EXHIBIT 4.3
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
PROASSURANCE CAPITAL TRUST II
Dated as of May 12, 2004
TABLE OF CONTENTS
Page
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ARTICLE I INTERPRETATION AND DEFINITIONS 1
SECTION 1.1 Definitions............................................................................... 1
ARTICLE II LIST OF HOLDERS; EVENTS OF DEFAULT 9
SECTION 2.1 Lists of Holders of Securities............................................................ 9
SECTION 2.2 Events of Default; Waiver................................................................. 9
SECTION 2.3 Event of Default; Notice.................................................................. 11
ARTICLE III ORGANIZATION 11
SECTION 3.1 Name...................................................................................... 11
SECTION 3.2 Office.................................................................................... 11
SECTION 3.3 Purposes.................................................................................. 12
SECTION 3.4 Authority................................................................................. 12
SECTION 3.5 Title to Property of the Trust............................................................ 12
SECTION 3.6 Powers and Duties of the Regular Trustees................................................. 12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees...................................... 15
SECTION 3.8 Powers and Duties of the Institutional Trustee............................................ 15
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee.......................... 17
SECTION 3.10 Certain Rights of the Institutional Trustee............................................... 19
SECTION 3.11 Delaware Trustee.......................................................................... 21
SECTION 3.12 Execution of Documents.................................................................... 21
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.................................... 22
SECTION 3.14 Duration of Trust......................................................................... 22
SECTION 3.15 Mergers................................................................................... 22
ARTICLE IV SPONSOR 24
SECTION 4.1 Sponsor's Purchase of Common Securities................................................... 24
SECTION 4.2 Responsibilities of the Sponsor........................................................... 24
SECTION 4.3 Right to Proceed.......................................................................... 24
SECTION 4.4 Expenses.................................................................................. 25
ARTICLE V TRUSTEES 26
SECTION 5.1 Number of Trustees........................................................................ 26
SECTION 5.2 Delaware Trustee.......................................................................... 26
SECTION 5.3 Institutional Trustee; Eligibility........................................................ 26
SECTION 5.4 Certain Qualifications of the Regular Trustees and the Delaware Trustee Generally......... 27
SECTION 5.5 Regular Trustees.......................................................................... 27
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SECTION 5.6 Appointment, Removal and Resignation of Trustees.......................................... 28
SECTION 5.7 Vacancies among Trustees.................................................................. 29
SECTION 5.8 Effect of Vacancies....................................................................... 30
SECTION 5.9 Meetings.................................................................................. 30
SECTION 5.10 Delegation of Power....................................................................... 30
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business............................... 30
ARTICLE VI DISTRIBUTIONS 31
SECTION 6.1 Distributions............................................................................. 31
ARTICLE VII ISSUANCE OF SECURITIES 31
SECTION 7.1 General Provisions Regarding Securities................................................... 31
SECTION 7.2 Paying Agent.............................................................................. 32
SECTION 7.3 Outstanding Preferred Securities.......................................................... 33
ARTICLE VIII DISSOLUTION AND TERMINATION OF TRUST 33
SECTION 8.1 Dissolution and Termination of Trust...................................................... 33
ARTICLE IX TRANSFER OF INTERESTS 34
SECTION 9.1 Transfer of Securities.................................................................... 34
SECTION 9.2 Transfer of Certificates.................................................................. 35
SECTION 9.3 Deemed Security Holders................................................................... 38
SECTION 9.4 Mutilated, Destroyed, Lost or Stolen Certificates......................................... 39
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS 39
SECTION 10.1 Liability................................................................................. 39
SECTION 10.2 Exculpation............................................................................... 40
SECTION 10.3 Fiduciary Duty............................................................................ 40
SECTION 10.4 Indemnification........................................................................... 41
SECTION 10.5 Outside Businesses........................................................................ 44
SECTION 10.6 Compensation; Fees........................................................................ 44
ARTICLE XI ACCOUNTING 45
SECTION 11.1 Fiscal Year............................................................................... 45
SECTION 11.2 Certain Accounting Matters and Reports.................................................... 45
SECTION 11.3 Banking................................................................................... 46
SECTION 11.4 Withholding............................................................................... 46
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ARTICLE XII AMENDMENTS AND MEETINGS 47
SECTION 12.1 Amendments................................................................................ 47
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent.......................... 48
ARTICLE XIII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE 50
SECTION 13.1 Representations and Warranties of Institutional Trustee................................... 50
SECTION 13.2 Representations and Warranties of Delaware Trustee........................................ 51
ARTICLE XIV MISCELLANEOUS 51
SECTION 14.1 Notices................................................................................... 51
SECTION 14.2 Governing Law............................................................................. 52
SECTION 14.3 Submission to Jurisdiction................................................................ 53
SECTION 14.4 Intention of the Parties.................................................................. 53
SECTION 14.5 Table of Contents, Headings, etc.......................................................... 53
SECTION 14.6 Successors and Assigns.................................................................... 53
SECTION 14.7 Partial Enforceability.................................................................... 53
SECTION 14.8 Counterparts.............................................................................. 53
ANNEX I -- Terms of Preferred Securities and Common Securities............................................ A-1
Exhibit A-1 -- Form of Preferred Security Certificate .................................................... A1-1
Exhibit A-2 -- Form of Common Security Certificate ....................................................... A2-1
Exhibit B -- QIB Transferee Certificate................................................................... B-1
Exhibit C -- Accredited Investor Transferee Certificate................................................... C-1
Exhibit D -- Offshore Transferee Certificate.............................................................. D-1
Exhibit E -- Form of Quarterly Officer's Certificate...................................................... E-1
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
PROASSURANCE CAPITAL TRUST II
May 12, 2004
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") is dated
and effective as of May 12, 2004 by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued pursuant to this
Declaration.
WHEREAS, certain of the Trustees and ProAssurance Corporation, as
Sponsor, Common Securities Holder and Debenture Issuer, established ProAssurance
Capital Trust II (the "Trust"), a statutory trust under the Statutory Trust Act
(as defined herein), pursuant to a Declaration of Trust, dated as of April 22,
2004 (the "Original Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on April 22, 2004 (the "Certificate
of Trust") for the purpose of issuing and selling Securities (as defined herein)
and investing the proceeds therefrom in Debentures of the Debenture Issuer (each
as defined herein); and
WHEREAS, as of the date hereof, no Securities have been issued; and
WHEREAS, the parties hereto, by this Declaration, hereby 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 Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the Holders, subject to the provisions of this
Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles, Sections,
Annexes and Exhibits are to Articles and Sections of, and Annexes and Exhibits
to, this Declaration;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Additional Tax Sums" has the meaning set forth in Section 2(g) of
Annex I.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote, 10% or
more of the outstanding Voting Securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding Voting
Securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authorized Officer" of a Person means any executive officer,
president, vice-president, assistant vice-president, treasurer, assistant
treasurer, secretary, assistant secretary or other officer of such Person
generally authorized to bind such Person.
"Business Day" means any day other than Saturday, Sunday or any other
day on which commercial banking institutions in The City of New York or
Wilmington, Delaware are permitted or required by any applicable law, regulation
or executive order to close.
"Calculation Agent" has the meaning set forth in Section 2(d) of Annex
I.
"Certificate" means a Common Security Certificate and/or a Preferred
Security Certificate, as the context requires.
"Certificate of Trust" has the meaning set forth in the first recital
hereto.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" shall mean the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities" has the meaning set forth in Section 7.1(a).
"Common Security Certificate" means a definitive certificate in fully
registered form evidencing one or more Common Securities substantially in the
form of Exhibit A-2.
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"Company Indemnified Person" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"Compound Interest" has the meaning set forth in Section 2(a) of Annex
I.
"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 Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001.
"Covered Person" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Creditor" has the meaning set forth in Section 4.4.
"Debenture Issuer" means ProAssurance Corporation, a Delaware
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Purchase Agreements" means the purchase agreements to be
dated as of the FTN Closing Date, the ICONS Closing Date and the Sandler Closing
Date between the Debenture Issuer and the Trust, relating to the Debentures.
"Debentures" means the Floating Rate Junior Subordinated Debentures due
2034 issued by the Sponsor to the Trust.
"Debt Trustee" means Wilmington Trust Company, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Declaration" has the meaning set forth in the preamble hereto.
"Deferral Period" has the meaning set forth in Section 2(e) of Annex I.
"Default" in respect of the Securities means a "Default" with the
meaning of, and as described under, the Indenture that has occurred and is
continuing in respect of the Debentures.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Determination Date" has the meaning set forth in Section 2(d) of Annex
I.
"Direct Action" has the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"Distribution Payment Date" has the meaning set forth in Section 2(c)
of Annex I.
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"Distribution Period" has the meaning set forth in Section 2(a) of
Annex I
"Distribution Rate" has the meaning set forth in Section 2(a) of Annex
I.
"Event of Default" in respect of the Securities means an "Event of
Default" within the meaning of, and as defined under, the Indenture that has
occurred and is continuing in respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"FTN" means FTN Financial Securities Corp., a Tennessee corporation.
"FTN Closing Date" means the "Closing Date as defined in the FTN
Purchase Agreement.
"FTN Purchase Agreement" means the Purchase and Placement Agreement
dated as of May 11, 2004 among the Trust, the Sponsor, Morgan Stanley & Co.
Incorporated, Cochran, Caronia & Co. and FTN.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner thereof within the
meaning of the Statutory Trust Act.
"ICONS" means ICONS, Ltd., a company with limited liability organized
under the laws of the Cayman Islands.
"ICONS Closing Date" means, upon execution of the ICONS Purchase
Agreement, the date defined as the "Closing Date" in such Purchase Agreement.
"ICONS Purchase Agreement" means the proposed Purchase and Placement
Agreement among the Trust, the Sponsor, Morgan Stanley & Co. Incorporated,
Cochran, Caronia Securities LLC and ICONS.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture, dated as of the FTN Closing Date,
between the Debenture Issuer and the Debt Trustee, and any indenture
supplemental thereto applicable to the Debentures, as such Indenture and any
supplemental Indenture may be amended, supplemented or otherwise modified from
time to time.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
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"Institutional Trustee Account" has the meaning set forth in Section
3.8(c).
"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 Section 4(c) of
Annex I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"LIBOR" has the meaning set forth in Section 2(d) of Annex I.
"Like Amount" has the meaning set forth in Section 3 of Annex I.
"Liquidation Distribution" has the meaning set forth in Section 3 of
Annex I. "List of Holders" has the meaning set forth in Section 2.1.
"London Business Day" means any day, other than a Saturday or Sunday,
on which banks are open for business (including dealings in U.S. dollars) in
London.
"Majority in Liquidation Amount of Securities" means, except as
provided in the terms of the Preferred Securities set forth in Annex I hereto or
by the Trust Indenture Act, Holder(s) of outstanding Securities voting together
as a single class, excluding the Trust, the Debenture Issuer and any Affiliate
of the Trust or the Debenture Issuer, or, as the context may require, Holders of
outstanding Preferred Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount (including the liquidation amount that would be
paid on redemption, liquidation or otherwise plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities, or all outstanding Securities of the relevant class,
as applicable.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person, one of whom shall
be the Chairman, Chief Executive Officer, Executive Vice President or a Vice
President one of whom shall be the Chief Financial Officer, Treasurer or
Assistant Treasurer. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Declaration shall
include:
(a) a statement that each Authorized Officer signing the
Certificate has read the covenant or condition;
(g) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate are based;
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(h) a statement that each such Authorized Officer has made such
examination or investigation as, in such Authorized Officer's opinion, is
necessary to enable such Authorized Officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(i) a statement as to whether or not, in the opinion of each such
Authorized Officer, such condition or covenant has been complied with.
"Original Declaration" has the meaning set forth in the first recital
hereto.
"Paying Agent" has the meaning set forth in Section 7.2.
"Payment Amount" has the meaning set forth in Section 6.1.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PORTAL System" has the meaning specified in Section 3.6(b)(iii).
"Preferred Guarantee Trustee" means Wilmington Trust Company, as
trustee under the Preferred Securities Guarantee until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Preferred Securities" has the meaning set forth in Section 7.1(a).
"Preferred Securities Guarantee" means the guarantee agreement, to be
dated as of the FTN Closing Date, between the Sponsor and the Preferred
Guarantee Trustee, in respect of the Preferred Securities.
"Preferred Security Certificate" means a certificate in fully
registered form evidencing one or more Preferred Securities substantially in the
form of Exhibit A-1.
"Pro Rata" has the meaning set forth in Section 8 of Annex I.
"Purchase Agreements" means the FTN Purchase Agreement, the ICONS
Purchase Agreement and the Sandler Purchase Agreement.
"QIB" means a "qualified institutional buyer" as that term is defined
in Rule 144A.
"Quorum" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both of them.
"Redemption/Distribution Notice" has the meaning set forth in Section
4(e)(i) of Annex I.
"Redemption Price" shall have the meaning set forth in Section 4(a) of
Annex I.
"Regular Trustee" has the meaning set forth in Section 5.1(a).
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"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly-owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Resale Restriction Termination Date" means, with respect to any
Securities, the date which is the later of (i) two years (or such shorter period
of time as permitted by Rule 144(k) under the Securities Act) after the later of
(x) the date of original issuance of such Securities or (y) the last date on
which the Trust, the Sponsor or any Affiliate of either of them was the Holder
of such Security or (ii) such later date, if any, as may be required by any
subsequent change in applicable securities law.
"Resignation Request" has the meaning set forth in Section 5.6(c).
"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, any assistant treasurer, any financial services officer or other
officer or agent of the Corporate Trust Office of the Institutional Trustee
customarily performing functions similar to those performed by any of the above
designated officers or agents and also means, with respect to a particular
corporate trust matter, any other officer or agent to whom such matter is
referred because of that officer's or agent's knowledge of and familiarity with
the particular subject.
"Restricted Securities Legend" has the meaning specified in Section
9.2(d).
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Sandler" means Sandler O'Neill & Partners, L.P.
"Sandler Closing Date" means, upon execution of the Sandler Purchase
Agreement, the date defined as the "Closing Date" in such Purchase Agreement.
"Sandler Purchase Agreement" means the proposed Purchase and Placement
Agreement among the Trust, the Sponsor, Morgan Stanley & Co. Incorporated,
Cochran, Caronia & Co. and Sandler.
"Securities" means the Common Securities and the Preferred 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 Section 4(c) of Annex I.
"Sponsor" means ProAssurance Corporation, a Delaware corporation, or
any permitted successor entity in a merger, consolidation or amalgamation, in
its capacity as sponsor of the Trust.
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"Stated Maturity" has the meaning set forth in Section 4(a) of Annex I.
"Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Successor Delaware Trustee" has the meaning set forth in Section
5.6(b)(ii).
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Successor Institutional Trustee" has the meaning set forth in Section
5.6(b)(i).
"Successor Securities" has the meaning set forth in Section
3.15(b)(i)(B).
"Super Majority" has the meaning set forth in Section 2.2(a)(ii).
"Tax Event" has the meaning set forth in Section 4(c) of Annex I
hereto.
"10% in liquidation amount" means, except as provided in the terms of
the Preferred Securities set forth in Annex I hereto or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class,
excluding the Trust, the Debenture Issuer and any Affiliate of the Trust or the
Debenture Issuer, or, as the context may require, Holders of outstanding
Preferred Securities or Holders of outstanding Common Securities voting
separately as a class, who are the record owners of 10% or more of the aggregate
liquidation amount (including the liquidation amount that would be paid on
redemption, liquidation or otherwise plus accumulated and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Securities, or all outstanding Securities of the relevant class, as applicable.
"Transfer Agent" has the meaning set forth in Section 9.2(f).
"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" has the meaning set forth in the first recital hereto.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
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ARTICLE II
LIST OF HOLDERS; EVENTS OF DEFAULT
SECTION 2.1 Lists of Holders of Securities.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Institutional Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Institutional
Trustee may reasonably require, of the names and addresses of the Holders ("List
of Holders") as of such record date, provided that neither the Sponsor nor the
Regular Trustees on behalf of the Trust shall be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Institutional Trustee by the Sponsor and the
Regular Trustees on behalf of the Trust and (ii) at any other time, within 30
days of receipt by the Trust of a written request for a List of Holders as of a
date no more than 15 days before such List of Holders is given to the
Institutional Trustee. The Institutional Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in the Lists of
Holders given to it or which it receives in its capacity as Paying Agent (if
acting in such capacity) provided that the Institutional Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
SECTION 2.2 Events of Default; Waiver.
(a) Subject to Section 2.2(c), the Holders of a Majority in
Liquidation Amount of Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any past Event of Default in
respect of the Preferred Securities and its consequences, provided that, if the
underlying event of default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default shall also not be waivable; or
(ii) requires the consent or vote of more than a simple
majority in aggregate principal amount of the holders of the Debentures
(a "Super Majority") to be waived under the Indenture, then the Event
of Default may be waived only by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the Preferred
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding; or
(iii) requires the consent or vote of each holder of
Debentures to be waived under the Indenture, then the Event of Default
may be waived only by each Holder of Preferred Securities.
Upon such waiver, the related default shall cease to exist, and any
Event of Default with respect to the Preferred Securities arising therefrom
shall be deemed to have been cured, for every purpose of this Declaration, but
no such waiver shall extend to any subsequent or other default or an Event of
Default with respect to the Preferred Securities or impair any right consequent
thereon. Any waiver by the Holders of the Preferred Securities of an Event of
Default with respect to the Preferred Securities shall also be deemed to
constitute a waiver by the
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Holders of the Common Securities of any such Event of Default with respect to
the Common Securities for all purposes of this Declaration without any further
act, vote or consent of the Holders of the Common Securities.
(b) Subject to Section 2.2(c), the Holders of a Majority in
Liquidation Amount of the Common Securities may, by vote, on behalf of the
Holders of all of the Common Securities, waive any past Event of Default with
respect to the Common Securities and its consequences, provided that, if the
underlying event of default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default as provided below in this Section 2.2(b), then the Event of
Default shall also not be waivable; or
(ii) requires the consent or vote of (A) a Super Majority
to be waived, then the Event of Default may be waived only by the vote
of the Holders of at least the proportion in aggregate liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding or (B) each holder of Debentures to be waived, then the
Event of Default may only be waived by each Holder of Common
Securities, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under the Declaration as
provided below in this Section 2.2(b).
Notwithstanding the foregoing, each Holder of Common Securities will be
deemed to have waived any such Event of Default and all Events of Default with
respect to the Common Securities and its consequences if all Events of Default
with respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the Holders of the Preferred Securities and only the Holders
of the Preferred Securities will have the right to direct the Institutional
Trustee in accordance with the terms of the Securities set forth in Annex I
hereto. If any Event of Default with respect to the Preferred Securities is
waived by the Holders of Preferred Securities as provided in this Declaration,
the Holders of Common Securities agree that such waiver shall also constitute
the waiver of such Event of Default with respect to the Common Securities for
all purposes under this Declaration without any further act, vote or consent of
the Holders of the Common Securities. Subject to the foregoing provisions of
this Section 2.2(b), upon such waiver, the related default shall cease to exist,
and any Event of Default with respect to the Common Securities arising therefrom
shall be deemed to have been cured for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or Event of Default
with respect to the Common Securities or impair any right consequent thereon.
(c) The right of any Holder to receive payment of Distributions,
the Redemption Price and the Liquidation Distribution in accordance with this
Declaration and the terms of the Securities set forth in Annex I on or after the
respective due dates therefor, or to institute suit for the enforcement of any
such payment on or after such dates, shall not be impaired without the consent
of each such Holder.
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(d) A waiver of an event of default under the Indenture by the
Institutional Trustee at the written direction of the Holders of the Preferred
Securities constitutes a waiver of the corresponding Event of Default.
SECTION 2.3 Event of Default; Notice.
(a) The Institutional Trustee shall, within 60 days after its
occurrence, mail to all Holders, as the names and addresses of such Holders
appear on the List of Holders, notice of all defaults actually known to a
Responsible Officer, unless such default shall have been cured before the giving
of such notice (the term "default" for the purposes of this Section 2.3(a) being
hereby defined to be any default under the Indenture, not including any periods
of grace, if any, provided for therein and irrespective of the giving of any
written notice provided therein); provided that, except in the case of a default
in the payment of principal of or premium on, if any, or interest on any of the
Debentures, the Institutional Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers of the Institutional
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders; and provided further, that in the case of any default
of the character specified in Section 5.01(c) of the Indenture, no such notice
to Holders shall be given until at least 60 days after the Institutional Trustee
has notified the Company of such occurrence but shall be given within 90 days
after such occurrence.
(b) The Institutional Trustee shall not be deemed to have
knowledge of any default except:
(i) a default in the payment of principal of or interest
on the Debentures; or
(ii) any default as to which the Institutional Trustee
shall have received written notice or of which a Responsible Officer
charged with the administration of the Declaration shall have actual
knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "ProAssurance Capital Trust II," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders. The Trust's activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o ProAssurance
Corporation, 100 Brookwood Place, Birmingham, AL 35209. Upon ten (10) Business
Days' written notice to the Holders of Securities (with a copy to the
Institutional Trustee), the Regular Trustees may designate another principal
office which shall be an address in any state of the United States or in the
District of Columbia.
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SECTION 3.3 Purposes.
The exclusive purposes and functions of the Trust are (i) to issue and
sell (a) its Preferred Securities pursuant to the Purchase Agreements in
exchange for cash and (b) its Common Securities to the Sponsor in exchange for
cash, and to use the aggregate proceeds of the sale of the Securities to
purchase the Debentures, (ii) to enter into such agreements and arrangements as
may be necessary in connection with the issuance and sale of the Securities and
to take all actions, and exercise such discretion, as may be necessary or
desirable in connection with the issuance and sale of the Securities, and (iii)
except as otherwise limited herein, to engage in only those other activities
necessary or incidental thereto. As more specifically provided in Section 3.7,
the Trust shall not borrow money, incur debt, 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.
SECTION 3.4 Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. Any
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and any action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the Debentures and
the Institutional Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Institutional
Trustee and shall be held and administered by the Institutional Trustee in trust
for the benefit of the Trust and the Holders in accordance with this
Declaration. The Holders shall not have legal title to any part of the assets of
the Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and authority
to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that the Trust may issue no more than one series
of Preferred Securities and no more than one series of Common Securities; and,
provided further, that there shall be no interests in the Trust other than the
Securities, and the issuance of Securities shall be limited to simultaneous
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issuance of both Preferred Securities and Common Securities on the FTN Closing
Date, the ICONS Closing Date and the Sandler Closing Date;
(b) in connection with the issue of the Preferred Securities, at
the direction of the Sponsor, to:
(i) execute and enter into the Purchase Agreements
providing for the sale of the Preferred Securities;
(ii) take any actions to comply with the Securities Act or
any securities laws of the states or other United States or foreign
jurisdictions; and
(iii) if requested by the Sponsor at the request of the
Holders of a Majority in Liquidation Amount of the Preferred
Securities, voting separately as a class, assist in the designation of
the Preferred Securities for trading in the PORTAL (Private Offering,
Resales and Trading through Automatic Linkages) system (the "PORTAL
System"), if available.
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities, and to execute and deliver the
Debenture Purchase Agreements; provided, however, that the Regular Trustees
shall cause legal title to the Debentures to be held of record in the name of
the Institutional Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Institutional Trustee prompt
written notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Securities as to such actions and applicable
record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities set forth in
Annex I hereto;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Institutional
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to give any certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Institutional Trustee, which certificate may be
executed by any Regular Trustee;
(j) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
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(k) to act as, or appoint another Person to act as, Securities
registrar, transfer agent and Paying Agent for the Preferred Securities;
(l) to give prompt written notice to the Holders of any notice
received from the Debenture Issuer of its election to defer payments of interest
on the Debentures by establishing or extending a Deferral Period under the
Indenture;
(m) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the Trust
to effect the purposes for which the Trust was created;
(n) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment
Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the Debenture Issuer
for United States federal income tax purposes,
provided that such actions do not materially adversely affect the interests of
Holders;
(o) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of
the Trust; and
(p) to execute all certificates, documents or instruments, perform
all duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.
The Regular Trustees shall exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Institutional Trustee set forth in Section
3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Debenture Issuer.
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The Regular Trustees shall take all actions on behalf of the Trust that
are not specifically required by this Declaration to be taken by any other
Trustee.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the
Institutional Trustee) shall not and shall cause the Trust not to, engage in any
activity other than in connection with the purposes of the Trust or other than
as required or authorized by this Declaration. In particular, the Trust shall
not, and the Trustees (including the Institutional Trustee) shall not and 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 pursuant to the terms of this Declaration and the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose
or execute any mortgage in respect of, or pledge, any Trust property;
(iv) make any investments other than investments
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;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities;
(vii) make any loans other than in respect of the
Debentures or incur any indebtedness for borrowed money; or
(viii) other than as provided in this Declaration or Annex I
hereto, (A) direct the time, method and place of exercising any trust
or power conferred upon the Debt 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 held in the Trust shall be due
and payable, or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures if such action would
cause the Trust to be classified for United States federal income tax
purposes as other than a grantor trust or would cause the Trust to be
deemed an Investment Company required to be registered under the
Investment Company Act.
SECTION 3.8 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 Holders. The right, title and interest of the Institutional Trustee to the
Debentures shall vest automatically in each Person who may
15
hereafter be appointed as Institutional Trustee in accordance with Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Institutional Trustee does not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Institutional Trustee Account") in the name
of and under the exclusive control of the Institutional Trustee on
behalf of the Holders and, upon the receipt of payments of funds made
in respect of the Debentures held by the Institutional Trustee, deposit
such funds into the Institutional Trustee Account and make payments to
the Holders from the Institutional Trustee Account in accordance with
Section 6.1. Funds in the Institutional Trustee 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 Securities to
the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders in accordance with
the provisions of the Indenture.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) The Institutional Trustee shall take any Legal Action which
arises out of or in connection with (i) an Event of Default of which a
Responsible Officer has actual knowledge or (ii) the Institutional Trustee's
duties and obligations under this Declaration or the Trust Indenture Act. If the
Institutional Trustee fails to enforce its rights under the Debentures after a
Holder of Preferred Securities has made a written request, such Holder may, to
the fullest extent permitted by law, institute a legal proceeding 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. 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 (including Additional Tax
Sums and Compound Interest) on or principal of 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 Preferred Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
interest on the Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such Holder (a
"Direct Action") on or after the respective due date
16
specified in the Debentures. Notwithstanding any payments made to such Holder of
Preferred Securities by the Debenture Issuer in connection with a Direct Action,
the Debenture Issuer shall remain obligated to pay the principal of or interest
on the Debentures held by the Trust or the Institutional Trustee of the Trust,
and the Holders of the Common Securities shall be subrogated to the rights of
the Holder of such Preferred Securities with respect to payments on the
Preferred Securities to the extent of any payments made by the Debenture Issuer
to such Holder in any Direct Action provided; however, that the Holder has
received full payment in respect of such Preferred Securities. Except as
provided in this paragraph and in the Preferred Securities Guarantee, the
Holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
(f) The Institutional Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders pursuant to the
terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed
and has accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a Responsible
Officer occurs and is continuing, the Institutional Trustee shall, for the
benefit of Holders, enforce its rights as holder of the Debentures subject to
the rights of the Holders pursuant to the terms of such Securities.
(h) The Institutional Trustee shall give prompt written notice to
the Holders of the Securities of any notice received by it from the Debenture
Issuer of the Debenture Issuer's election to defer payments of interest on the
Debentures by establishing or extending a Deferral Period with respect thereto.
(i) The Institutional Trustee shall notify all Holders of the
Preferred Securities of any notice of an event of default received from the Debt
Trustee with respect to the Debentures. Such notice shall state that such event
of default under the Indenture also constitutes an Event of Default hereunder.
(j) Subject to this Section 3.8, the Institutional Trustee shall
have none of the duties, liabilities, powers or authority of the Regular
Trustees set forth in Section 3.6.
The Institutional Trustee shall exercise the powers set forth in this
Section 3.8 and in Sections 3.9 and 3.10 in a manner that is consistent with the
purposes and functions of the Trust set out in Section 3.3, and the
Institutional Trustee shall not take any action that is inconsistent with the
purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Institutional
Trustee.
(a) The Institutional Trustee, prior to the occurrence of any
Event of Default and after the curing or waiving of all Events of Default that
may have occurred, shall undertake to perform
17
such duties and 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 2.2) of which a Responsible Officer
has actual knowledge, 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 such person's affairs.
(b) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the
Institutional Trustee shall be determined solely by the
express provisions of this Declaration and the Institutional
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall be
read into this Declaration against the Institutional Trustee;
and
(B) in the absence of bad faith on the part of
the Institutional Trustee, the Institutional Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional
Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Institutional Trustee was negligent in
ascertaining the pertinent facts;
(iii) 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 a Majority in
Liquidation Amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon
the Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that the repayment of such funds
or liability is not
18
reasonably assured to it under the terms of this Declaration or
adequate indemnity against such risk is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to
the custody, safekeeping and physical preservation of the Debentures
and the Institutional Trustee Account shall be to deal with such
property in a similar manner as the Institutional Trustee deals with
similar property for its own account, subject to the protections and
limitations on liability afforded to the Institutional Trustee under
this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the 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 money held by the Institutional
Trustee need not be segregated from other funds held by it except in
relation to the Institutional Trustee Account maintained by the
Institutional Trustee pursuant to Section 3.8(c)(i) and except to the
extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible
for monitoring the compliance by the Regular Trustees or the Sponsor
with their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of the Institutional Trustee.
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and
shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture or other paper or
document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Institutional Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the Sponsor or
the Regular Trustees;
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(iv) 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 registration thereof;
(v) the Institutional Trustee may consult with counsel or
other experts of its selection and the advice or opinion of such
counsel and experts with respect to legal matters or advice within the
scope of such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion, which counsel may be counsel to the Sponsor or any
of its Affiliates, and may include any of its employees. 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;
(vi) 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, order or direction of any Holder, unless
such Holder shall have provided to the Institutional Trustee security
and indemnity reasonably satisfactory to the Institutional Trustee
against the costs, expenses (including attorneys' fees and expenses and
the expenses of the Institutional Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as
may be requested by the Institutional Trustee; provided that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve the
Institutional Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the 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, coupon or other paper or
document, but the Institutional Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it
may see fit;
(viii) the Institutional Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, custodians, nominees or attorneys and
the Institutional Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care by it hereunder;
(ix) any action taken by the Institutional Trustee or its
agents hereunder shall bind the Trust and the Holders; 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;
(x) whenever in the administration of this Declaration
the Institutional Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or
20
right or taking any other action hereunder, the Institutional Trustee
(i) may request instructions from the Holders which instructions may
only be given by the Holders of the same proportion in aggregate
liquidation amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received and (iii) shall be protected in conclusively relying on or
acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration; and
(xii) the Institutional Trustee may request that the Trust
deliver an Officers' Certificate setting forth the names of individuals
and/or titles of officers authorized at such time to take specified
actions pursuant to this Declaration, which Officers' Certificate may
be signed by any person authorized to sign an Officers' Certificate,
including any person specified as so authorized in any such certificate
previously delivered and not superseded.
(b) 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 3.11 Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Institutional Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Statutory Trust Act. Notwithstanding anything herein to the contrary, the
Delaware Trustee shall not be liable for the acts or omissions to act of the
Trust or of the Regular Trustees except for such acts as the Delaware Trustee is
expressly obligated or authorized to undertake under this Declaration or the
Statutory Trust Act and except for the negligence or willful misconduct of the
Delaware Trustee.
SECTION 3.12 Execution of Documents.
Except as otherwise required by applicable law, any one of the Regular
Trustees is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to execute pursuant to Section
3.6.
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SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 Duration of Trust.
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall have existence until May 13, 2039.
SECTION 3.15 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 as an
entirety or substantially as an entirety to any Person or other entity, except
as described in Section 3.15(b) and (c) or Section 8.1(a)(iii).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees, and without the
consent of the Holders, the Institutional Trustee or the Delaware Trustee,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State of the United States; provided that:
(i) if the Trust is not the survivor, such successor
entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Preferred Securities
other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee
of the Successor Entity that possesses the same powers and duties as
the Institutional Trustee as the holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities
are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or with
another organization on which the Preferred Securities are then listed
or quoted;
22
(iv) such merger, consolidation, amalgamation or
replacement does not cause the rating on the Preferred Securities or
any Successor Securities by any nationally recognized statistical
rating organization to be downgraded or withdrawn;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Preferred Securities or any Successor
Securities in any material respect (other than with respect to any
dilution of such Holders' interests in the Successor Entity);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) after giving effect to the transaction, no Event of
Default and no event which, after notice or lapse of time, or both,
would become an Event of Default, has occurred and is continuing under
the Indenture.
(viii) prior to such merger, consolidation, amalgamation or
replacement, the Debenture Issuer 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 Preferred Securities or
any Successor Securities in any material respect (other than
with respect to any dilution of the Holders' interest in the
Successor Entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation,
amalgamation or replacement, the Trust or, if applicable, the
Successor Entity will be treated as a grantor trust for United
States federal income tax purposes;
(ix) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee and the Indenture; and
(x) prior to such merger, consolidation, amalgamation or
replacement, the Institutional Trustee shall have received an Officer's
Certificate from the Regular Trustees and the Sponsor as to the matters
set forth in clauses (i) through (ix) of this Section 3.15(b).
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it, if such consolidation, amalgamation, merger or
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replacement would cause the Trust or, if applicable, the Successor Entity not to
be classified as a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the FTN Closing Date, the Sponsor will purchase Common Securities
issued by the Trust in an amount at least equal to 3% of the total capital of
the Trust immediately prior to the issuance of the Preferred Securities to FTN
pursuant to the FTN Purchase Agreement.
On the ICONS Closing Date, the Sponsor will purchase Common Securities
issued by the Trust in an amount at least equal to 3% of the Preferred
Securities to be issued to ICONS pursuant to the ICONS Purchase Agreement.
On the Sandler Closing Date, the Sponsor will purchase Common
Securities issued by the Trust in an amount at least equal to 3% of the
Preferred Securities to be issued to Sandler pursuant to the Sandler Purchase
Agreement.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to determine the jurisdictions in which to take appropriate
action to qualify or register for sale all or part of the Preferred Securities
and to do any and all such acts, other than actions 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 jurisdictions;
(b) to prepare and request the Regular Trustees to cause the Trust
to apply for listing or quotation of the Preferred Securities on the PORTAL
System upon notice of issuance, if requested by a Majority in Liquidation Amount
of Securities; and
(c) to negotiate the terms of the Purchase Agreements providing
for the issuance of the Preferred Securities.
SECTION 4.3 Right to Proceed.
The Sponsor acknowledges the rights of the Holders to institute a
Direct Action against the Debenture Issuer as set forth in Section 3.8(e)
hereto.
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SECTION 4.4 Expenses.
In connection with the offering, sale and issuance of the Securities by
the Trust and the sale of the Debentures by the Debenture Issuer to the Trust,
the Debenture Issuer, in its capacity as borrower with respect to the
Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions payable to the underwriters in
respect of the Preferred Securities pursuant to the Purchase Agreements and
compensation, reimbursement and indemnification of the Debt Trustee under the
Indenture in accordance with the provisions of Section 6.06 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 commissions to the underwriters in
connection therewith), the fees and expenses (including reasonable counsel fees
and expenses) of the Institutional Trustee, the Delaware Trustee and the Regular
Trustees (including any amounts payable under Article X of this Declaration),
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 agent(s), registrar(s), transfer agent(s),
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 of the Preferred Securities);
(c) be primarily liable for any indemnification obligations
arising with respect to this Declaration; and
(d) 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 Debenture Issuer's obligations under this Section 4.4 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
Debenture Issuer's obligations under this Section 4.4 directly against the
Debenture Issuer and the Debenture Issuer irrevocably waives any right of remedy
to require that any such Creditor take any action against the Trust or any other
Person before proceeding against the Debenture Issuer. The Debenture Issuer
agrees to execute such additional agreements as may be necessary or desirable in
order to give full effect to the provisions of this Section 4.4.
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ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
(a) The number of Trustees initially shall be five. At any time
before the issuance of any Securities, the Sponsor may, by written instrument,
increase or decrease the number of Trustees. After the issuance of any
Securities, the number of Trustees may be increased or decreased by vote of the
Holders of Majority in Liquidation Amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; provided, however,
that, the number of Trustees shall in no event be less than two; and provided
further that (i) one Trustee shall possess the qualifications specified in
Section 5.2; (ii) there shall be at least one Trustee who is an employee or
officer of, or is affiliated with, the Sponsor (a "Regular Trustee"); and (iii)
one Trustee shall be the Institutional Trustee for so long as this Declaration
is required to qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as the Delaware Trustee if it meets the applicable
requirements.
(b) Any action taken by Holders of Common Securities pursuant to
this Article V shall be taken at a meeting of Holders of Common Securities
convened for such purpose or by written consent of such Holders.
(c) Except as otherwise provided herein, no amendment may be made
to this Section 5.1 which would change any rights with respect to the number,
existence or appointment and removal of Trustees, except with the consent of
each Holder of Common Securities.
SECTION 5.2 Delaware Trustee.
If required by the Statutory Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware;
or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law, provided that, if the Institutional Trustee has its principal
place of business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Institutional Trustee shall also be the Delaware
Trustee and Section 3.11 shall have no application.
The initial Delaware Trustee shall be Wilmington Trust Company, until
removed or replaced in accordance with Section 5.6.
SECTION 5.3 Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
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(ii) be a corporation or national association organized
and doing business under the laws of the United States of America or
any State or territory thereof or of the District of Columbia, or a
corporation or other Person permitted by the Commission to act as a
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000, and subject to supervision or examination by
federal, State, territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 5.3(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report
of condition so published.
(b) If at any time the Institutional Trustee shall cease to be
eligible in accordance with Section 5.3(a), the Institutional Trustee shall
resign immediately in the manner and with the effect specified in Section
5.6(c).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act or becomes a creditor of the Sponsor during the time periods
specified in Section 311 of the Trust Indenture Act, 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 Wilmington Trust
Company until removed or replaced in accordance with Section 5.6.
SECTION 5.4 Certain Qualifications of the Regular Trustees and the
Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the Institutional
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.5 Regular Trustees.
The initial Regular Trustees shall be Derrill Crowe, M.D., Victor T.
Adamo and Howard H. Friedman.
(a) Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(b) Except as otherwise required by applicable law, any one of the
Regular Trustees is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to execute pursuant to
Section 3.6.
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(c) A regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Section 5.6(b), Trustees may be appointed or
removed without cause at any time except during an Event of Default:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders
of a Majority in Liquidation Amount of the Common Securities voting as
a class at a meeting of the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be
continuing, with respect to:
(A) the Regular Trustees, by the vote of the
Holders of a Majority in Liquidation Amount of the Common
Securities voting as a class at a meeting of the Holders of
the Common Securities; and
(B) the Institutional Trustee and the Delaware
Trustee, by the vote of the Holders of a Majority in
Liquidation Amount of Preferred Securities voting as a class
at a meeting of the Holders of the Preferred Securities.
(b) The Trustee that acts as
(i) Institutional Trustee shall not be removed in
accordance with Section 5.6(a) until a successor institutional Trustee
possessing the qualifications to act as Institutional Trustee under
Section 5.3(a) (a "Successor Institutional Trustee") has been appointed
and has accepted such appointment by written instrument executed by
such Successor Institutional Trustee and delivered to the Regular
Trustees, the Sponsor and the Institutional Trustee being removed; and
(ii) Delaware Trustee shall not be removed in accordance
with Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees, the Sponsor and the
Delaware Trustee being removed.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office
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(without need for prior or subsequent accounting) by an instrument (a
"Resignation Request") in writing signed by the Trustee and delivered to the
Sponsor and the Trust, which resignation shall take effect upon such delivery or
upon such later date as is specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has
been appointed and has accepted such appointment by instrument
executed by such Successor Institutional Trustee and delivered
to the Trust, the Sponsor and the resigning Institutional
Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be, if the Institutional Trustee or the
Delaware Trustee delivers a Resignation Request in accordance with this Section
5.6.
(e) If no Successor Institutional Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery of a notice of removal or a
Resignation Request, the Institutional Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition, at the expense of the Sponsor, any
court of competent jurisdiction for appointment of a Successor Institutional
Trustee or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper and prescribe, appoint a
Successor Institutional Trustee or Successor Delaware Trustee, as the case may
be.
(f) No Institutional Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Institutional Trustee or
Successor Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees, shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
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SECTION 5.8 Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10 Delegation of Power.
The Regular Trustees shall have power to delegate from time to time to
such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation
30
succeeding to all or substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Institutional Trustee or the Delaware Trustee, as the case may
be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities as set forth in Annex I. If and to the
extent that the Debenture Issuer makes a payment of interest (including Compound
Interest and Additional Tax Sums) on and/or principal of the Debentures held by
the Institutional Trustee (the amount of any such payment being a "Payment
Amount"), the Institutional Trustee shall and is directed, to the extent funds
are available for that purpose, to make a distribution (a "Distribution") of the
Payment Amount to Holders in accordance with the terms of the Securities.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
(a) The Regular Trustees shall, on behalf of the Trust, issue from
time to time one class of preferred securities (the "Preferred Securities"),
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (which terms are incorporated by
reference in, and made a part of, this Declaration as if specifically set forth
herein) and one class of common securities (the "Common Securities"),
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (which terms are incorporated by
reference in, and made a part of, this Declaration as if specifically set forth
herein). The Trust shall issue no securities or other interests in the assets of
the Trust other than the Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by two
Regular Trustees. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustees. Typographical and other minor errors
or defects in any such reproduction of any such signature shall not affect the
validity of any Security. In case any Regular Trustee of the Trust who shall
have signed any of the Securities shall cease to be such Regular Trustee before
the Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Regular Trustee; and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such a
Regular Trustee. Certificates shall be typed, printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution
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thereof, and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation of any stock exchange on which Securities may be listed, or to
conform to usage.
(c) At the time of the delivery of the Preferred Securities, the
Regular Trustees shall cause Preferred Security Certificates to be authenticated
by the Institutional Trustee on behalf of the Trust and delivered to or upon the
written order of the Trust, signed by two Regular Trustees without further
corporate action by the Sponsor, in authorized denominations. A Preferred
Security Certificate shall not be valid until authenticated by the manual
signature of an authorized signatory of the Institutional Trustee. The signature
shall be conclusive evidence that the Preferred Security has been properly
authenticated under this Declaration.
The Institutional Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Securities. An authenticating
agent may authenticate Preferred Securities whenever the Institutional Trustee
may do so. Each reference in this Declaration to authentication by the
Institutional Trustee includes authentication by such agent. An authenticating
agent has the same rights as the Institutional Trustee to deal with the Sponsor
or an Affiliate, and may itself be an Affiliate of the Trust or a Related Party
of the Sponsor.
(d) 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.
(e) Upon issuance of Preferred Securities as provided in this
Declaration, Preferred Securities so issued shall be deemed to be validly
issued, fully paid and nonassessable undivided beneficial interests in the
assets of the Trust entitled to the benefits of this Declaration.
(f) Upon issuance of Common Securities as provided in this
Declaration, Common Securities so issued shall be deemed to be validly issued,
fully paid undivided beneficial interests in the assets of the Trust entitled to
the benefits of this Declaration.
(g) 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.
SECTION 7.2 Paying Agent.
The Trust shall maintain in Wilmington, Delaware an office or agency
where the Preferred Securities may be presented for payment ("Paying Agent").
The Regular Trustees may appoint the Paying Agent and may appoint one or more
additional paying agents in such other locations as it shall determine. The term
"Paying Agent" includes any additional paying agent. The Regular Trustees may
change any Paying Agent without prior notice to any Holder. The Trust shall
notify the Institutional Trustee of the name and address of any Agent not a
party to this Declaration. If the Regular Trustees fail to appoint or maintain
another entity as Paying Agent, the Institutional Trustee shall act as such. The
Trust or any of its Affiliates may act as Paying Agent. The Institutional
Trustee shall initially act as Paying Agent for the Preferred
32
Securities and the Common Securities. Any successor Paying Agent or any
additional Paying Agent shall execute and deliver to the Regular Trustees an
instrument in which such successor Paying Agent or additional Paying Agent shall
agree with the Regular Trustees that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Holders in trust for the benefit of the Holders entitled thereto
until such sums shall be paid to such Holders, will give the Institutional
Trustee notice of any default by the Trust (or any other obligor on the
Securities) in the making of any payment on the Securities and will, at any time
during the continuance of any such default, upon the written request of the
Institutional Trustee, forthwith pay to the Institutional Trustee all sums so
held in trust by such Paying Agent. The Paying Agent shall return all unclaimed
funds to the Institutional Trustee and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the Institutional
Trustee. Any reference in this Declaration to the Paying Agent shall include any
co-paying agent unless the context requires otherwise. Each reference in this
Declaration to payment to the Holders by the Institutional Trustee includes such
payment by a Paying Agent. A Paying Agent has the same rights as the
Institutional Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the Preferred
Securities authenticated by the Institutional Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding.
If a Preferred Security is replaced, paid or purchased, it ceases to be
outstanding unless the Institutional Trustee receives proof satisfactory to it
that the replaced, paid or purchased Preferred Security is held by a bona fide
purchaser.
If Preferred Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Preferred Securities owned
by the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be,
shall be disregarded and deemed not to be outstanding, except that for the
purposes of determining whether the Institutional Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Securities
which the Institutional Trustee actually knows are so owned shall be so
disregarded.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust.
(a) The Trust shall dissolve upon the earlier to occur of:
(i) May 13, 2039, the expiration of the term of the
Trust;
(ii) the bankruptcy, insolvency or liquidation of the
Sponsor or the Trust;
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(iii) the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;
(iv) the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor;
(v) the consent of the Holders of a Majority in
Liquidation Amount of the Securities voting together as a single class
to dissolve the Trust;
(vi) the revocation of the Sponsor's charter and the
expiration of 90 days after the date of revocation without a
reinstatement thereof;
(vii) the distribution of all of the Debentures (at any
time at the option of the Sponsor) to the Holders in exchange for all
of the Securities in accordance with the terms of the Securities and
the Sponsor's receipt and delivery to the Institutional Trustee of an
opinion of nationally recognized independent tax counsel experienced in
such matters, who shall not be an employee of the Sponsor or any of its
Affiliates, that Holders will not recognize gain or loss for United
States federal income tax purposes as a result of such distribution or
exchange; or
(viii) the time when all of the Securities shall have been
called for redemption and the amounts necessary for redemption thereof,
including any Additional Tax Sums or Compound Interest, shall have been
paid to the Holders in accordance with the terms of the Securities.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and after the completion of the winding up of the
Trust, the Regular Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware and the Trust shall thereupon be
terminated.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by law, any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be
freely transferable.
(c) For so long as the Securities remain outstanding, the Sponsor
agrees (i) not to transfer ownership of the Common Securities of the Trust,
provided that any permitted successor
34
of the Sponsor under the Indenture may succeed to the Sponsor's ownership of the
Common Securities, (ii) not to cause, as Sponsor of the Trust, or to permit, as
Holder of the Common Securities, the dissolution, winding-up or liquidation of
the Trust, except as provided in this Declaration and (iii) use its best efforts
to cause the Trust (a) to remain a statutory trust, except in connection with
the distribution of Debentures to the Holders in liquidation of the Trust, the
redemption of all of the Securities, or certain mergers, consolidations or
amalgamations, each as permitted by this Declaration, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes.
SECTION 9.2 Transfer of Certificates.
(a) The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued and authenticated by the Institutional Trustee in the name of the
designated transferee or transferees. Every Certificate surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Certificate. By acceptance of a Certificate, each transferee
shall be deemed to have agreed to be bound by this Declaration.
(b) Prior to the Resale Restriction Termination Date, the
Securities shall bear the Restricted Securities Legend. The Restricted
Securities Legend on any outstanding Security shall not be removed unless there
is delivered to the Trust such satisfactory evidence, which may include an
opinion of counsel, as may be reasonably required by the Trust, that neither the
Restricted Securities Legend nor the restrictions on transfer set forth therein
are required to ensure that transfers thereof comply with the provisions of the
Securities Act or that such Securities are not "restricted" within the meaning
of Rule 144 under the Securities Act. Upon provision of such satisfactory
evidence, the Institutional Trustee, at the written direction of the Trust,
shall authenticate and deliver Securities that do not bear the Restricted
Securities Legend in exchange for the Securities bearing the Restricted
Securities Legend.
(c) When Securities are presented to the Institutional Trustee or
Transfer Agent (x) to register the transfer of such Securities, or (y) to
exchange such Securities for an equal aggregate liquidation amount of Securities
represented by different Certificates, the Institutional Trustee or Transfer
Agent shall register the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met; provided, however, that
the Securities surrendered for registration of transfer or exchange, other than
a transfer made in accordance with Section 9.2(f), shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Trust and the Institutional Trustee or Transfer Agent duly executed by
the Holder thereof or his attorney duly authorized in writing and (i) if such
Securities are being transferred prior to the Resale Restriction Termination
Date to a QIB, accompanied by a
35
certificate of the transferor substantially in the form set forth as Exhibit B
hereto, (ii) if such Securities are being transferred prior to the Resale
Restriction Termination Date to an "accredited investor" within the meaning of
Rule 501(a) (1), (2), (3), (7) or (8) under the Securities Act, accompanied by a
certificate of the transferee substantially in the form set forth as Exhibit C
hereto, or (iii) if such Securities are being transferred prior to the Resale
Restriction Termination Date to a non-U.S. Person in an "offshore transaction,"
accompanied by a certificate of the transferee substantially in the form set
forth in Exhibit D hereto.
(d) The Securities may not be transferred prior to the Resale
Restriction Termination Date except in compliance with restrictions on transfer
set forth in the legend set forth below (the "Restricted Securities Legend"),
and except as otherwise contemplated in Section 9.2(b), prior to the Resale
Restriction Termination Date, each Security shall bear the Restricted Securities
Legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. 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. THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY
BE, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR
SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES
ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE
LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE
SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF THIS SECURITY OR SUCH INTEREST OR
PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF ANY, AS
MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE
DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7)
OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR
SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN 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, (D) PURSUANT TO OFFERS AND SALES TO
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NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S
UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
DEBENTURE ISSUER AND THE TRUST PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C), (D) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM
IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF
WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR
THEREOF, AS THE CASE MAY BE, AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY
ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, ALSO AGREES, REPRESENTS
AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, 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 THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, UNLESS
SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60,
91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING
OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION 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 THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, 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 AND HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL
DELIVER TO THE INSTITUTIONAL TRUSTEE AND TRANSFER AGENT SUCH CERTIFICATES AND
OTHER INFORMATION AS MAY BE REQUIRED BY THE
37
AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN
EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE
THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN FOR ANY
PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH PURPORTED TRANSFEREE SHALL
BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN.
(e) Securities may only be transferred in minimum blocks of
$100,000 aggregate liquidation amount (100 Securities) and multiples of $1,000
in excess thereof. Any attempted transfer of Securities in a block having an
aggregate liquidation amount of less than $100,000 shall be deemed to be void
and of no legal effect whatsoever. Any such purported transferee shall be deemed
not to be a Holder of such Securities for any purpose, including, but not
limited to, the receipt of Distributions on such Securities, and such purported
transferee shall be deemed to have no interest whatsoever in such Securities.
(f) The Institutional Trustee may appoint a transfer agent and
registrar ("Transfer Agent") acceptable to the Trust to perform the functions
set forth in this Section 9.2. The Transfer Agent may perform such functions
whenever the Institutional Trustee may do so. Each reference in this Declaration
to registration and transfer of Preferred Securities by the Institutional
Trustee includes such activities by the Transfer Agent. The Transfer Agent has
the same rights as the Institutional Trustee to deal with the Sponsor or an
Affiliate, and itself may be an Affiliate of the Trust or a Related Party of the
Sponsor.
SECTION 9.3 Deemed Security Holders.
The Trust and the Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole owner 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 shall
have actual or other notice thereof.
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SECTION 9.4 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees, the
Institutional Trustee or any authenticating agent such security or indemnity as
may be reasonably 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, any Regular Trustee on behalf of the Trust shall execute
and deliver and the Institutional Trustee shall authenticate, 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 9.4, the Regular Trustees 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.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Preferred Securities 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 which
shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any
deficit upon dissolution of the Trust or otherwise.
(b) The Debenture Issuer 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 Section 3803(a) of the Statutory Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
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SECTION 10.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's negligence, willful
misconduct or bad faith with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in conclusively
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders might properly be paid.
SECTION 10.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not
40
constitute a breach of this Declaration or any other agreement contemplated
herein or of any duty or obligation of the Indemnified Person at law or in
equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Declaration or by applicable law.
SECTION 10.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Trust) by reason of the fact that such Person is or was a
Company Indemnified Person, against expenses (including attorneys' fees
and expenses), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such
Person reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such Person's conduct
was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good
faith and in a manner which such person reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, that such Person had reasonable
cause to believe that such Person's conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that such Person is or was
a Company Indemnified Person against expenses (including attorneys'
fees and expenses) actually and reasonably incurred by such Person in
connection with the defense or settlement of such action or suit if
such Person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Trust and
except that no such indemnification shall be made in respect of any
claim, issue or matter as to which such Company Indemnified Person
shall have been adjudged to be liable to the Trust unless and only to
the extent that the Court of Chancery of Delaware or the
41
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such Person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or
such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, such Company Indemnified
Person shall be indemnified, to the full extent permitted by law,
against expenses (including attorneys' fees and expenses) actually and
reasonably incurred by such Company Indemnified Person in connection
therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Company Indemnified Person is
proper in the circumstances because such Person has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a Quorum consisting of such Regular Trustees who were not
parties to such action, suit or proceeding, (2) if such a Quorum is not
obtainable, or, even if obtainable, if a Quorum of disinterested
Regular Trustees so directs, by independent legal counsel in a written
opinion or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses)
incurred by a Company Indemnified Person in defending a civil,
criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be
paid by the Debenture Issuer in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Company Indemnified Person to repay such amount if it
shall ultimately be determined that such Person is not entitled to be
indemnified by the Debenture Issuer as authorized in this Section
10.4(a). Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made (i)
by the Regular Trustees by a majority vote of a Quorum of disinterested
Regular Trustees, (ii) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Regular Trustees so directs,
by independent legal counsel in a written opinion or (iii) by the
Debenture Issuer, that, based upon the facts known to the Regular
Trustees, counsel or the Debenture Issuer, as the case may be, at the
time such determination is made, such Company Indemnified Person acted
in bad faith or in a manner that such Person did not believe to be in,
or believed was opposed to, the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company Indemnified
Person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the
Regular Trustees, independent legal counsel or Debenture Issuer
reasonably determine that a Company Indemnified Person deliberately
breached such Person's duty to the Trust or its Common or Preferred
Security Holders.
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(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in such Person's official
capacity and as to action in another capacity while holding such
office. All rights to indemnification under this Section 10.4(a) shall
be deemed to be provided by a contract between the Debenture Issuer and
each Company Indemnified Person who serves in such capacity at any time
while this Section 10.4(a) is in effect. Any repeal or modification of
this Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any Person who is or was a Company
Indemnified Person against any liability asserted against such Person
and incurred by such Person in any such capacity, or arising out of
such Person's status as such, whether or not the Debenture Issuer would
have the power to indemnify such Person against such liability under
the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any Person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to the resulting or
surviving entity as such Person would have with respect to such
constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a Person
who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a
Person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Institutional
Trustee and the Delaware Trustee and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents of
the Institutional Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) including the Institutional Trustee and the Delaware Trustee in
their respective individual capacities, being referred to as a "Fiduciary
Indemnified Person") for, and to hold each Fiduciary Indemnified Person harmless
against, any and all loss, liability, damage, action, suit, claim or expense
including taxes (other than taxes based on the income of such Fiduciary
Indemnified Person) of any kind and nature whatsoever incurred without
negligence or bad faith on the part of such Fiduciary Indemnified Person,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending against or investigating any
claim (regardless of who has asserted such claim) or liability in connection
with the exercise or
43
performance of any of the powers or duties of such Fiduciary Indemnified Person
hereunder. The obligation to indemnify as set forth in this Section 10.4(b)
shall survive the resignation or removal of the Institutional Trustee or the
Delaware Trustee and the satisfaction and discharge of this Declaration.
(c) The Debenture Issuer agrees to pay the Institutional Trustee
and the Delaware Trustee, from time to time, such compensation for all services
rendered by the Institutional Trustee and the Delaware Trustee hereunder as may
be mutually agreed upon in writing by the Debenture Issuer and the Institutional
Trustee or the Debenture Issuer and the Delaware Trustee, as the case may be,
and, except as otherwise expressly provided herein, to reimburse the
Institutional Trustee and the Delaware Trustee upon its or their request for all
reasonable expenses (including legal fees and expenses), disbursements and
advances incurred or made by the Institutional Trustee or the Delaware Trustee,
as the case may be, in accordance with the provisions of this Declaration,
except any such expense, disbursement or advance as may be attributable to its
or their negligence or bad faith.
SECTION 10.5 Outside Businesses
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee (subject to Section 5.3(c)) may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the Trust,
shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the
Delaware Trustee or the 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, the Delaware Trustee 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, the Delaware Trustee 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 10.6 Compensation; Fees
The Sponsor agrees:
(a) to pay to the Trustees from time to time such compensation as
the Trust and the Trustees shall agree to in writing for all services rendered
by them hereunder (which compensation shall not be limited by any provision of
law in regard to compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse
the Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the
44
Trustees 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 their respective negligence or bad faith; and
(c) the provisions of this Section 10.6 shall survive the
termination of this Declaration and the resignation or removal of the Trustees.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters and Reports.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees. The books and records of the Trust, together with a
copy of the Declaration and a certified copy of the Certificate of Trust, and
any amendment thereto shall at all times be maintained at the principal office
of the Trust and shall be open for inspection for any examination by any Holder
or its duly authorized representative for any purpose reasonably related to its
interest in the Trust during normal business hours.
(b) The Regular Trustees shall cause to be prepared and delivered
to each of the Holders, within 90 days after the end of each Fiscal Year of the
Trust, annual financial statements of the Trust, including a balance sheet of
the Trust as of the end of such Fiscal Year, and the related statements of
income or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual
45
income tax returns required to be filed by the Regular Trustees on behalf of the
Trust with any state or local taxing authority.
(e) The Sponsor will cause the Regular Trustees to deliver to each
Holder of Securities, (i) not later than 45 days after the end of each quarterly
period (other than the last quarter of a Fiscal Year) (x) unaudited consolidated
financial statements of the Sponsor (including, without limitation, balance
sheet and statement of operations) for such quarterly period and (y) an
Officer's Certificate of the Sponsor substantially in the form specified in
Exhibit E, (ii) within 60 days after each year end (x) unaudited consolidated
financial statements of the Sponsor (including, without limitation, balance
sheet and statement of operations) for such year and (y) Officer's Certificates
of the Sponsor substantially in the form of Exhibit E with respect to each
subsidiary of the Sponsor that is an insurance company, (iii) within the earlier
of (I) 90 days after the end of each year and (II) such earlier number of days
prescribed by the Commission for filings of Form 10-K by companies required to
make such filings (x) audited consolidated financial statements (including,
without limitation, balance sheet and statement of operations) for such year,
accompanied by the report of the independent accountants with respect thereto,
and (y) an Officer's Certificate of the Sponsor specifying any material
differences between such statements and the statements delivered pursuant to
clause (ii)(x) and (iv) within five Business Days after the filing thereof, each
report Form 10-K or Form 10-Q filed in respect of the Sponsor or the Trust with
the Commission under the Exchange Act.
(f) The Sponsor covenants and agrees to transmit by mail to the
Regular Trustee within 5 days after the filing thereof with the Debt Trustee,
copies of all information, documents and reports filed with the Debt Trustee
under the Indenture.
SECTION 11.3 Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Institutional Trustee shall be made
directly to the Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, State and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount
46
of the withholding to the Holder. In the event of any claimed over withholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Trust may reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be modified and
amended by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two
Regular Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, the
Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Institutional Trustee, 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
(iii) to the extent the result of such amendment would be
to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
47
(B) reduce or otherwise adversely affect the
powers of the Institutional Trustee in contravention of the
Trust Indenture Act; or
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act.
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder may be effected only with such
additional requirements as may be set forth in the terms of such Securities;
(d) Sections 3.8(e), 4.4, 9.1(c), 10.1(c) and this Section 12.1
shall not be amended without the consent of all of the Holders of the
Securities;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in Liquidation Amount of the Common Securities;
(f) The rights of the Holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
Liquidation Amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended by the Regular Trustees without the consent of the Holders 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;
(iv) conform to any change in Rule 3a-5 or written change
in interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority, which amendment does
not have a material adverse effect on the right, preferences or
privileges of the Holders; and
(v) preserve the status of the Trust as a grantor trust
for United States federal income tax purposes, which amendment does not
have a material adverse effect on the right, preferences or privileges
of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the
48
Holders of such class if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders calling a
meeting shall specify in writing the Certificates held by the Holders exercising
the right to call a meeting and only those Securities specified shall be counted
for purposes of determining whether the required percentage set forth in the
second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders:
(i) notice of any such meeting shall be given to all the
Holders having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent
or approval of the Holders is permitted or required under this
Declaration or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders. Any action that may
be taken at a meeting of the Holders may be taken without a meeting and
without prior notice if a consent in writing setting forth the action
so taken is signed by the Holders owning not less than the minimum
amount of Securities in liquidation amount that would be necessary to
authorize or take such action at a meeting at which all Holders having
a right to vote thereon were present and voting. Prompt notice of the
taking of action without a meeting shall be given to the Holders
entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted to the Holders
for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder is entitled to participate,
including waiving notice of any meeting, or voting or participating at
a meeting. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Holder executing it.
Except as otherwise provided herein, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by the
Regular Trustees or by such other Person that the Regular Trustees may
designate; and
(iv) subject to the requirements specified in the
Statutory Trust Act, this Declaration, the terms of the Securities, the
Trust Indenture Act and the listing rules of any stock exchange on
which the Preferred Securities are then listed or trading, the Regular
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders, including notice of the
time, place or purpose of any meeting at which any matter is to be
voted on by any Holders, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements,
49
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Institutional Trustee.
The Trustee that acts as 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 banking corporation, a national
banking association or a bank or trust company, duly organized, validly existing
and in good standing under the laws of the United States or any state thereof,
as the case may be, with corporate power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of, this
Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of this Declaration have 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 constitutes the 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 and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law); and the Institutional
Trustee has duly authenticated the Preferred Securities;
(c) the execution, delivery and performance of this Declaration by
the Institutional Trustee do not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee;
(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;
(e) on the FTN Closing Date, the ICONS Closing Date and the
Sandler Closing Date, the Institutional Trustee will be the record holder of the
Debentures and the Institutional Trustee has not knowingly created any liens or
encumbrances on such Debentures; and
(f) the Institutional Trustee satisfies the qualifications set
forth in Section 5.3.
50
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) the Delaware Trustee is a Delaware banking corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with authority to execute and deliver, and to carry out and perform
its obligations under the terms of, this Declaration;
(b) the execution, delivery and performance by the Delaware
Trustee of this Declaration have been duly authorized by all necessary corporate
action on the part of the Delaware Trustee; this Declaration has been duly
executed and delivered by the Delaware Trustee and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration;
and
(d) the Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and meets the requirements
of Section 5.2.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders):
ProAssurance Capital Trust II
c/o ProAssurance Corporation
100 Brookwood Place
Birmingham, AL 35209
Attention: Howard H. Friedman, Chief Financial Officer
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders):
51
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302/636-4140
Telephone: 302/651-1000 or 302/636-6000
(c) 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):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302/636-4140
Telephone: 302/651-1000 or 302/636-6000
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
ProAssurance Corporation
100 Brookwood Place
Birmingham, AL 35209
Attention: Howard H. Friedman, Chief Financial Officer
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
THIS DECLARATION AND EACH SECURITY AND THE RIGHTS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED
BY SUCH LAWS, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
52
SECTION 14.3 Submission to Jurisdiction.
Each party hereto irrevocably and unconditionally submits to the
nonexclusive jurisdiction of the courts of the State of New York and the federal
courts of the United States located in the Borough of Manhattan, The City of New
York (and any courts having jurisdiction over appeals therefrom) in respect of
any action, suit or proceeding arising out of this Declaration or the Securities
or any of the transactions contemplated hereby or thereby and waives to the
extent permitted by law any objection to venue in respect thereof (based on
inconvenient forum or otherwise). Unless a party maintains a registered agent in
the State of New York, each such party agrees that process in any such suit may
be served by mailing the relevant process, by registered or certified mail,
return receipt requested, to the address of such party then specified pursuant
to Section 14.01.
SECTION 14.4 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 14.5 Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Declaration have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 14.6 Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether or not so expressed.
SECTION 14.7 Partial Enforceability.
In case any one or more of the provisions contained in this Declaration
or in the Securities shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Declaration or of such Securities,
but this Declaration and such Securities shall be construed as if such invalid
or illegal or unenforceable provision had never been contained herein or
therein.
SECTION 14.8 Counterparts.
This Declaration may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.
53
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
_____________________________________________
Derrill Crowe, M.D., as Regular Trustee
_____________________________________________
Victor T. Adamo, as Regular Trustee
_____________________________________________
Howard H. Friedman, as Regular Trustee
WILMINGTON TRUST COMPANY,
as Institutional Trustee and Delaware Trustee
_____________________________________________
Name:
Title:
PROASSURANCE CORPORATION
as Sponsor, Common Securities Holder and
Debenture Issuer
_____________________________________________
Name: Howard H. Friedman
Title: Chief Financial Officer
54
ANNEX I
TERMS OF PREFERRED SECURITIES
TERMS OF COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of May 12, 2004 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration:
1. Designation and Number.
(a) Preferred Securities. 10,000 Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
Ten Million Dollars ($10,000,000) and a liquidation amount with respect to the
assets of the Trust of $1,000 per preferred security, are hereby designated for
the purposes of identification only as "FTN Preferred Securities." 12,000
Preferred Securities of the Trust with an aggregate liquidation amount with
respect to the assets of the Trust of Twelve Million Dollars ($12,000,000) and a
liquidation amount with respect to the assets of the Trust of $1,000 per
preferred security, are hereby designated for the purposes of identification
only as "ICONS Preferred Securities." 10,000 Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
Ten Million Dollars ($10,000,000) and a liquidation amount with respect to the
assets of the Trust of $1,000 per preferred security, are hereby designated for
the purposes of identification only as "Sandler Preferred Securities."(together
with the FTN Preferred Securities and the ICONS Preferred Securities, the
"Preferred Securities") The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any stock exchange on which the Preferred Securities are listed.
(b) Common Securities. 310 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Three
Hundred Ten Thousand Dollars ($310,000) and a liquidation amount with respect to
the assets of the Trust of $1,000 per common security, are hereby designated for
the purposes of identification only as "FTN Common Securities." 372 Common
Securities of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of Three Hundred Seventy Two Thousand Dollars ($372,000) and
a liquidation amount with respect to the assets of the Trust of $1,000 per
common security, are hereby designated for the purposes of identification only
as "ICONS Common Securities." 310 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Three
Hundred Ten Thousand Dollars ($310,000) and a liquidation amount with respect to
the assets of the Trust of $1,000 per common security, are hereby designated for
the purposes of identification only as "Sandler Common Securities"(together with
the FTN Common Securities and the ICONS Common Securities, the "Common
Securities") The Common Security Certificates evidencing the Common Securities
shall be substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
(c) The Preferred Securities and the Common Securities (referred
to collectively as the "Securities") represent undivided beneficial interests in
the assets of the Trust.
(d) In connection with the purchase of the Securities, and subject
to the execution of the applicable Purchase Agreements, the Sponsor will deposit
in the Trust, and the Trust will purchase, respectively, as trust assets, (i)
Debentures of the Sponsor having an aggregate principal amount of Ten Million
Three Hundred Ten Thousand Dollars ($10,310,000) on the FTN Closing Date, (ii)
Debentures of the Sponsor having an aggregate principal amount of Twelve Million
Three Hundred Seventy Two Thousand Dollars ($12,372,000) on the ICONS Closing
Date and (iii) Debentures of the Sponsor having an aggregate principal amount of
Ten Million Three Hundred Ten Thousand Dollars ($10,310,000) on the Sandler
Closing Date, in each case, bearing interest at an annual rate equal to the
annual Distribution Rate, as it may change from time to time, on the Securities
and having payment and prepayment/maturity provisions which correspond to the
payment and redemption provisions of the Securities.
2. Distributions.
(a) Distributions will be payable at the rate per annum (the
"Distribution Rate"), determined with respect to a Distribution Period (as
defined below), equal to LIBOR (as defined below), as determined on the
Determination Date (as defined below) with respect to such Distribution Period,
plus 3.85%, of the stated liquidation amount of $1,000 per Security (provided,
that the Distribution Rate for any Distribution Period prior to the Distribution
Period commencing on the Distribution Payment Date on May 15, 2009 may not
exceed 12.50% per annum and, provided further, that the Distribution Rate for
any Distribution Period may not exceed the highest rate permitted by New York
law as the same may be modified by United States law of general application),
such Distribution Rate being the rate of interest payable on the Debentures to
be held by the Institutional Trustee. Distributions in arrears beyond the
applicable Distribution Payment Date will bear interest thereon compounded
quarterly at the applicable periodic Distribution Rate ("Compound Interest") to
the extent permitted by applicable law. The term "Distributions," as used
herein, includes such cash distributions and any such interest (including
Additional Tax Sums and Compound Interest) payable unless otherwise stated. A
Distribution will be made by the Institutional Trustee only to the extent that
payments are made in respect of the Debentures held by the Institutional Trustee
and to the extent the Trust has funds available in the Institutional Trustee
Account. The term "Distribution Period" means the period from and including a
Distribution Payment Date, or in the case of the first Distribution Period, the
original date of issuance of the Securities to, but excluding, the next
succeeding Distribution Payment Date or, in the case of the last Distribution
Payment Period, the related date of redemption.
(b) The amount of Distributions payable for any Distribution
Period will be computed for any full quarterly Distribution Period on the basis
of a 360-day year and the actual number of days elapsed in such Distribution
Period. All percentages resulting from any calculations on the 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.,
7.553455% (or .07553455) being rounded to 7.55346% (or .0755346)), and all
dollar amounts used in or
A-2
resulting from any such calculation will be rounded to the nearest cent (with
one-half cent being rounded upward).
(c) Distributions on the Securities will be cumulative, and will
accrue from (i) May 12, 2004, with respect to the FTN Securities; (ii) the ICONS
Closing Date with respect to the ICONS Securities; and (iii) the Sandler Closing
Date with respect to the Sandler Securities. Except as otherwise described
below, Distributions on the Securities will be payable quarterly in arrears, on
February 15, May 15, August 15 and November 15 of each year, commencing on
August 15, 2004 when, as and if available for payment, except as otherwise
described below (each, a "Distribution Payment Date").
(d) The "Calculation Agent" shall be the Institutional Trustee and
will calculate the Distribution Rate for each Distribution Period based on LIBOR
determined as of two London Business Days next preceding the first day of each
such Distribution Period (each, a "Determination Date"). "LIBOR" means, with
respect to a Distribution Period commencing on a Distribution Date (in the
following order of priority):
(i) the rate (expressed as a percentage per annum) for
Eurodollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the applicable
Determination Date;
(ii) if such rate does not appear on Telerate Page 3750 as
of 11:00 a.m. (London time) on the applicable Determination Date, the
Calculation Agent will request the principal London offices of four
leading banks in the London interbank market as selected by the
Calculation Agent to provide such banks' offered quotations (expressed
as percentages per annum) to prime banks in the London interbank market
for Eurodollar deposits having a three-month maturity as of 11:00 a.m.
(London time) on such Determination Date, and if at least two
quotations are provided, 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 Calculation Agent will request four
major New York City banks selected by the Calculation Agent to provide
such banks' offered quotations (expressed as percentage per annum) to
leading European banks for loans in Eurodollars as of 11:00 a.m. (New
York City time) on such Determination Date, and if at least two
quotations are provided, LIBOR will be the arithmetic mean of such
quotations;
(iv) if fewer than two such quotations are provided as
requested in clause (iii) above, LIBOR will be LIBOR as determined on
the preceding Determination Date.
On each Determination Date, the Calculation Agent will notify
any Paying Agent and the Sponsor of the Distribution Rate for the related
Distribution Period. The Calculation Agent shall, upon the request of any Holder
of any Securities, provide the Distribution Rate then in effect. The Sponsor
shall from time to time provide any necessary information to the Paying
A-3
Agent relating to any original issue discount and interest on the Securities
that is included in any payment and reportable for taxable income calculation
purposes.
Absent manifest error, the Calculation Agent's determination
of LIBOR and its calculation of the applicable Distribution Rate for each
Distribution Period will be final and binding.
(e) So long as no Event of Default under the Indenture has
occurred and is continuing, the Debenture Issuer has the right under the
Indenture, at any time and from time to time during the term of the Debentures,
to defer payments of interest on the Debentures by deferring the payment of
interest from time to time on the Debentures for a period (each of which periods
shall end on a Distribution Payment Date, each a "Deferral Period"); provided,
that (x) no Deferral Period may exceed 20 consecutive quarterly periods and (y)
no Deferral Period shall extend beyond the Stated Maturity or the earlier
redemption of the Debentures. No interest on the Debentures shall be due and
payable during a Deferral Period. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, to the extent
permitted by applicable law, quarterly Distributions will continue to accrue
with interest thereon at the then applicable Distribution Rate compounded
quarterly for each quarter of any Deferral Period. Any interest accrued on the
Debentures during a Deferral Period shall be paid Pro Rata to holders of
Debentures on the first payment date following the Deferral Period and the
Payment Amount shall be paid Pro Rata to the Holders on the first Distribution
Payment Date following the Deferral Period. Before the termination of any such
Deferral Period, the Debenture Issuer may further extend such Deferral Period;
provided that such Deferral Period, together with all such previous and further
extensions within such Deferral Period shall not exceed 20 consecutive quarterly
periods or extend beyond the Stated Maturity or earlier redemption of the
Debentures. Upon the termination of any Deferral Period and the payment of all
deferred interest then due, the Debenture Issuer may commence a new Deferral
Period, subject to the foregoing requirements. In the event that the Debenture
Issuer exercises this right, then the Debenture Issuer shall not (i) declare or
pay any dividend on, make any distribution or other payment with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock (other than (a) repurchases, redemptions or other acquisitions
of shares of capital stock of the Debenture Issuer in connection with the
satisfaction by the Debenture Issuer of its obligations under employee benefit
plans, (b) as a result of an exchange or conversion of any class or series of
the Debenture Issuer's capital stock for any other class or series of the
Debenture Issuer's capital stock, (c) the purchase of fractional interests in
shares of the Debenture Issuer's capital stock 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
shareholders' rights plan or the redemption or repurchase of rights pursuant
thereto or (e) any dividend or distribution in the form of capital stock or
rights to acquire capital stock where the rights of the capital stock being
issued, or issuable pursuant to such rights, rank pari passu or junior to the
capital stock as to which such dividend or distribution is paid), (ii) make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Debenture Issuer that rank pari passu
with or junior to the Debentures and (iii) make any guarantee payments with
respect to the foregoing (other than pursuant to the
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Preferred Securities Guarantee). The quarterly period in which any notice is
given pursuant to this Section 2(c) shall count as one of the 20 quarterly
period in the maximum Deferral Period.
(f) Distributions on the Securities will be payable promptly by
the Institutional Trustee upon receipt of immediately available funds to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates, which will be the fifteenth calendar day prior to the
relevant Distribution Payment Date. The record dates and Distribution Payment
Dates shall be the same as the record dates and interest payment dates on the
Debentures. 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 the corresponding interest payment on the Debentures, will
forthwith 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 established by the Regular Trustees, which record date
shall correspond to the special record date or other specified date determined
in accordance with the Indenture; provided, however, that Distributions shall
not be considered payable on any Distribution Payment Date falling within a
Deferral Period unless the Debenture Issuer has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
Payment Date. Distributions on the Securities will be paid by the Trust. All
Distributions paid with respect to the Securities shall be paid on a Pro Rata
basis to Holders thereof entitled thereto. If any date on which Distributions
are payable on the Securities is not a Business Day, then payment of the
Distributions payable on such date will be made on, and such Distribution
Payment Date will be moved to, the next succeeding day that is a Business Day
and additional interest will accrue for each day that such payment is delayed as
a result thereof; except that, if such next Business Day is in the next
succeeding calendar month, such payment shall be made on the preceding Business
Day, in each case with the same force and effect as if made on the date such
payment otherwise would have been payable; provided, however that in the event
that the redemption date is not a Business Day, then payment of liquidation
amount, distributions and premium (if any) payable on such date will be made on
the next Business Day (and without any additional accrual of interest or other
payment in respect of such delay).
(g) If at any time while the Institutional Trustee is the Holder
of any Securities, the Trust or the Institutional Trustee is required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, the Debenture Issuer will pay as additional
interest ("Additional Tax Sums") on the Debentures held by the Institutional
Trustee, such amounts as shall be required so that the net amounts received and
retained by the Trust and the Institutional Trustee after paying any such taxes,
duties, assessments or other governmental charges will be equal to the amounts
the Trust and the Institutional Trustee would have received had no such taxes,
duties, assessments or other governmental charges been imposed.
(h) 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 among the Holders.
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3. Liquidation Distribution Upon Dissolution.
In the event of any dissolution of the Trust (other than in connection
with the redemption of the Securities), the Trust shall be liquidated by the
Regular Trustees as expeditiously as the Regular Trustees determine to be
possible by distributing to the Holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, a Like Amount (as defined
below) of the Debentures, unless such distribution is determined by the
Institutional Trustee not to be practicable, in which event such Holders will be
entitled to receive out of the assets of the Trust legally available for
distribution to Holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, an amount equal to the aggregate of the
liquidation amount of $1,000 per Security plus accumulated and unpaid
Distributions thereon to the date of payment plus, if such liquidation occurs
prior to May 12, 2009, an amount equal to the applicable premium described in
the definition of "Redemption Price" in Section 4(a) (such distribution being
the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having a liquidation amount equal to the principal amount of
Debentures to be paid in accordance with their terms and (ii) with respect to a
distribution of Debentures upon the liquidation of the Trust, Debentures having
a principal amount equal to the liquidation amount of the Securities of the
Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets legally available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust with respect to the Securities shall be paid on a Pro Rata
basis.
4. Redemption and Distribution.
(a) Redemption of the Securities will occur simultaneously with
any repayment of the Debentures, whether at maturity or earlier prepayment. The
Debentures will mature on May 12, 2034 unless prepaid earlier as described in
this Section 4 (the "Stated Maturity").
Upon the repayment of the Debentures in whole or in part, whether at
maturity or earlier prepayment, the proceeds from such repayment shall be
simultaneously applied to redeem Securities having an aggregate liquidation
amount equal to the aggregate principal amount of the Debentures so repaid at
the Redemption Price. The "Redemption Price" shall be $1,000 per Security, plus
an amount equal to unpaid Distributions thereon accumulated to the date of
redemption, payable in cash, plus, if the redemption occurs prior to May 12,
2009, a premium in cash equal to the product of (i) $1,000 per Security, and
(ii) the percentage specified below for the applicable date of redemption
provided, that the Trust will obtain the prior approval of the applicable
insurance regulatory authority, if necessary:
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Redemption During the 12-Month
- ------------------------------
Period Beginning May 12, Percentage of Principal Amount
------------------------ ------------------------------
2004 5%
2005 4%
2006 3%
2007 2%
2008 1%
2009 and thereafter 0%
If fewer than all the outstanding Securities are to be so redeemed, the
Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed
will be as described in Section 4(f)(ii) below.
(b) The Debentures are prepayable prior to the Stated Maturity at
the option of the Company (i) in whole or in part, from time to time on an
Interest Payment Date specified in the Indenture, on any Interest Payment Date
(as defined in the Indenture) on or after May 12, 2009 or (ii) at any time prior
to May 12, 2009, in whole but not in part, upon the occurrence and continuation
of a Special Event (but within the time limitations specified in the Indenture),
in either case at a prepayment price (the "Prepayment Price") equal to 100% of
the principal amount thereof plus unpaid interest thereon (including Additional
Tax Sums and Compound Interest, if any) accrued to the date of prepayment, plus
the applicable premium (if any) specified in the Indenture.
(c) The following terms used herein shall be defined as follows:
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
such matters, who shall not be an officer or employee of the Sponsor or any of
its Affiliates, to the effect that, as a result of the occurrence of a change in
law or regulation or a written change (including any announced prospective
change) in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act,
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 Preferred
Securities.
"Special Event" means a Tax Event or an Investment Company Event, as
the case may be.
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"Tax Event" means that the Debenture Issuer and the Regular Trustees
shall have received an opinion of a nationally recognized independent tax
counsel experienced in such matters, who shall not be an officer or employee of
the Sponsor or any of its Affiliates, to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of the 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 on the Debentures is not, or within 90
days of the date of such opinion will not be, deductible by the Debenture Issuer
(assuming the Debenture Issuer is organized under the laws of any state of the
United States or the District of Columbia), in whole or in part, for United
States federal income tax purposes or (iii) the Trust is, or will be within 90
days of the date of such opinion, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
On the date fixed for any distribution of Debentures upon dissolution
of the Trust, (i) the Preferred Securities will no longer be deemed to be
outstanding and (ii) all certificates representing Preferred Securities will be
deemed to represent Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of, with an interest rate identical to the
Distribution Rate, as in effect from time to time, of, and accrued and unpaid
interest equal to accumulated and unpaid Distributions on, such Preferred
Securities until such certificates are presented to the Debenture Issuer or its
agent for transfer or reissuance.
(e) Redemption or Distribution Procedures.
(i) Notice of any prepayment of the Debentures, or notice
of distribution of Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail to
each Holder of Securities to be redeemed or exchanged not fewer than 30
nor more than 60 days before the date fixed for redemption or exchange
thereof which, in the case of a redemption, will be the date fixed for
prepayment of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are given
pursuant to this Section 4(e)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders. Each
Redemption/Distribution Notice shall be addressed to the Holders at the
address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
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(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder.
(iii) If 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 Section 4 (which notice
will be irrevocable), then by 10:00 a.m., New York City time, on the
redemption date, the Debenture Issuer will deposit with one or more
paying agents an amount of money sufficient to redeem on the redemption
date all the Securities so called for redemption at the Redemption
Price. If a Redemption/Distribution Notice shall have been given and
funds deposited as required, if applicable, then immediately prior to
the close of business on the date of such deposit, or on the redemption
date, as applicable, Distributions will cease to 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 Redemption Price, but without
interest on such Redemption Price. On presentation and surrender of
such Securities at a place of payment specified in said notice, the
said Securities or the specified portions thereof shall be paid and
redeemed by the Trust at the Redemption Price. Neither the Regular
Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities that have been so called for
redemption. If any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay)
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 Redemption Price in respect of any
Securities is improperly withheld or refused and not paid either by the
Institutional Trustee or by the Sponsor as guarantor pursuant to the
Preferred Securities Guarantee, Distributions on such Securities will
continue to accumulate from the original redemption date to the actual
date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating
the Redemption Price.
(iv) The Trust shall not be required to (i) issue, or
register the transfer or exchange of, any Securities during a period
beginning at the opening of business 15 days before the mailing of a
notice of redemption of Securities and ending at the close of business
on the day of the mailing of the relevant notice of redemption and (ii)
register the transfer or exchange of any Securities so selected for
redemption, in whole or in part, except the unredeemed portion of any
Securities being redeemed in part.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws),
the Sponsor or any of its subsidiaries may at any time and from time to
time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
5. Voting Rights - Preferred Securities.
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(a) Except as provided under Sections 5(b), 6(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) Subject to the requirements set forth in the immediately
following paragraph, the Holders of a Majority in Liquidation Amount of
Preferred 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 to direct the exercise of 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 to it under the Indenture as holder of the
Debentures, (ii) waive any past Event of Default and its consequences 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 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 a Super Majority, only the Holders of at least such Super Majority in
aggregate liquidation amount of the Preferred Securities may direct the
Institutional Trustee to give such consent or take such action; and provided
further, that where a consent or action under the Indenture is only effective
against each holder of Debentures who has consented thereto, such consent or
action will only be effective against a Holder of Preferred Securities who
directs the Institutional Trustee to give such consent or take such action. The
Institutional Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities. If the
Institutional Trustee fails to enforce its rights under the Debentures after a
holder of record of Preferred Securities has made a written request, such Holder
of Preferred Securities may, to the fullest extent permitted by law, 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.
The Institutional Trustee shall promptly notify all holders of
Securities of any Default or Event of Default (as those terms are defined in the
Indenture), actually known to the Institutional Trustee, except for any Default
or Event of Default (i) which has been cured prior to the giving of the notice,
(ii) is a Default or Event of Default constituting failure to pay principal or
interest on the Debentures or for situations in which the Institutional Trustee
determines in good faith that the withholding of such notice is in the interest
of the Holders of Securities.
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 on or principal of 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 Preferred Securities may institute a Direct
Action for enforcement of payment to such Holder of the principal of or interest
on the Debentures having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder on or after the
respective due date specified in the Debentures. Notwithstanding any payments
made to such Holder of Preferred Securities by the Debenture Issuer in
connection with a Direct Action, the Debenture Issuer shall remain obligated to
pay the principal of or interest on the Debentures held by the Trust or the
Institutional Trustee of the Trust, and the Holders of the Common Securities
shall be subrogated to the rights of the
A-10
Holder of such Preferred Securities with respect to payments on the Preferred
Securities under the Declaration to the extent of any payments made by the
Debenture Issuer to such Holder in any Direct Action provided, however, that the
Holder has received full payment in respect of such Preferred Securities. Except
as provided in this paragraph and Section 3.8(e) of the Declaration, the Holders
of Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
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) through (iv) above unless the
Institutional Trustee has obtained an opinion of a nationally recognized tax
counsel experienced in such matters to the effect that, taking such action into
account, the Trust will continue to be classified as a grantor trust for United
States federal income tax purposes.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, to be
mailed to each Holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote and (iii) instructions for the delivery of
proxies.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c) and 7 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be
continuing, the Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees. If an Event of
Default has occurred and is continuing, the Institutional Trustee and the
Delaware Trustee may be removed at such time only by the Holders of a Majority
in Liquidation Amount of the outstanding Preferred Securities. In no event will
the Holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Regular Trustees, which voting rights are vested
exclusively in the Sponsor as the Holder of the Common Securities. No
resignation or
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removal of a Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment of a successor trustee in
accordance with the provisions of the Declaration.
During an Event of Default, no vote or consent of the Holders of the
Common Securities will be required or obtained by the Regular Trustees with
respect to that Event of Default, until that Event of Default has been cured or
waived. During that Event of Default, the Institutional Trustee will act on
behalf of the Holders of the Preferred Securities without regard to any vote or
consent by the Holders of the Common Securities.
(c) Subject to Section 2.2 of the Declaration and only after the
Event of Default with respect to the Preferred 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 Debt
Trustee, or exercising any trust or power conferred on the Debt Trustee with
respect to the Debentures, (ii) waive any past default and its consequences that
is waivable under Section 5.07 of the Indenture or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and payable; provided that, where a consent or action under the Indenture
would require the consent or act of a Super Majority of Holders of Debentures
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 Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding; and
provided further, that where a consent or action under the Indenture would
require the consent or action of each holder of Debentures, each Holder of
Preferred Securities must direct the Institutional Trustee to give such consent
or take such action. Pursuant to this Section 6(c), the Institutional Trustee
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Preferred Securities. Except with respect to directing the time,
method and place of conducting a proceeding for a remedy, the Institutional
Trustee shall not take any action in accordance with the directions of the
Holders of the Common Securities under this paragraph unless the Institutional
Trustee has obtained an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that, as a result of such action, the
Trust will not fail to be classified as a grantor trust for United States
federal income tax purposes. If the Institutional Trustee fails to enforce its
rights under the Declaration, any Holder of Common Securities may, to the
fullest extent permitted by law, 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 Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, to be
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mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote and (iii) instructions for the delivery of
proxies.
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 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees 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, dissolution, winding-up or termination of the Trust, other than as
described in Section 8.1 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 (but not on any other amendment or proposal) and such
amendment or proposal shall not be effective except with the approval of the
Holders of a Majority in Liquidation Amount of the Securities affected thereby,
provided that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred 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 the Holders 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 on the Indenture, 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 the
Holders of 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 which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; and provided, further, that where a consent or action under the
Indenture is only effective against each holder of Debentures who has consented
thereto, such consent or action will only be effective against a Holder of
Preferred Securities who directs the Institutional Trustee to give such consent
or take such action; and provided, further, that the Institutional Trustee shall
not take any action in accordance with the directions of the Holders of the
Securities under this Section 7(b) unless the Institutional Trustee has obtained
an opinion of a nationally recognized tax counsel experienced in such matters to
the effect that for the purposes of United States federal income tax the Trust
will be classified as a grantor trust taking such action into account.
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(c) Notwithstanding the foregoing, no amendment or modification
may be made to the Declaration if such amendment or modification would (i) cause
the Trust not to be classified for purposes of United States federal income
taxation as 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.
8. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default has
occurred and is continuing, in which case any funds available to make such
payment shall be paid first to each Holder of the Preferred Securities pro rata
according to the aggregate liquidation amount of Preferred Securities held by
the relevant Holder of Preferred Securities relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder of Common Securities
relative to the aggregate liquidation amount of all Common Securities
outstanding.
9. Ranking.
The Preferred Securities rank pari passu, and payment thereon shall be
made Pro Rata, with the Common Securities except that, where an Event of Default
occurs and is continuing, the rights of Holders of the Common Securities to
receive payment of periodic Distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the Holders of
the Preferred Securities.
10. Acceptance of Preferred Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and to the provisions of the Indenture, including the respective
subordination provisions therein.
11. No Preemptive Rights.
The Holders shall have no preemptive or similar rights to subscribe for
any additional securities of the Trust or otherwise.
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12. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration or the Preferred
Securities Guarantee and the Indenture to a Holder without charge on written
request to the Sponsor at its principal place of business.
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EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. 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. THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY
BE, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR
SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES
ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE
LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE
SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF THIS SECURITY OR SUCH INTEREST OR
PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF ANY, AS
MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE
DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7)
OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR
SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN 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, (D) PURSUANT TO OFFERS AND SALES TO NON-US PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER THE SECURITIES ACT OR
(E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE DEBENTURE ISSUER AND THE
TRUST PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D) OR
(E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE AMENDED
AND RESTATED DECLARATION OF
A1-1
TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST.
THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS
ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS.
THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY
ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, ALSO AGREES, REPRESENTS
AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, 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 THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, UNLESS
SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60,
91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING
OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION 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 THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, 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 AND HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL
DELIVER TO THE INSTITUTIONAL TRUSTEE AND TRANSFER AGENT SUCH CERTIFICATES AND
OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF
TRUST TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN
EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY
A1-2
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY
OR ANY INTEREST OR PARTICIPATION HEREIN FOR ANY PURPOSE, INCLUDING, BUT NOT
LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR
PARTICIPATION, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST
WHATSOEVER IN THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN.
Certificate Number: P-__ Number of Preferred Securities: ______
Certificate Evidencing Preferred Securities
of
PROASSURANCE CAPITAL TRUST II
Preferred Securities
(liquidation amount $1,000 per Preferred Security)
ProAssurance Capital Trust II, a statutory trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that _______________
(the "Holder") is the registered holder of _____ preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust,
designated the Preferred Securities (liquidation amount $1,000 per Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust, dated
as of May 12, 2004, as the same may be amended from time to time (the
"Declaration of Trust"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration of Trust. Capitalized
terms used herein but not defined shall have the meaning given them in the
Declaration of Trust. The Holder is entitled to the benefits of the Preferred
Securities Guarantee to the extent provided therein. The Sponsor will provide a
copy of the Declaration of Trust, the Preferred Securities Guarantee and the
Indenture to a Holder without charge upon written request to the Trust at its
principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration of Trust and is entitled to the benefits thereunder.
In addition, the Holder is deemed to have (i) agreed to the terms of
the Indenture and the Debentures, including that the Debentures are subordinate
and junior in right of payment to all present and future Senior Indebtedness (as
defined in the Indenture) as and to the extent provided in the Indenture and
(ii) agreed to the terms of the Preferred Securities Guarantee, including that
the Preferred Securities Guarantee is subordinate and junior in right of payment
to all other liabilities of the Sponsor, including the Debentures, except those
made pari passu or subordinate by their terms, and pari passu with the most
senior preferred or preference stock now or hereafter issued by the Sponsor and
with any guarantee now or hereafter entered into by the Sponsor in
A1-3
respect of any preferred or preference stock of any Affiliate of the Sponsor. In
addition, each Holder hereof by his or her acceptance hereof, hereby agrees to
treat the Debentures as indebtedness for all United States federal income tax
purposes.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
Unless the Institutional Trustee's Certificate of Authentication hereon
has been properly executed, these Preferred Securities shall not be entitled to
any benefit under the Declaration or be valid or obligatory for any purpose.
A1-4
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of May, 2004.
PROASSURANCE CAPITAL TRUST II
By: ______________________________________
Name:
Title: Regular Trustee
By: ______________________________________
Name:
Title: Regular Trustee
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration of Trust.
Dated May __, 2004
WILMINGTON TRUST COMPANY.
not in its individual capacity but solely
as Institutional Trustee
By: ______________________________________
Authorized Signatory
A1-5
FORM OF REVERSE OF SECURITY
Distributions on each Preferred Security will be payable at the rate
per annum (the "Distribution Rate"), determined with respect to a Distribution
Period, equal to LIBOR (as defined in the Declaration of Trust), plus 3.85%, of
the stated liquidation amount of $1,000 per Preferred Security (provided, that
the Distribution Rate for any Distribution Period prior to the Distribution
Period commencing on the Distribution Payment Date on May 15, 2009 may not
exceed 12.50% per annum and, provided, further that the Distribution Rate for
any Distribution Payment Period may not exceed the highest rate permitted under
New York law as the same may be modified by United States law of general
application), such rate being the rate of interest payable on the Debentures to
be held by the Institutional Trustee. Distributions in arrears beyond the
applicable Distribution Payment Date (as defined below) will bear interest
thereon compounded quarterly at the Distribution Rate ("Compound Interest") (to
the extent permitted by applicable law). The term "Distributions," as used
herein, includes such cash distributions and any such interest (including
Additional Tax Sums and Compound Interest) payable unless otherwise stated. The
Distribution Rate for any Distribution Period will at no time be higher than the
maximum rate then permitted by applicable law. A Distribution will be made by
the Institutional Trustee 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 in the Institutional Trustee Account.
The amount of Distributions payable for any period will be computed for any
Distribution Period on the basis of a 360-day year and the actual number of days
elapsed in such Distribution Period.
Except as otherwise described below, Distributions on the Preferred
Securities will be cumulative, will accrue from May __, 2004 and will be payable
quarterly in arrears on February 15, May 15, August 15 and November 15 of each
year, commencing on August 15, 2004 (each, a "Distribution Payment Date"), to
Holders of record on the relevant record dates, which will be the fifteenth
calendar day prior to the relevant Distribution Payment Date. Such Distribution
Payment Dates shall correspond to the interest payment dates on the Debentures.
The Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period from time to time on the
Debentures for a period, which period shall end on a Distribution Payment Date,
not exceeding 20 consecutive quarterly periods (each, a "Deferral Period"),
provided that no Deferral Period shall last beyond the redemption date or the
maturity or earlier prepayment of the Debentures and, as a consequence of such
deferral, quarterly Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with interest thereon (to the
extent permitted by applicable law) at the Distribution Rate compounded
quarterly during any such Deferral Period. Prior to the termination of any such
Deferral Period, the Debenture Issuer may further extend such Deferral Period;
provided that such Deferral Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarterly periods or extend
beyond the redemption date or maturity or earlier prepayment of the Debentures.
Payments of Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the Deferral
Period. Upon the termination of any Deferral Period and the payment of all
amounts
A1-6
then due, the Debenture Issuer may commence a new Deferral Period, subject to
the above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration of Trust.
A1-7
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
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 Preferred 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 Preferred
Security Certificate)
(Signature(s) must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Trustee, which requirements include membership or
participation in STAMP or such other "signature guaranty program" as may be
determined by the Trustee in addition to or in substitution for STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A1-8
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS CERTIFICATE IS NOT TRANSFERABLE, SUBJECT TO THE TERMS OF THE DECLARATION OF
TRUST (AS DEFINED HEREIN).
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. 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. THE HOLDER OF THIS SECURITY OR ANY INTEREST
OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY
BE, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN PRIOR TO THE DATE WHICH IS THE LATER OF (i) TWO YEARS (OR
SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES
ACT) AFTER THE LATER OF (Y) THE DATE OF ORIGINAL ISSUANCE HEREOF AND (Z) THE
LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE (AS DEFINED IN RULE 405 UNDER THE
SECURITIES ACT) OF THE TRUST WAS THE HOLDER OF THIS SECURITY OR SUCH INTEREST OR
PARTICIPATION (OR ANY PREDECESSOR THERETO) AND (ii) SUCH LATER DATE, IF ANY, AS
MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW, ONLY (A) TO THE
DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A, THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3), (7)
OR (8) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR
SUCH INTEREST OR PARTICIPATION FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN 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, (D) PURSUANT TO OFFERS AND SALES TO NON-US PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES PURSUANT TO REGULATION S UNDER THE SECURITIES ACT OR
(E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE DEBENTURE ISSUER AND THE
TRUST PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
A2-1
(C), (D) OR (E) ABOVE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH
MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY ITS ACCEPTANCE HEREOF OR
THEREOF, AS THE CASE MAY BE, AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, BY
ITS ACCEPTANCE HEREOF OR THEREOF, AS THE CASE MAY BE, ALSO AGREES, REPRESENTS
AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, 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 THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN, UNLESS
SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60,
91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING
OF THIS SECURITY OR SUCH INTEREST OR PARTICIPATION 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 THIS SECURITY OR ANY INTEREST OR
PARTICIPATION HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND
HOLDING HEREOF OR THEREOF, AS THE CASE MAY BE, 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 AND HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO
APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL
DELIVER TO THE INSTITUTIONAL TRUSTEE AND TRANSFER AGENT SUCH CERTIFICATES AND
OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF
TRUST TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND
A2-2
MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO
BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL
BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION
HEREIN FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY OR SUCH INTEREST OR PARTICIPATION, AND SUCH
PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS
SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN.
Certificate Number: C-__ Number of Common Securities: ___
Certificate Evidencing Common Securities
of
PROASSURANCE CAPITAL TRUST II
Common Securities
(liquidation amount $1,000 per Common Security)
ProAssurance Capital Trust II, a statutory trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that ProAssurance
Corporation (the "Holder") is the registered holder of ___ common securities of
the Trust representing undivided beneficial interests in the assets of the
Trust, designated the Common Securities (liquidation amount $1,000 per Common
Security) (the "Common Securities"). The Common Securities are transferable on
the books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust, dated as of May 12, 2004, as the
same may be amended from time to time (the "Declaration of Trust"), including
the designation of the terms of the Common Securities as set forth in Annex I to
the Declaration of Trust. Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration of Trust. The Sponsor will
provide a copy of the Declaration and the Indenture to a Holder without charge
upon written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration of Trust and is entitled to the benefits thereunder.
In addition, the Holder is deemed to have agreed to the terms of the
Indenture and the Debentures, including that the Debentures are subordinate and
junior in right of payment to all present and future Senior Indebtedness (as
defined in the Indenture) as and to the extent provided in the Indenture.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
A2-3
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of May, 2004.
PROASSURANCE CAPITAL TRUST II
By: ______________________________________
Name:
Title: Regular Trustee
By: ______________________________________
Name:
Title: Regular Trustee
A2-4
FORM OF REVERSE OF SECURITY
Distributions on each Common Security will be payable at the rate per
annum (the "Distribution Rate"), determined on the Determination Date with
respect to such Distribution Period, equal to LIBOR (as defined in the
Declaration of Trust), plus 3.85%, of the stated liquidation amount of $1,000
per Common Security (provided, that the Distribution Rate for any Distribution
Period prior to the Distribution Period commencing on the Distribution Payment
Date on May 15, 2009 may not exceed 12.50% per annum and, provided, further that
the Distribution Rate for any Distribution Payment Period may not exceed the
highest rate permitted by New York law as the same may be modified by United
States law of general application), such rate being the rate of interest payable
on the Debentures to be held by the Institutional Trustee. Distributions in
arrears beyond the applicable Distribution Payment Date (as defined below) will
bear interest thereon compounded quarterly at the Distribution Rate ("Compound
Interest") (to the extent permitted by applicable law). The term
"Distributions," as used herein, includes such cash distributions and any such
interest (including Additional Tax Sums and Compound Interest) payable unless
otherwise stated. The Distribution Rate for any Distribution Period will at no
time be higher than the maximum rate then permitted by applicable law. A
Distribution will be made by the Institutional Trustee 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 in the
Institutional Trustee Account. The amount of Distributions payable for any
period will be computed for any Distribution Period on the basis of a 360-day
year and the actual number of days elapsed in such Distribution Period.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from May __, 2004 and will be payable
quarterly in arrears, on February 15, May 15, August 15 and November 15 of each
year, commencing on August 15, 2004 (each a "Distribution Payment Date"), to
Holders of record on the relevant record dates. Such Distribution Payment Dates
shall correspond to the interest payment dates on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of interest from time
to time on the Debentures for a period, which period shall end on a Distribution
Payment Date, not exceeding 20 consecutive quarterly periods (each, a "Deferral
Period"), provided that no Deferral Period shall last beyond the redemption date
or maturity or earlier prepayment of the Debentures and, as a consequence of
such deferral, quarterly Distributions will also be deferred. Despite such
deferral, quarterly Distributions will continue to accrue with interest thereon
(to the extent permitted by applicable law) at the Distribution Rate compounded
quarterly during any such Deferral Period. Prior to the termination of any such
Deferral Period, the Debenture Issuer may further extend such Deferral Period;
provided that such Deferral Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarterly periods or extend
beyond the redemption date or maturity or earlier prepayment of the Debentures.
Payments of Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the Deferral
Period. Upon the termination of any Deferral Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Deferral Period,
subject to the above requirements.
A2-5
The Common Securities shall be redeemable as provided in the
Declaration of Trust.
A2-6
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(s) must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Trustee, which requirements include membership or
participation in STAMP or such other "signature guaranty program" as may be
determined by the Trustee in addition to or in substitution for STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.)
A2-6
EXHIBIT B
FORM OF TRANSFEROR CERTIFICATE
TO BE EXECUTED FOR QIBS
__________, [ ]
ProAssurance Corporation
ProAssurance Capital Trust II
100 Brookwood Place
Birmingham, AL 35209
Re: Purchase of [-] stated liquidation amount of PREFERRED SECURITIES (the
"Preferred Securities") of ProAssurance Capital Trust II (the "Trust")
Reference is hereby made to the Amended and Restated Declaration of
Trust of ProAssurance Capital Trust II, dated as of May 12, 2004 (the
"Declaration"), among the regular trustees named therein, Wilmington Trust
Company, as Delaware Trustee, Wilmington Trust Company, as Institutional
Trustee, ProAssurance Corporation, as Sponsor, and the holders from time to time
of undivided beneficial interests in the assets of the Trust. Capitalized terms
used but not defined herein shall have the meanings given them in the
Declaration.
This letter relates to $[_______________] aggregate liquidation amount
of Preferred Securities which are held in the name of [name of transferor] (the
"Transferor").
In accordance with Section 9.2 of the Declaration, the Transferor does
hereby certify that such Preferred Securities are being transferred in
accordance with (i) the transfer restrictions set forth in the Preferred
Securities and (ii) Rule 144A under the Securities Act ("Rule 144A"), to a
transferee that the Transferor reasonably believes is purchasing the Preferred
Securities for its own account or an account with respect to which the
transferee exercises sole investment discretion and the transferee and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
a transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.
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__________________________________________
(Name of Transferor)
By:_______________________________________
Name:__________________________________
Title:_________________________________
Date:__________________________________
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EXHIBIT C
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY ACCREDITED INVESTORS
__________, [ ]
ProAssurance Corporation
ProAssurance Capital Trust II
100 Brookwood Place
Birmingham, AL 35209
Re: Purchase of $[mid dot] liquidation amount of Preferred Securities (the
"Preferred Securities") of ProAssurance Capital Trust II (the "Trust")
Ladies and Gentlemen:
In connection with our purchase of the Preferred Securities,
we confirm that:
1. We understand that the Preferred Securities of the
Trust have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered or sold except as permitted in the
following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing the Preferred Securities that, if we decide
to offer, sell or otherwise transfer any such Preferred Securities prior to the
date which is the later of (i) two years (or such shorter period of time as
permitted by Rule 144(k) under the Securities Act) after the later of (Y) the
date of original issuance of the Preferred Securities and (Z) the last date on
which the Trust, the Sponsor or any Affiliate (as defined in Rule 405 under the
Securities Act) thereof was the holder of any such Preferred Securities (or any
predecessor thereto) and (ii) such later date, if any, as may be required by any
subsequent change in applicable law (the "Resale Restriction Termination Date"),
then such offer, sale or other transfer will be made only (a) to the Company or
the Trust, (b) pursuant to Rule 144A under the Securities Act, to a person we
reasonably believe is a qualified institutional buyer under Rule 144A (a "QIB"),
that purchases for its own account or for the account of a QIB and to whom
notice is given that the transfer is being made in reliance on Rule 144A, (c)
pursuant to an exemption from registration, to an "accredited investor" within
the meaning of subparagraph (a) (1), (2), (3), (7) or (8) of Rule 501 under the
Securities Act that is acquiring any such Preferred Securities for its own
account or for the account of such an accredited investor for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act, (d) pursuant to offers
and sales to a non-U.S. Person that occur outside the United States pursuant to
Regulation S under the Securities Act, or (e) pursuant to another available
exemption from the registration requirements of the Securities Act, and in each
of the foregoing cases in accordance with any applicable state securities laws
and any requirements of law that govern the disposition of our property. If any
resale or other transfer of the Preferred Securities is proposed to be made
pursuant to clause (c) or (e) above, the transferor
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shall deliver a letter from the transferee substantially in the form of this
letter to the Institutional Trustee as Transfer Agent, which shall provide as
applicable, among other things, that the transferee is an accredited investor
within the meaning of subparagraph (a)(1), (2), (3), (7) or (8) of Rule 501
under the Securities Act that is acquiring such Preferred Securities for
investment purposes and not for any distribution in violation of the Securities
Act. We acknowledge on our behalf and on behalf of any investor account for
which we are purchasing Preferred Securities that the Company and the Trust
reserve the right prior to any offer, sale or other transfer pursuant to clause
(c) or (e) to require the delivery of any opinion of counsel, certifications
and/or other information satisfactory to ProAssurance Corporation (the
"Company") and the Trust. We understand that the certificates for any Preferred
Securities that we receive prior to the Resale Restriction Termination Date will
bear a legend substantially to the effect of the foregoing.
2. We are an accredited investor within the meaning of
subparagraph (a) (1), (2), (3), (7) or (8) of Rule 501 under the Securities Act
purchasing for our own account or for the account of such an accredited
investor, and we are acquiring the Preferred Securities for investment purposes
and not with view to, or for offer or sale in connection with, any distribution
in violation of the Securities Act, and we have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Preferred Securities, and we and any account for
which we are acting are each able to bear the economic risks of our or its
investment.
3. We are acquiring the Preferred Securities purchased
by us for our own account (or for one or more accounts as to each of which we
exercise sole investment discretion and have authority to make, and do make, the
statements contained in this letter) and not with a view to any distribution of
the Preferred Securities in violation of the Securities Act, subject,
nevertheless, to the understanding that the disposition of our property will at
all times be and remain within our control.
4. In the event that we purchase any Preferred
Securities, we will acquire such Preferred Securities having an aggregate
liquidation amount of not less than $100,000 for our own account and for each
separate account for which we are acting.
5. We acknowledge that we either (A) are not a fiduciary of a
pension, profit-sharing or other employee benefit plan or arrangement subject to
the Employee Retirement Income Security Act of 1974, as amended or to Section
4975 of the Internal Revenue Code of 1986, as amended (a "Plan"), or an entity
whose assets include "plan assets" by reason of any Plan's investment in the
entity and are not purchasing the Preferred Securities on behalf of or with
"plan assets" by reason of any Plan's investment in the entity and are not
purchasing the Preferred Securities on behalf of or with "plan assets" of any
Plan or (B) are eligible for the exemptive relief available under one or more of
the following prohibited transaction class exemptions ("PTCEs") issued by the
U.S. Department of Labor: PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
6. We acknowledge that each Plan, by its purchase of the
Preferred Securities, will be deemed to have directed the Trust to invest in the
junior subordinated debt
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securities due 2034 of the Company, and to have consented to the appointment of
the institutional trustee of the Trust.
7. We acknowledge that the Company, the Trust and others
will rely upon the truth and accuracy of the foregoing acknowledgments,
representations, warranties and agreements and agree that if any of our
acknowledgments, representations, warranties and agreements are no longer
accurate, we shall promptly notify the placement agents for the Preferred
Securities. If we are acquiring any Preferred Securities as a fiduciary or agent
for one or more investor accounts, we represent that we have sole discretion
with respect to each such investor account and that we have full power to make
the foregoing acknowledgments, representations and agreements on behalf of each
such investor account.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.
___________________________________________
(Name of Purchaser)
By: _______________________________________
Date:______________________________________
Upon transfer, the Preferred Securities should be registered
in the name of the new beneficial owner as follows.
Name:______________________________
Address:___________________________
Taxpayer ID Number:________________
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EXHIBIT D
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY NON-U.S. PERSONS
__________, [ ]
ProAssurance Corporation
ProAssurance Capital Trust II
100 Brookwood Place
Birmingham, AL 35209
Re: Purchase of $[SPECIFY] liquidation amount of Preferred Securities (the
"Preferred Securities") of ProAssurance Capital Trust II (the "Trust")
Reference is hereby made to the Amended and Restated
Declaration of Trust of ProAssurance Capital Trust II, dated as of May 12, 2004
(the "Declaration"), among the regular trustees named therein, as
Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Institutional Trustee, ProAssurance Corporation, as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Trust. Capitalized terms used but not defined herein shall have the meanings
given them in the Declaration.
This letter relates to $[_______________] aggregate
liquidation amount of Securities which are held in the name of [name of
transferor].
In accordance with Section 9.2 of the Declaration, we do
hereby certify that (i) we are not a "U.S. person" (as such term is defined in
Rule 902 under the Securities Act), (ii) we are not acquiring the Preferred
Securities for the account or benefit of any U.S. person, and (iii) the offer
and sale of Preferred Securities to us constitutes an "offshore transaction"
under Regulation S under the Securities Act.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy thereof to any interested party in
any administrative or legal proceeding or other inquiry with respect to matters
covered hereby.
___________________________________________
(Name of Transferee)
By: _______________________________________
Name:__________________________________
Title:_________________________________
Date:__________________________________
D-1
EXHIBIT E
DEKANIA
FORM OF QUARTERLY FINANCIAL REPORT
TO: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
PLEASE COMPLETE FOR EACH INSURANCE COMPANY SUBSIDIARY OF SPONSOR
All financial information provided herein should be provided in accordance with
Statutory Accounting Principles. Please provide the following information for
the most recent quarterly period ended.
Quarter: [ ] March 31 [ ] June 30 [ ] September 30 [ ] December 31, Year: 20____
Part I - To be completed for all insurance company subsidiaries of Sponsor
Name of Insurance Company Subsidiary: Date:
A.M. Best Insurer's Financial Strength Rating: Most Recently Reported NAIC RBC Ratio: %
Total Admitted Assets $ Total Policyholders' Surplus $
Return on Policyholders' Surplus Ratio of Consolidated Debt and Preferred Stock to
for Trailing Twelve Month Period % Total Policyholders' Surplus %
Ratio of NAIC Class 1 & Class 2 Rated Investments to Ratio of NAIC Class 1 & Class 2 Rated Investments to
Total Fixed Income Investments % Total Investments %
Part II - To be completed by property & casualty companies only
Expense Ratio % Loss and LAE Ratio % Combined Ratio %
Ratio of Net Premiums Written (Trailing Twelve Month Period) to Policyholders'
Surplus %
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CERTIFICATION
The undersigned certifies and states that the undersigned has
duly executed the attached Quarterly Financial Report, dated _______________,
20_____, for and on behalf of ________________________, that the undersigned is
the _______________ of such Company, and that the undersigned has authority to
execute and deliver such instrument. The undersigned further says that the
undersigned is familiar with such instrument and that the facts therein set
forth are true to the best of the undersigned's knowledge, information and
belief.
Signed: ___________________________________
Name: ___________________________________
Date: ____________________________________
E-2
LEGEND - LIFE INSURERS
NAIC RBC Ratio: (Total Adjusted Capital (as defined in
the NAIC RBC Instructions for Life
Insurers)/Authorized Control Level
Risk-Based Capital)
Total Admitted Assets: Total Admitted Assets as Determined in
accordance with Statutory Accounting
Principles
Total Capital and Surplus: Common Capital Stock + Preferred Capital
Stock + Aggregate Write-Ins for Special
Surplus Funds + Aggregate Write-Ins for
Other than Special Surplus Funds +
Surplus Notes + Gross Paid-In and
Contributed Surplus + Unassigned Funds
(Surplus) Asset Valuation Reserve -
Treasury Stock
Return on Policyholders' Surplus Net Income/Policyholders' Surplus for
for the Trailing Twelve Month Period: the Trailing Twelve Month Period
LEGEND - PROPERTY & CASUALTY INSURERS
NAIC RBC Ratio: (Total Adjusted Capital (as defined in
the NAIC RBC Instructions for Life
Insurers)/Authorized Control Level
Risk-Based Capital)
Total Admitted Assets: Total Admitted Assets as Determined in
accordance with Statutory Accounting
Principles
Total Capital and Surplus: Common Capital Stock + Preferred Capital
Stock + Aggregate Write-Ins for Special
Surplus Funds + Aggregate Write-Ins for
Other than Special Surplus Funds +
Surplus Notes + Gross Paid-In and
Contributed Surplus + Unassigned Funds
(Surplus) Asset Valuation Reserve -
Treasury Stock
Return on Policyholders' Surplus Net Income/Policyholders' Surplus for
for the Trailing Twelve Month Period: the Trailing Twelve Month Period
Expense Ratio: Other Underwriting Expenses Incurred/Net
Premiums Earned
Loss and LAE Ratio: (Losses Incurred + Loss Expenses
Incurred)/Net Premiums Earned
Combined Ratio: Expense Ratio + Loss and LAE Ratio
Net Premiums Written Net Premiums Written of the Trailing
(Trailing Twelve Month Period) Twelve Month Period/ Policyholders'
to Policyholders' Surplus: Surplus
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