Exhibit 4.2
HSB GROUP, INC.
to
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
---------------------------
INDENTURE
Dated as of December 31, 1997
---------------------------
7.0% CONVERTIBLE SUBORDINATED
DEFERRABLE INTEREST DEBENTURE
DUE DECEMBER 31, 2017
HSB GROUP, INC.
Reconciliation and tie between the Trust Indenture Act of 1939
(including cross-references to provisions of Section 310 to and including 317
which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended
by the Trust Reform Act of 1990, are a part of and govern the Indenture whether
or not physically contained therein) and the Indenture, dated as of December 31,
1997.
TRUST INDENTURE ACT SECTION INDENTURE SECTION
(ss.) 310 (a) (1), (2) and (5).............................. 6.9
(a) (3)........................................... Not Applicable
(a)(4)............................................ Not Applicable
(b)............................................... 6.8
.................................................. 6.10
(c)............................................... Not Applicable
(ss.) 311 (a)............................................... 6.13
(b)............................................... 6.13
(b) (2)........................................... 7.3(a)
.................................................. 7.3(a)
(ss.) 312 (a)............................................... 7.1
.................................................. 7.2(a)
(b)............................................... 7.2(b)
(c)............................................... 7.2(c)
(ss.) 313 (a)............................................... 7.3(a)
(b)............................................... 7.3(b)
(c)............................................... 7.3(a), 7.3(b)
(d)............................................... 7.3(c)
(ss.) 314 (a) (1), (2) and (3).............................. 7.4
(a) (4)........................................... 10.5
(b)............................................... Not Applicable
(c)(1)............................................ 1.2
(c)(2)............................................ 1.2
(c)(3)............................................ Not Applicable
(d)............................................... Not Applicable
(e)............................................... 1.2
(f)............................................... Not Applicable
(ss.) 315 (a)............................................... 6.1(a)
(b)............................................... 6.2
.................................................. 7.3(a)
(c)............................................... 6.1(b)
(d)............................................... 6.1(c)
(d)(1)............................................ 6.1(a)(1)
(d)(2)............................................ 6.1(c)(2)
(d)(3)............................................ 6.1(c)(3)
(e)............................................... 5.14
(ss.) 316 (a)............................................... 1.1
(a)(1)(A)......................................... 5.12
(a)(1)(B)......................................... 5.13
(a)(2)............................................ Not Applicable
(b)............................................... 5.8
(c)............................................... 1.4(f)
(ss.) 317 (a)(1)............................................ 5.3
(a)(2)............................................ 5.4
(b)............................................... 10.3
(ss.) 318 (a)............................................... 1.7
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Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..... 1
SECTION 1.1. Definitions................................................ 1
SECTION 1.2. Compliance Certificate and Opinions........................ 10
SECTION 1.3. Forms of Documents Delivered to Trustee.................... 11
SECTION 1.4. Acts of Holders............................................ 11
SECTION 1.5. Notices, Etc. to Trustee and Corporation................... 13
SECTION 1.6. Notice to Holders; Waiver.................................. 14
SECTION 1.7. Conflict with Trust Indenture Act.......................... 14
SECTION 1.8. Effect of Headings and Table of Contents................... 14
SECTION 1.9. Successors and Assigns..................................... 14
SECTION 1.10. Separability Clause....................................... 15
SECTION 1.11. Benefits of Indenture..................................... 15
SECTION 1.12. Governing Law............................................. 15
SECTION 1.13. Non-Business Days......................................... 15
ARTICLE II
SECURITY FORMS.................................................... 15
SECTION 2.1. Forms Generally............................................ 15
SECTION 2.2. Form of Face of Security................................... 16
SECTION 2.3. Form of Reverse of Security................................ 19
SECTION 2.4. Restrictive Legends........................................ 21
SECTION 2.5. Form of Trustee's Certificate of Authentication............ 22
ARTICLE III
THE SECURITIES.................................................... 22
SECTION 3.1. Title and Terms............................................. 22
SECTION 3.2. Denominations............................................... 22
SECTION 3.3. Execution, Authentication and Dating........................ 23
SECTION 3.4. Temporary Securities........................................ 23
SECTION 3.5. Registration, Transfer and Exchanges........................ 24
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities............ 27
SECTION 3.7. Payment of Interest; Interest Rights Preserved.............. 28
SECTION 3.8. Persons Deemed Owners....................................... 29
SECTION 3.9. Cancellation................................................ 30
SECTION 3.10. Computation of Interest.................................... 30
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SECTION 3.11. Deferrals of Interest Payment Dates....................... 30
SECTION 3.12. Right of Set-Off.......................................... 31
SECTION 3.13. Agreed Tax Treatment...................................... 31
SECTION 3.14. Shortening of Stated Maturity............................. 31
SECTION 3.15. CUSIP Numbers............................................. 31
ARTICLE IV
SATISFACTION AND DISCHARGE........................................... 32
SECTION 4.1. Satisfaction and Discharge of Indenture.................... 32
SECTION 4.2. Application of Trust Money................................. 33
ARTICLE V
REMEDIES....................................................... 33
SECTION 5.1. Events of Default..............................................33
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.............34
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee....................................................... 36
SECTION 5.4. Trustee May File Proofs of Claim.............................. 36
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.... 37
SECTION 5.6. Application of Money Collected................................ 37
SECTION 5.7. Limitation on Suits........................................... 38
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Capital Securities....... 39
SECTION 5.9. Restoration of Rights and Remedies............................ 39
SECTION 5.10. Rights and Remedies Cumulative............................... 39
SECTION 5.11. Delay or Omission Not Waiver................................. 39
SECTION 5.12. Control by Holders........................................... 40
SECTION 5.13. Waiver of Past Defaults...................................... 40
SECTION 5.14. Undertaking for Costs........................................ 41
SECTION 5.15. Waiver of Usury, Stay or Extension Laws...................... 41
ARTICLE VI
THE TRUSTEE..................................................... 41
SECTION 6.1. Certain Duties and Responsibilities........................... 41
SECTION 6.2. Notice of Defaults............................................ 43
SECTION 6.3. Certain Rights of Trustee..................................... 43
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities........ 44
SECTION 6.5. May Hold Securities........................................... 44
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SECTION 6.6. Money Held in Trust.......................................... 44
SECTION 6.7. Compensation and Reimbursement............................... 44
SECTION 6.8. Disqualification; Conflicting Interests...................... 45
SECTION 6.9. Corporate Trustee Required; Eligibility...................... 45
SECTION 6.10. Resignation and Removal; Appointment of Successor........... 46
SECTION 6.11. Acceptance of Appointment by Successor...................... 47
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. 48
SECTION 6.13. Preferential Collection of Claims Against Corporation....... 49
SECTION 6.14. Appointment of Authenticating Agent......................... 49
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND CORPORATION................ 50
SECTION 7.1. Corporation to Furnish Trustee Names and Addresses of Holders. 50
SECTION 7.2. Preservation of Information, Communications to Holders........ 51
SECTION 7.3. Reports by Trustee............................................ 51
SECTION 7.4. Reports by Corporation........................................ 51
ARTICLE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.............. 52
SECTION 8.1. Corporation May Consolidate, Etc., Only on Certain Terms...... 52
SECTION 8.2. Successor Corporation Substituted............................. 53
ARTICLE IX
SUPPLEMENTAL INDENTURES....................... 53
SECTION 9.1. Supplemental Indentures Without Consent of Holders............ 53
SECTION 9.2. Supplemental Indentures with Consent of Holders............... 54
SECTION 9.3. Execution of Supplemental Indentures.......................... 56
SECTION 9.4. Effect of Supplemental Indentures............................. 56
SECTION 9.5. Conformity with Trust Indenture Act........................... 56
SECTION 9.6. Reference in Securities to Supplemental Indentures............ 56
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ARTICLE X
COVENANTS................................................ 56
SECTION 10.1. Payment of Principal, Premium and Interest.................... 56
SECTION 10.2. Maintenance of Office or Agency............................... 57
SECTION 10.3. Money for Security Payments to be Held in Trust............... 57
SECTION 10.4. Statement as to Compliance.................................... 59
SECTION 10.5. Waiver of Certain Covenants................................... 59
SECTION 10.6. Additional Sums............................................... 59
SECTION 10.7. Additional Covenants.......................................... 60
ARTICLE XI
REDEMPTION OF SECURITIES.......................................... 61
SECTION 11.1. Applicability of This Article................................. 61
SECTION 11.2. Election to Redeem; Notice to Trustee......................... 61
SECTION 11.3. Selection of Securities to be Redeemed........................ 61
SECTION 11.4. Notice of Redemption.......................................... 62
SECTION 11.5. Deposit of Redemption Price................................... 63
SECTION 11.6. Payment of Securities Called for Redemption................... 63
SECTION 11.7. Right of Redemption of Securities Initially Issued to an
Issuer Trust.................................................. 63
SECTION 11.8. Mandatory Redemption Provisions............................... 64
ARTICLE XII
RANKING; SUBORDINATION OF SECURITIES.................................. 65
SECTION 12.1. Ranking; Securities Subordinate to Senior Indebtedness....... 65
SECTION 12.2. No Payment When Senior Indebtedness in Default; Payment
Over of Proceeds Upon Dissolution, Etc............................. 65
SECTION 12.3. Payment Permitted If No Default.............................. 67
SECTION 12.4. Subrogation to Rights of Holders of Senior Indebtedness...... 67
SECTION 12.5. Provisions Solely to Define Relative Rights.................. 68
SECTION 12.6. Trustee to Effectuate Subordination.......................... 68
SECTION 12.7. No Waiver of Subordination Provisions........................ 68
SECTION 12.8. Notice to Trustee............................................ 69
SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating
Agent........................................................ 70
SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.... 70
SECTION 12.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights................................... 70
SECTION 12.12. Article Applicable to Paying Agents......................... 70
SECTION 12.13. Certain Conversions or Exchanges Deemed Payment............. 70
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ARTICLE XIII
CONVERSION OF SECURITIES............................................... 71
SECTION 13.1. Conversion Rights............................................ 71
SECTION 13.2. Conversion Procedures........................................ 71
SECTION 13.3. Conversion Price Adjustments................................. 74
SECTION 13.4. Notice of Adjustments of Conversion Price.................... 77
SECTION 13.5. Prior Notice of Certain Events............................... 77
SECTION 13.6. Dividend or Interest Reinvestment Plans...................... 78
SECTION 13.7. Certain Additional Rights.................................... 78
SECTION 13.8. Restrictions on Common Stock Issuable Upon Conversion........ 79
SECTION 13.9. Trustee Not Responsible for Determining Conversion Price or
Adjustments........................................................ 79
ARTICLE XIV
EXPENSES....................................................... 80
SECTION 14.1. Payment of Expenses by the Corporation....................... 80
SECTION 14.2. Term of Agreement............................................ 80
SECTION 14.3. Waiver of Notice............................................. 81
SECTION 14.4. No Impairment................................................ 81
SECTION 14.5. Enforcement.................................................. 81
SECTION 14.6. Subrogation.................................................. 81
SECTION 14.7. Amendment.................................................... 82
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INDENTURE, dated as of December 31, 1997, between HSB GROUP, INC., a
Connecticut corporation (the "Corporation"), having its principal office at One
State Street, Hartford, Connecticut, and The First National Bank of Chicago, a
national banking association, as Trustee (the "Trustee").
Recitals of the Corporation
Whereas, the Corporation has duly authorized the execution and delivery
of this Indenture to provide for the issuance of its 7.0% Convertible
Subordinated Deferrable Interest Debentures (the "Securities") of substantially
the tenor hereinafter provided, including Securities issued to evidence loans
made to the Corporation with the proceeds from the issuance by HSB Capital II, a
Delaware business trust (the "Issuer Trust") of preferred undivided beneficial
interests in the assets of such Issuer Trust (the "Capital Securities") and
common undivided interests in the assets of such Issuer Trust (the "Common
Securities"), and to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered; and
Whereas, all things necessary to make this Indenture a valid agreement
of the Corporation, in accordance with its terms, have been done.
Now Therefore, this Indenture Witnesseth:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
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(c) The words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(d) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(e) Whenever the context may require, any gender shall be deemed
to include the others;
(f) Unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the
case may be, of this Indenture; and
(g) The words "hereby", "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified
in Section 1.4.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which an Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate the
Securities.
"Bankruptcy Code" means Title 11 of the United States Code or any
successor statute thereto, in each case as amended from time to time.
"Board of Directors" means the board of directors of the Corporation or
the Executive Committee of the board of directors of the Corporation (or any
other committee of the board of directors of the Corporation performing similar
functions) or a committee designated by the board of directors of the
Corporation (or such committee), comprised of two or more members of the board
of directors of the Corporation or officers of the Corporation, or both.
"Board Resolution" means a copy of a resolution certified by the
Corporate Secretary or an Assistant Secretary of the Corporation to have been
duly adopted by the Board of Directors,
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or officers of the Corporation to which authority to act on behalf of the Board
of Directors has been delegated, and to be in full force and effect on the date
of such certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii)
a day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (iii) a day on which the
Corporate Trust Office of the Trustee, or the Corporate Trust Office (as defined
in the related Trust Agreement) of the Property Trustee or the Delaware Trustee
under the related Trust Agreement, is closed for business.
"Capital Securities" has the meaning specified in the first recital of
this Indenture.
"Change of Control" shall mean an acquisition of greater than 50% of
the outstanding voting securities of either HSB Group, Inc. or Employers
Reinsurance Corporation, as the case may be.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after the
execution of this instrument such Securities and Exchange Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of
this Indenture.
"Common Stock" means common stock, no par value, of the Corporation.
"Conversion Agent" has the meaning specified in Section 13.2.
"Conversion Date" has the meaning specified in Section 13.2.
"Conversion Price" has the meaning specified in Section 13.1.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered.
"corporation" includes a corporation, association, company, limited
liability company, joint-stock company or business trust.
"Corporation" means the Person named as the "Corporation" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Corporation" shall mean such successor corporation.
- 3 -
"Corporation Request" and "Corporation Order" mean, respectively, a
written request or order signed in the name of the Corporation by its Chief
Executive Officer, its President, one of its Senior Vice Presidents or Vice
Presidents and by its Chief Financial Officer, Treasurer, Controller, its
Corporate Secretary or an Assistant Secretary, and delivered to the Trustee.
"Current Market Price" means for any day the last reported sale price,
regular way, on such day of Common Stock, 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 Transactions Tape,
or, if the Common Stock is not listed or admitted to trading on the NYSE on such
day, on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, exchange, or the Nasdaq National Market, or, if
the Common Stock is not quoted or admitted to trading on such quotation system,
on the principal quotation system on which the Common Stock 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 the Common Stock in the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted 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 od Directors for that purpose or, if not so available
in such manner, as otherwise determined in good faith by the Board of Directors.
"Debt" means, with respect to any Corporation, whether recourse is to
all or a portion of the assets of such Corporation and whether or not contingent
and without duplication, (i) every obligation of such Corporation for money
borrowed; (ii) every obligation of such Corporation evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of such Corporation with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of
such Corporation; (iv) every obligation of such Corporation issued or assumed as
the deferred purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Corporation; (vi) all
indebtedness of the Corporation, whether incurred on or prior to the date of
this Indenture or thereafter incurred, for claims in respect of derivative
products, including interest rate, foreign exchange rate and commodity forward
contracts, options and swaps and similar arrangements; and (vii) every
obligation of the type referred to in clauses (i) through (vi) of another Person
and all dividends of another Person the payment of which, in either case, such
Corporation has guaranteed or is responsible or liable for, directly or
indirectly, as obligor or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Delaware Trustee" means, with respect to any Issuer Trust, the Person
identified as the "Delaware Trustee" in the related Trust Agreement, solely in
its capacity as Delaware Trustee of such Issuer Trust under such Trust Agreement
and not in its individual capacity, or its
- 4 -
successor in interest in such capacity, or any successor Delaware trustee
appointed as therein provided.
"Distributions", with respect to the Trust Securities issued by an
Issuer Trust, means amounts payable in respect of such Trust Securities as
provided in the related Trust Agreement and referred to therein as
"Distributions".
"Dollar" or "$" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public and
private debts.
"Event of Default" has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 or any
successor statute thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.11.
"Guarantee Agreement" means, with respect to any Issuer Trust, the
Guarantee Agreement executed by the Corporation for the benefit of the Holders
of the Capital Securities issued by such Issuer Trust, as modified, amended or
supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Rate" means the rate of interest specified or determined as
specified in the Security as being the rate of interest payable on such
Security.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security or any installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
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"Notice of Conversion" means the notice given by a holder of Capital
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Capital Securities for Securities and to convert such Securities into
Common Stock on behalf of such holder.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(3).
"Officers' Certificate" means a certificate signed by its Chief
Executive Officer, the President or a Senior Vice President, and by the Chief
Financial Officer, Treasurer or the Corporate Secretary or Assistant Secretary,
of the Corporation and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Corporation or any Affiliate of the
Corporation.
"Original Issue Date" means the date of issuance specified as such in
each Security.
"Outstanding" means, when used in reference to any Securities, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent in
trust for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other
Securities have been authenticated and delivered or that have been
paid pursuant to Section 3.7, unless proof satisfactory to the Trustee
is presented that any such Securities are held by Holders in whose
hands such Securities are valid, binding and legal obligations of the
Corporation;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Corporation or any other obligor upon the Securities or any Affiliate of
the Corporation or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities that the Trustee knows to be so owned shall
be so disregarded. Securities so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Corporation or any other obligor upon the Securities or
any Affiliate of the Corporation or such other obligor. Upon the written request
of the Trustee, the Corporation shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Securities, if any, known by
the Corporation to be owned or held by or for the account of the Corporation or
any other obligor on the Securities, or any Affiliate of the
- 6 -
Corporation or such obligor, and subject to the provisions of Section 6.1, the
Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Securities not
listed therein are Outstanding for the purpose of any such determination.
Notwithstanding anything herein to the contrary, Securities shall be deemed to
be Outstanding notwithstanding the ownership by the Corporation or an Affiliate
of any beneficial interest in such Issuer Trust.
"Paying Agent" means the Trustee or any Person authorized by the
Corporation to pay the principal of (or premium, if any) or interest on, or
other amounts in respect of, any Securities on behalf of the Corporation.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Place of Payment" means, with respect to the Securities, New York, New
York or Chicago, Illinois, where the principal of (and premium, if any) and
interest on the Securities are payable.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For the purposes of this definition, any security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Procedures" has the meaning specified in Section 13.3.
"Proceeding" has the meaning specified in Section 12.2.
"Property Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Property Trustee" in the related Trust Agreement, solely in
its capacity as Property Trustee of such Issuer Trust under such Trust Agreement
and not in its individual capacity, or its successor in interest in such
capacity, or any successor property trustee appointed as therein provided.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture or the terms of such Security.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture or the terms of such Security.
"Regular Record Date" for the interest payable on any Interest Payment
Date, the day that is fifteen days next preceding such Interest Payment Date
(whether or not a Business Day).
- 7 -
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Securities" means all Securities for which it is required
pursuant to Section 2.4 to bear a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning specified in Section
2.4.
"Restricted Security" means each Security required to bear the
Restricted Securities Legend.
"Rights Plan" means a plan of the Corporation providing for the
issuance by the Corporation to all holders of its Common Stock of rights
entitling the holders thereof to subscribe for or purchase shares of any class
or series of capital stock of the Corporation, which rights are (i) deemed to be
transferred with such shares of Common Stock and (ii) also issued in respect of
future issuances of such Common Stock, in each case until the occurrence of a
specified event or events.
"Securities Act" means the Securities Act of 1933 or any successor
statute thereto, in each case as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Security" means any debt security authenticated and delivered under
this Indenture.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Corporation whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt of the Corporation, whether incurred on or prior to the date of this
Indenture or hereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Securities or
to other Debt that is pari passu with, or subordinated to, the Securities,
provided, however, that Senior Indebtedness shall not be deemed to include (a)
any Debt of the Corporation that, when incurred and without respect to any
- 8 -
election under Section 1111(b) of the Bankruptcy Reform Act of 1978, was without
recourse to the Corporation, (b) any Debt of the Corporation to any of its
Subsidiaries, (c) any Debt of the Corporation to any Person who is an employee
of the Corporation and (d) any Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof (or premium, if any) or interest thereon, means
the date specified pursuant to the terms of such Security as the fixed date on
which the principal of such Security or such installment of principal (or
premium, if any) or interest is due and payable, as such date may be shortened
as provided pursuant to the terms of such Security and this Indenture, in the
case of the Stated Maturity of any Security, and subject to the deferral of any
such date during any Extension Period, in the case of any installment of
interest.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Corporation or by
one or more other Subsidiaries, or by the Corporation and one or more other
Subsidiaries. For purposes of this definition, "voting stock" means stock that
ordinarily has voting power for the election of directors, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security. For the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Capital Securities of such Issuer Trust, there is more than an insubstantial
risk that (i) such Issuer Trust is, or within 90 days of the delivery of such
Opinion of Counsel will be, subject to United States federal income tax with
respect to income received or accrued on the Securities issued by the
Corporation to such Issuer Trust, (ii) interest payable by the Corporation on
such Securities is not, or within 90 days of the delivery of such Opinion of
Counsel will not be, deductible by the Corporation, in whole or in part, for
United States federal income tax purposes, or (iii) such Issuer Trust is, or
within 90 days of the delivery of such Opinion of Counsel will be, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
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"Trust Agreement" means, with respect to the Issuer Trust, the trust
agreement or other governing instrument of such Issuer Trust.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that if
the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture
Act" means the Trust Indenture Act of 1939 as so amended.
"Trust Securities" means the Common Securities and the Capital
Securities.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument, solely in its capacity as such Trustee and not in
its individual capacity, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder and,
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities shall mean the Trustee with respect to Securities.
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Corporation to the Trustee to
take any action under any provision of this Indenture, the Corporation shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent (including covenants compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent (including covenants
compliance with which constitutes a condition precedent), if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 10.4) shall include:
(1) a statement by each individual signing such certificate or
opinion that such individual has read such covenant or condition and
the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions of
such individual contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or
she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
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(4) a statement as to whether, in the opinion of such
individual, such condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons may certify or give an opinion as to other matters,
and any of such Persons may certify or give an opinion as to such matters
contained in one or several documents.
Any certificate or opinion of an officer of the Corporation may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate, opinion or representations
with respect to matters upon which his or her certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more officers of the Corporation stating that the
information with respect to such factual matters is in the possession of the
Corporation, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate, opinion or representations with respect to
matters upon which his or her certificate or opinion is based are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Corporation. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Trustee and the Corporation, if made in the manner provided in this Section
1.4.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary
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public or other officer authorized by law to take acknowledgments of deeds,
certifying that the individual signing such instrument or writing acknowledged
to such notary the execution thereof. Where such execution is by a Person acting
in other than such Persons's individual capacity, such certificate or affidavit
shall also constitute sufficient proof of such Person's authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Corporation in
reliance thereon, whether or not notation of such action is made upon such
Security.
(f) The Corporation may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Corporation may not set a record date
for, and the provisions of this paragraph shall not apply with respect to, the
giving or making of any notice, declaration, request or direction referred to in
the next succeeding paragraph. If any record date is set pursuant to this
paragraph, the Holders of Outstanding Securities on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date, provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date (as defined below) by Holders of the requisite principal amount
of Outstanding Securities on such record date. Nothing in this paragraph shall
be construed to prevent the Corporation from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Corporation, at its own expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Trustee in writing and to each Holder of Securities in the
manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.2, (iii) any request to institute proceedings referred
to in Section 5.7(2), or (iv) any direction referred to in Section 5.12, in each
case with respect to Securities. If any record date is set pursuant to this
paragraph, the
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Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to join in such notice, declaration, request or direction,
whether or not such Holders remain Holders after such record date, provided that
no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be canceled and of no effect), and nothing in this paragraph shall
be construed to render ineffective any action taken by Holders of the requisite
principal amount of Outstanding Securities on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Trustee,
at the Corporation's expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Corporation in writing and to each Holder of Securities in the manner set forth
in Section 1.6.
With respect to any record date set pursuant to this Section 1.4, the
party hereto that sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 1.6, on or prior
to the existing Expiration Date. If an Expiration Date is not designated with
respect to any record date set pursuant to this Section 1.4, the party hereto
that set such record date shall be deemed to have initially designated the 180th
day after such record date as the Expiration Date with respect thereto, subject
to its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Corporation.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Capital
Securities or the Corporation shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the
Trustee at its Corporate Trust office, or
(2) the Corporation by the Trustee, any Holder or any holder
of Capital Securities shall be sufficient for every purpose (except as
otherwise provided in
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Section 5.1) hereunder if in writing and mailed, first-class postage
prepaid, to the Corporation addressed to it at the address of its
principal office specified in the first paragraph of this Indenture or
at any other address previously furnished in writing to the Trustee by
the Corporation.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail service or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture or of
the relevant Securities, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
The Trust Indenture Act shall apply as a matter of contract to this
Indenture for purposes of interpretation, construction and defining the rights
and obligations hereunder, and this Indenture, the Corporation and the Trustee
shall be deemed for all purposes hereof to be subject to and governed by the
Trust Indenture Act to the same extent as would be the case if this Indenture
were qualified under that Act on the date hereof. Except as otherwise expressly
provided herein, if and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by any of Sections 310 to
317, inclusive, of the Trust Indenture Act through operation of Section 318(c)
thereof, such imposed duties shall control.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
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SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Corporation shall
bind its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Capital Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity shall
not be a Business Day, then (notwithstanding any other provision of this
Indenture or the Securities) payment of principal of (and premium, if any) or
interest or other amounts in respect of such Security need not be made on such
date, but may be made on the next succeeding Business Day (and no interest shall
accrue in respect of the amounts whose payment is so delayed for the period from
and after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, until such next succeeding Business Day) except that, if such
Business Day falls in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business
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Day (in each case with the same force and effect as if made on the Interest
Payment Date or Redemption Date or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities and the Trustee's certificate of authentication shall be
in substantially the forms set forth in this Article, or in such other form or
forms as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with applicable tax laws or the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
SECTION 2.2. Form of Face of Security.
HSB GROUP, INC.
7.0% Convertible Subordinated Deferrable Interest Debentures due December 31,
2017
No. 1 $309,300,000
HSB GROUP, INC., a Connecticut corporation (hereinafter called the
"Corporation", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to The
First National Bank of Chicago, as Property Trustee, pursuant to the Trust
Agreement of HSB Capital II, dated as of December 31, 1997, or registered
assigns, the principal sum of Three Hundred Nine Million Three Hundred Thousand
($309,300,000) Dollars on December 31, 2017; provided that the Corporation may
shorten the Stated Maturity of the principal of this Security to a date not
earlier than December 31, 2012 in the circumstances described on the reverse
hereof. The Corporation further promises to pay interest on said principal sum
from December 31, 1997 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually (subject to deferral
as set forth herein) in arrears on January 15 and July 15 of each year,
commencing January 15,
- 16 -
1998, at the rate of 7.0% per annum, together with Additional Sums, if any, as
provided in Section 10.6 of the Indenture until the principal hereof is paid or
duly provided for or made available for payment. The amount of interest payable
for any period less than a full interest period shall be computed on the basis
of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. The amount of interest payable for any full
interest period shall be computed by dividing the applicable rate per annum by
two. The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
installment, which shall be the January 1 or July 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Security may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the
Corporation shall have the right, at any time during the term of this Security,
from time to time to defer the payment of interest on this Security for up to
ten consecutive semi-annual interest payment periods with respect to each
deferral period (each an "Extension Period"), during which Extension Periods the
Corporation shall have the right to make partial payments of interest on any
Interest Payment Date, and at the end of which the Corporation shall pay all
interest then accrued and unpaid; provided, however, that no Extension Period
shall extend beyond the Stated Maturity of the principal of this Security as
then in effect, and no such Extension Period may end on a date other than an
Interest Payment Date; and provided further, however, that during any such
Extension Period, the Corporation shall not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock, or (ii) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation that rank pari passu in all
respects with or junior in interest to this Security or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt securities
of any subsidiary of the Corporation if such guarantee ranks pari passu with or
junior in interest to the Securities (other than (a) dividends or distributions
in common stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guarantee
and (d) purchases of common stock related to the issuance of common stock or
rights under any of the Corporation's or its subsidiaries' benefit plans for
their directors, officers or employees). Prior to the termination of any such
Extension Period, the Corporation may further defer the payment of interest,
provided that no Extension Period shall exceed ten consecutive semi-annual
interest payment
- 17 -
periods, and shall not extend beyond the Stated Maturity of the principal of
this Security or end on a date other than an Interest Payment Date. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest then due on any Interest Payment Date, the Corporation may elect
to begin a new Extension Period, subject to the above conditions. The
Corporation shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral or so long as such Securities are held by HSB
Capital II, at least one Business Day prior to the earlier of (i) the next
succeeding date on which Distributions on the Capital Securities of such Issuer
Trust would be payable but for such deferral, and (ii) the date on which the
Property Trustee of such Issuer Trust is required to give notice to holders of
such Capital Securities of the record date or the date such Distributions are
payable.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Corporation maintained for
that purpose in New York, New York or Chicago, Illinois, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Corporation payment of interest may be made (i) by check mailed to
the address of the Person entitled thereto as such address shall appear in the
Securities Register, or (ii) by wire transfer in immediately available funds at
such place and to such account as may be designated by the Person entitled
thereto as specified in the Securities Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and ranks pari passu with HSB Group,
Inc.'s Global Floating Rate Junior Subordinated Debentures, Series B, and this
Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on
such Holder's behalf to take such actions as may be necessary or appropriate to
effectuate the subordination so provided, and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each Holder hereof, by such
Holder's acceptance hereof, waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Corporation has caused this instrument to be
duly executed under its corporate seal.
HSB GROUP, INC.
By: --------------------
Name: Saul L. Basch
Title: Senior Vice President,
Treasurer and Chief
Financial Officer
Attest:
- -------------------
Corporate Secretary
SECTION 2.3. Form of Reverse of Security.
This Security is a duly authorized issue of securities of the
Corporation (herein called the "Securities"), limited in aggregate principal
amount to $309,300,000, issued under the Indenture, dated as of December 31,
1997 (herein called the "Indenture"), between the Corporation and The First
National Bank of Chicago, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Corporation, the Trustee, the holders of Senior Indebtedness and the Holders
of the Securities, and of the terms upon which the Securities are, and are to
be, authenticated and delivered.
All terms used in this Security that are defined in the Indenture or in
the Trust Agreement, dated as of December 31, 1997 (as modified, amended or
supplemented from time to time, the "Trust Agreement"), relating to HSB Capital
II (the "Issuer Trust") among the Corporation, as Depositor, the Trustees named
therein and the Holders from time to time of the Trust Securities issued
pursuant thereto, shall have the meanings assigned to them in the Indenture or
the Trust Agreement, as the case may be.
The Corporation may at any time, at its option, (i) on or after
December 31, 2004 or (ii) for a reason specified in Article XI of the Indenture,
in both cases subject to the terms and conditions of Article XI of the
Indenture, redeem this Security in whole at any time or in part from time to
time at a Redemption Price equal to 100% of the principal amount hereof,
together, in the case of any such redemption, with accrued interest to but
excluding the Redemption Date fixed for redemption.
- 19 -
Under limited circumstances, Employers Reinsurance Corporation may, at
its option and subject to the terms and conditions of Article XI of the
Indenture, require the Corporation to redeem this Security in whole, at a
Redemption Price as stated in Section 11.8 of the Indenture.
In addition, upon the occurrence and during the continuation of a Tax
Event in respect of the Issuer Trust, the Corporation may, at its option, at any
time within 90 days of the occurrence and during the continuation of such Tax
Event, redeem this Security, in whole but not in part, subject to the terms and
conditions of Article XI of the Indenture, at a Redemption Price equal to 100%
of the principal amount of the 7.0% Convertible Subordinated Deferrable Interest
Debentures so redeemed plus accrued and unpaid interest thereon to the date of
redemption.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Corporation with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Corporation and the Trustee at any time to enter into a supplemental indenture
or indentures for the purpose of modifying in any manner the rights and
obligations of the Corporation and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities at the time Outstanding, on behalf of the
Holders of all Securities, to waive compliance by the Corporation with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and of any Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to the Securities at the time Outstanding occurs
and is continuing, then and in every such case the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Outstanding Securities may
declare the principal amount of all the Outstanding Securities to be due and
payable immediately, by a notice in writing to the Corporation (and to the
Trustee if given by Holders), provided that, if upon an Event of Default, the
Trustee or such Holders fail to declare the principal of all the Outstanding
Securities to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount of the Capital Securities then Outstanding shall
have the right to make such declaration by a notice in writing to the
Corporation and the Trustee; and upon any such declaration the principal of and
the accrued interest on all the Securities shall become immediately due and
payable, provided that the
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payment of such principal and interest on such Securities shall remain
subordinated to the extent provided in Article XII of the Indenture.
Subject to the terms and conditions set forth in Article XIII of the
Indenture, this Security is convertible, at the option of the Holder, into
shares of Common Stock.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Corporation,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Security at the times, place and rate, and in the coin
or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Corporation maintained under Section 10.2 of the
Indenture for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the
Securities Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities,
of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $10,000,000 and any integral multiple of $100,000 in excess
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Corporation may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Corporation, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Corporation and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
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SECTION 2.4. Restrictive Legends.
Restricted Securities shall bear the following legend (the
"Restricted Securities Legend") unless the Corporation determines otherwise in
accordance with applicable law:
"THE CONVERTIBLE SUBORDINATED DEFERRABLE INTEREST DEBENTURES
EVIDENCED HEREBY AND THE COMMON STOCK ISSUABLE UPON THEIR CONVERSION
HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT IN WHOLE OR IN PART (BUT IF IN PART, IN
AMOUNTS NOT LESS THAN $10,000,000 IN PRINCIPAL AMOUNT) AND ONLY IN
COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OR PURSUANT TO
AN APPLICABLE EXEMPTION THEREFROM."
SECTION 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities designated therein referred to in the
within-mentioned Indenture.
Dated: December 31, 1997
----------------------------
as Trustee
By:
Authorized Officer
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is $309,300,000, except for Securities
authenticated and delivered upon registration of, transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Sections 3.4, 3.5 or 3.6.
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SECTION 3.2. Denominations.
The Securities shall be in registered form without coupons and shall be
issuable in denominations of $10,000,000 and any integral multiple of $100,000
thereof.
SECTION 3.3. Execution, Authentication and Dating.
The Securities shall be executed on behalf of the Corporation by its
Chief Executive Officer, its President or one of its Senior Vice Presidents or
Vice Presidents and attested by its Corporate Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities. At any time and from
time to time after the execution and delivery of this Indenture, the Corporation
may deliver Securities executed by the Corporation to the Trustee for
authentication, together with a Corporation Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Corporation
Order shall authenticate and deliver such Securities. Securities may be
authenticated on original issuance from time to time and delivered pursuant to
such procedures acceptable to the Trustee ("Procedures") as may be specified
from time to time by Corporation Order. Procedures may authorize authentication
and delivery pursuant to oral instructions of the Corporation or a duly
authorized agent, which instructions shall be promptly confirmed in writing.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Corporation, and the Corporation shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities, the Corporation may
execute, and upon Corporation Order the Trustee shall authenticate and deliver,
temporary Securities that are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any denomination,
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substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Corporation will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Corporation designated for that
purpose without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Corporation shall execute and the Trustee
shall authenticate and deliver in exchange therefor one or more definitive
Securities of any authorized denominations, of like tenor and aggregate
principal amount, bearing such restrictive legends as may be required by this
Indenture and bearing a number not contemporaneously outstanding. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 3.5. Registration, Transfer and Exchanges.
(a) Registration, Transfer and Exchange Generally. The Corporation
shall cause to be kept at the Corporate Trust Office of the Trustee a register
or registers (the "Securities Register") in which the registrar and transfer
agent with respect to the Securities (the "Securities Registrar"), subject to
such reasonable regulations as it may prescribe, shall provide for the
registration of Securities and of transfers and exchanges of Securities as
herein provided. The Trustee is hereby appointed Securities Registrar for the
purpose of registering Securities and transfers and exchanges of Securities as
herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Corporation designated for that purpose, the Corporation
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations, of like tenor and aggregate principal amount, bearing
such restrictive legends as may be required by this Indenture and bearing a
number not contemporaneously outstanding.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations, of like tenor and aggregate
principal amount, bearing such restrictive legends as may be required by this
Indenture and bearing a number not contemporaneously outstanding, upon surrender
of the Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Corporation shall execute, and
the Trustee shall authenticate and deliver, the Securities that the Holder
making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall
be the valid obligations of the Corporation, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
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Neither the Corporation, the Trustee nor the Securities Registrar shall
be required, pursuant to the provisions of this Section 3.5, (i) to issue,
register the transfer of or exchange any Security during a period beginning at
the opening of business 15 days before the day of selection for redemption of
Securities pursuant to Article XI and ending at the close of business on the day
of mailing of the notice of redemption, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except, in
the case of any such Security to be redeemed in part, any portion thereof not to
be redeemed.
Every Security presented or surrendered for registration of transfer or
exchange shall (if so required by the Corporation or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Corporation and the Securities Registrar, duly executed by
the Holder thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities, but the Corporation may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Securities.
(b) Registration, Transfer, and Exchange. A Security may be
transferred, in whole or in part, to a Person who takes delivery in the form of
another Security, provided that the following provisions are met. When
Securities are presented to the Securities Registrar with a request: (1) to
register the transfer of such Securities; or (2) to exchange such Securities for
Securities in an equal aggregate principal amount of Securities of other
authorized denominations, the Securities Registrar shall register the transfer
or make the exchange as requested if the requirements for such transaction are
met; provided, however, that the Securities surrendered for transfer or
exchange:
(A) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory
to the Trustee and the Securities Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing,
delivered to the Corporation at least 30 Business Days before
such intended transfer, and the Corporation shall not have
delivered a written notice of objection to the Holder within 5
Business Days prior to the intended transfer, which notice of
objection shall state whether the Corporation is objecting
pursuant to subsection (D) or (E) below;
(B) in the case of Restricted Securities, are being
transferred in compliance with the requirements of the
Securities Act or pursuant to an applicable exemption
therefrom and are accompanied by the following additional
information and documents: a Restricted Security Certificate,
satisfactory to the Trustee and duly executed by the
transferor Holder or his attorney duly authorized in writing,
in the form attached hereto as Exhibit A (a "Restricted
Securities Transfer Certificate") and an Opinion of Counsel
reasonably acceptable to the Corporation and to the Securities
Registrar to the effect that such transfer is in
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compliance with the Securities Act, in which case the
transferee Holder shall take delivery in the form of a
Restricted Security, subject to Section 3.5(c);
(C) shall be accompanied by a statement that such
transferee agrees in writing to be bound by the terms and
provisions of the Trust Agreement and the Purchase Agreement;
(D) shall be subject to the right of the Corporation
to veto the Holder's choice of such Person to whom the
proposed transfer or disposition is to occur by giving notice
of such objection to the Holder as described in (A) above; and
(E) shall, pursuant to Section 4.2(a)(iii) of the
Trust Agreement, be subject to the right of the Corporation to
cause the Issuer Trust to redeem at a Redemption Price stated
in Section 11.7, the Security or Securities surrendered for
transfer or exchange by giving notice of such objection to the
Holder as described in (A) above.
(c) Securities Act Legends. Except as set forth below, all
Securities or a new Security that is issued in exchange for another Security or
any portion thereof, upon transfer or otherwise, shall bear a Restricted
Securities Legend:
(i) At any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject
to transfer restrictions pursuant to the Securities Act, a new Security
which does not bear a Securities Act Legend may be issued in exchange
for or in lieu of a Security or any portion thereof which bears such a
legend if the Corporation has received from the Holder an Opinion of
Counsel as described in subsection (vi) below and if the Trustee has
received an Unrestricted Securities Transfer Certificate in the form of
Exhibit B hereto (an "Unrestricted Securities Transfer Certificate"),
satisfactory to the Trustee and duly executed by the Holder of such
legended Security or his attorney duly authorized in writing, and after
such date and receipt of such certificate, the Trustee shall
authenticate and deliver such a new Security in exchange for or in lieu
of such other Security as provided in this section;
(ii) a new Security that does not bear a Restricted Securities
Legend may be issued in exchange for or in lieu of a Restricted
Security or any portion thereof that bears such a legend if, after the
receipt by the Corporation of an Opinion of Counsel as described in
subsection (vi) below, in the Corporation's sole judgment, placing such
a legend upon such new Security is not and will not be necessary to
ensure compliance with the registration requirements of the Securities
Act, and the Trustee, at the written direction of the Corporation in
the form of an Officers' Certificate, shall authenticate and deliver
such a new Security as provided in this section;
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(iii) Securities distributed to a holder of Capital Securities
upon dissolution of the Issuer Trust shall bear a Restricted Securities
Legend if the Capital Securities so held bear a similar legend; and
(iv) The Holder agrees that it will not effect the proposed
transfer or disposition of the Security until such Holder has provided
to the Corporation an Opinion of Counsel satisfactory in form and
substance to the Corporation that such proposed disposition or transfer
is exempt from registration under the Securities Act and any applicable
state securities laws. The Corporation shall use its best efforts to
comply with any state securities laws, but shall in no event be
required, in connection therewith, to qualify to do business in any
state where it is not then qualified or to take any action that would
subject it to tax or to the general service of process in any state
where it is not then subject.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Corporation or the Trustee
to save each of them harmless, the Corporation shall execute and the Trustee
shall authenticate and deliver in exchange therefor a new Security, of like
tenor and aggregate principal amount, bearing the same legends, and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Corporation and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Corporation or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Corporation shall execute and upon its request the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security, of like tenor and aggregate principal amount, bearing the same legends
as such destroyed, lost or stolen Security, and bearing a number not
contemporaneously outstanding.
If any such mutilated, destroyed, lost or stolen Security has become or
is about to become due and payable, the Corporation in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.6, the
Corporation may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Corporation, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall
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be entitled to the same benefits of this Indenture equally and proportionately
with any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security that is payable, and is punctually paid or
duly provided for, on any Interest Payment Date, shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest in respect
of such Securities, except that, unless otherwise provided in the Securities,
interest payable on the Stated Maturity of the principal of a Security shall be
paid to the Person to whom principal is paid. The initial payment of interest on
any Security that is issued between a Regular Record Date and the related
Interest Payment Date shall be payable as provided in such Security.
Any interest on any Security that is due and payable, but is not timely
paid or duly provided for, on any Interest Payment Date for Securities (herein
called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Corporation, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Corporation may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Corporation
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Corporation shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as provided
in this Clause (1). Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest, which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Corporation of such Special Record Date and, in the
name and at the expense of the Corporation, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of a
Security at the address of such Holder as it appears in the Securities
Register not less than 10 days prior to such Special Record Date. The
Trustee may, in its discretion, in the name and at the expense
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of the Corporation, cause a similar notice to be published at least
once in a newspaper, customarily published in the English language on
each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, but such publication shall not be a
condition precedent to the establishment of such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered
on such Special Record Date and shall no longer be payable pursuant to
the following Clause (2).
(2) The Corporation may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities in respect of which
interest is in default may be listed and, upon such notice as may be
required by such exchange (or by the Trustee if the Securities are not
listed), if, after notice given by the Corporation to the Trustee of
the proposed payment pursuant to this Clause (2), such payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.7, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, that were carried by such other Security.
SECTION 3.8. Persons Deemed Owners.
The Corporation, the Trustee and any agent of the Corporation or the
Trustee shall treat the Person in whose name any Security is registered as the
owner of such Security for the purpose of receiving payment of principal of and
(subject to Section 3.7) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Corporation, the Trustee nor any agent of the Corporation or the Trustee shall
be affected by notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities and Securities surrendered
directly to the Trustee for any such purpose shall be promptly canceled by it.
The Corporation may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder that the Corporation
may have acquired in any manner whatsoever, and all Securities so delivered
shall be promptly canceled by the Trustee. No Securities shall be authenticated
in lieu of or in exchange for any Securities canceled as provided in this
Section 3.9, except as expressly permitted by this Indenture. All canceled
Securities shall be destroyed by the Trustee and the Trustee shall deliver to
the Corporation a certificate of such destruction.
- 29 -
SECTION 3.10. Computation of Interest.
Interest on the Securities for any partial period shall be computed on
the basis of a 360- day year of twelve 30-day months and the actual number of
days elapsed in any partial month in such period, and interest on the Securities
for a full period shall be computed by dividing the rate per annum by the number
of interest periods that together constitute a full twelve months.
SECTION 3.11. Deferrals of Interest Payment Dates.
So long as no Event of Default has occurred and is continuing, the
Corporation shall have the right, at any time during the term, from time to time
to defer the payment of interest on such Securities for up to ten consecutive
semi-annual interest payment periods with respect to each such deferral period
(each, an "Extension Period"), during which Extension Periods the Corporation
shall have the right to make partial payments of interest on any Interest
Payment Date. No Extension Period shall end on a date other than an Interest
Payment Date. At the end of any such Extension Period the Corporation shall pay
all interest then accrued and unpaid on the Securities; provided, however, that
no Extension Period shall extend beyond the Stated Maturity of the principal of
the Securities; and provided further, however that during any such Extension
Period, the Corporation shall not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock, or (ii) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation that rank pari passu in all
respects with or junior in interest to the Securities or make any guarantee
payments with respect to any guarantee by the Corporation of the debt securities
of any Subsidiary of the Corporation if such guarantee ranks pari passu with or
junior in interest to the Securities (other than (a) dividends or distributions
of Common Stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of Common Stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guarantee
Agreement and (d) purchases of Common Stock related to the issuance of Common
Stock or rights under any of the Corporation's or any Subsidiary of the
Corporation's benefit plans for their directors, officers or employees. Prior to
the termination of any such Extension Period, the Corporation may further defer
the payment of interest, provided that no Event of Default has occurred and is
continuing, and provided further that no Extension Period shall exceed the
period or periods specified in such Securities, extend beyond the Stated
Maturity of the principal of such Securities or end on a date other than an
Interest Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest then due on any Interest
Payment Date, the Corporation may elect to begin a new Extension Period, subject
to the above conditions. The Corporation shall give the Holders of the
Securities and the Trustee notice of its election to begin any such Extension
Period at least one Business Day prior to the next succeeding Interest Payment
Date on which interest on Securities would be payable but for such deferral or
so long as any such Securities are held by such Issuer Trust, at least one
Business Day prior to the earlier of (i) the next succeeding date on which
Distributions on the Capital Securities of such Issuer Trust would be payable
but for such deferral, and (ii) the date
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on which the Property Trustee of such Issuer Trust is required to give notice to
holders of such Capital Securities of the record date or the date such
Distributions are payable.
The Trustee shall promptly give notice of the Corporation's election to
begin any such Extension Period to the Holders of the Outstanding Securities.
SECTION 3.12. Right of Set-Off.
Notwithstanding anything to the contrary herein, the Corporation shall
have the right to set off any payment it is otherwise required to make in
respect of any such Security to the extent the Corporation has theretofore made,
or is concurrently on the date of such payment making, a payment under the
Guarantee Agreement relating to such Security or to a holder of Capital
Securities pursuant to an action undertaken under Section 5.8 of this Indenture.
SECTION 3.13. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Corporation and,
by its acceptance of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a beneficial interest in, such Security agree that
for United States federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
SECTION 3.14. Shortening of Stated Maturity.
If specified or as contemplated by Section 2.1, the Corporation shall
have the right to shorten the Stated Maturity of the principal of the Securities
at any time to any date.
SECTION 3.15. CUSIP Numbers.
The Corporation in issuing the Securities may (but is not required to)
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption and other similar or related
materials as a convenience to Holders; provided that any such notice or other
materials may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of
redemption or other materials and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
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This Indenture shall, upon Corporation Request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and as otherwise provided
in this Section 4.1) and the Trustee, on demand of and at the expense of the
Corporation, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A)(1) all Securities theretofore authenticated and
delivered (other than (i) Securities that have been destroyed,
lost or stolen and that have been replaced or paid as provided
in Section 3.6 and (ii) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Corporation and thereafter repaid to the
Corporation or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year of the date of
deposit, or
(iii) are to be called for redemption within
one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the
Corporation, or
(iv) are tendered for conversion pursuant to
Section 13.2,
and the Corporation, in the case of subclause (B)(i), (ii) or (iii)
above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount in the currency or
currencies in which the Securities are payable sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest to the date of such deposit (in the case of
Securities that have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Corporation has paid or caused to be paid all other sums
payable hereunder by the Corporation; and
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(3) the Corporation has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Corporation to the Trustee under Section 6.7, the obligations
of the Trustee to any Authenticating Agent under Section 6.14 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of Clause
(1) of this Section 4.1, the obligations of the Trustee under Section 4.2 and
the last paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by the Trustee, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Corporation acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the
Securities, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of 30 days (subject to the deferral of any due date in respect
of any interest in the case of an Extension Period); or
(2) default in the payment of the principal of (or premium, if
any, on) any Security at its Maturity; or
(3) failure on the part of the Corporation duly to observe or
perform in any material respects any other of the covenants or
agreements on the part of the Corporation in the Securities or in this
Indenture for a period of 90 days after the date on which
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written notice of such failure, requiring the Corporation to remedy the
same and stating that such notice is a "Notice of Default" shall have
been given by registered or certified mail to the Corporation by the
Trustee or to the Corporation and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Outstanding Securities;
or
(4) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Corporation a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization of the Corporation under the Bankruptcy Code or any
other similar applicable Federal or State law, which decree or order
shall have continued undischarged and unstayed for a period of 60 days;
or the entry of a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Corporation or of its
property, or for the winding up or liquidation of its affairs, which
decree or order shall have continued undischarged and unstayed for a
period of 60 days; or
(5) the commencement by the Corporation of voluntary
proceedings to be adjudicated a bankrupt, or the consent by the
Corporation to the filing of a bankruptcy proceeding against it, or the
filing by the Corporation of a petition or answer or consent seeking
reorganization under the Bankruptcy Code or any other similar Federal
or State law, or the consent by the Corporation to the filing of any
such petition, or the consent by the Corporation to the appointment of
a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property, or the making by the Corporation
of an assignment for the benefit of creditors, or the admission by the
Corporation in writing of its inability to pay its debts generally as
they become due; or
(6) any other Event of Default provided with respect to
Securities.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(4) or 5.1(5)) with respect to Securities at the time Outstanding
occurs and is continuing, then and in every such case the Trustee or the Holders
of not less than 25% in aggregate principal amount of the Outstanding Securities
may declare the principal amount of all the Securities to be due and payable
immediately, by a notice in writing to the Corporation (and to the Trustee if
given by Holders), provided that, if, upon an Event of Default, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities fail to declare the principal of all the Outstanding Securities (or
specified portion thereof) to be immediately due and payable, the holders of at
least 25% in aggregate Liquidation Amount (as defined in the related Trust
Agreement) of Capital Securities issued by such Issuer Trust then outstanding
shall have the right to make such declaration by a notice in writing to the
Corporation and the Trustee; and upon any such declaration such principal amount
(or specified portion thereof) of and the accrued interest on all the Securities
shall become immediately due and payable. If an Event of Default specified in
Section 5.1(4) or 5.1(5) with respect to Securities at the time Outstanding
occurs, the principal amount of all the Securities and the accrued interest on
all the Securities shall
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automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable. Payment of principal
(and premium, if any) and interest on such Securities shall remain subordinated
to the extent provided in Article XII notwithstanding that such amount shall
become immediately due and payable as herein provided.
At any time after such a declaration of acceleration with respect to
Securities has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article V
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Securities, by written notice to the Corporation and the Trustee,
may rescind and annul such declaration and its consequences if:
(1) the Corporation has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue installments of interest on all Securities,
(B) the principal of (and premium, if any, on) any
Securities that have become due otherwise than by such
declaration of acceleration, and
(C) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities, other than
the non-payment of the principal of Securities that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.13.
If the Holders of the Securities fail to annul such declaration and
waive such default, the holders of a Majority in Liquidation Amount of the
Capital Securities (as defined in the related Trust Agreement) issued by such
Issuer Trust shall also have the right to rescind and annul such declaration and
its consequences by written notice to the Corporation and the Trustee, subject
to the satisfaction of the conditions set forth in Clauses (1) and (2) above of
this Section 5.2.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Corporation covenants that if:
(1) default is made in the payment of any installment of
interest on any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
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(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Corporation will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal (and premium, if any), including any sinking
fund payment or analogous obligations, and interest, and, in addition thereto,
all amounts owing to the Trustee under Section 6.7.
If the Corporation fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Corporation or any other obligor upon such
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Corporation or any other
obligor upon the Securities, wherever situated.
If an Event of Default with respect to Securities occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Securities by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Corporation or any other obligor upon the Securities
or the property of the Corporation or of such other obligor or their creditors,
(a) the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Corporation for the payment of overdue
principal (or premium, if any) or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid
in respect of the Securities and to file such other papers or
documents as may be necessary or advisable and to take any and
all actions as are authorized under the Trust Indenture Act in
order to have the claims of the Holders and any predecessor to
the Trustee under Section 6.7 allowed in any such judicial
proceedings; and
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(2) in particular, the Trustee shall be authorized to
collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same in
accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) in any such judicial
proceeding is hereby authorized by each Holder to make such payments to
the Trustee for distribution in accordance with Section 5.6, and in the
event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due to it and
any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5. Trustee May Enforce Claim Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, subject to
Article XII and after provision for the payment of all the amounts owing the
Trustee and any predecessor Trustee under Section 6.7, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to Securities pursuant to this Article V shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money or property on account of principal (or premium, if
any) or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7;
SECOND: Subject to Article XII, to the payment of the amounts
then due and unpaid upon Securities of principal (and premium, if any)
and interest in respect of which or for the benefit of which such
money has been collected, ratably, without preference
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or priority of any kind, according to the amounts due and payable on
such Securities for principal (and premium, if any) and interest,
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver, assignee, trustee, liquidator or
sequestrator (or other similar official) or for any other remedy hereunder,
unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Securities;
(2) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have made written request
to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of Capital Securities.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Sections 3.7 and 3.11) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such right
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shall not be impaired without the consent of such Holder. Any registered holder
of Capital Securities shall have the right, upon the occurrence of an Event of
Default described in Section 5.1(1) or 5.1(2), to institute a suit directly
against the Corporation for enforcement of payment to such holder of principal
of (premium, if any) and (subject to Sections 3.7 and 3.11) interest on the
Securities having a principal amount equal to the aggregate Liquidation Amount
(as defined in the related Trust Agreement) of such Capital Securities held by
such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Capital Securities issued
by any Issuer Trust has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee, such Holder or such
holder of Capital Securities, then and in every such case the Corporation, the
Trustee, such Holders and such holder of Capital Securities shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and such holder of Capital Securities shall continue as
though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.6, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Capital Security to exercise any right or remedy accruing upon any
Event of Default with respect to the Securities shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein.
Every right and remedy given by this Article V or by law to the Trustee
or to the Holders and the right and remedy given to the holders of Capital
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Capital
Securities, as the case may be.
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SECTION 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee, with respect to the
Securities, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the proceeding
so directed would be unjustly prejudicial to the Holders not joining in any
such direction or would involve the Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities affected thereby and, the holders of a Majority in
Liquidation Amount of the Capital Securities (as defined in the related Trust
Agreement) issued by such Issuer Trust may waive any past default or Event of
Default hereunder and its consequences with respect to such Securities except a
default:
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (unless such default has been cured and the
Corporation has paid to or deposited with the Trustee a sum sufficient
to pay all matured installments of interest and all principal of (and
premium, if any, on) all Securities due otherwise than by
acceleration), or
(2) in respect of a covenant or provision hereof that under
Article IX cannot be modified or amended without the consent of each
Holder of any Outstanding Security affected.
Any such waiver shall be deemed to be on behalf of the Holders of all
the Securities and in the case of a waiver by holders of Capital Securities
issued by the Issuer Trust, by the holders of all the Capital Securities issued
by such Issuer Trust.
Upon any such waiver, such default or Event of Default shall cease to
exist, and any default or Event of Default arising therefrom shall be deemed to
have been cured, for every
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purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security,
by its acceptance thereof, shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.14 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder or group of Holders holding in the
aggregate more than 10% in aggregate principal amount of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security on
or after the respective Stated Maturities expressed in such Security.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Corporation covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Corporation (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
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certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions that by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Indenture.
(b) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct except that:
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section 6.1;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(3) the 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 Holders pursuant to Section 5.12 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to the Securities.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.1.
SECTION 6.2. Notice of Defaults.
Within 30 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities, the Trustee shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Securities Register, notice of such
default, unless such default shall have been cured or waived; provided, however,
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that, except in the case of a default in the payment of the principal of (or
premium, if any) or interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of Securities; and provided further, however, that, in
the case of any default of the character specified in Section 5.1(3), no such
notice to Holders of Securities shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section 6.2, the term "default"
means any event that is, or after notice or lapse of time or both would become,
an Event of Default with respect to Securities.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Corporation mentioned herein shall
be sufficiently evidenced by a Corporation Request or Corporation Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel
or any Opinion of Counsel 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 reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in complying with such
request or direction;
(f) the 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,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit; and
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Corporation, and neither the Trustee nor any Authenticating Agent assumes
any responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Corporation of the Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Corporation, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Corporation with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent,
Securities Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law (including the Trust
Indenture Act). The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Corporation.
SECTION 6.7. Compensation and Reimbursement.
The Corporation agrees:
(1) to pay to the Trustee from time to time such reasonable
compensation for all services rendered by it hereunder in such amounts
as the Corporation and the Trustee 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);
(2) to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
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(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel) incurred without negligence, wilful misconduct or bad faith,
arising out of or in connection with the acceptance or administration
of this trust or the performance of its duties hereunder, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder. This indemnification shall survive the termination of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or 5.1(5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Code.
SECTION 6.8. Disqualification; Conflicting Interests.
(a) The Trustee for the Securities shall be subject to the provisions
of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the
Trustee from filing with the Commission the application referred to in the
second to last paragraph of said Section 310(b).
(b) The Trust Agreement and the Guarantee Agreement with respect to
each Issuer Trust shall be deemed to be specifically described in this Indenture
for the purposes of clause (i) of the first proviso contained in Section 310(b)
of the Trust Indenture Act.
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be:
(a) a corporation organized and doing business under the laws
of the United States of America or of any State or Territory thereof or
the District of Columbia, authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority, or
(b) a corporation or other Person organized and doing business
under the laws of a foreign government that is permitted to act as
Trustee pursuant to a rule, regulation or order of the Commission,
authorized under such laws to exercise corporate trust powers, and
subject to supervision or examination by authority of such foreign
government or a political subdivision thereof substantially equivalent
to supervision or examination applicable to United States institutional
trustees,
in either case having at the time of appointment securities rated in one of the
three highest rating categories by a nationally recognized statistical rating
organization and a combined capital and surplus of at least $50,000,000. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section 6.9 and to the extent permitted by the Trust
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Indenture Act, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.9, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article VI. Neither the Corporation nor any Person directly or indirectly
controlling, controlled by or under common control with the Corporation shall
serve as Trustee for the Securities.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VI shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities
by giving written notice thereof to the Corporation. If an instrument of
acceptance by a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee with respect to the Securities.
(c) The Trustee may be removed at any time with respect to the
Securities by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities, delivered to the Trustee and to the Corporation.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Corporation or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and shall
fail to resign after written request therefor by the Corporation or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Corporation, acting pursuant to the authority of
a Board Resolution, may remove the Trustee with respect to the Securities, or
(ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of such Holder and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to the Securities and the appointment of a successor
Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities, the Corporation, by a Board Resolution, shall
promptly appoint a successor Trustee with respect to the Securities. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities shall be
appointed by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities delivered to the Corporation and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee with respect to the Securities
and supersede the successor Trustee appointed by the Corporation. If no
successor Trustee with respect to the Securities shall have been so appointed by
the Corporation or the Holders and accepted appointment in the manner
hereinafter provided, any Holder who has been a bona fide Holder of a Security
for at least six months may, subject to Section 5.14, on behalf of such Holder
and all others similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the Securities.
(f) The Corporation shall give notice of each resignation and each
removal of the Trustee with respect to the Securities and each appointment of a
successor Trustee with respect to the Securities by mailing written notice of
such event by first-class mail, postage prepaid, to the Holders of Securities as
their names and addresses appear in the Securities Register. Each notice shall
include the name of the successor Trustee with respect to the Securities and the
address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Corporation and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Corporation or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities, the Corporation, the retiring Trustee and each
successor Trustee with respect to the Securities shall execute and deliver an
indenture supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities, and (3) shall add to or change
any of the
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provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities; but, on request of the
Corporation or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities.
(c) Upon request of any such successor Trustee, the Corporation shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in paragraph (a) or (b) of this Section 6.11, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article VI.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article VI,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. If any Securities shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated, and if any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Corporation.
If and when the Trustee shall be or become a creditor of the
Corporation (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection of
claims against the Corporation (or any such other obligor).
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SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to the Securities, which shall be authorized to act on behalf of the Trustee to
authenticate the Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.5, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or to the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
or the Authenticating Agent's certificate of authentication set forth for this
Section 6.14. Each Authenticating Agent shall be acceptable to the Corporation
and shall at all times be a corporation organized and doing business under the
laws of the United States of America or of any State or Territory thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal, State, Territorial or District of
Columbia authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 6.14
and to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 6.14, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 6.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent, shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
qualified and eligible under this Section 6.14, without the execution or filing
of any paper or any further act on the part of the Trustee or the Authenticating
Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Corporation. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Corporation. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, the Trustee may appoint a successor
Authenticating Agent, which shall be acceptable to the Corporation and shall
give notice of such appointment in the manner provided in Section 1.6 to all
Holders of Securities with respect to which such Authenticating Agent will
serve. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor
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hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provision of this Section 6.14.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.14, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment is made pursuant to this Section 6.14, the Securities
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities designated therein referred to in the
within mentioned Indenture.
Dated: ___________________ -------------------
as Trustee
By: ------------------
As Authenticating Agent
By:-------------------
Authorized Officer
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND CORPORATION
SECTION 7.1. Corporation to Furnish Trustee Names and Addresses of Holders.
The Corporation will furnish or cause to be furnished to the Trustee:
(a) semi-annually, on or before January 1 or July 1 of each
year, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Holders as of a date not more than 15
days prior to the delivery thereof, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Corporation of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished,
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in each case to the extent such information is in the possession or control of
the Corporation and has not otherwise been received by the Trustee in its
capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by its acceptance thereof, agrees with
the Corporation and the Trustee that neither the Corporation nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted no later than July 15 in each calendar
year, commencing with the first July 15 after the first issuance of Securities
under this Indenture.
(c) If this Indenture shall have been qualified under the Trust
Indenture Act, a copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each securities exchange
upon which any Securities are listed and also with the Commission. The
Corporation will notify the Trustee when any Securities are listed on any
securities exchange.
SECTION 7.4. Reports by Corporation.
The Corporation shall file with the Trustee and with the Commission,
and transmit to the Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided in the Trust Indenture Act; provided
that any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be
filed with the Trustee within 15 days after the same is required to be filed
with the Commission. At any time when the Corporation is not subject to Section
13 or 15(d) of the Exchange Act,
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upon the request of a Holder or beneficial owner of a Security, the Corporation
shall continue to file with the Commission and provide the Trustee and Holders
with the annual reports and the information, documents and other reports which
are specified in Sections 13 and 15(d) of the Exchange Act. The Corporation also
shall comply with the other provisions of Trust Indenture Act Section 314(a),
provided, however, that the Corporation shall be required, pursuant to this
Section 7.4, to provide any document, report or other information to the
Commission only if this Indenture shall have been qualified under the Trust
Indenture Act.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Corporation May Consolidate, Etc., Only on Certain Terms.
The Corporation shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and no Person shall consolidate with or merge into
the Corporation or convey, transfer or lease its properties and assets
substantially as an entirety to the Corporation, unless:
(1) if the Corporation shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the corporation formed by
such consolidation or into which the Corporation is merged or the
Person that acquires by conveyance or transfer, or that leases, the
properties and assets of the Corporation substantially as an entirety
shall be a corporation, partnership or trust organized and existing
under the laws of the United States of America or any State thereof or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities
and the performance of every covenant of this Indenture on the part of
the Corporation to be performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event that, after notice or lapse of time, or
both, would constitute an Event of Default, shall have occurred and be
continuing; and
(3) the Corporation has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any such
supplemental indenture comply with this Article VIII and that all
conditions precedent herein provided for relating to such transaction
have been complied with; and the Trustee, subject to Section 6.1, may
rely upon such Officers' Certificate and Opinion of Counsel as
conclusive evidence that such transaction complies with this Section
8.1.
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SECTION 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Corporation with or into any
other Person, or any conveyance, transfer or lease by the Corporation of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1, the successor corporation formed by such consolidation or into
which the Corporation is merged or to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Corporation under this Indenture with the same effect as if
such successor Person had been named as the Corporation herein; and in the event
of any such conveyance, transfer or lease, the Corporation shall be discharged
from all obligations and covenants under this Indenture and the Securities.
Such successor Person may cause to be executed, and may issue either in
its own name or in the name of the Corporation, any or all of the Securities
issuable hereunder that theretofore shall not have been signed by the
Corporation and delivered to the Trustee; and, upon the order of such successor
Person instead of the Corporation and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities that previously shall have been signed and
delivered by the officers of the Corporation to the Trustee for authentication
pursuant to such provisions and any Securities that such successor Person
thereafter shall cause to be executed and delivered to the Trustee on its behalf
for the purpose pursuant to such provisions. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture.
In case of any such consolidation, merger, conveyance, transfer or
lease, such changes in phraseology and form may be made in the Securities
thereafter to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Corporation, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Corporation, and the assumption by any such successor of the covenants
of the Corporation contained herein and in the Securities contained; or
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(2) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee or to surrender any right or power
herein conferred upon the Corporation; or
(3) to add to the covenants of the Corporation for the
benefit of the Holders of Securities; or
(4) to add any additional Events of Default for the benefit of
the Holders of Securities; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall (a)
become effective only when there is no Security Outstanding created
prior to the execution of such supplemental indenture that is entitled
to the benefit of such provision or (b) not apply to any Outstanding
Securities; or
(6) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided that such
action pursuant to this clause (6) shall not adversely affect the
interest of the Holders of Securities in any material respect or for so
long Capital Securities issued by the Issuer Trust shall remain
outstanding, the holders of such Capital Securities; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities and to
add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of
Section 6.11(b); or
(8) to comply with the requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the
Trust Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Corporation and the Trustee, the Corporation, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment
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where, or the coin or currency in which, any Security or interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section 9.2, Section
5.13 or Section 10.5, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Security
affected thereby;
provided further, however, that, so long as Capital Securities remain
outstanding, (i) no such amendment shall be made that adversely affects the
holders of such Capital Securities in any material respect, and no termination
of this Indenture shall occur, and no waiver of any Event of Default or
compliance with any covenant under this Indenture shall be effective, without
the prior consent of the holders of at least a Majority in Liquidation Amount of
such Capital Securities (as defined in the related Trust Agreement) unless and
until the principal of (and premium, if any, on) the Securities and all accrued
and (subject to Section 3.11) unpaid interest thereon have been paid in full,
and (ii) no amendment shall be made to Section 5.8 of this Indenture that would
impair the rights of the holders of Capital Securities issued by the Issuer
Trust provided therein without the prior consent of the holders of each such
Capital Security then outstanding unless and until the principal of (and
premium, if any, on) the Securities and all accrued and (subject to Section
3.11) unpaid interest thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture that has expressly been included solely for
the benefit of the Securities or any Capital Securities of the Issuer Trust that
holds the Securities, or that modifies the rights of the Holders of Securities
or holders of such Capital Securities with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities or holders of Capital Securities.
It shall not be necessary for any Act of Holders under this Section 9.2
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
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SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent herein provided for relating to such action have
been complied with. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article IX,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and shall if required by
the Corporation, bear a notation in form approved by the Corporation as to any
matter provided for in such supplemental indenture. If the Corporation shall so
determine, new Securities so modified as to conform, in the opinion of the
Corporation, to any such supplemental indenture may be prepared and executed by
the Corporation and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Corporation covenants and agrees for the benefit of the Securities
that it will duly and punctually pay the principal of (and premium, if any) and
interest on the Securities in accordance with the terms of such Securities and
this Indenture.
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SECTION 10.2. Maintenance of Office or Agency.
The Corporation will maintain in each Place of Payment for the
Securities an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Corporation in respect of
the Securities and this Indenture may be served. The Corporation initially
appoints the Trustee, acting through its Corporate Trust Office, as its agent
for said purposes. The Corporation will give prompt written notice to the
Trustee of any change in the location of any such office or agency. If at any
time the Corporation shall fail to maintain such office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Corporation hereby appoints the Trustee as its agent to receive
all such presentations, surrenders, notices and demands.
The Corporation may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all of such purposes, and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Corporation of its obligation to maintain an office or agency in
each Place of Payment for Securities for such purposes. The Corporation will
give prompt written notice to the Trustee of any such designation and any change
in the location of any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Corporation shall at any time act as its own Paying Agent with
respect to the Securities, it will, on or before each due date of the principal
of (or premium, if any) or interest on any of the Securities, segregate and hold
in trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (or premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
will promptly notify the Trustee of its failure so to act.
Whenever the Corporation shall have one or more Paying Agents, it will,
prior to 10:00 a.m., New York City time, on each due date of the principal of
(or premium, if any) or interest on any Securities, deposit with a Paying Agent
a sum sufficient to pay the amount so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such amount, and (unless such Paying
Agent is the Trustee) the Corporation will promptly notify the Trustee of its
failure so to act.
The Corporation will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 10.3,
that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) and interest on the Securities in trust for
the benefit of the Persons entitled thereto
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until such sums shall be paid to such Persons or otherwise disposed of
as herein provided;
(2) give the Trustee notice of any default by the Corporation
(or any other obligor upon such Securities) in the making of any
payment of principal (or premium, if any) or interest in respect of any
Security;
(3) at any time during the continuance of any default with
respect to the Securities, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such Paying
Agent; and
(4) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent.
The Corporation may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Corporation Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Corporation or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the
Corporation or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Corporation in trust for the payment of the principal of (or premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (or premium, if any) or interest has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Corporation Request to the
Corporation, or (if then held by the Corporation) shall (unless otherwise
required by mandatory provision of applicable escheat or abandoned or unclaimed
property law) be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Corporation
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Corporation as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Corporation cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the Borough of Manhattan, The City of New York, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the
Corporation.
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SECTION 10.4. Statement as to Compliance.
The Corporation shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Corporation ending after the date hereof, an
Officers' Certificate covering the preceding calendar year, stating whether or
not to the best knowledge of the signers thereof the Corporation is in default
in the performance, observance or fulfillment of or compliance with any of the
terms, provisions, covenants and conditions of this Indenture, and if the
Corporation shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge. For the purpose of this Section
10.4, compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Capital Securities specified in
Section 9.2, if any, the Corporation may omit in any particular instance to
comply with any covenant or condition provided pursuant to Section 9.1(3) or
9.1(4) with respect to the Securities, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Corporation in respect of any such
covenant or condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
So long as no Event of Default has occurred and is continuing and
except as otherwise specified or as contemplated by Section 2.1, if (i) the
Issuer Trust is the Holder of all of the Outstanding Securities, and (ii) a Tax
Event has occurred and is continuing in respect of such Issuer Trust, the
Corporation shall pay to such Issuer Trust (or its permitted successor under the
related Trust Agreement) for so long as such Issuer Trust (or its permitted
successor) is the registered holder of the Outstanding Securities, together with
any payment of principal of (or premium, if any) or interest on such Securities,
such additional sums as may be necessary in order that the amount of
Distributions then payable by such Issuer Trust in respect of the related
Capital Securities and Common Securities in accordance with the terms thereof
shall not be reduced as a result of any Additional Taxes arising from such Tax
Event (the "Additional Sums"). Whenever in this Indenture or the Securities
there is a reference in any context to the payment of principal of (or premium,
if any) or interest on the Securities, such mention shall be deemed to include
mention of the payments of the Additional Sums provided for in this paragraph to
the extent that, in such context, Additional Sums are, were or would be payable
in respect thereof pursuant to the provisions of this paragraph, and any express
mention of the payment of Additional Sums (if applicable) in any provision
hereof shall not be construed as excluding Additional Sums in those provisions
hereof where such express mention is not made; provided, however, that the
deferral of the payment of interest pursuant to Section 3.11 or the
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terms of the Securities shall not defer the payment of any Additional Sums that
may be due and payable.
SECTION 10.7. Additional Covenants.
The Corporation covenants and agrees with each Holder of Securities
that it shall not, and it shall not permit any Subsidiary of the Corporation to,
(x) declare or pay any dividends or distributions on, or redeem purchase,
acquire or make a liquidation payment with respect to, any shares of the
Corporation's capital stock, or (y) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Corporation that rank pari passu in all respects with or junior in interest to
the Securities or make any guarantee payments with respect to any guarantee by
the Corporation of the debt securities of any Subsidiary of the Corporation if
such guarantee ranks pari passu with or junior in interest to the Securities
(other than (a) dividends or distributions in common stock of the Corporation,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Guarantee Agreement and (d) purchases of common stock related
to the issuance of common stock or rights under any of the Corporation's or any
Subsidiary of the Corporation's benefit plans for their directors, officers or
employees if at such time (i) there shall have occurred any event of which the
Corporation has actual knowledge that (A) with the giving of notice or the lapse
of time, or both, would constitute an Event of Default and (B) in respect of
which the Corporation shall not have taken reasonable steps to cure, (ii) the
Corporation shall be in default with respect to its payment of any obligations
under the Guarantee Agreement relating to the Capital Securities issued by such
Issuer Trust, or (iii) the Corporation shall have given notice of its selection
of an Extension Period with respect to the Securities as provided herein and
shall not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
The Corporation also covenants with each Holder of Securities issued to
the Issuer Trust (i) to hold, directly or indirectly, 100% of the Common
Securities of such Issuer Trust, provided that any permitted successor of the
Corporation hereunder may succeed to the Corporation's ownership of such Common
Securities, (ii) as holder of such Common Securities, not to voluntarily
terminate, wind-up or liquidate such Issuer Trust, other than (a) in connection
with a distribution of the Securities to the holders of the related Capital
Securities in liquidation of such Issuer Trust, or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the related Trust
Agreement, and (iii) to use its reasonable efforts, consistent with the terms
and provisions of such Trust Agreement, to cause such Issuer Trust to continue
to be classified as a grantor trust and not to be taxable as a corporation for
United States federal income tax purposes.
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ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article.
Redemption of Securities as permitted or required by any form of
Security issued pursuant to this Indenture shall be made in accordance with such
form of Security and this Article XI; provided, however, that if any provision
of any such form of Security shall conflict with any provision of this Article
XI, the provision of such form of Security shall govern. Each Security shall be
subject to partial redemption only in integral multiples of $100,000.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Corporation to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at the
election of the Corporation, the Corporation shall, not less than 30 nor more
than 60 days prior to the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee and the Property Trustee under
the related Trust Agreement, of such date and of the principal amount of
Securities to be redeemed and provide the additional information required to be
included in the notice or notices contemplated by Section 11.4; provided that
for so long as the Securities are held by the Issuer Trust, such notice shall be
given not less than 30 nor more than 75 days prior to such Redemption Date
(unless a shorter notice shall be satisfactory to the Property Trustee under the
related Trust Agreement). In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities, the Corporation shall furnish the Trustee with an Officers'
Certificate and an Opinion of Counsel evidencing compliance with such
restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security, provided that the unredeemed portion of
the principal amount of any Security shall be in an authorized denomination
(which shall not be less than the minimum authorized denomination) for such
Security.
The Trustee shall promptly notify the Corporation in writing of the
Securities selected for partial redemption and the principal amount thereof to
be redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security that has been or is to be
redeemed.
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SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at the address of such Holder
as it appears in the Securities Register, provided that; for so long as the
Securities are held by the Issuer Trust, such notice shall be given not less
than 30 nor more than 75 days prior to such Redemption Date (unless a shorter
notice shall be satisfactory to the Property Trustee under the related Trust
Agreement).
With respect to Securities to be redeemed, each notice of redemption
shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, an
estimate of the Redemption Price together with a statement that it is
an estimate and that the actual Redemption Price will be calculated on
the third Business Day prior to the Redemption Date (and, if such an
estimate of the Redemption Price is given, a subsequent notice shall be
given as set forth above on the date that such Redemption Price is
calculated setting forth the actual Redemption Price);
(c) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the respective principal amounts) of the particular Securities to be
redeemed;
(d) if the Securities are convertible, (A) that a Holder of
Securities who desires to convert such Securities called for redemption
must satisfy the requirements for conversion contained in Article XIII
below and (B) the Conversion Price;
(e) that on the Redemption Date, the Redemption Price will
become due and payable upon each such Security or portion thereof, and
that interest thereon, if any, shall cease to accrue on and after said
date;and
(f) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Corporation shall be given by the Corporation or, at the Corporation's
request, by the Trustee in the name and at the expense of the Corporation and
shall be irrevocable. The notice if mailed in the manner provided above shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
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SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.4, the
Corporation will deposit with the Trustee or with one or more Paying Agents (or,
if the Corporation is acting as its own Paying Agent, the Corporation will
segregate and hold in trust as provided in Section 10.3) an amount of money
sufficient to pay the Redemption Price of, and any accrued interest on, all the
Securities (or portions thereof) that are to be redeemed on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4,
the Securities or portion of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest to the Redemption Date. On presentation and surrender of such
Securities at a Place of Payment in said notice specified, the said Securities
or the specified portions thereof shall be paid and redeemed by the Corporation
at the applicable Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders of
such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant record dates according to their terms and
the provisions of Section 3.8.
Upon presentation of any Security redeemed in part only, the
Corporation shall execute and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Corporation, a new Security or Securities,
of authorized denominations, in aggregate principal amount equal to the
unredeemed portion of the Security so presented and having the same Original
Issue Date, Stated Maturity and terms.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal of (and premium, if any, on)
such Security shall, until paid, bear interest from the Redemption Date at the
rate prescribed therefor in such Security.
SECTION 11.7. Right of Redemption of Securities Initially Issued to an
Issuer Trust.
The Corporation, at its option, may redeem such Securities (i) on or
after December 31, 2004, in whole at any time or in part from time to time at a
Redemption Price specified in such Security, together with accrued interest to
but excluding the Redemption Date, (ii) upon the occurrence and during the
continuation of a Tax Event in whole (but not in part) at any time within 90
days following the occurrence and during the continuation of such Tax Event at a
Redemption Price specified in such Security, together with accrued interest to
but excluding the Redemption Date, (iii) upon a Change of Control of Employers
Reinsurance Corporation, in whole at any time or in part from time to time at a
Redemption Price equal to 100% of the principal amount of the Securities,
together, in the case of any such redemption, with accrued
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interest to but excluding the Redemption Date, (iv) in connection with Employers
Reinsurance Corporation's proposed transfer or disposition of Securities
pursuant to Section 5.4(c) of the Trust Agreement or Section 3.5(b) of the
Indenture, in whole at any time or in part from time to time at a Redemption
Price equal to 100% of the principal amount of the Securities, together, in the
case of any such redemption, with accrued interest to but excluding the
Redemption Date and (v) on or after March 31, 1998, in the event that the sale
of Industrial Risk Insurers to Employers Reinsurance Corporation has not been
completed, in whole at any time or in part from time to time at a Redemption
Price equal to 100% of the principal amount of the Securities, together, in the
case of any such redemption, with accrued interest to but excluding the
Redemption Date.
If less than all the Securities are to be redeemed, the aggregate
principal amount of such Securities remaining Outstanding after giving effect to
such redemption shall be sufficient to satisfy any provisions of the Trust
Agreement related to the Issuer Trust to which such Securities were issued,
including any requirement in such Trust Agreement as to the minimum Liquidation
Amount (as defined in such Trust Agreement) of Capital Securities that may be
held by a holder of Capital Securities thereunder.
SECTION 11.8. Mandatory Redemption Provisions.
(i) In the event of a Change of Control of HSB Group, Inc. within five
years after the Original Issuance Date, if the per share price paid in the
acquisition comprising the Change of Control is below the per share price
specified below for the year within which the Change of Control occurs,
Employers Reinsurance Corporation, at its option (which right shall not be
transferable), may require the Corporation to redeem all Outstanding Securities
in whole (but not in part) at any time at a Redemption Price equal to the
Redemption Value for each Security as specified in the following table:
Redemption Minimum Per Share Price Redemption Value
- ---------- ----------------------- ----------------
Year 1 $ 92.65 109.00%
Year 2 90.95 107.00%
Year 3 89.25 105.00%
Year 4 87.55 103.00%
Year 5 85.85 101.00%
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The Minimum Per Share Price stated above shall be subject to adjustment
in accordance with the provisions of Article XIII.
(ii) In addition, (A) if, on or prior to January 8, 1998, after good
faith negotiation and revisions (if any) to the documentation in accordance with
the provisions of the Term Sheet attached to the Purchase Agreement, Employers
Reinsurance Corporation determines that the Securities do not conform to the
fundamental economic terms set forth in the Term Sheet or contain provisions
that impose material legal or tax consequences or risks on Employers Reinsurance
Corporation that could not have been reasonably anticipated prior to the
purchase of the Securities or Employers Reinsurance Corporation has not
receieved the opinions of counsel referred to in Section 7(b) and (c) of the
Purchase Agreement, or (B) on or after March 31, 1998, in the event that the
sale of Industrial Risk Insurers to Employers Reinsurance Corporation has not
been completed, then, in the case of either (A) or (B), Employers Reinsurance
Corporation, at its option (which right shall not be transferable), may require
the Corporation to redeem within sixty (60) days after notice to the Corporation
of such desired redemption all Outstanding Securities in whole (but not in part)
at any time at a Redemption Price equal to 100% of the principal amount of the
Securities, together, in the case of any such redemption, with accrued interest
to but excluding the Redemption Date.
ARTICLE XII
RANKING; SUBORDINATION OF SECURITIES
SECTION 12.1. Ranking; Securities Subordinate to Senior Indebtedness.
The Corporation covenants and agrees, and each Holder of a Security, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article XII, the payment of the
principal of (and premium, if any) and interest on each and all of the
Securities are hereby expressly made subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness. The payment of the
principal of (and premium, if any) and interest on each and all of the
Securities shall rank pari passu with HSB Group, Inc.'s Global Floating Rate
Junior Subordinated Debentures, Series B.
SECTION 12.2. No Payment When Senior Indebtedness in Default; Payment Over
of Proceeds Upon Dissolution, Etc.
If the Corporation shall default in the payment of any principal of (or
premium, if any) or interest on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Corporation by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property or
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of (or premium, if
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any) or interest on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities.
In the event of (a) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceedings relating to the Corporation, its creditors or its property, (b) any
proceeding for the liquidation, dissolution or other winding up of the
Corporation, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings, (c) any assignment by the Corporation for the benefit of
creditors or (d) any other marshaling of the assets of the Corporation (each
such event, if any, herein sometimes referred to as a "Proceeding"), all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall be made to
any Holder of any of the Securities on account thereof. Any payment or
distribution, whether in cash, securities or other property (other than
securities of the Corporation or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), that would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of the Securities shall be paid or delivered directly to the holders of
Senior Indebtedness in accordance with the priorities then existing among such
holders until all Senior Indebtedness (including any interest thereon accruing
after the commencement of any Proceeding) shall have been paid in full.
In the event of any Proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holders of the Securities, together
with the holders of any obligations of the Corporation ranking on a parity with
the Securities, shall be entitled to be paid from the remaining assets of the
Corporation the amounts at the time due and owing on account of unpaid principal
of (and premium, if any) and interest on the Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Corporation ranking junior to the Securities and such other obligations.
If, notwithstanding the foregoing, any payment or distribution of any
character or any security, whether in cash, securities or other property (other
than securities of the Corporation or any other corporation provided for by a
plan of reorganization or readjustment the payment of which is subordinate, at
least to the extent provided in these subordination provisions with respect to
the indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), shall be
received by the Trustee or any Holder in contravention of any of the terms
hereof and before all Senior Indebtedness (including any interest thereon
accruing after the commencement of any Proceeding) shall have been paid in full,
such payment or distribution or security shall be received in trust for the
benefit of, and shall be paid over or delivered and transferred to, the holders
of the Senior Indebtedness at the time outstanding in
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accordance with the priorities then existing among such holders for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all such Senior Indebtedness (including any interest thereon
accruing after the commencement of any Proceeding) in full. If the Trustee or
any Holder fails to endorse or assign any such payment, distribution or
security, each holder of Senior Indebtedness is hereby irrevocably authorized to
endorse or assign the same.
The Trustee and the Holders shall take such action (including the
delivery of this Indenture to an agent for the holders of Senior Indebtedness or
consent to the filing of a financing statement with respect hereto) as may, in
the opinion of counsel designated by the holders of a majority in principal
amount of the Senior Indebtedness at the time outstanding, be necessary or
appropriate to assure the effectiveness of the subordination effected by these
provisions.
The provisions of this Section 12.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Corporation in
respect of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
The securing of any obligations of the Corporation, otherwise ranking
on a parity with the Securities or ranking junior to the Securities, shall not
be deemed to prevent such obligations from constituting, respectively,
obligations ranking on a parity with the Securities or ranking junior to the
Securities.
SECTION 12.3. Payment Permitted If No Default.
Nothing contained in this Article XII or elsewhere in this Indenture or
in any of the Securities shall prevent (a) the Corporation, at any time, except
during the pendency of the conditions described in the first paragraph of
Section 12.2 or of any Proceeding referred to in Section 12.2, from making
payments at any time of principal of (and premium, if any) or interest on the
Securities, or (b) the application by the Trustee of any moneys deposited with
it hereunder to the payment of or on account of the principal of (and premium,
if any) or interest on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the provisions of this
Article XII.
SECTION 12.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on
all Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article XII (equally and ratably with the
holders of all indebtedness of the Corporation that by its express terms is
subordinated to Senior Indebtedness of the Corporation to substantially the same
extent as the Securities are
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subordinated to the Senior Indebtedness and is entitled to like rights of
subrogation by reason of any payments or distributions made to holders of such
Senior Indebtedness) to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of (and premium, if any) and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article XII, and no payments over pursuant to the provisions of this Article XII
to the holders of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as among the Corporation, its creditors other than holders of
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment or distribution by the Corporation to or on account of such Senior
Indebtedness.
SECTION 12.5. Provisions Solely to Define Relative Rights.
The provisions of this Article XII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Corporation and
the Holders of the Securities, the obligations of the Corporation, which are
absolute and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest on the Securities as and when
the same shall become due and payable in accordance with their terms; (b) affect
the relative rights against the Corporation of the Holders of the Securities and
creditors of the Corporation other than their rights in relation to the holders
of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
(or to the extent expressly provided herein, the holder of any Capital Security)
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, including filing and voting claims in any Proceeding,
subject to the rights, if any, under this Article XII of the holders of Senior
Indebtedness to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 12.6. Trustee to Effectuate Subordination.
Each Holder of a Security, by its acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination provided
in this Article XII and appoints the Trustee such Holder's attorney-in-fact for
any and all such purposes.
SECTION 12.7. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Corporation or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Corporation with the terms, provisions and
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covenants of this Indenture, regardless of any knowledge thereof that any such
holder may have or be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to such Holders and without
impairing or releasing the subordination as provided in this Article XII or the
obligations hereunder of such Holders to the holders of Senior Indebtedness, do
any one or more of the following: (i) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Corporation and any other Person.
SECTION 12.8. Notice to Trustee.
The Corporation shall give prompt written notice to the Trustee of any
fact known to the Corporation that would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Corporation or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; provided, however, that if the Trustee shall not have
received the notice provided for in this Section 12.8 at least two Business Days
prior to the date upon which by the terms hereof any monies may become payable
for any purpose (including the payment of the principal of (and premium, if any,
on) or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself or herself to be a holder of Senior Indebtedness (or a trustee or
attorney-in-fact therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee or attorney-in-fact therefor). If
the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XII, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article XII, and if such evidence is
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not furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Corporation referred
to in this Article XII, the Trustee, subject to the provisions of Section 6.1,
and the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which any Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Corporation, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XII.
SECTION 12.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be liable to any such holders if it shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Corporation or to any
other Person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article XII or otherwise.
SECTION 12.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XII with respect to any Senior Indebtedness
that may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.
SECTION 12.12. Article Applicable to Paying Agents.
If at any time any Paying Agent other than the Trustee shall have been
appointed by the Corporation and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee.
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SECTION 12.13. Certain Conversions or Exchanges Deemed Payment.
For the purpose of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities shall not be deemed
to constitute a payment or distribution on account of the principal of (or
premium, if any) or interest on the Securities or on account of the purchase or
other acquisition of Securities, and (b) the payment, issuance or delivery of
cash (including any payments for fractional shares), property or securities
(other than junior securities) upon conversion or exchange of a Security shall
be deemed to constitute payment on account of the principal of such security.
For the purpose of this Section, the term "junior securities" means (i) shares
of any stock of any class of the Company and (ii) securities of the Company
which are subordinated in right of payment to all Senior Indebtedness which may
be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article.
ARTICLE XIII
CONVERSION OF SECURITIES
SECTION 13.1. Conversion Rights. Subject to and upon compliance with
the provisions of this Article and subject to the receipt by the Corporation and
the Holder of the appropriate Regulatory Approvals (as defined below) and the
termination of the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the related regulations and
published interpretations, the Securities are convertible, at the option of the
Holder, into fully paid and nonassessable shares of Common Stock of the
Corporation at an initial conversion rate of 11.7647 shares of Common Stock for
each $1,000 in aggregate principal amount of Securities (equal to a conversion
price of $85 per share of Common Stock), subject to adjustment as described in
this Article XIII (as adjusted the "Conversion Price"). A Holder of Securities
may convert any portion of the principal amount of the Securities into that
number of fully paid and nonassessable shares of Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) obtained by dividing the
principal amount of the Securities to be converted by the Conversion Price. In
case a Security or portion thereof is called for redemption, such conversion
right in respect of the Security or portion so called shall expire at the close
of business on the Business Day immediately preceding the corresponding
Redemption Date, unless the Corporation defaults in making the payment due upon
redemption.
"Regulatory Approvals" shall mean all necessary insurance regulatory
and other filings and/or approvals and any licenses and permits, authorizations,
consents, orders or approvals of, or registrations, declarations or filings with
all regulatory bodies as may be required to be obtained or made with respect to
either party in order to permit the parties to consummate the transactions
contemplated hereby which are to be consummated on or prior to the Closing Date
(as defined in the Trust Agreement).
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SECTION 13.2. Conversion Procedures. (a) In order to convert all or a
portion of the Securities, the Holder thereof shall deliver to the Property
Trustee, as conversion agent or to such other agent appointed for such purposes
(the "Conversion Agent") an irrevocable Notice of Conversion in the form
attached hereto as Exhibit C setting forth the principal amount of Securities to
be converted, together with the name or names, if other than the Holder, in
which the shares of Common Stock should be issued upon conversion and, surrender
to the Conversion Agent the Securities to be converted, duly endorsed or
assigned to the Corporation or in blank. In addition, a holder of Capital
Securities may exercise its right under the Trust Agreement to convert such
Capital Securities into Common Stock by delivering to the Conversion Agent an
irrevocable Notice of Conversion setting forth the information called for by the
preceding sentence and directing the Conversion Agent (i) to exchange such
Capital Security for a portion of the Securities held by the Trust (at an
exchange rate of $1000 principal amount of Securities for each Capital Security)
and (ii) to immediately convert such Securities, on behalf of such holder, into
Common Stock of the Corporation pursuant to this Article XIII and, if such
Capital Securities are in definitive form, surrendering such Capital Securities,
duly endorsed or assigned to the Corporation or in blank. So long as any Capital
Securities are outstanding, the Trust shall not convert any Securities except
pursuant to a Notice of Conversion delivered to the Conversion Agent by a holder
of Capital Securities.
If a Notice of Conversion is delivered on or after the Regular Record
Date and prior to the subsequent Interest Payment Date, the Holder of record on
the Regular Record Date will be entitled to receive the interest paid on the
subsequent Interest Payment Date on the portion of Securities to be converted
notwithstanding the conversion thereof prior to such Interest Payment Date.
However, if aredemption date falls between a record date and the subsequent
Interest Payment Date, the holder will be entitled to receive, on such Interest
Payment Date, the interest accured to, but excluding, the redemption date.
Except as otherwise provided in the first and second sentences of this
paragraph, in the case of any Security which is converted, interest whose Stated
Maturity is on or after the date of conversion of such Security shall not be
payable, and the Corporation shall not make nor be required to make any other
payment, adjustment or allowance with respect to accrued but unpaid interest on
the Securities being converted, which shall be deemed to be paid in full. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the day on which the Notice of Conversion was received (the
"Conversion Date") by the Conversion Agent from the Holder or from a holder of
the Capital Securities effecting a conversion thereof pursuant to its conversion
rights under the Trust Agreement, as the case may be. The Person or Persons
entitled to receive the Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Common Stock as
of the Conversion Date and such Person or Persons will cease to be a record
Holder or record Holders of the Securities on that date. As promptly as
practicable on or after the Conversion Date, the Corporation shall issue and
deliver at the office of the Conversion Agent, unless otherwise directed by the
Holder or holder in the Notice of Conversion, 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. The Conversion Agent shall
deliver such certificate or certificates to such Person or Persons.
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(b) The Corporation's delivery upon conversion of the fixed
number of shares of Common Stock into which the Securities are convertible
(together with the cash payment, if any, in lieu of fractional shares) shall be
deemed to satisfy the Corporation's obligation to pay the principal amount at
Maturity of the portion of Securities so converted and any unpaid interest
accrued on such Securities at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Corporation shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Current Market Price with respect to such fractional interest on the date on
which the Securities or Capital Securities, as the case may be, were duly
surrendered to the Conversion Agent for conversion, and the Conversion Agent in
turn will make such payment, if any, to the Holder of the Securities or the
holder of the Capital Securities so converted.
(d) In the event of the conversion of any Security in part
only, a new Security or Securities for the unconverted portion thereof will be
issued in the name of the Holder thereof upon the cancellation of the Security
converted in part in accordance with Section 3.5.
(e) In effecting the conversion transactions described in this
Section, the Conversion Agent is acting as agent of the holders of Capital
Securities (in the exchange of Capital Securities for Securities) and as agent
of the Holders of Securities (in the conversion of Securities into Common
Stock), as the case may be. The Conversion Agent is hereby authorized (i) to
exchange Securities held by the Trust from time to time for Capital Securities
in connection with the conversion of such Capital Securities in accordance with
this Article XIII and (ii) to convert all or a portion of the Securities into
Common Stock and thereupon to deliver such shares of Common Stock in accordance
with the provisions of this Article XIII and to deliver to the Trust a new
Security or Securities for any resulting unconverted principal amount.
(f) All shares of Common Stock delivered upon any conversion
of Restricted Securities shall bear a Restrictive Securities Legend
substantially in the form of the legend required to be set forth on such
Securities and shall be subject to the restrictions on transfer provided in such
legend and in Section 3.5 hereof. Neither the Trustee nor the Conversion Agent
shall have any responsibility for the inclusion or content of any such
Restrictive Securities Legend on such Common Stock; provided, however, that the
Trustee or the Conversion Agent shall have provided to the Corporation or to the
Corporation's transfer agent for such Common Stock, prior to or concurrently
with a request to the Corporation to deliver to such Conversion Agent
certificates for such Common Stock, written notice that the Securities delivered
for conversion are Restricted Securities.
(g) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for issuance
upon the conversion of the Securities, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the Securities
then outstanding. Notwithstanding the foregoing, the Corporation shall be
entitled to deliver upon conversion of Securities shares of Common Stock
reacquired and held
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in the treasury of the Corporation (in lieu of the issuance of authorized and
unissued shares of Common Stock) so long as any such treasury shares are free
and clear of all liens, charges, security interests or encumbrances. Whenever
the Corporation issues shares of Common Stock upon conversion of Securities and
the Corporation has in effect at such time a share purchase rights agreement
under which holders of Common Stock are issued rights ("Rights") entitling the
holders under certain circumstances to purchase an additional share or shares of
stock, the Corporation will issue, together with each such share of Common
Stock, such number of Rights (which number may be a fraction) as shall at that
time be issuable with a share of Common Stock pursuant to such share purchase
rights agreement (currently, half of a Right). Any shares of Common Stock issued
upon conversion of the Securities shall be duly authorized, validly issued and
fully paid and nonassessable. The Conversion Agent shall deliver the shares of
Common Stock received upon conversion of the Securities to the converting Holder
free and clear of all liens, charges, security interests and encumbrances,
except for United States withholding taxes. The Corporation shall use its
reasonable best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required by law, in order
to enable the Corporation to lawfully issue Common Stock upon conversion of the
Securities and to lawfully deliver the Common Stock to each Holder upon
conversion of the Securities.
(h) The Corporation will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Common Stock on
conversion of Securities. The Corporation shall not, however, be required to pay
any tax which 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
Conversion Agent the amount of any such tax, or has established to the
satisfaction of the Conversion Agent that such tax has been paid.
(i) Nothing in this Article XIII shall limit the requirement
of the Corporation to withhold taxes pursuant to the terms of the Securities or
as set forth in this Agreement or otherwise require the Trustee or the
Corporation to pay any amounts on account of such withholdings.
SECTION 13.3. Conversion Price Adjustments. The conversion price shall be
subject to adjustment (without duplication) from time to time as follows:
(a) In case the Corporation shall, while any of the Securities
are outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Corporation, the conversion
privilege and the Conversion Price in effect immediately prior to such action
shall be adjusted so that the Holder of any Securities thereafter surrendered
for conversion shall be entitled to receive the number of shares of capital
stock of the Corporation which he would have owned immediately following such
action had such Securities been converted immediately prior thereto. An ad-
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justment made pursuant to this subsection (a) shall become effective immediately
after the record date in the case of a dividend or other distribution and shall
become effective immediately after the effective date in case of a subdivision,
combination or reclassification (or immediately after the record date if a
record date shall have been established for such event). If, as a result of an
adjustment made pursuant to this subsection (a), the Holder of any Security
thereafter surrendered for conversion shall become entitled to receive shares of
two or more classes or series of capital stock of the Corporation, the Board of
Directors (whose determination shall be conclusive and shall be described in a
Board Resolution filed with the Trustee) shall determine the allocation of the
adjusted Conversion Price between or among shares of such classes or series of
capital stock. In the event that such dividend, distribution, subdivision,
combination or issuance is not so paid or made, the Conversion Price shall again
be adjusted to be the Conversion Price which would then be in effect if such
record date had not been fixed.
(b) In case the Corporation shall, while any of the Securities
are Outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at a price
per share less than the Current Market Price per share of Common Stock on the
record date mentioned below, the Conversion Price for the Securities shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of issuance of such
rights or warrants by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered for subscription or purchase would purchase at
such Current Market Price, and of which the denominator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights or warrants. To the extent that no shares of Common Stock are so
delivered after the expiration of such rights or warrants, the Conversion Price
shall be adjusted to the Conversion Price whixh would then be in effect if such
date fixed for the determination of stockholders entitled to receive such rights
or warrants had not been fixed. For the purposes of this subsection, the number
of shares of Common Stock at any time outstanding shall not include shares held
in the treasury of the Corporation. The Corporation shall not issue any rights
or warrants in respect of shares of Common Stock held in the treasury of the
Corporation. In case any rights or warrants referred to in this subsection in
respect of which an adjustment shall have been made shall expire unexercised
within 45 days after the same shall have been distributed or issued by the
Corporation, the Conversion Price shall be readjusted at the time of such
expiration to the Conversion Price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants.
(c) Subject to the last sentence of this subparagraph, in case
the Corporation shall, by dividend or otherwise, distribute to all holders of
its Common Stock evidences of its indebtedness, shares of any class or series of
capital stock, cash or assets(or rights or warrants
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to subscribe for or purchase any of its securities, but excluding any rights or
warrants referred to in subparagraph (b), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in subparagraph
(a) of this Section 13.3), the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (c) by a fraction of which the numerator shall
be the Current Market Price per share of the Common Stock on the date fixed for
the payment of such distribution (the "Reference Date") less the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed or of such
subscription rights or warrants applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day following the Reference Date; provided, however, that in the event
the numerator shall be less than one, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder of Securities shall have
the right to receive upon conversion the amount of such distribution such Holder
would have received had such Holder converted each Security immediately prior to
the reference date. In the event that such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such dividend or distribution had not
occurred. If the Board of Directors determines the fair market value of any
distribution for purposes of this subparagraph (c) by reference to the actual or
when issued trading market for any securities comprising such distribution, it
must in doing so consider the prices in such market over the same period used in
computing the current market price per share of Common Stock. For purposes of
this subparagraph (c), any dividend or distribution that includes shares of
Common Stock or rights or warrants to subscribe for or purchase shares of Common
Stock shall be deemed instead to be (i) a dividend or distribution of the
evidences of indebtedness, shares of capital stock, cash or assets other than
such shares of Common Stock or such rights or warrants (making any Conversion
Price reduction required by this subparagraph (c)) immediately followed by (ii)
a dividend or distribution of such shares of Common Stock or such rights or
warrants (making any further conversion price reduction required by subparagraph
(a) or (b)), except (A) the Reference Date of such dividend or distribution as
defined in this subparagraph shall be substituted as (x) "the record date in the
case of a dividend or other distribution," and (y) "the record date for the
determination of stockholders entitled to receive such rights or warrants" and
(z) "the date fixed for such determination" within the meaning of subparagraphs
(a) and (b) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed outstanding for purposes of computing any
adjustment of the conversion price in subparagraph (a).
(d) If the distribution date for the Rights of the Corporation
provided in the Shareholders Rights Plan, as presently constituted or under any
similar plan occurs prior to the Conversion Date, and a Holder of the Securities
who converts such Securities after such distribution date is not entitled to
receive the Rights that would otherwise be attached (but for the date of
conversion) to the shares of Common Stock received upon such conversion, then an
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adjustment shall be made to the Conversion Price pursuant to clause (ii) of
Section 13.4(a) as if the Rights were being distributed to the common
stockholders of the Corporation immediately prior to such conversion. If such an
adjustment is made and the Rights are later redeemed, invalidated or terminated,
then a corresponding reversing adjustment shall be made to the Conversion Price,
on an equitable basis, to take account of such event.
(e) The Corporation shall have the right to reduce from time
to time the Conversion Price by any amount selected by the Corporation for any
period of at least 30 days, provided, that Corporation shall give at least 15
days' notice of such reduction to the Trustee and the Property Trustee. The
Corporation may, at its option, make such reductions in the Conversion Price, in
addition to those set forth above in Section 13.3(a), as the Board of Directors
deems advisable to avoid or diminish any income tax to holders of Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. No adjustment
of the Conversion Price will be made upon the issuance of any shares of Common
Stock pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation and the
investment of additional optional amounts in shares of Common Stock under any
such plan, or the issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any present or future employee benefit plan or
program of the Corporation or pursuant to any option, warrant, right, or
exercisable, exchangeable or convertible security which does not constitute an
issuance to all holders of Common Stock of rights or warrants entitling holders
of such rights or warrants to subscribe for or purchase Common Stock at less
than the Current Market Price. There shall also be no adjustment of the
Conversion Price in case of the issuance of any Common Stock (or securities
convertible into or exchangeable for Common Stock), except as specifically
described above.
(f) If any action would require adjustment of the Conversion
Price pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the Holder of the Securities.
SECTION 13.4. Notice of Adjustments of Conversion Price. Whenever the
Conversion Price is adjusted as herein provided:
(a) the Corporation shall compute the adjusted conversion
price and shall prepare a certificate signed by the Chief Financial Officer or
the Treasurer of the Corporation setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the Trustee, the Conversion Agent
and the transfer agent for the Capital Securities and the Securities; and
(b) a notice stating the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Corporation to all record holders of Capital Securities and the
Securities at their last addresses as they appear upon the stock transfer books
of the Corporation and the Trust and the Securities Registrar.
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SECTION 13.5. Prior Notice of Certain Events.
In case:
(i) the Corporation shall declare any dividend (or
any other distribution) on its Common Stock, other than (x) a dividend
payable in shares of Common Stock or (y) a dividend payable in cash
that would not require an adjustment pursuant to Section 13.3(c);
(ii) the Corporation shall authorize the granting to
all holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any other
rights or warrants;
(iii) of any reclassification of Common Stock (other
than a subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par
value to par value), or of any consolidation or merger to which the
Corporation is a party and for which approval of stockholders of the
Corporation shall be required, or of the sale or transfer of all or
substantially all of the assets of the Corporation or of any compulsory
share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall (A) if any Capital Securities are outstanding under
the Trust Agreement, cause to be filed with the transfer agent for the Capital
Securities, and shall cause to be mailed to the holders of record of the Capital
Securities, at their last addresses as they shall appear upon the stock transfer
books of the Trust or (B) shall cause to be mailed to all Holders at their last
addresses as they shall appear in the Security Register, at least 15 days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record (if any) is to be taken for the purpose
of such dividend, distribution, rights or warrants or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
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SECTION 13.6. Dividend or Interest Reinvestment Plans. Notwithstanding
anything to the contrary in this Article 13, the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Corporation and the investment of
additional optional amounts in shares of Common Stock under any such plan, and
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any employee benefit plan or program of the Corporation or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Securities were first
issued, shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Corporation to which
any of the adjustment provisions described above applies. There shall also be no
adjustment of the Conversion Price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the Corporation except
as specifically described in this Article XIII.
SECTION 13.7. Certain Additional Rights.
In case the Corporation shall, by dividend or otherwise, declare or
make a distribution on its Common Stock referred to in Section 13.3(c)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 13.3(c)), the Holders of the Securities, upon the
conversion thereof subsequent to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution and prior to
the effectiveness of the Conversion Price adjustment in respect of such
distribution, shall also be entitled to receive for each share of Common Stock
into which the Securities are converted, the portion of the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash and assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Corporation (whose election
shall be evidenced by a resolution of the Board of Directors) with respect to
all Holders so converting, the Corporation may, in lieu of distributing to such
Holder any portion of such distribution not consisting of cash or securities of
the Corporation, pay such Holder an amount in cash equal to the fair market
value thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors). If any conversion of Securities described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the Holder of Securities so converted is entitled
to receive in accordance with the immediately preceding sentence, the
Corporation may elect (such election to be evidenced by a resolution of the
Board of Directors) to distribute to such Holder a due bill for the shares of
Common Stock, rights, warrants, evidences of indebtedness, shares of capital
stock, cash or assets to which such Holder is so entitled, provided, that such
due bill (i) meets any applicable requirements of the principal national
securities exchange or other market on which the Common Stock is then traded and
(ii) requires payment or delivery of such shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets no
later than the date of payment or delivery thereof to holders of shares of
Common Stock receiving such distribution.
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SECTION 13.8. Restrictions on Common Stock Issuable Upon Conversion.
(a) Shares of Common Stock to be issued upon conversion of a
Security in respect of Restricted Capital Securities shall bear such restrictive
legends as the Corporation may provide in accordance with applicable law.
(b) If shares of Common Stock to be issued upon conversion of
a Security in respect of Restricted Capital Securities are to be registered in a
name other than that of the Holder of such Capital Security, then the Person in
whose name such shares of Common Stock are to be registered must deliver to the
Conversion Agent a certificate satisfactory to the Corporation and signed by
such Person, as to compliance with the restrictions on transfer applicable to
such Capital Security. Neither the Trustee nor any Conversion Agent or Registrar
shall be required to register in a name other than that of the Holder shares of
Common Stock issued upon conversion of any such Security in respect of such
Capital Securities not so accompanied by a properly completed certificate.
SECTION 13.9. Trustee Not Responsible for Determining Conversion Price or
Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be under
any duty or responsibility to any Holder of any Security or to any holder of a
Capital Security to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed, or herein
or in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any Conversion Agent shall be accountable with respect
to the validity or value (or the kind of account) of any shares of Common Stock
or of any securities or property, which may at any time be issued or delivered
upon the conversion of any Security; and neither the Trustee nor any Conversion
Agent makes any representation with respect thereto. Neither the Trustee nor any
Conversion Agent shall be responsible for any failure of the Corporation to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates or other securities or property upon the surrender of any
Security for the purpose of conversion, or, except as expressly herein provided,
to comply with any of the covenants of the Corporation contained in Article 10
or this Article 13.
ARTICLE XIV
EXPENSES
SECTION 14.1. Payment of Expenses by the Corporation.
The Corporation hereby irrevocably and unconditionally
guarantees to each person or entity to whom any Issuer Trust is now or hereafter
becomes indebted or liable (the "Expense Beneficiaries") the full payment, when
and as due, of any and all Expense Obligations (as hereinafter defined) to such
Expense Beneficiaries. As used herein, "Expense Obligations" means
- 80 -
any costs, expenses or liabilities of any Issuer Trust, other than obligations
of an Issuer Trust to pay to holders of any Capital Securities or other similar
interests in such Issuer Trust the amounts due such holders pursuant to the
terms of the Capital Securities or such other similar interests, as the case may
be. This Article XIV is intended to be for the benefit of, and to be enforceable
by, all such Expense Beneficiaries, whether or not such Expense Beneficiaries
have received notice hereof.
SECTION 14.2. Term of Agreement.
This Article XIV shall terminate and be of no further force
and effect with respect to holders of securities of an Issuer Trust upon the
later of (a) the date on which full payment has been made of all amounts payable
to all holders of all the Capital Securities (whether upon redemption,
liquidation, exchange or otherwise) of such Issuer Trust and (b) the date on
which there are no Expense Beneficiaries remaining; provided, however, that this
Article XIV shall continue to be effective or shall be reinstated, as the case
may be, with respect to such Issuer Trust, if at any time any holder of Capital
Securities of such Issuer Trust or any Expense Beneficiary must restore payment
of any sums paid under the Capital Securities of such Issuer Trust, under any
Expense Obligation, under the guarantee agreement by the Corporation in favor of
holders of Capital Securities of such Issuer Trust or under this Article XIV for
any reason whatsoever. Subject to the terms of this Article XIV, the obligations
of the Corporation under this Article XIV are continuing, irrevocable,
unconditional and absolute.
SECTION 14.3. Waiver of Notice.
The Corporation hereby waives notice of acceptance of the agreements
contained in this Article XIV and of any Expense Obligation to which it applies
or may apply, and the Corporation hereby waives presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 14.4. No Impairment.
The obligations, covenants, agreements and duties of the Corporation
under this Article XIV shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Expense Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Expense
Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Expense Beneficiaries to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Expense Beneficiaries with respect
to the Expense Obligations or any action on the part of the Issuer Trust
granting indulgence or extension of any kind; or
- 81 -
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Issuer Trust.
There shall be no obligation of the Expense Beneficiaries to give notice to, or
obtain the consent of, the Corporation with respect to the happening of any of
the foregoing.
SECTION 14.5. Enforcement.
An Expense Beneficiary may enforce this Article directly
against the Corporation and the Corporation waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against the Corporation.
SECTION 14.6. Subrogation.
The Corporation shall be subrogated to all (if any) rights of the Trust
in respect of any amounts paid to the Expense Beneficiaries by the Corporation
under this Article XIV with respect to the applicable Issuer Trust; provided,
however, that the Corporation shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights which
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Article XIV, if, at
the time of any such payment, any amounts are due and unpaid under this Article
XIV.
SECTION 14.7. Amendment.
So long as there remains any Expense Beneficiary or any
Capital Securities of an Issuer Trust are outstanding, this Article XIV shall
not be modified or amended in any manner adverse to such Expense Beneficiary of
such Issuer Trust or to the holders of the Capital Securities of such Issuer
Trust without the written consent of such Expense Beneficiary or such holders,
as applicable.
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
- 82 -
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and attested, all as of the day and year first above written.
HSB GROUP, INC.
By: /s/ Saul L. Basch
Name: Saul L. Basch
Title: Senior Vice President, Chief
Financial Officer, Treasurer
Attest:
By: /s/ R. Kevin Price
Corporate Secretary
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
By: /s/ Melissa G. Weisman
Name: Melissa G. Weisman
Title: Vice President
Attest:
By:
Exhibit A -- Form of Restricted
Securities Transfer Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.5(b) of
the Indenture referred to below)
[-------------------------],
as Securities Registrar
[address]
Re: 7.0% Convertible Subordinated Deferrable Interest Debentures of HSB Group,
Inc. (the "Securities")
Reference is made to the Indenture, dated as of December 31, 1997 (the
"Indenture"), between HSB Group, Inc., a Connecticut corporation, and The First
National Bank of Chicago, as Trustee. Terms used herein and defined in the
Indenture or in Regulation S, Rule 144A or Rule 144 under the U.S. Securities
Act of 1933, as amended (the "Securities Act"), are used herein as so defined.
This certificate relates to $__________ aggregate principal
amount of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
Such Specified Securities are registered in the name of the Undersigned, as or
on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to
another person (the "Transferee") who will take delivery in the form of a
Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
compliance with the requirements of the Securities Act or pursuant to an
applicable exemption therefrom and in accordance with all applicable securities
laws of the states of the United States and other jurisdictions.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Corporation and the Purchaser (as defined in the
Trust Agreement relating to the Issuer Trust to which the Securities were
initially issued).
A-1
Dated:
(Print the name of the
Undersigned, as such term
is defined in the second
paragraph of this
certificate.)
By:
Name:
Title:
(If the Undersigned is a
corporation, partnership or
fiduciary, the title of the
person signing on behalf of
the Undersigned must be
stated.)
A-2
EXHIBIT B -- Form of Unrestricted
Securities Transfer Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section
3.5(c) of the Indenture )
The First National Bank of Chicago
One First National Plaza - Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Administration
Re: 7.0% Convertible Subordinated Deferrable Interest Debentures (the
"Securities")
Reference is made to the Indenture, dated as of December 31,
1997, between HSB Group. Inc. (the "Corporation") and The First National Bank of
Chicago, as Trustee (the "Trustee"). Terms used herein and defined in the
Indenture or in Regulation S or Rule 144 under the U.S. Securities Act of 1933,
as amended (the "Securities Act"), are used herein as so defined.
This certificate relates to ________________ shares of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ____________________________
CERTIFICATE No(s). ______________________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
The Specified Securities are registered in the name of the Undersigned as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Securities Act Legend pursuant to Section 5.4(d) of the
Trust Agreement and Section 3.5(c) of the Indenture. In connection with such
exchange, the Owner hereby certifies that the exchange is occurring after a
holding period of at least two years (computed in accordance with paragraph (d)
of Rule 144) has elapsed since the Specified Securities were last acquired from
the Trust or from an affiliate of the Trust, whichever is later, and the Owner
is not, and during the preceding three months has not been, an affiliate of the
Trust. The Owner also acknowledges that any future transfers of the Specified
Securities must comply with all applicable securities laws of the states of the
United States and other jurisdictions.
B-1
This certificate and the statements contained herein are made for your
benefit and the benefit of the Trust and the Purchaser.
Dated:___________________________________
(Print the name of the Undersigned, as such term is defined in
the second paragraph of this certificate.)
By:____________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of the
Undersigned must be stated.)
B-2
EXHIBIT C
NOTICE OF CONVERSION
To: HSB Group, Inc.
The undersigned owner of this Security hereby irrevocably exercises the
option to convert this Security, or the portion below designated, into Common
Stock of HSB GROUP, INC. in accordance with the terms of the Indenture referred
to in this Security, and directs 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.
Any Holder, upon the exercise of its conversion rights in accordance
with the terms of the Indenture and the Security, agrees to be bound by the
terms of the Registration Rights Agreement relating to the Common Stock issuable
upon conversion of the Security.
Date:
in whole
----------
Portions of Security to be converted
in part ($1,000 or integral multiples thereof):
----------
$
----------------------------
----------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
------------------------------------
Signature Guarantee: *
---------------------
* Signature must be guaranteed by an institution which is a member of one
of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) in such other guarantee programs
acceptable to the Trustee.
0148917.04-01S7a
C-1