3 of Annex I hereto.
"Liquidated Damages Agreement" means the Liquidated Damages Agreement,
dated as of February 25, 2000, by and among the Debenture Issuer, the Trust and
the Initial Purchaser named therein, as amended from time to time.
"List of Holders" has the meaning set forth in Section 2.2(a).
"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, Holders 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, excluding the Trust and the Debenture Issuer and any Affiliate thereof,
who are the record owners of more than 50% of the aggregate liquidation amount
(including the amount that would be paid on redemption, liquidation or
otherwise, plus accumulated and unpaid Distributions to but excluding 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)(i).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by an Authorized Officer of such Person. Any Officers' Certificate
delivered by the Trust shall be signed by at least one Administrative Trustee.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenants or conditions and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of the Sponsor, and who shall be acceptable to the Property Trustee.
6
"Participants" has the meaning specified in Section 7.3(b).
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning specified in Section 6.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"PORTAL" has the meaning set forth in Section 3.6(b)(iii).
"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)(i).
"Purchase Agreement" means the Purchase Agreement relating to the Series A
Capital Securities, dated February 25, 2000, by and among the Trust, the
Debenture Issuer and the Initial Purchaser named therein.
"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.
"Redemption Price" has the meaning set forth in Section 4(a) of Annex I
hereto.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of February 25, 2000, 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.
"Regulatory Capital Event" has the meaning set forth in Section 4(c) of
Annex I hereto.
"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 any officer within the Corporate Trust Office
of the Property Trustee with direct responsibility for the administration of
this Declaration and also means,
7
with respect to a particular corporate trust matter, any other officer of the
Property Trustee to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Restricted Capital Security" means a Capital Security required by Section
9.2 to contain a Restricted Securities Legend.
"Restricted Definitive Capital Securities" has the meaning set forth in
Section 7.3(c).
"Restricted Securities Legend" has the meaning set forth in Section 9.2(i).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"Securities" or "Trust Securities" means the Common Securities and the
Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section 7.1(a).
"Series A Capital Securities Guarantee" means the Series A Capital
Securities Guarantee Agreement, dated as of the Closing Time, by, Cascade
Financial Corporation in respect of the Series A Capital Securities.
"Series A Debentures" means the 11.00% Junior Subordinated Deferrable
Interest Debentures due March 1, 2030, Series A, of the Debenture Issuer issued
pursuant to the Indenture.
"Series B Capital Securities" has the meaning specified in Section 7.1(a).
"Series B Capital Securities Guarantee" means the Series B Capital
Securities Guarantee Agreement to be entered into in connection with the
Exchange Offer by Cascade Financial Corporation, in respect of the Series B
Capital Securities.
8
"Series B Debentures" means the 11.00% Junior Subordinated Deferrable
Interest Debentures due March 1, 2030, Series B, of the Debenture Issuer to be
issued pursuant to the Indenture in connection with the Exchange Offer.
"Special Event" has the meaning set forth in Section 4(c) of Annex I
hereto.
"Special Event Redemption Price" has the meaning set forth in Section 4(c)
of Annex I hereto.
"Sponsor" means Cascade Financial Corporation, a Delaware corporation, or
any successor entity resulting from any merger, consolidation, amalgamation or
other business combina tion, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
5.6(b)(ii).
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning set forth in Section
3.8(f)(ii).
"Successor Securities" has the meaning set forth in Section 3.15(b)(i).
"Super Majority" has the meaning set forth in Section 2.6(a) (ii).
"Tax Event" has the meaning set forth in Section 4(c) of Annex I hereto.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury Department, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in or
owing to the Property Trustee Account and (c) all proceeds and rights in respect
of the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to this Declaration.
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue as a trustee of the Trust 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.
"20% 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, Holders of
9
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, excluding the Trust
and the Debenture Issuer and any Affiliate thereof, who are the record owners of
20% or more of the aggregate liquidation amount (including the amount that would
be paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"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 in order for this
Declaration to be qualified under the Trust Indenture Act and shall,
to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by ss.ss. 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
that the List of Holders does not differ from the most recent List of
Holders given to the Property Trustee by the Sponsor and the
Administrative Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for
a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Property Trustee. The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it
receives in the capacity as Paying Agent (if acting in such capacity),
provided that the Property Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
10
(b) The Property Trustee shall comply with its obligations under ss.ss.
311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after the date hereof, and no later than the anniversary
date hereof in each succeeding year, the Property Trustee shall provide to the
Holders of the Capital Securities such reports as are required by ss. 313 of the
Trust Indenture Act, if any, in the form and in the manner provided by ss. 313
of the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of ss. 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee and the Commission such documents, reports
and information as are required by ss. 314 (if any) of the Trust Indenture Act
and shall provide to the Property Trustee the compliance certificate required by
ss. 314 of the Trust Indenture Act in the form, in the manner and at the times
required by ss. 314 of the Trust Indenture Act.
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 ss. 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to ss. 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 ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from
11
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Upon such waiver, any such Default shall cease to exist, and any Event of
Default with respect to the Capital Securities arising therefrom shall be deemed
to have been cured, for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other Default or an Event of Default with
respect to the Capital Securities or impair any right consequent thereon. Any
waiver by the Holders of the Capital Securities of an Event of Default with
respect to the Capital Securities shall also be deemed to constitute a waiver by
the Holders of the Common Securities of any such Event of Default with respect
to the Common Securities for all purposes of this Declaration without any
further act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying
Event of Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of
Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not
be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Declaration as
provided below in this Section 2.6(b), the Event of Default under
the Declaration may only be waived by the vote of the Holders of
at least the proportion in aggregate liquidation amount of the
Common Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and their 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
ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such ss.ss.
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such Default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other Default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding
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Event of Default under this Declaration. The foregoing provisions of
this Section 2.6(c) shall be in lieu of ss. 316(a)(1)(B) of the Trust
Indenture Act and such ss. 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 Default; Notice.
(a) The Property Trustee shall, within 90 days after a Responsible Officer
has actual knowledge of the occurrence of a Default with respect to
the Securities, transmit by mail, first class postage prepaid, to the
Holders, notices of all such Defaults, unless such Defaults have been
cured before the giving of such notice or previously waived; provided,
however, that except in the case of a Default arising from the
nonpayment of principal of (or premium, if any) or interest (including
Compounded Interest and Additional Sums (as such terms are defined in
the Indenture), if any) or Liquidated Damages, if any (as defined in
the Registration Rights Agreement), on any of the Debentures, the
Property Trustee shall be protected in withholding such notice if and
so long as a Responsible Officer 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 or Event of Default except:
(i) a Default or Event of Default under Sections 5.01(a) (other than
the payment or nonpayment of Compounded Interest, Additional Sums
and Liquidated Damages) and 5.01(b) of the Indenture; or
(ii) any Default or Event of Default as to which the Property Trustee
shall have received written notice or of which a Responsible
Officer charged with the administration of the Declaration shall
have actual knowledge.
(c) Within ten Business Days after a Responsible Officer has actual
knowledge of the occurrence of any Event of Default, the Property
Trustee shall transmit notice of such Event of Default to the Holders
of the Capital Securities, the Administrative Trustees and the
Sponsor, unless such Event of Default shall have been cured or waived.
The Sponsor and the Administrative Trustees shall file annually with
the Property Trustee a 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 Cascade Capital Trust I as such name may be modified
from time to time by the Administrative Trustees following written notice to the
Delaware Trustee, the Property Trustee and the Holders. The Trust's activities
may be conducted under the name of the Trust or any other name deemed advisable
by the Administrative Trustees.
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SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Cascade Financial
Corporation at 2828 Colby Avenue, Everett, Washington 98201. On ten Business
Days' prior written notice to the Delaware Trustee, the Property Trustee and 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, including without
limitation, those activities specified in Sections 3.6, 3.8, 3.9, 3.10, 3.11
and/or 3.12. 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 one or more of 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 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.
Subject to Section 5.5, the Administrative Trustees acting individually or
together shall have the exclusive right, power, duty and authority, and are
hereby authorized and directed, to cause the Trust to engage in the following
activities:
(a) to execute, enter into and deliver the Common Securities Subscription
Agreement and to execute, deliver, issue and sell the Securities in
accordance with this Declaration; provided, however, that except as
contemplated in Section 7.1(a), (i) the Trust may issue no more
14
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 the Closing Time;
(b) in connection with the issue and sale of the Capital Securities and
the consummation of the Exchange Offer, at the direction of the
Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by
the Sponsor, in relation to the offering and sale of Series A
Capital Securities to QIBs in reliance on Rule 144A and to
institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act), and to
execute and file with the Commission, at such time as is
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)execute and file an application, prepared by the Sponsor, to
permit the Capital Securities to trade or be quoted or listed in
or on the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market or any other securities
exchange, quotation system or the Nasdaq Stock Market's National
Market;
(iv) execute, enter into, deliver and perform the Common Securities
Subscription Agreement, the Purchase Agreement, the Registration
Rights Agreement, the Liquidated Damages Agreement and letters,
documents or instruments with DTC and other Clearing Agencies
relating to the Capital Securities; and
(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) or 12(g) of the Exchange Act, as
the case may be.
(c) to execute, enter into and deliver the Debenture Subscription
Agreement, to acquire the Series A Debentures with the proceeds of the
sale of the Series A Capital Securities and the Common Securities and
to exchange the Series A Debentures for a like principal amount of
Series B Debentures, pursuant to the Exchange Offer; provided,
however, that the Administrative Trustees shall cause legal title to
the Debentures to be held of record in the name of the Property
Trustee for the benefit of the Holders;
15
(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 to be established, including and
with respect to, for the purposes of ss. 316(c) of the Trust Indenture
Act, Distributions, voting rights, redemptions and exchanges, and to
issue relevant notices to the Holders with respect 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;
(g) to the fullest extent permitted by law, 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, agents (who may be designated
as officers with titles), managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate required by ss. 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 the
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 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 or to enable the Trust to effect the purposes for which
the Trust was created;
(o) 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:
16
(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 continue 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;
(p) to take all action necessary to consummate the Exchange Offer or
otherwise cause the Capital Securities to be registered pursuant to an
effective registration statement in accordance with the provisions of
the Registration Rights Agreement;
(q) 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; and
(r) to execute and deliver all documents, agreements, certificates and
instruments, exercise all rights and powers, perform all duties and do
all things for and on behalf of the Trust in all matters necessary,
advisable or incidental to the foregoing or the transactions
contemplated thereby.
The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Administrative Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property Trustee and
the Delaware Trustee) shall not, and the Administrative Trustees shall cause the
Trust not to, engage in any activity other than as required or authorized by
this Declaration. Notwithstanding any provision in this Declaration to the
contrary, 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;
17
(iii)possess Trust Property for other than a Trust purpose or execute
any mortgage in respect of, or pledge, any Trust Property;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust Property or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the
Securities;
(vii)other than as provided in this Declaration or Annex I hereto,
(A) direct the time, method and place of conducting any
proceeding with respect to any remedy available to the Debenture
Trustee, or exercising any trust or power conferred upon the
Debenture Trustee with respect to the Debentures, (B) waive any
past default that is waivable under the Indenture, or (C)
exercise any right to rescind or annul any declaration that the
principal of all the Debentures shall be due and payable; or
(viii) 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 independent
tax counsel experienced in such matters to the effect that such
amendment, modification or termination will not cause more than
an insubstantial risk that the Trust will not be classified as a
grantor trust for United States federal income tax purposes.
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 5.6. 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) Subject to Section 3.9(b)(vii), 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
18
Debentures held by the Property Trustee, deposit such funds into
the Property Trustee Account and make payments or cause the
Paying Agent to make payments to the Holders 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; and the Property Trustee
Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness
by a "nationally recognized statistical rating organization," as
that term is defined for purposes of Rule 436(g)(2) under the
Securities Act, is at least equal to the rating assigned to the
Capital Securities, unless the Capital Securities are not rated,
in which case the banking institution's long-term unsecured
indebtedness shall be rated at least investment grade by a
"nationally recognized statistical rating organization;"
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Securities to the
extent the Debentures are redeemed or mature; and
(iii)upon written notice of distribution issued by the Administrative
Trustees in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to
Holders upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and perform such duties as
may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any Legal
Action which arises out of or in connection with an Event of Default
of which a Responsible Officer has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust
Indenture Act; and if the Property Trustee shall have failed to take
such Legal Action following a written request from the Holders, the
Holders of the Capital Securities may, to the fullest extent permitted
by law, 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 (including Compounded Interest and Additional Sums, if any)
or Liquidated Damages, if any, on the Debentures on the date such
principal, premium, if any, or interest (including Compounded Interest
and Additional Sums, if any) or Liquidated Damages, if any, is
otherwise payable (or in the case of redemption, on the redemption
date), then a Holder of Capital Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal
of or premium, if any, or interest (including Compounded Interest and
Additional Sums, if any) or Liquidated Damages, if any, 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 Holders of the
Common Securities will be subrogated to the rights of such Holder of
Capital Securities to the extent of any payment made
19
by the Debenture Issuer to such Holder of Capital Securities in such
Direct Action. Except as provided in the preceding sentences, the
Holders of Capital Securities will not be able to exercise directly
any other remedy available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee until
either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders pursuant to the terms of
the Securities and this Declaration; or
(ii) a successor Property Trustee has been appointed and has accepted
that appointment in accordance with Section 5.6 (a "Successor
Property Trustee").
(g) The Property Trustee shall have the legal power to exercise all of the
rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible
Officer occurs and is continuing, the Property Trustee shall, for the
benefit of Holders, enforce its rights as holder of the Debentures
subject to the rights of the Holders pursuant to the terms of this
Declaration and the Securities.
(h) The Property Trustee shall be authorized to undertake any actions set
forth in ss. 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 ss. 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 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.
Notwithstanding anything expressed or implied to the contrary in this
Declaration or any Annex or Exhibit hereto, (i) 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 (ii)
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
(of which, other than in the case of Events of Default under Sections
5.01(a) and 5.01(b) of the Indenture, which the Property Trustee is
deemed to have knowledge of as provided in Section 2.7(b) hereof, a
Responsible Officer of the Property Trustee has actual knowledge) and
after the curing or
20
waiving of all such 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 has actual
knowledge, the Property Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of
care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own
affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default (of which, other
than in the case of Events of Default under Sections 5.01(a) and
5.01(b) of the Indenture, which the Property Trustee is deemed to
have knowledge of as provided in Section 2.7(b) hereof, a
Responsible Officer of the Property Trustee has actual knowledge)
and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this
Declaration and in the Securities and the Property Trustee
shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants
or obligations shall be read into this Declaration against
the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon 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 on their face 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, 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 a Majority in
Liquidation Amount of the Securities relating to the time, method
and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
21
(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;
(v) the Property Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of the Debentures and the
Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar
property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or 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 in relation to the
Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently
evidenced by an Officers' Certificate;
(iii)whenever in the administration of this Declaration, the Property
Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith
22
on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing
or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts of
its selection, and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope
of such experts' area of expertise shall be full and complete
authorization and protection in 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; and the Property Trustee shall have the
right at any time to seek instructions concerning the
administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the
costs, expenses (including reasonable attorneys' fees and
expenses and the expenses of the Property Trustee's agents,
nominees or custodians) and liabilities that might be incurred by
it in complying with such request or direction, including such
reasonable advances as may be requested by the Property Trustee;
provided, however, 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 which, other than in
the case of Events of Default under Sections 5.01(a) and 5.01(b)
of the Indenture, which the Property Trustee is deemed to have
knowledge of as provided in Section 2.7(b) hereof, a Responsible
Officer of the Property Trustee has actual knowledge), 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
23
responsible for any misconduct or negligence on the part of any
such agent, custodian, nominee 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, 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;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request
instructions from the Holders which instructions may only be
given by the Holders of the same proportion in liquidation amount
of the Securities as would be entitled to direct the Property
Trustee under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in 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 or willful misconduct, and reasonably believed by it
to be authorized or within the discretion or rights or powers
conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the
Property Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts, or to exercise
any such right, power, duty or obligation. No permissive power or
authority available to the Property Trustee shall be construed to be a
duty.
SECTION 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than Section
5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Trustees described in this Declaration (except as required under the Business
Trust Act). 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 ss.
3807 of the Business Trust Act. In the event the Delaware Trustee shall at any
time be required to take any action or
24
perform any duty hereunder, the Delaware Trustee shall be entitled to the
benefits of Section 3.9(b)(ii) to (viii), inclusive, and Section 3.10. No
implied covenants or obligations shall be read into this Declaration against the
Delaware Trustee.
SECTION 3.12 Execution of Documents.
Unless otherwise required by applicable law, each Administrative Trustee,
individually, is authorized to execute and deliver on behalf of the Trust any
documents, agreements, instruments or certificates that the Administrative
Trustees have the power and authority to execute pursuant to Section 3.6.
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 Trust Property or any part thereof. The Trustees
make no representations as to the validity or sufficiency of this Declaration or
the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless earlier dissolved pursuant to the provisions of Article
VIII hereof, shall dissolve on March 1, 2031.
SECTION 3.15 Mergers.
(a) The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to any Person, except as
described in Section 3.15(b) and (c) and except with respect to the
distribution of Debentures to Holders pursuant to Section 8.1(a)(iii)
of this Declaration 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,
the Delaware Trustee or the Property Trustee, merge with or into,
consolidate, amalgamate, or be replaced by, or convey, transfer or
lease its properties and assets as an entirety or substantially as an
entirety to, a trust organized as such under the laws of any State;
provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust under
the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the
"Successor Securities") so long as the
25
Successor Securities rank the same as the Securities rank in
priority 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
with respect to the Debentures;
(iii)the Successor Securities (excluding any securities substituted
for the Common Securities) are listed, quoted or included for
trading, or any Successor Securities will be listed, quoted or
included for trading upon notification of issuance, on any
national securities exchange or with any other organization on
which the Capital Securities are then listed, quoted or included;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital
Securities (including any Successor Securities) or the Debentures
to be downgraded by any nationally recognized statistical rating
organization that publishes a rating on the Capital Securities or
the Debentures;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including the
holders of any Successor Securities) in any material respect
(other than with respect to any dilution of the interests of such
Holders or holders, as the case may be, in the Successor Entity);
(vi) the 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 independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including
the holders of any Successor Securities) in any material
respect (other than with respect to any dilution of the
interests of such Holders or holders, as the case may be, in
the Successor Entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the
Trust nor the Successor Entity will be required to register
as an Investment Company; and
(C) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust (or
the Successor Entity) will
26
continue to be classified as a grantor trust for United
States federal income tax purposes;
(viii) the Sponsor or any permitted successor or assignee of the
Sponsor owns all of the common securities of the Successor Entity
and guarantees the obligations of the Successor Entity under the
Successor Securities at least to the extent provided by the
Securities Guarantees; and
(ix) there shall have been furnished to the Property Trustee an
Officers' Certificate and an Opinion of Counsel, each to the
effect that all conditions precedent in this Declaration to such
transaction have been satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the
consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets as
an entirety or substantially as an entirety to, any other Person or
permit any other Person to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or
the Successor Entity not to be classified as a grantor trust for
United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
At the Closing Time, pursuant to the Common Securities Subscription
Agreement, the Sponsor will purchase all of the Common Securities then issued by
the Trust, in an amount equal to at least 3% of the total 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, or
direct the Administrative Trustees to engage in, the following activities:
(a) to prepare the Offering Memorandum, in preliminary and final form, 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;
27
(c) if deemed necessary or advisable by the Sponsor, to prepare for filing
by the Trust an application to permit the Capital Securities to trade
or be quoted or listed in or on the PORTAL Market, or any other
securities exchange, quotation system or the Nasdaq Stock Market's
National Market;
(d) to prepare for filing by the Trust with the Commission a registration
statement on Form 8-A, including any amendments thereto, relating to
the registration of the Capital Securities under Section 12(b) or
12(g) of the Exchange Act, as the case may be, including any
amendments thereto; and
(e) to negotiate the terms of, execute, enter into and deliver the
Purchase Agreement, the Registration Rights Agreement and the
Liquidated Damages Agreement.
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 Debenture Issuer to pay the
principal of or premium (if any) or interest on the Debentures, to institute a
proceeding directly against the Debenture Issuer for enforcement of its payment
obligations in respect of the Debentures.
SECTION 4.4 Right to Dissolve Trust.
The Sponsor will have the right at any time to dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Debentures to be distributed to the Holders in
liquidation of the Trust. Such right is subject to the Sponsor's having received
(i) an Opinion of Counsel to the effect that such distribution will not cause
the Holders of Capital Securities to recognize gain or loss for United States
federal income tax purposes and (ii) all required regulatory approvals.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Appointment of Co-Trustee.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor may, by
written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a Majority in
Liquidation Amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities;
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the
28
State of Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware (the "Delaware Trustee");
(2) there shall be at least one Trustee who is an employee or officer of, or is
affiliated with, the Sponsor (an "Administrative Trustee"); and (3) one 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 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 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.
For so long as required by the Business Trust Act, the Delaware Trustee
shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided, however, 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.
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee (the "Property Trustee") which
shall act as Property Trustee and which shall:
(i) not be an Affiliate of the Sponsor; and
29
(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 indenture trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least
fifty million U.S. dollars ($50,000,000), and subject to
supervision or examination by federal, state, 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 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of ss. 330(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 ss. 310(b) of the Trust Indenture Act)
shall in all respects comply with the provisions of ss. 310(b) of the
Trust Indenture Act.
(d) The Capital Securities Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first
proviso contained in ss. 310 (b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
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.
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SECTION 5.5 Administrative Trustees.
The initial Administrative Trustees shall be:
Frank M. McCord
C.F. Safstrom
Russell E. Rosendal
c/o Cascade Financial Corporation
2828 Colby Avenue
Everett, Washington 98201
Telephone: (425) 339-5500
Telecopier: (425) 258-0624
(a) Except as otherwise 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 required by the Business Trust Act or other
applicable law, any Administrative Trustee acting alone 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.
(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 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b) hereof 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, and
with respect to the Administrative Trustees, in the manner set
forth in Section 5.6(a)(ii) hereof.
31
(b) (i) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 5.6(a) until a Successor Property Trustee
has been appointed and has accepted such appointment by written
instrument executed by such Successor Property Trustee and
delivered to the removed Property Trustee, the Administrative
Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed in
accordance with this Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
removed Delaware Trustee, the Property Trustee (if the removed
Delaware Trustee is not also the Property Trustee), the
Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the
Trustee and delivered to the other Trustees, 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, the Delaware Trustee (if the resigning Property
Trustee is not also the Delaware Trustee) and the resigning
Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the
Holders; 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 Property Trustee (if the resigning Delaware Trustee is
not also the Property Trustee), the Sponsor and the resigning
Delaware Trustee.
(d) The Holders of the Common Securities or, if an Event of Default shall
have occurred and be continuing after the issuance of the Securities,
the Holders of the Capital Securities shall use their best efforts to
promptly appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this
Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this
Section 5.6 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
32
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 to 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.
(g) At the time of resignation or removal of the Property Trustee or the
Delaware Trustee, the Sponsor shall pay to such Trustee any amounts
that may be owed to such Trustee pursuant to Section 10.4.
(h) Any successor Delaware Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of
Delaware identifying the name and principal place of business of such
Successor Delaware Trustee in the State of Delaware.
SECTION 5.7 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.l, 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 5.6.
SECTION 5.8 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, liquidate or annul the Trust or to terminate this
Declaration. Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with Section 5.6, 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 5.9 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
33
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 5.10 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 pur pose 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.
(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 this Declaration.
SECTION 5.11 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, 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, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided such Person shall be otherwise
qualified and eligible under this Article and provided further that such Person
shall file an amendment to the Certificate of Trust with the Delaware Secretary
of State as contemplated in Section 5.6(h).
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the applicable terms
of the relevant Holder's Securities. If and to the extent that the Debenture
Issuer makes a payment of interest (including Compounded Interest and Additional
Sums), premium and/or principal on the Debentures held by the Property Trustee
or Liquidated Damages or any other payments pursuant to the Registration Rights
Agreement or Liquidated Damages Agreement with respect to the
34
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 in accordance with the terms of the Securities.
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 preferred
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 common 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 preferred beneficial interests in
the assets of the Trust having such terms as set forth in Annex I (the
"Series B Capital Securities") in exchange for the 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 of the Sponsor or the Trust. The
Trust shall issue no securities or other interests in the assets of
the Trust other than the Capital Securities and the Common 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 and, subject
to the terms of this Declaration, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust and entitled
to the benefits of this Declaration, and the Holders thereof shall be
entitled to the benefits of this Declaration.
(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
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Administrative Trustees of the Trust, although at the date of the
execution and delivery of this Declaration any such person was not an
Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital Securities for the
Trust by manual or facsimile signature. Unless otherwise determined by
an Administrative Trustee on behalf of the Trust, an Administrative
Trustee shall sign the Common Securities for the Trust by manual
signature.
A Capital Security shall not be valid until authenticated by the manual
signature of an authorized signatory of the Property Trustee. The signature
shall be conclusive evidence that the Capital Security has been authenticated
under this Declaration. A Common Security shall be valid upon execution by an
Administrative Trustee without any act of the Property Trustee.
Upon a written order of the Trust signed by one Administrative Trustee, the
Property Trustee shall authenticate the Capital Securities for original issue.
The aggregate number of Capital Securities outstanding at any time shall not
exceed the number set forth 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 hereunder with respect to the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating.
The Capital Securities shall be evidenced by one or more certificates
substantially in the form of Exhibit A-1, and the Common Securities shall be
evidenced by one or more certificates substantially in the form of Exhibit A-2.
The Property Trustee's certificate of authentication shall be substantially in
the form set forth in Exhibit A-1. Certificates representing the Securities may
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to an Administrative Trustee, as evidenced by the
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 en
dorsement is in a form acceptable to the Administrative Trustees, as evidenced
by their execution thereof. 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 Capital Security. Capital Securities offered and sold to QIBs
in reliance on Rule 144A, as provided in the Purchase Agreement, shall
be issued in the form of a single permanent global Capital Security in
definitive, fully registered form without distribution coupons with
the appropriate global legends and Restricted Securities Legend set
forth in Exhibit
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A-1 hereto (the "Global Capital Security"), which shall be deposited
on behalf of the purchasers of the Capital Securities represented
thereby with the Property Trustee, at its Corporate Trust Office, as
custodian for the Clearing Agency, and registered in the name of the
Clearing Agency or a nominee of the Clearing Agency, duly executed by
the Trust and authenticated by the Property Trustee as hereinafter
provided. The number of Capital Securities represented by the Global
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
Global Capital Security and such other Capital Securities in global
form as may be authorized by the Trust to be deposited with or on
behalf of the Clearing Agency.
An Administrative Trustee shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for delivery
initially a single Global Capital Security 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 Property Trustee to such Clearing Agency or pursuant to such
Clearing Agency's written instructions or, if no such written instructions are
received by the Property Trustee, 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 the Global Capital
Security held on their behalf by the Clearing Agency or by the Property Trustee
as the custodian of the Clearing Agency or under such Global Capital Security,
and the Clearing Agency may be treated by the Trust, the Property Trustee and
any agent of the Trust or the Property Trustee as the absolute owner of such
Global Capital Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Trust, the Property Trustee or any
agent of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Clearing Agency or
impair, as between the Clearing Agency and its Participants, the operation of
customary practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in the Global Capital Security.
(c) Definitive Capital Securities. Except as provided in Section 7.9 or
9.2(f)(i), owners of beneficial interests in the 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 who are
not QIBs will receive Capital Securities in the form of individual
certificates in definitive, fully registered form without distribution
coupons and with the Restricted Securities Legend set forth in Exhibit
A-1 hereto ("Restricted Definitive Capital Securities"); provided,
however, that upon registration of transfer of such Restricted
Definitive Capital Securities to a QIB, such Restricted Definitive
Capital Securities will, unless the Global Capital Security has
previously been exchanged, be exchanged for an interest in the Global
Capital Security pursuant to the provisions of Section 9.2. Restricted
Definitive Capital Securities will bear the Restricted Securities
Legend set forth on Exhibit A-1 unless removed in accordance with this
Section 7.3 or Section 9.2.
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SECTION 7.4 Registrar, Paying Agent and Exchange Agent.
The Trust shall maintain in Wilmington, Delaware (i) an office or agency
where Capital Securities may be presented for registration of transfer
("Registrar"), (ii) an office or agency where Capital Securities may be
presented for payment ("Paying Agent") and (iii) an office or agency where
Securities may be presented for exchange ("Exchange Agent"). The Registrar shall
keep a register of the Capital Securities and of their transfer. The Trust may
appoint the Registrar, the Paying Agent and the Exchange Agent and may appoint
one or more co-registrars, one or more additional paying agents and one or more
additional Exchange Agents in such other locations as it shall determine. The
term "Registrar" includes any additional registrar, the term "Paying Agent"
includes any additional paying agent and the term "Exchange Agent" includes any
additional Exchange Agent. The Trust may change any Paying Agent, Registrar,
co-registrar or Exchange Agent without prior notice to any Holder. The Paying
Agent shall be permitted to resign as Paying Agent upon 30 days' written notice
to the Property Trustee, the Administrative Trustees and the Sponsor. 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.
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, and will notify the Property
Trustee if there are insufficient funds for such purpose. While any such
insufficiency continues, the Property Trustee may require a Paying Agent to pay
all money held by it to the Property Trustee. The Trust at any time may require
a Paying Agent to pay all money held by it to the Property Trustee and to
account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or 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, an
Administrative Trustee shall execute and the Property Trustee shall authenticate
and make available for delivery a replacement Security if the Property Trustee's
requirements 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, the Trust 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.
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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 canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to Section
7.6 hereof, it ceases to be outstanding unless the Property Trustee receives
proof satisfactory to it that the replaced, paid or purchased Capital Security
is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms of
this Declaration, they cease to be outstanding and Distributions on them shall
cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 Capital Securities in Treasury.
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Capital Securities owned by
the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be, shall
be disregarded and deemed not to be outstanding, except that for the purposes of
determining whether the Property Trustee shall be fully protected in relying on
any such direction, waiver or consent, only Securities which the Property
Trustee actually knows are so owned shall be so disregarded.
SECTION 7.9 Temporary Securities.
(a) Until Definitive Capital 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 Capital 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 Capital Securities in exchange
for temporary Securities.
(b) The 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 Capital Securities only if such transfer
complies with Section 9.2 and (i) the Clearing Agency notifies the
Sponsor 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, in each case, a clearing agency is not appointed by the
Sponsor within 90 days of receipt of such notice or of becoming aware
of such condition, (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 Capital Securities.
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(c) Any Global Capital Security that is transferable to the beneficial
owners thereof in the form of Definitive Capital Securities pursuant
to this Section 7.9 shall be surrendered by the Clearing Agency to the
Property Trustee 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
Capital Securities of authorized denominations in the form of
Definitive Capital Securities. Any portion of the Global Capital
Security transferred pursuant to this Section shall be registered in
such names as the Clearing Agency shall direct. Any Definitive Capital
Security delivered in exchange for an interest in the Restricted
Global Capital Security shall, except as otherwise provided by
Sections 7.3 and 9.1, bear the Restricted Securities Legend set forth
in Exhibit A-l hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of the 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 certifi cated Capital Securities in
fully registered form without distribution coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent shall
forward to the Property Trustee any Capital Securities surrendered to them for
registration of transfer, redemption, exchange or payment. The Property Trustee
shall promptly cancel all Capital Securities surrendered for registration of
transfer, redemption, exchange, payment, replacement or cancellation and shall
dispose of canceled Capital Securities in accordance with its customary
procedures unless the Trust otherwise directs. 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 redemp tion 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.
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ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust.
(a) The Trust shall automatically dissolve:
(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 Sponsor directing the Property Trustee to
dissolve the Trust (which direction is optional, and except as
otherwise expressly provided below, within the discretion of the
Sponsor), and provided, further, that such direction and such
distribution is conditioned on (a) the receipt by the Sponsor of
any and all required regulatory approvals, and (b) the Sponsor's
receipt and delivery to the Administrative Trustees of an opinion
of independent tax counsel experienced in such matters, which
opinion may rely on public or private rulings of the Internal
Revenue Service, to the effect that the Holders of the Capital
Securities 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 redemption or 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 upon completion of winding up of the Trust
following the occurrence of an event referred to in Section 8.1(a) and
the satisfaction of creditors of the Trust in accordance with
applicable law, the Administrative Trustees shall terminate the Trust
by filing a certificate of cancellation with the Secretary of State of
the State of Delaware in accordance with the Business Trust Act.
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(c) The provisions of Section 3.9 and Article X shall survive the
dissolution and 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
accordance with the terms of the Securities. To the fullest extent
permitted by law, any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration. To the fullest extent
permitted by law, any transfer or purported transfer of any Security
not made in accor dance with this Declaration shall be null and void.
(c) For so long as the Securities remain outstanding, the Sponsor agrees
(i) not to transfer ownership of the Common Securities of the Trust,
provided that any permitted successor of the Sponsor under the
Indenture may succeed to the Sponsor's ownership of the Common
Securities, (ii) not to cause, as Sponsor of the Trust, or to permit,
as Holder of the Common Securities, the dissolution, winding-up or
liquidation of the Trust, except as provided in this Declaration and
(iii) to use its best efforts to cause the Trust (a) to remain a
business trust, except in connection with the distribution of
Debentures to the Holders in liquidation of the Trust, the redemption
of all of the Securities, or certain mergers, consolidations or
amalgamations, each as permitted by this Declaration, and (b) to
otherwise continue to be classified as a grantor trust for United
States federal income tax purposes.
(d) The Registrar 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
Registrar 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, an Administrative
Trustee 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
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 delivered to the Registrar and
canceled in accordance with Section 7.10. 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 or any
interest therein, each transferee shall be deemed to have agreed to be
bound by this Declaration.
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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 Re stricted Securities Legend set forth
in Exhibit A-1 hereto, or if a request is made to remove such
Restricted Securities Legend on Capital Securities, the Capital
Securities so issued shall bear the Restricted Securities Legend, or
the Restricted Securities Legend shall not be removed, as the case may
be, unless there is delivered to the Trust and the Property Trustee
such satisfactory evidence, which shall include an Opinion of Counsel,
as may be reasonably required by the Trust and the Property Trustee,
that neither the Restricted Securities 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
Capital Securities, that such Securities are not "restricted" within
the meaning of Rule 144. Upon provision of such satisfac tory
evidence, the Property Trustee, at the written direction of an
Administrative Trustee on behalf 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 (other than the legend requiring that
transfers of Capital Securities be made in blocks having an aggregate
liquidation amount of not less than $100,000 (100 Capital Securities)
and multiples of $1,000 in excess thereof), and beneficial interests
in the Global Capital Security without legends will be available to
transferees of such Capital Securities, upon exchange of the
transferring Holder's Restricted Definitive Capital Security or
directions to transfer such Holder's beneficial interest in the Global
Capital Security, as the case may be. No such transfer or exchange of
a Restricted Definitive Capital Security or of an interest in the
Global Capital Security shall be effective unless the transferor
delivers to the Property Trustee a certificate in a form substantially
similar to that attached hereto as the form of "Assignment" in Exhibit
A-1. Except as otherwise provided in Section 9.2(m), after the
effectiveness of a Registration Statement, an Administrative Trustee
on behalf of the Trust shall issue and the Property Trustee, upon a
written order of the Trust signed by one Administrative Trustee, shall
authenticate a Global Capital Security without the Restricted
Securities Legend (the "Unrestricted Global Capital Security") to
deposit with the Clearing Agency to evidence transfers of beneficial
interests from the Global Capital Security and Restricted Definitive
Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities. When
Definitive Capital Securities are presented to the Registrar or
co-registrar:
(x) to register the transfer of such Definitive Capital Securities;
or
(y) to exchange such Definitive Capital Securities which became
mutilated, destroyed, defaced, stolen or lost, for an equal
number of Definitive Capital Securities, the Registrar or
co-registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are
met;
provided, however, that the Definitive Capital Securities surrendered
for registration of transfer or exchange:
43
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Trust and the
Registrar or co-registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) in the case of Definitive Capital Securities that are Restricted
Definitive Capital Securities:
(A) if such Restricted Capital Securities are being delivered to
the Registrar by a Holder for registration in the name of
such Holder, without transfer, certification(s) from such
Holder to that effect; or
(B) if such Restricted Capital Securities are being transferred:
(i) certification(s) in a form substantially similar to that
attached hereto as the form of "Assignment" in Exhibit A-1,
and (ii) if the Trust or Registrar so requests, evidence
reasonably satisfactory to them as to the compliance with
the restrictions set forth in the Restricted Securities
Legend.
(d) Restrictions on Transfer of a Definitive Capital Security for a
Beneficial Interest in the Global Capital Security. A Definitive
Capital Security may not be exchanged for a beneficial interest in the
Global Capital Security except upon satisfaction of the requirements
set forth below. Upon receipt by the Property Trustee of a Definitive
Capital Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Property Trustee,
together with:
(i) if such Definitive Capital Security is a Restricted Capital
Security, certification(s) in a form substantially similar to
that attached hereto as the form of "Assignment" in Exhibit A-1;
and
(ii) whether or not such Definitive Capital Security is a Restricted
Capital Security, written instructions directing the Property
Trustee to make, or to direct the Clearing Agency to make, an
adjustment on its books and records with respect to the 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 Global
Capital Security to be increased accordingly. If the Global Capital
Security is not then outstanding, an Administrative Trustee on behalf
of the Trust shall issue and the Property Trustee shall authenticate,
upon written order of any Administrative Trustee, a new Global Capital
Security representing an appropriate number of Capital Securities.
(e) Transfer and Exchange of the Global Capital Security. Subject to
Section 9.2(f), the transfer and exchange of the Global Capital
Security 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.
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(f) Transfer of a Beneficial Interest in the Global Capital Security for a
Definitive Capital Security.
(i) Any Person having a beneficial interest in the 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 the 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 certification(s) 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 the Global Capital Security to
be reduced on its books and records and, following such
reduction, the Trust will execute and the Property Trustee will
authenticate and make available for delivery to the transferee a
Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a beneficial
interest in the 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 Clearing Agency 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 the Global Capital Security.
Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in subsection (h) of this Section 9.2), the
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.
(h) Authentication of Definitive Capital Securities. If at any time:
(i) a Default or an Event of Default has occurred and is continuing,
(ii) the Trust, in its sole discretion, notifies the Property Trustee
in writing that it elects to cause the issuance of Definitive
Capital Securities under this Declaration, or
(iii)the Clearing Agency notifies the Sponsor that it is unwilling or
unable to continue as Clearing Agency for such Global Capital
Security or if at any time
45
such Clearing Agency ceases to be a "clearing agency" registered
under the Exchange Act, and, in each case, a clearing agency is
not appointed by the Sponsor within 90 days of receipt of such
notice or of becoming aware of such condition,
then an Administrative Trustee on behalf of the Trust will execute,
and the Property Trustee, upon receipt of a written order of the Trust
signed by one Administrative Trustee requesting the authentication and
delivery of Definitive Capital Securities to the Persons designated by
the Trust, will authenticate and make available for delivery
Definitive Capital Securities, equal in number to the number of
Capital Securities represented by the Global Capital Security, in
exchange for such Global Capital Security.
(i) Legend.
(i) Except as permitted by the following paragraph (ii), each Capital
Security Certificate evidencing the Global Capital Security and
each Definitive Capital Security (and all Capital Securities
issued in exchange therefor or substitution thereof) shall bear a
legend (the "Restricted Securities Legend") in substantially the
following form:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAW. NEITHER THIS 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 TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
CASCADE 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
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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) 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 PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH,
ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT
TO THE RIGHT OF CASCADE CAPITAL TRUST I (THE "TRUST") AND
THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT
TO CLAUSE (D) 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 FEBRUARY 25,
2000. 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.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN
EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR
47
OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY
WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF
ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING
"PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THE CAPITAL
SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR
HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF CAPITAL
SECURITIES IS NOT PROHIBITED BY SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR
HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES
OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED
BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS
NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION
3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE
IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF
AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR
ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN
TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
In all circumstances, each Capital Security Certificate shall
bear the following legend:
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000 (100 CAPITAL SECURITIES) AND MULTIPLES OF $1,000 IN
EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF CAPITAL SECURITIES
IN A BLOCK
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HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 (100
CAPITAL SECURITIES) SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL
BE DEEMED NOT TO BE THE HOLDER OF SUCH CAPITAL SECURITIES
FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT
OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH
PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
WHATSOEVER IN SUCH CAPITAL SECURITIES.
(ii) Upon any sale or transfer of a Restricted Capital Security
(including any Restricted Capital Security represented by the
Global Capital Security) pursuant to an effective registration
statement under the Securities Act or pursuant to Rule 144:
(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Registrar shall permit the
Holder thereof to exchange such Restricted Capital Security
for a Definitive Capital Security that does not bear the
Restricted Securities Legend and rescind any restriction on
the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security that is
represented by the Global Capital Security, the Registrar
shall permit the Holder of such Global Capital Security to
exchange such Global Capital Security for another Global
Capital Security that does not bear the Restricted
Securities Legend.
(j) Cancellation or Adjustment of Global Capital Security. At such time as
all beneficial interests in the Global Capital Security have either
been exchanged for Definitive Capital Securities to the extent
permitted by this Declaration or redeemed, repurchased or canceled in
accordance with the terms of this Declaration, such Global Capital
Security shall be returned to the Clearing Agency for cancellation or
retained and canceled by the Property Trustee. At any time prior to
such cancellation, if any beneficial interest in the 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 and the Clearing Agency or its nominee to reflect
such reduction.
(k) Obligations with Respect to Transfers and Exchanges of Capital
Securities.
(i) To permit registrations of transfers and exchanges, the Trust
shall execute and the Property Trustee shall authenticate
Definitive Capital Securities and the Global Capital Security at
the Registrar's or co-registrar's request in accordance with the
terms of this Declaration.
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(ii) Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Trust
or the Sponsor may require) in respect of any tax or other
governmental charge that may be imposed in relation to it.
(iii)The Registrar or co-registrar shall not be required to register
the transfer of or exchange of (a) Capital Securities during a
period beginning at the opening of business 15 days before the
day of mailing of a notice of redemption or any notice of
selection of Capital Securities for redemption and ending at the
close of business on the day of such mailing or (b) any Capital
Security so selected for redemption in whole or in part, except
the unredeemed portion of any Capital Security being redeemed in
part.
(iv) Prior to the due presentation for registration of transfer of any
Capital Security, the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar may deem and treat the
Person in whose name a Capital Security is registered as the
absolute owner of such Capital Security for the purpose of
receiving Distributions on such Capital Security and for all
other purposes whatsoever, and none of the Trust, the Property
Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary.
(v) All Capital Securities issued upon any registration of 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 registration of transfer or exchange.
(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to any Capital Security Beneficial Owner, 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
the Global Capital Security). The rights of Capital
Security Beneficial Owners 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 Capital Security
Beneficial Owners.
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(ii) The Property Trustee and the 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 Capital Security
Beneficial Owners) other than to require delivery of
such certificates and other documentation or evidence
as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration,
and to examine the same to determine substantial
compliance as to form with the express requirements
hereof.
(m) Exchange of Series A Capital Securities for Series B Capital
Securities. The Series A Capital Securities shall be exchanged for
Series B Capital Securities pursuant to the terms of the Exchange
Offer if the following conditions are satisfied:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the number of Series A Capital Securities properly tendered in the
Exchange Offer that are represented by the 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 and
the Series B Capital Securities Guarantee have been registered under Section 5
of the Securities Act and that this Declaration and the Series B Capital
Securities Guarantee have been qualified under the Trust Indenture Act and (y)
with respect to the matters set forth in Section 3(q) of the Registration Rights
Agreement, shall authenticate (A) the Global Capital Security, executed and
delivered by the Trust to the Property Trustee, for Series B Capital Securities
in aggregate liquidation amount equal to the aggregate liquidation amount of
Series A Capital Securities represented by the Global Capital Security indicated
in such Officers' Certificate as having been properly tendered and (B)
Definitive Capital Securities, executed and delivered by the Trust to the
Property Trustee, representing Series B Capital Securities registered in the
names 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
51
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 authenticated Definitive Capital Securities
for Series B Capital Securities to the Holders thereof as indicated in such
Officers' Certificate.
(n) Minimum Transfers. Series A Capital Securities and, if and when
issued, Series B Capital Securities may only be transferred in minimum
blocks of $100,000 aggregate liquidation amount (100 Capital
Securities) and multiples of $1,000 in excess thereof. Any attempted
transfer of Series A Capital Securities or Series B Capital Securities
in a block having an aggregate liquidation amount of less than
$100,000 shall be deemed to be voided and of no legal effect
whatsoever. Any such purported transferee shall be deemed not to be a
Holder of such Series A Capital Securities or Series B Capital
Securities for any purpose, including, but not limited to, the receipt
of Distributions on such Capital Securities, and such purported
transferee shall be deemed to have no interest whatsoever in such
Capital Securities.
SECTION 9.3 Deemed Security Holders.
The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner and Holder of
such Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Security on the part of any Person, whether
or not the Trust shall have actual or other notice thereof.
SECTION 9.4 Book-Entry Interests.
The Global Capital Security 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 physical delivery
of a definitive Capital Security certificate (a "Capital Security Certificate")
representing such Capital Security Beneficial Owner's interests in such Global
Capital Security, except as provided in Section 9.2 and Section 7.9. Unless and
until Definitive Capital Securities have been issued to the Capital Security
Beneficial Owners pursuant to Section 9.2 or Section 7.9:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal with the Clearing
Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Capital Security and receiving approvals,
votes or consents hereunder) as the sole Holder of the Global Capital
Security and shall have no obligation to the Capital Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
52
(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 Capital Security to such
Clearing Agency Participants; provided, however, that solely for the
purposes of determining whether the Holders of the requisite amount of
Capital Securities have voted on any matter provided for in this
Declaration, the Trustees, with respect to the Global Capital
Security, may conclusively rely on, and shall be protected in relying
on, any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Capital Security
Beneficial Owners' votes or assigning the right to vote on any matter
to any other Persons either in whole or in part; and the Clearing
Agency will also make book-entry transfers among the Clearing Agency
Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Capital Security Holders is
required to be given by a Trustee under this Declaration, such Trustee shall
give all such notices and communications specified herein to be given to the
Holder of the Global Capital Security to the Clearing Agency and shall have no
notice obligations to the Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Capital Securities, the Administrative Trustees
may, in their sole discretion, appoint a successor Clearing Agency with respect
to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders which shall
be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any deficit upon
dissolution of the Trust or otherwise.
(b) The Sponsor shall be liable for all of the debts and obligations of
the Trust (other than in respect of the Securities) to the extent not
satisfied out of the Trust's assets.
53
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders 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 in the case
of the Property Trustee or the Delaware Trustee, negligence) or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person
as to matters the Indemnified Person reasonably believes are within
such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Trust, including
information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders 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 Person and any Indemnified Person, 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
54
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 Indem nified Person at law or in equity or
otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall
have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person;
or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and
shall not be subject to any other or different standard imposed
by this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The 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 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 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
55
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
or she shall be indemnified, to the full extent permitted by law,
against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section
10.4(a) (unless ordered by a court) shall be made by the Sponsor
only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in
the circumstances because he or she 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 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 or she is not
entitled to be indemnified by the Sponsor as authorized in this
Section 10.4(a). Notwithstanding the foregoing, no advance shall
be made by the Sponsor 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) by 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
the Common Security Holder did not believe to be in, or believed
was 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 or her 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 a Company
Indemnified Person deliberately breached his or her 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 Sponsor or
56
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 and each Company Indemnified Person
who serves in such capacity at any time while this Section
10.4(a) is in effect. Any repeal or modification of this Section
10.4(a) shall not affect any rights or obligations then existing.
(vii)The 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 or her and incurred by
him or her in any such capacity, or arising out of his or her
status as such, whether or not the Debenture Issuer would have
the power to indemnify him or her 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 or she 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 or the
Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or
agents of the Property Trustee or the Delaware Trustee (each of the
Persons in (i) through (iv), including the Property Trustee and the
Delaware Trustee in their respective individual capacities, being
referred to as a "Fiduciary Indemnified Person") for, and to hold each
Fiduciary Indemnified Person harmless against, any and all loss,
liability, damage, action, suit, claim or expense including taxes
(other than taxes based on the income of such Fiduciary Indemnified
Person) of any kind and nature whatsoever incurred without negligence,
bad faith or willful misconduct on the part of such Fiduciary
Indemnified Person, 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 against or investigating any claim or liability
in connection with the exercise or performance of any of the powers or
duties of such Fiduciary Indemnified Person hereunder. The obligation
to indemnify as set forth in this Section 10.4(b) shall survive the
resignation or removal of the Property Trustee or the Delaware Trustee
and the satisfaction and discharge of this Declaration.
(c) The Sponsor agrees to pay the Property Trustee and the Delaware
Trustee, from time to time, such compensation for all services
rendered by the Property Trustee and the Dela ware Trustee hereunder
as may be mutually agreed upon in writing by the Sponsor and the
Property Trustee or the Delaware Trustee, as the case may be, and,
except as otherwise expressly provided herein, to reimburse the
Property Trustee and the Delaware Trustee upon its or their request
for all reasonable expenses (including legal fees and expenses),
disbursements and advances incurred or made by the Property Trustee or
the Delaware Trustee, as the case may be, in accordance with the
provisions of this Declaration, except any such expense, disbursement
or advance as may be attributable to its or their negligence or bad
faith.
SECTION 10.5 Outside Businesses.
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.
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.
57
(b) 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.
(c) 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 may maintain one or more bank accounts in the name and for the
sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Administrative Trustees; provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Administrative Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are 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 cause to be filed
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 of excess 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.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration (including Section 7
of Annex I hereto) or by any applicable terms of the Securities, this
Declaration may only be amended by a written instrument approved and
executed by:
(i) the Sponsor and the Administrative Trustees (or, if there are
more than two Administrative Trustees, a majority of the
Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations
or immunities of the Property Trustee, the Property Trustee; and
(iii)if the amendment affects the rights, powers, duties, obligations
or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment shall be
void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from
each of the Trust and the Sponsor that such amendment is
permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms
to, the terms of this Declaration (including the terms of
the Securities); and
(B) an Opinion of Counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms
to, the terms of this Declaration (including the terms of
the Securities) and that all conditions precedent to the
execution and delivery of such amendment have been
satisfied;
provided, however, that the Property Trustee shall not be
required to sign any such amendment; and
(iii)to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a
grantor trust;
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(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 (other than an amendment
pursuant to (g) below) may be effected only with such additional
requirements as may be set forth in the terms of such Securities;
(d) Section 10.1(c) and this Section 12.1 shall not be amended without the
consent of all of the Holders;
(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 V 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
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders 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;
(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; and
(iii)to modify, eliminate or add any provisions of the Declaration to
such extent as shall be necessary to enable the Trust or the
Sponsor to conduct an Exchange Offer in the manner contemplated
by the Registration Rights Agree ment;
provided, however, that in each clause above, such action shall not
adversely affect in any material respect the interests of the Holders,
and any such amendments of this Declaration shall become effective
when notice thereof is given to the Holders.
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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
20% in Liquidation Amount of such class of Securities. Such direction
shall be given by delivering to the Administrative Trustees one or
more notices in writing stating that the signing Holders 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 Capital Security Certificates held by the Holders
exercising the right to call a meeting and only those Securities
specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph
has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of
Holders:
(i) notice of any such meeting shall be given to all the Holders
having a right to vote thereat at least seven days and not more
than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders is permitted or required under
this Declaration or the rules of any stock exchange on which the
Capital Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders; any
action that may be taken at a meeting of the Holders may be taken
without a meeting if a consent in writing setting forth the
action so taken is signed by the Holders 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; and 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 eleven months from the date thereof unless
otherwise provided in the proxy; every proxy shall be revocable
at the pleasure of the Holder executing it; and, 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;
61
(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, waiver of any such notice, action by
consent without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any other
matter with respect to the exercise of any such right to vote.
ARTICLE 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 Delaware banking corporation, a national
banking association or a bank or trust company, duly organized,
validly existing and in good standing under the laws of the United
States or the State of Delaware as the case may be, with corporate
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
(b) the execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee; and this Declaration has
been duly executed and delivered by the Property Trustee and under
Delaware law (excluding any securities laws) constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable
against it in accordance with its terms, subject to applicable bank
ruptcy, 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
62
(d) no consent, approval or authorization of, or registration with or
notice to, any federal or state banking authority governing the trust
powers of the Property Trustee 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 Delaware banking corporation, a national
banking association or a bank or trust company, duly organized,
validly existing and in good standing under the laws of the United
States or the State of Delaware, as the case may be, with corporate
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
(b) the execution, delivery and performance by the Delaware Trustee of
this Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee; and this Declaration has
been duly executed and delivered by the Delaware Trustee and under
Delaware law (excluding any securities laws) constitutes a legal,
valid and binding obligation of the Delaware Trustee, enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other similar
laws affecting creditors' rights generally and to general principles
of equity and the discretion of the court (regardless of whether 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
Delaware Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Delaware Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any federal or Delaware banking authority governing the
trust powers of the Delaware Trustee is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration;
and
(e) the Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware, and is a Person
that satisfies for the Trust Section 3807(a) of the Business Trust
Act.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement; Liquidated Damages.
The Holders of the Series A Capital Securities, the Series A Debentures and
the Series A Capital Securities Guarantee are entitled to the benefits of the
Registration Rights Agreement and the Liquidated Damages Agreement. In certain
limited circumstances set forth in the Registration Rights Agreement and the
Liquidated Damages Agreement, the Debenture Issuer shall
63
be required to pay liquidated damages with respect to the Series A Debentures.
Unless otherwise stated, the term "Distribution," as used in this Declaration,
includes any and all liquidated damages.
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, overnight courier service or confirmed telecopy, 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 Property Trustee, the Delaware Trustee
and the Holders):
Cascade Capital Trust I
c/o Cascade Financial Corporation
2828 Colby Avenue
Everett, Washington 98201
Attention.: Chief Financial Officer
Telephone: (425) 339-5500
Telecopier: (425) 258-0624
(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):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
64
(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):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopier: (302) 651-8882]
(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):
CASCADE FINANCIAL CORPORATION
2828 Colby Avenue
Everett, Washington 98201
Attention: Chief Financial Officer
Telephone: (425) 339-5500
Telecopier: (425) 258-0624
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust. All such notices shall be deemed to have
been given when received in person, telecopied with receipt confirmed,
or mailed by first class mail, postage prepaid except that if a notice
or other document is refused delivery or cannot be delivered because
of a changed address of which no notice was given, such notice or
other document shall be deemed to have been delivered on the date of
such refusal or inability to deliver.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be governed
by and construed in accordance with the laws of the State of Delaware without
regard to conflict of laws principles thereof.
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.
65
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 or not 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 or more of such counterpart signature pages. All of
such counterpart signature pages shall be read as though one, and they shall
have the same force and effect as though all of the signers had signed a single
signature page.
66
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ Frank M. McCord
------------------------------------
Frank M. McCord
as Administrative Trustee
/s/ C.F. Safstrom
------------------------------------
C.F. Safstrom
as Administrative Trustee
/s/ Russell E. Rosendal
------------------------------------
Russell E. Rosendal
as Administrative Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Kathleen A. Pedelini
------------------------------------
Name: Kathleen A. Pedelini
Title: Administrative Account Manager
WILMINGTON TRUST COMPANY,
as Property Trustee
By: /s/ Kathleen A. Pedelini
------------------------------------
Name: Kathleen A. Pedelini
Title: Administrative Account Manager
CASCADE FINANCIAL CORPORATION,
as Sponsor and Debenture Issuer
By: /s/ Frank M. McCord
------------------------------------
Frank M. McCord
Chairman and Chief Executive Officer
ANNEX I
TERMS OF
11.00% CAPITAL SECURITIES, SERIES A/SERIES B
11.00% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration, dated as
of March 1, 2000 (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, the Indenture
or, if not defined in such Declaration or Indenture, as defined in the Offering
Memorandum referred to below in Section 2(c) of this Annex I):
1. Designation and Number.
(a) Capital Securities. 11.00% Series A Capital Securities of the
Trust and 11.00% Series B Capital Securities of the Trust, each
series with an aggregate liquidation amount with respect to the
assets of the Trust of Ten Million Dollars ($10,000,000) and with
a liquidation amount with respect to the assets of the Trust of
One Thousand Dollars ($1,000) (the "Liquidation Amount") per
security, are hereby designated for the purposes of
identification only as "11.00% Capital Securities, Series A" and
"11.00% Capital Securities, Series B," 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 exchange or quotation system on or in which the Capital
Securities are listed, traded or quoted.
(b) Common Securities. 310 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the
Trust of Three Hundred Ten Thousand Dollars ($310,000) and a
liquidation amount with respect to the assets of the Trust of
$1,000 per security, are hereby designated for the purposes of
identification only as "11.00% 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 on each Security will be payable at a fixed rate
per annum of 11.00% (the "Coupon Rate") of the liquidation amount
of $1000 per Security, such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one semi-annual period
will bear additional Distributions thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by
applicable law). Pursuant to the Registration Rights Agreement
and the Liquidated Damages Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay
Liquidated Damages (as defined in the Registration Rights
Agreement and the Liquidated Damages Agreement) with respect to
the Debentures. The term "Distributions" as used herein, includes
distributions of any and all such interest and Liquidated
I-1
Damages, if any, payable unless otherwise stated. A Distribution
is payable only to the extent that payments are made with respect
to the Debentures held by the Property Trustee and to the extent
the Property Trustee has funds legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have
been paid or, if no Distributions have been paid, from March 1,
2000 and will be payable semi-annually in arrears on March 1st
and September 1st of each year, commencing September 1, 2000
(each, a "Distribution Date"), except as otherwise described
below. Distributions will be computed on the basis a 360-day year
of twelve 30-day months. 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
ten 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 date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures.
As a consequence of such defer ral, Distributions (other than
Liquidated Damages, if any) will also be deferred.
Notwithstanding 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 does not cause such Extension Period, together with all
such previous and further extensions within such Extension
Period, to exceed ten consecutive semi-annual periods, including
the first semi-annual period during such Extension Period, end on
a date other than an Interest Payment Date for the Debentures or
extend beyond the Maturity Date of the Debentures. Upon the
termination of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on
the close of business on the 15th day of the month immediately
preceding the month in which the relevant Distribution Date
occurs, which Distribution Dates correspond to the Interest
Payment Dates for the Debentures. Subject to any applicable laws
and regulations and the provisions of the Declaration, each such
payment with respect to the Capital Securities will be made as
described under the heading "Description of Capital Securities --
Form, Denomination, Book-Entry Procedures and Transfer" in the
Offering Memorandum dated February 25, 2000 of the Debenture
Issuer and the Trust relating to the Securities and the
Debentures. The relevant record dates for the Common Securities
shall be the same as the record dates for the Capital Securities.
Distributions payable on any Securities that are not punctually
paid on any Distribution Date, as a result of the Debenture
Issuer having failed to make a payment under the Debentures, will
cease to be payable to the Holder on the relevant record date,
and such defaulted Distribution will instead be payable to the
Person in whose name such Securities are registered on the
special record date or other specified date determined in
accordance with the Indenture. If any date on which Distributions
are payable on the Securities is not a Business Day, then payment
of the Distributions 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 next succeeding
I-2
Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day
with the same force and effect as if made on such date (and
without any interest or other payment in respect of any such
delay).
(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.
3. Liquidation Distribution Upon Dissolution.
In the event of any dissolution of the Trust, the Trust shall be
liquidated by the Administrative Trustees as expeditiously as the
Administrative Trustees determine to be possible by distributing to the
Holders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, a Like Amount (as defined below) of the
Debentures, unless such distribution is determined by the Property Trustee
not to be practicable, in which event such Holders will be entitled to
receive out of the assets of the Trust legally available for distribution
to Holders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the aggregate of the
liquidation amount of $1,000 per Security plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal
amount of Debentures to be paid in accordance with their terms and (ii)
with respect to a distribution of Debentures upon the liquidation of the
Trust, Debentures having a principal amount equal to the Liquidation Amount
of the Securities of the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust with respect to the Securities shall
be paid on a Pro Rata basis.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures (with premium, if any) in
whole or in part, at maturity or otherwise (either at the option
of the Debenture Issuer or pursuant to a Special Event, as
described below), the proceeds from such repayment shall be
simultaneously applied by the Property Trustee (subject to the
Property Trustee having received written notice no later than 45
days prior to such repayment) to redeem a Like Amount of the
Securities at a redemption price equal to (i) in the case of the
repayment of the Debentures on the Maturity Date, the Maturity
Redemption Price (as defined below), (ii) in the case of the
optional prepayment of the Debentures prior to the Initial
Optional Redemption Date and upon the occurrence and continuation
of a Special Event, the Special Event Redemption Price (as
defined below) and (iii) in the case of the optional prepayment
of the Debentures on or after the Initial Optional Redemption
Date, the Optional Redemption Price (as defined below). The
Maturity Redemption Price, the Special Event Redemption Price and
the Optional Redemption Price are referred to collectively as the
"Redemption Price." Holders will be given not less than 30 nor
more than 60 days prior written notice of such redemption.
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(b) (i) The "Maturity Redemption Price" shall mean an amount equal
to 100% of the principal of, plus accrued and unpaid
interest (including Compounded Interest and Additional Sums,
if any, thereon to the date of redemption) on, the
Debentures as of the Maturity Date thereof.
(ii) The Debenture Issuer shall have the right (subject to the
conditions in the Indenture) to elect to prepay the
Debentures, in whole or in part, at any time on or after
March 1, 2010 (the "Initial Optional Redemption Date"), and,
simultaneous with such prepayment, to cause a Like Amount of
the Securities to be redeemed by the Trust at the Optional
Redemption Price on a Pro Rata basis. "Optional Redemption
Price" shall mean an amount equal to the applicable
redemption price set forth below plus, accumulated and
unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12-month period beginning
March 1st, of the years indicated below:
Percentage of
Year Liquidation Amount
- ------------------------------------------------------
2010 105.500%
2011 104.950%
2012 104.500%
2013 103.850%
2014 103.300%
2015 102.750%
2016 102.200%
2017 101.650%
2018 101.100%
2019 100.550%
2020 and thereafter 100.000%
(c) If at any time an Investment Company Event, a Regulatory
Capital Event or a Tax Event (each as defined below, and
each a "Special Event") occurs, the Debenture Issuer shall
have the right (subject to the conditions set forth in the
Indenture) at any time prior to the Initial Optional
Redemption Date, to prepay 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 prepayment, 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.
"Investment Company Event" shall mean the receipt by the Debenture
Issuer and the Trust of an opinion of independent securities 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
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laws or any regulations thereunder of the United States or any rules,
guidelines or policies of any applicable regulatory authority for the
Debenture Issuer 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 the date of original issuance of the Securities, the
Trust is, or within 90 days of the date of such opinion will be, considered
an Investment Company that is required to be registered under the
Investment Company Act.
"Regulatory Capital Event" shall mean the receipt by the Debenture
Issuer and the Trust of an opinion of independent bank regulatory counsel
experienced in such matters to the effect that as a result of (a) any
amendment to, or change (including any announced prospective change) in,
the laws or any regulations thereunder of the United States or any rules,
guidelines or policies of an applicable regulatory authority for the
Debenture Issuer 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 the date of original issuance of the Securities, the
Capital Securities do not constitute, or within 90 days of the date of such
opinion will not constitute, Tier 1 Capital (or its then equivalent if the
Sponsor were subject to such capital requirement); provided, however, that
the distribution of the Debentures in connection with the liquidation of
the Trust by the Debenture Issuer shall not in and of itself constitute a
Regulatory Capital Event.
"Special Event Redemption Price" shall mean, with respect to any
redemption of the Securities following a Special Event, an amount in cash
equal to the greater of (i) 100% of the principal amount of the Securities
or (ii) the sum, as determined by a Quotation Agent (as defined in the
Indenture), of the present values of the remaining scheduled payments of
principal and interest on such Securities, discounted to the redemption
date on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate (as defined in the Indenture),
plus, in the case of (i) or (ii), any accrued and unpaid interest thereon
(including Compounded Interest and Additional Sums, if any) to the date of
such redemption.
A "Tax Event" shall occur upon receipt by the Debenture Issuer and the
Trust of an opinion of independent 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 the date of original issuance of the
Securities, there is more than an insubstantial risk that (i) the Trust is,
or will be within 90 days of the date of such opinion, subject to United
States federal income tax with respect to income received or accrued on the
Debentures, (ii) the interest payable by the Debenture Issuer on the
Debentures is not, or within 90 days of the date of such opinion will not
be, deductible by the Debenture Issuer, in whole or in part, for 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.
(d) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Common
Securities and the Capital Securities shall be redeemed Pro
Rata
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and the Capital Securities to be redeemed will be determined
as described in Section 4(f)(ii) below. Upon the entry of an
order for the dissolution of the Trust by a court of
competent jurisdiction, the Debentures thereafter will be
subject to optional redemption, in whole, but not in part,
on or after the Initial Optional Redemption Date.
(e) 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 cer tificates 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 a Like Amount of Debentures until
such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(f) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions
have been paid on all Securities for all semi-annual
Distribution periods terminating on or before the date of
redemption.
(g) The procedure with respect to redemptions or distributions
of Securities 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 of Securities to be
redeemed or exchanged not fewer than 30 nor more than
60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption,
will be the date fixed for redemption of the
Debentures. For purposes of the calculation of the date
of redemption or exchange and the dates on which
notices are given pursuant to this Section 4(g)(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 at the address of each such Holder
appearing in the books and records of the Trust. No
defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder
shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the particular
Securities to be redeemed shall be selected on a Pro
Rata basis (based upon Liquidation Amounts) not more
than 60 nor less than 30 days prior to the date fixed
for redemption from the outstanding Securities not
previously called for redemption; provided, however,
that with respect to Holders that would be required to
hold less than 100 but more than zero Securities as a
result of such redemption, the Trust shall redeem
Securities of each such Holder so that after such
redemption such Holder shall hold either 100 Securities
or such Holder no longer holds any Securities, and
shall use such method (including, without limitation,
by lot) as the Trust shall deem fair and appropriate;
provided, further, that any such redemption may be made
on the basis of the aggregate Liquidation Amount of
I-6
Securities held by each Holder thereof and may be made by
making such adjustments as the Trust deems fair and
appropriate in order that fractional Securities shall not
thereafter remain outstanding. With respect to Capital
Securities registered in the name of and held of record by
the Clearing Agency or its nominee (or any successor
Clearing Agency or its nominee) or any nominee, the
distribution of the proceeds of such redemption will be made
to the Clearing Agency and disbursed by such Clearing Agency
in accordance with the procedures applied by such agency or
nominee.
(iii)If Securities are to be redeemed and the Trust gives a
Redemption/ Distribution Notice (which notice will be
irrevocable), then (A) with respect to Capital
Securities issued in book-entry form, by 12:00 noon,
New York City time, on the redemption date, provided
that the Debenture Issuer has paid the Property Trustee
a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures by
10:00 a.m., New York City time, on the Maturity Date or
the date of redemption, as the case re quires, the
Property Trustee will deposit irrevocably with the
Clearing Agency or its nominee (or successor Clearing
Agency or its nominee) immediately available 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 irrevocably
deposit with the paying agent for the Capital
Securities (if other than the Property Trustee) funds
sufficient to pay the applicable 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, and provided further,
that any such payment shall become due only upon
surrender by the Holder of the related certificated
Capital Securities. 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 re ceive the Redemption Price,
but without interest on such Redemption Price, and such
Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to
the rights of Holders at 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 at the opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Securities for
redemption 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 succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay). If payment of the Re demption Price with
respect to any Securities is improperly withheld or refused and not paid
either
I-7
by the Property Trustee or by the Sponsor as guarantor pursuant to the
relevant Securities Guarantee, Distributions on such Securities will
continue to accumulate from the original redemption date to the actual date
of payment, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) with respect to Capital
Securities issued in book-entry form, the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), (B)
with respect to Capital Securities issued in certificated form,
to the Holders thereof, and (C) with respect to the Common
Securities, to the Holders thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking
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), 6(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the
Capital Securities will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the
Debenture Trustee or executing any trust or power conferred on
such Debenture Trustee with respect to the Debentures, (ii) waive
any past default that is waivable under Section 5.07 of the
Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of
the Debentures or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures, where such
consent shall be required, without, in each case, obtaining the
prior approval of the Holders of a Majority in Liquidation Amount
of all outstanding Capital Securities; provided, however, that
where a consent under the Indenture would require the consent of
each holder of Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior approval of
each Holder of the Capital Securities. The Trustees shall not
revoke any action previously authorized or approved by a vote of
the Holders of the Capital Securities except by subsequent vote
of such Holders. The Property Trustee shall notify each Holder of
Capital Securities of any notice of default with respect to the
Debentures. In addition to obtaining the foregoing approvals of
such Holders of the Capital Securities, prior to taking any of
the foregoing actions, the Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust
will continue to be classified as a grantor trust for United
States federal income tax purposes after taking any such action
into account.
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 institute a
proceeding directly against the Debenture Issuer for enforcement of payment
to such Holder of the principal of or interest on a Like Amount of
Debentures (a "Direct Action") on or after the respective due date
specified in the Debentures. In
I-8
connection with such Direct Action, 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, or
except as set forth in the first sentence of 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 Property Trustee will cause a notice of any meeting at
which Holders of Capital Securities are entitled to vote 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 consent.
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.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7 or as
otherwise required by law and the Declaration, the Holders of the
Common Securities will have no voting rights.
(b) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the Holder
of the Common Securities. If a Debenture Event of Default has
occurred and is continuing, the Property Trustee and the Delaware
Trustee may be removed at such time by the Holders of a Majority
in Liquidation Amount of the outstanding Capital Securities. In
no event will the Holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative
Trustees, which voting rights are vested exclusively in the
Sponsor as the Holder of the Common Securities. No resignation or
removal of a Trustee and no appointment of a successor trustee
shall be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the
Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the
Debenture Trustee, or executing any trust or power conferred on
such Debenture Trustee with respect to the Debentures, (ii) waive
any past default that is waivable under Section 5.07 of the
Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the
I-9
principal of the Debentures or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in
Liquidation Amount of all outstanding Common Securities;
provided, however, that where a consent under the Indenture would
require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee
without the prior approval of each Holder of the Common
Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Common
Securities except by subsequent vote of such Holders. The
Property Trustee shall notify each Holder of Common Securities of
any notice of default with respect to the 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 continue to be
classified as a grantor trust for United States federal income
tax purposes after taking any such action into account.
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 directly against the Debenture Issuer
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 such Direct Action, the
rights of the Common Securities Holder will be subordinated to the rights of
Holders of Capital Securities in respect of any payment from the Debenture
Issuer 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.
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 to
(i) cure any ambiguity, correct or
I-10
supplement any provisions in the Declaration that may be inconsistent with any
other provisions, or 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, (ii) 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 or (iii) modify, eliminate or add any provisions of
the Declaration to such extent as shall be necessary to enable the Trust or the
Sponsor to conduct an Exchange Offer in the manner contemplated by the
Registration Rights Agreement; provided, however, that in each case, such action
shall not adversely affect in any material respect the interests of any Holder,
and any such amendments of the Declaration shall become effective when notice
thereof is given to the Holders. The Declaration may also be amended by the
Trustees and the Sponsor with (i) the consent of Holders representing a Majority
in Liquidation Amount of all outstanding Securities, and (ii) receipt by the
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such amendment
will not affect the Trust's status as a grantor trust for United States federal
income tax purposes or the Trust's exemption from status as an Investment
Company under the Investment Company Act; provided, however, that, without the
consent of each Holder of Trust Securities, the Declaration may not be amended
to (i) change the amount or timing of any Distribution on, or the payment
required to be made in respect of, the Trust Securities as of a specified date
or (ii) restrict the right of a Holder of Trust Securities to institute suit for
the enforcement of any such payment on or after such date.
8. Pro Rata.
A reference in these terms of the Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder according to
the aggregate liquidation amount of the Securities held by such 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 such
Holder relative to the aggregate liquidation amount of all Capital Securities
outstanding and then, 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 such
Holder relative to the aggregate liquidation amount of all Common Securities
outstanding.
9. Ranking.
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and any other payments
to which they are entitled at such time.
I-11
10. Acceptance of Capital Securities Guarantee, Common Securities
Guarantee. Indenture and Debentures.
Each Holder of Capital Securities and Common Securities, by the acceptance
thereof, agrees to the provisions of the Capital Securities Guarantee, the
Common Securities Guarantee, the Indenture and the Debentures, as applicable,
including the subordination provisions therein.
11. No Preemptive Rights.
Neither the issuance of Capital Securities, nor the issuance of Common
Securities is subject to preemptive or other similar rights. The Holders shall
have no preemptive or similar rights to subscribe for any additional securities.
12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital Securities
Guarantee or the Common Securities Guarantee, as applicable, and the Indenture
(including any supplemental indenture) to a Holder without charge upon written
request to the Trust at its principal place of business.
I-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 CLEARING AGENCY 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 CLEARING AGENCY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS 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 TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH CASCADE 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
A1-1
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) 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 PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF CASCADE CAPITAL TRUST (THE
"TRUST") AND THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
PURSUANT TO CLAUSE (D) 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 FEBRUARY 25, 2000. 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.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF CAPITAL SECURITIES IS NOT PROHIBITED BY SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER
OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO
HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT
AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN
TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON
ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR
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ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN
TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH
THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES)
AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF CAPITAL
SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 (100
CAPITAL SECURITIES) SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER
OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE
BOUND BY THE REGISTRATION RIGHTS AGREEMENT DATED AS OF FEBRUARY 25, 2000, BY AND
AMONG THE TRUST, THE SPONSOR AND SANDLER O'NEILL & PARTNERS, L.P., AS
REPRESENTATIVE OF THE INITIAL PURCHASERS NAMED IN SCHEDULE A OF THE PURCHASER
AGREEMENT, AS AMENDED FROM TIME TO TIME.
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Certificate Number: [ ] Aggregate Liquidation Amount: $ CUSIP Number:[ ]
Certificate Evidencing Capital Securities
of
Cascade Capital Trust I
_____% Capital Securities, Series A
(liquidation amount $1,000 per Capital Security)
Cascade Capital Trust I, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of $ ____________in aggregate liquidation
amount of Capital Securities of the Trust1 ______________ is the registered
owner of the aggregate liquidation amount of Capital Securities of the Trust
specified in Schedule A hereto]2 representing undivided preferred beneficial
interests in the assets of the Trust designated the _____% Capital Securities,
Series A (liquidation amount $1,000 per Capital Security) (the "Capital
Securities"). The Capital Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust,
dated as of March 1, 2000, 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 (including any supplemental indenture) to a Holder without charge upon
written request to the Trust at its principal place of business.
Upon receipt of this Certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Capital
Securities Guarantee to the extent provided therein.
By acceptance hereof, the Holder agrees, for United States federal income
tax purposes, to treat the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
1 Insert in Global Capital Securities only.
2 Insert in Definitive Capital Securities only.
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IN WITNESS WHEREOF, the Trust has executed this certificate this 1st day of
March, 2000.
CASCADE CAPITAL TRUST I
By: _____________________
C.F. Safstrom
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the _____% Capital Securities, Series A of Cascade Capital
Trust I referred to in the within-mentioned Declaration.
Dated:_____________________ ,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Property Trustee
By: _____________________
Authorized Signatory
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[FORM OF REVERSE OF SECURITY]
Distributions on each Capital Security will be payable at a fixed rate per
annum of _____% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement and the Liquidated Damages Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement and the Liquidated
Damages Agreement) with respect to the Debentures. The term "Distributions," as
used herein, includes such cash distributions and any and all such interest and
Liquidated Damages, if any, 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 Capital Securities will be cumulative, will accumulate
from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from March 1, 2000 and will be payable
semi-annually in arrears, on March 1st and September 1st of each year,
commencing September 1, 2000, except as otherwise described below. Distributions
will be computed on the basis of a 360-day year of twelve 30-day months. 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 ten consecutive semi-annual calendar
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 date other than an Interest Payment Date for the Debentures or extend
beyond the Maturity Date of the Debentures. As a consequence of such deferral,
Distributions (other than Liquidated Damages, if any) will also be deferred.
Notwithstanding 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 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 (i) exceed ten consecutive
semi-annual periods, including the first semi-annual period during such
Extension Period, (ii) end on a date other than an Interest Payment Date for the
Debentures or (iii) 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 record date immediately 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 receipt by the Sponsor of any and all required regulatory
approvals and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time dissolve the Trust and after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, cause the Debentures to be distributed
to the
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Holders of the Securities in liquidation of the Trust or, simultaneously with
any redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the Declaration.
A1-7
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN CON - as tenants in common
TEN ENT - as tenants in the entireties
JT TEN - as joint tenants with right of survival
UNIF GIFT MIN ACT - under Uniform Gift to Minors Act and not as tenants
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby assigns and transfers this Capital
Security Certificate to:
(Assignee's social security or tax identification number)
(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:
A1-8
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 Exchange Act of 1934, as amended.
A1-9
[Include the following if the Capital Security bears a Restricted
Securities Legend]
In connection with any transfer of any of the Capital Securities evidenced by
this Certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) o exchanged for the undersigned's own account without transfer; or
(2) o transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933, as amended; or
(3) o transferred to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under
the Securities Act of 1933 that is acquiring the Capital
Securities for its own account, or for the account of such an
institutional "accredited investor," for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act of 1933, as
amended; or
(4) o transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933, as
amended; or
(5) o transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Capital Securities evidenced by this Certificate in the name of any Person
other than the Holder hereof; provided, however, that if box (3) or (4) is
checked, the Registrar may require, prior to registering any such transfer of
the Capital Securities, such legal opinions, certifications and other
information as the Trust has reasonably requested to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act of 1933, as amended, such as
the exemption provided by Rule 144 under such Act; provided, further, that (i)
if box (2) is checked, by acceptance of this Certificate, the transferee shall
be deemed to have certified that it is a "qualified institutional buyer" (as
defined in Rule 144A) ("QIB") acquiring the Capital Securities for its own
account or for the account of another QIB over which it exercises sole
investment discretion and that it is aware that the Holder is relying upon the
exemption from registration afforded by Rule 144A in respect of the Holder's
transfer of Capital Securities to it or (ii) if box (3) is checked, the
transferee must also provide to the Registrar a Transferee Letter of
Representation in the form attached to the Offering Memorandum of the Trust
dated February ___, 2000; provided, further, that after the date that a
registration statement has been filed and so long as such Registration Statement
continues to be effective, only then may the Registrar permit transfers for
which box (5) has been checked.
Signature
A1-10
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
A2-1
This Certificate is not transferable except in compliance with Section
9.1(c) of the Declaration.
Certificate Evidencing Common Securities
of
Cascade Capital Trust I
____% Common Securities
(liquidation amount $1,000 per Common Security)
Cascade Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Cascade Financial Corporation (the "Holder") is the registered owner of ___
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the _____% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). Subject to the
terms of Section 9.1(c) of the Declaration (as defined below), the Common
Securities are not transferable. 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 the Trust dated as of
March 1, 2000, 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 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 Common Securities Guarantee to the extent provided therein.
By acceptance hereof, 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.
IN WITNESS WHEREOF, the Trust has executed this certificate
this 1st day of March, 2000.
CASCADE CAPITAL TRUST I
By: _____________________
C.F. Safstrom
Administrative Trustee
A2-2
[FORM OF REVERSE OF SECURITY]
Distributions on each Common Security will be payable at a rate of
____% per annum (the "Coupon Rate") of the liquidation amount of $1000 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any and
all such interest and Liquidated Damages, if any, 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, if no
Distributions have been paid, from March 1, 2000 and will be payable
semi-annually in arrears, on March 1st and September 1st of each year,
commencing September 1, 2000, except as otherwise described below. Distributions
will be computed on the basis of a 360-day year of twelve 30-day months. 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 ten 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 date other than an Interest Payment Date for the Debentures or extend
beyond the Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Notwithstanding 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 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 (i) exceed to ten consecutive semi-annual periods, including the first
semi-annual period during such Extension Period, (ii) end on a date other than
an Interest Payment Date for the Debentures or (iii) 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 record date
immediately 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 the receipt by the Sponsor of any and all required
regulatory approvals and to certain other conditions set forth in the
Declaration and the Indenture, the Property Trustee may, at the direction of the
Sponsor, at any time dissolve the Trust and cause the Debentures to be
distributed to the Holders of the Securities in liquidation of the Trust or,
simultaneously 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.
Under certain circumstances, the rights of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Capital
Securities, as provided in the Declaration.
A2-3