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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
DESIGNER FINANCE TRUST
Dated as of November 6, 1996
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TABLE OF CONTENTS
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions ............................................ 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application ....................... 9
SECTION 2.2 Lists of Holders of Securities ......................... 10
SECTION 2.3 Reports by the Property Trustee ........................ 11
SECTION 2.4 Periodic Reports to Property
Trustee .............................................. 11
SECTION 2.5 Evidence of Compliance with
Conditions Precedent ................................. 12
SECTION 2.6 Events of Default; Waiver .............................. 12
SECTION 2.7 Event of Default; Notice ............................... 14
ARTICLE III
ORGANIZATION
SECTION 3.1 Name ................................................... 15
SECTION 3.2 Office ................................................. 15
SECTION 3.3 Purpose ................................................ 15
SECTION 3.4 Prohibition of Actions by the Trust
and the Trustees ..................................... 16
SECTION 3.5 General Authority of the Trustees ...................... 17
SECTION 3.6 Title to Property of the Trust ......................... 17
SECTION 3.7 Not Responsible for Recitals or
Issuance of Securities ............................... 17
SECTION 3.8 Duration of Trust ...................................... 17
SECTION 3.9 Mergers ................................................ 17
SECTION 3.10 Termination of Trust ................................... 20
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common
Securities ........................................... 21
SECTION 4.2 Responsibilities of the Sponsor ........................ 21
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ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees ..................................... 22
SECTION 5.2 Delaware Trustee; Eligibility .......................... 23
SECTIOn 5.3 Property Trustee; Eligibility .......................... 23
SECTION 5.4 Qualifications of Regular Trustees
and Delaware Trustee Generally ........................ 24
SECTION 5.5 Initial Trustees ....................................... 25
SECTION 5.6 Appointment, Removal and
Resignation of Trustees ............................... 25
SECTION 5.7 Vacancies among Trustees ............................... 27
SECTION 5.8 Merger, Conversion, Consolidation
or Succession to Business of a
Trustee ............................................... 28
SECTION 5.9 Authority, Powers and Duties of the
Regular Trustees ...................................... 28
SECTION 5.10 Delegation of Powers and Duties of
the Regular Trustees .................................. 33
SECTION 5.11 Powers and Duties of the Property
Trustee ............................................... 33
SECTION 5.12 Certain Duties and Responsibilities
of the Property Trustee ............................... 35
SECTION 5.13 Certain Rights of Property Trustee ..................... 37
SECTION 5.14 Delaware Trustee ....................................... 40
SECTION 5.15 Meetings ............................................... 40
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions .......................................... 41
ARTICLE VII
THE SECURITIES
SECTION 7.1 Title and Terms ........................................ 41
SECTION 7.2 General Provisions Regarding the Securities ............ 42
SECTION 7.3 General Form of Certificates ........................... 42
SECTION 7.4 Form of Preferred Securities
Certificates; Global Certificates ..................... 43
SECTION 7.5 Execution and Dating of
Certificates .......................................... 44
SECTION 7.6 Authentication of Preferred
Security Certificates ................................. 45
SECTION 7.7 Definitive Preferred Security Certificates ............. 45
SECTION 7.8 Temporary Certificates ................................. 46
SECTION 7.9 Registrar, Paying Agent and
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Conversion Agent ..................................... 46
SECTION 7.10 Paying Agent to Hold Money in Trust .................... 47
SECTION 7.11 Outstanding Preferred Securities ....................... 47
SECTION 7.12 Preferred Securities in Treasury ....................... 48
SECTION 7.13 Notices to Clearing Agency ............................. 48
SECTION 7.14 Appointment of Successor Clearing Agency ............... 48
SECTION 7.15 Deemed Security Holders ................................ 48
ARTICLE VIII
TRANSFERS, EXCHANGES AND CANCELLATIONS
OF SECURITIES
SECTION 8.1 General ................................................ 49
SECTION 8.2 Transfer Procedures and
Restrictions for Global
Certificates .......................................... 50
SECTION 8.3 Mutilated, Destroyed, Lost or
Stolen Certificates; Replacement
Securities ............................................ 51
SECTION 8.4 Cancellation of Preferred Security
Certificates .......................................... 52
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES AND OTHERS
SECTION 9.1 Liability .............................................. 52
SECTION 9.2 Exculpation ............................................ 53
SECTION 9.3 Fiduciary Duty ......................................... 54
SECTION 9.4 Indemnification ........................................ 55
SECTION 9.5 Outside Businesses ..................................... 59
ARTICLE X
ACCOUNTING
SECTION 10.1 Fiscal Year ............................................ 60
SECTION 10.2 Certain Accounting Matters ............................. 60
SECTION 10.3 Banking ................................................ 61
SECTION 10.4 Withholding ............................................ 61
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments ............................................. 62
SECTION 11.2 Meetings of the Holders of Securities; Action by Written
Consent ............................................... 64
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ARTICLE XII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of Property Trustee ..... 66
SECTION 12.2 Representations and Warranties of Delaware Trustee ..... 67
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices ................................................ 68
SECTION 13.2 Governing Law .......................................... 69
SECTION 13.3 Intention of the Parties ............................... 70
SECTION 13.4 Headings ............................................... 70
SECTION 13.5 Successors and Assigns ................................. 70
SECTION 13.6 Partial Enforceability ................................. 70
SECTION 13.7 Counterparts ........................................... 70
ANNEX AND EXHIBITS
ANNEX I Terms of 6% Convertible Trust
Originated Preferred Securities
and 6% Convertible Common Securities
Exhibit A-1 Form of Preferred Security
Exhibit A-2 Form of Common Security
Exhibit B Form of Debenture
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CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- ---------------
310(a)........................................................ 5.3(a)
310(c)........................................................ Inapplicable
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(f)........................................................ Inapplicable
315(a)........................................................ 5.12(b)-(e)
315(c)........................................................ 5.12(a)
315(d)........................................................ 5.12(a)
316(a)........................................................ Annex I
316(c)........................................................ 5.9(d)(v)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
DESIGNER FINANCE TRUST
NOVEMBER 6, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated
and effective as of November 6, 1996, by the undersigned trustees (together with
all other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Designer
Holdings Ltd., a Delaware corporation, as trust sponsor (the "Sponsor"), and by
the holders, from time to time, of undivided beneficial interests in the Trust
issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Designer
Finance Trust (the "Trust"), a trust under the Business Trust Act (as defined
herein) pursuant to a Declaration of Trust dated as of September 26, 1996 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on September 27, 1996, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures (as defined herein) of the Debenture Issuer (as defined
herein);
WHEREAS, as of the date hereof, no interests in the Trust have
been issued; 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;
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.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections 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 reference to the singular includes the plural and vice
versa; and
(g) a reference to the masculine includes the feminine and vice
versa.
"Additional Interest" means if the Trust is required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other taxing
authority, such amounts as shall be required so that the net amounts received
and retained by the Trust after paying such taxes, duties, assessments and
governmental charges will not be less than the amounts the Trust would have
received had no such taxes, duties, assessments or governmental charges been
imposed.
2
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 8.2.
"Business Day" means any day other than a day on which banking
institutions in the City of New York or in Wilmington, Delaware are authorized
or required by law to close.
"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.
"Certificate" means a certificate in global or definitive form
representing a Common Security or a Preferred Security.
"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 Preferred 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 Preferred
Securities.
"Closing Date" means November 6, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section 7.1.
3
"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Common Securities Guarantee" means the guarantee agreement dated
as of November 6, 1996, of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (i) any Regular Trustee; (ii)
any Affiliate of any Regular Trustee; (iii) any officer, director, shareholder,
member, partner, employee, representative or agent of any Regular Trustee; or
(iv) any officer, employee or agent of the Trust or its Affiliates.
"Compounded Interest" means interest compounded quarterly at the
rate specified for the Debentures to the extent permitted by applicable law upon
interest accrued and unpaid (including Additional Interest) at the end of each
Extension Period.
"Conversion Agent" has the meaning set forth in Section 7.9.
"Covered Person" means (a) any officer, director, stockholder,
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 the Sponsor in its capacity as issuer of
the Debentures.
"Debenture Trustee" means IBJ Schroder Bank & Trust Company, a
New York banking corporation, as trustee under the Indenture until a successor
is appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the Debentures to be issued by the Debenture
Issuer under the Indenture and to be held by the Property Trustee, a specimen
certificate for such Debentures being Exhibit B hereto.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 7.7.
"Delaware Trustee" has the meaning set forth in Section 5.2.
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"Depositary" means The Depository Trust Company, the initial
Clearing Agency, until a successor shall be appointed pursuant to Section 7.14,
and thereafter means such successor Depositary.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder,
or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 9.4(b).
"Global Certificate" has the meaning set forth in Section 7.4(a).
"Holder" means a Person in whose name a Certificate representing
a Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of November 6, 1996,
between the Debenture Issuer and the Debenture Trustee, as it may be amended
from time to time.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, and the rules and regulations promulgated
thereunder, or any successor legislation.
"Legal Action" has the meaning set forth in Section 5.9(d)(vii).
5
"Majority in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holders of outstanding Securities voting together as a single class or, as
the context may require, Holders of outstanding Preferred Securities or Holders
of outstanding Common Securities voting separately as a class, who are the
record owners of more than 50% of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I hereto.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(i) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions
relating thereto;
(ii) a brief statement of the nature and scope of the
examination or investigation undertaken by each
officer in rendering the Certificate;
(iii) 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
(iv) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied
with.
"Paying Agent" has the meaning specified in Section 7.9.
6
"Person" means any legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities" has the meaning specified in Section 7.1.
"Preferred Security Certificate" means a certificate representing
a Preferred Security substantially in the form of Exhibit A-1.
"Preferred Securities Guarantee" means the Guarantee Agreement
dated as of November 6, 1996 of the Sponsor in respect of the Preferred
Securities.
"Preferred 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 Depositary, or on the books of a
Person maintaining an account with such Depositary (directly as a participant or
as an indirect participant, in each case in accordance with the rules of such
Depositary).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
5.11(c).
"Purchase Agreement" means the Purchase Agreement dated as of
November 1, 1996, between the Sponsor and the underwriters named therein,
relating to the Preferred Securities.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.9.
"Registration Statement" means the Registration Statement on Form
S-1 (Reg. No. 333-13097), including any amendments thereto relating to, among
other securities, the Preferred Securities.
7
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any vice-president, any assistant vice-president, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any other
officer in the Corporate Trust Department of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder, or any
successor legislation.
"Securities Guarantee" means the Common Securities Guarantee and
the Preferred Securities Guarantee.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means Designer Holdings Ltd., a Delaware corporation,
or any successor entity in a merger, consolidation or amalgamation, in its
capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
8
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, and the rules and regulations promulgated thereunder,
or any successor legislation.
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, which are
incorporated by reference in and made part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
9
(b) The Property Trustee shall be the only Trustee that 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 Regular Trustees on behalf of
the Trust shall provide the Property Trustee (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 of the
Securities ("List of Holders") as of such record date, provided that neither the
Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular 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 any List 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.
(b) The Property Trustee shall comply with its obligations under
'SS''SS'311(a), 311(b) and 312(b) of the Trust Indenture Act.
10
SECTION 2.3 Reports by the Property Trustee.
(a) Within 60 days after May 15 of each year, commencing May 15,
1997, the Property Trustee shall transmit by mail to Holders such reports
concerning the Property Trustee and its actions under this Declaration as may be
required pursuant to the Trust Indenture Act in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each stock
exchange upon which the Securities are listed, with the Commission and with the
Company. The Trust will notify the Property Trustee when the Securities are
listed on any stock exchange.
SECTION 2.3 Periodic Reports to Property Trustee.
Each of the Sponsor and the Trust shall file with the Property
Trustee and the Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant to such
Act; provided, that any such information, documents or reports required to be
filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Property Trustee within 15 days after the same is so
required to be filed with the Commission.
Delivery of such reports, information and documents to the
Property Trustee is for informational purposes only and the Property Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Trust's compliance with any of its covenants hereunder (as to which the
Property Trustee is entitled to rely exclusively on Officers' Certificates).
Each of the Sponsor and the Trust shall also provide to the
Property Trustee on a timely basis such information as the Property Trustee
requires to enable the Property Trustee to prepare and file any form required to
be submitted by the Company with the Internal Revenue Service and the Holders of
the Securities relating to original issue discount, if any, including, without
limitation, Form 1099-OID or any successor form.
11
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, 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) 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 Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
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 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 liquidation amount of
the Preferred 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 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
Preferred 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 Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
12
the Preferred Securities of an Event of Default with respect to the Preferred
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 liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred 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 Preferred Securities and only the Holders of the Preferred 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
13
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 Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
'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 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Event of Default as defined in the Indenture, not including any
periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures or in the
payment of any sinking fund installment established for the Debentures, the
Property 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 Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Securities.
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(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 501(1) and 501(2) of
the Indenture; or
(ii) any default as to which the Property Trustee
shall have received written notice or of which a Responsible
Officer of the Property Trustee charged with the administration
of the Declaration shall have actual knowledge.
ARTICLE III.
ORGANIZATION OF TRUST
SECTION 3.1 Name.
The Trust is named "Designer Finance Trust," as such name may be
modified from time to time by the Regular Trustees following 10 Business Days
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Designer
Holdings Ltd., 1385 Broadway, 3rd Floor, New York, New York 10018, Attention:
John J. Jones, Vice President, Secretary and General Counsel. On 10 Business
Days written notice to the Holders of Securities, the Regular 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 and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
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SECTION 3.4 Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall not cause the Trust to:
(a) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of Securities
pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Securities; or
(g) other than as provided in this Declaration or Annex I hereto,
(a) direct the time, method and place of 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, (c) exercise any right to rescind
or annul any declaration that the principal of all the Debentures shall be due
and payable, or (d) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless the
Trust shall have received an opinion of counsel to the effect that such
amendment or modification will not cause more than an insubstantial risk that
(i) the Trust will be deemed an Investment Company required to be registered
under the Investment Company Act, or (ii) for
16
United States federal income tax purposes the Trust will not be classified as a
grantor trust.
SECTION 3.5 General Authority of the Trustees.
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 3.6 Title to Property of the Trust.
Except as provided in Section 5.11 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 3.7 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.8 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Section 3.10 hereof, shall exist until September 27, 2021.
SECTION 3.9 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any Person, except as described in Sections
3.9(b) and 3.9(c).
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(b) The Trust may, with the consent of the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees, and without the
consent of the Holders of the Securities, the Delaware Trustee or the Property
Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any state of the United States; provided
that:
(i) if the Trust is not the survivor, such
successor entity (the "Successor Entity") either:
(A) expressly assumes all of the
obligations of the Trust under the Securities; or
(B) substitutes for the Preferred
Securities other securities having substantially
the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor
Securities rank the same as the Preferred
Securities with respect to Distributions, assets
and payments upon liquidation, redemption and
otherwise;
(ii) the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same powers
and duties as the Property Trustee as the Holder of the
Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed
upon notification of issuance, on any national securities
exchange or with another organization on which the Preferred
Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Preferred Securities (including
any Successor Securities) in any material respect (other than
with
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respect to any dilution of the Holders' interest in the new
entity);
(vi) such Successor Entity has a purpose
substantially identical to that of the Trust;
(vii) the Sponsor guarantees the obligations of
such Successor Entity under the Successor Securities at least to
the extent provided by the Preferred Securities Guarantee; and
(viii) prior to such merger, consolidation,
amalgamation or replacement, the Sponsor has received an opinion
of a nationally recognized independent counsel to the Trust
reasonably acceptable to the Property Trustee and experienced in
such matters to the effect that:
(A) such merger, consolidation,
amalgamation or replacement will not adversely
affect the rights, preferences and privileges of
the Holders of the Securities (including any
Successor Securities) in any material respect
(other than with respect to any dilution of the
Holders' interest in the new entity);
(B) following such merger,
consolidation, amalgamation or replacement, neither
the Trust nor the Successor Entity will be required
to register as an Investment Company; and
(C) following such merger,
consolidation, amalgamation or replacement, the
Trust (or the Successor Entity) will be treated as
a grantor trust for United States federal income
tax purposes.
(c) Notwithstanding Section 3.9(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Common
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
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SECTION 3.10 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor, the
filing of a certificate of cancellation with respect to the Trust
after having obtained the consent of at least a majority in
liquidation amount of the Securities, voting together as a single
class, to file such certificate of cancellation, or the
revocation of the Certificate of Incorporation of the Sponsor and
the expiration of 90 days after the date of revocation without a
reinstatement thereof;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor or the Trust;
(iv) when all of the Securities shall have been
called for redemption and the amounts necessary for redemption
thereof, including any Additional Interest and Compounded
Interest, shall have been paid to the Holders in accordance with
the terms of the Securities;
(v) upon the occurrence and continuation of a Tax
Event pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Securities and all of the
Debentures shall have been distributed to the Holders of
Securities in exchange for all of the Securities;
(vi) upon the distribution of the Sponsor's common
stock to all Securities Holders upon conversion of all
outstanding Preferred Securities;
(vii) the expiration of the term of the Trust on
September 27, 2021; or
(viii) before the issuance of any Securities, with
the consent of all the Regular Trustees and the Sponsor.
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(b) As soon as is practicable after the occurrence of an event
referred to in Section 3.10(a), the Regular Trustees shall pay (or make
provision for the payment of) all claims against the Trust and shall execute and
file a certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) The provisions of Article IX shall survive the termination of
the Trust.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date and on any other date Preferred Securities
and Common Securities are sold pursuant to the over-allotment option granted in
the Purchase Agreement, the Sponsor will purchase all of the Common Securities
issued by the Trust, in an aggregate amount at least equal to 3% of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing with the Commission the Registration
Statement, including any amendments thereto;
(b) to determine the states and foreign jurisdictions in which to
take appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than actions that
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 and foreign jurisdictions;
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(c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing or quotation of the Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Purchase Agreement and other
agreements, documents and instruments providing for the sale of the Preferred
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The initial number of Trustees shall be four, 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; provided further that (i) there shall be at least one Regular Trustee who
is an employee or officer of, or is affiliated with the Sponsor and (ii) 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.
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SECTION 5.2 Delaware Trustee; Eligibility.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be
(a) a natural person who is resident of the State of Delaware; or
(b) if not a natural person, an entity that has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee and Section 5.14
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee and shall
(i) not be an Affiliate of the Sponsor;
(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 Person
permitted by the Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, 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; and
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(iii) if the Trust is excluded from the definition
of an Investment Company solely by means of Rule 3a-5 and to the
extent the Investment Company Act or Trust Indenture Act requires
a trustee having certain qualifications to hold title to the
"eligible assets" of the Trust, the Property Trustee shall
possess those qualifications.
(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(d).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of 'SS' 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in '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 Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular 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 Initial Trustees.
(a) The initial Regular Trustees are:
Arnold H. Simon
c/o Designer Holdings Ltd.
1385 Broadway, 3rd Floor
New York, New York 10018
Merril M. Halpern
c/o Charterhouse Group International, Inc.
535 Madison Avenue
New York, New York 10022
The initial Delaware Trustee is:
Delaware Trust Capital Management, Inc.
900 Market Street H02M12
Wilmington, DE 19801
Attention: Corporate Trust Department
The initial Property Trustee is:
IBJ Schroder Bank & Trust Company
1 State Street
11th Floor
New York, NY 10004
Attention: Corporate Trust & Agency Department
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Sections 5.6(b) and 5.6(c), 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; and
(ii) 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.
(b) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a successor possessing the
qualifications to act as a Property Trustee under Section 5.3 (a "Successor
Property
25
Trustee") has been appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to the Trust, the
Sponsor and the removed Property Trustee.
(c) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor 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 instrument executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the removed Delaware Trustee.
(d) A Trustee appointed to office shall hold office until his,
hers or its successor shall have been appointed or until his, her or its death,
removal, resignation, dissolution or liquidation. 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 Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as
the Property Trustee shall be effective:
(A) until a Successor Property
Trustee has been appointed and has accepted such
appointment by instrument executed by such
Successor Property Trustee and delivered to the
Trust, the Sponsor and the resigning Property
Trustee; or
(B) until the assets of the Trust
have been completely liquidated and the proceeds
thereof distributed to the holders of the
Securities; and
(ii) no such resignation of the Trustee that acts
as the Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware
Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee.
26
(e) The Holders of the Common 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 Section 5.6(d).
(f) 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 pursuant to this Section 5.6 of an
instrument of resignation or removal, the Property Trustee or Delaware Trustee
resigning or being removed, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
(g) No Property Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number
of Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees
is increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular 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.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with this Section 5.6, the Regular Trustees
in office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
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SECTION 5.8 Merger, Conversion, Consolidation or Succession to Business of a
Trustee.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation 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 corporation 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, provided such corporation
shall be otherwise qualified and eligible under this Article V, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
SECTION 5.9 Authority, Powers and Duties of the Regular Trustees.
(a) Subject to the limitations provided in this Declaration and
to the specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular 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.
(b) Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(c) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 5.9, provided, that the Registration Statement,
including any amendments thereto, shall be signed by a majority of the Regular
Trustees.
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(d) The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(i) to issue and sell the Preferred Securities and
the Common Securities in accordance with this Declaration;
provided, however, that the Trust may issue no more than one
series of Preferred Securities and no more than one series of
Common Securities, and, provided, further, that there shall be no
interests in the Trust other than the Securities, and the
issuance of Securities shall be limited to simultaneous issuance
of both Preferred Securities and Common Securities on the Closing
Date and any other date Preferred Securities and Common
Securities are sold pursuant to the over-allotment option granted
in the Purchase Agreement;
(ii) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(A) execute the Registration
Statement prepared by the Sponsor, including any
amendments thereto relating to, among other
securities, the Preferred Securities;
(B) 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 Preferred
Securities in any state or foreign jurisdiction in
which the Sponsor has determined to qualify or
register such Preferred Securities for sale;
(C) execute and file an application,
prepared by the Sponsor, to the New York Stock
Exchange or any other national stock exchange or
the Nasdaq National Market for listing or quotation
of the Preferred Securities, from time to time;
(D) execute and deliver letters,
documents, or instruments to the Depositary
relating to the Preferred Securities;
29
(E) 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
Preferred Securities under Section 12(b) of the
Exchange Act; and
(F) execute and perform the Purchase
Agreement and other agreements, documents and
instruments providing for the sale of the Preferred
Securities;
(iii) to acquire the Debentures with the proceeds
of the sale of the Preferred Securities and the Common
Securities; provided, however, that the Regular 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 of
the Preferred Securities and the Holders of Common Securities;
(iv) to give the Sponsor and the Property Trustee
prompt written notice of the occurrence of a Special Event;
provided that the Regular Trustees shall consult with the Sponsor
and the Property Trustee before taking or refraining from taking
any Ministerial Action in relation to a Special Event;
(v) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes of
'SS' 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices
to the Holders of Preferred Securities and Holders of Common
Securities as to such actions and applicable record dates;
(vi) to take all actions and perform such duties as
may be required of the Regular Trustees pursuant to the terms of
the Securities;
(vii) 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
30
5.11(f), the Property Trustee has the exclusive power to bring
such Legal Action;
(viii) to employ or otherwise engage employees and
agents (who may be designated as officers with titles) and
managers, advisors, and consultants and pay reasonable
compensation for such services;
(ix) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(x) 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 Regular Trustee;
(xi) to incur expenses that are necessary or
incidental to carry out any of the purposes of the Trust;
(xii) to act as, or appoint another Person to act
as, registrar and transfer agent for the Securities;
(xiii) to give prompt written notice to the Holders
of the Securities 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;
(xiv) to execute all documents or instruments,
perform all duties and powers, and do all things for and on
behalf of the Trust in all matters necessary or incidental to the
foregoing;
(xv) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as a
statutory business trust under the laws of the State of Delaware
and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the
Preferred Securities or to enable the Trust to effect the
purposes for which the Trust was created;
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(xvi) to take any action, not inconsistent with
this Declaration or with applicable law, that the Regular
Trustees determine in their discretion to be necessary or
desirable in carrying out the activities of the Trust as set out
in this Section 5.9, including, but not limited to:
(A) causing the Trust not to be
deemed to be an Investment Company required to be
registered under the Investment Company Act;
(B) causing the Trust to be
classified for United States federal income tax
purposes as a grantor trust; and
(C) 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;
provided that such action does not adversely affect the interests of Holders;
and
(xvii) 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 Regular Trustees, on behalf of the
Trust.
(e) The Regular Trustees must exercise the powers set forth in
this Section 5.9 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
(f) Subject to this Section 5.9, the Regular Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
5.11.
(g) Any expenses incurred by the Regular Trustees pursuant to
this Section 5.9 shall be reimbursed by the Debenture Issuer.
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SECTION 5.10 Delegation of Powers and Duties of the Regular Trustees.
The Regular 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 Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein. The Regular
Trustees may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 their power for the purpose of
executing any documents contemplated in Section 5.9, including the Registration
Statement or any amendment thereto or other document filed with the Commission,
or making any other governmental filing.
SECTION 5.11 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
Holders of the Securities. 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 Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated
non-interest bearing trust account (the "Property Trustee
Account") in the name of and under the exclusive control of the
Property Trustee on behalf of the Holders of the Securities and,
upon the receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds into
the Property Trustee Account and make payments to the
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Holders of the Preferred Securities and Holders of the Common
Securities from the Property Trustee Account in accordance with
Section 6.1. Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Declaration.
The Property Trustee Account shall be an account that is
maintained with the Property Trustee or a banking institution the
rating on whose long-term unsecured indebtedness is at least
equal to the rating assigned to the Preferred Securities by a
"nationally recognized statistical rating organization," as that
term is defined for purposes of Rule 436(g)(2) under the
Securities Act;
(ii) engage in such ministerial activities as so
directed and as shall be necessary or appropriate to effect the
redemption of the Preferred Securities and the Common Securities
to the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by
the Regular Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as so directed
as shall be necessary or appropriate to effect the distribution
of the Debentures to Holders of Securities upon the occurrence of
certain Special Events arising from a change in law or a change
in legal interpretation or other specified circumstances pursuant
to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Property Trustee occurs and is continuing, the Property Trustee shall, for
the benefit of Holders of the Securities, but subject to the rights of the
Holders pursuant to the terms of such Securities, enforce its rights as holder
of the Debentures, including the right to take any Legal Action which arises out
of or in connection with such an Event of Default.
34
(f) Subject to this Section 5.11, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 5.9.
(g) The Property Trustee must exercise the powers set forth in
this Section 5.11 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 5.12 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all Events of Default that may have
occurred, shall undertake to perform only such duties and obligations as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Property Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section 2.6)
of which a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such rights and powers vested in it by this
Declaration, and use the same degree of care and skill in its exercise, as a
prudent individual 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 prior
to the occurrence of an Event of Default and after the curing or waiving of all
such Events of Default that may have occurred, 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; but in the case of any such
certificates or opinions that by any provision hereof are specifically required
to be furnished to the Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Declaration.
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(c) The Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property Trustee,
unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts.
(d) The Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in liquidation amount of
the 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.
(e) The Property Trustee shall not be responsible for monitoring
the compliance by the Regular 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 Regular Trustees or the Sponsor.
(f) No provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it.
(g) The Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act.
(h) 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 Sec-
36
tion 5.11(c)(i) and except to the extent otherwise required by law.
(i) 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.
SECTION 5.13 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 5.12:
(i) the Property 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;
(ii) any direction or act of the Sponsor or the
Regular Trustees contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or
omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, request and rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular 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
of its choice or other experts and the advice or opinion of such
counsel and experts with respect to
37
legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court
of competent jurisdiction;
(vi) the Property Trustee shall be under no
obligation to exercise any of the rights or powers vested in it
by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Property Trustee
adequate security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested
by the Property Trustee; provided that, nothing contained in this
Section 5.13(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, security, 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 or attorneys and the Property
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;
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(ix) any action taken by the Property Trustee or
its agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its
agents alone shall be sufficient and effective to perform any
such action and no third party shall be required to inquire as to
the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action;
(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
(A) may request instructions from the Holders of the Securities,
which instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would be
entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or action, (B) may
refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (C) shall be
protected in 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 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
39
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 5.14 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 Regular Trustees or the Property Trustee described in
this Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall
be a Trustee for the sole and limited purpose of fulfilling the requirements of
'SS' 3807 of the Business Trust Act.
SECTION 5.15 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of the
Regular 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 a Regular Trustee at a meeting
shall constitute a waiver of notice of such meeting except where a Regular
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 Regular Trustees may be taken at a meeting by vote of a majority of the
Regular 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 Regular Trustees. In the event
there is only one Regular Trustee, any and all action of such Regular Trustee
shall be evidenced by a written consent of such Regular Trustee.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest), Additional Interest, premium and/or
principal on the Debentures held by the Property Trustee (the amount of any such
payment being a "Payment Amount"), the Property Trustee shall and is directed,
to the extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders of Preferred Securities and
Common Securities in accordance with the preferences set forth in the respective
terms of such Securities, as described in Annex I hereto.
ARTICLE VII
THE SECURITIES
SECTION 7.1 Title and Terms.
The Regular Trustees shall on behalf of the Trust issue one class
of convertible preferred securities, representing undivided beneficial interests
in the assets of the Trust (the "Preferred Securities"), and one class of
convertible common securities, representing undivided beneficial interests in
the assets of the Trust (the "Common Securities"), each having such terms (the
"Terms") as are set forth in Annex I. The Trust shall issue no securities or
other interests in the assets of the Trust other than the Preferred Securities
and the Common Securities. The aggregate number of Preferred Securities
outstanding at any time shall not exceed the number set forth in the Terms in
Annex I hereto.
The Terms of the Securities set forth in Annex I and the forms of
Certificates 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 to be bound thereby.
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SECTION 7.2 General Provisions Regarding the Securities.
(a) 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.
(b) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be validly issued, fully paid and
nonassessable.
(c) Every Person, by virtue of having become a Holder or a
Preferred 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 7.3 General Form of Certificates.
The Preferred Security Certificates and the Property Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-1
and the Common Security Certificates shall be substantially in the form of
Exhibit A-2, each of which is hereby incorporated in and expressly made a part
of this Declaration.
The Certificates may have letters, numbers, notations or other
marks of identification or designation and such legends or endorsements required
by law, stock exchange rule, agreements to which the Trust is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Trust). The Trust at the direction of the Sponsor shall
furnish any such legend not contained in Exhibit A-1 to the Property Trustee in
writing.
The definitive Certificates shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the Regular Trustees, as evidenced by their execution thereof. The Trust shall
issue no Securities in bearer form.
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SECTION 7.4 Form of Preferred Securities Certificates; Global Certificates.
(a) Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance, will be
issued in the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to The Depository
Trust Company, the initial Clearing Agency, by, or on behalf of, the Trust. No
Preferred Security Beneficial Owner will receive a definitive Preferred Security
Certificate representing such Preferred Security Beneficial Owner's interests in
such Global Certificates, except as provided in Section 7.7.
(b) Unless required by the Depositary, any securities exchange on
which the Preferred Securities may be listed or any rule, regulation or law,
Preferred Securities issued in the form of Global Certificates need not be
printed, lithographed or engraved on steel engraved borders, but shall be in
such form as is acceptable to the Depositary.
(c) Every Global Certificate authenticated and delivered
hereunder shall bear a legend in substantially the following form, in capital
letters and bold-face type:
THIS SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A PREFERRED SECURITY
REGISTERED, AND NO TRANSFER OF THIS PREFERRED SECURITY IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER
THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION.
43
(d) If the Depositary is the Depository Trust Company, the Global
Certificate authenticated and delivered hereunder shall also bear a legend in
substantially the following form, in capital letters and bold-face type:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED SIGNATORY
OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE TRUST OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SECTION 7.5 Execution and Dating of Certificates.
The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. In case any Regular Trustee who shall have signed any of the
Certificates shall cease to be such Regular Trustee before the Certificates so
signed shall be delivered by the Trust, such Certificates nevertheless may be
delivered as though the person who signed such Certificates had not ceased to be
such Regular Trustee; and any Certificates may be signed on behalf of the Trust
by such persons who, at the actual date of execution of such Certificate, shall
be the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee. Each
Preferred Security shall be dated the date of its authentication.
One Regular Trustee shall sign the Preferred Security
Certificates for the Trust by manual or facsimile signature. Unless otherwise
determined by the Trust, such signature shall, in the case of Common Security
Certificates, be a manual signature.
44
SECTION 7.6 Authentication of Preferred Security Certificates.
Each Global Certificate shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of The
Depositary Trust Company, and delivered to such Depositary or a nominee thereof
or custodian therefor, and each such Global Certificate shall constitute a
single Preferred Security for all purposes of this Declaration.
A Preferred Security Certificate 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 Preferred Security Certificate
has been authenticated under this Declaration. Upon a written order of the Trust
signed by one Regular Trustee, the Property Trustee shall authenticate the
Preferred Security Certificates for original issue.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Security Certificates. An
authenticating agent may authenticate Preferred Security Certificates whenever
the Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by such agent. An
authenticating agent has the same rights as the Property Trustee to deal with
the Sponsor or an Affiliate.
SECTION 7.7 Definitive Preferred Security Certificates.
(a) Upon the occurrence of an event specified in Section 8.2(a),
definitive, fully registered Preferred Security Certificates ("Definitive
Preferred Security Certificates") shall be prepared by the Regular Trustees on
behalf of the Trust with respect to such Preferred Securities.
(b) Upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees shall
cause Definitive Preferred Security Certificates to be delivered to Preferred
Security Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any delay in
delivery of such instructions and
45
each of them may conclusively rely on and shall be protected in relying on, said
instructions of the Clearing Agency.
SECTION 7.8 Temporary Certificates.
Until definitive Certificates are ready for delivery, the Trust
may prepare and, in the case of the Preferred Securities, the Property Trustee
shall authenticate temporary Certificates. Temporary Certificates shall be
substantially in the form of definitive Certificates but may have variations
that the Trust considers appropriate for temporary Certificates. Without
unreasonable delay, the Trust shall prepare and, in the case of the Preferred
Securities, the Property Trustee shall authenticate definitive Certificates in
exchange for temporary Certificates.
SECTION 7.9 Registrar, Paying Agent and Conversion Agent.
In the event that the Preferred Securities are not in book entry
only form, the Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York, an office or agency where Preferred Securities may be
presented for registration of transfer or from exchange ("Registrar"), (ii) an
office or agency where Preferred Securities may be presented for payment
("Paying Agent"). The Trust shall maintain an office or agency where Securities
may be presented for conversion ("Conversion Agent"). The Registrar shall keep a
register of the Preferred Securities and of their transfer and exchange. The
Trust may appoint the Registrar, the Paying Agent and the Conversion Agent and
may appoint one or more co-registrars, one or more additional paying agents and
one or more additional conversion agents in such other locations as it shall
determine. The term "Paying Agent" includes any additional paying agent and the
term "Conversion Agent" includes any additional conversion agent. The Trust may
change any Paying Agent, Registrar, co-registrar or Conversion 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 Regular Trustees. The Trust
shall notify the Property Trustee of the name and address of any Agent not a
party to this Declaration. If the Trust fails to appoint or maintain another
entity as Registrar, Paying Agent or Conversion Agent, the Property Trustee
shall act as such. The Trust or any of its Affiliates may act as Paying Agent,
Registrar, or Conversion
46
Agent. The Trust shall act as Paying Agent, Registrar, co-registrar, and
Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar,
Paying Agent and Conversion Agent for the Preferred Securities. The Property
Trustee shall be entitled to the protections of Sections 5.12 and 5.13 and
Article IX in its capacity as Registrar, Paying Agent and Conversion Agent.
SECTION 7.10 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 principal or distribution on the Securities, and will notify
the Property Trustee if there are insufficient funds. 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 7.11 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the
Preferred Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section 7.11 as not outstanding.
If a Preferred Security is replaced or paid pursuant to Section
8.3, it ceases to be outstanding unless the Property Trustee receives proof
satisfactory to it that the replaced, paid or purchased Preferred Security is
held by a bona fide purchaser.
47
If Preferred Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and interest on them
ceases to accrue.
A Preferred Security does not cease to be outstanding because one
of the Trust, the Sponsor or an Affiliate of the Sponsor holds the Preferred
Security.
SECTION 7.12 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
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 Preferred
Securities which the Property Trustee knows are so owned shall be so
disregarded.
SECTION 7.13 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, the Regular Trustees shall,
in the case of any Global Preferred Security, give all such notices and
communications specified herein to be given to the Preferred Security Holders to
the Depositary, and shall have no notice obligations to the Preferred Security
Beneficial Owners.
SECTION 7.14 Appointment of Successor Clearing Agency.
If the Depositary elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
SECTION 7.15 Deemed Security Holders.
The Trustees and any Agent may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to
48
recognize any equitable or other claim to or interest in such Certificate or in
the Securities represented by such Certificate on the part of any Person,
whether or not the Trust shall have actual or other notice thereof.
ARTICLE VIII
TRANSFERS, EXCHANGES AND CANCELLATIONS
OF SECURITIES
SECTION 8.1 General.
(a) Where Preferred Security Certificates are presented to the
Registrar or a co-registrar with a request to register a transfer or to exchange
them for an equal number of Preferred Securities represented by different
certificates, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Trust shall issue and the Property Trustee shall
authenticate Preferred Security Certificates at the Registrar's request.
(b) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the Terms set forth in Annex I. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(c) Subject to this Article VIII, the Sponsor and any Related
Party may only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor; provided that, any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer
would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United
States federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or
the transferee would become an Investment Company.
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(d) The Regular Trustees shall provide for the registration of
Securities and of transfers of Securities, which will be effected without charge
but only upon payment (with such indemnity as the Regular Trustees may require)
in respect of any tax or other governmental charges that may be imposed in
relation to it. Upon surrender for registration of transfer of any Certificates,
the Regular Trustees shall cause one or more new Certificates to be issued in
the name of the designated transferee or transferees. Every Certificate
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
(e) The Trust shall not be required (i) to issue, register the
transfer of or exchange Preferred Security Certificates during a period
beginning at the opening of business 15 days before the day of any selection of
Preferred Securities for redemption and ending at 5:00 p.m. (New York City time)
on the day of selection, or (ii) to register the transfer or exchange of any
Preferred Security so selected for redemption in whole or in part, except the
unredeemed portion of any Preferred Security being redeemed in part.
SECTION 8.2 Transfer Procedures and Restrictions for Global
Certificates.
(a) Notwithstanding any other provision in this Declaration, no
Global Certificate may be exchanged in whole or in part for Preferred Securities
registered, and no transfer of a Global Certificate in whole or in part may be
registered, in the name of any Person other than the Depositary for such Global
Certificate or a nominee thereof or a successor Depositary or a nominee of such
successor Depositary, unless (i) such Depositary (x) has notified the Sponsor
that it is unwilling or unable to continue as Depositary for such Global
Certificate and is not replaced by a successor Depositary approved by the
Sponsor within 90 days or (y) at any time has ceased to be a clearing agency
50
registered under the Exchange Act, or (ii) an Event of Default has occurred and
is continuing.
(b) The transfer and exchange of Global Certificates or
beneficial interests therein shall be effected through the Clearing Agency, in
accordance with this Declaration and the procedures of the Clearing Agency
therefor.
(c) Unless and until Definitive Preferred Security Certificates
have been issued to the Preferred Security Beneficial Owners pursuant to Section
7.7:
(i) 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
Certificates and receiving approvals, votes or consents
hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Certificates and shall have no obligation to
the Preferred Security Beneficial Owners; and
(ii) the rights of the Preferred Security
Beneficial Owners shall be exercised only through the Clearing
Agency and shall be limited to those established by law and
agreements between such Preferred Security Beneficial Owners and
the Clearing Agency and/or the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants. The Depositary
will make book entry transfers among the Clearing Agency
Participants.
SECTION 8.3 Mutilated, Destroyed, Lost or Stolen Certificates;
Replacement Securities.
If the holder of a Security claims that the Certificate
representing such Security has been lost, destroyed or wrongfully taken or if
such Certificate is mutilated and is surrendered to the Trust or in the case of
the Preferred Securities to the Property Trustee, the Trust shall issue and the
Property Trustee shall authenticate a replacement Certificate if the Property
Trustee's and the Trust's requirements, as the case may be, are met. If required
by the Property Trustee or the Trust, an indemnity bond must be sufficient in
the judgment of both to protect the Trustees, the Property Trustee, the Sponsor
or any
51
authenticating agent from any loss which any of them may suffer if a Certificate
is replaced. The Company may charge for its expenses in replacing a Certificate.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Sponsor in its discretion
may, instead of issuing a new Certificate, pay such Security.
Every replacement Certificate is an additional obligation of the
Trust.
SECTION 8.4 Cancellation of Preferred Security Certificates.
The Trust at any time may deliver Preferred Security Certificates
to the Property Trustee for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Property Trustee any Preferred Securities
surrendered to them for registration of transfer, redemption, conversion,
exchange or payment. The Property Trustee shall promptly cancel all Preferred
Securities surrendered for registration of transfer, redemption, conversion,
exchange, payment, replacement or cancellation and shall dispose of cancelled
Preferred Securities as the Trust directs. The Trust may not issue new Preferred
Securities to replace Preferred Securities that it has paid or that have been
delivered to the Property Trustee for cancellation or that any holder has
converted.
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES AND OTHERS
SECTION 9.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion
of the capital contributions (or any return thereon) of the
Holders of the Securities which shall be made solely from assets
of the Trust; or
52
(ii) required to pay to the Trust or to any Holder
of Securities any deficit upon dissolution of the Trust or
otherwise.
(b) The Holder of the Common Securities shall be liable for all
of the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to 'SS' 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability as is extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of Delaware.
SECTION 9.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person 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, 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 of Securities might properly be paid.
53
SECTION 9.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the 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 an Indemnified Person and any Covered 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 conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be
54
entitled to consider such interests and factors as it desires,
including its own interests, and shall have no duty or obligation
to give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 9.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, 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), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason
of the fact
55
that he is or was a Company Indemnified Person against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in
respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the
Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including
dismissal of an action without prejudice or the settlement of an
action without admission of liability) in defense of any action,
suit or proceeding referred to in paragraphs (i) and (ii) of this
Section 9.4(a), or in defense of any claim, issue or matter
therein, he shall be indemnified, to the full extent permitted by
law, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 9.4(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific case upon
a determination that indemnification of the Company Indemnified
Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and
(ii). Such determination shall be made (1) by the Regular
Trustees by a majority vote of a quorum consisting of such
Regular 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 Regular Trustees so
directs, by independent legal counsel in a written opinion, or
(3) by the Holders of the Common Securities of the Trust.
56
(v) Expenses (including attorneys' fees) 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 9.4(a)
shall be paid by the Debenture Issuer in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to
repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Debenture Issuer as
authorized in this Section 9.4(a). Notwithstanding the foregoing,
no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion or
(iii) the Holders of the Common Securities of the Trust, that,
based upon the facts known to the Regular Trustees, counsel or
the Holders of the Common Securities at the time such
determination is made, such Company Indemnified Person acted in
bad faith or in a manner that such person did not believe to be
in or not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company Indemnified
Person believed or had reasonable cause to believe his conduct
was unlawful. In no event shall any advance be made in instances
where the Regular Trustees, independent legal counsel or the
Holders of the Common Securities reasonably determine that such
person deliberately breached his duty to the Trust or the Holders
of the Common or Preferred Securities.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 9.4(a) shall not be deemed exclusive of any other rights
to which those seeking indemnification and advancement of
expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer
or Holders of the Preferred Securities 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 9.4(a) shall be deemed to be
provided by a con-
57
tract between the Debenture Issuer and each Company Indemnified
Person who serves in such capacity at any time while this Section
9.4(a) is in effect. Any repeal or modification of this Section
9.4(a) shall not affect any rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a
Company Indemnified Person against any liability asserted against
him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the
provisions of this Section 9.4(a).
(viii) For purposes of this Section 9.4(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
9.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its
separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 9.4(a) shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a Company Indemnified Person
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the
Delaware Trustee, (iii) any Affiliate of the Property Trustee and the Delaware
Trustee, and (iv) any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Property
Trustee and the Delaware Trustee (each of the Persons in (i) through (iv) being
referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary
Indemnified Person harmless against, any and all
58
loss, liability or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration or the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 9.4(b) shall survive the satisfaction and
discharge of this Declaration.
SECTION 9.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. 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.
59
ARTICLE X
ACCOUNTING
SECTION 10.1 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 10.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
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 by a firm of independent certified public accountants selected by the
Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust, including a
balance sheet of the Trust as of the end of such Fiscal Year, and the related
statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, 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 Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
60
(d) The Regular 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 the Code, and
any other annual income tax returns required to be filed by the Regular Trustees
on behalf of the Trust with any state or local taxing authority.
SECTION 10.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the 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 Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 10.4 Withholding.
The Trust and the Regular 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 Regular Trustee shall file required
forms with applicable jurisdictions and, unless an exemption from withholding is
properly established by a Holder, shall remit amounts withheld with respect to
the Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be deemed
to be a distribution in the amount of the withholding to the Holder. In the
event of any claimed overwithholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
61
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more
than two Regular Trustees, a majority of the Regular 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
62
terms of this Declaration (including the terms of
the Securities); 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;
(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 that is required to be
registered under the Investment Company Act.
(c) So long as any Securities remain outstanding, any amendment
that would adversely affect the rights, privileges or preferences of any Holder
of Securities may be effected only with such additional requirements as may be
set forth in the terms of such Securities.
(d) Section 8.1(c) and this Section 11.1 shall not be amended
without the consent of all of the Holders of the Securities.
(e) Article IV and 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.
(f) Notwithstanding Section 11.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or
obligations of the Sponsor; and
63
(iv) conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory
authority, which amendment does not have a material adverse
effect on the rights, preferences or privileges of the Holders.
SECTION 11.2 Meetings of the Holders of Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular 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 Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities represented by the Certificates so specified
shall be counted for purposes of determining whether the required percentage set
forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to
all the Holders of Securities having a right to vote thereat at
least seven days and not more than 60 days before the date of
such meeting. Whenever a vote, consent or approval of the Holders
of Securities is permitted or required under this Declaration or
the rules of any stock exchange or over-the-counter market on
which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting
of the Holders of Securities.
64
Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities
in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of Securities
having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given
to the Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may specify that any
written ballot submitted to the Security Holders for the purpose
of taking any action without a meeting shall be returned to the
Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any
Person to act for it by proxy on all matters in which a Holder of
Securities is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or by such other
Person that the Regular 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 Preferred
Securities are then listed or trading provide otherwise, the
Regular Trustees, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities,
including notice of the time, place or pur-
65
pose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by
consent without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any other
matter with respect to the exercise of any such right to vote.
ARTICLE XII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1 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 banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
New York, with trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee; and the Declaration has been duly
executed and delivered by the Property Trustee, and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or By-laws of the Property Trustee.
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(d) At the Closing Date, the Property Trustee has not knowingly
created any liens or encumbrances on such Debentures.
(e) No consent, approval or authorization of, or registration
with or notice to, any New York State or federal banking authority is required
for the execution, delivery or performance by the Property Trustee, of the
Declaration.
SECTION 12.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration and at
the time of Closing, and each Successor Delaware Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Delaware Trustee's
acceptance of its appointment as Delaware Trustee that:
(a) The Delaware Trustee is a duly organized, validly existing
and in good standing under the laws of the State of Delaware, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration.
(b) The execution, delivery and performance by the Delaware
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee; and the Declaration has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
(d) No consent, approval or authorization of, or registration
with or notice to, any state or federal banking
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authority is required for the execution, delivery or performance by the Delaware
Trustee, of this Declaration.
(e) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
(f) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.2 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, sent by
facsimile or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
c/o Designer Holdings Ltd.
1385 Broadway
Third Floor
New York, NY 10018
Tel: (212) 556-9600
Telecopy: (212) 556-9722
Attention: John J. Jones, General Counsel
(b) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of to
the Holders of the Securities):
IBJ Schroder Bank & Trust Company
1 State Street
11th Floor
New York, NY 10004
Tel: (212) 858-2529
Telecopy: (212) 858-2952
Attention: Corporate Trust & Agency Department
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(c) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders of the Securities):
Delaware Trust Capital Management, Inc.
900 Market Street H02M12
Wilmington, DE 19801
Attention: Corporate Trust Department
(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):
c/o Designer Holdings Ltd.
1385 Broadway
Third Floor
New York, NY 10018
Tel: (212) 556-9600
Telecopy: (212) 556-9722
Attention: John J. Jones, General Counsel
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust or the Registrar, as applicable.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 13.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
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SECTION 13.3 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 13.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 13.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named
or referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 13.6 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 13.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to
be executed as of the date first above written.
By: /s/ ARNOLD H. SIMON
_________________________________
Name: Arnold H. Simon
Title: Trustee
By: /s/ MERRIL M. HALPERN
___________________________________
Name: Merril M. Halpern
Title: Trustee
DELAWARE TRUST CAPITAL
MANAGEMENT, INC., Delaware
Trustee
By:_____________________________
Name:
Title:
IBJ SCHRODER BANK & TRUST
COMPANY, Property Trustee
By:_____________________________
Name:
Title:
DESIGNER HOLDINGS LTD., Sponsor
By: /s/ ARNOLD H. SIMON
_____________________________
Name: Arnold H. Simon
Title: President, Chief,
Executive Officer and
Director
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