EXHIBIT 4.1
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AMENDED AND RESTATED DECLARATION
OF TRUST
LIFE FINANCIAL CAPITAL TRUST
DATED AS OF ________________, 1997
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TABLE OF CONTENTS
Page
ARTICLE I - INTERPRETATION AND DEFINITIONS........................................................................1
SECTION 1.1. Definitions...................................................................................1
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ARTICLE II - TRUST INDENTURE ACT..................................................................................8
SECTION 2.1. Trust Indenture Act; Application..............................................................8
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SECTION 2.2. Lists of Holders of Securities................................................................8
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SECTION 2.3. Reports by the Property Trustee...............................................................9
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SECTION 2.4. Periodic Reports to Property Trustee..........................................................9
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SECTION 2.5. Evidence of Compliance with Conditions Precedent..............................................9
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SECTION 2.6. Events of Default; Waiver.....................................................................9
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SECTION 2.7. Event of Default; Notice.....................................................................11
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ARTICLE III - ORGANIZATION.......................................................................................12
SECTION 3.1. Name.........................................................................................12
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SECTION 3.2. Office.......................................................................................12
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SECTION 3.3. Purpose......................................................................................12
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SECTION 3.4. Authority....................................................................................12
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SECTION 3.5. Title to Property of the Trust...............................................................13
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SECTION 3.6. Powers and Duties of the Administrators......................................................13
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SECTION 3.7. Prohibition of Actions by the Trust, the Trustees and the Administrators.....................16
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SECTION 3.8. Powers and Duties of the Property Trustee....................................................17
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SECTION 3.9. Certain Additional Duties and Responsibilities of the Property Trustee.......................19
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SECTION 3.10. Certain Rights of the Property Trustee.......................................................21
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SECTION 3.11. Delaware Trustee.............................................................................23
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SECTION 3.12. Not Responsible for Recitals or Issuance of Securities.......................................23
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SECTION 3.13. Duration of Trust............................................................................23
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SECTION 3.14. Mergers......................................................................................23
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ARTICLE IV - SPONSOR.............................................................................................25
SECTION 4.1. Sponsor's Purchase of Common Securities......................................................25
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SECTION 4.2. Responsibilities of the Sponsor..............................................................25
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SECTION 4.3. Right to Proceed.............................................................................25
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ARTICLE V - TRUSTEES AND ADMINISTRATORS..........................................................................26
SECTION 5.1. Number of Trustees and Administrators; Appointment of Co-Trustee.............................26
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SECTION 5.2. Delaware Trustee.............................................................................26
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SECTION 5.3. Property Trustee; Eligibility................................................................27
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SECTION 5.4. Certain Qualifications of Administrators and Delaware Trustee Generally......................28
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SECTION 5.5. Administrators...............................................................................28
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SECTION 5.6. Appointment, Removal and Resignation of Trustees and Administrators..........................28
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SECTION 5.7. Vacancies Among Trustees and Administrators..................................................30
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SECTION 5.8. Effect of Vacancies..........................................................................30
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SECTION 5.9. Meetings.....................................................................................30
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SECTION 5.10. Delegation of Power..........................................................................31
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SECTION 5.11. Merger, Conversion, Consolidation or Succession to Business..................................31
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ARTICLE VI - DISTRIBUTIONS.......................................................................................31
SECTION 6.1. Distributions................................................................................31
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ARTICLE VII - ISSUANCE OF SECURITIES.............................................................................32
SECTION 7.1. General Provisions Regarding Securities......................................................32
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SECTION 7.2. Execution and Authentication.................................................................32
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SECTION 7.3. Form and Dating..............................................................................33
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SECTION 7.4. Definitive Capital Securities................................................................34
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SECTION 7.5. Registrar, Paying Agent and Conversion Agent.................................................35
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SECTION 7.6. Paying Agent to Hold Money in Trust..........................................................35
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SECTION 7.7. Replacement Securities.......................................................................36
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SECTION 7.8. Outstanding Capital Securities...............................................................36
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SECTION 7.9. Capital Securities in Treasury...............................................................36
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SECTION 7.10. Temporary Securities.........................................................................37
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SECTION 7.11. Cancellation.................................................................................37
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SECTION 7.12. CUSIP........................................................................................37
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ARTICLE VIII - DISSOLUTION AND TERMINATION OF TRUST..............................................................37
SECTION 8.1. Dissolution and Termination of Trust.........................................................37
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ARTICLE IX - TRANSFER OF INTERESTS...............................................................................38
SECTION 9.1. Transfer of Securities.......................................................................38
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SECTION 9.2. Transfer Procedures and Restrictions.........................................................39
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SECTION 9.3. Book Entry Interests.........................................................................42
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SECTION 9.4. Notices to Clearing Agency...................................................................43
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SECTION 9.5. Appointment of Successor Clearing Agency.....................................................43
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ARTICLE X - LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS.................................43
SECTION 10.1. Liability....................................................................................43
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SECTION 10.2. Exculpation..................................................................................44
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SECTION 10.3. Fiduciary Duty...............................................................................44
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SECTION 10.4. Indemnification..............................................................................45
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SECTION 10.5. Outside Businesses...........................................................................48
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SECTION 10.6. Compensation; Fees...........................................................................48
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ARTICLE XI - ACCOUNTING..........................................................................................49
SECTION 11.1. Fiscal Year..................................................................................49
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SECTION 11.2. Certain Accounting Matters...................................................................49
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SECTION 11.3. Banking......................................................................................49
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SECTION 11.4. Withholding..................................................................................50
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ARTICLE XII - AMENDMENTS AND MEETINGS............................................................................50
SECTION 12.1. Amendments...................................................................................50
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SECTION 12.2. Meetings of the Holders; Action by Written Consent...........................................52
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ARTICLE XIII - REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE..........................................54
SECTION 13.1. Representations and Warranties of Property Trustee...........................................54
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SECTION 13.2. Representations and Warranties of Delaware Trustee...........................................54
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ARTICLE XIV - MISCELLANEOUS......................................................................................55
SECTION 14.1. Notices......................................................................................55
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SECTION 14.2. Governing Law................................................................................56
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SECTION 14.3. Intention of the Parties.....................................................................57
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SECTION 14.4. Headings.....................................................................................57
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SECTION 14.5. Successors and Assigns.......................................................................57
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SECTION 14.6. Partial Enforceability.......................................................................57
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SECTION 14.7. Counterparts.................................................................................57
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AMENDED AND RESTATED DECLARATION OF TRUST
OF
LIFE FINANCIAL CAPITAL TRUST
_____________________, 1997
DECLARATION OF TRUST ("Declaration") dated and effective as of
_______________, 1997, by the Trustees (as defined herein), the Administrators
(as defined herein), the Sponsor (as defined herein) and by the holders, from
time to time, of undivided beneficial interests in the assets of the Trust (as
defined herein) to be issued pursuant to this Declaration;
WHEREAS, the Delaware Trustee, the Property Trustee, the Initial Trustee
and the Sponsor established LIFE Financial Capital Trust (the "Trust"), a trust
created under the Business Trust Act (as defined herein) pursuant to a
Declaration of Trust dated as of ___________, 1997 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on ________________, 1997, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain Debentures of the
Debenture Issuer (each as hereinafter defined);
WHEREAS, all of the trustees of the Trust, the Administrators and the
Sponsor, by this Declaration, amend and restate each and every term and
provision of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1. Definitions.
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Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to this
Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Administrator" has the meaning set forth in Section 5.1.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Conversion Agent.
"Authorized Officer" of a Person means any other Person that is authorized
to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global Certificate
registered in the name of a Clearing Agency or its nominee, ownership and
transfers of which shall be maintained and made through book entries by a
Clearing Agency as described in Sections 9.2 and 9.3.
"Business Day" means any day other than a Saturday or a Sunday or a day on
which banking institutions in California or Massachusetts are authorized or
required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. C. Section 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Capital Securities" has the meaning specified in Section 7.1(a).
"Capital Securities Guarantee" means the Capital Securities Guarantee
Agreement, dated as of ___________________, 1997, by the Sponsor as guarantor,
the Trust and State Street Bank and Trust Company, as Capital Securities
Guarantee Trustee, with respect to the Capital Securities.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Capital Securities and in whose
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name or in the name of a nominee of that organization shall be registered a
Global Certificate and which shall undertake to effect book entry transfers and
pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Time" means either the time of the closing of the Public Offering
or the time of the closing of the Underwriter's overallotment option with
respect to the Public Offering, as the case may be.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the United States Securities and Exchange Commission as
from time to time constituted, or if any time after the execution of this
Declaration such Commission is not existing and performing the duties now
assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the Common Securities Guarantee
Agreement, dated as of _________________, 1997, by the Sponsor as guarantor,
with respect to the Common Securities.
"Common Securities Subscription Agreement" means the subscription agreement
dated as of ___________________, 1997 between the Trust and the Sponsor relating
to the Common Securities representing undivided beneficial interests in the
assets of the Trust.
"Common Stock" means the common stock, $0.01 par value per share, of the
Sponsor.
"Company Indemnified Person" means (a) any Administrator; (b) any Affiliate
of any Administrator; (c) any officers, directors, shareholders, members,
partners, employees, representatives or agents of any Administrator; or (d) any
officer, employee or agent of the Trust or its Affiliates.
"Conversion Agent" has the meaning specified in Section 7.5.
"Corporate Trust Office" means the office of the Property Trustee at which
the corporate trust business of the Property Trustee, at any particular time,
shall be principally administered, which office at the date of execution of this
Declaration is located at Two International Place, Boston, Massachusetts 02110.
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"Covered Person" means (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates and (b) any Holder of Securities.
"Debenture Issuer" means LIFE Financial Corporation, a Delaware
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Subscription Agreement" means the Subscription Agreement dated
as of ____________________, 1997 between the Sponsor and the Trust relating to
the Debentures issuable pursuant to the Indenture.
"Debenture Trustee" means State Street Bank and Trust Company, a
Massachusetts banking corporation, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the ____% Junior Convertible Subordinated Debentures due
_____________, 2027 of the Debenture Issuer issued pursuant to the Indenture.
"Default" means an event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in Section
7.4.
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance with
Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of Default
(as defined in the Indenture) that has occurred and is continuing in respect of
the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Capital Security" has the meaning set forth in Section 7.3(a).
"Holder" means a Person in whose name a Security is registered, such Person
being a beneficial owner within the meaning of the Business Trust Act.
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"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture, dated as of ____________________, 1997,
between the Debenture Issuer and State Street Bank and Trust Company, as amended
from time to time.
"Initial Trustee" shall mean _________________, not in his individual
capacity but solely in his capacity as initial trustee of the Trust.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Officer's Certificate" means, with respect to any Person, a certificate
signed by the Chairman, the Co-Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary of such Person. Any Officer's Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that the officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
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"Opinion of Counsel" shall mean a written opinion of counsel, who may be an
employee of the Sponsor, and who shall be acceptable to the Property Trustee.
"Paying Agent" has the meaning specified in Section 7.5.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Prospectus" has the meaning set forth in Section 4.2(a).
"Public Offering" means the offering of all Capital Securities in a firm
commitment public offering.
"Quorum" means a majority of the Administrators or, if there are only two
Administrators, both of them.
"Registrar" has the meaning set forth in Section 7.5.
"Registration Statement" means the Registration Statement on Form S-1,
including any amendments thereto, relating to, among other securities, the
Capital Securities.
"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, including any
vice president, any assistant vice president, any assistant secretary, any
assistant treasurer, any trust officer, any senior trust officer or other
officer of the Corporate Trust Office of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Securities" or "Trust Securities" means the Common Securities and the
Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, or any successor legislation.
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"Securities Guarantees" means the Common Securities Guarantee and the
Capital Securities Guarantee.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means LIFE Financial Corporation, a Delaware corporation, or any
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust Securities,
except as provided in the terms of the Capital Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Underwriting Agreement" means the Underwriting Agreement among the
Sponsor, the Trust and Keefe, Bruyette & Woods, Inc., as underwriter, in
connection with the Public Offering of the Capital Securities.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
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(a) This Declaration is subject to the provisions of the Trust Indenture
Act that are required to be part of this Declaration and, to the extent
applicable, shall be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee for
the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall
not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2. Lists of Holders of Securities.
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(a) Each of the Sponsor and the Administrators on behalf of the Trust
shall provide the Property Trustee, unless the Property Trustee is Registrar for
the Securities (i) within 14 days after each record date for payment of
Distributions, a list, in such form as the Property Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of
such record date, provided that neither the Sponsor nor the Administrators on
behalf of the Trust shall be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Property Trustee by the Sponsor and the Administrators on behalf of
the Trust, and (ii) at any other time, within 30 days of receipt by the Trust of
a written request for a List of Holders by a Holder for a purpose reasonably
related to the Holder's interest as a Holder, as of a date no more than 14 days
before such List of Holders is given to the Property Trustee. The determination
of what constitutes a purpose reasonably related to the Holder's interest as a
Holder shall be in the sole discretion of the Administrators. The Property
Trustee shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3. Reports by the Property Trustee.
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Within 60 days after May 15 of each year, commencing May 15, 1998, the
Property Trustee shall provide to the Holders of the Capital Securities such
reports as are required by Section 313(a) of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Property Trustee shall also comply with the other requirements of Section
313 of the Trust Indenture Act. The Sponsor shall promptly notify the Property
Trustee if and when the Capital Securities are listed on any stock exchange.
SECTION 2.4. Periodic Reports to Property Trustee.
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Each of the Sponsor and the Administrators on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as are
required by Section 314 (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314(a)(4) of the Trust Indenture Act, such compliance
certificate to be delivered annually on or before 120 days after the end of each
fiscal year of the Sponsor; provided, that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act shall be filed with the Property Trustee within 15 days
after the same is required to be filed with the Commission.
Delivery of such reports, information and documents to the Property Trustee
is for informational purposes only and the Property Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Trust's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
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Each of the Sponsor and the Administrators on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent provided for in this Declaration that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c) (1) of the Trust
Indenture Act may be given in the form of an Officer's Certificate.
SECTION 2.6. Events of Default; Waiver.
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(a) The Holders of a Majority in liquidation amount of Capital Securities
may, by vote, on behalf of the Holders of all of the Capital Securities, waive
any past Event of Default in respect of the Capital Securities and its
consequences, provided that, if the underlying Event of Default under the
Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
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(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super Majority")
to be waived under the Indenture, the Event of Default under the Declaration may
only be waived by the vote of the Holders of at least the proportion in
aggregate liquidation amount of the Capital Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote or
consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee or to direct the
exercise of any trust or power conferred upon the Property Trustee, including
the right to direct the Property Trustee to exercise the remedies available to
it as a holder of the Debentures; provided, however, that (subject to the
provisions of Section 3.9) the Property Trustee shall have the right to decline
to follow any such direction if the Property Trustee, upon the advice of
counsel, shall determine that the action so directed would be unjustly
prejudicial to the Holders not taking part in such direction or if the Property
Trustee, upon the advice of counsel, determines that the action or proceeding so
directed may not lawfully be taken or if the Property Trustee, in good faith, by
its board of directors or trustees, executive committee, or a trust committee of
directors or trustees, and/or Responsible Officers, shall determine that the
action or proceeding so directed would involve the Property Trustee in personal
liability.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the
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Declaration may only be waived by the vote of the Holders of at least the
proportion in aggregate liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding; provided further, each Holder of Common Securities will
be deemed to have waived any such Event of Default and all Events of Default
with respect to the Common Securities and its consequences if all Events of
Default with respect to the Capital Securities have been cured, waived or
otherwise eliminated, and until such Events of Default have been so cured,
waived or otherwise eliminated, the Property Trustee will be deemed to be acting
solely on behalf of the Holders of the Capital Securities and only the Holders
of the Capital Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.6(b), upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the Property
Trustee, at the direction of the Holders of the Capital Securities, constitutes
a waiver of the corresponding Event of Default under this Declaration. The
foregoing provisions of this Section 2.6(c) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7. Event of Default; Notice.
-----------
(a) The Property Trustee, within 90 days after the occurrence of an Event
of Default, shall transmit by mail, first class postage prepaid, to the Holders
notice of all defaults with respect to the Securities actually known to a
Responsible Officer of the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Event of Default as defined in
the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 5.1(a) and 5.1(b) of the
Indenture; or
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(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of the Declaration shall have actual
knowledge.
(c) Within ten Business Days after the occurrence of any Event of Default
actually known to the Sponsor, the Sponsor shall transmit notice of such Event
of Default to the holders of the Capital Securities, the Administrators and the
Property Trustee, unless such Event of Default shall have been cured or waived.
The Sponsor and the Administrators shall file annually with the Property Trustee
a certification as to whether or not they are in compliance with all the
conditions and covenants applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1. Name.
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The Trust is named "LIFE Financial Capital Trust" as such name may be
modified from time to time by the Administrators following written notice to the
Holders of Securities and the Trustees. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the
Administrators.
SECTION 3.2. Office.
-----------
The address of the principal office of the Trust is c/o LIFE Financial
Corporation, 10540 North Magnolia Avenue, Unit B, Riverside, California 92505.
On ten Business Days written notice to the Holders of Securities and the
Trustees, the Administrators may designate another principal office.
SECTION 3.3. Purpose.
-----------
The exclusive purposes and functions of the Trust are (a) to issue and sell
the Securities, (b) use the proceeds from the sale of the Securities to acquire
the Debentures, and (c) except as otherwise limited herein, to engage in only
those other activities necessary, advisable or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, mortgage or pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4. Authority.
-----------
Except as specifically provided in this Declaration, the Administrators and
the Property Trustee shall have exclusive and complete authority to carry out
the purposes of the Trust. An action taken by a Property Trustee or an
Administrator in accordance with its powers shall constitute the act of and
serve to bind the Trust. In dealing with the Trustees or the Administrators
acting on behalf
12
of the Trust, no Person shall be required to inquire into the authority of the
Trustees or the Administrators to bind the Trust. Persons dealing with the Trust
are entitled to rely conclusively on the power and authority of the Trustees as
set forth in this Declaration. The Administrators shall have only those
ministerial duties set forth herein with respect to accomplishing the purposes
of the Trust and are not intended to be trustees or fiduciaries with respect to
the Trust or the Holders of Securities. The Property Trustee shall have the
right, but shall not be obligated except as provided in Section 3.8, to perform
those duties assigned to the Administrators.
SECTION 3.5. Title to Property of the Trust.
-----------
Except as provided in Section 3.8 with respect to the Debentures and the
Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.6. Powers and Duties of the Administrators.
-----------
The Administrators shall have the power, duty and authority to cause the
Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this Declaration;
provided, however, that (i) the Trust may issue no more than one series of
Capital Securities (as contemplated in Section 7.1(a)) and no more than one
series of Common Securities, (ii) there shall be no interests in the Trust other
than the Securities, and (iii) the issuance of Securities shall be limited to a
simultaneous issuance of Capital Securities and Common Securities at the Closing
Time;
(b) in connection with the issue and sale of the Capital Securities, at
the direction of and to the extent so directed by the Sponsor, to:
(i) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to qualify
or register all or part of the Capital Securities in any State in which the
Sponsor has determined to qualify or register such Capital Securities for sale;
(ii) at the direction of the Sponsor, execute and file an
application, prepared by the Sponsor, to the New York Stock Exchange or any
other national stock exchange or the National Market System of the Nasdaq Stock
Market for listing or quotation of the Capital Securities;
(iii) execute and deliver letters, documents, or instruments
with DTC and other Clearing Agencies relating to the Capital Securities;
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(iv) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor, relating to the registration of the Capital Securities under the
Exchange Act;
(v) execute and enter into the Common Securities Subscription
Agreement providing for the purchase from the Trust of the Common Securities;
(vi) execute and enter into the Debenture Subscription
Agreement providing for the Trust to purchase the Debentures from the Debenture
Issuer; and
(vi) execute and enter into the Capital Security Guarantee on
behalf of the Trust.
(c) to acquire the Debentures with the proceeds of the sale of the Capital
Securities and the Common Securities; provided, however, that the Administrators
shall cause legal title to the Debentures to be held of record in the name of
the Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written notice of
the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and conversions, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of the
Administrators pursuant to the terms of this Declaration or the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Administrator;
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(k) to incur expenses that are necessary or incidental to carry out any of
the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Conversion Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.5 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to Holders
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment period
under the Indenture;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which the Trust was created;
(p) to take any action, not inconsistent with this Declaration or with
applicable law, that the Administrators determine in their discretion to be
necessary or desirable in carrying out the activities of the Trust as set out in
this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for United
States federal income tax purposes.
(q) to take all action necessary to consummate the Public Offering; and
(r) to take all action necessary to cause all applicable tax returns and
tax information reports that are required to be filed with respect to the Trust
to be duly prepared and filed by the Administrators, on behalf of the Trust.
The Administrators must exercise the powers set forth in this Section 3.6
in a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3, and the Administrators shall not take any action that is
inconsistent with the purposes and functions of the Trust set forth in Section
3.3.
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Subject to this Section 3.6, the Administrators shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Administrators pursuant to this Section 3.6
shall be reimbursed by the Debenture Issuer.
In addition to the powers set forth above, the Administrators may from time
to time designate committees of the Administrators, with such lawfully delegable
powers and duties as the Administrators thereby confer, to serve at the pleasure
of the Administrators.
SECTION 3.7. Prohibition of Actions by the Trust, the Trustees and the
-----------
Administrators.
(a) The Trust shall not, and the Trustees (including the Property Trustee)
and the Administrators shall not, engage in any activity other than as required
or authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant to the
terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of conducting any proceeding with respect to
any remedy available to the Debenture Trustee, or exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is waivable under the Indenture, (C) exercise any right to
rescind or annul any declaration that the principal of all the Debentures shall
be due and payable, or (D) consent to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of a nationally recognized independent
tax counsel experienced in such matters to the effect that such modification
will not affect the Trust's status as a grantor trust for United States federal
income tax purposes.
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SECTION 3.8. Powers and Duties of the Property Trustee.
-----------
(a) The legal title to the Debentures shall be owned by and held of record
in the name of the Property Trustee in trust for the benefit of the Holders. The
right, title and interest of the Property Trustee to the Debentures shall vest
automatically in each Person who may hereafter be appointed as Property Trustee
in accordance with Section 5.6. Such vesting and cessation of title shall be
effective whether or not conveyancing documents with regard to the Debentures
have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and interest
in the Debentures to the Administrators or to the Delaware Trustee (if the
Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the exclusive
control of the Property Trustee on behalf of the Holders and, upon the receipt
of payments of funds made in respect of the Debentures held by the Property
Trustee, deposit such funds into the Property Trustee Account and make payments
to the Holders of the Capital Securities and Holders of the Common Securities
from the Property Trustee Account in accordance with Section 6.1. Funds in the
Property Trustee Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Trustee Account shall be an account that is
maintained with a banking institution that is at least in compliance with the
capital requirements of regulatory authority regulating such institution;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities and the Common
Securities to the extent the Debentures are redeemed or mature or the conversion
of Capital Securities to the extent the Capital Securities are converted into
Common Stock; and
(iii) upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities, engage in such
ministerial activities as shall be necessary or appropriate to effect the
distribution of the Debentures to Holders of Securities upon the occurrence of
certain events.
(d) The Property Trustee shall take all actions and perform such duties as
may be specifically required of the Property Trustee pursuant to the terms of
the Securities.
(e) Subject to Section 3.9(a), the Property Trustee may take any Legal
Action which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Property Trustee has actual knowledge or the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act and if such Property Trustee shall have failed to take such Legal Action,
the Holders of the Capital Securities may, to the fullest extent permitted by
law, take such Legal Action, to the same extent as if such Holders of Capital
Securities held an aggregate
17
principal amount of Debentures equal to the aggregate liquidation amount of such
Capital Securities, without first proceeding against the Property Trustee or the
Trust; provided however, that if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay the principal of or premium, if any, or interest on the Debentures on the
date such principal, premium, if any, or interest is otherwise payable (or in
the case of prepayment, on the prepayment date), then 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
Debentures having a principal amount equal to the aggregate liquidation amount
of the Capital Securities of such Holder (a "Direct Action") on or after the
respective due date specified in the Debentures. In connection with such Direct
Action, the rights of the Holders of the Common Securities will be subrogated to
the rights of such Holder of Capital Securities to the extent of any payment
made by the Debenture Issuer to such Holder of Capital Securities in such Direct
Action. Except as provided in the preceding sentences, the Holders of Capital
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders pursuant to the terms of the
Securities; or
(ii) a successor property trustee possessing the qualifications to
act as Property Trustee under Section 5.3 (a "Successor Property Trustee") has
been appointed and has accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise all of the
rights, powers and privileges of a holder of Debentures under the Indenture and,
if an Event of Default actually known to a Responsible Officer of the Property
Trustee occurs and is continuing, the Property Trustee, for the benefit of
Holders, shall enforce its rights as holder of the Debentures subject to the
rights of the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake any actions set
forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such Paying Agent
shall comply with Section 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time the Property
Trustee remains as Paying Agent and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by the
Property Trustee while the Property Trustee is so acting as Paying Agent.
(j) The Property Trustee shall have the power and authority to act with
respect to any of the duties, liabilities, powers or the authority of the
Administrators set forth in Sections 3.6(b)(ii),
18
(m) or (o), but shall not have a duty to do any such act unless specifically
directed to do so in writing by the Sponsor and then shall be fully protected in
acting pursuant to such direction. In the event of a conflict between the action
of the Administrators and the action of the Property Trustee, the action of the
Property Trustee shall prevail.
The Property Trustee must exercise the powers set forth in this Section 3.8
in a manner that is consistent with the purposes and functions of the Trust set
out in Section 3.3, and the Property Trustee shall not take any action that is
inconsistent with the purposes and functions of the Trust set out in Section
3.3.
SECTION 3.9. Certain Additional Duties and Responsibilities of the
-----------
Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration and in the Securities and no implied covenants shall be read into
this Declaration against the Property Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this Declaration and in the
Securities and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants or obligations shall
be read into this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Property Trustee and conforming to the
requirements of this Declaration; provided, however, that in the case of any
such certificates or opinions that by any provision hereof are specifically
required to be furnished to the Property Trustee, the Property Trustee shall be
under a duty to examine the same to determine whether or not they conform to the
requirements of this Declaration;
19
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property Trustee,
unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of
the Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with the
Sponsor. Money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Property Trustee Account maintained
by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent
otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrators or the Sponsor with their respective duties
under this Declaration, nor shall the Property Trustee be liable for any default
or misconduct of the Administrators or the Sponsor.
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SECTION 3.10. Certain Rights of the Property Trustee.
------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties;
(ii) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration may be sufficiently evidenced by an Officer's
Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed), in the absence of bad
faith on its part, may request and conclusively rely upon an Officer's
Certificate which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Administrators;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts
of its selection and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion, such counsel may be counsel to the
Sponsor or any of its Affiliates, and may include any of its employees. The
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request or
direction of any Holder, unless such Holder shall have provided to the Property
Trustee security and indemnity, reasonably satisfactory to the Property Trustee,
against the costs, expenses (including reasonable attorney's fees and expenses
and the expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Property Trustee; provided, that, nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Declaration;
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(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action and no third party shall be required to
inquire as to the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Property Trustees' or its agent's
taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders which instructions may
only be given by the Holders of the same proportion in liquidation amount of the
Securities as would be entitled to direct the Property Trustee under the terms
of the Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in conclusively relying
on or acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith, without negligence, and
reasonably believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
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SECTION 3.11. Delaware Trustee.
------------
Notwithstanding any other provision of this Declaration other than Section
5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities, of the
Administrators or the Property Trustee described in this Declaration. Except as
set forth in Section 5.2, the Delaware Trustee shall be a Trustee for the sole
and limited purpose of fulfilling the requirements of Section 3807 of the
Business Trust Act.
SECTION 3.12. Not Responsible for Recitals or Issuance of Securities.
------------
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and none of the Trustees or the
Administrators assume any responsibility for their correctness. None of the
Trustees or the Administrators make any representations as to the value or
condition of the property of the Trust or any part thereof. None of the Trustees
or the Administrators make any representations as to the validity or sufficiency
of this Declaration, the Debentures or the Securities.
SECTION 3.13. Duration of Trust.
------------
The Trust, unless dissolved pursuant to the provisions of Article VIII
hereof, shall have existence up to [_____________, 2028].
SECTION 3.14. Mergers.
------------
(a) The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.14(b) and (c) and Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, as Holder of the Common
Securities, and without the consent of the Holders of the Capital Securities,
the Delaware Trustee or the Property Trustee, merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust organized as
such under the laws of any State; provided that:
(i) if the Trust is not the surviving entity, such successor
entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor Securities") so
long as the Successor Securities rank the same as the Securities rank with
respect to Distributions and payments upon liquidation, redemption and
otherwise;
23
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee as the
Holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Capital Securities
are then listed or quoted, if any;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders (including any Successor Securities) in any
material respect (other than with respect to any dilution of such Holders'
interests in the new entity);
(v) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an opinion
of an independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders (including any Successor Securities) in any
material respect (other than with respect to any dilution of the Holders'
interests in the new entity); and
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor the Successor
Entity will be required to register as an Investment Company; and
(vii) the Sponsor or any permitted successor or assignee owns all of
the common securities of such Successor Entity and guarantees the obligations
of such Successor Entity under the Successor Securities at least to the extent
provided by the Capital Securities Guarantee and the Common Securities
Guarantee.
(c) Notwithstanding Section 3.14(b), the Trust shall not, except with the
consent of Holders of 100% in liquidation amount of the Securities, consolidate,
amalgamate, merge with or into, or be replaced by, or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the Successor Entity not
to be classified as a grantor trust for United States federal income tax
purposes or result in the Holders recognizing any gain or loss for federal
income tax purposes.
24
ARTICLE IV
SPONSOR
SECTION 4.1. Sponsor's Purchase of Common Securities.
-----------
At the Closing Time, the Sponsor will purchase all of the Common Securities
then issued by the Trust, in an amount equal to approximately, but not less
than, 3% of the capital of the Trust, at the same time as the Capital Securities
are issued and sold.
SECTION 4.2. Responsibilities of the Sponsor.
-----------
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare one or more prospectuses (each a "Prospectus") in
preliminary and final form, in relation to the offering and sale of Capital
Securities in the Public Offering, and to execute and file with the Commission,
the Registration Statement, including any amendments thereto;
(b) to determine the States in which to take appropriate action to qualify
or register for sale all or part of the Capital Securities and to do any and all
such acts, other than actions which must be taken by the Trust, and advise the
Trust of actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems necessary
or advisable in order to comply with the applicable laws of any such States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for filing
by the Trust an application to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing or quotation of the
Capital Securities;
(d) to prepare for filing by the Trust with the Commission a registration
statement on Form 8-A (if necessary) relating to the registration of the Capital
Securities under Section 12(b) or 12(g), as appropriate, of the Exchange Act,
including any amendments thereto; and
(e) to negotiate the terms of and execute the Underwriting Agreement in
connection with the Public Offering, and other agreements, documents and
instruments providing for the sale of the Capital Securities.
SECTION 4.3. Right to Proceed.
-----------
The Sponsor acknowledges the rights of the Holders of Capital Securities,
in the event that a failure of the Trust to pay Distributions on the Capital
Securities is attributable to the failure of the Company to pay interest or
principal on the Debentures, to institute a Direct Action against the Debenture
Issuer for enforcement of its payment obligations on the Debentures.
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ARTICLE V
TRUSTEES AND ADMINISTRATORS
SECTION 5.1. Number of Trustees and Administrators; Appointment of Co-
-----------
Trustee.
The number of Trustees initially shall be two (2) and the number of
Administrators initially shall be two (2), and:
(a) at any time before the issuance of any Securities, the Sponsor, by
written instrument, may increase or decrease the number of Trustees and
Administrators; and
(b) after the issuance of any Securities, the number of Trustees and
Administrators may be increased or decreased by vote of the Holders of a
Majority in liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities; provided, however, that, the
number of Trustees shall in no event be less than two (2); and provided further
that (1) one Trustee, in the case of a natural person, shall be a person who is
a resident of the State of Delaware or that, if not a natural person, is an
entity which has its principal place of business in the State of Delaware and is
capable of acting in such position pursuant to Section 3807 of the Business
Trust Act; (2) there shall be at least one administrator who is an employee or
officer of, or is affiliated with the Sponsor (an "Administrator"); and (3) one
Trustee shall be the Property Trustee for so long as this Declaration is
required to qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements. Notwithstanding the above, unless an Event of Default shall have
occurred and be continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any jurisdiction in which
any part of the Trust's property may at the time be located, the Holders of a
Majority in liquidation amount of the Common Securities acting as a class at a
meeting of the Holders of the Common Securities, and the Administrators shall
have power to appoint one or more persons either to act as a co-trustee, jointly
with the Property Trustee, of all or any part of the Trust's property, or to act
as separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such person or
persons in such capacity any property, title, right or power deemed necessary or
desirable, subject to the provisions of this Declaration. In case an Event of
Default has occurred and is continuing, the Property Trustee alone shall have
power to make any such appointment of a co-trustee.
(c) Effective as of the date of this Declaration, without any further
action by any Person, the Initial Trustee shall cease to be a trustee of the
Trust and the only trustees of the Trust shall be the Trustees, as their number
may increase or decrease from time to time in accordance with the provisions of
this Declaration.
SECTION 5.2. Delaware Trustee.
-----------
If required by the Business Trust Act, one Trustee (the "Delaware Trustee")
shall be:
(a) a natural person who is a resident of the State of Delaware; or
26
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law, provided that, if the Property Trustee has its principal place
of business in the State of Delaware and otherwise meets the requirements of
applicable law, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
(c) The initial Delaware Trustee shall be:
Delaware Trust Capital Management
3 Beaver Valley Road, FC 5-4-2-6
Wilmington, Delaware 19803
Attention: Corporate Trust Administration
SECTION 5.3. Property Trustee; Eligibility.
-----------
(a) There shall at all times be one Trustee (the "Property Trustee") which
shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a Person permitted by the Commission to act as an
institutional trustee under the Trust Indenture Act, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least __ million U.S. dollars ($__________), 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 supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to so
act under Section 5.3(a), the Property Trustee shall immediately resign in the
manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act, subject to the penultimate paragraph thereof.
(d) The Capital Securities Guarantee shall be deemed to be specifically
described in this Declaration for purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
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(e) The initial Property Trustee shall be:
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Administration
SECTION 5.4. Certain Qualifications of Administrators and Delaware
-----------
Trustee Generally.
Each Administrator and the Delaware Trustee (unless the Property Trustee
also acts as Delaware Trustee) shall be either a natural person who is at least
21 years of age or a legal entity that shall act through one or more Authorized
Officers.
SECTION 5.5. Administrators.
-----------
The initial Administrators shall be:
Daniel L. Perl and L. Bruce Mills, Jr.
LIFE Financial Corporation
10540 North Magnolia Avenue, Unit B
Riverside, California 92505
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Administrators is called with respect to any matter over which
the Administrators have power to act, any power of the Administrators may be
exercised by, or with the consent of, any one such Administrator.
(b) Except as otherwise required by the Business Trust Act or applicable
law, any Administrator is authorized to execute on behalf of the Trust any
documents which the Administrators have the power and authority to cause the
Trust to execute pursuant to Section 3.6.
SECTION 5.6. Appointment, Removal and Resignation of Trustees and
-----------
Administrators.
(a) Subject to Section 5.6(b) of this Declaration and to Section 7(b) of
Annex I hereto, the Trustees and Administrators may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities and, with respect to any
Administrator, at any time after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; and
28
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee or
the Delaware Trustee, by vote of Holders of a Majority in liquidation amount of
the Capital Securities voting as a class at a meeting of Holders of the Capital
Securities.
(iv) In no event will the Holders of the Capital Securities have
the right to vote to appoint, remove or replace the Administrators, which voting
rights are vested exclusively in the Holders of the Common Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Administrators and the
Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with this Section 5.6(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Administrators and the Sponsor.
(c) A Trustee or Administrator appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation. Any Trustee or Administrator may resign from office (without need
for prior or subsequent accounting) by an instrument in writing signed by the
Trustee or the Administrator, as the case may be, and delivered to the Sponsor
and the Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor Property
Trustee and delivered to the Trust, the Sponsor and the resigning Property
Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of the
Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been appointed
and has accepted such appointment by instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee.
29
(d) The Holders of the Common Securities shall use their best efforts to
promptly appoint a Successor Delaware Trustee or Successor Property Trustee, as
the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this Section 5.6
within 60 days after delivery of an instrument of resignation or removal, the
Property Trustee or Delaware Trustee resigning or being removed, as applicable,
may petition any court of competent jurisdiction for appointment of a Successor
Property Trustee or Successor Delaware Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the acts
or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 5.7. Vacancies Among Trustees and Administrators.
-----------
If a Trustee or Administrator ceases to hold office for any reason and the
number of Trustees or Administrators, as the case may be, is not reduced
pursuant to Section 5.1, or if the number of Trustees or Administrators, as the
case may be, is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Administrators or, if
there are more than two, a majority of the Administrators, shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8. Effect of Vacancies.
-----------
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee or an
Administrator shall not operate to dissolve, terminate or annul the Trust.
Whenever a vacancy in the number of Administrators shall occur, until such
vacancy is filled by the appointment of an Administrator in accordance with
Section 5.6, the Administrators in office, regardless of their number, shall
have all the powers granted to the Administrators and shall discharge all the
duties imposed upon the Administrators by this Declaration.
SECTION 5.9. Meetings.
-----------
If there is more than one Administrator, meetings of the Administrators
shall be held from time to time upon the call of any Administrator. Regular
meetings of the Administrators may be held at a time and place fixed by
resolution of the Administrators. Notice of any in-person meetings of the
Administrators shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not
30
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of an Administrator at a meeting shall constitute a
waiver of notice of such meeting except where an Administrator attends a meeting
for the express purpose of objecting to the transaction of any activity on the
ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrators may be
taken at a meeting by vote of a majority of the Administrators present (whether
in person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Administrators. In the event there is only one Administrator, any
and all action of such Administrator shall be evidenced by a written consent of
such Administrator.
SECTION 5.10. Delegation of Power.
------------
(a) Any Administrator may, by power of attorney consistent with applicable
law, delegate to any other natural person over the age of 21 his or her power
for the purpose of executing any documents contemplated in Section 3.6.
(b) The Trustees and Administrators shall have power to delegate from time
to time to such of their number or to such of the other Administrators, as the
case may be, or to officers of the Trust the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Trustees or Administrators, as the case may be, or otherwise as the Trustees
or Administrators, as the case may be, may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
SECTION 5.11. Merger, Conversion, Consolidation or Succession to
------------
Business.
Any Person into which the Property Trustee or the Delaware Trustee or any
Administrator that is not a natural person, as the case may be, 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 Property Trustee, the Delaware
Trustee or the Administrator, as the case may be, shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
the Property Trustee, the Delaware Trustee or the Administrator, as the case may
be, shall be the successor of the Property Trustee, the Delaware Trustee or the
Administrator, as the case may be, hereunder, provided such Person shall be
otherwise qualified and eligible under this Article and applicable law, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1. Distributions.
-----------
Holders shall receive Distributions in accordance with the applicable terms
of the relevant Holders' Securities. If and to the extent that the Debenture
Issuer makes a payment of interest (including Compounded Interest (as defined in
the Indenture) and Additional Interest (as defined in
31
the Indenture)), premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distribution") of the Payment Amount to
Holders in accordance with the respective term of the Securities held by them.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1. General Provisions Regarding Securities.
-----------
(a) The Administrators shall on behalf of the Trust issue one class of
____% Convertible Trust Preferred Securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in Annex
I (the "Capital Securities") and one class of __% Convertible Trust Common
Securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "Common Securities").
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration, the
Securities so issued shall be deemed to be validly issued, fully paid and non-
assessable.
(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 7.2. Execution and Authentication.
-----------
(a) The Securities shall be signed on behalf of the Trust by an
Administrator. In case any Administrator who shall have signed any of the
Securities shall cease to be such Administrator before the Securities so signed
shall be delivered by the Trust, such Securities nevertheless may be delivered
as though the Person who signed such Securities had not ceased to be such
Administrator; and any Securities may be signed on behalf of the Trust by such
Persons who, at the actual date of execution of such Security, shall be the
Administrators of the Trust, although at the date of the execution and delivery
of the Declaration any such Person was not such an Administrator.
(b) One Administrator shall sign the Capital Securities for the Trust by
manual or facsimile signature. Unless otherwise determined by the Trust, such
signature shall, in the case of Common Securities, be a manual signature.
(c) A Capital Security shall not be valid until authenticated by the
manual signature of an authorized officer of the Property Trustee. The signature
shall be conclusive evidence that the Capital Security has been authenticated
under this Declaration.
32
(d) Upon a written order of the Trust signed by one Administrator, the
Property Trustee shall authenticate the Capital Securities for original issue.
The aggregate number of Capital Securities outstanding at any time shall not
exceed the number set forth in the Terms in Annex I hereto except as provided in
Section 7.7.
(e) The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3. Form and Dating.
-----------
The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit B-1, each of which is
hereby incorporated in and expressly made a part of this Declaration.
Certificates representing the Securities may be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrators, as evidenced by their execution thereof. The Securities may
have letters, CUSIP or other numbers, notations or other marks of identification
or designation and such legends or endorsements required by law, stock exchange
rule, agreements to which the Trust is subject, if any, or usage (provided that
any such notation, legend or endorsement is in a form acceptable to the Trust).
The Trust at the direction of the Sponsor shall furnish any such legend not
contained in Exhibit A-1 to the Property Trustee in writing. Each Capital
Security shall be dated the date of its authentication. The terms and provisions
of the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and B-1 are part of the terms of this Declaration and to the extent
applicable, the Property Trustee and the Sponsor, by their execution and
delivery of this Declaration, expressly agree to such terms and provisions and
to be bound thereby.
(a) Global Securities. Unless otherwise specified in the terms of the
Capital Securities, the Capital Securities issued in the Public Offering shall
be issued in the form of one or more, permanent global Securities in definitive,
fully registered form without distribution coupons with the global legends set
forth in Exhibit A-1 hereto (each a "Global Capital Security"), which shall be
deposited on behalf of the purchasers of the Capital Securities represented
thereby with the Property Trustee, at its Boston office, as custodian for the
Clearing Agency, and registered in the name of the Clearing Agency or a nominee
of the Clearing Agency, duly executed by the Trust and authenticated by the
Property Trustee as hereinafter provided. The Trust at the direction of the
Sponsor shall furnish any such legend not contained in Exhibit A-1 to the
Property Trustee in writing. The number of Capital Securities represented by a
Global Capital Security may from time to time be increased or decreased by
adjustments made on the records of the Property Trustee and the Clearing Agency
or its nominee as hereinafter provided.
33
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to the
Global Capital Securities and such other Capital Securities in global form as
may be authorized by the Trust to be deposited with or on behalf of the Clearing
Agency.
The Trust shall execute and the Property Trustee shall, in accordance with
Section 7.2, authenticate and make available for delivery initially one or more
Global Capital Securities that (i) shall be registered in the name of Cede & Co.
or other nominee of such Clearing Agency and (ii) shall be delivered by the
Property Trustee to such Clearing Agency or pursuant to such Clearing Agency's
written instructions or held by the Property Trustee as custodian for the
Clearing Agency.
Members of, or participants in, the Clearing Agency ("Participants") shall
have no rights under this Declaration with respect to any Global Capital
Security held on their behalf by the Clearing Agency or by the Property Trustee
as the custodian of the Clearing Agency or under such Global Capital Security,
and the Clearing Agency may be treated by the Trust, the Property Trustee and
any agent of the Trust or the Property Trustee as the absolute owner of such
Global Capital Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Trust, the Property Trustee or any
agent of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Clearing Agency or
impair, as between the Clearing Agency and its Participants, the operation of
customary practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in any Global Capital Security.
SECTION 7.4. Definitive Capital Securities.
-----------
Except as provided in this Section 7.4, owners of beneficial interests in a
Global Capital Security will not be entitled to receive physical delivery of
certificated Capital Securities ("Definitive Capital Securities").
(a) A Global Capital Security deposited with the Clearing Agency or with
the Property Trustee as custodian for the Clearing Agency pursuant to Section
7.3 shall be transferred to the beneficial owners thereof in the form of
Definitive Capital Securities only if such transfer complies with Section 9.2
and (i) the Clearing Agency notifies the Sponsor that it is unwilling or unable
to continue as Clearing Agency for such Global Capital Security or if at any
time such Clearing Agency ceases to be a "clearing agency" registered under the
Exchange Act and a clearing agency is not appointed by the Sponsor within 90
days of such notice or within 90 days after the Sponsor becomes aware of such
non-registration, (ii) a Default or an Event of Default has occurred and is
continuing or (iii) the Trust at its sole discretion elects to cause the
issuance of Definitive Capital Securities.
(b) Any Global Capital Security that is transferable to the beneficial
owners thereof in the form of Definitive Capital Securities pursuant to this
Section 7.4 shall be surrendered by the Clearing Agency to the Property Trustee
located in ________________________, to be so transferred, in whole or from time
to time in part, without charge, and the Property Trustee shall authenticate and
make available for delivery, upon such transfer of each portion of such Global
Capital Security, an equal aggregate liquidation amount of Securities in the
form of Definitive
34
Capital Securities. Any portion of a Global Capital Security transferred
pursuant to this Section shall be registered in such names as the Clearing
Agency shall direct.
(c) Subject to the provisions of Section 7.4(b), the Holder of a Global
Capital Security may grant proxies and otherwise authorize any person, including
Participants and persons that may hold interests through Participants, to take
any action which such Holder is entitled to take under this Declaration or the
Securities.
(d) In the event of the occurrence of any of the events specified in
Section 7.4(a), the Trust will promptly make available to the Property Trustee a
reasonable supply of Definitive Capital Securities in fully registered form
without distribution coupons.
SECTION 7.5. Registrar, Paying Agent and Conversion Agent.
-----------
The Trust shall maintain in ___________________________________________,
(i) an office or agency where Capital Securities may be presented for
registration of transfer ("Registrar"), (ii) an office or agency where Capital
Securities may be presented for payment ("Paying Agent") and (iii) an office or
agency where Securities may be presented for conversion ("Conversion Agent").
The Registrar shall keep a register of the Capital Securities and of their
transfer. Subject to Section 3.8(i), the Trust may appoint the Registrar, the
Paying Agent and the Conversion Agent and may appoint one or more co-registrars,
one or more additional paying agents and one or more additional conversion
agents in such other locations as it shall determine. The term "Registrar"
includes any additional registrar, "Paying Agent" includes any additional paying
agent and the term "Conversion Agent" includes any additional conversion agent.
Subject to Section 3.8(i), the Trust may change any Paying Agent, Registrar, co-
registrar or Conversion Agent without prior notice to any Holder. The Paying
Agent shall be permitted to resign as Paying Agent upon 30 days written notice
to the Trustees and the Administrators. The Trust shall notify the Property
Trustee of the name and address of any Agent not a party to this Declaration. If
the Trust fails to appoint or maintain another entity as Registrar, Paying Agent
or Conversion Agent, the Property Trustee shall act as such. The Trust or any of
its Affiliates may act as Paying Agent, Registrar or Conversion Agent. The Trust
shall act as Paying Agent, Registrar, co-registrar and Conversion Agent for the
Common Securities.
The Trust initially appoints the Property Trustee as Registrar, Paying
Agent and Conversion Agent for the Capital Securities.
SECTION 7.6. Paying Agent to Hold Money in Trust.
-----------
The Trust shall require each Paying Agent other than the Property Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Property Trustee all money held by the Paying Agent for the
payment of liquidation amounts or Distributions on the Securities, and will
notify the Property Trustee if there are insufficient funds for such purpose.
While any such insufficiency continues, the Property Trustee may require a
Paying Agent to pay all money held by it to the Property Trustee. The Trust at
any time may require a Paying Agent to pay all money held by it to the Property
Trustee and to account for any money disbursed by it. Upon payment over to
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the Property Trustee, the Paying Agent (if other than the Trust or an Affiliate
of the Trust) shall have no further liability for the money. If the Trust or the
Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent.
SECTION 7.7. Replacement Securities.
-----------
If a Holder claims that a Security owned by it has been lost, destroyed or
wrongfully taken or if such Security is mutilated and is surrendered to the
Trust or in the case of the Capital Securities to the Property Trustee, the
Trust shall issue and the Property Trustee shall authenticate a replacement
Security if the Property Trustee's and the Trust's requirements, as the case may
be, are met. At the request of the Property Trustee or the Sponsor, an indemnity
bond may be required from the Holder which, in the judgment of the Property
Trustee, is sufficient to protect the Trustees, the Administrators, the Sponsor
or any authenticating agent from any loss which any of them may suffer if a
Security is replaced. The Trust may charge such Holder for its expenses in
replacing a Security.
Every replacement Security is an additional beneficial interest in the
Trust.
SECTION 7.8. Outstanding Capital Securities.
-----------
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding.
If a Capital Security is replaced or purchased pursuant to Section 7.7
hereof, it ceases to be outstanding unless the Property Trustee receives proof
satisfactory to it that the replaced, paid or purchased Capital Security is held
by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms of
this Declaration, they cease to be outstanding and Distributions on them shall
cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.9. Capital Securities in Treasury.
-----------
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Capital Securities owned by
the Trust, the Sponsor or an Affiliate of the Sponsor, as the case may be, shall
be disregarded and deemed not to be outstanding, except that for the purposes of
determining whether the Property Trustee shall be fully protected in relying on
any such direction, waiver or consent, only Securities which the Property
Trustee actually knows are so owned shall be so disregarded.
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SECTION 7.10. Temporary Securities.
------------
Until Definitive Capital Securities are ready for delivery, the Trust may
prepare and, in the case of the Capital Securities, the Property Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Trust
considers appropriate for temporary Securities. Without unreasonable delay, the
Trust shall prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
SECTION 7.11. Cancellation.
------------
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent shall
forward to the Property Trustee any Capital Securities surrendered to them for
registration of transfer, redemption, conversion, exchange or payment. The
Property Trustee shall promptly cancel all Capital Securities, surrendered for
registration of transfer, redemption, conversion, exchange, payment, replacement
or cancellation and shall dispose of canceled Capital Securities as the Trust
directs, provided that the Property Trustee shall not be obligated to destroy
Capital Securities. The Trust may not issue new Capital Securities to replace
Capital Securities that it has paid or that have been delivered to the Property
Trustee for cancellation or that any holder has converted.
SECTION 7.12. CUSIP.
------------
The Trust in issuing the Capital Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1. Dissolution and Termination of Trust.
-----------
(a) The Trust shall dissolve:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or liquidation
or its equivalent with respect to the Sponsor; or the revocation of the
Sponsor's charter and the expiration of 90 days after the date of revocation
without a reinstatement thereof;
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(iii) upon receipt by the Property Trustee of written notice from
the Holder of the Common Securities directing the Property Trustee to dissolve
the Trust (which direction is optional, and except as otherwise expressly
provided below, within the discretion of the Holder of the Common Securities)
and provided, further, that such direction (and the resulting distribution of a
Like Amount of the Debentures as provided in Annex I hereto) is conditioned on
(x) the receipt by the Sponsor or the Trust, as the case requires, of any
required regulatory approval, and (y) the Administrator's receipt of an opinion
of a tax counsel experienced in such matters (a "No Recognition Opinion"), which
opinion may rely on published rulings of the Internal Revenue Service, to the
effect that the Holders will not recognize any gain or loss for United States
federal income tax purposes as a result of the dissolution of the Trust (and the
resulting distribution of Debentures);
(iv) upon the entry of a decree of judicial dissolution of the Trust
by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been paid to the
Holders in accordance with the terms of the Securities;
(vi) upon the repayment of the Debentures or at such time as no
Debentures are outstanding; or
(vii) the expiration of the term of the Trust provided in Section
3.13.
(b) As soon as is practicable after the occurrence of an event referred to
in Section 8.1(a) and after satisfaction of liabilities to creditors, and
subject to the terms set forth in Annex I hereto, the Administrators (each of
whom is hereby authorized to take such action) shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1. Transfer of Securities.
-----------
(a) Securities may only be transferred, in whole or in part, only in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by law, any
transfer or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) The Sponsor may not transfer the Common Securities, except to the
extent pursuant to a transaction not prohibited by Article X of the Indenture.
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(c) The Administrators shall provide for the registration of Securities
and of the transfer of Securities, which will be effected without charge but
only upon payment (with such indemnity as the Administrators may require) in
respect of any tax or other governmental charges that may be imposed in relation
to it. Upon surrender for registration of transfer of any Securities, the
Administrators shall cause one or more new Securities to be issued in the name
of the designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Administrators and the Registrar duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Security surrendered for registration of transfer shall be canceled by the
Property Trustee in accordance with Section 7.11. A transferee of a Security
shall be entitled to the rights and subject to the obligations of a Holder
hereunder upon the receipt by such transferee of a Security. By acceptance of a
Security, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.2. Transfer Procedures and Restrictions.
-----------
(a) Transfer and Exchange of Definitive Capital Securities. When
Definitive Capital Securities are presented to the Registrar or co-Registrar:
(x) to register the transfer of such Definitive Capital Securities; or (y) to
exchange such Definitive Capital Securities for an equal number of Definitive
Capital Securities, the Registrar or co-registrar shall register the transfer or
make the exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive Capital Securities
surrendered for transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the
Administrators and the Registrar or co-registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and
(b) Restrictions on Transfer of a Definitive Capital Security for a
Beneficial Interest in a Global Capital Security. A Definitive Capital Security
may not be exchanged for a beneficial interest in a Global Capital Security
except upon satisfaction of the requirements set forth below. Upon receipt by
the Property Trustee of a Definitive Capital Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Registrar and the Administrators, together with written instructions directing
the Property Trustee to make, or to direct the Clearing Agency to make, an
adjustment on its books and records with respect to the appropriate Global
Capital Security to reflect an increase in the number of the Capital Securities
represented by such Global Capital Security, then the Property Trustee shall
cancel such Definitive Capital Security and cause, or direct the Clearing Agency
to cause, the aggregate number of Capital Securities represented by the
appropriate Global Capital Security to be increased accordingly. If no Global
Capital Securities are then outstanding, the Trust shall issue and the Property
Trustee shall authenticate, upon written order of any Administrator, an
appropriate number of Capital Securities in global form.
(c) Transfer and Exchange of Global Capital Securities. Subject to Section
9.02(f), the transfer and exchange of Global Capital Securities or beneficial
interests therein shall be effected through the Clearing Agency, in accordance
with this Declaration (including applicable restrictions on transfer set forth
herein, if any) and the procedures of the Clearing Agency therefor.
39
(d) Transfer of a Beneficial Interest in a Global Capital Security for a
Definitive Capital Security.
(i) Subject to Section 7.4, any Person having a beneficial interest
in a Global Capital Security may upon request, but only upon 20 days prior
notice to the Property Trustee, and if accompanied by the information specified
below, exchange such beneficial interest for a Definitive Capital Security
representing the same number of Capital Securities. Upon receipt by the Property
Trustee from the Clearing Agency or its nominee on behalf of any Person having a
beneficial interest in a Global Capital Security of written instructions or such
other form of instructions as is customary for the Clearing Agency or the Person
designated by the Clearing Agency as having such a beneficial interest in a
Global Capital Security and a certification from the transferor (in a form
substantially similar to that attached hereto as the "Form of Assignment" in
Exhibit A-1), which may be submitted by facsimile, then the Property Trustee
will cause the aggregate number of Capital Securities represented by Global
Capital Securities to be reduced on its books and records and, following such
reduction, the Trust will execute and the Property Trustee will authenticate and
make available for delivery to the transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this Section 9.2(d)
shall be registered in such names and in such denominations as the Clearing
Agency, pursuant to instructions from its Participants or indirect participants
or otherwise, shall instruct the Property Trustee in writing. The Property
Trustee shall deliver such Capital Securities to the Persons in whose names such
Capital Securities are so registered in accordance with such instructions of the
Clearing Agency.
(e) Restrictions on Transfer and Exchange of Global Capital Securities.
Notwithstanding any other provisions of this Declaration (other than the
provisions set forth in subsection (f) of this Section 9.2), a Global Capital
Security may not be transferred as a whole except by the Clearing Agency to a
nominee of the Clearing Agency or another nominee of the Clearing Agency or by
the Clearing Agency or any such nominee to a successor Clearing Agency or a
nominee of such successor Clearing Agency.
(f) Authentication of Definitive Capital Securities. If at any time:
(i) the Clearing Agency notifies the Sponsor that it is unwilling or
unable to continue as Clearing Agency for such Global Capital Security or if at
any time such Clearing Agency ceases to be a "clearing agency" registered under
the Exchange Act and a clearing agency is not appointed by the Sponsor within 90
days of such notice or within 90 days after the Sponsor becomes aware of such
non-registration,
(ii) there occurs a Default or an Event of Default which is
continuing, or
(iii) the Trust, in its sole discretion, notifies the Property Trustee
in writing that it elects to cause the issuance of Definitive Capital Securities
under this Declaration, then the Trust will execute, and the Property Trustee,
upon receipt of a written order of the Trust signed by one
40
Administrator requesting the authentication and delivery of Definitive Capital
Securities to the Persons designated by the Trust, will authenticate and make
available for delivery Definitive Capital Securities, equal in number to the
number of Capital Securities represented by the Global Capital Securities, in
exchange for such Global Capital Securities.
(g) Cancellation or Adjustment of Global Capital Security. At such time as
all beneficial interests in a Global Capital Security have either been exchanged
for Definitive Capital Securities to the extent permitted by this Declaration or
redeemed, converted, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be returned to the Clearing
Agency for cancellation or retained and canceled by the Property Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Capital
Security is exchanged for Definitive Capital Securities, Capital Securities
represented by such Global Capital Security shall be reduced and an adjustment
shall be made on the books and records of the Property Trustee (if it is then
the custodian for such Global Capital Security) with respect to such Global
Capital Security, by the Property Trustee to reflect such reduction.
(h) Obligations with Respect to Transfers and Exchanges of Capital
Securities.
(i) To permit registrations of transfers and exchanges, the Trust
shall execute and the Property Trustee shall authenticate Definitive Capital
Securities and Global Capital Securities at the Registrar's or co-Registrar's
request in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Trust or the Sponsor
may require) in respect of any tax or other governmental charge that may be
imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) Capital Securities during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Capital Securities for
redemption and ending at the close of business on the day of such mailing; or
(b) any Capital Security so selected for redemption in whole or in part, except
the unredeemed portion of any Capital Security being redeemed in part.
(iv) Prior to the due presentation for registrations of transfer of
any Capital Security, the Trust, the Property Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose name a
Capital Security is registered as the owner of such Capital Security for the
purpose of receiving Distributions on such Capital Security (subject to Section
2(c) of Annex I hereto) and for all other purposes whatsoever, and none of the
Trust, the Property Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary.
(v) All Capital Securities issued upon any transfer or exchange
pursuant to the terms of this Declaration shall evidence the same security and
shall be entitled to the same benefits under this Declaration as the Capital
Securities surrendered upon such transfer or exchange.
41
(i) No Obligation of the Property Trustee and Registrar.
(i) The Property Trustee shall have no responsibility or obligation
to any beneficial owner of a Global Capital Security, a Participant in the
Clearing Agency or other Person with respect to the accuracy of the records of
the Clearing Agency or its nominee or of any Participant thereof, with respect
to any ownership interest in the Capital Securities or with respect to the
delivery to any Participant, beneficial owner or other Person (other than the
Clearing Agency) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Capital Securities. All
notices and communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or made only to or
upon the order of the registered Holders (which shall be the Clearing Agency or
its nominee in the case of a Global Capital Security). The rights of beneficial
owners in any Global Capital Security shall be exercised only through the
Clearing Agency subject to the applicable rules and procedures of the Clearing
Agency. The Property Trustee may conclusively rely and shall be fully protected
in relying upon information furnished by the Clearing Agency or any agent
thereof with respect to its Participants and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no obligation or
duty to monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Declaration or under applicable law with respect to
any transfer of any interest in any Capital Security (including any transfers
between or among Clearing Agency Participants or beneficial owners in any Global
Capital Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
SECTION 9.3. Book Entry Interests.
-----------
Global Capital Securities shall initially be registered on the books and
records of the Trust in the name of Cede & Co., the nominee of the Clearing
Agency, and no Capital Security Beneficial Owner will receive a Definitive
Capital Security representing such Capital Security Beneficial Owner's interests
in such Global Capital Securities, except as provided in Sections 7.4 and 9.2.
Unless and until fully registered Definitive Capital Securities certificates
have been issued to the Capital Security Beneficial Owners pursuant to Sections
7.4 and 9.2:
(a) the provisions of this Section 9.3 shall be in full force and effect;
(b) the Trust, the Trustees and the Administrators shall be entitled to
deal with the Clearing Agency for all purposes of this Declaration (including
the payment of Distributions on the Global Capital Securities and receiving
approvals, votes or consents hereunder) as the Holder of the Capital Securities
and the sole holder of the Global Certificates and shall have no obligation to
the Capital Security Beneficial Owners;
42
(c) to the extent that the provisions of this Section 9.3 conflict with
any other provisions of this Declaration, the provisions of this Section 9.3
shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and the
Clearing Agency will receive all Distributions pursuant to the terms of this
Declaration and payments of Distributions on the Global Certificates to such
Clearing Agency Participants will be made by the Clearing Agency in accordance
with its established procedures. DTC will make book entry transfers among the
Clearing Agency Participants.
SECTION 9.4. Notices to Clearing Agency.
-----------
Whenever a notice or other communication to the Capital Security Holders is
required under this Declaration, the Trustees and the Administrators shall give
all such notices and communications specified herein to be given to the Holders
of Global Capital Securities to the Clearing Agency, and shall have no notice
obligations to the Capital Security Beneficial Owners.
SECTION 9.5. Appointment of Successor Clearing Agency.
-----------
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Capital Securities, the Administrators may, in
their sole discretion, appoint a successor Clearing Agency with respect to such
Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1. Liability.
------------
(a) Except as expressly set forth in this Declaration, the Securities
Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities which
shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any
deficit upon dissolution of the Trust or otherwise.
(b) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
the Common Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of
43
Delaware; provided, however, that the Sponsor shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of
the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2. Exculpation.
------------
(a) Except as otherwise specifically provided in this Declaration, no
Indemnified Person shall be liable, responsible or accountable in damages or
otherwise to the Trust or any Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and, if selected by such Indemnified Person, has been selected by
such Indemnified Person with reasonable care on behalf of the Trust, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of Securities
might properly be paid.
SECTION 10.3. Fiduciary Duty.
------------
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Person and any Indemnified Person; or
44
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner that
is, or provides terms that are, fair and reasonable to the Trust or any Holder
of Securities, the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case the relative
interest of each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles. In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors as
it desires, including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the Trust or any
other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or by
applicable law.
SECTION 10.4. Indemnification.
------------
(a) (i) The Sponsor shall indemnify, to the full extent permitted by law,
any Company Indemnified Person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorney's fees and
expenses), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted by law,
any Company Indemnified Person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment
45
in its favor by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorney's fees and expenses) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Trust and except that no
such indemnification shall be made in respect of any claim, issue or matter as
to which such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability) in
defense of any action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a), or in defense of any claim, issue or matter therein, he
shall be indemnified, to the fullest extent permitted by law, against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Sponsor only as
authorized in the specific case upon a determination that indemnification of the
Company Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Administrators by a majority vote of a
Quorum consisting of such Administrators who were not parties to such action,
suit or proceeding, (2) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion, or (3) by the Common Security
Holder of the Trust.
(v) Expenses (including attorney's fees and expenses) incurred by
a Company Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 10.4(a) shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Administrators by a majority vote of a Quorum of
disinterested Administrators, (ii) if such a Quorum is not obtainable, or, even
if obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion or (iii) the Common Security
Holder of the Trust, that, based upon the facts known to the Administrators,
counsel or the Common Security Holder at the time such determination is made,
such Company Indemnified Person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such Company
Indemnified Person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the
Administrators, independent
46
legal counsel or Common Security Holder reasonably determine that such person
deliberately breached his duty to the Trust or its Common or Capital Security
Holders.
(vi) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 10.4(a) shall not
be deemed exclusive of any other rights to which those seeking indemnification
and advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a
contract between the Sponsor and each Company Indemnified Person who serves in
such capacity at any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or obligations
then existing.
(vii) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any person who is or was a Company Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 10.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(ix) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 10.4(a), unless otherwise provided when
authorized or ratified, shall continue as to a person who has ceased to be a
Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) To the fullest extent permitted by law, the Sponsor agrees to
indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii) any
Affiliate of the Property Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents of the Property Trustee and the
Delaware Trustee (each of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any and all loss, liability, damage, claim or expense
including taxes (other than taxes based on the income of such Fiduciary
Indemnified Person) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its
47
powers or duties hereunder. The obligation to indemnify as set forth in this
Section 10.4(b) shall survive the dissolution of the Trust and the termination
and discharge of this Declaration.
SECTION 10.5. Outside Businesses.
------------
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee (subject to Section 5.3(c)), may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
SECTION 10.6. Compensation; Fees.
------------
The Sponsor agrees:
(a) to pay to the Trustees and the Administrators from time to time such
compensation for all services rendered by them hereunder as the parties shall
agree from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and
(b) except as otherwise expressly provided herein, to reimburse the
Trustees and the Administrators upon request for all reasonable expenses,
disbursements and advances incurred or made by the Trustees or the
Administrators in accordance with any provision of this Declaration (including
the reasonable compensation and the expenses and disbursements of their
respective agents and counsel), except any such expense, disbursement or advance
as may be attributable to their respective negligence or bad faith.
The provisions of this Section 10.6 shall survive the dissolution of the
Trust and the termination of this Declaration and the removal or resignation of
any Trustee or Administrator.
No Trustee may claim any lien or charge on any property of the Trust as a
result of any amount due pursuant to this Section 10.6.
48
ARTICLE XI
ACCOUNTING
SECTION 11.1. Fiscal Year.
------------
The fiscal year ("Fiscal Year") of the Trust shall end on December 31 of
each year, or such other year as is required by the Code.
SECTION 11.2. Certain Accounting Matters.
------------
(a) At all times during the existence of the Trust, the Administrators
shall keep, or cause to be kept, full books of account, records and supporting
documents, which shall reflect in reasonable detail, each transaction of the
Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Administrators.
(b) The Administrators shall cause to be prepared and delivered to each of
the Holders, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the Trust
as of the end of such Fiscal Year, and the related statements of income or loss;
(c) The Administrators shall cause to be duly prepared and delivered to
each of the Holders, any annual United States federal income tax information
statement required by the Code, containing such information with regard to the
Securities held by each Holder as is required by the Code and the Treasury
Regulations. Notwithstanding any right under the Code to deliver any such
statement at a later date, the Administrators shall endeavor to deliver all such
information statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Administrators shall cause to be duly prepared and filed with the
appropriate taxing authority, an annual United States federal income tax return,
on a Form 1041 or such other form required by United States federal income tax
law, and any other annual income tax returns required to be filed by the
Administrators on behalf of the Trust with any state or local taxing authority.
SECTION 11.3. Banking.
------------
The Trust shall maintain one or more bank accounts in the name and for the
sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account provided that such funds need not be segregated
from other funds except to the extent required by mandatory provisions of law.
The sole signatories for such accounts shall
49
be designated by the Administrators; provided, however, that the Property
Trustee shall designate the signatories for the Property Trustee Account.
SECTION 11.4. Withholding.
------------
The Trust and the Administrators shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Administrators shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to Distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
Distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1. Amendments.
------------
(a) Except as otherwise provided in this Declaration or by any applicable
terms of the Securities, this Declaration may only be amended by a written
instrument approved and executed by:
(i) the Administrators (or if there are more than two
Administrators a majority of the Administrators);
(ii) the Property Trustee;
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee; and
(iv) the Sponsor.
(b) No amendment shall be made, and any such purported amendment shall be
void and ineffective:
(i) unless, the Property Trustee shall have first received an
Officer's Certificate from each of the Trust and the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration (including the
terms of the Securities); and
50
(ii) unless the Property Trustee shall have received an Opinion of
Counsel (who may be counsel to the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this Declaration (including the
terms of the Securities), provided, however, that the Property Trustee and the
Delaware Trustee (to the extent the Delaware Trustee is required to sign such
amendment) shall not be required to sign any such amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee or the
Delaware Trustee, as the case may be, under the Declaration or otherwise; and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act;
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act; or
(D) result in the Holders recognizing gain or loss for federal
income tax purposes.
(c) At such time after the Trust has issued any Securities, any amendment
that would adversely affect, in any material respect, the rights, privileges or
preferences of any Holder of Securities may be effected only as set forth in the
terms of such Securities;
(d) Sections 9.1(b), 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article Four shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities;
(f) The rights of the holders of the Common Securities under Article Five
to increase or decrease the number of, and appoint and remove Trustees and
Administrators shall not be amended without the consent of the Holders of a
Majority in liquidation amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any provision in
this Declaration that may be inconsistent with any other provision of this
Declaration or to make any other provisions with respect to matters or questions
arising under this Declaration which shall not be inconsistent with the other
provisions of the Declaration; or
51
(ii) modify, eliminate or add to any provisions of the Declaration
to such extent as shall be necessary to ensure that the Trust will be classified
for United States federal income tax purposes as a grantor trust at all times
that any Securities are outstanding or to ensure that the Trust will not be
required to register as an Investment Company under the Investment Company Act;
provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interest of the Holders of the
Securities.
(h) This Declaration may be amended by the Trustees, the Administrators
and the Sponsor if:
(i) the Holders of a Majority in liquidation amount of the Securities
consent to such amendment; and
(ii) the Trustees and Administrators have received an opinion of
nationally recognized independent counsel experienced in such matters to the
effect that such amendment or the exercise of any power granted to the Trustees
or Administrators in accordance with such amendment will not affect the Trust's
status as a grantor trust for United States federal income tax purposes or the
Trust's exemption from status as an Investment Company under the Investment
Company Act, provided, that without the consent of each Holder of Securities,
this Declaration may not be amended to:
(x) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date; or.
(y) restrict the right of a Holder of Securities to institute
suit for the enforcement of any such payment on or after such date.
SECTION 12.2. Meetings of the Holders; Action by Written Consent.
------------
(a) Meetings of the Holders of any class of Securities may be called at any
time by the Administrators (or as provided in the terms of the Securities) to
consider and act on any matter on which Holders of such class of Securities are
entitled to act under the terms of this Declaration, the terms of the Securities
or the rules of any stock exchange on which the Capital Securities are listed or
admitted for trading. The Administrators shall call a meeting of the Holders of
such class if directed to do so by the Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be given by delivering
to the Administrators one or more notices in a writing stating that the signing
Holders of Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders calling a
meeting shall specify in writing the Securities held by the Holders exercising
the right to call a meeting and only those Securities specified shall be counted
for purposes of determining whether the required percentage set forth in the
second sentence of this paragraph has been met.
52
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders
of Securities having a right to vote thereat at least seven days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders is permitted or required under this Declaration or the
rules of any stock exchange on which the Capital Securities are listed or
admitted for trading, such vote, consent or approval may be given at a meeting
of the Holders. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing setting forth
the action so taken is signed by the Holders of Securities owning not less than
the minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders having a
right to vote thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders entitled to vote who have
not consented in writing. The Administrators may specify that any written ballot
submitted to the Security Holder for the purpose of taking any action without a
meeting shall be returned to the Trust within the time specified by the
Administrators;
(ii) each Holder may authorize any Person to act for it by proxy on
all matters in which a Holder is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall
be valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrators or by such other Person that the Administrators may designate;
and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed or trading otherwise
provides, the Administrators, in their sole discretion, shall establish all
other provisions relating to meetings of Holders, including notice of the time,
place or purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any such
right to vote.
53
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND
DELAWARE TRUSTEE
SECTION 13.1. Representations and Warranties of Property Trustee.
------------
The Trustee that acts as initial Property Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
Successor Property Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee (with appropriate changes to clause (a) below) that:
(a) The Property Trustee is a Massachusetts banking corporation with trust
powers and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate action on
the part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) The execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the charter or
by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with or
notice to, any Massachusetts or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.
SECTION 13.2. Representations and Warranties of Delaware Trustee.
------------
The Trustee that acts as initial Delaware Trustee represents and warrants
to the Trust and to the Sponsor at the date of this Declaration, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
54
(b) The execution, delivery and performance by the Delaware Trustee of this
Declaration has been duly authorized by all necessary corporate action on the
part of the Delaware Trustee. This Declaration has been duly executed and
delivered by the Delaware Trustee and constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution, delivery
or performance by the Delaware Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a resident of the State
of Delaware or, if not a natural person, an entity which has its principal place
of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. Notices.
------------
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrators at the Trust's
mailing address set forth below (or such other address as the Trust may give
notice of to the Holders and the Property Trustee):
LIFE Financial Capital Trust
c/o LIFE Financial Corporation
10540 North Magnolia Avenue, Unit B
Riverside, California 92505
Attention: Chief Executive Officer
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders):
Delaware Trust Capital Management
3 Beaver Valley Road, FC 5-4-2-6
Wilmington, Delaware 19803
Facsimile: (302) 421-7387
Attention: Corporate Trust Administration
55
(c) if given to the Property Trustee, at the Property Trustee's mailing
address set forth below (or such other address as the Property Trustee may give
notice of to the Holders):
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Facsimile: (617) 644-5372
(d) if given to the Holder of the Common Securities, at the mailing address
of the Sponsor set forth below (or such other address as the Holder of the
Common Securities may give notice to the Trust and the Property Trustee):
LIFE Financial Corporation
10540 North Magnolia Avenue, Unit B
Riverside, California 92505
Attention: Chief Executive Officer
(e) if given to any other Holder, at the address set forth on the books and
records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2. Governing Law.
------------
This Declaration and the rights of the parties hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware and all
rights and remedies shall be governed by such laws without regard to principles
of conflict of laws of the State of Delaware or any other jurisdiction that
would call for the application of the law of any jurisdiction other than the
State of Delaware; provided, however, that there shall not be applicable to the
parties hereunder or this Declaration any provision of the laws (statutory or
common) of the State of Delaware (other than the Business Trust Act) pertaining
to trusts that relate to or regulate, in a manner inconsistent with the terms
hereof (A) the filing with any court or governmental body or agency of Trustee
accounts or schedules of Trustee fees and charges, (B) affirmative requirements
to post bonds for Trustees, officers, agents or employees of a trust, (C) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (D) fees or
other sums payable to Trustees, officers, agents or employees of a trust, (E)
the allocation of receipts and expenditures to income or principal, (F)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding or investing Trust assets or (G) the establishment of
fiduciary or other standards of responsibility or limitations on the acts or
powers of trustees that are inconsistent with the
56
limitations or liabilities or authorities and powers of the Trustees hereunder
as set forth or referenced in this Declaration. Section 3540 of Title 12 of the
Delaware Code shall not apply to the Trust.
SECTION 14.3. Intention of the Parties.
------------
It is the intention of the parties hereto that the Trust be classified for
United States federal income tax purposes as a grantor trust. The provisions of
this Declaration shall be interpreted to further this intention of the parties.
The parties hereto agree, and any Holder by the purchase of a Trust Security
shall be deemed to have agreed, to treat in all tax and accounting filings and
reports (i) the Trust as a grantor trust and (ii) the Debentures as
indebtedness.
SECTION 14.4. Headings.
------------
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5. Successors and Assigns.
------------
Whenever in this Declaration any of the parties hereto is named or referred
to, the successors and assigns of such party shall be deemed to be included, and
all covenants and agreements in this Declaration by the Sponsor, the Trustees
and the Administrators shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6. Partial Enforceability.
------------
If any provision of this Declaration, or the application of such provision
to any Person or circumstance, shall be held invalid, the remainder of this
Declaration, or the application of such provision to Persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 14.7. Counterparts.
------------
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
the Sponsor, each of the Trustees and each of the Administrators to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
57
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
____________________________________________________
Daniel L. Perl, in his capacity as Administrator
____________________________________________________
L. Bruce Mills, Jr., in his capacity as Administrator
Delaware Trust Capital Management
as Delaware Trustee
By: _______________________________________________
Authorized Signatory
State Street Bank and Trust Company, as Property
Trustee
By: _______________________________________________
LIFE Financial Corporation, as Sponsor
By: _______________________________________________
Daniel L. Perl
President and Chief Executive Officer
__________________________________
___________, solely to acknowledge the
restatement and amendment of the Original
Declaration and his removal from his
position as Initial Trustee pursuant to
Section 5.1(c).
58
ANNEX I
TERMS OF
____% CONVERTIBLE TRUST PREFERRED SECURITIES
___% CONVERTIBLE TRUST COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust,
dated as of ________________, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the
Prospectus):
1. Designation and Number.
(a) Capital Securities. ____________ ___% Convertible Trust Preferred
------------------
Securities of the Trust, with an aggregate liquidation amount with respect to
the assets of the Trust of ________ Million dollars ($___________), and each
with a liquidation amount with respect to the assets of the Trust of $__ per
Security, are hereby designated for the purposes of identification only as
"____% Convertible Trust Preferred Securities" (the "Capital Securities"). The
certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or practice
or to conform to the rules of any stock exchange on which the Capital Securities
are listed.
(b) Common Securities. _________ ___% Convertible Trust Common
-----------------
Securities of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of _____________________ dollars ($____________) and a
liquidation amount with respect to the assets of the Trust of $__ per Security,
are hereby designated for the purposes of identification only as "Common
Securities" (the "Common Securities"). The certificates evidencing the Common
Securities shall be substantially in the form of Exhibit B-1 to the Declaration,
with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at a rate per
annum of ____% (the "Coupon Rate") of the liquidation amount of $___ per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one quarterly period will bear additional distributions
thereon compounded quarterly at the Coupon Rate (to the extent permitted by
applicable law). The term "Distributions", as used herein, includes
distributions of any such interest, including any Additional Interest and
Compounded Interest (each as defined in the Indenture) unless otherwise stated.
A Distribution is payable only to the extent that payments are made in respect
of the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds on hand legally available therefor.
59
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided for,
from __________, 1997, and will be payable quarterly in arrears on March 15,
June 15, September 15 and December 15 of each year, commencing on March 15, 1998
(each, a "Distribution Date"), except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and for any period less than a full calendar month on the
basis of the actual number of days elapsed in such 30-day month. As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period at any time and from time to time on
the Debentures for a period not exceeding 20 consecutive quarters, including the
first such quarter during such period (each an "Extension Period"), during which
Extension Period no interest shall be due and payable on the Debentures,
provided that no Extension Period shall end on a day other than an interest
payment date for the Debentures or shall extend beyond the Maturity Date of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, Distributions will continue to accumulate with
additional Distributions thereon (to the extent permitted by applicable law but
not at a rate greater than the rate at which interest is then accruing on the
Debentures) at the Coupon Rate compounded quarterly during any such Extension
Period. Prior to the termination of any such Extension Period, the Debenture
Issuer may further defer payments of interest by further extending such
Extension Period; provided that such Extension Period, together with all such
previous and further extensions within such Extension Period, may not exceed 20
consecutive quarters, including the first quarter during such Extension Period,
or extend beyond the Maturity Date of the Debentures. Upon the termination of
any Extension Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the fifteenth
day of the month in which the relevant Distribution Date occurs, which
Distribution Dates correspond to the interest payment dates on the Debentures.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment in respect of the Capital Securities will be made
as follows: (i) if the Capital Securities are held in global form by a Clearing
Agency (or its nominee), in accordance with the procedures of the Clearing
Agency, and (ii) if the Capital Securities are held in definitive form, by check
mailed to the address of the holder thereof entitled thereto as reflected in the
records of the Registrar, unless otherwise agreed by the Trust. The relevant
record dates for the Common Securities shall be the same as the record dates for
the Capital Securities. Distributions payable on any Securities that are not
punctually paid on any Distribution Date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures, will cease to be payable
to the Holder on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding 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
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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.
(d) In the event of an election by a Holder to exchange its Securities
through the Conversion Agent for Debentures and convert such Debentures into
Common Stock pursuant to the terms of the Securities as set forth in this Annex
I to the Declaration, accrued Distributions will not be paid on Securities that
are converted, nor will any payment, allowance or adjustment be made for
accumulated and unpaid Distributions on such Securities, whether or not in
arrears, on converted Securities except under the limited circumstances
described in paragraph 5(b) and except that if any Security is converted on or
after a record date for payment of Distributions thereon, the Holder of
Securities at the close of business on any record date for the payment of
Distributions will be entitled to receive the Distribution payable on such
Securities on the corresponding payment date notwithstanding the conversion of
such Securities into Common Stock following such record date.
(e) In the event that there is any money or other property held by or
for the Trust on a Distribution Date that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any dissolution of the Trust or the Holders of the Common
Securities otherwise give notice of their election to dissolve the Trust
pursuant to and in compliance with the provisions of Section 8.1(a)(iii) of the
Declaration, the Trust shall be liquidated by the Administrators as
expeditiously as practicable by distributing, after paying or making reasonable
provision to pay all claims and obligations of the Trust in accordance with
Section 3808(e) of the Business Trust Act, to the Holders a Like Amount (as
defined below) of the Debentures, unless such distribution is determined by the
Property Trustee not to be practicable, in which event such Holders will be
entitled to receive out of the assets of the Trust legally available for
distribution to Holders, after paying or making reasonable provision to pay all
claims and obligations of the Trust in accordance with Section 3808(e) of the
Business Trust Act, an amount equal to the aggregate of the liquidation amount
of $___ per Security plus accumulated and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be paid in accordance with their terms and (ii) with respect to a
distribution of Debentures upon the liquidation of the Trust, Debentures having
a principal amount equal to the Liquidation Amount of the Securities of the
Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets on hand legally available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Capital Securities shall be paid on a Pro Rata
basis.
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4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or upon prepayment (either at the option of the Debenture Issuer or
pursuant to a Special Event, as described below), the proceeds from such
repayment shall be simultaneously applied by the Property Trustee (subject to
the Property Trustee having received notice no later than 45 days prior to such
repayment) to redeem a Like Amount of the Securities at a redemption price equal
to (i) in the case of the repayment of the Debentures at maturity, the Maturity
Redemption Price (as defined below), (ii) in the case of the optional prepayment
of the Debentures upon the occurrence and continuation of a Special Event, the
Special Event Redemption Price (as defined below) and (iii) in the case of the
optional prepayment of the Debentures other than as a result of the occurrence
and continuance of a Special Event, the Optional Redemption Price (as defined
below). The Maturity Redemption Price, the Special Event Redemption Price and
the Optional Redemption Price are referred to collectively as the "Redemption
Price". Holders will be given not less than 30 nor more than 60 days notice of
such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued and unpaid interest on the Debentures as of the maturity date thereof.
(ii) In the case of an optional redemption, if fewer than all
the outstanding Securities are to be so redeemed, the Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be determined
as described in Section 4(f)(ii) below. Upon the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction, the Debentures
thereafter will be subject to optional repayment, in whole, but not in part, on
or after ____________, ____ (the "Initial Optional Redemption Date").
The Debenture Issuer shall have the right (subject to the conditions in
the Indenture) to elect to prepay the Debentures in whole or in part at any time
on or after the Initial Optional Redemption Date, upon not less than 30 days and
not more than 60 days notice, at the Optional Redemption Price and, simultaneous
with such prepayment, to cause a Like Amount of the Securities to be redeemed by
the Trust at the Optional Redemption Price on a Pro Rata basis. "Optional
Redemption Price" shall mean a price equal to 100% of the liquidation amount of
Debentures to be prepaid plus accumulated and unpaid interest thereon, if any,
to the date of such prepayment.
(c) If at any time a Tax Event, a Regulatory Capital Event or an
Investment Company Event (each as defined below, and each a "Special Event")
occurs, the Debenture Issuer shall have the right (subject to the conditions set
forth in the Indenture) at any time, upon not less than 30 nor more than 60 days
notice, to prepay the Debentures in whole, but not in part, within the 90 days
following the occurrence of such Special Event (the "90 Day Period"), and,
simultaneous with such prepayment, to cause a Like Amount of the Securities to
be redeemed by the Trust at the Special Event Redemption Price on a Pro Rata
basis.
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A "Tax Event" means (a) the receipt by the Debenture Issuer and the Trust
of an opinion of Muldoon, Murphy & Faucette or any other nationally recognized
tax counsel experienced in such matters, to the effect that as a result of (i)
any amendment to, clarification of, 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, (ii)
any amendment to, clarification of, or change in, an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination or the publication of an explanation of legislation by the staff
of the Joint Committee on Taxation), (iii) any interpretation or pronouncement
that provides for a position with respect to such laws or regulations that
differs from the theretofore generally accepted position or (iv) any judicial
decision, administrative pronouncement, ruling, regulatory procedure, notice,
announcement (including any notice or announcement of intent to adopt procedures
or regulations) or any other actions taken by any governmental agency or
regulatory authority, which amendment or change is enacted, promulgated, issued
or announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case, on or after the Issue Date, there is more
than an insubstantial risk that (x) within 90 days the Trust is or will be
subject to United States federal income tax with respect to income received or
accrued on the Debentures, (y) interest payable by the Debenture Issuer on the
Debentures is not or will not be deductible by the Debenture Issuer, in whole or
in part, for United States federal income tax purposes, or (z) within 90 days
the Trust is or will be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, or (b) a proposed audit adjustment by a
taxing authority which, if sustained, would result in any of the events
described in clauses (x), (y) or (z) above.
A "Regulatory Capital Event" means the receipt by the Debenture Issuer
and the Trust of an opinion of Muldoon, Murphy & Faucette or any other
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 the Office of Thrift Supervision,
the Board of Governors of the Federal Reserve System (the "Federal Reserve") or
any other federal bank regulatory agency or (b) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the Issue Date, (i) the Debenture Issuer is or
within 90 days will be subject to capital adequacy requirements and such
requirements do not or will not permit the Capital Securities to constitute,
subject to limitations on inclusion of the Capital Securities as Tier 1 capital
by the Federal Reserve capital guidelines in effect as of the date of the
Prospectus relating to the Subscription Offering, Tier 1 capital (or its then-
equivalent) or (ii) the amount of net proceeds received from the sale of the
Capital Securities and contributed by the Debenture Issuer to its subsidiary,
Life Bank, does not or within 90 days will not constitute Tier 1 (core) capital
(or its then-equivalent).
An "Investment Company Event" means the receipt by the Debenture Issuer
and the Trust of an opinion of Muldoon, Murphy & Faucette or any other
nationally recognized counsel experienced in such matters, to the effect that
(a) as a result of any amendment to, or change
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(including any announced prospective change) in, the laws or any regulations
thereunder of the United States or any political subdivision or authority
thereof or therein or (b) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on or after
the Issue Date, there is more than an insubstantial risk that the Trust is or
within 90 days will be considered an Investment Company that is required to be
registered under the Investment Company Act.
"Special Event Redemption Price" shall mean, with respect to a redemption
of Securities, a price equal to 100% of the principal of a Like Amount of
Debentures to be prepaid plus accumulated and unpaid interest thereon, if any,
to the date of such prepayment.
(d) On and from the date fixed by the Administrators for any
distribution of Debentures and liquidation of the Trust: (i) the Securities will
no longer be deemed to be outstanding and (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of the
Capital Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and any
certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
(e) The Trust may not redeem fewer than all the outstanding Securities
unless all accumulated and unpaid Distributions have been paid on all Securities
for all quarterly Distribution periods terminating on or before the date of
redemption.
(f) The procedure with respect to redemptions of, or distributions of
Debentures in exchange for, the Securities, shall be as follows: (i) Notice of
any redemption of, or notice of distribution of Debentures in exchange for, the
Securities (a "Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder to be redeemed or exchanged not fewer than 30 nor more than
60 days before the date fixed for redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for prepayment of the Debentures.
The Redemption/Distribution Notice shall identify the Securities to be redeemed
or exchanged and shall state:
(A) the redemption/distribution date;
(B) the Redemption Price; provided, however, if the
Redemption Price is not known at the time the Redemption/Distribution Notice is
sent, such notice shall set forth the manner of calculation thereof;
(C) the name and address of the Paying Agent;
(D) that Securities called for redemption or exchange must
be surrendered to the Paying Agent to collect the Redemption Price;
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(E) if fewer than all of the outstanding Securities are to
redeemed or exchanged, the identification and amounts of the particular
Securities to be redeemed or exchanged, as the case may be;
(F) in case any Security is to be redeemed or exchanged in
part only, the portion of the principal amount to be redeemed or exchanged, and
that on and after the date fixed for exchange or redemption, upon surrender of
such Security, a new Security or Securities in principal amount equal to the
portion thereof not redeemed or exchanged shall be issued;
(G) that, unless the Debenture Issuer defaults in paying the
Redemption Price, any distributions on the Securities called for redemption will
cease to accrue on and after such redemption date; and
(H) the CUSIP number, if any, of the Securities called for
redemption or exchange.
For purposes of the calculation of the date of redemption or exchange and
the dates on which notices are given pursuant to this Section 4(f)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders. Each
Redemption/Distribution Notice shall be addressed to the Holders of Securities
at the address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of
either thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from
each Holder of Securities, it being understood that, in respect of Capital
Securities registered in the name of and held of record by the Clearing Agency
or its nominee (or any successor Clearing Agency or its nominee), the
distribution of the proceeds of such redemption will be made to the Clearing
Agency and disbursed by such Clearing Agency in accordance with the procedures
applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, (which notice will be irrevocable), then (A)
with respect to Capital Securities issued in book-entry form, by 12:00 noon,
Eastern time, on the redemption date, provided that the Debenture Issuer has
paid the Property Trustee a sufficient amount of cash in connection with the
related prepayment or maturity of the Debentures by 10:00 a.m., Eastern time, on
the maturity date or the date of prepayment, as the case requires, the Property
Trustee will deposit irrevocably with the Clearing Agency or its nominee (or
successor Clearing Agency or its nominee) funds sufficient to pay the applicable
Redemption Price with respect to such Capital Securities, and (B) with respect
to Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a sufficient
amount of cash in connection with the related prepayment or maturity of the
Debentures, the Property Trustee will pay the relevant Redemption Price to the
Holders of such Securities against presentation to the Paying Agent of the
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certificates therefor. If a Redemption/Distribution Notice shall have been given
and funds deposited as required, if applicable, then immediately prior to the
close of business on the date of such deposit, or on the redemption date, as
applicable, Distributions will cease to accumulate on the Securities so called
for redemption and all rights of Holders so called for redemption will cease,
except the right of the Holders of such Securities to receive the Redemption
Price, but without interest on such Redemption Price, and such Securities shall
cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of Holders of
Securities on the close of business on a regular record date in respect of a
Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrators nor the Trust shall be required to register or
cause to be registered the transfer of (i) any Securities beginning on the
opening of business 15 days before the day of mailing of a notice of redemption
or any notice of selection of Securities for redemption or (ii) any Securities
selected for redemption except the unredeemed portion of any Security being
redeemed. If any date fixed for redemption of Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price in respect
of any Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Securities Guarantee, Distributions on such Securities will continue to
accumulate from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital Securities, the
Clearing Agency or its nominee (or any successor Clearing Agency or its nominee)
if the Global Certificates have been issued or, if Definitive Capital Security
Certificates have been issued, to the Holder thereof, and (B) in respect of the
Common Securities, to the Holder thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws and banking laws), provided
the acquiror is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from time
to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5. Conversion Rights.
Holders of Securities shall have the right at any time prior to 5:00 p.m.
(Eastern time) on the earlier of (i) the Business Day immediately preceding the
date of repayment of such Securities, whether at maturity or upon redemption,
and (ii) the Conversion Termination Date, if any, to cause the Conversion Agent
to exchange Securities, on behalf of the converting Holders, for Debentures,
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which Debentures will be converted into shares of Common Stock in the manner
described herein on and subject to the following terms and conditions:
(a) The Securities will be exchangeable for Debentures which will be
convertible at the office of the Conversion Agent into fully paid and
nonassessable shares of Common Stock pursuant to the Holder's direction to the
Conversion Agent to exchange such Securities for a portion of the Debentures
theretofore held by the Trust on the basis of one Security per $__ principal
amount of Debentures, and immediately convert such amount of Debentures into
fully paid and nonassessable shares of Common Stock at a conversion rate of
________ shares of Common stock for each Debenture, subject to certain
adjustments set forth in the terms of the Debentures (as so adjusted, the
"Conversion Price").
(b) To exchange the Securities for Debentures and to convert the
Debentures into Common Stock, the Holder shall submit to the Conversion Agent at
the office designated therefor an irrevocable request to convert Securities on
behalf of such Holder (the "Conversion Request"), together, if the Securities
are in certificated form, with such certificates. The Conversion Request shall
(i) set forth the number of Securities to be exchanged and the name or names, if
other than the Holder, in which the shares of Common Stock should be issued and
(ii) direct the Conversion Agent (A) to exchange such Securities for a portion
of the Debentures held by the Trust (at the rate of exchange specified in the
preceding paragraph) and (B) to immediately convert such Debentures on behalf of
such Holder, into Common Stock (at the Conversion Price specified in the
preceding paragraph). The Conversion Agent shall notify the Trust of the
Holder's election to exchange Securities for a portion of the Debentures held by
the Trust and the Trust shall, upon receipt of such notice, deliver to the
Conversion Agent the appropriate principal amount of Debentures for exchange in
accordance with this Section 5. The Conversion Agent shall thereupon notify the
Debenture Issuer of the Holder's election to convert such Debentures into shares
of Common Stock. Holders of Securities at 5:00 p.m. (Eastern time) on a record
date for a Distribution Date will be entitled to receive the Distribution
payable on such Securities on the corresponding Distribution Date
notwithstanding the conversion of such Securities following such record date but
on or prior to such Distribution Date. Except as provided in the immediately
preceding sentence, neither the Trust nor the Debenture Issuer will make, or be
required to make, any payment, allowance or adjustment for accumulated and
unpaid Distributions, whether or not in arrears, on converted Securities;
provided, however, that if notice of redemption of Securities is mailed or
otherwise given to Holders of Securities or the Trust issues a press release
announcing a Conversion Termination Date, then, if any Holder of Securities
converts any Securities into Common Stock on any date on or after the date on
which such notice of redemption is mailed or otherwise given or the date of such
press release, as the case may be, and if such Conversion Date falls on any day
from and including the first day of an Extension Period and on or prior to the
Distribution Date upon which such Extension Period ends, such converting holder
shall be entitled to receive either (i) if the Conversion Date falls after a
record date and on or prior to the next succeeding Distribution Date, all
accrued and unpaid Distributions on such Securities (including interest thereon,
if any, to the extent permitted by applicable law) to such Distribution Date or
(ii) if the Conversion Date does not fall on a date described in clause (i)
above, all accrued and unpaid Distributions on such Securities (including
interest thereon, if any, to the extent permitted by applicable law) to the most
recent
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Distribution Date prior to the Conversion Date, which Distributions shall, in
either such case, be paid to such converting holder unless the Conversion Date
of such Securities is on or prior to the Distribution Date upon which such
Extension Period ends and after the record date for such Distribution Date, in
which case such Distributions shall be paid to the Person who was the Holder of
such Securities (or one or more predecessor Securities) at 5:00 p.m. (Eastern
time) on such record date. The Debenture Issuer shall make no payment or
allowance for distributions on the shares of Common Stock issued upon such
conversion, except to the extent that such shares of Common Stock are held of
record on the record date for any such distributions. Securities shall be deemed
to have been converted immediately prior to 5:00 p.m. (Eastern time) on the day
on which a Conversion Request relating to such Securities is received by the
Trust in accordance with the foregoing provision (the "Conversion Date"). The
Person or Persons entitled to receive Common Stock issuable upon conversion of
the Debentures shall be treated for all purposes as the record holder or holders
of such Common Stock at such time. As promptly as practicable on or after the
Conversion Date, the Debenture Issuer shall issue and deliver at the office of
the Conversion Agent a certificate or certificates for the number of full shares
of Common Stock issuable upon such conversion, together with the cash payment,
if any, in lieu of any fraction of any share to the Person or Persons entitled
to receive the same, unless otherwise directed by the Holder in the notice of
conversion and the Conversion Agent shall distribute such certificate or
certificates to such Person or Persons.
(c) Each Holder of a Security by his acceptance thereof appoints State
Street Bank and Trust (the "Conversion Agent") for the purpose of effecting the
exchange of Securities and conversion of Debentures in accordance with this
Section 5. In effecting the exchange, conversion and transactions described in
this Section 5, the Conversion Agent shall be acting as agent of the Holders of
Securities directing it to effect such transactions. The Conversion Agent is
hereby authorized (i) to exchange Securities from time to time for Debentures
held by the Trust in connection with the conversion of such Securities in
accordance with this Section 5 and (ii) to convert all or a portion of the
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this Section 5 and to deliver to the
Trust a new Debenture or Debentures for any resulting unconverted principal
amount. So long as any Capital Securities are outstanding, the Trust shall not
convert any Securities except pursuant to a Conversion Request delivered to the
Conversion Agent by a holder of Capital Securities.
(d) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, such fractional interest will be paid in cash
(based on the Closing Price of Common Stock on the Conversion Date) by the
Debenture Issuer to the Trust, which in turn will make such payment to the
Holder or Holders of Securities so exchanged.
(e) The Debenture Issuer shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of such shares of Common Stock as shall from time to time be
issuable upon the conversion of all the Debentures then outstanding.
Notwithstanding the foregoing, the Debenture Issuer shall be entitled to deliver
upon conversion of Debentures, shares of Common Stock reacquired and held in the
treasury of the Debenture Issuer (in lieu of the issuance of authorized and
unissued shares of Common Stock), so
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long as any such treasury shares are free and clear of all liens, charges,
security interests or encumbrances. Any shares of Common Stock issued upon
conversion of the Debentures shall be duly authorized, validly issued, fully
paid and nonassessable. The Trust shall deliver the shares of Common Stock
received upon conversion of the Debentures to the converting Holder free and
clear of all liens, charges, security interests and encumbrances, except for
United States withholding taxes. Each of the Debenture Issuer and the Trust
shall prepare and shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorizations as may be required by
law, and shall comply with all applicable requirements as to registration or
qualification of the Common Stock issuable upon conversion of Debentures (and
all requirements to list on any national securities exchange or quotation system
such Common Stock that are at the time applicable), to enable the Debenture
Issuer to lawfully issue Common Stock to the Trust upon conversion of the
Debentures and the Trust to lawfully deliver Common Stock to each Holder upon
such conversion.
(f) The Debenture Issuer shall pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Common Stock on
conversion of Debentures and the delivery of shares of Common Stock by the Trust
to the Holder upon conversion. The Debenture Issuer shall not, however, be
required to pay any tax that may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that in
which the Securities so converted were registered, and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Trust the amount of any such tax or has established to the satisfaction of the
Trust that such tax has been paid.
(g) Nothing in the preceding Section 5(f) shall limit the requirement
of the Trust to withhold taxes pursuant to the terms of the Securities or as set
forth in this Annex I to the Declaration or the Declaration itself or otherwise
require the Property Trustee or the Trust to pay any amounts on account of such
withholdings.
(h) (i) On and after _______________, ____ the Debenture Issuer
shall have the right, at its option, to cause the conversion rights of holders
of the Debentures to convert the Debentures into Common Stock to terminate, in
which case the rights of Holders of the Securities to convert the Securities
into Common Stock pursuant to this Section 5 will likewise terminate, if (x) the
Trust is current in the payment of Distributions on the Securities (except to
the extent that the payment of Distributions may have been deferred as the
result of an Extension Period) and (y) for at least 20 trading days within any
period of 30 consecutive trading days ending on or after ______________, ____
including the last trading day of such period, the Closing Price of the Common
Stock on each of such 20 trading days shall have exceeded ___% of the Conversion
Price in effect on such trading day.
(ii) To exercise its option to cause the conversion rights of
Holders of the Securities to terminate, the Debenture Issuer must cause the
Trust to issue a press release for publication on the Dow Jones News Service or
on a comparable news service (the "Press Release") prior to the opening of
business on the second trading day after any period in which the conditions in
paragraph 5(h)(i) have been met (which date shall not be prior to ____________,
____), which Press Release shall state that the Debenture Issuer has elected to
exercise its right to terminate the
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conversion rights of holders of Debentures and Holders of Securities, specify
the Conversion Termination Date and provide the current Conversion Price of the
Securities and the Closing Price of the Capital Securities and the Common Stock,
in each case as of the close of business on the trading day next preceding the
date of the Press Release. If the Debenture Issuer exercises the option
described in this paragraph 5(h), the "Conversion Termination Date" shall be the
Business Day selected by the Debenture Issuer which shall not be less than 30
nor more than 60 calendar days after the date on which the Trust issues the
Press Release. If the Debenture Issuer does not exercise the option described in
this paragraph 5(h), and the Securities are otherwise called for redemption, the
Securities will be convertible until 5:00 p.m. (Eastern time) on the Business
Day immediately preceding the date of such redemption.
(iii) In addition to the Press Release, notice of the termination
of conversion rights of Holders of the Securities (a "Notice of Conversion
Termination") must be given by the Trust by first-class mail to each Holder of
Securities not more than four Business Days after the Trust issues the Press
Release. Each such mailed Notice of Conversion Termination shall state: (1) the
Conversion Termination Date; (2) the Conversion Price of the Securities and the
Closing Price of the Capital Securities and the Common Stock, in each case as of
the close of business on the trading day next preceding the date of the Notice
of Conversion Termination; (3) that Securities will be convertible until 5:00
p.m. (Eastern time) on the Conversion Termination Date and the place or places
at which a conversion notice may be given and Securities (if not in book-entry
form) may be surrendered for conversion into shares of Common Stock; and (4)
such other information or instructions as the Trust deems necessary or advisable
to enable a Holder to exercise its conversion rights hereunder. For purposes of
the calculation of the Conversion Termination Date and the dates on which
notices are given pursuant to this paragraph 5(h)(iii), a Notice of Conversion
Termination shall be deemed to have been given on the day such notice is first
mailed by first-class mail, postage prepaid, to each Holder of Securities at the
address of such Holder appearing in the books and records of the Trust (whether
or not any such Holder receives the Notice of Conversion Termination). No defect
in the Notice of Conversion Termination or in the mailing thereof with respect
to any Security shall affect the validity of such notice with respect to any
other Security. As of 5:00 p.m. (Eastern time) on the Conversion Termination
Date, the Securities shall be deemed to be non-convertible securities.
(iv) The term "Closing Price" of any security on any day means
the last reported sale price of such security, regular way on such day, or, if
no sale takes place on such day, the average of the reported closing bid and
asked prices on such day, regular way, in either case as reported on the NYSE
Composite Tape, or, if such security is not listed or admitted to trading on the
NYSE, on the principal national securities exchange on which such security is
listed or admitted to trading, or, if such security is not listed or admitted to
trading on a national securities exchange, on the National Market System of the
National Association of Securities Dealers, Inc., or, if such security is not
quoted or admitted to trading on such quotation system, on the principal
quotation system on which such security may be listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of such security in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted
70
reporting service, or, if not so available in such manner, as furnished by any
NYSE member firm selected from time to time by the Board of Directors of the
Sponsor for that purpose or, if not so available in such manner, as otherwise
determined in good faith by the Board of Directors of the Sponsor.
6. Voting Rights - Capital Securities.
(a) Except as provided under Sections 6(b) and 8 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.7 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding Capital Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Capital Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Capital Securities except by subsequent vote of such Holders. Subject to
Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of
Capital Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Capital
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that, as
a result of such action, the Trust will not be classified as an association
taxable as a corporation for United States federal income tax purposes and (ii)
the Holders will not recognize gain or loss for federal income tax purposes.
If an Event of Default under the Declaration has occurred and is continuing
and such event is attributable to the failure of the Debenture Issuer to pay
principal of or premium, if any, or interest on the Debentures on the due date
(or in the case of prepayment, on the prepayment date), then 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 a Like Amount
of Debentures (a "Direct Action") on or after the respective due date specified
in the Debentures. In connection with such Direct Action, the rights of the
Common Securities Holder will be subordinated to the rights of such Holder of
Capital Securities to the extent of any payment made by the Debenture Issuer to
such Holder of Capital Securities in such Direct Action. Except as provided in
the second preceding sentence or as otherwise provided in the Declaration, the
Holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may be given at
a separate meeting of Holders of Capital Securities convened for such purpose,
at a meeting of all of the Holders of
71
Securities in the Trust or pursuant to written consent. The Administrators will
cause a notice of any meeting at which Holders of Capital Securities are
entitled to vote, or of any matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of record of Capital
Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
7. Voting Rights - Common Securities.
(a) Except as provided under Sections 7(b), 7(c) and 8 as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) Unless an Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by the holder of the Common Securities.
If an Event of Default has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed at such time by the Holders of a Majority in
liquidation amount of the outstanding Capital Securities. In no event will the
Holders of the Capital Securities have the right to vote to appoint, remove or
replace the Administrators, which voting rights are vested exclusively in the
Holders of the Common Securities. No resignation or removal of a Trustee or
Administrator and no appointment of a successor trustee or administrator shall
be effective until the acceptance of appointment by the successor trustee or
administrator in accordance with the provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.7 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding Common Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Common Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Common
72
Securities except by subsequent vote of such Holders. Subject to Section 2.7 of
the Declaration, the Property Trustee shall notify each Holder of Common
Securities of any notice of default with respect to the Debentures. In addition
to obtaining the foregoing approvals of such Holders of the Common Securities,
prior to taking any of the foregoing actions, the Trustees shall obtain an
opinion of counsel experienced in such matters to the effect that, as a result
of such action, the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes and (ii) the Holders
will not recognize gain or loss for federal income tax purposes.
If an Event of Default under the Declaration has occurred and is continuing
and such event is attributable to the failure of the Debenture Issuer to pay
principal of or premium, if any, or interest on the Debentures on the due date
(or in the case of prepayment, on the prepayment date), then a Holder of Common
Securities may institute a Direct Action for enforcement of payment to such
Holder of the principal of or premium, if any, or interest on a Like Amount of
Debentures on or after the respective due date specified in the Debentures. In
connection with any Direct Action, the rights of the Common Securities Holder
will be subordinated to the rights of such Holder of Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of Common
Securities in such Direct Action. Except as provided in the second preceding
sentence, the Holders of Common Securities will not be able to exercise directly
any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be given at a
separate meeting of Holders of Common Securities convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust or pursuant to written
consent. The Administrators will cause a notice of any meeting at which Holders
of Common Securities are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a statement setting
forth (i) the date of such meeting or the date by which such action is to be
taken, (ii) a description of any resolution proposed for adoption at such
meeting on which such Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the delivery of proxies or
consents.
No vote or consent of the Holders of the Common Securities will be required
for the Trust to redeem and cancel Common Securities or to distribute the
Debentures in accordance with the Declaration and the terms of the Securities.
8. Amendments to Declaration.
In addition to the requirements set out in Section 12.1 of the Declaration,
the Declaration may be amended from time to time by the Sponsor, the Property
Trustee and the Administrators, without the consent of the Holders of the
Securities (i) to cure any ambiguity, correct or supplement any provisions in
the Declaration that may be inconsistent with any other provisions, or to make
any other provisions with respect to matters or questions arising under the
Declaration which shall not be inconsistent with the other provisions of the
Declaration, or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified for United States federal income tax purposes as a grantor trust
at all times that any
73
Securities are outstanding or to ensure that the Trust will not be required to
register as an Investment Company under the Investment Company Act; provided,
however, that in the case of clause (i), such action shall not adversely affect
in any material respect the interests of any Holder of Securities, and any such
amendments of the Declaration shall become effective when notice thereof is
given to the holders of the Securities. The Declaration may be amended by the
Trustees, the Administrators and the Sponsor with (i) the consent of Holders
representing a Majority in liquidation amount of all outstanding Securities, and
(ii) receipt by the Trustees and the Administrators of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees or Administrators in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax purposes
or the Trust's exemption from status as an Investment Company under the
Investment Company Act or result in the Holders recognizing gain or loss for
federal income tax purposes, provided that, without the consent of each Holder
of Securities, the Declaration may not be amended to (i) change the amount or
timing of any Distribution on the Securities or otherwise adversely affect the
amount of any Distribution required to be made in respect of the Securities as
of a specified date or (ii) restrict the right of a holder of Securities to
institute suit for the enforcement of any such payment on or after such date.
9. Pro Rata.
A reference in these terms of the Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder according to
the aggregate liquidation amount of the Securities held by the relevant Holder
in relation to the aggregate liquidation amount of all Securities outstanding
unless, in relation to a payment, an Event of Default under the Declaration has
occurred and is continuing, in which case any funds available to make such
payment shall be paid first to each Holder of the Capital Securities pro rata
according to the aggregate liquidation amount of Capital Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Capital
Securities outstanding, and only after satisfaction of all amounts owed to the
Holders of the Capital Securities, to each Holder of Common Securities pro rata
according to the aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding. In any such proration, the Trust may make such
adjustments as may be appropriate in order that only Securities in authorized
denominations shall be redeemed.
10. Ranking.
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default under the Declaration occurs 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, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
74
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Capital Securities and Common Securities, by the acceptance
thereof, agrees to the provisions of the Capital Securities Guarantee and the
Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive or similar rights to
subscribe for any additional securities.
75
EXHIBIT A-1
FORM OF CONVERTIBLE TRUST PREFERRED SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CONVERTIBLE TRUST PREFERRED SECURITY
("CAPITAL SECURITY"), INSERT: THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY
WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED
IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE
OF THE CLEARING AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR
ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND
NO TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY
OR BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE
OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
Certificate Number Number of Convertible Trust Preferred Securities
CUSIP NO._________________
Certificate Evidencing Convertible Trust Preferred Securities
of
LIFE Financial Capital Trust
____% Convertible Trust Preferred Securities
(liquidation amount $__ per Capital Security)
LIFE Financial Capital Trust, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that _____ (the
"Holder") is the registered owner of [$_______ in aggregate liquidation amount
of Convertible Trust Preferred Securities of the Trust]1
76
[the aggregate liquidation amount of Convertible Trust Preferred Securities of
the Trust specified in Schedule A hereto]2 representing undivided beneficial
interests in the assets of the Trust designated the ____% Convertible Trust
Preferred Securities (liquidation amount $__ per Capital Security) (the "Capital
Securities"). The Capital Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities represented hereby are issued and shall in all respects
be subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of __________, 1997, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the Capital
Securities as set forth in Annex I to the Declaration. Capitalized terms used
but not defined herein shall have the meaning given them in the Declaration. The
Sponsor will provide a copy of the Declaration, the Capital Securities Guarantee
and the Indenture to a Holder without charge upon written request to the Trust
at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Capital
Securities Guarantee, to the extent provided therein.
By its acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Trust as a grantor trust, the Debentures as
indebtedness and the Capital Securities as evidence of indirect beneficial
ownership in the Debentures.
________
1 Insert in Definitive Capital Securities only.
2 Insert in Global Capital Securities only.
77
IN WITNESS WHEREOF, the Trust has executed this certificate this day of
_________________, 199__.
LIFE FINANCIAL CAPITAL TRUST
By:_______________________________
Name:
Title: Administrator
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the
Capital Securities referred to in the within-mentioned Declaration.
Dated: ______________ __, 1997
State Street Bank and Trust Company,
as Property Trustee
By:_______________________________
Authorized Signatory
78
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate per
annum of ____% (the "Coupon Rate") of the liquidation amount of $__ per Capital
Security, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one quarter
period will bear interest thereon compounded quarterly at the Coupon Rate (to
the extent permitted by applicable law). The term "Distributions", as used
herein, includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Property Trustee and to the extent
the Property Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be cumulative, will accumulate
from the most recent date to which Distributions have been paid or duly provided
for or, if no Distributions have been paid or duly provided for, from
_________________, 1997 and will be payable quarterly in arrears, on March 15,
June 15, September 15 and December 15 of each year, commencing on March 15,
1998, except as otherwise described below. Distributions will be computed on the
basis of a 360-day year consisting of twelve 30-day months and, for any period
less than a full calendar month, the number of days elapsed in such month. As
long as no Event of Default has occurred and is continuing under the Indenture,
the Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time to
time on the Debentures for a period not exceeding 20 consecutive calendar
quarters, including the first quarter during such extension period (each an
"Extension Period"), provided that no Extension Period shall end on a day other
than an interest payment date for the Debentures or shall extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate of interest
then accruing on the Debentures) at the Coupon Rate compounded quarterly during
any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension Period, together
with all such previous and further extensions within such Extension Period, may
not exceed 20 consecutive quarters, including the first quarter during such
Extension Period, or extend beyond the Maturity Date of the Debentures. Payments
of accumulated Distributions will be payable to Holders as they appear on the
books and records of the Trust on the first record date preceding the end of the
Extension Period. Upon the termination of any Extension Period and the payment
of all amounts then due, the Debenture Issuer may commence a new Extension
Period, subject to the above requirements.
Subject to the prior obtaining of any regulatory approval then required and
to certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Holder of the Common Securities,
at any time dissolve the Trust and, after satisfaction of liabilities to
creditors of the Trust as required by applicable law, cause the Debentures to be
distributed to the holders of the Securities in liquidation of the Trust or,
simultaneous with any prepayment of the Debentures, cause a Like Amount of the
Securities to be redeemed by the Trust.
79
The Capital Securities shall be governed by, and construed in accordance
with, the laws of the State of Delaware (without regard to conflict of laws
principles that would call for the application of the substantive law of any
jurisdiction other than the State of Delaware).
The Capital Securities shall be redeemable as provided in the Declaration.
The Capital Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Capital Securities for an appropriate principal
amount of Debentures and (ii) the immediate conversion of such Debentures into
shares of Common Stock, in the manner and according to the terms set forth in
Annex I to the Declaration and in the Indenture. The conversion rights of the
Holders of Capital Securities are subject to termination at the option of the
Debenture Issuer on and after _____________, ____ subject to and upon
satisfaction of certain conditions set forth in Annex I to the Declaration and
in the Indenture.
80
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security certificate to:
______________________________________________________
______________________________________________________
(Insert assignees social security or tax identification number)
______________________________________________________
______________________________________________________
______________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
______________________________________________________
______________________________________________________
______________________________________________________
agent to transfer this Capital Security certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Capital Security
certificate)
Signature Guarantee(3): ___________________________________
______________________
3 Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities and Exchange Act of 1934, as amended.
81
Schedule A(1)
The initial aggregate liquidation amount of Capital Securities evidenced by
the Certificate to which this Schedule is attached is $_____________ (equivalent
to ______ Capital Securities). The notations on the following table evidence
decreases and increases in the number of Capital Securities evidenced by such
Certificate.
- ----------------------------------------------------------------------------------------------
DECREASE IN INCREASE IN LIQUIDATION AMOUNT NOTATION BY REGISTRAR
LIQUIDATION AMOUNT OF LIQUIDATION AMOUNT OF CAPITAL SECURITIES
CAPITAL SECURITIES OF CAPITAL SECURITIES AFTER SUCH INCREASE
- ----------------------------------------------------------------------------------------------
____________________
1. Append to Global Capital Securities only.
82
CONVERSION REQUEST
To: State Street Bank and Trust Company, as Conversion Agent of Holders of
Capital Securities.
The undersigned owner of these Capital Securities hereby irrevocably
exercises the option to convert these Capital Securities, or the portion below
designated, into Common Stock of LIFE Financial Corporation (the "Common Stock")
in accordance with the terms of the Amended and Restated Declaration of Trust
(the "Declaration"), dated as of __________ __, 1997, by Daniel L. Perl and L.
Bruce Mills, Jr., as Administrators, Delaware Trust Capital Management, as
Delaware Trustee, State Street Bank and Trust Company, as Property Trustee, LIFE
Financial Corporation, as Sponsor, and by the Holders, from time to time, of
undivided beneficial interests in the assets of the Trust to be issued pursuant
to the Declaration. Pursuant to the aforementioned exercise of the right to
convert these Capital Securities, the undersigned hereby directs the Conversion
Agent (as that term is defined in the Declaration) to (i) exchange such Capital
Securities for a portion of the Debentures (as that term is defined in the
Declaration) held by the Trust (at the rate of exchange specified in the terms
of the Capital Securities set forth as Annex I to the Declaration) and (ii)
immediately convert such Debentures on behalf of the undersigned, into Common
Stock (at the conversion price specified in the terms of the Capital Securities
set forth as Annex I to the Declaration).
The undersigned also hereby directs the Conversion Agent that the shares
issuable and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Date: __________________
Number of Capital Securities to be converted: ____________________
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Common Stock are to be issued,
along with the address or addresses of such person or persons.
______________________________________________________
______________________________________________________
______________________________________________________
(Sign exactly as your name appears on the other side of this Capital Security
certificate) (for conversion only).
Please Print or Type Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number.
______________________________________
______________________________________
______________________________________
Signature Guarantee: *____________________________
____________________________
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockholder, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
83
EXHIBIT B-1
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES
LAW. NEITHER THIS COMMON 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.
THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT UPON LIMITED CIRCUMSTANCES SET FORTH IN THE DECLARATION.
CERTIFICATE NUMBER NUMBER OF COMMON SECURITIES
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
LIFE FINANCIAL CAPITAL TRUST
___% COMMON SECURITIES
(LIQUIDATION AMOUNT $__ PER COMMON SECURITY)
LIFE Financial Capital Trust, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that LIFE
Financial Corporation (the "Holder") is the registered owner of ____________
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the ____% Convertible Common Securities
(liquidation amount $__ per Common Security) (the "Common Securities"). The
Common Securities are not transferable except to the extent permitted by the
Declaration. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities represented hereby are
issued and shall in all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of ___________, 1997, as the
same may be amended from time to time (the "Declaration"), including the
designation of the terms of the Common Securities as set forth in Annex I to the
Declaration. Capitalized terms used but not defined herein shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declaration, the Common Securities Guarantee and the Indenture (including any
supplemental indenture) to a Holder without charge upon written request to the
Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Common
Securities Guarantee to the extent provided therein.
By its acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Trust as a grantor trust, the Debentures as
indebtedness and the Common Securities as evidence of indirect beneficial
ownership in the Debentures.
B-1
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day of
________ , 1997.
LIFE FINANCIAL CAPITAL TRUST
By:
________________________
Name:
Title: Administrator
B-2
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate per
annum of ____% (the "Coupon Rate") of the liquidation amount of $__ per Common
Security, such rate being the rate of interest payable on the Debentures to be
held by the Property Trustee. Distributions in arrears for more than one quarter
will bear interest thereon compounded quarterly at the Coupon Rate (to the
extent permitted by applicable law). The term "Distributions", as used herein,
includes such cash distributions and any such interest payable unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Property Trustee and to the extent the
Property Trustee has funds legally available therefor.
Distributions on the Common Securities will be cumulative, will accrue from
the most recent date to which Distributions have been paid or duly provided or,
if no Distributions have been paid or duly provided, from ___________, 1997 and
will be payable quarterly in arrears, on March 15, June 15, September 15 and
December 15 of each year, commencing on March 15, 1998, except as otherwise
described below. Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full calendar
month, the number of days elapsed in such month. As long as no Event of Default
has occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures for
a period not exceeding 20 consecutive calendar quarters, including the first
such quarter during such extension period (each an "Extension Period"), provided
that no Extension Period shall end on a day other than an interest payment date
for the Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law, but not at a rate exceeding the rate of
interest then accruing on the Debentures) at the Coupon Rate compounded
quarterly during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest by
further extending such Extension Period; provided that such Extension Period,
together with all such previous and further extensions within such Extension
Period, may not exceed 20 consecutive quarters, including the first quarter
during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date preceding
the end of the Extension Period. Upon the termination of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to the Sponsor obtaining any regulatory prior approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Holders of the
Common Securities, at any time dissolve the Trust and, after satisfaction of
liabilities to creditors of the Trust as required by applicable law, cause the
Debentures to be distributed to the holders of the Securities in liquidation of
the Trust or, simultaneous with any prepayment of the Debentures, cause a Like
Amount of the Securities to be redeemed by the Trust.
The Common Securities shall be governed by, and construed in accordance
with, the laws of the State of Delaware (without regard to conflicts by laws
principles that would call for the application of the substantive law of any
jurisdiction other than the State of Delaware).
The Common Securities shall be redeemable as provided in the Declaration.
The Common Securities shall be convertible into shares of Common Stock,
through (i) the exchange of Common Securities for an appropriate principal
amount of Debentures and (ii) the immediate conversion of such Debentures into
shares of Common Stock, in the manner and according to the terms set forth in
Annex I to the Declaration and in the Indenture. The conversion rights of the
Holders of Common Securities are subject to termination at the option of the
Debenture Issuer on and after ____________, ____, subject to and upon
satisfaction of certain conditions set forth in Annex I to the Declaration and
in the Indenture.
B-3
CONVERSION REQUEST
TO: NAME OF TRUSTEE, AS CONVERSION AGENT OF HOLDERS OF COMMON SECURITIES
The undersigned owner of these Common Securities hereby irrevocably
exercises the option to convert these Common Securities, or the portion below
designated, into Common Stock of LIFE Financial Corporation (the "Common Stock")
in accordance with the terms of the Amended and Restated Declaration of Trust
(the "Declaration"), dated as of __________ __, 1997, by Daniel L. Perl and L.
Bruce Mills, Jr., as Administrators, Delaware Trust Capital Management, as
Delaware Trustee, State Street Bank and Trust Company, as Property Trustee, LIFE
Financial Corporation, as Sponsor, and by the Holders, from time to time, of
undivided beneficial interests in the assets of the Trust to be issued pursuant
to the Declaration. Pursuant to the aforementioned exercise of the right to
convert these Common Securities, the undersigned hereby directs the Conversion
Agent (as that term is defined in the Declaration) to (i) exchange such Common
Securities for a portion of the Debentures (as that term is defined in the
Declaration) held by the Trust (at the rate of exchange specified in the terms
of the Common Securities set forth as Annex I to the Declaration) and (ii)
immediately convert such Debentures on behalf of the undersigned, into Common
Stock (at the conversion price specified in the terms of the Common Securities
set forth as Annex I to the Declaration).
The undersigned also hereby directs the Conversion Agent that the shares
issuable and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Date: __________________
Number of Common Securities to be converted: ____________________
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Common Stock are to be issued,
along with the address or addresses of such person or persons.
________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Common Security
certificate) (for conversion only)
B-4
Please Print or Type Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number.
______________________________________________________
______________________________________________________
______________________________________________________
Signature Guarantee: *____________________________
_________________________
* Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockholder, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
B-5