EXHIBIT 4.20
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PREFERRED SECURITIES GUARANTEE AGREEMENT
Dated as of __________, 199__
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CROSS-REFERENCE TABLE*
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
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310(a)..............................................4.1(a)
310(b)..............................................4.1(c)
310(c)..............................................Inapplicable
311(a)..............................................2.2(b)
311(b)..............................................2.2(b)
311(c)..............................................Inapplicable
312(a)..............................................2.2(a)
312(b)..............................................2.2(b)
313 ..............................................2.3
314(a)..............................................2.4
314(b)..............................................Inapplicable
314(c)..............................................2.5
314(d)..............................................Inapplicable
314(e)..............................................2.4
314(f)..............................................Inapplicable
315(a)..............................................3.1(d)
315(b)..............................................2.7
315(c)..............................................3.1(c)
315(d)..............................................3.1(d)
315(e)..............................................2.12
316(a)..............................................5.4(a), 2.6
316(b)..............................................2.9
316(c)..............................................3.1
317(a)..............................................2.10, 2.11
317(b)..............................................3.1(e)
318(a)..............................................2.1
318(b)..............................................Inapplicable
318(c)..............................................2.1
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* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms
or provisions.
PREFERRED SECURITIES GUARANTEE AGREEMENT
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THIS PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee Agreement"),
dated as of __________, 199_, is executed and delivered by PROVIDIAN FINANCIAL
CORPORATION, a Delaware corporation (the "Guarantor"), and THE BANK OF NEW YORK,
a New York banking corporation, as trustee (the "Preferred Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of Providian Financing __________, a
Delaware statutory business trust (the "Trust Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of __________, 199_, among the administrators of the
Trust Issuer named therein, the Guarantor, as Sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Trust Issuer, the
Trust Issuer is issuing on the date hereof $____ aggregate stated Liquidation
Amount of Preferred Securities designated the ______% Trust Originated Preferred
Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee Agreement, to pay to the Holders the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee Agreement") with substantially
identical terms to this Guarantee Agreement for the benefit of the holders of
the Common Securities (as defined herein) except that if a Guarantee Event of
Default (as defined herein), has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated to the rights of the Holders to receive
Guarantee Payments under this Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders.
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS AND INTERPRETATION. In this Guarantee Agreement, unless
the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.1 or, if not defined in this Guarantee Agreement, then in the
Declaration;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires; and
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(f) a reference to the singular includes the plural and vice versa.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust Issuer.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Guarantee Event of Default" means a default by the Guarantor on any of
its payment obligations under this Guarantee Agreement.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Trust Issuer: (i) any accrued and unpaid Distributions that
are required to be paid on such Preferred Securities if and to the extent that,
in each case, the Issuer of the Subordinated Notes has made a payment to the
Property Trustee of interest and/or principal on the Subordinated Notes, (ii)
the redemption price, including all accrued and unpaid Distributions to the date
of redemption (the "Redemption Price"), if and to the extent that, in each case,
the Issuer of the Subordinated Notes has made a payment to the Property Trustee
of interest and/or principal on the Subordinated Notes, with respect to any
Preferred Securities called for redemption by the Trust Issuer, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
Issuer (other than in connection with the distribution of Subordinated Notes to
the Holders in exchange for Preferred Securities as provided in the
Declaration), the lesser of (a) the aggregate of the Liquidation Amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, and (b) the amount of assets of the Trust Issuer remaining available
for distribution to Holders in liquidation of the Trust Issuer (in either case,
the "Liquidation Distribution"). If an event of default under the Indenture has
occurred and is continuing, the rights of holders of the Common Securities to
receive payments under the Common Securities Guarantee Agreement are
subordinated to the rights of Holders to receive Guarantee Payments.
"Holder" shall mean any registered owner of any Preferred Security, as
shown on the Register; provided, however, that in determining whether the
Holders of the requisite percentage of Preferred Securities have voted or given
any request, notice, consent or waiver hereunder, Preferred Securities which are
owned by the Guarantor, the Trust Issuer or any other obligor on the Preferred
Securities or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Sponsor, the Trust Issuer or
any other obligor on the Preferred Securities shall be disregarded.
"Indemnified Person" means the Preferred Guarantee Trustee or any
officers, directors, shareholders, members, partners, employees, representatives
or agents of the Preferred Guarantee Trustee.
"Indenture" means the Subordinated Indenture dated as of __________,
199_, as supplemented by the First Supplemental Indenture dated as of
__________, 199_, each being between the Subordinated Note Issuer and The Bank
of New York, as trustee, as such Indenture may be further amended, supplemented
or modified in accordance with the provisions thereof.
"Liquidation Amount" has the meaning set forth in the Declaration.
"Liquidation Distribution" has the meaning set forth in the definition
of Guarantee Payment.
"Majority in Liquidation Amount of Preferred Securities" means, except
as provided by the Trust Indenture Act, a vote by Holder(s) of outstanding
Preferred Securities, voting separately as a class, where the aggregate
Liquidation Amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities voted by such Holders represents more than 50% of the above stated
Liquidation Amount of all Preferred Securities.
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"Officer's Certificate" means, with respect to any Person, a
certificate signed by an Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement that the officer signing the Certificate has read the
covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation on which the statements or opinions contained in such Certificate
are based;
(c) a statement that, in the opinion of such officer, he or she has
made such examination or investigation as is necessary to enable such officer to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Person" means an individual, a corporation, a partnership, a joint
venture, an association, a joint stock company, a trust, an unincorporated
organization, or a government or any agency, authority or political subdivision
thereof.
"Preferred Guarantee Trustee" means The Bank of New York until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agreement and thereafter
means each such Successor Preferred Guarantee Trustee as may have been so
appointed from time to time.
"Redemption Price" has the meaning set forth in the definition of
Guarantee Payments.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any vice president, any assistant vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer or any other officer of the Corporate Trust
Department of the Preferred Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1 and which has been appointed as such under Section
4.2.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
as of the date of this Guarantee Agreement.
"25% in Liquidation Amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, Holder(s) of Preferred Securities a vote
by Holder(s) of Preferred Securities, voting separately as a class, and the
aggregate Liquidation Amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Preferred
Securities voted by such Holders represents more than 25% of the above stated
Liquidation Amount of all Preferred Securities.
ARTICLE 2
TRUST INDENTURE ACT
2.1 TRUST INDENTURE ACT; APPLICATION.
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(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions; provided,
however, that any provisions of the Trust Indenture Act which may in accordance
therewith be excluded are hereby excluded from the provisions hereof; and
(b) if and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Section 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control;
2.2 LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor will furnish or cause to be furnished to the
Preferred Guarantee Trustee, not less than 45 days nor more than 60 days after
each (Month and day) that is a Distribution payment date under the Declaration,
but in no event less frequently than semiannually, and at such other times as
the Preferred Guarantee Trustee may request in writing, within 30 days after
receipt by the Guarantor of any such request, a list in such form as the
Preferred Guarantee Trustee may reasonably require containing all the
information in the possession or control of the Guarantor, as to the names and
addresses of the Holders, obtained since the date as of which the next previous
list, if any, was furnished. Any such list may be dated as of a date not more
than 15 days prior to the time such information is furnished and need not
include information received after such date.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. Within 60 days after
May 15 of each year commencing May 15, 1999, the Preferred Guarantee Trustee
shall provide to the Holders such reports, if any, as are required by Section
313(a) of the Trust Indenture Act, in each case in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Preferred Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE. The Guarantor
shall provide to the Preferred Guarantee Trustee such documents, reports and
information (if any), and the compliance certificate, required by Section 314(a)
and Section 314(e) of the Trust Indenture Act in the form, in the manner and at
the times required by Section 314(a) of the Trust Indenture Act.
2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The Guarantor
shall provide to the Preferred Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officer's
Certificate.
2.6 GUARANTEE EVENTS OF DEFAULT: WAIVER. The Holders of a Majority in
Liquidation Amount of the Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any past Guarantee Event of
Default and its consequences. Upon such waiver, any such Guarantee Event of
Default shall cease to exist, and any Guarantee Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Guarantee Event of Default or impair any right consequent thereon.
2.7 GUARANTEE EVENT OF DEFAULT; NOTICE.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of a Guarantee Event of Default, transmit by mail, first class
postage prepaid, to the Holders, notices of all Guarantee Events of Default
known to the Preferred Guarantee Trustee, unless such defaults have been cured
before the giving of such notice; provided, that the Preferred Guarantee Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers of the
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Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Guarantee Event of Default unless the Preferred Guarantee
Trustee shall have received written notice, or a Responsible Officer charged
with the administration of the Declaration shall have obtained written notice,
of such Guarantee Event of Default.
2.8 CONFLICTING INTERESTS. The Declaration shall be deemed to be
specifically described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.
2.9 LIMITATION ON SUITS BY HOLDERS. No Holder shall have any right by
virtue or by availing of any provision of this Guarantee Agreement to institute
any suit, action or proceeding in equity or at law upon or under or with respect
to this Guarantee Agreement or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless such Holder previously shall have given
to the Guarantee Trustee written notice of a continuing Guarantee Event of
Default, as hereinbefore provided, and unless also the Holders of not less than
25% in Liquidation Amount of the Preferred Securities shall have made written
request upon the Guarantee Trustee to institute such action, suit or proceeding
in its own name as Guarantee Trustee hereunder and shall have offered to the
Guarantee Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby (including the
reasonable fees of counsel for the Guarantee Trustee), and the Guarantee
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to this Section 2.9; it being understood and
intended, and being expressly covenanted by the taker and every Holder with
every other taker and Holder and the Guarantee Trustee, that no one or more
Holders shall have any right in any manner whatever by virtue or by availing of
any provision of this Guarantee Agreement to affect, disturb or prejudice the
rights of any other Holders, or to obtain or seek to obtain priority over or
preference to any other Holder, or to enforce any right under this Guarantee
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders. For the protection and enforcement of the
provisions of this Section 2.9, each and every Holder and the Guarantee Trustee
shall be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provisions in this Guarantee Agreement, the
right of any Holder to receive payment of the Guaranteed Payments when due, or
to institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
2.10 COVENANT OF GUARANTOR TO PAY TO GUARANTEE TRUSTEE WHOLE AMOUNT DUE
ON DEFAULT IN GUARANTEE PAYMENTS. The Guarantor covenants that in case default
shall be made in the payment of any Guarantee Payment as and when the same shall
become due and payable and which payment has not been extended in accordance
with the provisions of this Guarantee, and such default shall have continued for
a period of 90 days or upon demand of the Preferred Guarantee Trustee, the
Guarantor will pay to the Preferred Guarantee Trustee, for the benefit of the
Holders, the whole amount that then shall have become due and payable, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expense of collection, including a reasonable compensation to the Preferred
Guarantee Trustee, its agents and counsel, and any expenses or liabilities
incurred, and all advances made, by the Preferred Guarantee Trustee hereunder
other than through its negligence or bad faith.
In case the Guarantor shall fail forthwith to pay such amounts upon
such demand, the Guarantee Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Guarantor or any other
obligor upon such Preferred Guarantees, and collect in the manner provided by
law out of the property of the Guarantor or any other such obligor wherever
situated the moneys adjudged or decreed to be payable.
If a Guarantee Event of Default with respect to the Preferred
Guarantees occurs and is continuing, the Guarantee Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders by such
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appropriate judicial proceedings as the Preferred Guarantee Trustee shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Guarantee Agreement or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
2.11 PREFERRED GUARANTEE TRUSTEE MAY FILE PROOFS OF CLAIM. Upon the
occurrence of a Guarantee Event of Default, the Preferred Guarantee Trustee is
hereby authorized to (a) recover judgment, in its own name and as trustee of an
express trust, against the Guarantor for the whole amount of any Guarantee
Payments remaining unpaid and (b) file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have its claims and those
of the Holders allowed in any judicial proceedings relative to the Guarantor,
its creditors or its property.
2.12 REQUIREMENT OF AN UNDERTAKING TO PAY COSTS IN CERTAIN SUITS UNDER
THE GUARANTEE AGREEMENT. All parties to this Guarantee Agreement agree, and each
Holder by such Holder's acceptance thereof, shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Guarantee Agreement, or in any suit against the
Preferred Guarantee Trustee for any action taken or omitted by it as trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 2.12 shall not apply to
any suit instituted by the Preferred Guarantee Trustee, to any suit instituted
by any Holder, or group of such Holders, holding in the aggregate more than 10%
of the Liquidation Amount of the Preferred Securities, or to any suit instituted
by any Holder for the enforcement of the payment of the Guarantee Payments, on
or after the due date expressed in the Preferred Security.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Preferred Guarantee
Trustee for the benefit of the Holders, and the Preferred Guarantee Trustee
shall not transfer this Guarantee Agreement except a Holder exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee
Trustee on acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right, title
and interest of the Preferred Guarantee Trustee shall automatically vest in any
Successor Preferred Guarantee Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Preferred Guarantee
Trustee.
(b) If a Guarantee Event of Default has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Guarantee Agreement for the
benefit of the Holders.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Guarantee Event of Default and after the curing of all Guarantee Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Guarantee Agreement, and no implied covenants
shall be read into this Guarantee Agreement against the Preferred Guarantee
Trustee. In case a Guarantee Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.6), the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Guarantee Agreement,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
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(i) prior to the occurrence of any Guarantee Event of Default
and after the curing or waiving of all Guarantee Events of Default that
may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Guarantee Agreement, and the Preferred
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Guarantee Agreement, and no implied
covenants or obligations shall be read into this Guarantee
Agreement against the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Preferred Guarantee Trustee,
the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Declaration;
(ii) the Preferred Guaranty Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee, or exercising any trust
or power conferred upon the Preferred Guarantee Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured
to it under the terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to it.
(e) The Preferred Guarantee Trustee may authorize one or more Paying
Agents to pay Guarantee Payments and any such Paying Agent shall comply with
Section 317(b) of the Trust Indenture Act. Any Paying Agent may be removed by
the Preferred Guarantee Trustee at any time and a successor Paying Agent or
additional Paying Agents may be appointed at any time by the Preferred Guarantee
Trustee.
3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may 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.
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(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by a Direction
or an Officer's Certificate.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Preferred Guarantee Trustee shall deem it desirable that
a matter be proved or established before taking, suffering or omitting
any action hereunder, the Preferred Guarantee Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad
faith on its part, request and rely upon an Officer's Certificate which
shall be promptly delivered by the Guarantor upon receipt of such
request.
(iv) The Preferred Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred Guarantee Trustee such
adequate security and indemnity as would satisfy a reasonable person in
the position of the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Preferred
Guarantee Trustee; provided, that nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee,
upon the occurrence of a Guarantee Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee
Agreement.
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, Subordinated Note,
note, other evidence of indebtedness or other paper or document, but
the Preferred Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys, and the Preferred
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care
by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders, and the signature of the
Preferred Guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action. No third party shall be required
to inquire as to the authority of the Preferred Guarantee Trustee to so
act or as to its compliance with any of the terms and provisions of
this Guarantee Agreement, both of which shall be conclusively evidenced
by the Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Guarantee Agreement
the Preferred Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions
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from the Holders of a Majority in Liquidation Amount, (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 acting
in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Preferred Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Preferred
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.
(c) This Guarantee Agreement and all moneys received by the Preferred
Guarantee Trustee hereunder in respect of the Guarantee Payments will not be
subject to any right, charge, security interest, lien or claim of any kind in
favor of, or for the benefit of the Preferred Guarantee Trustee or its agents or
creditors.
3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE. The recitals
contained in this Guarantee Agreement shall be taken as the statements of the
Guarantor, and the Preferred Guarantee Trustee does not assume any
responsibility for their correctness. The Preferred Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE 4
PREFERRED GUARANTEE TRUSTEE
4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least $100,000,000, and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1 (a)(ii),
the combined capital and surplus of such corporation shall be 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 Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act, subject to the penultimate paragraph thereof.
4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEE.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during a
Guarantee Event of Default.
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(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed.
The Preferred Guarantee Trustee may resign from office (without need for prior
or subsequent accounting) by an instrument in writing executed by the Preferred
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Preferred Guarantee Trustee has been appointed and
has accepted such appointment by instrument in writing executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor and the
resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of removal or resignation,
the resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
ARTICLE 5
GUARANTEE
5.1 GUARANTEE. The Guarantor unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Trust Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Trust Issuer may have or assert (other than a
defense of prior payment). The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Trust Issuer to pay such amounts to
the Holders.
5.2 UNCONDITIONAL NATURE OF OBLIGATIONS. The obligations of the
Guarantor under this Guarantee Agreement shall be absolute and unconditional and
shall remain in full force and effect until the entire Liquidation Amount of all
outstanding Preferred Securities shall have been paid, and such obligation shall
not be affected, modified or impaired upon the happening from time to time of
any event, including without limitation any of the following, whether or not
with notice to, or the consent of, the Guarantor:
(a) the waiver, surrender, compromise, settlement, release or
termination of any or all of the obligations, covenants or agreements of the
Trust Issuer under the Preferred Securities;
(b) the failure to give notice to the Guarantor of the occurrence of a
default under the Preferred Securities;
(c) the waiver, compromise or release of the payment, performance or
observance by the Trust Issuer of any or all of the obligations, covenants or
agreements contained, in the Preferred Securities;
(d) the extension of the time for payment of the Liquidation Amount of
any Preferred Securities or of the time for performance of any other
obligations, covenants or agreements under or arising out of the Preferred
Securities;
(e) the modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in the Preferred Securities;
(f) any failure, omission, delay or lack of diligence on the part of
any Holder to enforce, assert or exercise any right, privilege, power or remedy
conferred on it in or in connection with the Preferred Securities;
(g) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets, marshaling of assets
and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of
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creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings affecting the Trust Issuer or any
of its assets, or any allegation or contest of the validity of the Preferred
Securities in any such proceeding;
(h) any defense based upon any legal disability of the Trust Issuer or,
to the extent permitted by law, any release, discharge, reduction or limitation
of or with respect of any sums owing by the Trust Issuer or any other liability
of the Trust Issuer to any Holder;
(i) to the extent permitted by law, the release or discharge by
operation of law of the Guarantor from the performance or observance of any
obligation, covenant or agreement contained in this Guarantee Agreement,
(j) the default or failure of the Guarantor fully to perform any of its
obligations set forth in this Guarantee Agreement; or
(k) the invalidity of, or defect or deficiency in, the Preferred
Securities or any defense which the Trust Issuer may have against any Holder.
If any payment by the Trust Issuer to any Holder is rescinded or must
be returned by such Holder, the obligations of the Guarantor hereunder shall be
reinstated with respect of such payment.
No set-off, counterclaim, reduction, or diminution of any obligation,
or any defense of any kind or nature which the Guarantor has or may have against
any Holder shall be available hereunder to the Guarantor against such Holder to
reduce the payments to it under this Guarantee Agreement.
The Guarantor assumes responsibility for being and remaining informed
of the financial condition of the Trust Issuer and of all other circumstances
bearing upon the risk of nonpayment of amounts owing under the Preferred
Securities which diligent inquiry would reveal and agrees that no Holder shall
have any duty to advise he Guarantor of information known to it regarding such
condition or any such circumstances.
5.3 PROCEEDINGS AGAINST THE GUARANTOR. In the event of Guarantee Event
of Default, the Preferred Guarantee Trust, on behalf of the Holders, shall have
the right to proceed first and directly against the Guarantor under this
Guarantee Agreement without proceeding against the Trust Issuer or exhausting
any other remedies which it may have and without resorting to any other security
held by it.
5.4 RIGHTS OF HOLDERS. The Guarantor and the Preferred Guarantee
Trustee expressly acknowledge and agree as follows: (i) this Guarantee Agreement
will be deposited with the Preferred Guarantee Trustee to be held for the
benefit of the Holders; (ii) the Preferred Guarantee Trustee shall have the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii)
Holders representing not less than a Majority in Liquidation Amount of the
Preferred Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available in respect of this
Guarantee Agreement including the giving of directions to the Preferred
Guarantee Trustee, or exercising any trust or other power conferred upon the
Preferred Guarantee Trustee under this Guarantee Agreement and (iv) if the
Preferred Guarantee Trustee fails to enforce this Guarantee Agreement, any
Holder of Preferred Securities may, after a period of 90 days has elapsed from
such Holder's written request to the Preferred Guarantee Trustee to enforce this
Guarantee Agreement, institute a legal proceeding directly against the Guarantor
to enforce its rights under this Guarantee Agreement, without first instituting
a legal proceeding against the Trust Issuer, the Preferred Guarantee Trustee, or
any other Person.
5.5 GUARANTEE OF PAYMENT. This Guarantee Agreement creates a guarantee
of payment and not of collection.
5.6 SUBROGATION. The Guarantor shall be subrogated to all rights (if
any) of the Holders against the Trust Issuer in respect of any amounts paid to
such Holders by the Guarantor pursuant to the provisions hereof; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to
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enforce, or to receive any payments arising out of or based upon, such right of
subrogation until the Distributions due on all Preferred Securities shall have
been paid in full.
5.7 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Trust Issuer,
and that the Guarantor shall be liable hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence
of any event referred to in subsections (a) through (k), inclusive, of Section
5.2 hereof.
ARTICLE 6
LIMITATION OF TRANSACTIONS;
SUBORDINATION; CORPORATE EXISTENCE
6.1 LIMITATION OF TRANSACTIONS. So long as any Preferred Securities
remain outstanding, if there shall have occurred a Guarantee Event of Default or
an Event of Default, then (a) the Guarantor shall not declare or pay any
dividend on, or make any distribution with respect to, or redeem, purchase,
acquire or make any distribution with respect to, any of its capital stock and
(b) the Guarantor shall not make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by the
Guarantor which rank pari passu with or junior to the Subordinated Notes;
provided, that, the foregoing restrictions in this Section 6.1 shall not apply
to any (a) stock dividends paid by the Guarantor, or any of its subsidiaries,
where the dividend stock is the same stock as that on which the dividend is
being paid, (b) dividends or distributions in shares of, or options, warrants or
rights to subscriber for or purchase shares of, common stock of the Guarantor,
(c) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (d)
payments under the Guarantee Agreement, (e) as a result of a reclassification of
the Guarantor's capital stock solely into shares of one or more classes or
series of the Guarantor's capital stock or the exchange or the conversion of one
class or series of the Guarantor's capital stock, (f) purchase of fractional
interests in shares of the Guarantor's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged, and (g) purchases of the Guarantor's common stock in connection with
the satisfaction by the Guarantor of its obligations (including purchases
related to the issuance of such common stock or rights) under any of the
Guarantor's benefit plans for its and its subsidiaries' directors, officers or
employees or any of the Guarantor's dividend reinvestment plans.
6.2 RANKING. This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor except those made pari passu
or subordinate by their terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any guarantee
now or hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
6.3 CORPORATE EXISTENCE. The Guarantor covenants that so long as any of
the Preferred Guarantees are outstanding, it will maintain its existence, will
not dissolve, sell or otherwise dispose of all or substantially all of its
assets and will not consolidate with or merge into another entity or permit one
or more other entities to consolidate with or merge into it; provided that the
Guarantor may, without violating the covenants in this Section 6.2 contained,
consolidate with or merge into another entity or permit one or more other
entities to consolidate with or merge into it, or sell or otherwise transfer to
another entity all or substantially all of its assets as an entirety and
thereafter dissolve, if the surviving, resulting or transferee entity, as the
case may be, (i) shall be organized and existing under the laws of one of the
States of the United States of America, (ii) assumes, if such entity is not the
Guarantor, all of the obligations of the Guarantor hereunder and (iii) is not,
after such transaction, otherwise in default under any provisions hereof.
ARTICLE 7
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TERMINATION
7.1 TERMINATION. This Guarantee Agreement shall terminate upon (i) full
payment of all Distributions due with respect to the Preferred Securities or the
Redemption Price of all Securities, (ii) upon the distribution of the
Subordinated Notes to the Holders or (iii) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid under the Preferred Securities or under
this Guarantee Agreement.
ARTICLE 8
COMPENSATION AND EXPENSES OF PREFERRED GUARANTEE TRUSTEE
The Guarantor agrees to pay to the Preferred Guarantee Trustee from
time to time such compensation as the parties shall agree from time to time
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of any express trust), and the Guarantor will pay or
reimburse the Preferred Guarantee Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Preferred Guarantee
Trustee incurred or made by the Preferred Guarantee Trustee in accordance with
the acceptance and administration of its duties under this Guarantee Agreement
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Guarantor also agrees to indemnify the Preferred Guarantee Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Preferred Guarantee Trustee and
arising out of or in connection with the acceptance or administration of this
Guarantee Agreement, including the reasonable costs and expenses of defending
itself against any claim of liability in the premises. The obligations of the
Guarantor under this Section to compensate the Preferred Guarantee Trustee, to
pay or reimburse the Preferred Guarantee Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Preferred Guarantee Trustee
shall constitute additional indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture. Such additional indebtedness shall
be secured by a lien prior to that of the Preferred Securities upon all property
and funds held or collected by the Preferred Guarantee Trustee as such, except
funds held in trust for the payment of principal of or interest or redemption
premium on particular Preferred Securities.
ARTICLE 9
INDEMNIFICATION
9.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee Agreement or by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to the Holders might properly be paid.
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9.2 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the Guarantor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such Indemnified Person by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Guarantee Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.2(a).
ARTICLE 10
MISCELLANEOUS
10.1 SUCCESSORS AND ASSIGNS. All guarantees and agreements contained in
this Guarantee Agreement shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders then outstanding.
10.2 AMENDMENTS. Except with respect to any changes that do not
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Guarantee Agreement may be amended only with the prior
approval of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval.
10.3 NOTICES. All notices provided for in this Guarantee Agreement
shall be in writing, duly signed by the party giving such notice, and shall be
sent by facsimile transmission or hand delivered or sent by overnight courier,
addressed to the relevant party as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders):
The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders):
Providian Financial Corporation
201 Mission Street
San Francisco, California 94105
Fax No.: 415-278-6046
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Trust Issuer.
For all purposes of this Guarantee Agreement, a notice or communication
will be deemed effective:
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(i) if delivered by hand or sent by overnight courier, on the
day it is delivered unless (i) that day is not a Business Day in the
city specified (a "Local Business Day") in the address for
notice provided by the recipient or (ii) if delivered after the close
of business on a Local Business Day, then on the next succeeding Local
Business Day or
(d) if sent by facsimile transmission, on the date transmitted, unless
the date of transmission is not a Local Business Day, in which case, on the next
succeeding Local Business Day, provided that oral or written confirmation of
receipt is obtained by the sender.
10.4 BENEFIT. This Guarantee Agreement is solely for the benefit of the
Holders and is not separately transferable from the Preferred Securities.
10.5 GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
PROVIDIAN FINANCIAL CORPORATION
By
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Title
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THE BANK OF NEW YORK
as Preferred Guarantee Trustee
By
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Title
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