Exhibit 10.1
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AMENDED AND RESTATED DECLARATION
OF TRUST
BY AND AMONG
U.S. BANK NATIONAL ASSOCIATION,
AS INSTITUTIONAL TRUSTEE,
AMERICAN PHYSICIANS CAPITAL, INC.,
AS SPONSOR,
AND
WILLIAM B. CHEESEMAN AND
FRANK H. FREUND,
AS ADMINISTRATORS,
DATED AS OF OCTOBER 29, 2003
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TABLE OF CONTENTS
Page
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ARTICLE I. INTERPRETATION AND DEFINITIONS............................................................. 1
Section 1.1. Definitions.......................................................................... 1
ARTICLE II. ORGANIZATION............................................................................... 8
Section 2.1. Name................................................................................. 8
Section 2.2. Office............................................................................... 8
Section 2.3. Purpose.............................................................................. 8
Section 2.4. Authority............................................................................ 9
Section 2.5. Title to Property of the Trust....................................................... 9
Section 2.6. Powers and Duties of the Institutional Trustee and the Administrators................ 9
Section 2.7. Prohibition of Actions by the Trust and the Institutional Trustee.................... 13
Section 2.8. Powers and Duties of the Institutional Trustee....................................... 14
Section 2.9. Certain Duties and Responsibilities of the Institutional Trustee and Administrators.. 15
Section 2.10. Certain Rights of Institutional Trustee.............................................. 17
Section 2.11. Execution of Documents............................................................... 19
Section 2.12. Not Responsible for Recitals or Issuance of Securities............................... 19
Section 2.13. Duration of Trust.................................................................... 19
Section 2.14. Mergers.............................................................................. 19
ARTICLE III. SPONSOR.................................................................................... 21
Section 3.1. Sponsor's Purchase of Common Securities.............................................. 21
Section 3.2. Responsibilities of the Sponsor...................................................... 21
Section 3.3. Expenses............................................................................. 21
Section 3.4. Right to Proceed..................................................................... 22
ARTICLE IV. INSTITUTIONAL TRUSTEE AND ADMINISTRATORS................................................... 22
Section 4.1. Institutional Trustee; Eligibility................................................... 22
Section 4.2. Administrators....................................................................... 23
Section 4.3. Appointment, Removal and Resignation of Institutional Trustee and Administrators..... 23
Section 4.4. Institutional Trustee Vacancies...................................................... 24
Section 4.5. Effect of Vacancies.................................................................. 25
Section 4.6. Meetings of the Institutional Trustee and the Administrators......................... 25
Section 4.7. Delegation of Power.................................................................. 25
Section 4.8. Conversion, Consolidation or Succession to Business.................................. 25
ARTICLE V. DISTRIBUTIONS.............................................................................. 26
Section 5.1. Distributions........................................................................ 26
ARTICLE VI. ISSUANCE OF SECURITIES..................................................................... 26
Section 6.1. General Provisions Regarding Securities.............................................. 26
Section 6.2. Paying Agent, Transfer Agent and Registrar........................................... 27
Section 6.3. Form and Dating...................................................................... 27
Section 6.4. Mutilated, Destroyed, Lost or Stolen Certificates.................................... 28
Section 6.5. Temporary Securities................................................................. 28
Section 6.6. Cancellation......................................................................... 28
Section 6.7. Rights of Holders; Waivers of Past Defaults.......................................... 29
ARTICLE VII. DISSOLUTION AND TERMINATION OF TRUST....................................................... 30
Section 7.1. Dissolution and Termination of Trust................................................. 30
ARTICLE VIII. TRANSFER OF INTERESTS...................................................................... 31
Section 8.1. General.............................................................................. 31
Section 8.2. Transfer Procedures and Restrictions................................................. 32
Section 8.3. Deemed Security Holders.............................................................. 35
ARTICLE IX. LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS.......... 35
Section 9.1. Liability............................................................................ 35
Section 9.2. Exculpation.......................................................................... 35
Section 9.3. Fiduciary Duty....................................................................... 36
Section 9.4. Indemnification...................................................................... 36
Section 9.5. Outside Businesses................................................................... 39
Section 9.6. Compensation; Fee.................................................................... 39
ARTICLE X. TAX AND ACCOUNTING......................................................................... 39
Section 10.1. Fiscal Year.......................................................................... 39
Section 10.2. Certain Accounting Matters........................................................... 40
Section 10.3. Banking.............................................................................. 40
Section 10.4. Withholding.......................................................................... 40
Section 10.5. Intention of the Parties............................................................. 41
ARTICLE XI. AMENDMENTS AND MEETINGS.................................................................... 41
Section 11.1. Amendments........................................................................... 41
Section 11.2. Meetings of the Holders of Securities; Action by Written Consent..................... 42
ARTICLE XII. REPRESENTATIONS OF INSTITUTIONAL TRUSTEE................................................... 44
Section 12.1. Representations and Warranties of Institutional Trustee.............................. 44
ARTICLE XIII. MISCELLANEOUS.............................................................................. 44
Section 13.1. Notices.............................................................................. 44
Section 13.2. Governing Law........................................................................ 45
Section 13.3. Intention of the Parties............................................................. 46
Section 13.4. Headings............................................................................. 46
Section 13.5. Successors and Assigns............................................................... 46
Section 13.6. Partial Enforceability............................................................... 46
Section 13.7. Counterparts......................................................................... 46
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Annex I.................. Terms of Securities
Exhibit A-1.............. Form of Capital Security Certificate
Exhibit A-2.............. Form of Common Security Certificate
Exhibit B................ Specimen of Initial Debenture
Exhibit C................ Placement Agreement
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
AMERICAN PHYSICIANS CAPITAL STATUTORY TRUST III
OCTOBER 29, 2003
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of October 29, 2003, by the Institutional Trustee (as defined
herein), the Administrators (as defined herein), the Sponsor (as defined herein)
and by the holders, from time to time, of undivided beneficial interests in the
Trust (as defined herein) to be issued pursuant to this Declaration;
WHEREAS, the Institutional Trustee, the Administrators and the Sponsor
established American Physicians Capital Statutory Trust III (the "Trust"), a
statutory trust under the Statutory Trust Act (as defined herein) pursuant to a
Declaration of Trust dated as of October 14, 2003 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of the State of the State of
Connecticut on October 14, 2003, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain debentures of the
Debenture Issuer (as defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, the Institutional Trustee, the Administrators and the Sponsor,
by this Declaration, amend and restate each and every term and provision of the
Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitutes the governing instrument of such statutory trust,
the Institutional Trustee declares 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. The
parties hereto hereby agree as follows:
ARTICLE I.
INTERPRETATION AND DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and vice
versa.
"Additional Interest" has the meaning set forth in the Indenture.
"Additional Sums" has the meaning set forth in the Indenture.
"Administrative Action" has the meaning set forth in paragraph 4(a) of
Annex I.
"Administrators" means each of William B. Cheeseman and Frank H.
Freund, solely in such Person's capacity as Administrator of the Trust created
and continued hereunder and not in such Person's individual capacity, or such
Administrator's successor in interest in such capacity, or any successor
appointed as herein provided.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(b) such Person shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of such Person of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in New York City or Hartford, Connecticut are
permitted or required by any applicable law to close.
"Capital Securities" has the meaning set forth in paragraph 1(a) of
Annex I.
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"Capital Security Certificate" means a definitive Certificate in fully
registered form representing a Capital Security substantially in the form of
Exhibit A-1.
"Certificate" means any certificate evidencing Securities.
"Closing Date" has the meaning set forth in the Placement Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Common Securities" has the meaning set forth in paragraph 1(b) of
Annex I.
"Common Security Certificate" means a definitive Certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Company Indemnified Person" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103.
"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.
"Covered Person" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.
"Creditor" has the meaning set forth in Section 3.3.
"Debenture Issuer" means American Physicians Capital, Inc., a Michigan
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means U.S. Bank National Association, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Debentures" means the Floating Rate Junior Subordinated Deferrable
Interest Debentures due 2033 to be issued by the Debenture Issuer under the
Indenture.
"Defaulted Interest" has the meaning set forth in the Indenture.
"Determination Date" has the meaning set forth in paragraph 2(a) of
Annex I.
"Direct Action" has the meaning set forth in Section 2.8(d).
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"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 5.1.
"Distribution Payment Date" has the meaning set forth in paragraph 2(b)
of Annex I.
"Distribution Period" has the meaning set forth in paragraph 2(a) of
Annex I.
"Distribution Rate" means, for the period beginning on (and including)
the date of original issuance and ending on (but excluding) January 29, 2004,
the rate per annum of 5.010%, and for the period beginning on (and including)
January 29, 2004, and thereafter, the Coupon Rate.
"Event of Default" means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) the occurrence of an Indenture Event of Default; or
(b) default by the Trust in the payment of any Optional Redemption
Price of any Security when it becomes due and payable; or
(c) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Institutional Trustee in this
Declaration (other than those specified in clause (a) or (b) above) and
continuation of such default or breach for a period of 60 days after there has
been given, by registered or certified mail to the Institutional Trustee and to
the Sponsor by the Holders of at least 25% in aggregate liquidation amount of
the outstanding Capital Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(d) the occurrence of a Bankruptcy Event with respect to the
Institutional Trustee if a successor Institutional Trustee has not been
appointed within 90 days thereof.
"Extension Period" has the meaning set forth in paragraph 2(b) of Annex
I.
"Fiduciary Indemnified Person" shall mean the Institutional Trustee,
any Affiliate of the Institutional Trustee and any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee.
"Fiscal Year" has the meaning set forth in Section 10.1.
"Guarantee" means the guarantee agreement, to be dated as of the
Closing Date, of the Sponsor in respect of the Capital Securities.
"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 Statutory Trust Act.
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"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of the Closing Date, between
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental indenture may be amended, supplemented or otherwise modified
from time to time.
"Indenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 4.1.
"Interest" means any interest due on the Debentures including any
Additional Interest and Defaulted Interest.
"Interest Rate" has the meaning set forth in paragraph 2(a) of Annex I.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Liquidation" has the meaning set forth in paragraph 3 of Annex I.
"Liquidation Distribution" has the meaning set forth in paragraph 3 of
Annex I.
"Majority in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Maturity Date" has the meaning set forth in paragraph 2(a) of Annex I.
"Officers' Certificates" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person, and, with respect
to the Administrators, a certificate signed by at least two Administrators. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant providing for it in this Declaration shall include:
(a) a statement that each individual signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
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(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each individual in rendering the Officers'
Certificate;
(c) a statement that each such individual signing the Officers'
Certificate has made such examination or investigation as, in such individual's
opinion, is necessary to enable such individual to express an informed opinion
as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Optional Redemption Date" has the meaning set forth in paragraph 4(a)
of Annex I.
"Optional Redemption Price" has the meaning set forth in paragraph
4(a) of Annex I.
"Paying Agent" has the meaning specified in Section 6.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Placement Agreement" means the Placement Agreement relating to the
offering and sale of Capital Securities in the form of Exhibit C.
"Property Account" has the meaning set forth in Section 2.8(c).
"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
"Quorum" means a majority of the Administrators or, if there are only
two Administrators, both of them.
"Redemption/Distribution Notice" has the meaning set forth in
paragraph 4(e) of Annex I.
"Registrar" has the meaning set forth in Section 6.2.
"Responsible Officer" means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee,
including any vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Institutional Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Restricted Securities Legend" has the meaning set forth in Section
8.2(b).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
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"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Special Event" has the meaning set forth in paragraph 4(a) of Annex I.
"Special Redemption Date" has the meaning set forth in paragraph 4(a)
of Annex I.
"Special Redemption Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Sponsor" means American Physicians Capital, Inc., a Michigan
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as sponsor of the Trust.
"Statutory Trust Act" means Chapter 615 of Title 34 of the Connecticut
General Statutes, Sections 500, et seq. as may be amended from time to time.
"Subsidiary" means with respect to any Person, (a) any corporation at
least a majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (b) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar interests of which shall at the time be owned by such Person, or by one
or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries, and (c) any limited partnership of which such Person or any of its
Subsidiaries is a general partner. For the purposes of this definition, "voting
stock" means shares, interests, participations or other equivalents in the
equity interest (however designated) in such Person having ordinary voting power
for the election of a majority of the directors (or the equivalent) of such
Person, other than shares, interests, participations or other equivalents having
such power only by reason of the occurrence of a contingency.
"Successor Entity" has the meaning set forth in Section 2.14(b).
"Successor Institutional Trustee" has the meaning set forth in Section
4.3(a).
"Successor Securities" has the meaning set forth in Section 2.14(b).
"Super Majority" has the meaning set forth in paragraph 5(b) of Annex
I.
"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.
"10% in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
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Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"3-Month LIBOR" has the meaning set forth in paragraph 2(a) of Annex I.
"Transfer Agent" has the meaning set forth in Section 6.2.
"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).
"Trust Securities" has the meaning set forth in the Indenture.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Property Account, and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.
"U.S. Person" means a United States Person as defined in Section
7701(a)(30) of the Code.
ARTICLE II.
ORGANIZATION
SECTION 2.1. NAME. The Trust is named "American Physicians Capital
Statutory Trust III," as such name may be modified from time to time by the
Administrators following written notice to the Holders of the Securities. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrators.
SECTION 2.2. OFFICE. The address of the principal office of the Trust
is c/o U.S. Bank National Association, 225 Asylum Street, Goodwin Square,
Hartford, Connecticut 06103. On at least 10 Business Days written notice to the
Holders of the Securities, the Administrators may designate another principal
office, which shall be in a state of the United States or in the District of
Columbia.
SECTION 2.3. PURPOSE. The exclusive purposes and functions of the Trust
are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the Debentures, (c) to facilitate direct investment in the
assets of the Trust through issuance of the Common Securities and the Capital
Securities, and (d) 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 2.4. AUTHORITY. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by the
Institutional Trustee in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Institutional Trustee acting on
behalf of the Trust, no Person shall be required to inquire into the authority
of the Institutional Trustee to bind the Trust. Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of the
Institutional Trustee as set forth in this Declaration. The Administrators shall
have only those ministerial duties set forth herein with respect to
accomplishing the purposes of the Trust and are not intended to be trustees or
fiduciaries with respect to the Trust or the Holders. The Institutional Trustee
shall have the right, but shall not be obligated except as provided in Section
2.6, to perform those duties assigned to the Administrators.
SECTION 2.5. TITLE TO PROPERTY OF THE TRUST. Except as provided in
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.
SECTION 2.6. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE AND THE
ADMINISTRATORS.
(a) The Institutional Trustee and the Administrators shall conduct
the affairs of the Trust in accordance with the terms of this Declaration.
Subject to the limitations set forth in paragraph (b) of this Section, and in
accordance with the following provisions (i) and (ii), the Institutional Trustee
and the Administrators shall have the authority to enter into all transactions
and agreements determined by the Institutional Trustee to be appropriate in
exercising the authority, express or implied, otherwise granted to the
Institutional Trustee or the Administrators, as the case may be, under this
Declaration, and to perform all acts in furtherance thereof, including without
limitation, the following:
(i) Each Administrator shall have the power and
authority to act on behalf of the Trust with respect to the following
matters:
(A) the issuance and sale of the
Securities;
(B) to cause the Trust to enter into,
and to execute and deliver on behalf of the Trust, such
agreements as may be necessary or desirable in connection with
the purposes and function of the Trust, including agreements
with the Paying Agent;
(C) ensuring compliance with the
Securities Act and applicable state securities or blue sky
laws;
(D) the sending of notices (other than
notices of default), and other information regarding the
Securities and the Debentures to the Holders in accordance
with this Declaration;
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(E) the consent to the appointment of a
Paying Agent, Transfer Agent and Registrar in accordance with
this Declaration, which consent shall not be unreasonably
withheld or delayed;
(F) execution and delivery of the
Securities in accordance with this Declaration;
(G) execution and delivery of closing
certificates pursuant to the Placement Agreement and the
application for a taxpayer identification number;
(H) unless otherwise determined by the
Holders of a Majority in liquidation amount of the Securities
or as otherwise required by the Statutory Trust Act, to
execute on behalf of the Trust (either acting alone or
together with any or all of the Administrators) any documents
that the Administrators have the power to execute pursuant to
this Declaration;
(I) the taking of any action incidental
to the foregoing as the Institutional Trustee may from time to
time determine is necessary or advisable to give effect to the
terms of this Declaration for the benefit of the Holders
(without consideration of the effect of any such action on any
particular Holder);
(J) to establish a record date with
respect to all actions to be taken hereunder that require a
record date be established, including Distributions, voting
rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of
Common Securities as to such actions and applicable record
dates; and
(K) to duly prepare and file all
applicable tax returns and tax information reports that are
required to be filed with respect to the Trust on behalf of
the Trust.
(ii) As among the Institutional Trustee and the
Administrators, the Institutional Trustee shall have the power, duty
and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Property
Account;
(B) the receipt of the Debentures;
(C) the collection of interest,
principal and any other payments made in respect of the
Debentures in the Property Account;
(D) the distribution through the Paying
Agent of amounts owed to the Holders in respect of the
Securities;
(E) the exercise of all of the rights,
powers and privileges of a holder of the Debentures;
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(F) the sending of notices of default
and other information regarding the Securities and the
Debentures to the Holders in accordance with this Declaration;
(G) the distribution of the Trust
Property in accordance with the terms of this Declaration;
(H) to the extent provided in this
Declaration, the winding up of the affairs of and liquidation
of the Trust and the preparation, execution and filing of the
certificate of cancellation with the Secretary of the State of
the State of Connecticut;
(I) after any Event of Default
(provided that such Event of Default is not by or with respect
to the Institutional Trustee) the taking of any action
incidental to the foregoing as the Institutional Trustee may
from time to time determine is necessary or advisable to give
effect to the terms of this Declaration and protect and
conserve the Trust Property for the benefit of the Holders
(without consideration of the effect of any such action on any
particular Holder); and
(J) to take all action that may be
necessary for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as
a statutory trust under the laws of the State of Connecticut
and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of
the Capital Securities or to enable the Trust to effect the
purposes for which the Trust was created.
(iii) The Institutional Trustee shall have the
power and authority to act on behalf of the Trust with respect to any
of the duties, liabilities, powers or the authority of the
Administrators set forth in Section 2.6(a)(i)(D), (E) and (F) herein
but shall not have a duty to do any such act unless specifically
requested to do so in writing by the Sponsor, and shall then be fully
protected in acting pursuant to such written request; and in the event
of a conflict between the action of the Administrators and the action
of the Institutional Trustee, the action of the Institutional Trustee
shall prevail.
(b) So long as this Declaration remains in effect, the Trust (or
the Institutional Trustee or Administrators acting on behalf of the Trust) shall
not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the Institutional
Trustee nor the Administrators may cause the Trust to (i) acquire any
investments or engage in any activities not authorized by this Declaration, (ii)
sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose
of any of the Trust Property or interests therein, including to Holders, except
as expressly provided herein, (iii) take any action that would reasonably be
expected (A) to cause the Trust to fail or cease to qualify as a "grantor trust"
for United States federal income tax purposes or (B) to require the trust to
register as an Investment Company under the Investment Company Act, (iv) incur
any indebtedness for borrowed money or issue any other debt, or (v) take or
consent to any action that would result in the placement of a lien on any of the
Trust Property. The Institutional
11
Trustee shall, at the sole cost and expense of the Trust, defend all claims and
demands of all Persons at any time claiming any lien on any of the Trust
Property adverse to the interest of the Trust or the Holders in their capacity
as Holders.
(c) In connection with the issuance and sale of the Capital
Securities, the Sponsor shall have the right and responsibility to assist the
Trust with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the Sponsor in furtherance of the following prior to the date
of this Declaration are hereby ratified and confirmed in all respects):
(i) the taking of any action necessary to obtain
an exemption from the Securities Act;
(ii) the determination of the States in which to
take appropriate action to qualify or register for sale all or part of
the Capital Securities and the determination of any and all such acts,
other than actions which must be taken by or on behalf of the Trust,
and the advice to the Administrators of actions they must take on
behalf of the Trust, and the preparation for execution and filing of
any documents to be executed and filed by the Trust or on behalf of the
Trust, as the Sponsor deems necessary or advisable in order to comply
with the applicable laws of any such States in connection with the sale
of the Capital Securities;
(iii) the negotiation of the terms of, and the
execution and delivery of, the Placement Agreement providing for the
sale of the Capital Securities; and
(iv) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators and the Holders of a Majority in liquidation amount of the Common
Securities are authorized and directed to conduct the affairs of the Trust and
to operate the Trust so that the Trust will not (i) be deemed to be an
Investment Company required to be registered under the Investment Company Act,
and (ii) fail to be classified as a "grantor trust" for United States federal
income tax purposes. The Administrators and the Holders of a Majority in
liquidation amount of the Common Securities shall not take any action
inconsistent with the treatment of the Debentures as indebtedness of the
Debenture Issuer for United States federal income tax purposes. In this
connection, the Administrators and the Holders of a Majority in liquidation
amount of the Common Securities are authorized to take any action, not
inconsistent with applicable laws, the Certificate of Trust or this Declaration,
as amended from time to time, that each of the Administrators and the Holders of
a Majority in liquidation amount of the Common Securities determines in their
discretion to be necessary or desirable for such purposes.
(e) All expenses incurred by the Administrators or the
Institutional Trustee pursuant to this Section 2.6 shall be reimbursed by the
Sponsor, and the Institutional Trustee and the Administrators shall have no
obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
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(g) Legal title to all Trust Property shall be vested at all times
in the Institutional Trustee (in its capacity as such) and shall be held and
administered by the Institutional Trustee and the Administrators for the benefit
of the Trust in accordance with this Declaration.
(h) If the Institutional Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Declaration and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Institutional Trustee or to such Holder, then and in
every such case the Sponsor, the Institutional Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Institutional Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 2.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE INSTITUTIONAL
TRUSTEE.
(a) The Trust shall not, and the Institutional Trustee shall cause
the Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Institutional
Trustee shall cause the Trust not to:
(i) invest any proceeds received by the Trust
from holding the Debentures, but shall distribute all such proceeds to
Holders of the Securities pursuant to the terms of this Declaration and
of the Securities;
(ii) acquire any assets other than as expressly
provided herein;
(iii) possess Trust Property for other than a
Trust purpose;
(iv) make any loans or incur any indebtedness
other than loans represented by the Debentures;
(v) possess any power or otherwise act in such a
way as to vary the Trust assets or the terms of the Securities in any
way whatsoever other than as expressly provided herein;
(vi) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Trust other
than the Securities;
(vii) carry on any "trade or business" as that
phrase is used in the Code; or
(viii) other than as provided in this Declaration
(including Annex I), (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 a written opinion of counsel to
the effect that such modification will not cause the Trust to cease to
be classified as a "grantor trust" for United States federal income tax
purposes.
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SECTION 2.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Institutional Trustee in trust for the benefit of
the Trust and the Holders of the Securities. The right, title and interest of
the Institutional Trustee to the Debentures shall vest automatically in each
Person who may hereafter be appointed as Institutional Trustee in accordance
with Section 4.3. Such vesting and cessation of title shall be effective whether
or not conveyancing documents with regard to the Debentures have been executed
and delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Administrators.
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated
non-interest bearing trust account (the "Property Account") in the name
of and under the exclusive control of the Institutional Trustee,
maintained in the Institutional Trustee's trust department, on behalf
of the Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Property Account and make
payments, or cause the Paying Agent to make payments, to the Holders of
the Capital Securities and Holders of the Common Securities from the
Property Account in accordance with Section 5.1. Funds in the Property
Account shall be held uninvested until disbursed in accordance with
this Declaration;
(ii) engage in such ministerial activities as
shall be necessary or appropriate to effect the redemption of the
Capital Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued
by the Administrators in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain circumstances pursuant to the
terms of the Securities.
(d) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust that arise out of or in
connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or arises out of the Institutional
Trustee's duties and obligations under this Declaration; provided, however, that
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the Debentures on the date such interest or principal is otherwise payable
(or in the case of redemption, on the redemption date), then a Holder of the
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of
14
the Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of the Capital Securities in such Direct Action; provided,
however, that no Holder of the Common Securities may exercise such right of
subrogation so long as an Event of Default with respect to the Capital
Securities has occurred and is continuing.
(e) The Institutional Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and
the proceeds of the liquidation distributed to the Holders of the
Securities pursuant to the terms of the Securities and this
Declaration; or
(ii) a Successor Institutional Trustee has been
appointed and has accepted that appointment in accordance with Section
4.3.
(f) The Institutional Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a Holder of the Debentures
under the Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to this Declaration (including Annex I) and the terms of the
Securities.
The Institutional Trustee must exercise the powers set forth in this
Section 2.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 2.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 2.3.
SECTION 2.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL
TRUSTEE AND ADMINISTRATORS.
(a) The Institutional Trustee, before the occurrence of any Event
of Default and after the curing or waiving of all such Events of Default that
may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Institutional Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
6.7), the Institutional Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) The duties and responsibilities of the Institutional Trustee
and the Administrators shall be as provided by this Declaration. Notwithstanding
the foregoing, no provision of this Declaration shall require the Institutional
Trustee or Administrators to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder, or
in the exercise of any of their rights or powers if the Institutional Trustee or
such Administrator shall have reasonable grounds to believe that repayment of
such funds or adequate protection against such risk of liability is not
reasonably assured to the Institutional Trustee or such Administrator. Whether
or not therein expressly so provided, every provision of this Declaration
relating to the conduct or affecting the liability of or affording protection to
the Institutional Trustee or Administrators shall be subject to the provisions
of this Article. Nothing in this Declaration shall be construed to relieve an
Administrator or the Institutional Trustee from
15
liability for the Institutional Trustee's or such Administrator's own negligent
act, the Institutional Trustee's or such Administrator's own negligent failure
to act, or the Institutional Trustee's or such Administrator's own willful
misconduct. To the extent that, at law or in equity, the Institutional Trustee
or an Administrator has duties and liabilities relating to the Trust or to the
Holders, the Institutional Trustee or such Administrator shall not be liable to
the Trust or to any Holder for the Institutional Trustee's or such
Administrator's good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of the Administrators or the Institutional Trustee otherwise
existing at law or in equity, are agreed by the Sponsor and the Holders to
replace such other duties and liabilities of the Administrators or the
Institutional Trustee.
(c) All payments made by the Institutional Trustee or a Paying
Agent in respect of the Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the
Institutional Trustee or a Paying Agent to make payments in accordance with the
terms hereof. Each Holder, by its acceptance of a Security, agrees that it will
look solely to the revenue and proceeds from the Trust Property to the extent
legally available for distribution to it as herein provided and that the
Institutional Trustee and the Administrators are not personally liable to it for
any amount distributable in respect of any Security or for any other liability
in respect of any Security. This Section 2.9(c) does not limit the liability of
the Institutional Trustee expressly set forth elsewhere in this Declaration.
(d) The Institutional Trustee shall not be liable for its own acts
or omissions hereunder except as a result of its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) the Institutional Trustee shall not be
liable for any error of judgment made in good faith by an Authorized
Officer of the Institutional Trustee, unless it shall be proved that
the Institutional Trustee was negligent in ascertaining the pertinent
facts;
(ii) the Institutional Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of not less
than a Majority in liquidation amount of the Capital Securities or the
Common Securities, as applicable, relating to the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon
the Institutional Trustee under this Declaration;
(iii) the Institutional Trustee's sole duty with
respect to the custody, safekeeping and physical preservation of the
Debentures and the Property Account shall be to deal with such property
in a similar manner as the Institutional Trustee deals with similar
property for its fiduciary accounts generally, subject to the
protections and limitations on liability afforded to the Institutional
Trustee under this Declaration;
(iv) the Institutional Trustee shall not be
liable for any interest on any money received by it except as it may
otherwise agree in writing with the Sponsor; and
16
money held by the Institutional Trustee need not be segregated from
other funds held by it except in relation to the Property Account
maintained by the Institutional Trustee pursuant to Section 2.8(c)(i)
and except to the extent otherwise required by law; and
(v) the Institutional Trustee shall not be
responsible for monitoring the compliance by the Administrators or the
Sponsor with their respective duties under this Declaration, nor shall
the Institutional Trustee be liable for any default or misconduct of
the Administrators or the Sponsor.
SECTION 2.10. CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE. Subject to the
provisions of Section 2.9:
(a) the Institutional Trustee may conclusively rely and shall
fully be protected in acting, or refraining from acting, in good faith upon any
resolution, opinion of counsel, certificate, written representation of a Holder
or transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
appraisal, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(b) if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Capital Securities are entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's written instructions as to the course of action
to be taken and the Institutional Trustee shall take such action, or refrain
from taking such action, as the Institutional Trustee shall be instructed in
writing, in which event the Institutional Trustee shall have no liability except
for its own negligence or willful misconduct;
(c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;
(d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before undertaking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may request and conclusively rely upon an Officers' Certificate as to factual
matters which, upon receipt of such request, shall be promptly delivered by the
Sponsor or the Administrators;
(e) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Institutional Trustee may consult with counsel of its
selection (which counsel may be counsel to the Sponsor or any of its Affiliates)
and the advice of such counsel shall be
17
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon and in
accordance with such advice; the Institutional Trustee shall have the right at
any time to seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(g) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any of the Holders pursuant to this Declaration, unless
such Holders shall have offered to the Institutional Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction; provided, that nothing contained in this Section 2.10(g) shall be
taken to relieve the Institutional Trustee, subject to Section 2.9(b), upon the
occurrence of an Event of Default (that has not been cured or waived pursuant to
Section 6.7), of the power to exercise such of the rights and powers vested in
it by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs;
(h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Institutional Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(i) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys and the Institutional Trustee shall not be
responsible for any misconduct or negligence on the part of or for the
supervision of, any such agent or attorney appointed with due care by it
hereunder;
(j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder
the Institutional Trustee (i) may request instructions from the Holders of the
Capital Securities which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Capital Securities as would be
entitled to direct the Institutional Trustee under the terms of the Capital
Securities in respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions;
(k) except as otherwise expressly provided in this Declaration,
the Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration;
(l) when the Institutional Trustee incurs expenses or renders
services in connection with a Bankruptcy Event, such expenses (including the
fees and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law or
law relating to creditors rights generally;
18
(m) the Institutional Trustee shall not be charged with knowledge
of an Event of Default unless a Responsible Officer of the Institutional Trustee
obtains actual knowledge of such event or the Institutional Trustee receives
written notice of such event from any Holder, the Sponsor or the Debenture
Trustee;
(n) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action; and
(o) no provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
SECTION 2.11. EXECUTION OF DOCUMENTS. Unless otherwise determined in
writing by the Institutional Trustee, and except as otherwise required by the
Statutory Trust Act, the Institutional Trustee, or any one or more of the
Administrators, as the case may be, is authorized to execute on behalf of the
Trust any documents that the Institutional Trustee or the Administrators, as the
case may be, have the power and authority to execute pursuant to Section 2.6.
SECTION 2.12. 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 Institutional Trustee does not assume any
responsibility for their correctness. The Institutional Trustee makes no
representations as to the value or condition of the property of the Trust or any
part thereof. The Institutional Trustee makes no representations as to the
validity or sufficiency of this Declaration, the Debentures or the Securities.
SECTION 2.13. DURATION OF TRUST. The Trust, unless earlier dissolved
pursuant to the provisions of Article VII hereof, shall be in existence for 35
years from the Closing Date.
SECTION 2.14. MERGERS.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Sections 2.14(b) and (c) and except in connection with the
liquidation of the Trust and the distribution of the Debentures to Holders of
Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 4 of
Annex I.
(b) The Trust may, with the consent of the Institutional Trustee
and without the consent of the Holders of the Capital Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state; provided that:
19
(i) if the Trust is not the surviving entity,
such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the
obligations of the Trust under the Securities; or
(B) substitutes for the Securities
other securities having substantially the same terms as the
Securities (the "Successor Securities") so that the Successor
Securities rank the same as the Securities rank with respect
to Distributions and payments upon Liquidation, redemption and
otherwise;
(ii) the Sponsor expressly appoints a trustee of
the Successor Entity that possesses substantially the same powers and
duties as the Institutional Trustee as the Holder of the Debentures;
(iii) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any Successor
Securities) in any material respect;
(iv) the Institutional Trustee receives written
confirmation from a nationally recognized statistical rating
organization that rates securities issued by the initial purchaser of
the Capital Securities that it will not reduce or withdraw the rating
of any such securities because of such merger, conversion,
consolidation, amalgamation or replacement;
(v) such Successor Entity has a purpose
substantially identical to that of the Trust;
(vi) prior to such merger, consolidation,
amalgamation or replacement, the Trust has received an opinion of a
nationally recognized independent counsel to the Trust experienced in
such matters to the effect that:
(A) such merger, consolidation,
amalgamation or replacement does not adversely affect the
rights, preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any
material respect;
(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 continue to be classified as a "grantor
trust" for United States federal income tax purposes;
(vii) the Sponsor guarantees the obligations of
such Successor Entity under the Successor Securities at least to the
extent provided by the Guarantee;
20
(viii) the Sponsor owns 100% of the common
securities of any Successor Entity; and
(ix) prior to such merger, consolidation,
amalgamation or replacement, the Institutional Trustee shall have
received an Officers' Certificate of the Administrators and an opinion
of counsel, each to the effect that all conditions precedent under this
Section 2.14(b) to such transaction have been satisfied.
(c) Notwithstanding Section 2.14(b), the Trust shall not, except
with the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by 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.
ARTICLE III.
SPONSOR
SECTION 3.1. SPONSOR'S PURCHASE OF COMMON SECURITIES. On the Closing
Date, the Sponsor will purchase all of the Common Securities issued by the Trust
in an amount at least equal to 3% of the capital of the Trust, at the same time
as the Capital Securities are sold.
SECTION 3.2. RESPONSIBILITIES OF THE SPONSOR. In connection with the
issue and sale of the Capital Securities, the Sponsor shall have the exclusive
right and responsibility to engage in, or direct the Administrators to engage
in, the following activities:
(a) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States; and
(b) to negotiate the terms of and/or execute on behalf of the
Trust, the Placement Agreement and other related agreements providing for the
sale of the Capital Securities.
SECTION 3.3. EXPENSES. In connection with the offering, sale and
issuance of the Debentures to the Trust and in connection with the sale of the
Securities by the Trust, the Sponsor, in its capacity as Debenture Issuer,
shall:
(a) pay all reasonable costs and expenses relating to the
offering, sale and issuance of the Debentures, including compensation of the
Debenture Trustee under the Indenture in accordance with the provisions of the
Indenture;
(b) be responsible for and shall pay all debts and obligations
(other than with respect to the Securities) and all costs and expenses of the
Trust (including, but not limited to, costs and expenses relating to the
organization, maintenance and dissolution of the Trust), the offering, sale and
issuance of the Securities (including fees to the placement agents in connection
21
therewith), the fees and expenses (including reasonable counsel fees and
expenses) of the Institutional Trustee and the Administrators, the costs and
expenses relating to the operation of the Trust, including, without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, Paying Agents, Registrars, Transfer Agents, duplicating, travel and
telephone and other telecommunications expenses and costs and expenses incurred
in connection with the acquisition, financing, and disposition of Trust assets
and the enforcement by the Institutional Trustee of the rights of the Holders;
and
(c) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
The Sponsor's obligations under this Section 3.3 shall be for the
benefit of, and shall be enforceable by, any Person to whom such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 3.3 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements as
may be necessary or desirable in order to give full effect to the provisions of
this Section 3.3.
SECTION 3.4. RIGHT TO PROCEED. The Sponsor acknowledges the rights of
Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.
ARTICLE IV.
INSTITUTIONAL TRUSTEE AND ADMINISTRATORS
SECTION 4.1. INSTITUTIONAL TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Institutional Trustee which
shall:
(i) not be an Affiliate of the Sponsor;
(ii) not offer or provide credit or credit
enhancement to the Trust; and
(iii) be a banking corporation or trust company
organized and doing business under the laws of the United States of
America or any state thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars
($50,000,000.00), and subject to supervision or examination by Federal,
state, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to
above, then for the purposes of this Section 4.1(a)(iii), 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.
22
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 4.1(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
4.3(a).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act of 1939, as amended, the Institutional Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to this Declaration.
(d) The initial Institutional Trustee shall be U.S. Bank National
Association.
SECTION 4.2. ADMINISTRATORS. Each Administrator shall be a U.S. Person,
21 years of age or older and authorized to bind the Sponsor. The initial
Administrators shall be William B. Cheeseman and Frank H. Freund. There shall at
all times be at least one Administrator. Except where a requirement for action
by a specific number of Administrators is expressly set forth in this
Declaration and except with respect to any action the taking of which is the
subject of a meeting of the Administrators, any action required or permitted to
be taken by the Administrators may be taken by, and any power of the
Administrators may be exercised by, or with the consent of, any one such
Administrator.
SECTION 4.3. APPOINTMENT, REMOVAL AND RESIGNATION OF INSTITUTIONAL
TRUSTEE AND ADMINISTRATORS.
(a) Notwithstanding anything to the contrary in this Declaration,
no resignation or removal of the Institutional Trustee and no appointment of a
Successor Institutional Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the Successor Institutional Trustee in
accordance with the applicable requirements of this Section 4.3.
Subject to the immediately preceding paragraph, the Institutional
Trustee may resign at any time by giving written notice thereof to the Holders
of the Securities and by appointing a Successor Institutional Trustee. Upon the
resignation of the Institutional Trustee, the Institutional Trustee shall
appoint a successor by requesting from at least three Persons meeting the
eligibility requirements its expenses and charges to serve as the successor
Institutional Trustee on a form provided by the Administrators, and selecting
the Person who agrees to the lowest expense and charges (the "Successor
Institutional Trustee"). If the instrument of acceptance by the Successor
Institutional Trustee required by this Section 4.3 shall not have been delivered
to the Institutional Trustee within 60 days after the giving of such notice of
resignation or delivery of the instrument of removal, the Institutional Trustee
may petition, at the expense of the Trust, any Federal, state or District of
Columbia court of competent jurisdiction for the appointment of a Successor
Institutional Trustee. Such court may thereupon, after prescribing such notice,
if any, as it may deem proper, appoint a Successor Institutional Trustee. The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section 4.3.
The Institutional Trustee may be removed by the act of the Holders of a
Majority in liquidation amount of the Capital Securities, delivered to the
Institutional Trustee (in its
23
individual capacity and on behalf of the Trust) if an Event of Default shall
have occurred and be continuing. If the Institutional Trustee shall be so
removed, the Holders of Capital Securities, by act of the Holders of a Majority
in liquidation amount of the Capital Securities then outstanding delivered to
the Institutional Trustee, shall promptly appoint a Successor Institutional
Trustee, and such Successor Institutional Trustee shall comply with the
applicable requirements of this Section 4.3. If no Successor Institutional
Trustee shall have been so appointed by the Holders of a Majority in liquidation
amount of the Capital Securities and accepted appointment in the manner required
by this Section 4.3, within 30 days after delivery of an instrument of removal,
any Holder who has been a Holder of the Securities for at least 6 months may, on
behalf of himself and all others similarly situated, petition any Federal, state
or District of Columbia court of competent jurisdiction for the appointment of
the Successor Institutional Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Institutional
Trustee.
The Institutional Trustee shall give notice of its resignation and
removal and each appointment of a Successor Institutional Trustee to all Holders
in the manner provided in Section 13.1(d) and shall give notice to the Sponsor.
Each notice shall include the name of the Successor Institutional Trustee and
the address of its Corporate Trust Office.
(b) In case of the appointment hereunder of a Successor
Institutional Trustee, the retiring Institutional Trustee and the Successor
Institutional Trustee shall execute and deliver an amendment hereto wherein the
Successor Institutional Trustee shall accept such appointment and which (i)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, the Successor Institutional Trustee all the rights,
powers, trusts and duties of the retiring Institutional Trustee with respect to
the Securities and the Trust and (ii) shall add to or change any of the
provisions of this Declaration as shall be necessary to provide for or
facilitate the administration of the Trust by more than one Institutional
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Institutional Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring
Institutional Trustee shall become effective to the extent provided therein and
each Successor Institutional Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Institutional Trustee; but, on request of the Trust or any
Successor Institutional Trustee such retiring Institutional Trustee shall duly
assign, transfer and deliver to such Successor Institutional Trustee all Trust
Property, all proceeds thereof and money held by such retiring Institutional
Trustee hereunder with respect to the Securities and the Trust.
(c) No Institutional Trustee shall be liable for the acts or
omissions to act of any Successor Institutional Trustee.
(d) The Holders of the Capital Securities will have no right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Holder of the Common Securities.
SECTION 4.4. INSTITUTIONAL TRUSTEE VACANCIES. If the Institutional
Trustee ceases to hold office for any reason a vacancy shall occur. A resolution
certifying the existence of such
24
vacancy by the Institutional Trustee shall be conclusive evidence of the
existence of such vacancy. The vacancy shall be filled with a trustee appointed
in accordance with Section 4.3.
SECTION 4.5. EFFECT OF VACANCIES. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of the Institutional Trustee shall not operate to dissolve,
terminate or annul the Trust or terminate this Declaration.
SECTION 4.6. MEETINGS OF THE INSTITUTIONAL TRUSTEE AND THE
ADMINISTRATORS. Meetings of the Administrators shall be held from time to time
upon the call of an Administrator. Regular meetings of the Administrators may be
held in person in the United States or by telephone, at a place (if applicable)
and time fixed by resolution of the Administrators. Notice of any in-person
meetings of the Institutional Trustee with the Administrators or meetings of the
Administrators shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the
Institutional Trustee with the Administrators or meetings of the Administrators
or any committee thereof shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier) not less
than 24 hours before a meeting. Notices shall contain a brief statement of the
time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of the Institutional Trustee or an Administrator, as the
case may be, at a meeting shall constitute a waiver of notice of such meeting
except where the Institutional Trustee or an Administrator, as the case may be,
attends a meeting for the express purpose of objecting to the transaction of any
activity on the grounds that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Institutional Trustee or the Administrators, as the case may be, may be taken at
a meeting by vote of the Institutional Trustee or a majority vote of the
Administrators 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 Institutional Trustee or the
Administrators. Meetings of the Institutional Trustee and the Administrators
together shall be held from time to time upon the call of the Institutional
Trustee or an Administrator.
SECTION 4.7. DELEGATION OF POWER.
(a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 that is
a U.S. Person his or her power for the purpose of executing any documents
contemplated in Section 2.6; and
(b) the Administrators shall have power to delegate from time to
time to such of their number the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Administrators
or otherwise as the Administrators may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
SECTION 4.8. CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any
Person into which the Institutional Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the
25
Institutional Trustee shall be a party, or any Person succeeding to all or
substantially all the corporate trust business of the Institutional Trustee
shall be the successor of the Institutional Trustee hereunder, provided such
Person shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE V.
DISTRIBUTIONS
SECTION 5.1. DISTRIBUTIONS. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of Interest or any
principal on the Debentures held by the Institutional Trustee, the Institutional
Trustee shall and is directed to, to the extent funds are available for that
purpose, make a distribution (a "Distribution") of such amounts to Holders.
ARTICLE VI.
ISSUANCE OF SECURITIES
SECTION 6.1. GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Administrators shall, on behalf of the Trust, issue one
series of capital securities substantially in the form of Exhibit A-1
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I and one series of common securities
representing undivided beneficial interests in the assets of the Trust having
such 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 Capital Securities and
the Common Securities. The Capital Securities rank pari passu to, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default has occurred and is continuing, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities as set forth in Annex I.
(b) The Certificates shall be signed on behalf of the Trust by one
or more Administrators. Such signature shall be the facsimile or manual
signature of any Administrator. In case any Administrator of the Trust who shall
have signed any of the Securities shall cease to be such Administrator before
the Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Administrator, and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be an Administrator of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not such an
Administrator. A Capital Security shall not be valid until authenticated by the
facsimile or manual signature of an Authorized Officer of the Institutional
Trustee. Such signature shall be conclusive evidence that the Capital Security
has been authenticated under this
26
Declaration. Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate the Capital Securities for original
issue. The Institutional Trustee may appoint an authenticating agent that is a
U.S. Person acceptable to the Trust to authenticate the Capital Securities. A
Common Security need not be so authenticated.
(c) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and, except as provided in Section 9.1(b) with respect to the Common
Securities, non-assessable.
(e) Every Person, by virtue of having become a Holder in
accordance with the terms of this Declaration, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by, this Declaration and
the Guarantee.
SECTION 6.2. PAYING AGENT, TRANSFER AGENT AND REGISTRAR. The Trust
shall maintain in Hartford, Connecticut, an office or agency where the Capital
Securities may be presented for payment ("Paying Agent"), and an office or
agency where Securities may be presented for registration of transfer or
exchange (the "Transfer Agent"). The Trust shall keep or cause to be kept at
such office or agency a register for the purpose of registering Securities,
transfers and exchanges of Securities, such register to be held by a registrar
(the "Registrar"). The Administrators may appoint the Paying Agent, the
Registrar and the Transfer Agent and may appoint one or more additional Paying
Agents or one or more co-Registrars, or one or more co-Transfer Agents in such
other locations as they shall determine. The term "Paying Agent" includes any
additional paying agent, the term "Registrar" includes any additional registrar
or co-Registrar and the term "Transfer Agent" includes any additional transfer
agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Paying Agent, Transfer Agent and Registrar for the Capital Securities and the
Common Securities. The Institutional Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.
SECTION 6.3. FORM AND DATING. The Capital Securities and the
Institutional Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit A-1, and the Common Securities shall be
substantially in the form of Exhibit A-2, each of which is hereby incorporated
in and expressly made a part of this Declaration. Certificates may be typed,
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators, as conclusively evidenced by their
execution thereof. The Securities may have letters, numbers, notations or other
marks of identification or designation and such legends or endorsements required
by law, stock exchange rule, agreements to which the Trust is subject if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Sponsor). The Trust at the direction of the Sponsor shall
furnish any such legend not contained in Exhibit A-1 to the Institutional
Trustee in writing. Each Capital Security shall be dated on or before the date
of its authentication. The terms and provisions of the Securities set
27
forth in Annex I and the forms of Securities set forth in Exhibits A-1 and A-2
are part of the terms of this Declaration and to the extent applicable, the
Institutional Trustee, the Administrators and the Sponsor, by their execution
and delivery of this Declaration, expressly agree to such terms and provisions
and to be bound thereby. Capital Securities will be issued only in blocks having
a stated liquidation amount of not less than $100,000.00 and any multiple of
$1,000.00 in excess thereof.
The Capital Securities are being offered and sold by the Trust pursuant
to the Placement Agreement in definitive, registered form without coupons and
with the Restricted Securities Legend.
SECTION 6.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If:
(a) any mutilated Certificates should be surrendered to the
Registrar, or if the Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Registrar, the Administrators
and the Institutional Trustee such security or indemnity as may be required by
them to keep each of them harmless;
then, in the absence of notice that such Certificate shall have been acquired by
a protected purchaser, an Administrator on behalf of the Trust shall execute
(and in the case of a Capital Security Certificate, the Institutional Trustee
shall authenticate) and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 6.4, the Registrar or the Administrators may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 6.5. TEMPORARY SECURITIES. Until definitive Securities are
ready for delivery, the Administrators may prepare and, in the case of the
Capital Securities, the Institutional Trustee shall authenticate, temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Administrators consider
appropriate for temporary Securities. Without unreasonable delay, the
Administrators shall prepare and, in the case of the Capital Securities, the
Institutional Trustee shall authenticate, definitive Securities in exchange for
temporary Securities.
SECTION 6.6. CANCELLATION. The Administrators at any time may deliver
Securities to the Institutional Trustee for cancellation. The Registrar shall
forward to the Institutional Trustee any Securities surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly cancel all Securities surrendered for registration of transfer,
payment, replacement or cancellation and shall dispose of such canceled
Securities as the Administrators direct. The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.
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SECTION 6.7. RIGHTS OF HOLDERS; WAIVERS OF PAST DEFAULTS.
(a) The legal title to the Trust Property is vested exclusively in
the Institutional Trustee (in its capacity as such) in accordance with Section
2.5, and the Holders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Trust except as described below. The
Securities shall be personal property giving only the rights specifically set
forth therein and in this Declaration. The Securities shall have no preemptive
or similar rights.
(b) For so long as any Capital Securities remain outstanding, if
upon an Indenture Event of Default, the Debenture Trustee fails or the holders
of not less than 25% in principal amount of the outstanding Debentures fail to
declare the principal of all of the Debentures to be immediately due and
payable, the Holders of a Majority in liquidation amount of the Capital
Securities then outstanding shall have the right to make such declaration by a
notice in writing to the Institutional Trustee, the Sponsor and the Debenture
Trustee.
At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Institutional Trustee, subject to the provisions hereof, fails
to annul any such declaration and waive such default, the Holders of a Majority
in liquidation amount of the Capital Securities, by written notice to the
Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and
annul such declaration and its consequences if:
(i) the Debenture Issuer has paid or deposited
with the Debenture Trustee a sum sufficient to pay
(A) all overdue installments of
interest on all of the Debentures,
(B) any accrued Additional Interest on
all of the Debentures,
(C) the principal of (and premium, if
any, on) any Debentures that have become due otherwise than by
such declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Debentures, and
(D) all sums paid or advanced by the
Debenture Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the
Debenture Trustee and the Institutional Trustee, their agents
and counsel; and
(ii) all Events of Default with respect to the
Debentures, other than the non-payment of the principal of the
Debentures that has become due solely by such acceleration, have been
cured or waived as provided in Section 5.7 of the Indenture.
The Holders of at least a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture or any Indenture Event of Default, except a
default or Indenture Event of Default in the payment of
29
principal or interest (unless such default or Indenture Event of Default has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default under the Indenture or an Indenture Event of
Default in respect of a covenant or provision that under the Indenture cannot be
modified or amended without the consent of the holder of each outstanding
Debenture. No such waiver shall affect any subsequent default or impair any
right consequent thereon.
Upon receipt by the Institutional Trustee of written notice declaring
such an acceleration, or rescission and annulment thereof, by Holders of any
part of the Capital Securities, a record date shall be established for
determining Holders of outstanding Capital Securities entitled to join in such
notice, which record date shall be at the close of business on the day the
Institutional Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to join
in such notice, whether or not such Holders remain Holders after such record
date; provided, that unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 6.7.
(c) Except as otherwise provided in paragraphs (a) and (b) of this
Section 6.7, the Holders of at least a Majority in liquidation amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon.
ARTICLE VII.
DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1. DISSOLUTION AND TERMINATION OF TRUST.
(a) The Trust shall dissolve on the first to occur of:
(i) unless earlier dissolved, on October 29,
2038, the expiration of the term of the Trust;
(ii) upon a Bankruptcy Event with respect to the
Sponsor, the Trust or the Debenture Issuer;
(iii) (other than in connection with a merger,
consolidation or similar transaction not prohibited by the Indenture,
this Declaration or the Guarantee, as the case
30
may be) upon (A)the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, and (B)(I) upon the consent of
Holders of a Majority in liquidation amount of the Securities voting
together as a single class to file a certificate of cancellation with
respect to the Trust or (II) upon the revocation of the charter of the
Sponsor and the expiration of 90 days after the date of revocation
without a reinstatement thereof;
(iv) upon the distribution of the Debentures to
the Holders of the Securities, upon exercise of the right of the Holder
of all of the outstanding Common Securities to dissolve the Trust as
provided in Annex I hereto;
(v) upon the entry of a decree of judicial
dissolution of the Holder of the Common Securities, the Sponsor, the
Trust or the Debenture Issuer;
(vi) when all of the Securities shall have been
called for redemption and the amounts necessary for redemption thereof
shall have been paid to the Holders in accordance with the terms of the
Securities; or
(vii) before the issuance of any Securities, with
the consent of the Institutional Trustee and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 7.1(a), and after satisfaction of liabilities to
creditors of the Trust as required by applicable law, including of the Statutory
Trust Act, and subject to the terms set forth in Annex I, the Institutional
Trustee shall terminate the Trust by filing a certificate of cancellation with
the Secretary of the State of the State of Connecticut.
(c) The provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.
ARTICLE VIII.
TRANSFER OF INTERESTS
SECTION 8.1. GENERAL.
(a) Subject to Section 8.1(c), where Capital Securities 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 Capital 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 transfer and exchanges, the Trust shall issue and the
Institutional Trustee shall authenticate Capital Securities at the Registrar's
request.
(b) Upon issuance of the Common Securities, the Sponsor shall
acquire and retain beneficial and record ownership of the Common Securities and
for so long as the Securities remain outstanding, the Sponsor shall maintain
100% ownership of the Common Securities; provided, however, that any permitted
successor of the Sponsor, in its capacity as Debenture Issuer, under the
Indenture that is a U.S. Person may succeed to the Sponsor's ownership of the
Common Securities.
31
(c) Capital Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. To the fullest extent permitted by
applicable law, any transfer or purported transfer of any Security not made in
accordance with this Declaration shall be null and void and will be deemed to be
of no legal effect whatsoever and any such transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
(d) The Registrar shall provide for the registration of Securities
and of transfers of Securities, which will be effected without charge but only
upon payment (with such indemnity as the Registrar may 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 Securities, the Registrar
shall cause one or more new Securities of the same tenor to be issued in the
name of the designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Institutional Trustee pursuant
to Section 6.6. A transferee of a Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Security. By acceptance of a Security, 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 any Securities during a period beginning at the opening
of business 15 days before the day of any selection of Securities for redemption
and ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 8.2. TRANSFER PROCEDURES AND RESTRICTIONS.
(a) The Capital Securities shall bear the Restricted Securities
Legend, which shall not be removed unless there is delivered to the Trust such
satisfactory evidence, which may include an opinion of counsel satisfactory to
the Institutional Trustee, as may be reasonably required by the Trust, that
neither the legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof comply with the provisions of the
Securities Act. Upon provision of such satisfactory evidence, the Institutional
Trustee, at the written direction of the Trust, shall authenticate and deliver
Capital Securities that do not bear the legend.
(b) Except as permitted by Section 8.2(a), each Capital Security
shall bear a legend (the "Restricted Securities Legend") in substantially the
following form and a Capital Security shall not be transferred except in
compliance with such legend, unless otherwise determined by the Sponsor, upon
the advice of counsel expert in securities law, in accordance with applicable
law:
32
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY
BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A
NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903
OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH
MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS
INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN
33
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY
PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS"
OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE
EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT
PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH
RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED
BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A
PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR
OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR
ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT
PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT
RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100
SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS
THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH
THE FOREGOING RESTRICTIONS.
THIS SECURITY IS IN REGISTERED FORM WITHIN THE MEANING OF
TREASURY REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME
AND WITHHOLDING TAX PURPOSES.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS MAY BE REQUIRED BY THE DECLARATION TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
(c) To permit registrations of transfers and exchanges, the Trust
shall execute and the Institutional Trustee shall authenticate Capital
Securities at the Registrar's request.
34
(d) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Registrar or
the Sponsor may require) in respect of any tax or other governmental charge that
may be imposed in relation to it.
(e) All Capital Securities issued upon any registration of
transfer or exchange pursuant to the terms of this Declaration shall evidence
the same security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such registration of
transfer or exchange.
SECTION 8.3. DEEMED SECURITY HOLDERS. The Trust, the Administrators,
the Institutional Trustee, the Paying Agent, the Transfer Agent or the Registrar
may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Institutional
Trustee, the Paying Agent, the Transfer Agent or the Registrar shall have actual
or other notice thereof
ARTICLE IX.
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS
SECTION 9.1. LIABILITY.
(a) Except as expressly set forth in this Declaration, the
Guarantee and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any
portion of the capital contributions (or any return thereon) of the
Holders of the Securities which shall be made solely from assets of the
Trust; or
(ii) required to pay to the Trust or to any
Holder of the Securities any deficit upon dissolution of the Trust or
otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to the Statutory Trust Act, the Holders of the
Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Connecticut.
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
35
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 negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care by or on
behalf of the Trust, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.
SECTION 9.3. FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of the Indemnified
Person.
(b) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of
similar authority, the Indemnified Person shall be entitled to consider
such interests and factors as it desires, including its own interests,
and shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 9.4. INDEMNIFICATION.
(a) The Sponsor shall indemnify, to the full extent permitted by
law, any Indemnified Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) arising out of or in connection with the
acceptance or administration of this Declaration by reason of the fact that he
is or was an Indemnified Person against expenses (including reasonable
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
36
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 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.
(b) The Sponsor shall indemnify, to the full extent permitted by
law, any Indemnified Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Trust to procure a judgment in its favor arising out of or in connection
with the acceptance or administration of this Declaration by reason of the fact
that he is or was an Indemnified Person against expenses (including reasonable
attorneys' fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust; provided, however, that no such indemnification
shall be made in respect of any claim, issue or matter as to which such
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the court 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 shall deem proper.
(c) To the extent that an Indemnified Person shall be successful
on the merits or otherwise (including dismissal of an action without prejudice
or the settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this Section
9.4, 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 and expenses) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification of an Administrator under paragraphs (a)
and (b) of this Section 9.4 (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination that
indemnification of the Indemnified Person is proper in the circumstances because
he has met the applicable standard of conduct set forth in paragraphs (a) and
(b). Such determination shall be made (i) by the Administrators by a majority
vote of a Quorum consisting of such Administrators who were not parties to such
action, suit or proceeding, (ii) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion, or (iii) by the Common Security
Holder of the Trust.
(e) To the fullest extent permitted by law, expenses (including
reasonable attorneys' fees and expenses) incurred by an Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in paragraphs (a) and (b) of this Section 9.4 shall be
paid by the Sponsor in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Indemnified
Person to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Sponsor as authorized in this Section 9.4.
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the
37
Administrators by a majority vote of a Quorum of disinterested Administrators,
(ii) if such a Quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Administrators so directs, by independent legal counsel in a
written opinion, or (iii) by the Common Security Holder of the Trust, that,
based upon the facts known to the Administrators, counsel or the Common Security
Holder at the time such determination is made, such Indemnified Person acted in
bad faith or in a manner that such Indemnified Person did not believe to be in
the best interests of the Trust, or, with respect to any criminal proceeding,
that such Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in instances where
the Administrators, independent legal counsel or the Common Security Holder
reasonably determine that such Indemnified Person deliberately breached his duty
to the Trust or its Common or Capital Security Holders.
(f) The Institutional Trustee, at the sole cost and expense of the
Sponsor, retains the right to representation by counsel of its own choosing in
any action, suit or any other proceeding for which it is indemnified under
paragraphs (a) and (b) of this Section 9.4, without affecting its right to
indemnification hereunder or waiving any rights afforded to it under this
Declaration or applicable law.
(g) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 9.4 shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 9.4 shall be deemed to be provided by a
contract between the Sponsor and each Indemnified Person who serves in such
capacity at any time while this Section 9.4 is in effect. Any repeal or
modification of this Section 9.4 shall not affect any rights or obligations then
existing.
(h) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any Person who is or was an Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this
Section 9.4.
(i) For purposes of this Section 9.4, references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4 with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(j) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 9.4 shall, unless otherwise provided when
authorized or ratified, (i) continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the
38
benefit of the heirs, executors and administrators of such a Person, and (ii)
survive the termination or expiration of this Declaration or the earlier removal
or resignation of an Indemnified Person.
SECTION 9.5. OUTSIDE BUSINESSES. Any Covered Person, the Sponsor and
the Institutional 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. None of any Covered Person, the Sponsor or
the Institutional Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor and the Institutional Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person and the Institutional Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
or may act as depositary for, trustee or agent for, or act on any committee or
body of holders of, securities or other obligations of the Sponsor or its
Affiliates.
SECTION 9.6. COMPENSATION; FEE. The Sponsor agrees:
(a) to pay to the Institutional Trustee from time to time such
compensation for all services rendered by it hereunder as the parties shall
agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and
(b) except as otherwise expressly provided herein, to reimburse
the Institutional Trustee upon request for all reasonable expenses,
disbursements and advances incurred or made by the Institutional Trustee in
accordance with any provision of this Declaration (including the reasonable
compensation and the expenses and disbursements of their respective agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence, bad faith or willful misconduct.
The provisions of this Section 9.6 shall survive the dissolution of the
Trust and the termination of this Declaration and the removal or resignation of
the Institutional Trustee.
No Trustee may claim any lien or charge on any property of the Trust as
a result of any amount due pursuant to this Section 9.6.
ARTICLE X.
TAX AND 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.
39
SECTION 10.2. CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the
Administrators shall keep, or cause to be kept at the principal office of the
Trust in the United States, as defined for purposes of Treasury Regulations
Section 301.7701-7, full books of account, records and supporting documents,
which shall reflect in reasonable detail each transaction of the Trust. The
books of account shall be maintained, at the Sponsor's expense, in accordance
with generally accepted accounting principles, consistently applied. The books
of account and the records of the Trust shall be examined by and reported upon
(either separately or as part of the Sponsor's regularly prepared consolidated
financial report) as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrators.
(b) The Administrators shall cause to be duly prepared and
delivered to each of the Holders of Securities all annual United States federal
income tax information statements required by the Code, if any, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Administrators shall endeavor
to deliver all such statements within 30 days after the end of each Fiscal Year
of the Trust.
(c) The Administrators, at the Sponsor's expense, shall cause to
be duly prepared at the principal office of the Sponsor in the United States, as
`United States' is defined in Section 7701(a)(9) of the Code (or at the
principal office of the Trust if the Sponsor has no such principal office in the
United States), and filed an annual United States federal income tax return on a
Form 1041 or such other form required by United States federal income tax law,
if any, and any other annual income tax returns required to be filed by the
Administrators on behalf of the Trust with any state or local taxing authority.
SECTION 10.3. BANKING. The Trust shall maintain in the United States,
as defined for purposes of Treasury Regulations Section 301.7701-7, 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
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.
SECTION 10.4. WITHHOLDING. The Institutional Trustee or any Paying
Agent and the Administrators shall comply with all withholding requirements
under United States federal, state and local law. The Institutional Trustee or
any Paying Agent shall request, and each Holder shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the Holder,
and any representations and forms as shall reasonably be requested by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling, its withholding obligations. The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall
40
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 Institutional
Trustee or any Paying Agent may reduce subsequent Distributions by the amount of
such withholding.
SECTION 10.5. 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.
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 the Institutional Trustee.
(b) Notwithstanding any other provision of this Article XI, an
amendment may be made, and any such purported amendment shall be valid and
effective only if:
(i) the Institutional Trustee shall have first
received:
(A) an Officers' Certificate from each
of the Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (who may be
counsel to the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(ii) the result of such amendment would not be to
(A) cause the Trust to cease to be
classified for purposes of United States federal income
taxation as a grantor trust; or
(B) cause the Trust to be deemed to be
an Investment Company required to be registered under the
Investment Company Act.
(c) Except as provided in Section 11.1(d), (e) or (h), no
amendment shall be made, and any such purported amendment shall be void and
ineffective, unless the Holders of a Majority in liquidation amount of the
Capital Securities shall have consented to such amendment.
(d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the
41
amount or timing of any Distribution on the Securities or otherwise adversely
affect the amount of any Distribution required to be made in respect of the
Securities as of a specified date or change any conversion or exchange
provisions, or (ii) restrict the right of a Holder to institute suit for the
enforcement of any such payment on or after such date.
(e) Sections 9.1(b) and 9.1(c) and this Section 11.1 shall not be
amended without the consent of all of the Holders of the Securities.
(f) Except as provided in Section 11.1(d), (e) or (g), no
amendment shall be made, and any such purported amendment shall be void and
ineffective, unless the Holders of a Majority in liquidation amount of the
Common Securities shall have consented to such amendment.
(g) The rights of the Holders of the Capital Securities under
Article IV to appoint and remove the Institutional Trustee shall not be amended
without the consent of the Holders of a Majority in liquidation amount of the
Capital Securities.
(h) This Declaration may be amended by the Institutional Trustee
and the Holders of a Majority in liquidation amount of the Common Securities
without the consent of the Holders of the Capital Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or
obligations of the Sponsor; or
(iv) modify, eliminate or add to any provision of
this Declaration to such extent as may be necessary to ensure that the
Trust will be classified for United States federal income tax purposes
at all times as a grantor trust and will not be required to register as
an "investment company" under the Investment Company Act (including
without limitation to conform to any change in Rule 3a-5, Rule 3a-7 or
any other applicable rule under the Investment Company Act or written
change in interpretation or application thereof by any legislative
body, court, government agency or regulatory authority) which amendment
does not have a material adverse effect on the rights, preferences or
privileges of the Holders of Securities;
provided, however, that no such modification, elimination or addition
referred to in clauses (i), (ii), (iii) or (iv) shall adversely affect in any
material respect the powers, preferences or special rights of Holders of Capital
Securities.
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 Administrators (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration or the terms
of the Securities. The Administrators shall call a meeting of the Holders
42
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 Administrators one or more calls in a writing stating that the signing
Holders of the Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders of the
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of the Securities exercising the right to call a meeting and only
those Securities represented by such Certificates shall be counted for purposes
of determining whether the required percentage set forth in the second sentence
of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of the
Securities:
(i) notice of any such meeting shall be given to
all the Holders of the Securities having a right to vote thereat at
least 7 days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of the Securities
is permitted or required under this Declaration, such vote, consent or
approval may be given at a meeting of the Holders of the Securities.
Any action that may be taken at a meeting of the Holders of the
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of the
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of the Securities having a
right to vote thereon were present and voting. Prompt notice of the
taking of action without a meeting shall be given to the Holders of the
Securities entitled to vote who have not consented in writing. The
Administrators may specify that any written ballot submitted to the
Holders of the Securities for the purpose of taking any action without
a meeting shall be returned to the Trust within the time specified by
the Administrators;
(ii) each Holder of a Security may authorize any
Person to act for it by proxy on all matters in which a Holder of
Securities is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. No proxy shall be
valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the Holder of the Securities executing it. Except as
otherwise provided herein, all matters relating to the giving, voting
or validity of proxies shall be governed by the General Corporation Law
of the State of Connecticut relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Connecticut
corporation and the Holders of the Securities were stockholders of a
Connecticut corporation; each meeting of the Holders of the Securities
shall be conducted by the Administrators or by such other Person that
the Administrators may designate; and
(iii) unless the Statutory Trust Act, this
Declaration, or the terms of the Securities otherwise provides, the
Administrators, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any matter
is to be voted on by any Holders of the Securities, waiver of any such
notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or
43
any other matter with respect to the exercise of any such right to
vote; provided, however, that each meeting shall be conducted in the
United States (as that term is defined in Treasury Regulations section
301.7701-7).
ARTICLE XII.
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE.
The initial Institutional Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Institutional
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Institutional Trustee's acceptance of its appointment as Institutional
Trustee, that:
(a) the Institutional Trustee is a national banking association
with trust powers, duly organized and validly existing under the laws of the
United States of America 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 Institutional
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of this Declaration by
the Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee of this
Declaration.
ARTICLE XIII.
MISCELLANEOUS
SECTION 13.1. NOTICES. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:
(a) if given to the Trust in care of the Administrators at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
44
American Physicians Capital Statutory Trust III
c/o American Physicians Capital, Inc.
1301 N. Hagadorn Road
East Lansing, Michigan 48823
Attention: Frank H. Freund
Telecopy: 517-351-7866
if given to the Institutional Trustee, at the Institutional Trustee's mailing
address set forth below (or such other address as the Institutional Trustee may
give notice of to the Holders of the Securities):
U.S. Bank National Association
225 Asylum Street, Goodwin Square
Hartford, Connecticut 06103
Attention: Vice President, Corporate Trust Services
Telecopy: 860-244-1889
With a copy to:
U.S. Bank National Association
1 Federal Street
Boston, Massachusetts 02110
Attention: Paul D. Allen, Corporate Trust Services
Telecopy: 617-603-6665
(b) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
American Physicians Capital, Inc.
1301 N. Hagadorn Road
East Lansing, Michigan 48823
Attention: Frank H. Freund
Telecopy: 517-351-7866
(c) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 13.2. GOVERNING LAW. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
law of the State of Connecticut and all rights and remedies shall be governed by
such laws without regard to the principles of conflict of laws of the State of
Connecticut or any other jurisdiction that would call for the application of
45
the law of any jurisdiction other than the State of Connecticut; provided,
however, that there shall not be applicable to the Trust, the Institutional
Trustee or this Declaration any provision of the laws (statutory or common) of
the State of Connecticut pertaining to trusts that relate to or regulate, in a
manner inconsistent with the terms hereof (a) the filing with any court or
governmental body or agency of trustee accounts or schedules of trustee fees and
charges, (b) affirmative requirements to post bonds for trustees, officers,
agents or employees of a trust, (c) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (d) fees or other sums payable to trustees, officers,
agents or employees of a trust, (e) the allocation of receipts and expenditures
to income or principal, or (f) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets.
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 Institutional Trustee shall bind and
inure to the benefit of their respective successors and assigns, whether or not
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 Institutional Trustee and
Administrators to any of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
Signatures appear on the following page
46
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
U.S. BANK NATIONAL ASSOCIATION,
AS INSTITUTIONAL TRUSTEE
By: /s/ Paul D. Allen
------------------------------------------
Name: Paul D. Allen
Title: Vice President
AMERICAN PHYSICIANS CAPITAL, INC., AS SPONSOR
By: /s/ Frank H. Freund
------------------------------------------
Name: Frank H. Freund
Title: Chief Financial Officer
AMERICAN PHYSICIANS CAPITAL
STATUTORY TRUST III
By: /s/ William B. Cheeseman
------------------------------------------
William B. Cheeseman
Administrator
By: /s/ Frank H. Freund
------------------------------------------
Frank H. Freund
Administrator
47
ANNEX I
TERMS OF SECURITIES
Pursuant to Section 6.1 of the Amended and Restated
Declaration of Trust, dated as of October 29, 2003 (as amended from time to
time, the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration):
1. Designation and Number.
(a) 20,000 Floating Rate Capital Securities of American
Physicians Capital Statutory Trust III (the "Trust"), with an aggregate stated
liquidation amount with respect to the assets of the Trust of twenty million
dollars ($20,000,000.00) and a stated liquidation amount with respect to the
assets of the Trust of $1,000.00 per Capital Security, are hereby designated for
the purposes of identification only as the "Capital Securities". The Capital
Security Certificates evidencing the Capital Securities shall be substantially
in the form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice.
(b) 619 Floating Rate Common Securities of the Trust (the
"Common Securities") will be evidenced by Common Security Certificates
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. Distributions.
(a) Distributions will be payable on each Security for
the period beginning on (and including) the date of original issuance and ending
on (but excluding) January 29, 2004 at a rate per annum of 5.010% and shall bear
interest for each successive period beginning on (and including) January 29,
2004, and each succeeding Distribution Payment Date, and ending on (but
excluding) the next succeeding Distribution Payment Date (each, a "Distribution
Period") at a rate per annum equal to the 3-Month LIBOR, determined as described
below, plus 3.850% (the "Coupon Rate"), applied to the stated liquidation amount
thereof, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears will bear interest
thereon compounded quarterly at the applicable Distribution Rate (to the extent
permitted by law). Distributions, as used herein, include cash distributions,
any such compounded distributions and any Additional Sums payable on the
Debentures unless otherwise noted. A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds available
therefor. In the event that any date on which a Distribution is payable on the
Securities is not a Business Day, then payment of the Distribution payable on
such date shall be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on the date such payment was originally
payable. The
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amount of the Distribution payable for any Distribution Period will be
calculated by applying the Distribution Rate to the stated liquidation amount
outstanding at the commencement of the Distribution Period and multiplying each
such amount by the actual number of days in the Distribution Period concerned
divided by 360. All percentages resulting from any calculations on the Capital
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
"3-Month LIBOR" means the London interbank offered interest rate for
three-month, U.S. dollar deposits determined by the Debenture Trustee in the
following order of priority:
(1) the rate (expressed as a percentage per annum) for
U.S. dollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date (as defined below). "Telerate Page 3750" means the
display designated as "Page 3750" on the Dow Jones Telerate Service or
such other page as may replace Page 3750 on that service or such other
service or services as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits;
(2) if such rate cannot be identified on the related
Determination Date, the Debenture Trustee will request the principal
London offices of four leading banks in the London interbank market to
provide such banks' offered quotations (expressed as percentages per
annum) to prime banks in the London interbank market for U.S. dollar
deposits having a three-month maturity as of 11:00 a.m. (London time)
on such Determination Date. If at least two quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations;
(3) if fewer than two such quotations are provided as
requested in clause (2) above, the Debenture Trustee will request four
major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations; and
(4) if fewer than two such quotations are provided as
requested in clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately
preceding such current Distribution Period.
If the rate for U.S. dollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date is superseded on the Telerate Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.
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The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.
"Determination Date" means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.
"Interest Rate" means for the period beginning on (and including) the
date of original issuance and ending on (but excluding) January 29, 2004 the
rate per annum of 5.010% and for each Distribution Period thereafter, the Coupon
Rate.
"Maturity Date" means October 29, 2033.
(b) Distributions on the Securities will be cumulative,
will accrue from the date of original issuance, and will be payable, subject to
extension of distribution payment periods as described herein, quarterly in
arrears on January 29, April 29, July 29 and October 29 of each year, commencing
on January 29, 2004 (each a "Distribution Payment Date") when, as and if
available for payment. The Debenture Issuer has the right under the Indenture to
defer payments of interest on the Debentures, so long as no Indenture Event of
Default has occurred and is continuing, by deferring the payment of interest on
the Debentures for up to 20 consecutive quarterly periods (each an "Extension
Period") at any time and from time to time, subject to the conditions described
below, during which Extension Period no interest shall be due and payable.
During any Extension Period, interest will continue to accrue on the Debentures,
and interest on such accrued interest will accrue at an annual rate equal to the
Distribution Rate in effect for each such Extension Period, compounded quarterly
(from the date such interest would have been payable were it not for the
Extension Period, to the extent permitted by law (such interest referred to
herein as "Additional Interest") during any Extension Period. No Extension
Period may end on a date other than a Distribution Payment Date. At the end of
any such Extension Period the Debenture Issuer shall pay all interest then
accrued and unpaid on the Debentures (together with Additional Interest
thereon); provided, however, that no Extension Period may extend beyond the
Maturity Date and provided further, however, that during any such Extension
Period, the Debenture Issuer shall not, and shall not permit any Affiliate of
the Debenture Issuer controlled by the Debenture Issuer to (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Debenture Issuer's or such
Affiliates' capital stock (other than payments of dividends or distributions to
the Debenture Issuer or a Subsidiary of the Debenture Issuer) or make any
guarantee payments with respect to the foregoing; or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Debenture Issuer or any Affiliate of the Debenture
Issuer controlled by the Debenture Issuer that rank pari passu in all respects
with or junior in interest to the Debentures (other than, with respect to
clauses (i) and (ii) above, (a) repurchases, redemptions or other acquisitions
of shares of capital stock of the Debenture Issuer or any Subsidiary of the
Debenture Issuer in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Debenture Issuer or of such Subsidiary (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the
I-3
applicable Extension Period, (b) as a result of any exchange or conversion of
any class or series of the Debenture Issuer's capital stock (or any capital
stock of a Subsidiary of the Debenture Issuer) for any class or series of the
Debenture Issuer's capital stock (or in the case of a Subsidiary of the
Debenture Issuer, any class or series of such Subsidiary's capital stock) or of
any class or series of the Debenture Issuer's indebtedness for any class or
series of the Debenture Issuer's capital stock (or in the case of indebtedness
of a Subsidiary of the Debenture Issuer, of any class or series of such
Subsidiary's indebtedness for any class or series of such Subsidiary's capital
stock), (c) the purchase of fractional interests in shares of the Debenture
Issuer's capital stock (or the capital stock of a Subsidiary of the Debenture
Issuer) pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, (d) any declaration of a dividend
in connection with any stockholders' rights plan, or the issuance of rights,
stock or other property under any stockholders' rights plan, or the redemption
or repurchase of rights pursuant thereto, (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock and any cash payments in lieu of fractional shares issued in
connection therewith, or (f) payments under the Capital Securities Guarantee).
Prior to the termination of any Extension Period, the Debenture Issuer may
further extend such period, provided that such period together with all such
previous and further consecutive extensions thereof shall not exceed 20
consecutive quarterly periods, or extend beyond the Maturity Date. Upon the
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and Additional Interest, the Debenture Issuer may commence a new
Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Securities shall be
deferred for a period equal to the Extension Period. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.
(c) Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. The relevant record dates shall be 15 days before the
relevant Distribution Payment Date. Distributions payable on any Securities that
are not punctually paid on any Distribution Payment Date, as a result of the
Debenture Issuer having failed to make a payment under the Debentures, as the
case may be, when due (taking into account any Extension Period), will cease to
be payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding
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day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such payment
date.
(d) In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. Liquidation Distribution Upon Dissolution. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each a "Liquidation") other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the lesser of (i) the
aggregate of the stated liquidation amount of $1,000.00 per Security plus
accrued and unpaid Distributions thereon to the date of payment, to the extent
the Trust shall have funds available therefor, and (ii) the amount of assets of
the Trust remaining available for contributions to Holders in liquidation of the
Trust (such amount being, the "Liquidation Distribution"), unless in connection
with such Liquidation, the Debentures in an aggregate stated principal amount
equal to the aggregate stated liquidation amount of such Securities, with an
interest rate equal to the Distribution Rate of, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on, and
having the same record date as, such Securities, after paying or making
reasonable provision to pay all claims and obligations of the Trust in
accordance with the Statutory Trust Act, shall be distributed on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.
The Sponsor, as the Holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Special Event) and, after satisfaction of liabilities to
creditors of the Trust, cause the Debentures to be distributed to the Holders of
the Securities on a Pro Rata basis in accordance with the aggregate stated
liquidation amount thereof.
If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated
by the Institutional Trustee as expeditiously as it determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust, to
the Holders of the Securities, the Debentures on a Pro Rata basis to the extent
not satisfied by the Debenture Issuer, unless such distribution is determined by
the Institutional Trustee not to be practical, in which event such Holders will
be entitled to receive out of the assets of the Trust available for distribution
to the Holders, after satisfaction of liabilities of creditors of the Trust to
the extent not satisfied by the Debenture Issuer, an amount equal to the
Liquidation Distribution. An early Liquidation of the Trust pursuant to clause
(iv) of Section 7.1(a) of the Declaration shall occur if the Institutional
Trustee determines that such Liquidation is possible by distributing, after
satisfaction of liabilities to creditors of the Trust, to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.
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If, upon any such Liquidation the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid to the Holders of the Securities
on a Pro Rata basis, except that if an Event of Default has occurred and is
continuing, the Capital Securities shall have a preference over the Common
Securities with regard to such distributions.
After the date for any distribution of the Debentures upon dissolution
of the Trust (i) the Securities of the Trust will be deemed to be no longer
outstanding, (ii) upon surrender of a Holder's Securities certificate, such
Holder of the Securities will receive a certificate representing the Debentures
to be delivered upon such distribution, (iii) any certificates representing the
Securities still outstanding will be deemed to represent undivided beneficial
interests in such of the Debentures as have an aggregate principal amount equal
to the aggregate stated liquidation amount with an interest rate identical to
the Distribution Rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance (and
until such certificates are so surrendered, no payments of interest or principal
shall be made to Holders of Securities in respect of any payments due and
payable under the Debentures; provided, however that such failure to pay shall
not be deemed to be an Event of Default and shall not entitle the Holder to the
benefits of the Guarantee), and (iv) all rights of Holders of Securities under
the Declaration shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.
4. Redemption and Distribution.
(a) The Debentures will mature on October 29, 2033. The
Debentures may be redeemed by the Debenture Issuer, in whole or in part at any
time and from time to time on or after October 29, 2008, at the Optional
Redemption Price. In addition, the Debentures may be redeemed by the Debenture
Issuer at the Special Redemption Price, in whole but not in part, at any
Distribution Payment Date, upon the occurrence and continuation of a Special
Event within 120 days following the occurrence of such Special Event at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice to
holders of such Debentures so long as such Special Event is continuing.
"Investment Company Event" means the receipt by the Debenture Issuer
and the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or written
change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Trust is or, within 90 days of the date of such opinion, will be considered
an Investment Company that is required to be registered under the Investment
Company Act which change or prospective change becomes effective or would become
effective, as the case may be, on or after the date of the issuance of the
Debentures.
"Optional Redemption Date" shall mean the date fixed for the
redemption of Capital Securities, which shall be January 29, April 29, July 29
or October 29 on or after October 29, 2008.
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"Optional Redemption Price" means 100% of the principal amount of the
Debentures being redeemed, plus accrued and unpaid interest on such Debentures
to the Optional Redemption Date.
"Special Event" means a Tax Event or an Investment Company Event.
"Special Redemption Date" means a date on which a Special Event
redemption occurs, which shall be any January 29, April 29, July 29 or October
29.
"Special Redemption Price" means (i) 107.5% of the principal amount of
the Debentures being redeemed on a Special Redemption Date that occurs before
October 29, 2008, and (ii) 100% of the principal amount of the Debentures being
redeemed on a Special Redemption Date that occurs on October 29, 2008 or after,
plus, in each case, accrued and unpaid interest on such Debentures to the
Special Redemption Date.
"Tax Event" means the receipt by the Debenture Issuer and the Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
change) in the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action")) or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Debenture Issuer or the Trust and whether or not
subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the date of original issuance of the Debentures, there is more
than an insubstantial risk that: (i) the Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Debentures; (ii) interest payable
by the Debenture Issuer on the Debentures is not, or within 90 days of the date
of such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States federal income tax purposes; or (iii) the Trust is, or
will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes (excluding withholding taxes), duties or other
governmental charges.
(b) Upon the repayment in full at maturity or redemption
in whole or in part of the Debentures (other than following the distribution of
the Debentures to the Holders of the Securities), the proceeds from such
repayment or payment shall concurrently be applied to redeem Pro Rata at the
applicable Optional Redemption Price or Special Redemption Price, as applicable,
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed; provided, however,
that holders of such Securities shall be given not less than 30 nor more than 60
days' notice of such redemption (other than at the scheduled maturity of the
Debentures).
(c) If fewer than all the outstanding Securities are to
be so redeemed, the Common Securities and the Capital Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be redeemed Pro
Rata from each Holder of Capital Securities.
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(d) The Trust may not redeem fewer than all the
outstanding Capital Securities unless all accrued and unpaid Distributions have
been paid on all Capital Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of or notice of
distribution of the Debentures in exchange for, the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail to
each Holder of Securities to be redeemed or exchanged not fewer than 30
nor more than 60 days before the date fixed for redemption or exchange
thereof which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are given
pursuant to this paragraph 4(e)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of such Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of
such Securities at the address of each such Holder appearing on the
books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) If the Securities are to be redeemed and the
Trust gives a Redemption/ Distribution Notice, which notice may only be
issued if the Debentures are redeemed as set out in this paragraph 4
(which notice will be irrevocable), then, provided that the
Institutional Trustee has a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Optional Redemption Price
or Special Redemption Price, as applicable, to the Holders of such
Securities by check mailed to the address of each such Holder appearing
on the books and records of the Trust on the Optional Redemption Date
or Special Redemption Date, as applicable. If a Redemption/Distribution
Notice shall have been given and funds deposited as required then
immediately prior to the close of business on the date of such deposit
Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such
Securities to receive the applicable Optional Redemption Price or
Special Redemption Price specified in paragraph 4(a), but without
interest on such Optional Redemption Price or Special Redemption Price.
If any date fixed for redemption of Securities is not a Business Day,
then payment of any such Optional Redemption Price or Special
Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made
on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date fixed for redemption. If
payment of the Optional Redemption Price or Special Redemption Price in
respect of any Securities is improperly withheld or refused and not
paid either by the Trust or by the Debenture Issuer as guarantor
pursuant to the Guarantee, Distributions on such Securities will
continue to accrue at the Distribution Rate from the original Optional
Redemption Date or Special Redemption Date to the actual date of
payment, in which case the actual
I-8
payment date will be considered the date fixed for redemption for
purposes of calculating the Optional Redemption Price or Special
Redemption Price. In the event of any redemption of the Capital
Securities issued by the Trust in part, the Trust shall not be required
to (i) issue, register the transfer of or exchange any Security during
a period beginning at the opening of business 15 days before any
selection for redemption of the Capital Securities and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all Holders of the Capital
Securities to be so redeemed, or (ii) register the transfer of or
exchange any Capital Securities so selected for redemption, in whole or
in part, except for the unredeemed portion of any Capital Securities
being redeemed in part.
(iii) Redemption/Distribution Notices shall be
sent by the Administrators on behalf of the Trust to (A) in respect of
the Capital Securities, the Holders thereof and (B) in respect of the
Common Securities, the Holder thereof.
(iv) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws),
and provided that the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any of
its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under paragraphs 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights. The Administrators are required to call a
meeting of the Holders of the Capital Securities if directed to do so by Holders
of at least 10% in liquidation amount of the Capital Securities.
(b) Subject to the requirements of obtaining a tax
opinion by the Institutional Trustee in certain circumstances set forth in the
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Capital Securities, voting separately as a class, have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to (i)
exercise the remedies available under the Indenture as the holder of the
Debentures, (ii) waive any past default that is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable, or (iv) consent on behalf of all
the Holders of the Capital Securities to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required; provided, however, that, where a consent or action under the Indenture
would require the consent or act of the holders of greater than a simple
majority in aggregate principal amount of Debentures (a "Super Majority")
affected thereby, the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Capital Securities outstanding which the relevant
Super Majority represents of the aggregate principal amount of the Debentures
outstanding. If the Institutional Trustee fails to enforce its rights under the
Debentures after the Holders of a Majority in liquidation amount of such Capital
Securities have so directed the Institutional
I-9
Trustee, to the fullest extent permitted by law, a Holder of the Capital
Securities may institute a legal proceeding directly against the Debenture
Issuer to enforce the Institutional Trustee's rights under the Debentures
without first instituting any legal proceeding against the Institutional Trustee
or any other person or entity. Notwithstanding the foregoing, if an Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Debenture Issuer to pay interest or principal on the Debentures
on the date the interest or principal is payable (or in the case of redemption,
the Optional Redemption Date or the Special Redemption Date, as applicable),
then a Holder of record of the Capital Securities may directly institute a
proceeding for enforcement of payment on or after the respective due dates
specified in the Debentures, to such Holder directly of the principal of or
interest on the Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such Holder. The
Institutional Trustee shall notify all Holders of the Capital Securities of any
default actually known to the Institutional Trustee with respect to the
Debentures unless (x) such default has been cured prior to the giving of such
notice, or (y) the Institutional Trustee determines in good faith that the
withholding of such notice is in the interest of the Holders of such Capital
Securities, except where the default relates to the payment of principal of or
interest on any of the Debentures. Such notice shall state that such Indenture
Event of Default also constitutes an Event of Default hereunder. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the Institutional Trustee shall
request the direction of the Holders of the Securities with respect to such
amendment modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities outstanding which the relevant Super-Majority represents of the
aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of the
Holders of the Securities unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of
the corresponding Event of Default hereunder. Any required approval or direction
of Holders of the Capital Securities may be given at a separate meeting of
Holders of the Capital Securities convened for such purpose, at a meeting of all
of the Holders of the Securities in the Trust or pursuant to written consent.
The Institutional Trustee will cause a notice of any meeting at which Holders of
the Capital Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to each Holder
of record of the Capital Securities. Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such
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matter upon which written consent is sought, and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the Holders of the
Capital Securities will be required for the Trust to redeem and cancel Capital
Securities or to distribute the Debentures in accordance with the Declaration
and the terms of the Securities.
Notwithstanding that Holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not entitle the Holder thereof to vote or consent and shall, for purposes
of such vote or consent, be treated as if such Capital Securities were not
outstanding.
In no event will Holders of the Capital Securities have the right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the Holder of all of the Common Securities
of the Trust. Under certain circumstances as more fully described in the
Declaration, Holders of Capital Securities have the right to vote to appoint,
remove or replace the Institutional Trustee.
6. Voting Rights - Common Securities.
(a) Except as provided under paragraphs 6(b), 6(c) and 7
and as otherwise required by law and the Declaration, the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article IV of the Declaration, to vote to appoint, remove or
replace any Administrators.
(c) Subject to Section 6.7 of the Declaration and only
after each Event of Default (if any) with respect to the Capital Securities has
been cured, waived, or otherwise eliminated and subject to the requirements of
the second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waiving any past
default and its consequences that is waivable under the Indenture, or (iii)
exercising any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable; provided, however, that, where a
consent or action under the Indenture would require a Super Majority, the
Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Common Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding. Notwithstanding
this paragraph 6(c), the Institutional Trustee shall not revoke any action
previously authorized or approved by a vote or consent of the Holders of the
Capital Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action described in (i), (ii) or (iii) above, unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights
I-11
under the Declaration to the fullest extent permitted by law, any Holder of the
Common Securities may institute a legal proceeding directly against any Person
to enforce the Institutional Trustee's rights under the Declaration, without
first instituting a legal proceeding against the Institutional Trustee or any
other Person.
Any approval or direction of Holders of the Common Securities may be
given at a separate meeting of Holders of the Common Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent. The Administrators will cause a notice of any
meeting at which Holders of the Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of the Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought, and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 11.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Institutional Trustee, Sponsor or Administrators otherwise propose to
effect, (i) any action that would adversely affect the powers, preferences or
special rights of the Securities, whether by way of amendment to the Declaration
or otherwise, or (ii) the Liquidation of the Trust, other than as described in
Section 7.1 of the Declaration, then the Holders of outstanding Securities,
voting together as a single class, will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of the Holders of at least a Majority in liquidation amount of the
Securities, affected thereby; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital
Securities or only the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee
as the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination of the Indenture or the Debentures,
the Institutional Trustee shall request the written direction of the Holders of
the Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification, or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require a Super Majority, the Institutional Trustee may only give such
consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
I-12
(c) Notwithstanding the foregoing, no amendment or
modification may be made to the Declaration if such amendment or modification
would (i) cause the Trust to be classified for purposes of United States federal
income taxation as other than a grantor trust, (ii) reduce or otherwise
adversely affect the powers of the Institutional Trustee, or (iii) cause the
Trust to be deemed an Investment Company which is required to be registered
under the Investment Company Act.
(d) Notwithstanding any provision of the Declaration, the
right of any Holder of the Capital Securities to receive payment of
distributions and other payments upon redemption or otherwise, on or after their
respective due dates, or to institute a suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder. For the protection and enforcement of the
foregoing provision, each and every Holder of the Capital Securities shall be
entitled to such relief as can be given either at law or equity.
8. Pro Rata. A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder of the Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities then outstanding unless, in relation to a
payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of the Common Securities Pro Rata according to the aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking. The Capital Securities rank pari passu with and
payment thereon shall be made Pro Rata with the Common Securities except that,
where an Event of Default has occurred and is continuing, the rights of Holders
of the Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Optional Redemption Price (or Special Redemption Price) of,
any Common Security, and no other payment on account of redemption, liquidation
or other acquisition of Common Securities, shall be made unless payment in full
in cash of all accumulated and unpaid Distributions on all outstanding Capital
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Optional Redemption Price (or Special Redemption
Price) the full amount of such Optional Redemption Price (or Special Redemption
Price) on all outstanding Capital Securities then called for redemption, shall
have been made or provided for, and all funds immediately available to the
Institutional Trustee shall first be applied to the payment in full in cash of
all Distributions on, or the Optional Redemption Price (or Special Redemption
Price) of, the Capital Securities then due and payable.
10. Acceptance of Guarantee and Indenture. Each Holder of the
Capital Securities and the Common Securities, by the acceptance of such
Securities, agrees to the provisions of the Guarantee, including the
subordination provisions therein and to the provisions of the Indenture.
I-13
11. No Preemptive Rights. The Holders of the Securities shall have
no preemptive or similar rights to subscribe for any additional securities.
12. Miscellaneous. These terms constitute a part of the
Declaration. The Sponsor will provide a copy of the Declaration, the Guarantee,
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-14
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND
THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS
INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR
A-1-1
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE
EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE
OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT
EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3)
OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE
OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY
OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO
FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH
THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
THIS SECURITY IS IN REGISTERED FORM WITHIN THE MEANING OF TREASURY
REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND WITHHOLDING
TAX PURPOSES.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
CERTIFICATE NUMBER P-1 20,000 CAPITAL SECURITIES
OCTOBER 29, 2003
CERTIFICATE EVIDENCING FLOATING RATE CAPITAL SECURITIES
OF
AMERICAN PHYSICIANS CAPITAL STATUTORY TRUST III
(LIQUIDATION AMOUNT $1,000.00 PER CAPITAL SECURITY)
American Physicians Capital Statutory Trust III, a statutory trust
created under the laws of the State of Connecticut (the "Trust"), hereby
certifies that Hare & Co. (the "Holder"), as the nominee of The Bank of New
York, indenture trustee under the Indenture dated as of October
A-1-2
29, 2003, among I-Preferred Term Securities III, Ltd., I-Preferred Term
Securities III, Inc. and The Bank of New York, is the registered owner of
capital securities of the Trust representing undivided beneficial interests in
the assets of the Trust, (liquidation amount $1,000.00 per capital security)
(the "Capital Securities"). Subject to the Declaration (as defined below), the
Capital Securities are transferable on the books and records of the Trust in
person or by a duly authorized attorney, upon surrender of this Certificate duly
endorsed and in proper form for transfer. The Capital Securities represented
hereby are issued pursuant to, and the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities shall in all respects be subject to, the provisions of the Amended
and Restated Declaration of Trust of the Trust dated as of October 29, 2003,
among William B. Cheeseman and Frank H. Freund, as Administrators, U.S. Bank
National Association, as Institutional Trustee, American Physicians Capital,
Inc., as Sponsor, and the holders from time to time of undivided beneficial
interests in the assets of the Trust, including the designation of the terms of
the Capital Securities as set forth in Annex I to such amended and restated
declaration as the same may be amended from time to time (the "Declaration").
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Guarantee to
the extent provided therein. The Sponsor will provide a copy of the Declaration,
the Guarantee, and the Indenture to the Holder without charge upon written
request to the Sponsor at its principal place of business.
Upon receipt of this Security, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and construed in accordance with,
the laws of the State of Connecticut, without regard to principles of conflict
of laws.
Signatures appear on following page
A-1-3
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
AMERICAN PHYSICIANS CAPITAL
STATUTORY TRUST III
By: _____________________________________
Name:
Title: Administrator
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
U.S. BANK NATIONAL ASSOCIATION,
as the Institutional Trustee
By: _____________________________________
Authorized Officer
A-1-4
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be payable at an
annual rate equal to 5.010% beginning on (and including) the date of original
issuance and ending on (but excluding) January 29, 2004 and at an annual rate
for each successive period beginning on (and including) January 29, 2004, and
each succeeding Distribution Payment Date, and ending on (but excluding) the
next succeeding Distribution Payment Date (each a "Distribution Period"), equal
to 3-Month LIBOR, determined as described below, plus 3.850% (the "Coupon
Rate"), applied to the stated liquidation amount of $1,000.00 per Capital
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears will bear interest
thereon compounded quarterly at the Distribution Rate (to the extent permitted
by applicable law). The term "Distributions" as used herein includes payments of
cash distributions and any such compounded distributions and any Additional Sums
payable on the Debentures unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. As used herein, "Determination Date" means the date that is
two London Banking Days (i.e., a business day in which dealings in deposits in
U.S. dollars are transacted in the London interbank market) preceding the
commencement of the relevant Distribution Period. In the event that any date on
which a Distribution is payable on this Capital Security is not a Business Day,
then a payment of the Distribution payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable. The amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such amount by the
actual number of days in the Distribution Period concerned divided by 360.
"3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Dow Jones Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two such quotations are provided, 3-Month
LIBOR will be the arithmetic mean of such quotations; (iii) if fewer than two
such quotations are provided as requested in clause (ii) above, the Debenture
Trustee will request four major New York City banks to provide such banks'
offered quotations (expressed as percentages per annum) to leading European
banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; and (iv) if fewer than two such
quotations are provided as requested in clause (iii) above, 3-Month LIBOR will
be a 3-Month
A-1-5
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.
The Coupon Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.
All percentages resulting from any calculations on the Capital
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on January 29, April 29, July 29 and
October 29 of each year, commencing on January 29, 2004. The Debenture Issuer
has the right under the Indenture to defer payments of interest on the
Debentures, so long as no Indenture Event of Default has occurred and is
continuing, by extending the interest payment period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period, compounded quarterly from the date such
interest would have been payable were it not for the Extension Period, to the
extent permitted by law (such interest referred to herein as "Additional
Interest"). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period the Debenture Issuer shall
pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no Extension Period may
extend beyond the Maturity Date. Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided that such
period together with all such previous and further consecutive extensions
thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing requirements. No
interest or Additional Interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Additional Interest. During any Extension Period, Distributions on the Capital
Securities shall be deferred for a period equal to the Extension Period. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, to Holders of the Common Securities as
they appear on the books and records of the Trust on the record date immediately
preceding such date. Distributions on the Common Securities must be paid on the
dates payable (after giving effect to any Extension Period) to the extent that
the Trust has funds available for the payment of such distributions in the
Property Account of the Trust. The Trust's funds available for Distribution to
the Holders of the Common Securities will be
A-1-6
limited to payments received from the Debenture Issuer. The payment of
Distributions out of moneys held by the Trust is guaranteed by the Guarantor
pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
A-1-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
__________________________________________________________________
(Insert assignee's social security or tax identification number)__
__________________________________________________________________
__________________________________________________________________
(Insert address and zip code of assignee) and irrevocably appoints
__________________________________________________________________
agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date: _____________________________
Signature: ________________________
(Sign exactly as your name appears on the other side
of this Capital Security Certificate)
Signature Guarantee:(1)
- ------------------------
(1) Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-1-8
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH SECTION
8.1 OF THE DECLARATION.
THIS COMMON SECURITY IS IN REGISTERED FORM WITHIN THE MEANING OF
TREASURY REGULATIONS SECTION 1.871-14(c)(1)(i) FOR U.S. FEDERAL INCOME AND
WITHHOLDING TAX PURPOSES.
CERTIFICATE NUMBER C-1 619 COMMON SECURITIES
OCTOBER 29, 2003
CERTIFICATE EVIDENCING FLOATING RATE COMMON SECURITIES
OF
AMERICAN PHYSICIANS CAPITAL STATUTORY TRUST III
American Physicians Capital Statutory Trust III, a statutory trust
created under the laws of the State of Connecticut (the "Trust"), hereby
certifies that American Physicians Capital, Inc. (the "Holder") is the
registered owner of common securities of the Trust representing undivided
beneficial interests in the assets of the Trust (the "Common Securities").
Subject to the Declaration (as defined below), the Common Securities are
transferable on the books and records of the Trust in person or by a duly
authorized attorney, upon surrender of this Certificate duly endorsed and in
proper form for transfer. The Common Securities represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities shall in all respects be
subject to, the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of October 29, 2003, among William B. Cheeseman and Frank H.
Freund, as Administrators, U.S. Bank National Association, as Institutional
Trustee, American Physicians Capital, Inc., as Sponsor, and the holders from
time to time of undivided beneficial interest in the assets of the Trust
including the designation of the terms of the Common Securities as set forth in
Annex I to such amended and restated declaration, as the same may be amended
from time to time (the "Declaration"). Capitalized terms used herein but not
defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture
to the Holder without charge upon written request to the Sponsor at its
principal place of business.
As set forth in the Declaration, when an Event of Default has occurred
and is continuing, the rights of Holders of Common Securities to payment in
respect of Distributions and payments upon Liquidation, redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.
A-2-1
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of undivided beneficial ownership in the
Debentures.
This Common Security is governed by, and construed in accordance with,
the laws of the State of Connecticut, without regard to principles of conflict
of laws.
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
AMERICAN PHYSICIANS CAPITAL
STATUTORY TRUST III
By: __________________________________
Name:
Title: Administrator
A-2-2
[FORM OF REVERSE OF COMMON SECURITY]
Distributions payable on each Common Security will be payable at an
annual rate equal to 5.010% beginning on (and including) the date of original
issuance and ending on (but excluding) January 29, 2004 and at an annual rate
for each successive period beginning on (and including) January 29, 2004, and
each succeeding Distribution Payment Date, and ending on (but excluding) the
next succeeding Distribution Payment Date (each a "Distribution Period"), equal
to 3-Month LIBOR, determined as described below, plus 3.850% (the "Coupon
Rate"), applied to the stated liquidation amount of $1,000.00 per Common
Security, such rate being the rate of interest payable on the Debentures to be
held by the Institutional Trustee. Distributions in arrears will bear interest
thereon compounded quarterly at the Distribution Rate (to the extent permitted
by applicable law). The term "Distributions" as used herein includes cash
distributions and any such compounded distributions and any Additional Sums
payable on the Debentures unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. As used herein, "Determination Date" means the date that is
two London Banking Days (i.e., a business day in which dealings in deposits in
U.S. dollars are transacted in the London interbank market) preceding the
commencement of the relevant Distribution Period. In the event that any date on
which a Distribution is payable on this Common Security is not a Business Day,
then a payment of the Distribution payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable. The amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period and multiplying each such amount by the
actual number of days in the Distribution Period concerned divided by 360.
"3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Dow Jones Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will request four major New York City banks to provide such banks' offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
A-2-3
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.
The Coupon Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.
All percentages resulting from any calculations on the Common
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on January 29, April 29, July 29 and
October 29 of each year, commencing on January 29, 2004. The Debenture Issuer
has the right under the Indenture to defer payments of interest on the
Debentures, so long as no Indenture Event of Default has occurred and is
continuing, by extending the interest payment period for up to 20 consecutive
quarterly periods (each an "Extension Period") at any time and from time to time
on the Debentures, subject to the conditions described below, during which
Extension Period no interest shall be due and payable. During any Extension
Period, interest will continue to accrue on the Debentures, and interest on such
accrued interest will accrue at an annual rate equal to the Distribution Rate in
effect for each such Extension Period, compounded quarterly from the date such
interest would have been payable were it not for the Extension Period, to the
extent permitted by law (such interest referred to herein as "Additional
Interest"). No Extension Period may end on a date other than a Distribution
Payment Date. At the end of any such Extension Period the Debenture Issuer shall
pay all interest then accrued and unpaid on the Debentures (together with
Additional Interest thereon); provided, however, that no Extension Period may
extend beyond the Maturity Date. Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided that such
period together with all such previous and further consecutive extensions
thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the
Maturity Date. Upon the termination of any Extension Period and upon the payment
of all accrued and unpaid interest and Additional Interest, the Debenture Issuer
may commence a new Extension Period, subject to the foregoing requirements. No
interest or Additional Interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Additional Interest. During any Extension Period, Distributions on the Common
Securities shall be deferred for a period equal to the Extension Period. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, to Holders of the Securities as they
appear on the books and records of the Trust on the record date immediately
preceding such date. Distributions on the Securities must be paid on the dates
payable (after giving effect to any Extension Period) to the extent that the
Trust has funds available for the payment of such distributions in the Property
Account of the Trust. The Trust's funds available for Distribution to the
Holders of the Securities will be limited to payments received from the
Debenture Issuer.
A-2-4
The Common Securities shall be redeemable as provided in the
Declaration.
A-2-5
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
______________________________________________________________________
(Insert assignee's social security or tax identification number)______
______________________________________________________________________
______________________________________________________________________
(Insert address and zip code of assignee) and irrevocably appoints
______________________________________________________________________
______________________________________________agent
to transfer this Common Security Certificate on the
books of the Trust. The agent may substitute another
to act for him or her.
Date: ____________________________
Signature: _______________________
(Sign exactly as your name appears on the other side
of this Common Security Certificate)
Signature: _______________________
(Sign exactly as your name appears on the other side
of this Common Security Certificate)
Signature Guarantee(2)
- ----------------------------
(2) Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-2-6
EXHIBIT B
SPECIMEN OF INITIAL DEBENTURE
EXHIBIT C
PLACEMENT AGREEMENT