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EXHIBIT 4.7
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HAWTHORNE FINANCIAL CORPORATION
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INDENTURE
Dated as of March 28, 2001
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WILMINGTON TRUST COMPANY,
as Debenture Trustee
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JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS .......................................................................... 1
SECTION 1.01 Definitions .............................................................. 1
SECTION 1.02 Business Day Certificate ................................................. 9
ARTICLE II SECURITIES .......................................................................... 9
SECTION 2.01 Forms Generally .......................................................... 9
SECTION 2.02 Execution and Authentication ............................................. 9
SECTION 2.03 Form and Payment ......................................................... 10
SECTION 2.04 Legends .................................................................. 10
SECTION 2.05 Interest ................................................................. 10
SECTION 2.06 Transfer and Exchange .................................................... 11
SECTION 2.07 Replacement Securities ................................................... 12
SECTION 2.08 Temporary Securities ..................................................... 12
SECTION 2.09 Cancellation ............................................................. 13
SECTION 2.10 Defaulted Interest ....................................................... 13
SECTION 2.11 CUSIP Numbers ............................................................ 14
ARTICLE III PARTICULAR COVENANTS OF THE CORPORATION ............................................ 14
SECTION 3.01 Payment of Principal and Interest ........................................ 14
SECTION 3.02 Offices for Notices and Payments, etc. ................................... 14
SECTION 3.03 Appointments to Fill Vacancies in Debenture Trustee's Office ............. 15
SECTION 3.04 Provision as to Paying Agent ............................................. 15
SECTION 3.05 Certificate to Debenture Trustee ......................................... 16
SECTION 3.06 Compliance with Consolidation Provisions ................................. 16
SECTION 3.07 Limitation on Dividends .................................................. 16
SECTION 3.08 Covenants as to the Trust ................................................ 17
SECTION 3.09 Payment of Expenses ...................................................... 17
SECTION 3.10 Payment Upon Resignation or Removal ...................................... 18
ARTICLE IV LIST OF SECURITYHOLDERS AND REPORTS BY THE CORPORATION AND THE DEBENTURE TRUSTEE .... 18
SECTION 4.01 List of Securityholders .................................................. 18
SECTION 4.02 Preservation and Disclosure of Lists ..................................... 18
SECTION 4.03 Reports by the Corporation ............................................... 20
SECTION 4.04 Reports by the Debenture Trustee ......................................... 21
ARTICLE V REMEDIES OF THE DEBENTURE TRUSTEE AND SECURITYHOLDERS UPON EVENT OF DEFAULT .......... 21
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SECTION 5.01 Events of Default ............................................. 21
SECTION 5.02 Payment of Securities on Default; Suit Therefor ............... 23
SECTION 5.03 Application of Moneys Collected by Debenture Trustee .......... 24
SECTION 5.04 Proceedings by Securityholders ................................ 25
SECTION 5.05 Proceedings by Debenture Trustee .............................. 26
SECTION 5.06 Remedies Cumulative and Continuing ............................ 26
SECTION 5.07 Direction of Proceedings and Waiver of Defaults by Majority
of Securityholders ............................................ 26
SECTION 5.08 Notice of Defaults ............................................ 27
SECTION 5.09 Undertaking to Pay Costs ...................................... 28
ARTICLE VI CONCERNING THE DEBENTURE TRUSTEE ......................................... 28
SECTION 6.01 Duties and Responsibilities of Debenture Trustee .............. 28
SECTION 6.02 Reliance on Documents, Opinions, etc. ......................... 29
SECTION 6.03 No Responsibility for Recitals, etc. .......................... 31
SECTION 6.04 Debenture Trustee, Authenticating Agent, Paying Agents,
Transfer Agents and Registrar May Own Securities .............. 31
SECTION 6.05 Moneys to be Held in Trust .................................... 31
SECTION 6.06 Compensation and Expenses of Debenture Trustee ................ 31
SECTION 6.07 Officers' Certificate as Evidence ............................. 32
SECTION 6.08 Conflicting Interest of Debenture Trustee ..................... 32
SECTION 6.09 Eligibility of Debenture Trustee .............................. 33
SECTION 6.10 Resignation or Removal of Debenture Trustee ................... 33
SECTION 6.11 Acceptance by Successor Debenture Trustee ..................... 34
SECTION 6.12 Succession by Merger, etc. .................................... 35
SECTION 6.13 Limitation on Rights of Debenture Trustee as a Creditor ....... 35
SECTION 6.14 Authenticating Agents ......................................... 35
ARTICLE VII CONCERNING THE SECURITYHOLDERS .......................................... 37
SECTION 7.01 Action by Securityholders ..................................... 37
SECTION 7.02 Proof of Execution by Securityholders ......................... 37
SECTION 7.03 Who Are Deemed Absolute Owners ................................ 38
SECTION 7.04 Securities Owned by Corporation Deemed Not Outstanding ........ 38
SECTION 7.05 Revocation of Consents; Future Holders Bound .................. 38
ARTICLE VIII MEETINGS OF SECURITYHOLDERS ............................................ 39
SECTION 8.01 Purposes of Meetings .......................................... 39
SECTION 8.02 Call of Meetings by Debenture Trustee ......................... 39
SECTION 8.03 Call of Meetings by Corporation or Securityholders ............ 39
SECTION 8.04 Qualifications for Voting ..................................... 40
SECTION 8.05 Regulations ................................................... 40
SECTION 8.06 Voting ........................................................ 40
ARTICLE IX AMENDMENTS ............................................................... 41
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SECTION 9.01 Without Consent of Securityholders .............................. 41
SECTION 9.02 With Consent of Securityholders ................................. 42
SECTION 9.03 Compliance with Trust Indenture Act; Effect of Supplemental
Indentures ...................................................... 43
SECTION 9.04 Notation on Securities .......................................... 43
SECTION 9.05 Evidence of Compliance of Supplemental Indenture to be
Furnished to Debenture Trustee .................................. 44
ARTICLE X CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE .................. 44
SECTION 10.01 Corporation May Consolidate, etc., on Certain Terms ............. 44
SECTION 10.02 Successor Person to be Substituted for Corporation .............. 44
SECTION 10.03 Opinion of Counsel to be Given Debenture Trustee ................ 45
ARTICLE XI SATISFACTION AND DISCHARGE OF INDENTURE ..................................... 45
SECTION 11.01 Discharge of Indenture .......................................... 45
SECTION 11.02 Deposited Moneys and U.S. Government Obligations to be Held
in Trust by Debenture Trustee ................................... 46
SECTION 11.03 Paying Agent to Repay Moneys Held ............................... 46
SECTION 11.04 Return of Unclaimed Moneys ...................................... 46
SECTION 11.05 Defeasance Upon Deposit of Moneys or U.S. Government
Obligations ..................................................... 47
ARTICLE XII IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS ............ 48
SECTION 12.01 Indenture and Securities Solely Corporate Obligations ........... 48
ARTICLE XIII MISCELLANEOUS PROVISIONS .................................................. 48
SECTION 13.01 Successors ...................................................... 48
SECTION 13.02 Official Acts by Successor Corporation .......................... 48
SECTION 13.03 Surrender of Corporation Powers ................................. 49
SECTION 13.04 Addresses for Notices, etc. ..................................... 49
SECTION 13.05 Governing Law ................................................... 49
SECTION 13.06 Evidence of Compliance with Conditions Precedent ................ 49
SECTION 13.07 Business Days ................................................... 50
SECTION 13.08 Trust Indenture Act to Control .................................. 50
SECTION 13.09 Table of Contents, Headings, etc. ............................... 50
SECTION 13.10 Execution in Counterparts ....................................... 50
SECTION 13.11 Separability .................................................... 50
SECTION 13.12 Assignment ...................................................... 50
SECTION 13.13 Acknowledgment of Rights ........................................ 51
ARTICLE XIV PREPAYMENT OF SECURITIES ................................................... 51
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SECTION 14.01 Special Event Prepayment ................................ 51
SECTION 14.02 Optional Prepayment by Corporation ...................... 51
SECTION 14.03 No Sinking Fund ......................................... 52
SECTION 14.04 Notice of Prepayment; Selection of Securities ........... 53
SECTION 14.05 Payment of Securities Called for Prepayment ............. 53
ARTICLE XV SUBORDINATION OF SECURITIES ......................................... 54
SECTION 15.01 Agreement to Subordinate ................................ 54
SECTION 15.02 Default on Senior Indebtedness .......................... 54
SECTION 15.03 Liquidation; Dissolution; Bankruptcy .................... 55
SECTION 15.04 Subrogation ............................................. 56
SECTION 15.05 Debenture Trustee to Effectuate Subordination ........... 57
SECTION 15.06 Notice by the Corporation ............................... 57
SECTION 15.07 Rights of the Debenture Trustee; Holders of Senior
Indebtedness ............................................ 58
SECTION 15.08 Subordination May Not Be Impaired ....................... 58
ARTICLE XVI EXTENSION OF INTEREST PAYMENT PERIOD ............................... 59
SECTION 16.01 Extension of Interest Payment Period .................... 59
SECTION 16.02 Notice of Extension ..................................... 60
TESTIMONIUM
SIGNATURES
EXHIBIT A
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Tie Sheet of provisions of Trust Indenture Act of 1939 with Indenture
dated as of March 28, 2001 between Hawthorne Financial Corporation and
Wilmington Trust Company, as Debenture Trustee:
ACT SECTION INDENTURE SECTION
310(a)(1) ...................................... 6.09
(a)(2) ...................................... 6.09, 6.10, 6.11
310(a)(3) ...................................... N/A
(a)(4) ...................................... N/A
310(a)(5) ...................................... 6.09, 6.10, 6.11
310(b) ...................................... 6.08
310(c) ...................................... N/A
311(a) ...................................... 6.13
311(b) ...................................... 6.13
311(c) ...................................... N/A
312(a) ...................................... 4.01(a) and 4.02(a)
312(b) ...................................... 4.02(b)
312(c) ...................................... 4.02(c)
313(a) ...................................... 4.04(a)
313(b)(1) ...................................... 4.04(a)
313(b)(2) ...................................... 4.04(a)
313(c) ...................................... 4.04(a)
313(d) ...................................... 4.04(b)
314(a) ...................................... 3.05, 4.03
314(b) ...................................... N/A
314(c)(1) ...................................... 6.07 and 13.06
314(c)(2) ...................................... 6.07 and 13.06
314(c)(3) ...................................... N/A
314(d) ...................................... N/A
314(e) ...................................... 6.07, 13.06
314(f) ...................................... N/A
315(a)(c) and (d) ...................................... 6.01
315(b) ...................................... 5.08
315(e) ...................................... 5.09
316(a)(1) ...................................... 5.07
316(a)(2) ...................................... N/A
316(a) last sentence ...................................... 9.02
316(b) ...................................... 5.07 and 9.02
316(c) ...................................... 7.01 and 9.02
317(a) ...................................... 5.05
317(b) ...................................... 6.05
318 ...................................... 13.08
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THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
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THIS INDENTURE, dated as of March 28, 2001, between Hawthorne Financial
Corporation, a Delaware corporation (hereinafter called the "Corporation"), and
Wilmington Trust Company, a Delaware banking corporation, as debenture trustee
(hereinafter sometimes called the "Debenture Trustee").
W I T N E S S E T H :
In consideration of the premises, and the purchase of the Securities (as
defined below) by the holders thereof, the Corporation covenants and agrees with
the Debenture Trustee for the equal and proportionate benefit of the respective
holders from time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture shall have the respective meanings specified in this Section
1.01. All other terms used in this Indenture which are defined in the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which are by
reference therein defined in the Securities Act of 1933, as amended (the
"Securities Act"), shall (except as herein otherwise expressly provided or
unless the context otherwise requires) have the meanings assigned to such terms
in said Trust Indenture Act and in said Securities Act as in force at the date
of this Indenture as originally executed. The following terms have the meanings
given to them in the Declaration (as defined below): (i) Delaware Trustee; (ii)
Property Trustee; (iii) Administrative Trustees; (iv) Capital Securities; (v)
Direct Action; (vi) Capital Securities Guarantee; (vii) Distributions; (viii)
Common Securities; and (ix) Common Securities Guarantee. All accounting terms
used herein and not expressly defined shall have the meanings assigned to such
terms in accordance with generally accepted accounting principles, and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted at the time of any computation. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision. Headings are used for convenience of reference only and do not
affect interpretation. The singular includes the plural and vice versa.
"Additional Sums" shall have the meaning set forth in Section 2.05(c).
"Affiliate" shall have the meaning given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Allocable Amounts," when used with respect to any Senior Indebtedness,
means all amounts due or to become due on such Senior Indebtedness less, if
applicable, any amount which would have been paid to, and retained by, the
holders of such Senior Indebtedness (whether as a result of the receipt of
payments by the holders of such Senior Indebtedness from the Corporation or any
other obligor thereon or from any holders of, or trustee in respect of, other
indebtedness that is subordinate and junior in right of payment to such Senior
Indebtedness
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pursuant to any provision of such indebtedness for the payment over of amounts
received on account of such indebtedness to the holders of such Senior
Indebtedness or otherwise) but for the fact that such Senior Indebtedness is
subordinate or junior in right of payment to (or subject to a requirement that
amounts received on such Senior Indebtedness be paid over to obligees on) trade
accounts payable or accrued liabilities arising in the ordinary course of
business.
"Authenticating Agent" shall mean any agent or agents of the Debenture
Trustee which at the time shall be appointed and acting pursuant to Section
6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of the
Corporation or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Corporation to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Debenture Trustee.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in Wilmington, Delaware, El Segundo,
California or New York, New York are authorized or required by law or executive
order to remain closed.
"Capital Securities" shall mean undivided beneficial interests in the
assets of the Trust which are designated as "MMCapS(SM)" and rank pari passu
with the Common Securities issued by the Trust; provided, however, that if an
Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the Capital
Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are entitled.
"Capital Securities Guarantee" shall mean any guarantee agreement that
the Corporation may enter into with Wilmington Trust Company or other Persons
that operates directly or indirectly for the benefit of holders of Capital
Securities.
"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" shall mean undivided beneficial interests in the
assets of the Trust which are designated as "Common Securities" and rank pari
passu with Capital Securities issued by the Trust; provided, however, that if an
Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the Capital
Securities shall be paid in full the Distributions and the liquidation,
redemption and other payments to which they are then entitled.
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"Common Securities Guarantee" shall mean any guarantee that the
Corporation may enter into that operates directly or indirectly for the benefit
of holders of Common Securities.
"Common Stock" shall mean the Common Stock, $.01 par value per share, of
the Corporation or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Compounded Interest" shall have the meaning set forth in Section 16.01.
"Corporation" shall mean the person identified as "corporation" in the
preamble to this Indenture and, subject to the provisions of Article X, shall
also include its successors and assigns.
"Corporation Request" or "Corporation Order" shall mean a written
request or order signed in the name of the Corporation by an Officer and
delivered to the Debenture Trustee.
"Coupon Rate" shall have the meaning set forth in Section 2.05(a).
"Custodian" shall mean any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Debenture Trustee" shall mean the Person identified as "Debenture
Trustee" in the preamble to this Indenture and, subject to the provisions of
Article VI hereof, shall also include its successors and assigns.
"Declaration" shall mean the Amended and Restated Declaration of Trust
of the Trust, dated as of March 28, 2001, by and among the Trustees (as defined
therein), the Corporation, as sponsor, and the holders from time to time of
undivided beneficial interest in the assets of the Trust, as amended from time
to time.
"Default" shall mean any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulted Interest" shall have the meaning set forth in Section 2.10.
"Deferred Interest" shall have the meaning set forth in Section 16.01.
"Dissolution Event" shall mean any event resulting in the dissolution of
the Trust pursuant to the Declaration, and the distribution of the Securities
held by the Property Trustee to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice, if
any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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"Extended Interest Payment Period" shall have the meaning set forth in
Section 16.01.
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System.
"Indebtedness" shall mean, whether recourse as to all or a portion of
the assets of the Corporation and whether or not contingent, (i) every
obligation of the Corporation for money borrowed; (ii) every obligation of the
Corporation evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Corporation
with respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of the Corporation; (iv) every obligation of the
Corporation issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising in
the ordinary course of business); (v) every capital lease obligation of the
Corporation; (vi) all indebtedness of the Corporation, whether incurred on or
prior to the date of this Indenture or hereafter incurred, for claims in respect
of derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps and similar arrangements; and
(vii) every obligation of the type referred to in clauses (i) through (vi) of
another Person and all dividends of another Person the payment of which, in
either case, the Corporation has guaranteed or is responsible or liable for
directly or indirectly, as obligor or otherwise.
"Indebtedness Ranking on a Parity with the Securities" shall mean (i)
Indebtedness, whether outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, to the extent such Indebtedness by its
terms ranks pari passu with and not junior to or prior or senior to the
Securities in the right of payment upon the happening of the dissolution,
winding-up, liquidation or reorganization of the Corporation, and (ii) all other
debt securities, and guarantees in respect of those debt securities, issued to
any trust other than the Trust, or a trustee of such trust, partnership or other
entity affiliated with the Corporation, that is a financing vehicle of the
Corporation (a "financing entity") in connection with the issuance by such
financing entity of equity securities or other securities guaranteed by the
Corporation pursuant to an instrument that ranks pari passu with or junior in
right of payment to the Capital Securities Guarantee. The securing of any
Indebtedness otherwise constituting Indebtedness Ranking on a Parity with the
Securities shall not be deemed to prevent such Indebtedness from constituting
Indebtedness Ranking on a Parity with the Securities with respect to any assets
of the Corporation not securing such Indebtedness.
"Indebtedness Ranking Junior to the Securities" shall mean any
Indebtedness, whether outstanding on the date of execution of this Indenture or
hereafter created, assumed or incurred, to the extent such Indebtedness by its
terms ranks junior to and not pari passu with or prior or senior to the
Securities in right of payment upon the happening of the dissolution or
winding-up or liquidation or reorganization of the Corporation. The securing of
any Indebtedness otherwise constituting Indebtedness Ranking Junior to the
Securities shall not be deemed to prevent such Indebtedness from constituting
Indebtedness Ranking Junior to the Securities with respect to any assets of the
Corporation not securing such Indebtedness.
"Indenture" shall mean this instrument as originally executed or, if
amended as herein provided, as so amended.
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"Initial Optional Prepayment Date" shall mean June 8, 2011.
"Interest Payment Date" shall have the meaning set forth in Section
2.05(a).
"Investment Company" shall mean an investment company as defined in the
Investment Company Act.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"Investment Company Event" shall mean the receipt by the Corporation and
the Trust of a written opinion of independent securities counsel experienced in
such matters to the effect that as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws or any regulations
thereunder of the United States or any rules, guidelines or policies of any
applicable regulatory authority for the Corporation or (b) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of original issuance
of the Securities, the Trust is, or within 90 days of the date of such opinion
will be, considered an investment company that is required to be registered
under the Investment Company Act.
"Like Amount" shall mean (i) with respect to a redemption of the Trust
Securities, Trust Securities having a liquidation amount equal to the principal
amount of Securities to be paid with their terms and (ii) with respect to a
distribution of Securities upon the liquidation of the Trust, Securities having
a principal amount equal to the liquidation amount of the Trust Securities of
the holder to whom Securities are distributed, pursuant to Section 2.06(c).
"Maturity Date" shall mean June 8, 2031.
"Officers" shall mean any of the Chairman, the Chief Executive Officer,
the President, an Executive or Senior Vice President, the Chief Financial
Officer, the Secretary or an Assistant Secretary of the Corporation.
"Officers' Certificate" shall mean a certificate signed by two Officers
and delivered to the Debenture Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be
an employee of the Corporation, and who shall be reasonably acceptable to the
Debenture Trustee.
"Optional Prepayment Price" shall have the meaning set forth in Section
14.02(a).
"Other Debentures" shall mean all junior subordinated debentures other
than the Securities issued by the Corporation from time to time and sold to
trusts other than the Trust to be established by the Corporation (if any), in
each case similar to the Trust.
"Other Guarantees" shall mean all guarantees other than the Capital
Securities Guarantee and the Common Securities Guarantee issued by the
Corporation with respect to preferred
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beneficial interests (if any) issued to trusts other than the Trust to be
established by the Corporation (if any), in each case similar to the Trust.
"Outstanding" when used with reference to the Securities, shall mean,
subject to the provisions of Section 7.04, as of any particular time, all
Securities authenticated and delivered by the Debenture Trustee or the
Authenticating Agent under this Indenture, except
(a) Securities theretofore canceled by the Debenture Trustee or the
Authenticating Agent or delivered to the Debenture Trustee for
cancellation;
(b) Securities, or portions thereof, for the payment or prepayment
of which moneys in the necessary amount shall have been
deposited in trust with the Debenture Trustee or with any paying
agent (other than the Corporation) or shall have been set aside
and segregated in trust by the Corporation (if the Corporation
shall act as its own paying agent); provided that, if such
Securities, or portions thereof, are to be prepaid prior to
maturity thereof, notice of such prepayment shall have been
given as set forth in Article XIV or provision satisfactory to
the Debenture Trustee shall have been made for giving such
notice;
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant
to the terms of Section 2.07 unless proof satisfactory to the
Corporation and the Debenture Trustee is presented that any such
Securities are held by bona fide holders in due course and;
(d) Securities held by the Corporation, the Trust or any Affiliate
thereof.
"Person" shall mean any individual, corporation, estate, partnership,
joint venture, national banking association, association, joint-stock company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Placement Agency Agreement" shall mean the Placement Agency Agreement,
dated March 21, 2001, by and among the Corporation, the Trust and the Placement
Agent.
"Placement Agent" shall mean Sandler O'Neill & Partners, L.P.
"Predecessor Security" of any particular Security shall mean every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.07 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"Prepayment Price" shall mean the Special Event Prepayment Price or
Optional Prepayment Price, as the context requires.
"Principal Office of the Debenture Trustee," or other similar term,
shall mean the office of the Debenture Trustee, at which at any particular time
its corporate trust business shall be administered.
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"Regulatory Capital Event" shall mean the receipt by the Corporation and
the Trust of a written opinion of independent bank regulatory counsel
experienced in such matters to the effect that as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any rules, guidelines or
policies of an applicable regulatory authority for the Corporation or (b) any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of original
issuance of the Securities, the Capital Securities do not constitute, or within
90 days of the date of such opinion will not constitute, Tier 1 Capital (or its
then equivalent) if the Corporation is a bank holding company or if the
Corporation is a savings and loan holding company and is then subject to similar
capital adequacy requirements; provided, however, that the distribution of the
Securities in connection with the liquidation of the Trust by the Corporation
shall not in and of itself constitute a Regulatory Capital Event.
"Responsible Officer" shall mean any officer of the Debenture Trustee's
Corporate Trust Administration department with direct responsibility for the
administration of the Indenture and also means, with respect to a particular
corporate trust matter, any other officer of the Debenture Trustee to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Restricted Security" shall mean Securities that bear or are required to
bear the legends relating to transfer restrictions under the Securities Act set
forth in Exhibit A hereto.
"Rule 144A" shall mean Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" shall mean the Corporation's 10.18% Junior Subordinated
Deferrable Interest Debentures due June 8, 2031, as authenticated and issued
under this Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholder," "holder of Securities," or other similar terms, shall
mean any Person in whose name at the time a particular Security is registered in
the Security Register kept by the Corporation or the Debenture Trustee for that
purpose in accordance with the terms of this Indenture.
"Security Register" shall mean (i) prior to a Dissolution Event, the
list of holders provided to the Debenture Trustee pursuant to Section 4.01, and
(ii) following a Dissolution Event, any security register maintained by a
security registrar for the Securities appointed by the Corporation following the
execution of a supplemental indenture providing for transfer procedures as
provided for in Section 2.06(a).
"Senior Indebtedness" shall mean the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Corporation whether
or not such claim for post petition interest is allowed in such proceedings), on
all Indebtedness, whether outstanding on the date of execution of this
Indenture, or hereafter created, assumed or incurred, except Indebtedness
Ranking on a
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Parity with the Securities or Indebtedness Ranking Junior to the Securities, and
any deferrals, renewals or extensions of such Senior Indebtedness.
"Special Event" shall mean an Investment Company Event, a Regulatory
Capital Event or a Tax Event, as the context requires.
"Special Event Prepayment Price" shall mean, with respect to any
prepayment of the Securities following a Special Event, an amount in cash equal
to (i) 106.090 of the principal amount of the Securities to be prepaid if the
Special Event occurs prior to June 8, 2011 and (ii) if the Special Event occurs
on or after June 8, 2011, the amount of the Optional Prepayment Price
(calculated as if the Corporation had prepaid such Securities on such date),
plus, in the case of (i) and (ii), any accrued and unpaid interest thereon
(including Compounded Interest and Additional Sums, if any) to the date of such
prepayment.
"Subscription Agreement" shall mean the Capital Securities Subscription
Agreement, dated March 21, 2001, by and among the Corporation, the Trust and the
Purchaser named therein.
"Subsidiary" shall mean with respect to any Person, (i) any corporation
at least a majority of the outstanding voting stock of which is owned, directly
or indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture, limited liability company or similar entity, at least a majority of
whose outstanding partnership, membership or similar interests shall at the time
be owned by such Person or by one or more of its Subsidiaries, or by such Person
and one or more of its Subsidiaries and (iii) any limited partnership of which
such Person or any of its Subsidiaries is a general partner. For the purposes of
this definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by the Trust and the Corporation of a
written opinion of independent tax counsel experienced in such matters to the
effect that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of original issuance of the Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be within 90 days of the date of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Securities, (ii) the interest payable by the Corporation on the
Securities is not, or within 90 days of the date of such opinion will not be,
deductible by the Corporation, 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.
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"Trust" shall mean HFC Capital Trust I, a Delaware business trust
created for the purpose of issuing its undivided beneficial interests in
connection with the issuance of Securities under this Indenture.
"Trust Securities" shall mean, collectively, the Capital Securities and
the Common Securities.
"U.S. Government Obligations" shall mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii), are not callable or prepayable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction with respect to the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
SECTION 1.02 Business Day Certificate.
On the date of execution and delivery of this Indenture (with respect to
the remainder of calendar year 2001) and within 15 days prior to the end of each
calendar year while this Indenture remains in effect (with respect to succeeding
calendar years), the Corporation shall deliver to the Debenture Trustee an
Officers' Certificate specifying the days on which banking institutions or trust
companies in Wilmington, Delaware, El Segundo, California and New York, New York
are then authorized or obligated by law or executive order to remain closed.
ARTICLE II
SECURITIES
SECTION 2.01 Forms Generally.
The Securities and the Debenture Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Corporation is subject or usage. Each Security shall be
dated the date of its authentication.
SECTION 2.02 Execution and Authentication.
An Officer shall sign the Securities for the Corporation by manual or
facsimile signature. If an Officer whose signature is on a Security no longer
holds that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
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A Security shall not be valid until authenticated by the manual
signature of the Debenture Trustee. The signature of the Debenture Trustee shall
be conclusive evidence that the Security has been authenticated under this
Indenture.
The Debenture Trustee shall, upon a Corporation Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed, $9,300,000 aggregate principal amount of
the Securities, except as provided in Sections 2.06, 2.07, 2.08 and 14.05.
SECTION 2.03 Form and Payment.
The Securities shall be issued in fully registered certificated form
without interest coupons. Principal of and premium, if any, and interest on the
Securities will be payable in immediately available funds, the transfer of such
Securities will be registerable and such Securities will be exchangeable for
Securities bearing identical terms and provisions, at the office or agency of
the Corporation maintained for such purpose under Section 3.02; provided,
however, that payments of interest shall be made by transfer to an account
maintained by the Person entitled thereto unless proper transfer instructions
have not been received in writing by the relevant record date, in which case
such payments shall be made by check mailed to the holder at such address as
shall appear in the Security Register. Notwithstanding the foregoing, so long as
the holder of any Securities is the Property Trustee, the payment of the
principal of and premium, if any, and interest (including Compounded Interest if
any) and Additional Sums, if any, on such Securities held by the Property
Trustee will be made at such place and to such account as may be designated by
the Property Trustee.
SECTION 2.04 Legends.
Except as otherwise determined by the Corporation in accordance with
applicable law, each Security shall bear the applicable legends relating to
restrictions on transfer pursuant to the Securities Act and any other applicable
securities laws in substantially the form set forth on Exhibit A hereto.
SECTION 2.05 Interest.
(a) Each Security will bear interest, at the rate of 10.18% per annum
(the "Coupon Rate"), from the most recent date to which interest has been paid
or duly provided for or, if no interest has been paid or duly provided for, from
March 28, 2001, until the principal thereof becomes due and payable, and at the
Coupon Rate on any overdue principal (and premium, if any) and (to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest, compounded semi-annually, payable (subject to
the provisions of Article XVI) semi-annually in arrears on June 8th and December
8th of each year, commencing June 8, 2001 (each, an "Interest Payment Date"), to
the Person in whose name such Security or any predecessor Security is registered
at the close of business on the regular record date for such interest
installment, which shall be the 15th day of the month immediately preceding the
month in which the relevant Interest Payment Date falls.
(b) The amount of interest payable on the Securities shall be computed
on the basis of a 360-day year of twelve 30-day months.
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(c) During such time as the Property Trustee is the holder of any
Securities, the Corporation shall pay any additional amounts on the Securities
as may be necessary in order that the amount of Distributions then due and
payable by the Trust on the outstanding Trust Securities shall not be reduced as
a result of any additional taxes, duties and other governmental charges to which
the Trust has become subject as a result of a Tax Event ("Additional Sums").
SECTION 2.06 Transfer and Exchange.
(a) Transfer Restrictions.
(i) The Securities may not be transferred except in compliance
with the legend contained in Exhibit A unless otherwise determined by the
Corporation in accordance with applicable law. Upon any distribution of the
Securities following a Dissolution Event, the Corporation and the Debenture
Trustee shall enter into a supplemental indenture pursuant to Section 9.01 to
provide for the transfer restrictions and procedures with respect to the
Securities substantially similar to those contained in the Declaration to the
extent applicable in the circumstances existing at such time.
(ii) The Securities will be issued and may be transferred only
in blocks having an aggregate principal amount of not less than $100,000 and in
multiples of $1,000 in excess thereof. Any attempted transfer of the Securities
in a block having an aggregate principal amount of less than $100,000 shall be
deemed to be voided and of no legal effect whatsoever. Any such purported
transferee shall be deemed not to be a holder of such Securities for any
purpose, including, but not limited to the receipt of payments on such
Securities, and such purported transferee shall be deemed to have no interest
whatsoever in such Securities.
(b) General Provisions Relating to Transfers and Exchanges. To permit
registrations of transfers and exchanges, the Corporation shall execute and the
Debenture Trustee shall authenticate Securities at the request of the security
registrar. All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Corporation, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
No service charge shall be made to a holder for any registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.
The Corporation shall not be required to: (i) issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of prepayment or any
notice of selection of Securities for prepayment under Article XIV hereof and
ending at the close of business on the day of such mailing; or (ii) register the
transfer of or exchange any Security so selected for prepayment in whole or in
part, except the nonprepaid portion of any Security being prepaid in part.
Prior to due presentment for the registration of a transfer of any
Security, the Debenture Trustee, the Corporation and any agent of the Debenture
Trustee or the Corporation may deem and treat the Person in whose name any
Security is registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and premium, if any, and interest
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on such Securities, and none of the Debenture Trustee, the Corporation or any
agents of the Debenture Trustee or the Corporation shall be affected by notice
to the contrary.
(c) Exchanges in Connection With a Dissolution Event. In connection with
a Dissolution Event, the Securities shall be presented to the Debenture Trustee
by the Property Trustee and any Capital Security certificates which represent
Capital Securities will be deemed to represent a beneficial interest in
Securities having an aggregate principal amount equal to the aggregate
liquidation amount of the Capital Securities until such Capital Security
certificates are presented to the security registrar for the Securities for
transfer or reissuance, at which time such Capital Security certificates will be
canceled, and a Security in a Like Amount, registered in the name of the holder
of the Capital Security certificate or the transferee of the holder of such
Capital Security certificate, as the case may be, will be executed by the
Corporation and delivered to the Debenture Trustee for authentication and
delivery in accordance with this Indenture; and upon the issuance of such
Securities to the holders, or transferee of the holder, of such Capital Security
certificate, Securities with an equivalent aggregate principal amount that were
presented by the Property Trustee to the Debenture Trustee will be canceled.
SECTION 2.07 Replacement Securities.
If any mutilated Security is surrendered to the Debenture Trustee, or
the Corporation and the Debenture Trustee receive evidence to their satisfaction
of the destruction, loss or theft of any Security, the Corporation shall issue
and the Debenture Trustee shall authenticate a replacement Security if the
Debenture Trustee's requirements for replacements of Securities are met. An
indemnity bond must be supplied by the holder that is sufficient in the judgment
of the Debenture Trustee and the Corporation to protect the Corporation, the
Debenture Trustee, any agent thereof or any Authenticating Agent from any loss
that any of them may suffer if a Security is replaced. The Corporation or the
Debenture Trustee may charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Corporation and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Securities duly issued hereunder.
SECTION 2.08 Temporary Securities.
Pending the preparation of definitive Securities, the Corporation may
execute, and upon Corporation Order the Debenture Trustee shall authenticate and
make available for delivery, temporary Securities that are printed,
lithographed, typewritten, mimeographed or otherwise reproduced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the Officers executing such
Securities may determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Corporation shall cause
definitive Securities to be prepared without unreasonable delay. The definitive
Securities shall be printed, lithographed or engraved, or provided by any
combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
Officers
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executing such definitive Securities. After the preparation of definitive
Securities, the temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the office or agency
maintained by the Corporation for such purpose pursuant to Section 3.02 hereof,
without charge to the holder thereof. Upon surrender for cancellation of any one
or more temporary Securities, the Corporation shall execute, and the Debenture
Trustee shall authenticate and make available for delivery, in exchange therefor
the same aggregate principal amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 2.09 Cancellation.
The Corporation at any time may deliver Securities to the Debenture
Trustee for cancellation. The Debenture Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall return such canceled Securities to the
Corporation. The Corporation may not issue new Securities to replace Securities
that have been prepaid or paid or that have been delivered to the Debenture
Trustee for cancellation.
SECTION 2.10 Defaulted Interest.
Any interest on any Security that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the holder on the relevant
regular record date by virtue of having been such holder; and such Defaulted
Interest shall be paid by the Corporation, at its election, as provided in
clause (a) or clause (b) below:
(a) The Corporation may make payment of any Defaulted Interest
on Securities to the Persons in whose names such Securities (or their
respective Predecessor Securities) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Corporation
shall notify the Debenture Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security and the date of the
proposed payment, and at the same time the Corporation shall deposit
with the Debenture Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Debenture Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon, the
Debenture Trustee shall fix a special record date for the payment of
such Defaulted Interest which shall not be more than 15 nor less than 10
days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Debenture Trustee of the notice of the proposed
payment. The Debenture Trustee shall promptly notify the Corporation of
such special record date and, in the name and at the expense of the
Corporation, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be mailed,
first class postage prepaid, to each Securityholder at his or her
address as it appears in the Security Register, not less than 10 days
prior to such special record date. Notice of the proposed payment of
such Defaulted
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Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Securities (or their respective Predecessor Securities) are
registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Corporation may make payment of any Defaulted Interest
on any Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Corporation to the Debenture Trustee of the
proposed payment pursuant to this clause, such manner of payment shall
be deemed practicable by the Debenture Trustee.
SECTION 2.11 CUSIP Numbers.
The Corporation in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Debenture Trustee shall use "CUSIP"
numbers in notices of prepayment as a convenience to Securityholders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a prepayment and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such prepayment shall
not be affected by any defect in or omission of such numbers. The Corporation
will promptly notify the Debenture Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE CORPORATION
SECTION 3.01 Payment of Principal and Interest.
The Corporation covenants and agrees for the benefit of the holders of
the Securities that it will duly and punctually pay or cause to be paid the
principal of and premium, if any, and interest on the Securities at the place,
at the respective times and in the manner provided herein. The Corporation
further covenants to pay any and all amounts due in respect of the Securities,
including, without limitation, Additional Sums, as may be required pursuant to
Section 2.05(c) and Compounded Interest, as may be required pursuant to Section
16.01.
SECTION 3.02 Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the Corporation
will maintain in Wilmington, Delaware an office or agency where the Securities
may be presented for payment, an office or agency where the Securities may be
presented for registration of transfer and for exchange as in this Indenture
provided and an office or agency where notices and demands to or upon the
Corporation in respect of the Securities or this Indenture may be served. The
Corporation will give to the Debenture Trustee written notice of the location of
any such office or agency and of any change of location thereof. Until otherwise
designated from time to time by the Corporation in a notice to the Debenture
Trustee, any such office or agency for all of the above purposes shall be the
Principal Office of the Debenture Trustee. In case the Corporation shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or
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of any change in the location thereof, presentations and demands may be made and
notices may be served at the Principal Office of the Debenture Trustee.
In addition to any such office or agency, the Corporation may from time
to time designate one or more offices or agencies outside Wilmington, Delaware
where the Securities may be presented for payment, for registration of transfer
and for exchange and where notices and demands to or upon the Corporation in
respect of the Securities or this Indenture may be served in the manner provided
in this Indenture, and the Corporation may from time to time rescind such
designation, as the Corporation may deem desirable or expedient; provided,
however, that no such designation or rescission shall in any manner relieve the
Corporation of its obligation to maintain any such office or agency in
Wilmington, Delaware for the purposes above mentioned. The Corporation will give
to the Debenture Trustee prompt written notice of any such designation or
rescission thereof.
SECTION 3.03 Appointments to Fill Vacancies in Debenture Trustee's
Office.
The Corporation, whenever necessary to avoid or fill a vacancy in the
office of Debenture Trustee, will appoint, in the manner provided in Section
6.10, a Debenture Trustee, so that there shall at all times be a Debenture
Trustee hereunder.
SECTION 3.04 Provision as to Paying Agent.
(a) If the Corporation shall appoint a paying agent other than the
Debenture Trustee with respect to the Securities, it will cause such paying
agent to execute and deliver to the Debenture Trustee an instrument in which
such agent shall agree with the Debenture Trustee, subject to the provisions of
this Section 3.04,
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or
interest on the Securities (whether such sums have been
paid to it by the Corporation or by any other obligor on
the Securities) in trust for the benefit of the holders
of the Securities; and
(2) that it will give the Debenture Trustee notice of any
failure by the Corporation (or by any other obligor on
the Securities) to make any payment of the principal of
or premium, if any, or interest (including Additional
Sums and Compounded Interest, if any) on the Securities
when the same shall be due and payable.
(b) If the Corporation shall act as its own paying agent, it will, on or
before each due date of the principal of and premium, if any, or interest on the
Securities, set aside, segregate and hold in trust for the benefit of the
holders of the Securities a sum sufficient to pay such principal, premium or
interest so becoming due and will notify the Debenture Trustee of any failure to
take such action and of any failure by the Corporation (or by any other obligor
under the Securities) to make any payment of the principal of and premium, if
any, or interest on the Securities when the same shall become due and payable.
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(c) Anything in this Section 3.04 to the contrary notwithstanding, the
Corporation may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the Securities hereunder, or for any other reason, pay
or cause to be paid to the Debenture Trustee all sums payable with respect to
the Securities, such sums to be held by the Debenture Trustee upon the trusts
herein contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.04 is subject to
Sections 11.03 and 11.04.
SECTION 3.05 Certificate to Debenture Trustee.
The Corporation will deliver to the Debenture Trustee on or
before 120 days after the end of each fiscal year of the Corporation, commencing
with the first fiscal year ending after the date hereof, so long as Securities
are outstanding hereunder, an Officers' Certificate, one of the signers of which
shall be the principal executive, principal financial or principal accounting
officer of the Corporation, stating that in the course of the performance by the
signers of their duties as officers of the Corporation they would normally have
knowledge of any Default by the Corporation in the performance of any covenants
contained herein, stating whether or not they have knowledge of any such Default
and, if so, specifying each such Default of which the signers have knowledge,
the nature thereof and the action, if any, the Corporation intends to undertake
as a result of such Default.
SECTION 3.06 Compliance with Consolidation Provisions.
The Corporation will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other Person unless the
provisions of Article X hereof are complied with.
SECTION 3.07 Limitation on Dividends.
The Corporation will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal of or interest or premium, if any, on, or repay, repurchase or
redeem any debt securities of the Corporation (including Other Debentures) that
rank pari passu with or junior in right of payment to the Securities or (iii)
make any guarantee payments with respect to any guarantee by the Corporation of
the debt securities of any Subsidiary of the Corporation (including Other
Guarantees) if such guarantee ranks pari passu with or junior in right of
payment to the Securities (other than (a) dividends or distributions in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Common Stock, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Capital Securities Guarantee, (d) as a
result of a reclassification of the Corporation's capital stock or the exchange
or conversion of one class or series of the Corporation's capital stock for
another class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged and (f) purchases of Common Stock related to the
issuance of Common
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Stock or rights under any of the Corporation's benefit or compensation plans for
its directors, officers or employees or any of the Corporation's dividend
reinvestment plans), if at such time (1) there shall have occurred any event of
which the Corporation has actual knowledge that (a) is a Default or an Event of
Default and (b) in respect of which the Corporation shall not have taken
reasonable steps to cure, (2) such Securities are held by the Property Trustee,
and the Corporation shall be in default with respect to its payment of any
obligations under the Capital Securities Guarantee or (3) the Corporation shall
have given notice of its election to exercise its right to commence an Extended
Interest Payment Period and shall not have rescinded such notice, and such
Extended Interest Payment Period or any extension thereof shall have commenced
and be continuing.
SECTION 3.08 Covenants as to the Trust
In the event Securities are issued to the Trust or a trustee of such
Trust in connection with the issuance of Trust Securities by the Trust, for so
long as such Trust Securities remain outstanding, the Corporation (i) will
maintain 100% direct or indirect ownership of the Common Securities of the
Trust; provided, however, that any successor of the Corporation, permitted
pursuant to Article X, may succeed to the Corporation's ownership of such Common
Securities, (ii) will use commercially reasonable efforts to cause the Trust (a)
to remain a business trust, except in connection with a distribution of
Securities to the holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities of the Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (b)
to otherwise continue to be classified as a grantor trust and not an association
taxable as a corporation for United States federal income tax purposes, (iii)
will use commercially reasonable efforts to cause each holder of the Trust
Securities to be treated as owning an undivided beneficial interest in the
Securities and (iv) will not cause, as sponsor of the Trust, or permit, as
holder of the Common Securities, the dissolution, winding-up or liquidation of
the Trust, except as provided in the Declaration.
SECTION 3.09 Payment of Expenses.
In connection with the offering, sale and issuance of the Securities to
the Trust and in connection with the sale of the Trust Securities by the Trust,
the Corporation, in its capacity as borrower with respect to the Securities,
shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Securities, including compensation of the
Debenture Trustee in accordance with the provisions of Section
6.06;
(b) pay all costs and expenses of the Trust, including, but not
limited to, costs and expenses relating to the organization of
the Trust, the sale and issuance of the Trust Securities
(including commissions payable to the Placement Agent pursuant
to the Placement Agency Agreement in connection therewith), the
fees and expenses of the Property Trustee and the Delaware
Trustee, 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,
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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 assets of the Trust;
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(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; and
(e) pay all other fees, expenses, debts and obligations (other than
in respect of the Trust Securities) related to the Trust.
SECTION 3.10 Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or resignation of the
Debenture Trustee, unless otherwise stated, the Corporation shall pay to the
Debenture Trustee all amounts accrued and owing to the Debenture Trustee to the
date of such termination, removal or resignation. Upon termination of the
Declaration or the removal or resignation of the Delaware Trustee or the
Property Trustee, as the case may be, pursuant to Section 5.7 of the
Declaration, the Corporation shall pay to the Delaware Trustee or the Property
Trustee, as the case may be, all amounts accrued and owing to such trustee(s) to
the date of such termination, removal or resignation.
ARTICLE IV
LIST OF SECURITYHOLDERS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE
SECTION 4.01 List of Securityholders.
The Corporation covenants and agrees that it will furnish or cause to be
furnished to the Debenture Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Debenture Trustee may
reasonably require, of the names and addresses of the
Securityholders as of such record date; and
(b) at such other times as the Debenture Trustee may request in
writing, within 30 days after the receipt by the Corporation, of
any such request, a list of similar form and content as of a
date not more than 15 days prior to the time such list is
furnished,
except that, no such lists need be furnished so long as the Debenture Trustee is
in possession thereof by reason of its acting as security registrar for the
Securities.
SECTION 4.02 Preservation and Disclosure of Lists.
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(a) The Debenture Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of the Securities (1) contained in the most recent list furnished to it
as provided in Section 4.01 or (2) received by it in the capacity of security
registrar (if so acting) hereunder. The Debenture Trustee may destroy any list
furnished to it as provided in Section 4.01 upon receipt of a new list so
furnished.
(b) In case three or more holders of Securities (hereinafter referred to
as "applicants") apply in writing to the Debenture Trustee and furnish to the
Debenture Trustee reasonable proof that each such applicant has owned a Security
for a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
holders of Securities or with holders of all Securities with respect to their
rights under this Indenture and is accompanied by a copy of the form of proxy or
other communication which such applicants propose to transmit, then the
Debenture Trustee shall, within five Business Days after the receipt of such
application, at its election, either:
(1) afford such applicants access to the information
preserved at the time by the Debenture Trustee in
accordance with the provisions of subsection (a) of this
Section 4.02, or
(2) inform such applicants as to the approximate number of
holders of all Securities whose names and addresses
appear in the information preserved at the time by the
Debenture Trustee in accordance with the provisions of
subsection (a) of this Section 4.02, and as to the
approximate cost of mailing to such Securityholders the
form of proxy or other communication, if any, specified
in such application.
If the Debenture Trustee shall elect not to afford such applicants
access to such information, the Debenture Trustee shall, upon the written
request of such applicants, mail to each Securityholder whose name and address
appear in the information preserved at the time by the Debenture Trustee in
accordance with the provisions of subsection (a) of this Section 4.02 a copy of
the form of proxy or other communication which is specified in such request with
reasonable promptness after a tender to the Debenture Trustee of the material to
be mailed and of payment, or provision for the payment, of the reasonable
expenses of mailing, unless within five Business Days after such tender, the
Debenture Trustee shall mail to such applicants and, if required by law, file
with the Commission, together with a copy of the material to be mailed, a
written statement to the effect that, in the opinion of the Debenture Trustee,
such mailing would be contrary to the best interests of the holders of
Securities or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Debenture
Trustee shall mail copies of such material to all such Securityholders with
reasonable promptness after the entry of such order and the renewal of such
tender; otherwise the Debenture Trustee shall be relieved of any obligation or
duty to such applicants respecting their application.
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(c) Each and every holder of Securities, by receiving and holding the
same, agrees with the Corporation and the Debenture Trustee that neither the
Corporation nor the Debenture Trustee nor any paying agent shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the holders of Securities in accordance with the provisions of
subsection (b) of this Section 4.02, regardless of the source from which such
information was derived, and that the Debenture Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
said subsection (b).
SECTION 4.03 Reports by the Corporation.
(a) The Corporation covenants and agrees to file with the Debenture
Trustee, within 15 days after the date on which the Corporation is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as said Commission may from time to time by rules and regulations
prescribe) which the Corporation may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the
Corporation is not required to file information, documents or reports pursuant
to either of such sections, then to provide to the Debenture Trustee, such of
the supplementary and periodic information, documents and reports which would
have been required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange or copies of
the call reports that the Corporation is required to file with its primary
federal banking regulator. The Corporation also covenants and agrees to comply
with the provisions of Section 314(a) of the Trust Indenture Act.
(b) The Corporation covenants and agrees to file with the Debenture
Trustee and the Commission, in accordance with the rules and regulations
prescribed from time to time by said Commission, such additional information,
documents and reports with respect to compliance by the Corporation with the
conditions and covenants provided for in this Indenture as may be required from
time to time by such rules and regulations.
(c) The Corporation covenants and agrees to transmit by mail to
MMCapS(SM) Funding I, Ltd. and to all holders of Securities, as the names and
addresses of such holders appear upon the Security Register, within 30 days
after the filing thereof with the Debenture Trustee, such summaries of any
information, documents and reports required to be filed by the Corporation
pursuant to subsections (a) and (b) of this Section 4.03 as may be required by
rules and regulations prescribed from time to time by the Commission.
(d) Delivery of such reports, information and documents to the Debenture
Trustee is for informational purposes only and the Debenture Trustee's receipt
of such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Corporation's compliance with any of its covenants hereunder (as to which the
Debenture Trustee is entitled to rely exclusively on Officers' Certificates).
(e) So long as is required for an offer or sale of the Securities to
qualify for an exemption under Rule 144A under the Securities Act, the
Corporation shall, upon request, provide the information required by clause
(d)(4) thereunder to each Securityholder and to each beneficial owner and
prospective purchaser of Securities identified by each Securityholder of
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Restricted Securities, unless such information is furnished to the Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
SECTION 4.04 Reports by the Debenture Trustee.
(a) The Debenture Trustee shall transmit to Securityholders such reports
concerning the Debenture Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust Indenture
Act, the Debenture Trustee shall, within 60 days after the date hereof, and no
later than the anniversary date hereof in each succeeding year, deliver to
Securityholders a brief report, dated as of each such date which complies with
the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such transmission
to Securityholders, be filed by the Debenture Trustee with each stock exchange,
if any, upon which the Securities are listed, with the Commission and with the
Corporation. The Corporation will promptly notify the Debenture Trustee when the
Securities are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE DEBENTURE TRUSTEE AND
SECURITYHOLDERS UPON EVENT OF DEFAULT
SECTION 5.01 Events of Default.
One or more of the following events of default shall constitute an Event
of Default hereunder (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest (including Compounded
Interest and Additional Sums, if any) on the Securities or any
Other Debentures (about which a Responsible Officer of the
Debenture Trustee has actual knowledge) when due, and
continuance of such default for a period of 30 days; provided,
however, that a valid extension of an interest payment period by
the Corporation in accordance with the terms hereof or thereof
shall not constitute a default in the payment of interest for
this purpose; or
(b) default in the payment of any principal of (or premium, if any,
on) the Securities or any Other Debentures (about which a
Responsible Officer of the Debenture Trustee has actual
knowledge) when due, whether at maturity, upon prepayment, by
declaration of acceleration of maturity or otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Corporation in this Indenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a period of 90
days after there has been given, by registered or certified
mail, to the Corporation by the
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Debenture Trustee or to the Corporation and the Debenture
Trustee by the holders of at least 25% in aggregate principal
amount of the outstanding Securities a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Corporation in an
involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Corporation or for any substantial
part of its property, or ordering the winding-up or liquidation
of its affairs and such decree or order shall remain unstayed
and in effect for a period of 90 consecutive days; or
(e) the Corporation shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall
consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator
(or other similar official) of the Corporation or of any
substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Debenture
Trustee or the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding may declare the principal amount of all Securities
to be due and payable immediately, by a notice in writing to the Corporation
(and to the Debenture Trustee if given by the holders of the outstanding
Securities), and upon any such declaration the same shall become immediately due
and payable.
The foregoing provisions, however, are subject to the condition that if,
at any time after the principal of the Securities shall have been so declared
due and payable, and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided, (i) the
Corporation shall pay or shall deposit with the Debenture Trustee a sum
sufficient to pay (A) all matured installments of interest (including Compounded
Interest and Additional Sums, if any) on all the Securities and the principal of
and premium, if any, on any and all Securities which shall have become due
otherwise than by acceleration (with interest upon such principal and premium,
if any, and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest, at the same rate as the
rate of interest specified in the Securities to the date of such payment or
deposit) and (B) such amount as shall be sufficient to cover compensation due to
the Debenture Trustee and each predecessor Debenture Trustee, their respective
agents, attorneys and counsel, pursuant to Section 6.06, and (ii) any and all
Events of Default under the Indenture, other than the non-payment of the
principal of the Securities which shall have become due solely by such
declaration of acceleration, shall have been cured, waived or otherwise remedied
as provided herein, then, in every such case, the holders of a majority in
aggregate principal amount of the Securities then outstanding, by written notice
to the Corporation and to the Debenture Trustee, may rescind and annul such
declaration and its consequences, but no such waiver or rescission
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and annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.
In case the Debenture Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Debenture Trustee, then and in every
such case the Corporation, the Debenture Trustee and the holders of the
Securities shall be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Corporation, the Debenture
Trustee and the holders of the Securities shall continue as though no such
proceeding had been taken.
SECTION 5.02 Payment of Securities on Default; Suit Therefor.
The Corporation covenants that (a) in case default shall be made in the
payment of any installment of interest (including Compounded Interest and
Additional Sums, if any) on any of the Securities as and when the same shall
become due and payable, and such default shall have continued for a period of 30
days, or (b) in case default shall be made in the payment of the principal of or
premium, if any, on any of the Securities as and when the same shall have become
due and payable, whether at maturity of the Securities or upon prepayment or by
declaration or otherwise, then, upon demand of the Debenture Trustee, the
Corporation will pay to the Debenture Trustee, for the benefit of the holders of
the Securities, the whole amount that then shall have become due and payable on
all such Securities for principal and premium, if any, or interest (including
Compounded Interest and Additional Sums, if any), with interest upon the overdue
principal and premium, if any, and (to the extent that payment of such interest
is enforceable under applicable law and, if the Securities are held by the Trust
or a trustee of such Trust, without duplication of any other amounts paid by the
Trust or a trustee in respect thereof) upon the overdue installments of interest
(including Compounded Interest and Additional Sums, if any) at the rate borne by
the Securities; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation to the Debenture Trustee, its agents, attorneys and counsel, and
any other amount due to the Debenture Trustee pursuant to Section 6.06.
In case the Corporation shall fail forthwith to pay such amounts upon
such demand, the Debenture Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Corporation or any other
obligor on the Securities and collect in the manner provided by law out of the
property of the Corporation or any other obligor on the Securities, wherever
situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Corporation or any other obligor on the Securities under
Title 11, United States Code, or any other applicable law, or in case a receiver
or trustee shall have been appointed for the property of the Corporation or such
other obligor, or in the case of any other similar judicial proceedings relative
to the Corporation or other obligor upon the Securities, or to the creditors or
property of the Corporation or such other obligor, the Debenture Trustee,
irrespective of whether the
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principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Debenture Trustee
shall have made any demand pursuant to the provisions of this Section 5.02,
shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of principal
and interest owing and unpaid in respect of the Securities and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Debenture
Trustee (including any claim for amounts due to the Debenture Trustee pursuant
to Section 6.06) and of the Securityholders allowed in such judicial proceedings
relative to the Corporation or any other obligor on the Securities, or to the
creditors or property of the Corporation or such other obligor, unless
prohibited by applicable law and regulations, to vote on behalf of the holders
of the Securities in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or person performing similar functions in comparable proceedings,
and to collect and receive any moneys or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make such
payments to the Debenture Trustee, and, in the event that the Debenture Trustee
shall consent to the making of such payments directly to the Securityholders, to
pay to the Debenture Trustee such amounts as shall be sufficient to cover
reasonable compensation to, and expenses of, the Debenture Trustee, each
predecessor Debenture Trustee and their respective agents, attorneys and
counsel, and all other amounts due to the Debenture Trustee pursuant to Section
6.06.
Nothing herein contained shall be construed to authorize the Debenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof or to
authorize the Debenture Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Debenture Trustee without
the possession of any of the Securities, or the production thereof on any trial
or other proceeding relative thereto, and any such suit or proceeding instituted
by the Debenture Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the holders of the Securities.
In any proceedings brought by the Debenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Debenture Trustee shall be a party), the Debenture Trustee shall be
held to represent all the holders of the Securities, and it shall not be
necessary to make any holders of the Securities parties to any such proceedings.
SECTION 5.03 Application of Moneys Collected by Debenture Trustee.
Any moneys collected by the Debenture Trustee shall be applied in the
following order, at the date or dates fixed by the Debenture Trustee for the
distribution of such moneys, upon
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presentation of the Securities in respect of which moneys have been collected,
and stamping thereon the payment, if only partially paid, and upon surrender
thereof if fully paid:
First: To the payment of costs and expenses of collection applicable to
the Securities and all other amounts due to the Debenture Trustee under Section
6.06;
Second: To the payment of all Senior Indebtedness of the Corporation if
and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon Securities
for principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) on the Securities, in respect of which or
for the benefit of which money has been collected, ratably, without preference
of priority of any kind, according to the amounts due on such Securities for
principal (and premium, if any) and interest, respectively; and
Fourth: To the Corporation.
SECTION 5.04 Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such holder previously shall have given to the Debenture
Trustee written notice of an Event of Default and of the continuance thereof
with respect to the Securities specifying such Event of Default, as hereinbefore
provided, and unless also the holders of not less than 25% in aggregate
principal amount of the Securities then outstanding shall have made written
request upon the Debenture Trustee to institute such action, suit or proceeding
in its own name as Debenture Trustee hereunder and shall have offered to the
Debenture Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Debenture
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action, suit or proceeding, it
being understood and intended, and being expressly covenanted by the taker and
holder of every Security with every other taker and holder and the Debenture
Trustee, that no one or more holders of Securities shall have any right in any
manner whatever by virtue of or by availing itself of any provision of this
Indenture to affect, disturb or prejudice the rights of any other holder of
Securities, or to obtain or seek to obtain priority over or preference to any
other such holder, or to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all
holders of Securities.
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Security to receive payment of the principal of (and
premium, if any) and interest on (including Compounded Interest and Additional
Sums, if any) such Security, on or after the same shall have become due and
payable, or to institute suit for the enforcement of any such payment, shall not
be impaired or affected without the consent of such holder, and by accepting a
Security hereunder it is expressly understood, intended and covenanted by the
taker and holder of every Security with every other such taker and holder and
the Debenture Trustee, that no one or more holders of Securities shall have any
right in any manner whatsoever by virtue or by availing itself
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of any provision of this Indenture to affect, disturb or prejudice the rights of
the holders of any other Securities, or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Securities. For the protection and enforcement
of the provisions of this Section, each and every Securityholder and the
Debenture Trustee shall be entitled to such relief as can be given either at law
or in equity.
The Corporation and the Debenture Trustee acknowledge that pursuant to
the Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence a
Direct Action with respect to any Event of Default referred to in clause (a) or
(b) of Section 5.01.
SECTION 5.05 Proceedings by Debenture Trustee.
In case an Event of Default occurs with respect to Securities
and is continuing, the Debenture Trustee may in its discretion proceed to
protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Debenture Trustee shall deem most
effectual to protect and enforce any of such rights, either by suit in equity or
by action at law or by proceeding in bankruptcy or otherwise, whether for the
specific enforcement of any covenant or agreement contained in this Indenture or
in aid of the exercise of any power granted in this Indenture, or to enforce any
other legal or equitable right vested in the Debenture Trustee by this Indenture
or by law.
SECTION 5.06 Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the Debenture Trustee
or to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to the
Debenture Trustee or the holders of the Securities, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with respect to
the Securities, and no delay or omission of the Debenture Trustee or of any
holder of any of the Securities to exercise any right or power accruing upon any
Event of Default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or an
acquiescence therein; and, subject to the provisions of Section 5.04, every
power and remedy given by this Article V or by law to the Debenture Trustee or
to the Securityholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Debenture Trustee or by the Securityholders.
SECTION 5.07 Direction of Proceedings and Waiver of Defaults by Majority
of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee; provided, however, that (subject to the provisions of Section 6.01) the
Debenture Trustee shall have the right to decline to follow any such direction
if the Debenture Trustee shall determine that the action so directed would be
unjustly prejudicial to the
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holders not taking part in such direction or if the Debenture Trustee being
advised by counsel determines that the action or proceeding so directed may not
lawfully be taken or if the Debenture Trustee in good faith by one of its
Responsible Officers shall determine that the action or proceedings so directed
would involve the Debenture Trustee in personal liability. Prior to any
declaration accelerating the maturity of the Securities, the holders of a
majority in aggregate principal amount of the Securities at the time outstanding
may on behalf of the holders of all of the Securities waive any past Default or
Event of Default and its consequences except a Default (a) in the payment of
principal of (or premium, if any) or interest on (including Compounded Interest
and Additional Sums, if any) any of the Securities (unless such default has been
cured and a sum sufficient to pay all matured installments of interest
(including Compounded Interest and Additional Sums, if any) and principal (and
premium, if any), due otherwise than by acceleration has been deposited with the
Debenture Trustee) or (b) in respect of covenants or provisions hereof which
cannot be modified or amended without the consent of the holder of each Security
affected; provided, however, that if the Securities are held by the Property
Trustee, such waiver or modification to such waiver shall not be effective until
the holders of a majority in aggregate liquidation amount of Trust Securities
shall have consented to such waiver or modification to such waiver; provided,
further, that if the consent of the holder of each outstanding Security is
required, such waiver shall not be effective until each holder of the Trust
Securities shall have consented to such waiver. Upon any such waiver, the
Default covered thereby shall be deemed to be cured for all purposes of this
Indenture and the Corporation, the Debenture Trustee and the holders of the
Securities shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon. Whenever any Default or Event of Default
hereunder shall have been waived as permitted by this Section 5.07, said Default
or Event of Default shall for all purposes of the Securities and this Indenture
be deemed to have been cured and to be not continuing.
SECTION 5.08 Notice of Defaults
(a) The Debenture Trustee shall, within 90 days after the Debenture
Trustee has knowledge of the occurrence of a Default with respect to the
Securities, mail to all Securityholders, as the names and addresses of such
holders appear upon the Security Register, notice of all such Defaults, unless
such Default shall have been cured before the giving of such notice (the term
"Default" for the purpose of this Section 5.08 being hereby defined to be any of
the events specified in clauses (a), (b), (c), (d) and (e) of Section 5.01, not
including periods of grace, if any, provided for therein, and irrespective of
the giving of written notice specified in clause (c) of Section 5.01); provided,
however, that, except in the case of Default in the payment of the principal of
(or premium, if any) or interest (including Compounded Interest or Additional
Sums, if any) on any of the Securities, the Debenture 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 Debenture Trustee in good faith determines that the withholding
of such notice is in the interests of the Securityholders; provided, further,
that in the case of any Default of the character specified in Section 5.01(c),
no such notice to Securityholders shall be given until at least 60 days after
the occurrence thereof, but shall be given within 90 days after such occurrence.
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(b) Within ten Business Days after the Debenture Trustee has knowledge
of the occurrence of any Event of Default, the Debenture Trustee shall transmit
notice of such Event of Default to all Securityholders as their names and
addresses appear on the Security Register, unless such Event of Default shall
have been cured or waived.
SECTION 5.09 Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any Security by
its acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Debenture Trustee for any action
taken or omitted by it as Debenture Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees and expenses, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 5.09 shall not apply to any suit instituted
by the Debenture Trustee, to any suit instituted by any Securityholder, or group
of Securityholders, holding in the aggregate more than 10% in aggregate
principal amount of the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest (including Compounded Interest and Additional Sums,
if any) on any Security against the Corporation on or after the same shall have
become due and payable.
ARTICLE VI
CONCERNING THE DEBENTURE TRUSTEE
SECTION 6.01 Duties and Responsibilities of Debenture Trustee.
With respect to the holders of the Securities issued hereunder, the
Debenture Trustee, prior to the occurrence of an Event of Default (which, other
than in the case of Sections 5.01(a) and 5.01(b) hereof, is known to the
Debenture Trustee) and after the curing or waiving of all such Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture. In case an Event of Default
(which, other than in the case of Sections 5.01(a) and 5.01(b) hereof, is known
to the Debenture Trustee) has occurred (which has not been cured or waived), the
Debenture Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
No provision of this Indenture shall be construed to relieve the
Debenture Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default (which, other
than in the case of Sections 5.01(a) and 5.01(b) hereof, is
known to the Debenture Trustee) and after the curing or waiving
of all such Events of Default which may have occurred,
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(1) the duties and obligations of the Debenture Trustee
shall be determined solely by the express provisions of
this Indenture, and the Debenture Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall
be read into this Indenture against the Debenture
Trustee; and
(2) in the absence of bad faith on the part of the Debenture
Trustee, the Debenture Trustee may conclusively rely, as
to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificate or
opinion furnished to the Debenture Trustee and
conforming to the requirements of this Indenture; but,
in the case of any such certificate or opinion which by
any provision hereof is specifically required to be
furnished to the Debenture Trustee, the Debenture
Trustee shall be under a duty to examine the same to
determine whether or not it conforms on its face to the
requirements of this Indenture;
(b) the Debenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers, unless it shall be proved that the
Debenture Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Debenture 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 Securityholders pursuant to
Section 5.07, relating to the time, method and place of
conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred
upon the Debenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Debenture 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 reasonably believes that the repayment of
such funds or liability is not reasonably assured to it under the terms of this
Indenture or adequate indemnity against such risk is not reasonably assured to
it.
SECTION 6.02 Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Debenture 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, note, debenture or other
paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Corporation
mentioned herein may be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any Board Resolution may
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be evidenced to the Debenture Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the
Corporation;
(c) the Debenture Trustee may consult with counsel of its selection
and any advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(d) the Debenture Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at
the request, order or direction of any of the Securityholders,
pursuant to the provisions of this Indenture, unless such
Securityholders shall have offered to the Debenture Trustee
reasonable and sufficient security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby;
(e) the Debenture Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Indenture; nothing contained herein
shall, however, relieve the Debenture Trustee of the obligation,
upon the occurrence of an Event of Default (which, other than in
the case of Sections 5.01(a) and 5.01(b) hereof, is known to the
Debenture Trustee) (that has not been cured or waived), to
exercise such of the rights and powers vested in it by this
Indenture, and to use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs;
(f) the Debenture 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, unless requested in writing
to do so by the holders of a majority in aggregate principal
amount of the outstanding Securities; provided, however, that if
the payment within a reasonable time to the Debenture Trustee of
the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the
Debenture Trustee, not reasonably assured to the Debenture
Trustee by the security afforded to it by the terms of this
Indenture, the Debenture Trustee may require reasonable
indemnity against such expense or liability as a condition to so
proceeding;
(g) the Debenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents (including any Authenticating Agent) or
attorneys, and the Debenture Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent
or attorney appointed by it with due care;
(h) notwithstanding any provision in this Indenture to the contrary,
the Debenture Trustee shall not be charged with knowledge of any
Default or Event of Default unless (1) such Default or Event of
Default falls within Section 5.01(a) (other than a default with
respect to the payment or nonpayment of Compounded Interest or
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Additional Sums or, unless the Debenture Trustee is also trustee
with respect thereto, amounts on any Other Debentures) or
Section 5.01(b) (other than a default with respect to the
payment or nonpayment of amounts on any Other Debentures unless
the Debenture Trustee is also trustee with respect thereto) of
this Indenture, (2) a Responsible Officer shall have actual
knowledge of such Default or Event of Default or (3) written
notice of such Default or Event of Default shall have been given
to the Debenture Trustee by the Corporation or any other obligor
on the Securities or by any holder of the Securities; and
(i) the Debenture Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith, without negligence or
willful misconduct and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Indenture.
SECTION 6.03 No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Debenture Trustee or the Authenticating
Agent) shall be taken as the statements of the Corporation, and the Debenture
Trustee and the Authenticating Agent assume no responsibility for the
correctness of the same. The Debenture Trustee and the Authenticating Agent make
no representations as to the validity or sufficiency of this Indenture or of the
Securities. The Debenture Trustee and the Authenticating Agent shall not be
accountable for the use or application by the Corporation of any Securities or
the proceeds of any Securities authenticated and delivered by the Debenture
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.
SECTION 6.04 Debenture Trustee, Authenticating Agent, Paying Agents,
Transfer Agents and Registrar May Own Securities.
The Debenture Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any security registrar for the Securities, in its
individual or any other capacity, may become the owner or pledgee of Securities
with the same rights it would have if it were not Debenture Trustee,
Authenticating Agent, paying agent, transfer agent or security registrar for the
Securities.
SECTION 6.05 Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys received by the
Debenture Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Debenture Trustee and any paying agent shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed in
writing with the Corporation. So long as no Event of Default shall have occurred
and be continuing, all interest allowed on any such moneys shall be paid from
time to time upon the written order of the Corporation, signed by an Officer
thereof.
SECTION 6.06 Compensation and Expenses of Debenture Trustee.
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The Corporation, as issuer of Securities under this Indenture, covenants
and agrees to pay to the Debenture Trustee from time to time, and the Debenture
Trustee shall be entitled to, such compensation as shall be agreed to in writing
between the Corporation and the Debenture Trustee (which shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust), and the Corporation will pay or reimburse the Debenture Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Debenture Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ),
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Corporation also covenants to indemnify each of the
Debenture Trustee (including in its individual capacity) and any predecessor
Debenture Trustee (and its officers, agents, directors and employees) for, and
to hold it harmless against, any and all loss, damage, claim, action, suit,
liability or expense including taxes (other than taxes based on the income of
the Debenture Trustee) incurred without negligence or bad faith on the part of
the Debenture Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability. The obligations of the Corporation under
this Section 6.06 to compensate and indemnify the Debenture Trustee and to pay
or reimburse the Debenture Trustee for expenses, disbursements and advances
shall constitute additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior to that of the Securities upon all property and
funds held or collected by the Debenture Trustee as such, except funds held in
trust for the benefit of the holders of particular Securities.
When the Debenture Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or Section
5.01(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for its services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation or removal
of the Debenture Trustee and the defeasance or other termination of this
Indenture.
SECTION 6.07 Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02, whenever in the
administration of the provisions of this Indenture, the Debenture Trustee shall
deem it necessary or desirable that a matter be proved or established prior to
taking or omitting any action hereunder, such matter (unless other evidence in
respect thereof is herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Debenture Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to the
Debenture Trustee, and such Officers' Certificate, in the absence of negligence
or bad faith on the part of the Debenture Trustee, shall be full warrant to the
Debenture Trustee for any action taken or omitted by it under the provisions of
this Indenture upon the faith thereof.
SECTION 6.08 Conflicting Interest of Debenture Trustee.
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If the Debenture Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Debenture
Trustee and the Corporation shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
SECTION 6.09 Eligibility of Debenture Trustee.
The Debenture Trustee hereunder shall at all times be a Person 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 to act as trustee by the Commission authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000) and subject to supervision or
examination by federal, state, territorial, or District of Columbia authority.
If such Person 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 6.09 the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published.
The Corporation may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Corporation, serve
as Debenture Trustee.
In case at any time the Debenture Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Debenture Trustee shall
resign immediately in the manner and with the effect specified in Section 6.10.
SECTION 6.10 Resignation or Removal of Debenture Trustee.
(a) The Debenture Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice of such resignation
to the Corporation and by mailing notice thereof to the holders of the
Securities at their addresses as they shall appear on the Security Register.
Upon receiving such notice of resignation, the Corporation shall promptly
appoint a successor trustee or trustees, in accordance with the provisions of
Section 6.09, by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Debenture Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within 60 days after the mailing of such notice of
resignation to the affected Securityholders, the resigning Debenture Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Securityholder may, subject to the provisions of Section 5.09,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(1) the Debenture Trustee shall fail to comply with the
provisions of Section 6.08 after written request
therefor by the Corporation, or by MMCapS(SM) Funding I,
Ltd. or by any other Securityholder who has been a bona
fide holder of a Security or Securities for at least six
months, or
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(2) the Debenture Trustee shall cease to be eligible in
accordance with the provisions of Section 6.09 and shall
fail to resign after written request therefor by the
Corporation, by MMCapS(SM) Funding I, Ltd. or by any
other Securityholder who has been a bona fide holder of
a Security or Securities for at least six months, or
(3) the Debenture Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a
receiver of the Debenture Trustee or of its property
shall be appointed, or any public officer shall take
charge or control of the Debenture Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, the Corporation may remove the Debenture Trustee and
appoint a successor trustee, in accordance with the provisions of Section 6.09,
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the Debenture Trustee so removed and one copy to the successor
trustee, or, subject to the provisions of Section 5.09, MMCapS(SM) Funding I,
Ltd. or any other Securityholder who has been a bona fide holder of a Security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Debenture Trustee and the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Debenture Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the Debenture Trustee
and nominate a successor trustee, which shall be deemed appointed as successor
trustee unless within 10 days after written notification of such nomination the
Corporation objects thereto, or if no successor trustee shall have been so
appointed and shall have accepted appointment within 30 days after such removal,
in which case the Debenture Trustee so removed or any Securityholder, upon the
terms and conditions and otherwise as in subsection (a) of this Section 6.10
provided, may petition any court of competent jurisdiction for an appointment of
a successor trustee.
(d) Any resignation or removal of the Debenture Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 6.10
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 6.11.
SECTION 6.11 Acceptance by Successor Debenture Trustee.
Any successor trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Corporation and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Corporation or of the successor
trustee, the trustee ceasing to act shall, upon payment of all amounts then due
it pursuant to the provisions of Section 6.06, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
trustee all property
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and money held by such retiring trustee thereunder. Upon request of any such
successor trustee, the Corporation shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property or funds held or collected by such
trustee to secure any amounts then due it pursuant to the provisions of Section
6.06.
No successor trustee shall accept appointment as provided in this
Section 6.11 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided in
this Section 6.11, the Corporation shall mail notice of the succession of such
trustee hereunder to the holders of Securities at their addresses as they shall
appear on the Security Register. If the Corporation fails to mail such notice
within 10 days after the acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Corporation.
SECTION 6.12 Succession by Merger, etc.
Any Person into which the Debenture Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Debenture Trustee shall be a party, or
any Person succeeding to all or substantially all of the corporate trust
business of the Debenture Trustee, shall be the successor of the Debenture
Trustee hereunder without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
In case any Securities shall have been authenticated but not delivered
at the time such successor to the Debenture Trustee shall succeed to the trusts
created by this Indenture, any such successor to the Debenture Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of the Securities
shall not have been authenticated, any successor to the Debenture Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificates
shall have the full force which the Securities or this Indenture elsewhere
provides that the certificate of the Debenture Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Debenture Trustee or authenticate Securities in the name of any
predecessor Debenture Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 6.13 Limitation on Rights of Debenture Trustee as a Creditor.
The Debenture Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section 311(b)
of the Trust Indenture Act. A Debenture Trustee who has resigned or been removed
shall be subject to Section 311(a) of the Trust Indenture Act to the extent
included therein.
SECTION 6.14 Authenticating Agents.
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There may be one or more Authenticating Agents appointed by the
Debenture Trustee upon the request of the Corporation with power to act on the
Debenture Trustee's behalf and subject to the Debenture Trustee's direction in
the authentication and delivery of Securities issued upon exchange or transfer
thereof as fully to all intents and purposes as though any such Authenticating
Agent had been expressly authorized to authenticate and deliver Securities;
provided, however, that the Debenture Trustee shall have no liability to the
Corporation for any acts or omissions of the Authenticating Agent with respect
to the authentication and delivery of Securities. Any such Authenticating Agent
shall at all times be a Person organized and doing business under the laws of
the United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $5,000,000 and being subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such Person publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.14 the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect herein specified in
this Section.
Any Person into which any Authenticating Agent may be merged, converted
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which any Authenticating Agent shall be a party, or any Person
succeeding to the corporate trust business of any Authenticating Agent, shall be
the successor of such Authenticating Agent hereunder, if such successor Person
is otherwise eligible under this Section 6.14 without the execution or filing of
any paper or any further act on the part of the parties hereto or such
Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Debenture Trustee and to the Corporation. The Debenture
Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and to the
Corporation. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.14, the Debenture Trustee may, and upon the
request of the Corporation shall, promptly appoint a successor Authenticating
Agent eligible under this Section 6.14, shall give written notice of such
appointment to the Corporation and shall mail notice of such appointment to all
Securityholders as the names and addresses of such holders appear on the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Authenticating Agent herein.
The Corporation, as issuer of the Securities, agrees to pay to any
Authenticating Agent from time to time reasonable compensation for its services.
Any Authenticating Agent shall have no responsibility or liability for any
action taken by it as such in accordance with the directions of the Debenture
Trustee.
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ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01 Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action), the fact that at
the time of taking any such action the holders of such specified percentage have
joined therein may be evidenced (a) by any instrument (including by way of
electronic transmission) or any number of instruments of similar tenor executed
by such Securityholders in person or by agent or proxy appointed in writing, or
(b) by the record of such holders of Securities voting in favor thereof at any
meeting of such Securityholders duly called and held in accordance with the
provisions of Article VIII, or (c) by a combination of such instrument or
instruments and any such record of such a meeting of such Securityholders.
If the Corporation shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action, the
Corporation may, at its option, as evidenced by an Officers' Certificate, fix in
advance a record date for the determination of Securityholders entitled to give
such request, demand, authorization, direction, notice, consent, waiver or other
action, but the Corporation shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
outstanding Securities shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
months after the record date.
SECTION 7.02 Proof of Execution by Securityholders.
Subject to the provisions of Sections 6.01, 6.02 and 8.05, proof of the
execution of any instrument by a Securityholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable rules and regulations as
may be prescribed by the Debenture Trustee or in such manner as shall be
satisfactory to the Debenture Trustee. The ownership of Securities shall be
proved by the Security Register or by a certificate of the security registrar
for the Securities. The Debenture Trustee may require such additional proof of
any matter referred to in this Section 7.02 as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in the manner
provided in Section 8.06.
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SECTION 7.03 Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any Security,
the Corporation, the Debenture Trustee, any Authenticating Agent, any paying
agent, any transfer agent and any security registrar for the Securities may deem
the person in whose name such Security shall be registered upon the Security
Register to be, and may treat him or her as, the absolute owner of such Security
(whether or not such Security shall be overdue) for the purpose of receiving
payment of or on account of the principal of and premium, if any, and (subject
to Section 2.05) interest on such Security and for all other purposes; and
neither the Corporation nor the Debenture Trustee nor any Authenticating Agent
nor any paying agent nor any transfer agent nor any security registrar for the
Securities shall be affected by any notice to the contrary. All such payments so
made to any holder for the time being or upon his or her order shall be valid
and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Security.
SECTION 7.04 Securities Owned by Corporation Deemed Not Outstanding.
In determining whether the holders of the requisite aggregate principal
amount of Securities have concurred in any direction, consent or waiver under
this Indenture, Securities that are owned by the Corporation or any other
obligor on the Securities or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Corporation or
any other obligor on the Securities shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided, however, that
for the purposes of determining whether the Debenture Trustee shall be protected
in relying on any such direction, consent or waiver, only Securities which a
Responsible Officer of the Debenture Trustee actually knows are so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as outstanding for the purposes of this Section 7.04 if the pledgee
shall establish to the satisfaction of the Debenture Trustee the pledgee's right
to vote such Securities and that the pledgee is not the Corporation or any such
other obligor or Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Corporation or any such other
obligor. In the case of a dispute as to such right, any decision by the
Debenture Trustee taken upon the advice of counsel shall be full protection to
the Debenture Trustee.
SECTION 7.05 Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Debenture
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or any
Security issued in whole or in part in exchange or substitution therefor),
subject to Section 7.01, the serial number of which is shown by the evidence to
be included in the group of Securities the holders of which have consented to
such action, may, by filing written notice with the Debenture Trustee at its
principal office and upon proof of holding as provided in Section 7.02, revoke
such action so far as concerns such Security (or so far as concerns the
principal amount represented by any exchanged or substituted Security). Except
as aforesaid, any such action taken by the holder of any Security shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Security, and of any Security
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issued in exchange or substitution therefor, irrespective of whether or not any
notation in regard thereto is made upon such Security or any Security issued in
exchange or substitution therefor.
ARTICLE VIII
MEETINGS OF SECURITYHOLDERS
SECTION 8.01 Purposes of Meetings.
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article VIII for any of the following
purposes:
(a) to give any notice to the Corporation or to the Debenture
Trustee, or to give any directions to the Debenture Trustee, or
to consent to the waiving of any Default hereunder and its
consequences, or to take any other action authorized to be taken
by Securityholders pursuant to any of the provisions of Article
V;
(b) to remove the Debenture Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02;
or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of
such Securities under any other provision of this Indenture or
under applicable law.
SECTION 8.02 Call of Meetings by Debenture Trustee.
The Debenture Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 8.01, to be held at such time and at
such place in Wilmington, Delaware as the Debenture Trustee shall determine.
Notice of every meeting of the Securityholders, setting forth the time and the
place of such meeting and in general terms the action proposed to be taken at
such meeting, shall be mailed to holders of Securities at their addresses as
they shall appear on the Security Register. Such notice shall be mailed not less
than 20 nor more than 180 days prior to the date fixed for the meeting.
SECTION 8.03 Call of Meetings by Corporation or Securityholders.
In case at any time the Corporation, pursuant to a resolution of the
Board of Directors, or the holders of at least 20% in aggregate principal amount
of the Securities then outstanding, shall have requested the Debenture Trustee
to call a meeting of Securityholders, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Debenture Trustee shall not have mailed the notice of such meeting within 20
days after receipt of such request, then the Corporation or such Securityholders
may determine the time and the place in El Segundo, California for such meeting
and may call such meeting to take any action authorized in Section 8.01, by
mailing notice thereof as provided in Section 8.02.
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SECTION 8.04 Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders, a Person shall
be (a) a holder of one or more Securities or (b) a Person appointed by an
instrument in writing as proxy by a holder of one or more Securities. The only
Persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Debenture Trustee and its counsel and any
representatives of the Corporation and its counsel.
SECTION 8.05 Regulations.
Notwithstanding any other provisions of this Indenture, the Debenture
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Debenture Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Corporation or by Securityholders as provided in Section 8.03, in which case
the Corporation or the Securityholders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
Subject to the provisions of Section 8.04, at any meeting each holder of
Securities or proxy therefor shall be entitled to one vote for each $1,000
principal amount of Securities held or represented by him or her; provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not outstanding and ruled by the chairman of the meeting
to be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Securities held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Securityholders. Any meeting of Securityholders duly called pursuant to the
provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, and the meeting may be held as so adjourned without
further notice.
SECTION 8.06 Voting.
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the serial
number or numbers of the Securities held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or
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more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was mailed as provided in Section 8.02.
The record shall show the serial numbers of the Securities voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Corporation and the other to the Debenture
Trustee to be preserved by the Debenture Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01 Without Consent of Securityholders.
The Corporation and the Debenture Trustee may from time to time and at
any time amend this Indenture, without the consent of the Securityholders, for
one or more of the following purposes:
(a) to evidence the succession of another Person to the Corporation,
or successive successions, and the assumption by the successor
Person of the covenants, agreements and obligations of the
Corporation pursuant to Article X hereof;
(b) to add to the covenants of the Corporation such further
covenants, restrictions or conditions for the protection of the
Securityholders as the Board of Directors and the Debenture
Trustee shall consider to be for the protection of the
Securityholders, and to make the occurrence, or the occurrence
and continuance, of a default in any of such additional
covenants, restrictions or conditions a Default or an Event of
Default permitting the enforcement of all or any of the remedies
provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant,
restriction or condition such amendment may provide for a
particular period of grace after default (which period may be
shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Debenture
Trustee upon such default;
(c) to provide for the issuance under this Indenture of Securities
in coupon form (including Securities registrable as to principal
only) and to provide for exchangeability of such Securities with
the Securities issued hereunder in fully registered form and to
make all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained
herein or in any supplemental indenture; or to make such other
provisions in regard to matters or questions arising under this
Indenture, provided that any such action shall not materially
adversely affect the interests of the holders of the Securities;
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(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(f) to make provision for transfer procedures, certification, book
entry provisions, the form of restricted securities legends, if
any, to be placed on Securities, and all other matters required
pursuant to Section 2.06 or otherwise necessary, desirable or
appropriate in connection with the issuance of Securities to
holders of Capital Securities in the event of a distribution of
Securities by the Trust following a Dissolution Event, provided
that any such action shall not materially adversely affect the
interests of the holders of the Securities;
(g) to qualify or maintain qualification of this Indenture under the
Trust Indenture Act; or
(h) to make any change that does not adversely affect the rights of
any Securityholder in any material respect.
The Debenture Trustee is hereby authorized to join with the Corporation
in the execution of any supplemental indenture to effect such amendment, to make
any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any property
thereunder, but the Debenture Trustee shall not be obligated to, but may in its
discretion, enter into any such supplemental indenture which affects the
Debenture Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Any amendment to this Indenture authorized by the provisions of this
Section 9.01 may be executed by the Corporation and the Debenture Trustee
without the consent of the holders of any of the Securities at the time
outstanding, notwithstanding any of the provisions of Section 9.02.
SECTION 9.02 With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of the holders
of a majority in aggregate principal amount of the Securities at the time
outstanding, the Corporation, when authorized by a Board Resolution, and the
Debenture Trustee may from time to time and at any time amend this Indenture for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the holders of the Securities; provided, however, that no such amendment
shall, without the consent of the holders of each Security then outstanding and
affected thereby (i) change the Maturity Date of any Security, or reduce the
rate or extend the time of payment of interest thereon (except as contemplated
by Article XVI), or reduce or increase the aggregate principal amount of the
series of which such Security is a part or issue other Securities, or change any
prepayment provisions, or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than U.S. dollars, or impair or
affect the right of any Securityholder to institute suit for payment thereof, or
(ii) reduce the aforesaid percentage of Securities, the holders of which are
required to consent to any such amendment to the Indenture; provided, however,
that if the Securities are held by the Trust, such amendment shall not be
effective until the holders of a majority in liquidation amount of Trust
Securities shall have consented to such
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amendment; provided, further, that if the consent of the holder of each
outstanding Security is required, such amendment shall not be effective until
the holder of each outstanding Trust Security shall have consented to such
amendment.
Upon the request of the Corporation accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture effecting such
amendment, and upon the filing with the Debenture Trustee of evidence of the
consent of Securityholders as aforesaid, the Debenture Trustee shall join with
the Corporation in the execution of such supplemental indenture unless such
supplemental indenture affects the Debenture Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Debenture
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
Promptly after the execution by the Corporation and the Debenture
Trustee of any supplemental indenture pursuant to the provisions of this
Section, the Debenture Trustee shall transmit by mail, first class postage
prepaid, a notice, prepared by the Corporation, setting forth in general terms
the substance of such supplemental indenture, to the Securityholders as their
names and addresses appear upon the Security Register. Any failure of the
Debenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 9.03 Compliance with Trust Indenture Act; Effect of Supplemental
Indentures.
Any supplemental indenture executed pursuant to the provisions of this
Article IX shall comply with the Trust Indenture Act. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Debenture Trustee, the Corporation
and the holders of Securities shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
SECTION 9.04 Notation on Securities.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article IX may bear a
notation in form approved by the Debenture Trustee as to any matter provided for
in such supplemental indenture. If the Corporation or the Debenture Trustee
shall so determine, new Securities so modified as to conform, in the opinion of
the Debenture Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by
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the Corporation, authenticated by the Debenture Trustee or the Authenticating
Agent and delivered in exchange for the Securities then outstanding.
SECTION 9.05 Evidence of Compliance of Supplemental Indenture to be
Furnished to Debenture Trustee.
The Debenture Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article IX.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE, TRANSFER AND LEASE
SECTION 10.01 Corporation May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Corporation with or into any other
Person (whether or not affiliated with the Corporation, as the case may be), or
successive consolidations or mergers in which the Corporation or its successor
or successors, as the case may be, shall be a party or parties, or shall prevent
any sale, conveyance, transfer or lease of the property of the Corporation, or
its successor or successors as the case may be, as an entirety, or substantially
as an entirety, to any other Person (whether or not affiliated with the
Corporation, or its successor or successors, as the case may be) authorized to
acquire and operate the same; provided, that (a) the Corporation is the
surviving Person, or the Person formed by or surviving any such consolidation or
merger (if other than the Corporation) or to which such sale, conveyance,
transfer or lease of property is made is a Person organized and existing under
the laws of the United States or any State thereof or the District of Columbia,
and (b) if the Corporation is not the surviving Person, upon any such
consolidation, merger, sale, conveyance, transfer or lease, the due and punctual
payment of the principal of (and premium, if any) and interest on the Securities
according to their tenor and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be kept or performed by
the Corporation shall be expressly assumed by the surviving Person, by
supplemental indenture (which shall conform to the provisions of the Trust
Indenture Act as then in effect) satisfactory in form to the Debenture Trustee,
executed and delivered to the Debenture Trustee by the Person formed by such
consolidation, or into which the Corporation shall have been merged, or by the
Person which shall have acquired such property, as the case may be, and (c)
after giving effect to such consolidation, merger, sale, conveyance, transfer or
lease, no Default or Event of Default shall have occurred and be continuing.
SECTION 10.02 Successor Person to be Substituted for Corporation.
In case of any such consolidation, merger, sale, conveyance, transfer or
lease, and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Debenture Trustee and satisfactory in
form to the Debenture Trustee, of the obligation of due and punctual payment of
the principal of (and premium, if any) and interest on all of the Securities and
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Corporation,
such successor
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Person shall succeed to and be substituted for the Corporation, with the same
effect as if it had been named herein as a party hereto, and the Corporation
thereupon shall be relieved of any further liability or obligation hereunder or
upon the Securities. Such successor Person thereupon may cause to be signed, and
may issue either in its own name or in the name of the Corporation, any or all
of the Securities issuable hereunder which theretofore shall not have been
signed by the Corporation and delivered to the Debenture Trustee or the
Authenticating Agent; and, upon the order of such successor Person instead of
the Corporation and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Debenture Trustee or the Authenticating Agent shall
authenticate and deliver any Securities which previously shall have been signed
and delivered by any Officer of the Corporation to the Debenture Trustee or the
Authenticating Agent for authentication, and any Securities which such successor
Person thereafter shall cause to be signed and delivered to the Debenture
Trustee or the Authenticating Agent for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Securities had been issued at
the date of the execution hereof.
SECTION 10.03 Opinion of Counsel to be Given Debenture Trustee.
The Debenture Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or lease, and any assumption,
permitted or required by the terms of this Article X complies with the
provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01 Discharge of Indenture.
When (a) the Corporation shall deliver to the Debenture Trustee for
cancellation all Securities theretofore authenticated (other than any Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced as provided in Section 2.07) and not theretofore canceled, or (b) all
the Securities not theretofore canceled or delivered to the Debenture Trustee
for cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for prepayment within
one year under arrangements satisfactory to the Debenture Trustee for the giving
of notice of prepayment, and the Corporation shall deposit with the Debenture
Trustee, in trust, funds sufficient to pay on the Maturity Date or upon
prepayment all of the Securities (other than any Securities which shall have
been destroyed, lost or stolen and which shall have been replaced as provided in
Section 2.07) not theretofore canceled or delivered to the Debenture Trustee for
cancellation, including principal (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) due or to become due to the
Maturity Date or prepayment date, as the case may be, but excluding, however,
the amount of any moneys for the payment of principal of (or premium, if any) or
interest (including Compounded Interest and Additional Sums, if any) on the
Securities (1) theretofore repaid to the Corporation in accordance with the
provisions of Section 11.04, or (2) paid to any State or to the District of
Columbia pursuant to its unclaimed property or similar
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laws, and if, in either case the Corporation shall also pay or cause to be paid
all other sums payable hereunder by the Corporation, then this Indenture shall
cease to be of further effect except for the provisions of Sections 2.02, 2.06,
2.07, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof, which shall survive until
such Securities shall mature and be paid. Thereafter, Sections 6.06, 6.10 and
11.04 shall survive, and the Debenture Trustee, on demand of the Corporation
accompanied by any Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Corporation, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture; the Corporation,
however, hereby agrees to reimburse the Debenture Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Debenture Trustee in
connection with this Indenture or the Securities.
SECTION 11.02 Deposited Moneys and U.S. Government Obligations to be
Held in Trust by Debenture Trustee.
Subject to the provisions of Section 11.04, all moneys and U.S.
Government Obligations deposited with the Debenture Trustee pursuant to Sections
11.01 or 11.05 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Corporation if acting as its
own paying agent), to the holders of the particular Securities for the payment
of which such moneys or U.S. Government Obligations have been deposited with the
Debenture Trustee, of all sums due and to become due thereon for principal,
premium, if any, and interest.
The Corporation shall pay and indemnify the Debenture Trustee against
any tax, fee or other charge imposed on or assessed against the U.S.
Governmental Obligations deposited pursuant to Section 11.05 or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the holders of outstanding Securities.
SECTION 11.03 Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys then
held by any paying agent of the Securities (other than the Debenture Trustee)
shall, upon written demand of the Corporation, be repaid to it or paid to the
Debenture Trustee, and thereupon such paying agent shall be released from all
further liability with respect to such moneys.
SECTION 11.04 Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Debenture Trustee or any paying
agent for payment of the principal of (or premium, if any) or interest
(including Compounded Interest and Additional Sums, if any) on Securities and
not applied but remaining unclaimed by the holders of Securities for two years
after the date upon which the principal of (or premium, if any) or interest
(including Compounded Interest and Additional Sums, if any) on such Securities,
as the case may be, shall have become due and payable, shall be repaid to the
Corporation by the Debenture Trustee or such paying agent; and the holder of any
of the Securities shall thereafter look only to the Corporation for any payment
which such holder may be entitled to collect and all liability of the Debenture
Trustee or such paying agent with respect to such moneys shall thereupon cease.
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SECTION 11.05 Defeasance Upon Deposit of Moneys or U.S. Government
Obligations.
The Corporation shall be deemed to have been Discharged (as defined
below) from its obligations with respect to the Securities on the 91st day after
the applicable conditions set forth below have been satisfied:
(a) the Corporation shall have deposited or caused to be deposited
irrevocably with the Debenture Trustee or the Defeasance Agent
(as defined below) as trust funds in trust, specifically pledged
as security for, and dedicated solely to, the benefit of the
holders of the Securities (i) money in an amount, or (ii) U.S.
Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any
payment, money in an amount, or (iii) a combination of (i) and
(ii), sufficient, in the opinion (with respect to (ii) and
(iii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Debenture Trustee and the Defeasance Agent, if
any, to pay and discharge each installment of principal of and
interest on and premium, if any, on the outstanding Securities
on the dates such installments of principal and interest (and
premium, if any) are due;
(b) if the Securities are then listed on any national securities
exchange, the Corporation shall have delivered to the Debenture
Trustee and the Defeasance Agent, if any, an Opinion of Counsel
to the effect that the exercise of the option under this Section
11.05 would not cause such Securities to be delisted from such
exchange;
(c) no Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such
deposit; and
(d) the Corporation shall have delivered to the Debenture Trustee
and the Defeasance Agent, if any, an Opinion of Counsel to the
effect that holders of the Securities will not recognize income,
gain or loss for United States federal income tax purposes as a
result of the exercise of the option under this Section 11.05
and will be subject to United States federal income tax on the
same amount and in the same manner and at the same times as
would have been the case if such option had not been exercised.
"Discharged" means that the Corporation shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Debenture Trustee, at the expense of the
Corporation, shall execute proper instruments acknowledging the same), except
(1) the rights of holders of Securities to receive, from the trust fund
described in clause (a) above, payment of the principal of and the interest and
premium, if any, on the Securities when such payments are due; (2) the
Corporation's obligations with respect to the Securities under Sections 2.06,
2.07, 5.02 and 11.04; and (3) the rights, powers, trusts, duties and immunities
of the Debenture Trustee hereunder.
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"Defeasance Agent" means another financial institution which is eligible
to act as Debenture Trustee hereunder and which assumes all of the obligations
of the Debenture Trustee necessary to enable the Debenture Trustee to act
hereunder. In the event such a Defeasance Agent is appointed pursuant to this
Section, the following conditions shall apply:
(1) the Debenture Trustee shall have approval rights over
the document appointing such Defeasance Agent and the
document setting forth such Defeasance Agent's rights
and responsibilities; and
(2) the Defeasance Agent shall provide verification to the
Debenture Trustee acknowledging receipt of sufficient
money and/or U.S. Government Obligations to meet the
applicable conditions set forth in this Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01 Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or
interest (including Compounded Interest and Additional Sums, if any) on any
Security, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Corporation
in this Indenture, or in any Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, officer or director, as such, past, present or future, of
the Corporation or of any successor Person to the Corporation, either directly
or through the Corporation or any successor Person to the Corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and as
a consideration for, the execution of this Indenture and the issuance of the
Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01 Successors.
All of the covenants, stipulations, promises and agreements of the
Corporation contained in this Indenture shall also bind the Corporation's
successors and assigns whether so expressed or not.
SECTION 13.02 Official Acts by Successor Corporation.
Any act or proceeding that, by any provision of this Indenture, is
authorized or required to be done or performed by any board, committee or
officer of the Corporation shall and may be
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done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Corporation.
SECTION 13.03 Surrender of Corporation Powers.
The Corporation by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Debenture Trustee
may surrender any of the powers reserved to the Corporation hereunder, and
thereupon such power so surrendered shall terminate both as to the Corporation,
as the case may be, and as to any successor Person.
SECTION 13.04 Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Debenture Trustee or by the
holders of Securities on the Corporation may be given or served by being
deposited postage prepaid by first class mail, registered or certified mail,
overnight courier service or conformed telecopy addressed (until another address
is filed by the Corporation with the Debenture Trustee for the purpose) to
Hawthorne Financial Corporation at 2381 Rosecrans Avenue, El Segundo, California
90245, Attention: Karen Abajian. Any notice, direction, request or demand by any
Securityholder to or upon the Debenture Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
office of Wilmington Trust Company at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration
(unless another address is provided by the Debenture Trustee to the Corporation
for such purpose). Any notice or communication to a Securityholder shall be
mailed by first class mail to his or her address shown on the Security Register
kept by the security registrar for the Securities. Notices required to be given
to the Debenture Trustee or the Authenticating Agent shall be in writing,
personally delivered or mailed first class postage prepaid to each of the
foregoing, or at such other address as shall be designated by written notice to
the other parties.
SECTION 13.05 Governing Law.
This Indenture and each Security shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be governed
by and construed in accordance with the laws of said State without regard to
conflict of law principles thereof.
SECTION 13.06 Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Corporation to the Debenture
Trustee to take any action under any of the provisions of this Indenture, the
Corporation shall furnish to the Debenture Trustee an Officers' Certificate
stating that in the opinion of the signers all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered
to the Debenture Trustee with respect to compliance with a condition or covenant
provided for in this Indenture (except certificates delivered pursuant to
Section 3.05) shall include (1) a statement that the Person making such
certificate or opinion has read such covenant or condition; (2) a brief
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statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07 Business Days.
In any case where the date of payment of principal of (or premium, if
any) or interest on the Securities is not a Business Day, the payment of such
principal of (or premium, if any) or interest on the Securities will not be made
on such date but will be made on the next succeeding Business Day, except if
such Business Day is in the next succeeding calendar year, such payment will be
made on the immediately preceding Business Day, with the same force and effect
as if made on the original date of payment, and no interest shall accrue for the
period from and after such date.
SECTION 13.08 Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 318,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.09 Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture 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 13.10 Execution in Counterparts.
This Indenture 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.
SECTION 13.11 Separability.
In case any one or more of the provisions contained in this Indenture 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 Indenture or of the Securities,
but this Indenture and the Securities shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
SECTION 13.12 Assignment.
The Corporation will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Corporation, provided that, in the event of any
such assignment, the Corporation will remain liable for all such obligations.
Subject to the foregoing, this Indenture is binding upon and inures
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to the benefit of the parties thereto and their respective successors and
assigns. This Indenture may not otherwise be assigned by the parties thereto.
SECTION 13.13 Acknowledgment of Rights.
The Corporation acknowledges that, with respect to any Securities held
by the Trust or a trustee of such Trust, if the Property Trustee of such Trust
fails to enforce its rights under this Indenture as the holder of the Securities
held as the assets of the Trust, any holder of Capital Securities may institute
legal proceedings, subject to Section 5.09, directly against the Corporation to
enforce such Property Trustee's rights under this Indenture without first
instituting any legal proceedings against such Property Trustee or any other
person or entity. Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Corporation to pay principal of (or premium, if any) or interest on the
Securities when due, the Corporation acknowledges that a holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of (or premium, if any) or interest on the
Securities having an aggregate principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder on or after the
respective due date specified in the Securities.
ARTICLE XIV
PREPAYMENT OF SECURITIES
SECTION 14.01 Special Event Prepayment.
If, prior to the Initial Optional Prepayment Date, a Special Event has
occurred and is continuing, then, notwithstanding Section 14.02(a) but subject
to Section 14.02(c), the Corporation shall have the right, at any time within 90
days following the occurrence of such Special Event, upon (i) not less than 45
days' written notice to the Debenture Trustee and (ii) not less than 30 days nor
more than 60 days' written notice to the Securityholders, to prepay the
Securities, in whole (but not in part), at the Special Event Prepayment Price.
The Special Event Prepayment Price shall be paid prior to 12:00 noon, New York
City time, on the date of such prepayment or such earlier time as the
Corporation determines, provided that the Corporation shall deposit with the
Debenture Trustee an amount sufficient to pay the Special Event Prepayment Price
by 10:00 a.m., New York City time, on the date such Special Event Prepayment
Price is to be paid.
SECTION 14.02 Optional Prepayment by Corporation.
(a) Subject to Sections 14.02(b) and (c), the Corporation shall have the
right to prepay the Securities, in whole or in part, at any time on or after the
Initial Optional Prepayment Date, upon (i) not more than 45 days' written notice
to the Debenture Trustee and (ii) not less than 30 days and not more than 60
days' written notice to the Securityholders, at the prepayment prices set forth
below plus, in each case, accrued and unpaid interest thereon (including
Compounded Interest and Additional Sums, if any) to the applicable date of
prepayment (the "Optional Prepayment Price"), if prepaid during the 12-month
period beginning June 8th of the years indicated below.
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Year Percentage of Principal
---- -----------------------
2011 105.090%
2012 104.581%
2013 104.072%
2014 103.563%
2015 103.054%
2016 102.545%
2017 102.036%
2018 101.527%
2019 101.018%
2020 100.509%
2021 and thereafter 100.000%
If the Securities are only partially prepaid pursuant to this Section 14.02, the
Securities to be prepaid shall be selected on a pro rata basis not more than 60
days prior to the date fixed for prepayment from the outstanding Securities not
previously called for prepayment; provided, however, that with respect to
Securityholders that would be required to hold Securities with an aggregate
principal amount of less than $100,000 but more than an aggregate principal
amount of zero as a result of such pro rata prepayment, the Corporation shall
prepay Securities of each such Securityholder so that after such prepayment such
Securityholder shall hold Securities either with an aggregate principal amount
of at least $100,000 or such Securityholder no longer holds any Securities, and
shall use such method (including, without limitation, by lot) as the Corporation
shall deem fair and appropriate; provided, further, that any such proration may
be made on the basis of the aggregate principal amount of Securities held by
each Securityholder and may be made by making such adjustments as the
Corporation deems fair and appropriate in order that only Securities in
denominations of $1,000 or integral multiples thereof shall be prepaid. The
Optional Prepayment Price shall be paid prior to 12:00 noon New York City time,
on the date of such prepayment or at such earlier time as the Corporation
determines, provided that the Corporation shall deposit with the Debenture
Trustee an amount sufficient to pay the Optional Prepayment Price by 10:00 a.m.,
New York City time, on the date such Optional Prepayment Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02(a), upon the
entry of an order for dissolution of the Trust by a court of competent
jurisdiction, the Securities thereafter will be subject to optional prepayment,
in whole only, but not in part, on or after the Initial Optional Prepayment
Date, at the applicable Optional Prepayment Price and otherwise in accordance
with this Article XIV.
(c) Any prepayment of Securities pursuant to Section 14.01 or Section
14.02 shall be subject to the Corporation obtaining any and all required
regulatory approvals.
SECTION 14.03 No Sinking Fund.
The Securities are not entitled to the benefit of any sinking fund.
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SECTION 14.04 Notice of Prepayment; Selection of Securities.
In case the Corporation shall desire to exercise the right to prepay
all, or, as the case may be, any part of the Securities in accordance with their
terms, it shall fix a date for prepayment and shall mail a notice of such
prepayment at least 30 and not more than 60 days' prior to the date fixed for
prepayment to the holders of Securities to be so prepaid as a whole or in part
at their last addresses as the same appear on the Security Register. Such
mailing shall be by first class mail. The notice, if mailed in the manner herein
provided, shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security designated for
prepayment as a whole or in part shall not affect the validity of the
proceedings for the prepayment of any other Security.
Each such notice of prepayment shall specify the CUSIP number of the
Securities to be prepaid, the date fixed for prepayment, the Prepayment Price at
which the Securities are to be prepaid (or the method by which such Prepayment
Price is to be calculated), the place or places of payment where payment will be
made upon presentation and surrender of the Securities, that interest accrued to
the date fixed for prepayment will be paid as specified in said notice, and that
on and after said date interest thereon or on the portions thereof to be prepaid
will cease to accrue. If less than all the Securities are to be prepaid, the
notice of prepayment shall specify the numbers of the Securities to be prepaid.
In case any Security is to be prepaid in part only, the notice of prepayment
shall state the portion of the principal amount thereof to be prepaid and shall
state that on and after the date fixed for prepayment, upon surrender of such
Security, a new Security or Securities in principal amount equal to the portion
thereof that has not been prepaid will be issued.
By 10:00 a.m., New York City time, on the prepayment date specified in
the notice of prepayment given as provided in this Section, the Corporation will
deposit with the Debenture Trustee or with one or more paying agents an amount
of money sufficient to prepay on the prepayment date all the Securities so
called for prepayment at the Prepayment Price.
SECTION 14.05 Payment of Securities Called for Prepayment.
If notice of prepayment has been given as provided in Section 14.04, the
Securities or portions of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the Prepayment Price (subject to the rights of holders of
Securities at the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the prepayment date), and on and
after said date (unless the Corporation shall default in the payment of such
Securities at the Prepayment Price) interest (including Compounded Interest and
Additional Sums, if any) on the Securities or portions of Securities so called
for prepayment shall cease to accrue. 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 prepaid by the Corporation
at the applicable Prepayment Price (subject to the rights of holders of
Securities on the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the prepayment date).
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Upon presentation of any Security prepaid in part only, the Corporation
shall execute and the Debenture Trustee shall authenticate and make available
for delivery to the holder thereof, at the expense of the Corporation, a new
Security or Securities of authorized denominations, in principal amount equal to
the portion of the Security so presented that has not been prepaid.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01 Agreement to Subordinate.
The Corporation covenants and agrees, and each holder of Securities
issued hereunder likewise covenants and agrees, that the Securities shall be
issued subject to the provisions of this Article XV; and each holder of a
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Corporation of the principal of, premium, if any, and
interest (including Compounded Interest and Additional Sums, if any) on all
Securities issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated and subject in right of payment to the prior payment
in full of all Allocable Amounts then due and payable in respect of Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
incurred.
No provision of this Article XV shall prevent the occurrence of any
Default or Event of Default hereunder.
SECTION 15.02 Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Corporation in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default and such acceleration has
not been rescinded or canceled, then, in either case, no payment shall be made
by the Corporation with respect to the principal (including prepayment payments)
of (or premium, if any) or interest on the Securities (including Compounded
Interest and Additional Sums, if any, or any other amounts which may be due on
the Securities pursuant to the terms hereof or thereof).
In the event of the acceleration of the maturity of the Securities, then
no payment shall be made by the Corporation with respect to the principal
(including prepayment payments) of (or premium, if any) or interest on the
Securities (including Compounded Interest and Additional Sums, if any, or any
other amounts which may be due on the Securities pursuant to the terms hereof or
thereof) until the holders of all Senior Indebtedness outstanding at the time of
such acceleration shall receive payment, in full, of all Allocable Amounts due
on or in respect of such Senior Indebtedness (including any amounts due upon
acceleration).
In the event that, notwithstanding the foregoing, any payment is
received by the Debenture Trustee, or any Securityholder, when such payment is
prohibited by the preceding paragraphs of this Section 15.02, such payment shall
be held in trust for the benefit of, and shall be paid over or delivered by the
Debenture Trustee (if the notice required by Section 15.06 has
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been received by the Debenture Trustee) or by any Securityholder, to the holders
of Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent of the Allocable Amounts in respect of such Senior Indebtedness and to
the extent that the holders of the Senior Indebtedness (or their representative
or representatives or a trustee) notify the Debenture Trustee in writing within
90 days of such payment of the Allocable Amounts then due and owing on such
Senior Indebtedness, and only the Allocable Amounts specified in such notice to
the Debenture Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 15.03 Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Corporation or distribution of assets of the
Corporation of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution, winding-up, liquidation or reorganization of
the Corporation, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, the holders of all Senior Indebtedness of the
Corporation will first be entitled to receive payment in full of Allocable
Amounts due on or in respect of such Senior Indebtedness, before any payment is
made by the Corporation on account of the principal of (or premium, if any) or
interest on the Securities (including Compounded Interest and Additional Sums,
if any, or any other amounts which may be due on the Securities pursuant to the
terms hereof or thereof); and upon any such dissolution, winding-up, liquidation
or reorganization, any payment by the Corporation, or distribution of assets of
the Corporation of any kind or character, whether in cash, property or
securities, which the Securityholders or the Debenture Trustee would be entitled
to receive from the Corporation, except for the provisions of this Article XV,
shall be paid by the Corporation or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Securityholders or by the Debenture Trustee under the Indenture if
received by them or it, directly to the holders of Senior Indebtedness of the
Corporation (pro rata to such holders on the basis of the respective Allocable
Amounts of Senior Indebtedness held by such holders, as calculated by the
Corporation) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Allocable Amounts of Senior
Indebtedness in full, in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Debenture Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Corporation of any kind or character prohibited by
the foregoing, whether in cash, property or securities, shall be received by the
Debenture Trustee, or any Securityholder, before the Allocable Amounts of all
Senior Indebtedness is paid in full, or provision is made for such payment in
money in accordance with its terms, such payment or distribution shall be held
in trust for the benefit of and shall be paid over or delivered by the Debenture
Trustee (if the Notice requested by Section 15.06 has been received by the
Debenture Trustee) or by any Securityholder, to the holders of such Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective
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interests may appear, as calculated by the Corporation, for application to the
payment of all Allocable Amounts of Senior Indebtedness remaining unpaid to the
extent necessary to pay all Allocable Amounts due on or in respect of such
Senior Indebtedness in full in money in accordance with its terms, after giving
effect to any concurrent payment or distribution to or for the benefit of the
holders of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Corporation as
reorganized or readjusted, or securities of the Corporation or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article
XV with respect to the Securities to the payment of Senior Indebtedness that may
at the time be outstanding, provided that (i) such Senior Indebtedness is
assumed by the new corporation, if any, resulting from any such reorganization
or readjustment, and (ii) the rights of the holders of such Senior Indebtedness
are not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Corporation with, or the merger of the
Corporation into, another Person or the liquidation or dissolution of the
Corporation following the sale, conveyance, transfer or lease of its property as
an entirety, or substantially as an entirety, to another Person upon the terms
and conditions provided for in Article X of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 15.03 if such other Person shall, as a part of such consolidation,
merger, sale, conveyance, transfer or lease, comply with the conditions stated
in Article X of this Indenture. Nothing in Section 15.02 or in this Section
15.03 shall apply to claims of, or payments to, the Debenture Trustee under or
pursuant to Section 6.06 of this Indenture.
SECTION 15.04 Subrogation.
Subject to the payment in full of all Allocable Amounts of Senior
Indebtedness, the rights of the Securityholders shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Corporation, as the case
may be, applicable to such Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders of
such Senior Indebtedness of any cash, property or securities to which the
Securityholders or the Debenture Trustee would be entitled except for the
provisions of this Article XV, and no payment over pursuant to the provisions of
this Article XV to or for the benefit of the holders of such Senior Indebtedness
by Securityholders or the Debenture Trustee, shall, as between the Corporation,
its creditors other than holders of Senior Indebtedness of the Corporation, and
the holders of the Securities, be deemed to be a payment by the Corporation to
or on account of such Senior Indebtedness. It is understood that the provisions
of this Article XV are and are intended solely for the purposes of defining the
relative rights of the holders of the Securities, on the one hand, and the
holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Corporation,
its creditors other than the holders of Senior Indebtedness of the Corporation,
and the holders of the Securities, the obligation of the Corporation, which is
absolute and unconditional, to pay to the holders of the Securities the
principal of (and premium, if any) and interest (including Compounded Interest
and Additional
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Sums, if any) on the Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holders of the Securities and creditors of the
Corporation, as the case may be, other than the holders of Senior Indebtedness
of the Corporation, as the case may be, nor shall anything herein or therein
prevent the Debenture Trustee or the holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XV of the holders
of such Senior Indebtedness in respect of cash, property or securities of the
Corporation, as the case may be, received upon the exercise of any such remedy.
SECTION 15.05 Debenture Trustee to Effectuate Subordination.
Each Securityholder, by such Securityholder's acceptance thereof,
authorizes and directs the Debenture Trustee on such Securityholder's behalf to
take such action (as the Debenture Trustee, in its discretion, deems necessary
or appropriate, upon instruction or otherwise) to effectuate the subordination
provided in this Article XV and appoints the Debenture Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.06 Notice by the Corporation.
The Corporation shall give prompt written notice to a Responsible
Officer of the Debenture Trustee of any fact known to the Corporation that would
prohibit the making of any payment of monies to or by the Debenture Trustee in
respect of the Securities pursuant to the provisions of this Article XV.
Notwithstanding the provisions of this Article XV or any other provision of this
Indenture, the Debenture Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment of monies
to or by the Debenture Trustee in respect of the Securities pursuant to the
provisions of this Article XV, unless and until a Responsible Officer of the
Debenture Trustee shall have received written notice thereof from the
Corporation or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Debenture
Trustee, subject to the provisions of Article VI of this Indenture, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Debenture Trustee shall not have received the notice provided for in
this Section 15.06 at least two Business Days prior to the date upon which, by
the terms hereof, any money may become payable for any purpose (including,
without limitation, the payment of the principal of (or premium, if any) or
interest (including Compounded Interest and Additional Sums, if any) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Debenture Trustee shall have full power and authority to receive such money and
to apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.
The Debenture Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on a written notice delivered
to it by a Person representing himself to be a holder of Senior Indebtedness of
the Corporation (or a trustee on behalf of such holder), as the case may be, to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the event
that the Debenture Trustee determines in good faith that further evidence is
required with respect to the right of any
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Person as a holder of such Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XV, the Debenture Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Debenture
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article XV, and, if such evidence is not furnished, the Debenture Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Upon any payment or distribution of assets of the Corporation referred
to in this Article XV, the Debenture Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding-up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Debenture Trustee
or to the Securityholders, for the purpose of ascertaining the persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Corporation, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XV.
SECTION 15.07 Rights of the Debenture Trustee; Holders of Senior
Indebtedness.
The Debenture Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Debenture
Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Corporation,
the Debenture Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Debenture Trustee.
The Debenture Trustee shall not be deemed to owe any fiduciary duty to the
holders of such Senior Indebtedness and, subject to the provisions of Article VI
of this Indenture, the Debenture Trustee shall not be liable to any holder of
such Senior Indebtedness if it shall pay over or deliver to Securityholders, the
Corporation or any other Person money or assets to which any holder of such
Senior Indebtedness shall be entitled by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to, the
Debenture Trustee under or pursuant to Section 6.06.
SECTION 15.08 Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of
the Corporation to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Corporation, as the case may be, or by any act or
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failure to act, in good faith, by any such holder, or by any noncompliance by
the Corporation, as the case may be, with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Corporation may, at any time and from
time to time, without the consent of or notice to the Debenture Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Securities to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Corporation, as the case may be, and any
other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01 Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing, the
Corporation shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the interest
payment period of such Securities for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
extension period (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable, provided that no
Extended Interest Payment Period shall end on a date other than an Interest
Payment Date or extend beyond the Maturity Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 16.01, will
bear interest thereon at the Coupon Rate compounded semi-annually for each
semi-annual period during the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended Interest Payment Period, the Corporation
shall pay all interest accrued and unpaid on the Securities, including any
Additional Sums and Compounded Interest (together, "Deferred Interest"), that
shall be payable to the holders of the Securities in whose names the Securities
are registered in the Security Register on the record date immediately preceding
the end of the Extended Interest Payment Period. Before the termination of any
Extended Interest Payment Period, the Corporation may further defer payments of
interest by further extending such Extended Interest Payment Period, provided
that such Extended Interest Payment Period, together with all such previous and
further extensions within such Extended Interest Payment Period, shall not (i)
exceed 10 consecutive semi-annual periods, including the first such semi-annual
period during such Extended Interest Payment Period, (ii) end on a date other
than an Interest Payment Date or (iii) extend beyond the Maturity Date of the
Securities. Upon the termination of any Extended Interest Payment Period and the
payment of all amounts then due,
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the Corporation may commence a new Extended Interest Payment Period, subject to
the foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof, but the Corporation
may prepay at any time all or any portion of the interest accrued during an
Extended Interest Payment Period.
SECTION 16.02 Notice of Extension.
(a) If the Property Trustee is the only holder of the Securities at the
time the Corporation elects to commence an Extended Interest Payment Period, the
Corporation shall give written notice to the Administrative Trustees, the
Property Trustee and the Debenture Trustee of its election to commence such
Extended Interest Payment Period at least five Business Days before the earlier
of (i) the next succeeding date on which Distributions on the Trust Securities
would have been payable, and (ii) the date the Property Trustee is required to
give notice of the record date, or the date such Distributions are payable, to
any national securities exchange or to holders of the Capital Securities, but in
any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the Securities at
the time the Corporation elects to commence an Extended Interest Payment Period,
the Corporation shall give the holders of the Securities and the Debenture
Trustee written notice of its election of such Extended Interest Payment Period
at least 10 Business Days before the earlier of (i) the next succeeding Interest
Payment Date, and (ii) the date the Debenture Trustee is required to give notice
of the record or payment date of such interest payment to any national
securities exchange.
(c) The semi-annual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 16.02 shall be counted as one of the 10
semi-annual periods permitted in the maximum Extended Interest Payment Period
permitted under Section 16.01.
Wilmington Trust Company hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
60
67
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
HAWTHORNE FINANCIAL CORPORATION
By:
-------------------------------------
Simone F. Lagomarsino
President and Chief Executive Officer
WILMINGTON TRUST COMPANY,
as Debenture Trustee
By:
-------------------------------------
Name:
Title:
S-1
68
EXHIBIT A
(FORM OF FACE OF SECURITY)
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 LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH HAWTHORNE FINANCIAL
CORPORATION (THE "CORPORATION") OR ANY "AFFILIATE" OF THE CORPORATION WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE
CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (a)(1), (2), (3), (7) OR (8) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE
CORPORATION, AND (ii) PURSUANT TO CLAUSE (D) TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEREE TO THE CORPORATION. SUCH HOLDER FURTHER AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
Exhibit A-1
69
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. ANY ATTEMPTED
TRANSFER OF SECURITIES IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS
THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE
VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE
DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT
NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, AND
SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH
SECURITIES.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR 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 IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
Exhibit A-2
70
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE CERTIFICATE
HAWTHORNE FINANCIAL CORPORATION
$_______________________
10.18% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE JUNE 8, 2031
Hawthorne Financial Corporation, a Delaware corporation (the
"Corporation," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to HFC
Capital Trust I or registered assigns, the principal sum of $___________
(_________________________________________ Dollars) on June 8, 2031 (the
"Maturity Date"), unless previously prepaid, and to pay interest on the
outstanding principal amount hereof from March 28, 2001, or from the most recent
interest payment date (each such date, an "Interest Payment Date") to which
interest has been paid or duly provided for, semi-annually (subject to deferral
as set forth herein) in arrears on June 8th and December 8th of each year,
commencing June 8, 2001 at the rate of 10.18% per annum, until the principal
hereof shall have become due and payable, and on any overdue principal and
premium, if any, and (without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually ("Compounded
Interest"). The amount of interest payable hereon shall be computed on the basis
of a 360-day year of twelve 30- day months. In the event that any date on which
the principal of (or premium, if any) or interest on this Security is payable is
not a Business Day (as defined in the Indenture), then the payment payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except that
if such next succeeding Business Day falls in the next succeeding calendar year
such payment shall be made on the immediately preceding Business Day with the
same force and effect as if made on such date. Pursuant to the Indenture, in
certain circumstances the Corporation will be required to pay Additional Sums
(as defined in the Indenture) with respect to this Security.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities, as defined in said Indenture) is registered at the close of business
on the regular record date for such interest installment, which shall be at the
close of business on the 15th day of the month immediately preceding the month
in which the relevant Interest Payment Date falls. Any such interest installment
not punctually paid or duly provided for shall forthwith cease to be payable to
the holders on such regular record date and may be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on a special record date to be fixed by the Debenture Trustee
for the payment of such defaulted interest, notice whereof shall be given to the
holders of Securities not less than 10 days prior to such special record date,
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on
Exhibit A-3
71
which the Securities may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) on this Security shall be
payable in immediately available funds at the office or agency of the
Corporation maintained for that purpose in any coin or currency of the United
States of America that at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest shall be
made by transfer to an account maintained by the Person entitled thereto unless
proper written transfer instructions have not been received by the relevant
record date, in which case such payments shall be made by check mailed to the
holder at such address as shall appear in the Security Register. Notwithstanding
the foregoing, so long as the holder of this Security is the Property Trustee of
HFC Capital Trust I, the payment of the principal of (and premium if any) and
interest (including Compounded Interest and Additional Sums, if any) on this
Security will be made at such place and to such account as may be designated by
such Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Allocable Amounts then due and payable in respect of
Senior Indebtedness, and this Security is issued subject to the provisions of
the Indenture with respect thereto. Each holder of this Security, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Debenture Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Debenture Trustee his or her attorney-in-fact
for any and all such purposes. Each holder hereof, by his or her acceptance
hereof, hereby waives all notice of the acceptance of the subordination
provisions contained herein and in the Indenture by each holder of Senior
Indebtedness, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture
or be valid or become obligatory for any purpose until the Certificate of
Authentication hereon shall have been signed by or on behalf of the Debenture
Trustee.
The provisions of this Security are continued on the reverse side hereof
and such provisions shall for all purposes have the same effect as though fully
set forth at this place.
Exhibit A-4
72
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
duly executed and sealed this ___ day of ________________ ________.
HAWTHORNE FINANCIAL CORPORATION
By:
-------------------------------------
NAME:
TITLE:
Attest:
By:
--------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the 10.18% Junior Subordinated Deferrable Interest
Debentures of Hawthorne Financial Corporation referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Debenture Trustee
By:
-------------------------------------
Authorized Signatory
Dated:
----------------------
Exhibit A-5
73
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Corporation (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of March 28,
2001 (the "Indenture"), duly executed and delivered between the Corporation and
Wilmington Trust Company, as Debenture Trustee (the "Debenture Trustee"), to
which Indenture reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Debenture Trustee, the Corporation and the holders of the Securities. The
Securities are limited in aggregate principal amount as specified in Section
2.02 of the Indenture.
Upon the occurrence and continuation of a Special Event (as defined in
the Indenture) prior to June 8, 2011 (the "Initial Optional Prepayment Date"),
the Corporation shall have the right, at any time within 90 days following the
occurrence of such Special Event, to prepay this Security in whole (but not in
part) at the Special Event Prepayment Price. "Special Event Prepayment Price"
shall mean, with respect to any prepayment of the Securities following the
occurrence and continuation of a Special Event prior to the Initial Optional
Prepayment Date, an amount in cash equal to (i) 106.09% of the principal amount
of the Securities to be prepaid, if the Special Event occurs prior to June 8,
2011 and (ii) if the Special Event occurs on or after June 8, 2011, the amount
of the Optional Prepayment Price (calculated as if the Corporation had prepaid
such Securities on such date), plus, in the case of (i) and (ii), any accrued
and unpaid interest (including Compounded Interest and Additional Sums, if any)
thereon to the date of such prepayment.
In addition, the Corporation shall have the right to prepay this
Security, in whole or in part, at any time on or after the Initial Optional
Prepayment Date (an "Optional Prepayment"), at the prepayment prices set forth
below plus, in each case, accrued and unpaid interest thereon (including
Compounded Interest and Additional Sums, if any, thereon to the applicable date
of prepayment (the "Optional Prepayment Price"), if prepaid during the 12-month
period beginning June 8th, of the years indicated below.
Year Percentage of Principal
---- -----------------------
2011 105.090%
2012 104.581%
2013 104.072%
2014 103.563%
2015 103.054%
2016 102.545%
2017 102.036%
2018 101.527%
2019 101.018%
2020 100.509%
2021 and thereafter 100.000%
The Prepayment Price shall be paid prior to 12:00 noon, New York City
time, on the date of such prepayment or at such earlier time as the Corporation
determines, provided that the Corporation shall deposit with the Debenture
Trustee an amount sufficient to pay the Prepayment
Exhibit A-6
74
Price by 10:00 a.m., New York City time, on the date such Prepayment Price is to
be paid. Any prepayment pursuant to this paragraph will be made upon not less
than 30 days nor more than 60 days' prior written notice.
If the Securities are only partially prepaid by the Corporation pursuant
to an Optional Prepayment, the particular Securities to be prepaid shall be
selected on a pro rata basis from the outstanding Securities not previously
called for prepayment; provided, however, that with respect to Securityholders
that would be required to hold Securities with an aggregate principal amount of
less than $100,000 but more than an aggregate principal amount of zero as a
result of such pro rata prepayment, the Corporation shall prepay Securities of
each such Securityholder so that after such prepayment such Securityholder shall
hold Securities either with an aggregate principal amount of at least $100,000
or such Securityholder no longer holds any Securities and shall use such method
(including, without limitation, by lot) as the Corporation shall deem fair and
appropriate; provided, further, that any such proration may be made on the basis
of the aggregate principal amount of Securities held by each Securityholder
thereof and may be made by making such adjustments as the Corporation deems fair
and appropriate in order that only Securities in denominations of $1,000 or
integral multiples thereof shall be prepaid. In the event of prepayment of this
Security in part only, a new Security or Securities for the portion hereof that
has not been prepaid will be issued in the name of the holder hereof upon the
cancellation hereof.
Notwithstanding the foregoing, any prepayment of Securities by the
Corporation shall be subject to the receipt of any and all required regulatory
approvals.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Corporation and the
Debenture Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Securities at the time outstanding (as defined in the
Indenture), to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders of the
Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and affected
thereby, (i) change the Maturity Date of any Security, or reduce the rate or
extend the time of payment of interest thereon (subject to Article XVI of the
Indenture),or reduce or increase the aggregate principal amount of the series of
which such Security is a part or issue other Securities, or change any of the
prepayment provisions or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than U.S. dollars, or impair or
affect the right of any holder of Securities to institute suit for payment
thereof, or (ii) reduce the aforesaid percentage of Securities the holders of
which are required to consent to any such supplemental indenture. The Indenture
also contains provisions permitting the holders of a majority in aggregate
principal amount of the Securities at the time outstanding affected thereby, on
behalf of all of the holders of the Securities, to waive any past default in the
performance of any of the covenants contained in the Indenture, or established
pursuant to the Indenture, and its consequences, except a default in the
Exhibit A-7
75
payment of the principal of or premium, if any, or interest on any of the
Securities or a default in respect of any covenant or provision under which the
Indenture cannot be modified or amended without the consent of each holder of
Securities then outstanding. Any such consent or waiver by the holder of this
Security (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and owners of this Security
and of any Security issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Corporation,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest (including Compounded Interest Additional Sums, if any) on
this Security at the time and place and at the rate and in the money herein
prescribed.
So long as no Event of Default shall have occurred and be continuing,
the Corporation shall have the right, at any time and from time to time during
the term of the Securities, to defer payments of interest by extending the
interest payment period (an "Extended Interest Payment Period") of such
Securities for a period not (i) exceeding 10 consecutive semi-annual periods,
including the first such semi-annual period during such extension period, (ii)
ending on a date other than an Interest Payment Date or (iii) extending beyond
the Maturity Date of the Securities, at the end of which period the Corporation
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate specified for the Securities to the extent that payment of such
interest is enforceable under applicable law). Before the termination of any
such Extended Interest Payment Period, the Corporation may further defer
payments of interest by further extending such Extended Interest Payment Period,
provided that such Extended Interest Payment Period, together with all such
previous and further extensions within such Extended Interest Payment Period,
(i) shall not exceed 10 consecutive semi- annual periods including the first
semi-annual period during such Extended Interest Payment Period, (ii) shall not
end on any date other than an Interest Payment Date, and (iii) shall not extend
beyond the Maturity Date of the Securities. Upon the termination of any such
Extended Interest Payment Period and the payment of all accrued and unpaid
interest and any additional amounts then due, the Corporation may commence a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Corporation may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
The Corporation has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal of or premium, if any, or interest on or
repay, repurchase or redeem any debt securities of the Corporation (including
Other Debentures) that rank pari passu with or junior in right of payment to the
Securities or (iii) make any guarantee payments with respect to any guarantee by
the Corporation of the debt securities of any Subsidiary of the Corporation
(including Other Guarantees) if such guarantee ranks pari passu with or junior
in right of payment to the Securities (other than (a) dividends or distributions
in shares of, or options, warrants or rights to subscribe for or purchase shares
of, Common Stock), (b) any declaration of a dividend in connection with the
implementation of a
Exhibit A-8
76
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Capital Securities Guarantee, as defined in the Indenture,
(d) as a result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital stock
for another class or series of the Corporation's capital stock, (e) the purchase
of fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged and (f) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Corporation's benefit or
compensation plans for its directors, officers or employees or any of the
Corporation's dividend reinvestment plans), if at such time (1) there shall have
occurred any event of which the Corporation has actual knowledge that (a) is a
Default or an Event of Default and (b) in respect of which the Corporation shall
not have taken reasonable steps to cure, (2) such Securities are held by the
Property Trustee of HFC Capital Trust I and the Corporation shall be in default
with respect to its payment of any obligations under the Capital Securities
Guarantee or (3) the Corporation shall have given notice of its election to
exercise its right to commence an Extended Interest Payment Period and shall not
have rescinded such notice, and such Extended Interest Payment Period or any
extension thereof shall have commenced and be continuing.
Subject to (i) the Corporation having received any required regulatory
approvals and (ii) the Administrative Trustees of HFC Capital Trust I having
received an opinion of counsel to the effect that such distribution will not
cause the holders of Capital Securities to recognize gain or loss for United
States federal income tax purposes, the Corporation will have the right at any
time to liquidate the Trust and, after satisfaction of liabilities of creditors
of the Trust as required by applicable law, to cause the Securities to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
The Securities are issuable only in registered form without coupons in
minimum denominations of $100,000 and multiples of $1,000 in excess thereof. As
provided in the Indenture and subject to the transfer restrictions limitations
as may be contained herein and therein from time to time, this Security is
transferable by the holder hereof on the Security Register of the Corporation,
upon surrender of this Security for registration of transfer at the office or
agency of the Corporation in Wilmington, Delaware accompanied by a written
instrument or instruments of transfer in form satisfactory to the Corporation or
the Debenture Trustee duly executed by the holder hereof or his or her attorney
duly authorized in writing, and thereupon one or more new Securities of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Corporation may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of transfer of this Security,
the Corporation, the Debenture Trustee, any authenticating agent, any paying
agent, any transfer agent and the security registrar may deem and treat the
holder hereof as the absolute owner hereof (whether or not this Security shall
be overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the security registrar for the Securities) for the purpose of
receiving payment of or on account of the principal hereof and premium, if any,
and (subject to the Indenture) interest due hereon and for all other purposes,
and neither the Corporation nor the
Exhibit A-9
77
Debenture Trustee nor any authenticating agent nor any paying agent nor any
transfer agent nor any security registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or premium,
if any, or interest (including Compounded Interest and Additional Sums, if any)
on this Security, or for any claim based hereon, or otherwise in respect hereof,
or based on or in respect of the Indenture, against any incorporator,
stockholder, employee, officer or director, past, present or future, as such, of
the Corporation or of any predecessor or successor Person, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.
Exhibit A-10