Exhibit 4.5
TRUST AGREEMENT
among
HSB GROUP, INC.,
as Depositor
THE FIRST NATIONAL BANK OF CHICAGO
as Property Trustee
FIRST CHICAGO DELAWARE INC.
as Delaware Trustee
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
---------------------------
Dated as of December 31, 1997
---------------------------
HSB CAPITAL II
HSB CAPITAL II
Certain Sections of this Trust Agreement relating
to Sections 310 through 318 of the Trust Indenture
Act of 1939:
Trust Indenture Act Section Trust Agreement Section
((ss.)) 310 (a)(1)..................................... 8.7
(a)(2)..................................... 8.7
(a)(3)..................................... 8.9
(a)(4)..................................... 2.7(a)(ii)
(b)........................................ 8.8
((ss.)) 311 (a)....................................... 8.13
(b)........................................ 8.13
((ss.)) 312 (a)........................................ 5.7
(b)........................................ 5.7
(c)........................................ 5.7
((ss.)) 313 (a)........................................ 8.15
(a)(4)..................................... 8.15
(b)........................................ 8.15
(c)........................................ 10.8
(d)........................................ 8.15(c)
((ss.)) 314 (a)........................................ 8.16
(b)........................................ Not Applicable
(c)(1)..................................... 8.17
(c)(2)..................................... 8.17
(c)(3)..................................... Not Applicable
(d)........................................ Not Applicable
(e)........................................ 1.1, 8.17
((ss.)) 315 (a)........................................ 8.1(a), 8.3(a)
(b)........................................ 8.2, 10.8
(c)........................................ 8.1(a)
(d)........................................ 8.1, 8.3
(e)........................................ Not Applicable
((ss.)) 316 (a)........................................ Not Applicable
(a)(1)(A).................................. Not Applicable
(a)(1)(B).................................. Not Applicable
(a)(2)..................................... Not Applicable
(b)........................................ 5.12
(c)........................................ 6.7
((ss.)) 317 (a)(1)..................................... Not Applicable
(a)(2)..................................... Not Applicable
(b)........................................ 5.9
((ss.)) 318 (a)........................................ 10.10
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Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to
be a part of the Trust Agreement.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.................................................... 1
ARTICLE II
ESTABLISHMENT OF THE ISSUER TRUST
SECTION 2.1. Name ....................................................... 11
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business.... 11
SECTION 2.3. Initial Contribution of Trust Property; Organizational Expenses 11
SECTION 2.4. Issuance of the Capital Securities............................. 12
SECTION 2.5. Issuance of the Common Securities; Subscription and Purchase o f
Debentures............................................ 12
SECTION 2.6. Declaration of Trust........................................... 12
SECTION 2.7. Authorization to Enter into Certain Transactions............... 13
SECTION 2.8. Assets of Trust................................................ 16
SECTION 2.9. Title to Trust Property........................................ 16
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account................................................. 16
ARTICLE IV
DISTRIBUTIONS; REDEMPTION; CONVERSION
SECTION 4.1. Distributions................................................... 17
SECTION 4.2. Redemption...................................................... 18
SECTION 4.3. Conversion...................................................... 21
SECTION 4.4. Subordination of Common Securities.............................. 23
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SECTION 4.5. Payment Procedures.............................................. 24
SECTION 4.6. Tax Returns and Reports......................................... 24
SECTION 4.7. Payment of Taxes, Duties, Etc. of the Issuer Trust.............. 24
SECTION 4.8. Payments under Indenture or Pursuant to Direct Actions.......... 24
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.............................................. 25
SECTION 5.2. The Trust Securities Certificates.............................. 25
SECTION 5.3. Execution and Delivery of Trust Securities Certificates........ 25
SECTION 5.4. Registration, Transfer and Exchange Generally; Certain Transfers
and Exchanges; Securities Act Legends.......................... 26
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates................................................... 29
SECTION 5.6. Persons Deemed Holders......................................... 30
SECTION 5.7. Access to List of Holders' Names and Addresses................. 30
SECTION 5.8. Maintenance of Office or Agency................................ 30
SECTION 5.9. Appointment of Paying Agents................................... 31
SECTION 5.10. Ownership of Common Securities by Depositor................... 31
SECTION 5.11. Restrictive Legends........................................... 32
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights.....................................34
SECTION 6.2. Notice of Meetings...............................................35
SECTION 6.3. Meetings of Holders of the Capital Securities....................35
SECTION 6.4. Voting Rights....................................................36
SECTION 6.5. Proxies, etc.....................................................36
SECTION 6.6. Holder Action by Written Consent.................................36
SECTION 6.7. Record Date for Voting and Other Purposes........................36
SECTION 6.8. Acts of Holders..................................................37
SECTION 6.9. Inspection of Records............................................38
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee................................................ 38
SECTION 7.2. Representations and Warranties of Depositor..................... 39
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ARTICLE VIII
THE ISSUER TRUSTEES; PAYING AGENTS
SECTION 8.1. Certain Duties and Responsibilities.......................... 40
SECTION 8.2. Certain Notices.............................................. 42
SECTION 8.3. Certain Rights of Property Trustee........................... 43
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities....... 45
SECTION 8.5. May Hold Securities.......................................... 45
SECTION 8.6. Compensation; Indemnity; Fees................................ 45
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Issuer
Trustees..................................................... 46
SECTION 8.8. Conflicting Interests........................................ 47
SECTION 8.9. Co-Trustees and Separate Trustee............................. 47
SECTION 8.10. Resignation and Removal; Appointment of Successor........... 49
SECTION 8.11. Acceptance of Appointment by Successor...................... 50
SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business. 51
SECTION 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust................................................ 51
SECTION 8.14. Property Trustee May File Proofs of Claim................... 51
SECTION 8.15. Reports by Property Trustee................................. 52
SECTION 8.16. Reports to the Property Trustee............................. 53
SECTION 8.17. Evidence of Compliance with Conditions Precedent............ 53
SECTION 8.18. Number of Issuer Trustees................................... 53
SECTION 8.19. Delegation of Power......................................... 53
SECTION 8.20. Appointment of Administrative Trustees...................... 54
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date............................. 54
SECTION 9.2. Early Dissolution............................................ 55
SECTION 9.3. Termination.................................................. 55
SECTION 9.4. Liquidation.................................................. 55
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Issuer Trust................................................. 57
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders............................. 58
SECTION 10.2. Amendment................................................... 58
SECTION 10.3. Separability................................................ 59
SECTION 10.4. Governing Law............................................... 59
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SECTION 10.5. Payments Due on Non-Business Day............................. 60
SECTION 10.6. Successors................................................... 60
SECTION 10.7. Headings..................................................... 60
SECTION 10.8. Reports, Notices and Demands................................. 60
SECTION 10.9. Agreement Not to Petition.................................... 61
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act...... 62
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee Agreement
and Indenture............................................... 62
Exhibit A Certificate of Trust
Exhibit B Form of Common Securities Certificate
Exhibit C Form of Capital Securities Certificate
Exhibit D Form of Restricted Securities Certificate
Exhibit E Form of Unrestricted Securities Certificate
Exhibit F Notice of Conversion
iv
TRUST AGREEMENT, dated as of December 31, 1997, among (i) HSB Group,
Inc., a Connecticut corporation (including any successors or assigns, the
"Depositor"), (ii) The First National Bank of Chicago, a national banking
association as property trustee (in such capacity, the "Property Trustee" and,
in its separate corporate capacity and not in its capacity as Property Trustee,
the "Bank"), (iii) First Chicago Delaware Inc., a Delaware corporation, as
Delaware trustee (in such capacity, the "Delaware Trustee"), and (iv) Saul L.
Basch, an individual, Roberta O'Brien, an individual, and Robert C. Walker, an
individual, each of whose address is c/o HSB Group, Inc., One State Street,
Hartford, Connecticut 06102 (each an "Administrative Trustee"), (the Property
Trustee, the Delaware Trustee and the Administrative Trustees being referred to
collectively as the "Issuer Trustees").
WITNESSETH
WHEREAS, the Depositor and the Issuer Trustees hereby declare and
create a business trust pursuant to the Delaware Business Trust Act by entering
into this Trust Agreement, dated as of December 31, 1997 (the "Trust
Agreement"), and by the execution of the Certificate of Trust by the Issuer
Trustees and the filing of such Certificate of Trust with the Secretary of State
of the State of Delaware on December 31, 1997, attached as Exhibit A; and
WHEREAS, the Depositor and the Issuer Trustees desire to enter into
this Trust Agreement to provide for, among other things, (i) the issuance and
sale of the Common Securities by the Issuer Trust to the Depositor, (ii) the
issuance and sale of the Capital Securities by the Issuer Trust pursuant to the
Purchase Agreement, (iii) the acquisition by the Issuer Trust from the Depositor
of all of the right, title and interest in the Debentures, and (iv) the
appointment of the Property Trustee and certain additional Administrative
Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby enters into this Trust
Agreement and agrees as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, 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;
(c) The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;
(e) Unless the context otherwise requires, any reference to an
"Article", a "Section" or an "Exhibit" refers to an Article, a Section or an
Exhibit, as the case may be, of or to this Trust Agreement; and
(f) The words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrative Trustee" means each Person appointed in accordance with
Section 8.20 solely in such Person's capacity as Administrative Trustee of the
Issuer Trust heretofore created and continued hereunder and not in such Person's
individual capacity, or any successor Administrative Trustee appointed as herein
provided.
"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.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its
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affairs, and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or
the Executive Committee of the board of directors of the Depositor (or any other
committee of the board of directors of the Depositor performing similar
functions) or a committee designated by the board of directors of the Depositor
(or any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in The City of New York are authorized by law
or executive order to remain closed, or (c) a day on which the Property
Trustee's corporate trust office or the corporate trust office of the Debenture
Trustee is closed for business.
"Capital Securities Certificate" means a certificate evidencing
ownership of Capital Securities, substantially in the form attached as Exhibit
C.
"Capital Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $1,000 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution to the extent provided herein, and
designated as Convertible Capital Securities, Series A.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, or, if at any time after the execution of this instrument
such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act, then the body performing such duties at such
time.
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"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit B.
"Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $1,000 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution to the extent provided herein.
"Common Stock" means common stock, no par value per share, of the
Depositor.
"Conversion Agent" has the meaning specified in Section 4.3.
"Conversion Date" has the meaning specified in Section 4.3.
"Conversion Price" has the meaning specified in Section 4.3.
"Corporate Trust Office" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located in
Chicago, Illinois, and (ii) when used with respect to the Debenture Trustee, the
principal office of the Debenture Trustee located in Chicago, Illinois.
"Current Market Price", with respect to the Common Stock, means for any
day the last reported sale price, regular way, on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the New York Stock Exchange
Composite Transactions Tape, or, if the Common Stock is not listed or admitted
to trading on the New York Stock Exchange on such day, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
if the Common Stock is listed on a national securities 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 New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose or, if not so available in such manner, as otherwise determined
in good faith by the Board of Directors.
"Debenture Event of Default" means any "Event of Default" specified in
Section 5.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed as set forth under the Indenture, the date fixed for redemption of such
Debentures under the Indenture.
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"Debenture Trustee" means the Person identified as the "Trustee" in the
Indenture, solely in its capacity as Trustee pursuant to the Indenture and not
in its individual capacity, or its successor in interest in such capacity, or
any successor Trustee appointed as provided in the Indenture.
"Debentures" means the Depositor's 7.0% Convertible Subordinated
Deferrable Interest Debentures, issued pursuant to the Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., or any successor statute thereto,
in each case as amended from time to time.
"Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Delaware Trustee of the trust heretofore created and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor Delaware trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Direct Action" has the meaning specified in Section 5.12(c).
"Distribution Amount" means, with respect to any Trust Security and any
Distribution period, the amount of Distributions payable in respect of such
Distribution period, which amount shall be calculated by applying the
Distribution Rate to the Liquidation Amount of each Trust Security Outstanding
at the commencement of the Distribution period, by multiplying each such amount
by the actual number of days in the Distribution period concerned (which actual
number of days shall include the first day but exclude the last day of such
Distribution period) divided by 360 and rounding the resultant figure upwards to
the nearest cent (half a cent being rounded upwards). The determination of the
Distribution Rate and the Distribution Amount by or on behalf of the Issuer
Trust shall (in the absence of manifest error) be final and binding on all
parties.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distribution period" means the period for payment on the Trust
Securities set forth in Section 4.1(a).
"Distribution Rate" means, with respect to any Distribution period, a
rate per annum equal to the Interest Rate (as defined in and determined in
accordance with the Indenture) with respect to the Interest Payment Date (as
defined in the Indenture) that begins on the same date as such Distribution
period begins and ends on the same date as such Distribution period ends.
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
5
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days (subject to the deferral of any due
date in the case of an Extension Period, as such term is defined in the
Indenture); or
(c) default by the Issuer Trust in the payment of any
Redemption Price of any Trust Security when it becomes due and payable;
or
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in this
Trust Agreement (other than those specified in clause (b) or (c) above)
and continuation of such default or breach for a period of 90 days
after there has been given, by registered or certified mail, to the
Issuer Trustees by the Holders of at least 25% in aggregate Liquidation
Amount of the outstanding Capital Securities a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee if a successor Property Trustee has not been appointed
within 90 days thereof.
"Expiration Date" has the meaning specified in Section 9.1.
" Guarantee Agreement" means the Capital Securities Guarantee Agreement
executed and delivered by the Depositor and The First National Bank of Chicago,
as guarantee trustee, contemporaneously with the execution and delivery of this
Trust Agreement, for the benefit of the Holders of the Capital Securities, as
amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities are registered in the Securities Register; any such Person shall be a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Issuer Trust" means the Delaware business trust known as "HSB Capital
II", created on December 31, 1997, under the Delaware Business Trust Act
pursuant to this Trust Agreement.
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"Issuer Trustees" means, collectively, the Property Trustee, the
Delaware Trustee and the Administrative Trustees.
"Indenture" means the Indenture, dated as of December 31, 1997, between
the Depositor and the Debenture Trustee, as trustee, as amended or supplemented
from time to time.
"Investment Company Act" means the Investment Company Act of 1940, or
any successor statute thereto, in each case as amended from time to time.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (i) with respect to a redemption of Capital
Securities, Capital Securities having a Liquidation Amount (as defined below)
equal to that portion of the principal amount of Debentures to be
contemporaneously redeemed in accordance with the Debentures, allocated to the
Common Securities and to the Capital Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of the Capital Securities and (ii) with respect to a
distribution of Debentures to holders of Capital Securities in connection with a
dissolution or liquidation of the Issuer Trust, Debentures having a principal
amount equal to the Liquidation Amount of the Capital Securities of the holder
to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust
Security.
"Liquidation Date" means the date of the dissolution, winding-up or
termination of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Majority in Liquidation Amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, Capital Securities representing
more than 50% of the aggregate Liquidation Amount of all then Outstanding
Capital Securities.
"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 Security for Debentures and to convert such Debentures into Common
Stock on behalf of such holder. Such notice is substantially in the form set
forth in Exhibit F.
"Officers' Certificate" means a certificate signed by the Chief
Executive Officer, the President or one of the Senior Vice Presidents or Vice
Presidents, and by the Treasurer, an Assistant Treasurer, the Corporate
Secretary or an Assistant Secretary, of the Depositor, and delivered to the
Issuer Trustees. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Trust Agreement shall include:
7
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and
the definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering
the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.
"Outstanding", when used with respect to Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent; provided that, if such Trust Securities
are to be redeemed, notice of such redemption has been duly given
pursuant to this Trust Agreement; and
(c) Trust Securities that have been paid or in exchange for or
in lieu of which other Capital Securities have been executed and
delivered pursuant to Sections 5.4, 5.5 and 5.11;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Capital Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Capital
Securities owned by the Depositor, any Issuer Trustee or any Affiliate of the
Depositor or any Issuer Trustee shall be disregarded and deemed not to be
Outstanding, except that (a) in determining whether any Issuer Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Capital Securities that such Issuer Trustee
knows to be so owned shall be so disregarded, and (b) the foregoing clause (a)
shall not apply at any time when all of the Outstanding Capital Securities are
owned by the Depositor, one or more of the Issuer Trustees and/or any such
Affiliate. Capital Securities so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Administrative
8
Trustees the pledgee's right so to act with respect to such Capital Securities
and that the pledgee is not the Depositor or any Affiliate of the Depositor.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.9 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Holders in which all amounts paid in respect
of the Debentures will be held and from which the Property Trustee, through the
Paying Agent, shall make payments to the Holders in accordance with Sections 4.1
and 4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated association, or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Plan" means an employee benefit or other plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended, or Section 4975
of the Code.
"Plan Asset Entity" means any Person whose underlying assets include
"plan assets" by reason of any Plan's investment in such Person.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Property Trustee of the trust heretofore created and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor property trustee appointed as herein provided.
"PTCE" means a U.S. Department of Labor Prohibited Transaction Class
Exemption.
"Purchase Agreement" means the Purchase Agreement, dated as of December
31, 1997, among the Issuer Trust, the Depositor and the Purchaser, as the same
may be amended from time to time.
"Purchaser" means Employers Reinsurance Corporation and ERC Life
Reinsurance Corporation.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus
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the related amount of the premium, if any, paid by the Depositor upon the
concurrent redemption of a Like Amount of Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Restricted Capital Securities" means the Capital Securities and the
Capital Securities Certificate, for which it is required pursuant to Section
5.4(c) to bear a Restricted Capital Securities Legend.
"Restricted Capital Securities Legend" means a legend substantially in
the form of the legend required in the form of Capital Securities Certificate
set forth in Exhibit C to be placed upon a Restricted Securities Certificate.
"Restricted Certificated Securities" has the meaning specified in Section
5.2.
"Restricted Securities Certificate" has the meaning specified in
Section 5.4(b) and is substantially in the form attached as Exhibit D.
"Restricted Securities Legend" has the meaning specified in Section
5.13(a).
"Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Securities Act" means the Securities Act of 1933, and 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 5.4(a).
"Successor Capital Securities" of any particular Capital Securities
Certificate means every Capital Securities Certificate issued after, and
evidencing all or a portion of the same beneficial interest in the Issuer Trust
as that evidenced by, such particular Capital Securities Certificate; and, for
the purposes of this definition, any Capital Securities Certificate executed and
delivered under Section 5.5 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Capital Securities Certificate shall be deemed to
evidence the same beneficial interest in the Issuer Trust as the mutilated,
destroyed, lost or stolen Capital Securities Certificate.
"Trust Agreement" means this Trust Agreement, as the same may be
modified, amended or supplemented in accordance with the applicable provisions
hereof, including (i) all Exhibits, and (ii) for all purposes of this Trust
Agreement and any such modification, amendment or supplement, the provisions of
the Trust Indenture Act that are deemed to be a part of and govern this Trust
Agreement and any such modification, amendment or supplement, respectively.
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"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, to the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account, and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Securities Certificate" means any Common Securities Certificate
or Capital Securities Certificate.
"Trust Security" means any one of the Common Securities or the Capital
Securities.
"Unrestricted Securities Certificate" has the meaning specified in
Section 5.4(c).
ARTICLE II
ESTABLISHMENT OF THE ISSUER TRUST
SECTION 2.1. Name.
The trust created hereby shall be known as "HSB Capital II", as such
name may be modified from time to time by the Administrative Trustees following
written notice to the Holders of Trust Securities and the other Issuer Trustees,
in which name the Issuer Trustees (other than the Delaware Trustee) may conduct
the business of the Issuer Trust, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is 300
King Street, Wilmington, DE 19801, or such other address in the State of
Delaware as the Delaware Trustee may designate by written notice to the Holders,
the Depositor, the Property Trustee and the Administrative Trustees. The
principal executive office of the Issuer Trust is c/o HSB Group, Inc., One State
Street, Hartford, Connecticut 06102, Attention: Corporate Secretary.
SECTION 2.3. Initial Contribution of Trust Property; Organizational
Expenses.
It is the intention of the parties hereto that the Issuer Trust
created hereby constitute a business trust under the Delaware Business Trust
Act, and that this document constitutes the governing instrument of the Trust.
The Trustee and the Delaware Trustee are hereby authorized and directed to
execute and file a certificate of trust substantially in the form of Annex A
with
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the Delaware Secretary of State in accordance with the provisions of the
Delaware Business Trust Act. The Depositor shall pay organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such expenses paid by such Issuer
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.4. Issuance of the Capital Securities.
On the Closing Date, an Administrative Trustee, on behalf of the Issuer
Trust, shall execute in accordance with Sections 5.2 and 5.3, cause to be
authenticated, and deliver a Capital Securities Certificate registered in the
name of the Purchaser, in an aggregate amount of 300,000 Capital Securities
having an aggregate Liquidation Amount of $300,000,000, against receipt of an
aggregate purchase price plus accumulated distributions from December 31, 1997
on such Capital Securities of $300,000,000, which amount such Administrative
Trustee shall promptly deliver to the Property Trustee.
SECTION 2.5. Issuance of the Common Securities; Subscription and
Purchase of Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Issuer Trust, shall
execute in accordance with Section 5.2 and 5.3 and the Property Trustee shall
deliver to the Depositor a Common Securities Certificate, registered in the name
of the Depositor, evidencing an aggregate of 9,300 Common Securities having an
aggregate Liquidation Amount of $9,300,000 against receipt of the aggregate
purchase price of such Common Securities of $9,300,000 (plus accrued
Distributions, if any), to the Property Trustee. Contemporaneously therewith,
the Depositor shall issue and sell to the Issuer Trust, and the Issuer Trust
shall purchase from the Depositor, Debentures having an aggregate principal
amount equal to $309,300,000 registered in the name of the Property Trustee on
behalf of the Issuer Trust and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Issuer Trust, shall deliver
to the Depositor the sum of $309,300,000 (plus accrued Distributions, if any)
(being the sum of the amounts delivered to the Property Trustee pursuant to (i)
the second sentence of Section 2.4, and (ii) the first sentence of this Section
2.5).
SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are (a) to
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Debentures, (b) to make Distributions to holders, and (c) to engage in only
those activities necessary or incidental thereto. The Depositor hereby appoints
the Issuer Trustees as trustees of the Issuer Trust, to have all the rights,
powers and duties to the extent set forth herein, and the respective Issuer
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the benefit of the Issuer Trust and the Holders. The
Administrative Trustees shall have all rights, powers and duties set
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forth herein and in accordance with applicable law. The Delaware Trustee shall
not be entitled to exercise any powers, nor shall the Delaware Trustee have any
of the duties and responsibilities, of the Issuer Trustees set forth herein,
except as required by the Delaware Business Trust Act. The Delaware Trustee
shall be one of the trustees of the Issuer Trust for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Delaware Business
Trust Act and for taking such actions as are required to be taken by a Delaware
trustee under the Delaware Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees shall conduct the affairs of the Issuer Trust
in accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section 2.7, and in accordance with the
following provisions (i) and (ii), the Property Trustee and the Administrative
Trustees shall have the authority to enter into all transactions and agreements
determined by the Property Trustee and Administrative Trustees to be appropriate
in exercising the authority, express or implied, otherwise granted to such
Issuer Trustees, as the case may be, under this Trust Agreement, and to perform
all acts in furtherance thereof, including the following:
(i) As among the Issuer Trustees, each Administrative Trustee,
acting individually or jointly, shall have the power and authority to
act on behalf of the Issuer Trust with respect to the following
matters:
(A) the issuance and sale of the Trust Securities;
(B) causing the Issuer Trust to enter into, and to
execute, deliver and perform on behalf of the Issuer Trust,
such agreements as may be necessary or desirable in connection
with the purposes and function of the Issuer Trust;
(C) causing the Trust to assist in the qualifications
of this Trust Agreement as a trust indenture under the Trust
Indenture Act;
(D) assisting in compliance with the duties and
obligations of the Issuer Trust under the Securities Act and
applicable state securities or blue sky laws and the Trust
Indenture Act;
(E) assisting in the sending of notices (other than
notices of default) and other information regarding the Trust
Securities and the Debentures to the Holders in accordance
with this Trust Agreement;
(F) consenting to the appointment of a Paying Agent,
authenticating agent and Securities Registrar in accordance
with this Trust Agreement (which consent shall not be
unreasonably withheld);
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(G) executing the Trust Securities on behalf of the
Issuer Trust in accordance with this Trust Agreement;
(H) executing and delivering closing certificates, if
any, pursuant to the Purchase Agreement and application for a
taxpayer identification number for the Issuer Trust;
(I) unless otherwise determined by the Property
Trustee or Holders of at least a Majority in Liquidation
Amount of the Capital Securities or as otherwise required by
the Delaware Business Trust Act or the Trust Indenture Act,
executing on behalf of the Issuer Trust (either acting alone
or together with any other Administrative Trustee) any
documents that the Administrative Trustees have the power to
execute pursuant to this Trust Agreement; and
(J) taking any action incidental to the foregoing as
the Issuer Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement.
(ii) The Property Trustee shall have the power, duty and
authority to act on behalf of the Issuer Trust with respect to the
following matters:
(A) establishing the Payment Account;
(B) receiving the Debentures;
(C) collecting interest, principal and any other
payments made in respect of the Debentures and the holding of
such amounts in the Payment Account;
(D) distributing through any Paying Agent of amounts
distributable to the Holders in respect of the Trust
Securities;
(E) exercising all of the rights, powers and
privileges of a holder of the Debentures;
(F) sending notices of default and other information
regarding the Trust Securities and the Debentures to the
Holders in accordance with this Trust Agreement;
(G) distributing the Trust Property in accordance
with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
winding up the affairs of and liquidating the Issuer Trust and
preparing, executing and filing the certificate of
cancellation with the Secretary of State of the State of
Delaware;
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(I) after an Event of Default (other than under
paragraph (b), (c), (d) or (e) of the definition of such term
if such Event of Default is by or with respect to the Property
Trustee) taking of any action incidental to the foregoing as
the Property Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement and to protect and conserve the Trust Property
for the benefit of the Holders (without consideration of the
effect of any such action on any particular Holder);
(b) So long as this Trust Agreement remains in effect, the Issuer Trust
(or the Issuer Trustees acting on behalf of the Issuer Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, the Issuer Trustees, acting in
their capacity as such, shall not (i) acquire any investments or engage in any
activities not authorized by this Trust Agreement, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust
Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected to
cause the Issuer Trust to become taxable as a corporation or classified as other
than a grantor trust for United States Federal income tax purposes, (iv) incur
any indebtedness for borrowed money or issue any other debt, or (v) take or
consent to any action that would result in the placement of a Lien on any of the
Trust Property. The Administrative Trustees shall defend all claims and demands
of all Persons at any time claiming any Lien on any of the Trust Property
adverse to the interest of the Issuer Trust or the Holders in their capacity as
Holders.
(c) In connection with the issue and sale of the Capital Securities,
the Depositor shall have the right and responsibility to assist the Issuer Trust
with respect to, or effect on behalf of the Issuer Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the taking of any action necessary or desirable to sell
the Capital Securities in a transaction or a series of transactions
exempt from the registration requirements of the Securities Act;
(ii) the determination of the States, or other jurisdictions,
if any, in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and the determination of any
and all such acts, other than actions that must be taken by or on
behalf of the Issuer Trust, and the advice to the Issuer Trustees of
actions they must take on behalf of the Issuer Trust, and the
preparation for execution and filing of any documents to be executed
and filed by the Issuer Trust or on behalf of the Issuer Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such States in connection with the sale of the
Capital Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Purchase Agreement; and
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(iv) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Issuer Trust
and to operate the Issuer Trust so that the Issuer Trust will not be deemed to
be an "investment company" required to be registered under the Investment
Company Act, and will not be taxable as a corporation or classified as other
than a grantor trust for United States Federal income tax purposes and so that
the Debentures will be treated as indebtedness of the Depositor for United
States Federal income tax purposes. In this connection, each Administrative
Trustee and the Holder of the Common Securities are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or this
Trust Agreement, that such Administrative Trustee or Holder of the Common
Securities determines in its discretion to be necessary or desirable for such
purposes, as long as such action does not adversely affect in any material
respect the interests of the Holders of the Outstanding Capital Securities. In
no event shall the Issuer Trustees be liable to the Issuer Trust or the Holders
for any failure to comply with this section that results from a change in law or
regulation or in the interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist of the Trust Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee in trust for the benefit of the Issuer Trust and the
Holders in accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the Holders
and for distribution as herein provided, including (and subject to) any priority
of payments provided for herein.
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(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION; CONVERSION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests in
the Trust Property, and distributions ("Distributions"), comprised of (i) the
Distribution Amount, (ii) any Additional Sums and (iii) and other payments in
respect of the Debentures, will be made on the Trust Securities on the dates
that payments of interest are made on the Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative,
and shall accumulate whether or not there are funds of the Issuer Trust
available for the payment of Distributions. Distributions shall
accumulate from December 31, 1997, and, except in the event (and to the
extent) that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable
semi-annually in arrears on January 15 and July 15 of each year,
commencing January 15, 1998. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day, then
the payment of such Distribution shall be made on the next succeeding
day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such next succeeding
Business Day falls within the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case, with the
same force and effect as if made on the date on which such payment was
originally payable (each date on which distributions are payable in
accordance with this Section 4.1(a)(i), a "Distribution Date").
(ii) The Trust Securities shall be entitled to Distributions
(before giving effect to any Additional Sums) payable at the
Distribution Rate multiplied by the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any period will be
computed on the basis of the actual number of days in the applicable
Distribution period (which actual number of days shall include the
first day but exclude the last day of such Distribution period) divided
by 360. The period beginning on, and including, the date of original
issuance, and ending on, but excluding, the first Distribution Date,
and each successive period beginning on, and including, a Distribution
Date, and ending on, but excluding, the next succeeding Distribution
Date is herein called a "Distribution period"). The amount of
Distributions payable for any period shall also include any Additional
Sums, if any, so payable in respect of such period.
17
(iii) Distributions on the Trust Securities shall be made by
the Property Trustee from the Payment Account and shall be payable on
each Distribution Date only to the extent that the Issuer Trust has
funds then on hand and available in the Payment Account for the payment
of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
January 1 or July 1 (whether or not a Business Day) next preceding the relevant
Distribution Date.
(c) (i) The Issuer Trust shall cause the Distribution Rate, the
Distribution Amount in respect of each Trust Security and the Distribution Date
for each Distribution period to be notified to the Property Trustee, each Paying
Agent appointed by the Issuer Trust and any securities exchange or automated
quotation system on which the Trust Securities are listed or quoted and also to
be notified to the Holders of the Trust Securities in accordance with the
provisions of Section 10.8, in each case as soon as practicable after the
determination thereof but in no event later than the second Business Day after
the Determination Date in respect of such Distribution period.
(ii) All calculations of the Distribution Rate and the
Distribution Amount by or on behalf of the Issuer Trust shall (in the absence of
manifest error) be final and binding on all parties, and all certificates,
communications, opinions, determinations, calculations, quotations and decisions
given, expressed, made or obtained for the purposes of the provisions of this
Section 4.1(c) or the provisions of the Indenture relating to the calculation of
the Interest Rate (as defined in the Indenture), shall (in the absence of
willful default, bad faith or manifest error) be binding on the Issuer Trust,
the Depositor, the Debenture Trustee and all of the Holders of the Trust
Securities, and no liability shall (in the absence of willful default, bad faith
or manifest error) attach to the Debenture Trustee in connection with the
exercise or non-exercise by it of its powers, duties and discretions.
SECTION 4.2. Redemption.
(a) (i) On each Debenture Redemption Date and on the stated maturity of
the Debentures, the Issuer Trust will be required to redeem a Like Amount of
Trust Securities at the Redemption Price.
(ii) If at any time following a Conversion Date, less than
five percent (5%) in principal amount of the Debentures originally issued by the
Depositor remain outstanding, such Debentures are redeemable, at the option of
the Depositor, in whole but not in part, at a Redemption Price equal to the
aggregate principal amount thereof, and all accrued and unpaid interest; in such
event, the proceeds from such redemption shall be applied to redeem the
Outstanding Trust Securities.
18
(iii) In addition, the Issuer Trust will be required to redeem
at the Redemption Price stated in Section 11.7 of the Indenture, the amount of
Trust Securities that the Purchaser proposes to dispose or transfer, if subject
to Section 5.4(b)(2)(E), the Depositor vetoes the Purchaser's choice of Person
to whom the Purchaser desires to dispose or transfer such Securities.
(iv) Pursuant to Section 11.8 of the Indenture, the Depositor
may be required to redeem all Outstanding Trust Securities at a Redemption Price
stated in Section 11.8 of the Indenture.
(b) Notice of redemption shall be given by the Property Trustee and the
Conversion Agent 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 Trust
Securities to be redeemed, at such Holder's address appearing in the Security
Register. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price provided pursuant to (and as defined
in) the Indenture 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 an estimate is
provided, that a further notice shall be sent of the actual Redemption
Price on the date on which such Redemption Price is calculated);
(iii) the CUSIP number or CUSIP numbers of the Capital
Securities affected;
(iv) if less than all the Outstanding Trust Securities are to
be redeemed, the identification and the aggregate Liquidation Amount of
the particular Trust Securities to be redeemed;
(v) If the Capital Securities are convertible, (A) that a
Holder of Capital Securities who desires to convert such Capital
Securities called for redemption must satisfy the requirements for
conversion contained in Section 4.3 below and (B) the Conversion Price;
(vi) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed and
that Distributions thereon will cease to accumulate on and after such
date, except as provided in Section 4.2(d) below; and
(vii) the place or places where the Trust Securities are to be
surrendered for the payment of the Redemption Price.
19
The Issuer Trust in issuing the Trust Securities may use "CUSIP" or
"private placement" numbers (if then generally in use), and, if so, the Property
Trustee shall indicate the "CUSIP" or "private placement" numbers of the Trust
Securities in notices of redemption and related materials as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Trust Securities
or as contained in any notice of redemption and related materials.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the extent
that the Issuer Trust has funds then on hand and available in the Payment
Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Capital Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to the Capital Securities, irrevocably deposit with the Paying Agent or
Paying Agents, to the extent available therefor, funds sufficient to pay the
applicable Redemption Price and will give the Paying Agent or Paying Agents
irrevocable instructions and authority to pay the Redemption Price to the
Holders of the Capital Securities upon surrender of their Capital Securities
Certificates. Notwithstanding the foregoing, Distributions payable on or prior
to the Redemption Date for any Trust Securities called for redemption shall be
payable to the Holders of such Trust Securities as they appear on the Securities
Register on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required, then
upon the date of such deposit, all rights of Holders holding Trust Securities so
called for redemption will cease, except the right of such Holders to receive
the Redemption Price and any Distribution payable in respect of the Trust
Securities on or prior to the Redemption Date, but without interest, and such
Securities will cease to be Outstanding. In the event that any date on which any
Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day, in each
case, with the same force and effect as if made on such date. In the event that
payment of the Redemption Price in respect of any Trust Securities called for
redemption is improperly withheld or refused and not paid either by the Issuer
Trust or by the Depositor pursuant to the Guarantee Agreement, Distributions on
such Trust Securities will continue to accumulate, as set forth in Section 4.1,
from the Redemption Date originally established by the Issuer Trust for such
Trust Securities to the date such Redemption Price is actually paid, in which
case the actual payment date will be the date fixed for redemption for purposes
of calculating the Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated pro
rata to the Common Securities and the Capital Securities based upon the relative
Liquidation Amounts of such classes. The particular Capital Securities
20
to be redeemed shall be selected on a pro rata basis based upon their respective
Liquidation Amounts not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Capital Securities not previously called
for redemption, provided that, after giving effect to such redemption, no Holder
shall hold Capital Securities with an aggregate Liquidation Amount of less than
$1,000. The Property Trustee shall promptly notify the Securities Registrar in
writing of the Capital Securities selected for redemption and, in the case of
any Capital Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of this Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of Capital
Securities shall relate, in the case of any Capital Securities redeemed or to be
redeemed only in part, to the portion of the aggregate Liquidation Amount of
Capital Securities that has been or is to be redeemed.
SECTION 4.3. Conversion. The Holders of Trust Securities, subject to
the limitations set forth in this Section, shall have the right, at their
option, to cause the Conversion Agent to convert Trust Securities, on behalf of
the converting Holders, into shares of Common Stock in the manner described
herein on and subject to the following terms and conditions:
(i) Subject to the receipt by the Purchaser and the Depositor
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 Trust
Securities will be convertible into fully paid and nonassessable shares
of Common Stock pursuant to the Holder's direction to the Conversion
Agent to exchange such Trust Securities for a portion of the
Debentures, and immediately convert such amount of Debentures into
fully paid and nonassessable shares of Common Stock at an initial rate
of 11.7647 shares of Common Stock for each Trust Security (which is
equivalent to a conversion price of $85 per share of Common Stock),
subject to certain adjustments set forth in the Indenture (as so
adjusted, "Conversion Price"). "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.
(ii) In order to convert Trust Securities into Common Stock,
the Holder of such Trust Securities shall submit to the Conversion
Agent an irrevocable Notice of Conversion, as set forth in Exhibit F,
to convert Trust Securities on behalf of such Holder, together, with
the certificates representing the Trust Securities. The Notice of
Conversion shall (i) set forth the number of Trust Securities to be
converted and the name or names, if other than the Holder, in which the
shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Trust Securities for a portion of the
Debentures held by the Property Trustee (at the rate of exchange
specified in the preceding paragraph) and (b) to immediately convert
such Debentures, on behalf of such Holder, into Common Stock (at the
conversion rate specified in the preceding
21
paragraph). The Conversion Agent shall notify the Property Trustee of
the Holder's election to exchange Trust Securities for a portion of the
Debentures held by the Property Trustee and the Property Trustee shall,
upon receipt of such notice, deliver to the Conversion Agent the
appropriate principal amount of Debentures for exchange in accordance
with this Section. The Conversion Agent shall thereupon notify the
Depositor of the Holder's election to convert such Debentures into
shares of Common Stock. Holders of Trust Securities at the close of
business on a Distribution payment record date will be entitled to
receive the Distribution paid on such Trust Securities on the
corresponding Distribution Date notwithstanding the conversion of such
Trust Securities following such record date but prior to such
Distribution Date. Except as provided above, neither the Trust nor the
Depositor will make, or be required to make, any payment, allowance or
adjustment upon any conversion on account of any accumulated and unpaid
Distributions whether or not in arrears accrued on the Trust Securities
surrendered for conversion, or on account of any accumulated and unpaid
dividends on the shares of Common Stock issued upon such conversion.
Trust Securities shall be deemed to have been converted immediately
prior to the close of business on the day on which an irrevocable
Notice of Conversion relating to such Trust Securities is received by
the Conversion Agent in accordance with the foregoing provision (the
"Conversion Date"). The Person or Persons entitled to receive the
Common Stock issuable upon conversion of the Debentures shall be
treated for all purposes as the record holder or holders of such Common
Stock on the date of conversion. As promptly as practicable on or after
the Conversion Date, the Depositor shall issue and deliver at the
office of the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion,
together with the cash payment, if any, in lieu of any fraction of any
share to the Person or Persons entitled to receive the same, unless
otherwise directed by the Holder in the notice of conversion and the
Conversion Agent shall distribute such certificate or certificates to
such Person or Persons.
(iii) Each Holder of a Trust Security by its acceptance
thereof initially appoints the Property Trustee, not in its individual
capacity but solely as conversion agent (the "Conversion Agent") for
the purpose of effecting the conversion of Trust Securities in
accordance with this Section. In effecting the conversion and
transactions described in this Section, the Conversion Agent shall be
acting as agent of the Holders of Trust Securities directing it to
effect such conversion transactions. The Conversion Agent is hereby
authorized (i) to exchange Trust Securities from time to time for
Debentures held by the Trust in connection with the conversion of such
Trust Securities in accordance with this Section and (ii) to convert
all or a portion of the Debentures into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with the provisions
of this Section and to deliver to the Property Trustee any new
Debenture or Debentures for any resulting unconverted principal amount
delivered to the Conversion Agent by the Debenture Trustee.
(iv) No fractional shares of Common Stock will be issued as a
result of conversion, but, in lieu thereof, such fractional interest
will be paid in cash by the
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Depositor to the Conversion Agent in an amount equal to the Current
Market Price of the fractional share of the Common Stock, and the
Conversion Agent will in turn make such payment to the Holder or
Holders of Trust Securities so converted.
(v) Nothing in this Section 4.3 shall limit the requirement of
the Trust to withhold taxes pursuant to the terms of the Trust
Securities or as set forth in this Agreement or otherwise required of
the Property Trustee or the Trust to pay any amounts on account of such
withholdings.
SECTION 4.4. Subordination of Common Securities.
(a) Payment of Distributions on, the Redemption Price of, and the
Liquidation Distribution in respect of the Trust Securities, as applicable,
shall be made, subject to Section 4.2(e), pro rata among the Common Securities
and the Capital Securities based on the Liquidation Amount of the Trust
Securities; provided, however, that if on any Distribution Date, Redemption Date
or Liquidation Date any Event of Default resulting from a Debenture Event of
Default specified in Section 5.1(1) or 5.1(2) of the Indenture shall have
occurred and be continuing, no payment of any Distribution on, Redemption Price
of, or Liquidation Distribution in respect of any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all Outstanding Capital Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all Outstanding
Capital Securities then called for redemption, or in the case of payment of the
Liquidation Distribution the full amount of such Liquidation Distribution on all
Outstanding Capital Securities, shall have been made or provided for, and all
funds immediately available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions on, the Redemption Price of or
the Liquidation Distribution in respect of the Capital Securities then due and
payable.
(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holder of the Common Securities shall
have no right to act with respect to any such Event of Default under this Trust
Agreement until the effects of all such Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Capital
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Capital Securities and
not on behalf of the Holder of the Common Securities, and only the Holders of
the Capital Securities will have the right to direct the Property Trustee to act
on their behalf.
SECTION 4.5. Payment Procedures.
Payments of Distributions or of the Redemption Price, Liquidation
Amount or any other amounts in respect of the Capital Securities shall be made
by check mailed to the address of the Person entitled thereto as such address
shall appear on the Securities Register. Payments in
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respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Holder of all the Common
Securities.
SECTION 4.6. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States Federal, state and local tax
and information returns and reports required to be filed by or in respect of the
Issuer Trust. In this regard, the Administrative Trustees shall (a) prepare and
file (or cause to be prepared and filed) all Internal Revenue Service forms
required to be filed in respect of the Issuer Trust in each taxable year of the
Issuer Trust, and (b) prepare and furnish (or cause to be prepared and
furnished) to each Holder all Internal Revenue Service forms required to be
provided by the Issuer Trust. The Administrative Trustees shall provide the
Depositor and the Property Trustee with a copy of all such returns and reports
promptly after such filing or furnishing. The Issuer Trustees shall comply with
United States Federal withholding and backup withholding tax laws and
information reporting requirements with respect to any payments to Holders under
the Trust Securities.
SECTION 4.7. Payment of Taxes, Duties, Etc. of the Issuer Trust.
Upon receipt under the Indenture of Additional Sums, the Property
Trustee shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Issuer Trust by
the United States or any other taxing authority with respect to which such
Additional Sums were paid.
SECTION 4.8. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Capital Securities shall
be reduced by the amount of any corresponding payment such Holder has directly
received pursuant to Section 5.9 of the Indenture or Section 5.12 of this Trust
Agreement.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the creation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are Outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.
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SECTION 5.2. The Trust Securities Certificates.
Unless otherwise set forth herein, a single Capital Securities
Certificate representing the Capital Securities shall be issued to the Purchaser
in the form of a definitive Capital Securities Certificate. A single Common
Security Certificate representing the Common Securities shall be issued to the
Depositor in the form of a definitive Common Securities Certificate. The
consideration received by the Trust for the issuance of the Trust Securities
shall constitute a contribution to the capital of the Trust and shall not
constitute a loan to the Trust.
The Purchaser shall receive a Capital Securities Certificate bearing
the Restricted Securities Legend ("Restricted Certificated Securities").
Restricted Certificated Securities shall include the Restricted Securities
Legend unless removed in accordance with Section 5.4(c) hereof.
The Trust Securities Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of at least one Administrative Trustee
and authenticated by the Property Trustee. Trust Securities Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Issuer Trust, shall be validly issued and entitled to the benefit of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.4.
SECTION 5.3. Execution and Delivery of Trust Securities Certificates.
On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust and delivered
to or upon the written order of the Depositor, executed by an authorized officer
thereof, without further corporate action by the Depositor, in authorized
denominations.
SECTION 5.4. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) Registration, Transfer and Exchange Generally. The Administrative
Trustees shall keep or cause to be kept, at the office or agency maintained
pursuant to Section 5.8, a register or registers (the "Securities Register") in
which the registrar and transfer agent with respect to the Trust Securities (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of the Capital Securities
Certificate and (subject to Section 5.10) the Common Securities Certificate and
of transfers and exchanges of the Capital Securities Certificate as herein
provided. The Property Trustee is hereby appointed Securities
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Registrar for the purpose of registering the Capital Securities Certificate and
(subject to Section 5.10) the Common Securities Certificate and transfers and
exchanges thereof as provided herein.
Upon surrender for registration of transfer of the Capital Securities
Certificate at the office or agency maintained pursuant to Section 5.8, the
Administrative Trustees or any one of them shall execute and deliver to the
Property Trustee, and the Property Trustee shall deliver, in the name of the
designated transferee or transferees, one or more new Capital Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
and bearing such restrictive legends as may be required by this Trust Agreement,
dated the date of execution by such Administrative Trustee or Trustees.
At the option of the Holder, the Capital Securities Certificate may be
exchanged for other Capital Securities Certificates of the same series of any
authorized denominations, of like tenor and aggregate Liquidation Amount,
bearing such restrictive legends as may be required by this Trust Agreement and
bearing a number not contemporaneously Outstanding, upon surrender of the
Capital Securities Certificate to be exchanged at such office or agency.
Whenever any Capital Securities Certificate is so surrendered for exchange, the
Administrative Trustees or any one of them shall execute and deliver to the
Property Trustee, and the Property Trustee shall deliver, the Capital Securities
Certificates that the Holder making the exchange is entitled to receive.
All Capital Securities issued upon any transfer or exchange of Capital
Securities shall evidence the same interest in the assets of the Issuer Trust,
and be entitled to the same benefits under this Trust Agreement, as the Capital
Securities surrendered upon such transfer or exchange.
The Securities Registrar shall not be required, (i) to issue, register
the transfer of or exchange any Capital Security during a period beginning at
the opening of business 15 days before the day of selection for redemption of
such Capital Securities pursuant to Article IV 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 Capital Security so selected for redemption in
whole or in part, except, in the case of any such Capital Security to be
redeemed in part, any portion thereof not to be redeemed.
The Capital Securities Certificate presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to an Administrative
Trustee and the Securities Registrar duly executed by the Holder or such
Holder's attorney duly authorized in writing. The Capital Securities Certificate
surrendered for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Property Trustee in accordance with its
customary practice.
No service charge shall be made for any registration of transfer or
exchange of the Capital Securities Certificate, but the Issuer Trust may require
payment of a sum sufficient to
26
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of the Capital Securities Certificate.
(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 Capital
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
Capital Securities in an equal aggregate principal amount of Capital Securities
of other authorized denominations, the Securities Registrar shall register the
transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Capital 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 Property Trustee and the Securities Registrar, duly
executed by the Purchaser or his attorney duly authorized in
writing, delivered to the Depositor at least 30 Business Days
before such intended transfer, and the Depositor shall not
have delivered a written notice of objection to the Purchaser
within 5 Business Days prior to the intended transfer, which
notice of objection shall state whether the Depositor is
objecting pursuant to subsection (D) or (E) below;
(B) in the case of Restricted Securities, are being
transferred pursuant to an applicable exemption from the
Securities Act and are accompanied by the following additional
information and documents: a Restricted Security Certificate,
satisfactory to the Property Trustee and duly executed by the
transferor Holder or his attorney duly authorized in writing,
in the form attached hereto as Exhibit D (the "Restricted
Securities Certificate") and an opinion of counsel (as
described in subsection (c)(v) below) reasonably acceptable to
the Depositor and to the Securities Registrar to the effect
that such transfer is in compliance with the Securities Act,
in which case the transferee Holder shall take delivery in the
form of a Restricted Security, subject to Section 5.4(c);
(C) shall be accompanied by a written statement that
such transferee agrees to be bound by the terms and provisions
of this Trust Agreement and the Purchase Agreement;
(D) shall be subject to the right of the Depositor to
veto the Purchaser's choice of such Person to whom the
proposed transfer or disposition is to occur by giving notice
of such objection to the Purchaser as described in (A) above;
and
(E) shall, pursuant to Section 4.2(a)(iii), be
subject to the right of the Depositor to cause the Issuer
Trust to send out a notice of redemption to redeem at a
Redemption Price specified in Section 11.7 of the Indenture,
the Security or
27
Securities surrendered for transfer or exchange by giving
notice of such objection to the Purchaser as described in (A)
above.
(c) Securities Act Legends. Except as set forth below, Certificated
Capital Securities, their respective Successor Securities and a new Capital
Security which is issued in exchange for another Capital Security or any portion
thereof, upon transfer or otherwise, shall bear a Restricted Securities Legend
as set forth in Section 5.11:
(i) at any time after the Capital 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 Capital Security which does not bear a Securities Act Legend may
be issued in exchange for or in lieu of a Capital Security or any
portion thereof which bears such a legend if the Depositor has received
from the Purchaser an opinion of counsel as described in subsection (v)
below and if the Property Trustee has received an Unrestricted
Securities Certificate, in the form of Exhibit E hereto (an
"Unrestricted Securities Certificate"), satisfactory to the Property
Trustee and duly executed by the Holder of such legended Capital
Security or his attorney duly authorized in writing, and after such
date and receipt of such certificate, the Property Trustee shall
authenticate and deliver such a new Capital Security in exchange for or
in lieu of such other Capital Security as provided in this Article 5;
(ii) a new Capital Security which does not bear a Securities
Act Legend may be issued in exchange for or in lieu of a Capital
Security or any portion thereof which also does not bear such a legend
if, after the receipt by the Depositor of an opinion of counsel as
described in subsection (v) below, in the Depositor's judgment, placing
such a legend upon such new Capital Security is not necessary to ensure
compliance with the registration requirements of the Securities Act,
and the Property Trustee, at the direction of the Depositor, shall
authenticate and deliver such a new Capital Security as provided in
this Article 5; and
(iii) the Purchaser agrees that it will not effect the
proposed transfer or disposition of the Capital Security until such
Purchaser has provided to the Depositor an opinion of counsel
satisfactory in form and substance to the Depositor that such proposed
disposition or transfer is exempt from registration under the
Securities Act and any applicable state securities laws. The Depositor
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.
(d) Any purchaser or Holder of any Capital Securities or any interest
therein will be deemed to have represented by its purchase and holding thereof
that it either (i) is not a Plan or a Plan Asset Entity and is not purchasing
such Capital Securities on behalf of or with "plan assets" of any Plan, or (ii)
is eligible for the exemptive relief available under PTCE 96-23, 95-
28
60, 91-38, 90-1 or 84-14 or another applicable exemption with respect to such
purchase or holding. The Securities Registrar may, and if the Depositor shall so
request, the Securities Registrar shall, before registering for transfer or
exchange any Capital Securities Certificates as provided in Sections 5.2, 5.4 or
5.5 of this Trust Agreement, (A) require the purchaser or Holder of such Capital
Securities Certificates to confirm that it either (x) is not a Plan, a Plan
Asset Entity or a Person investing "plan assets" of any Plan or (y) is eligible
for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or
84-14, and (B) if such purchaser or Holder does not provide such confirmation,
require an Opinion of Counsel or other evidence satisfactory to the Depositor of
the availability to such purchaser or Holder of another applicable exemption
with respect to such purchase or holding.
SECTION 5.5. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate, and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Issuer Trust shall execute and make available for delivery, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Trust Securities
Certificate, a new Trust Securities Certificate of like class, tenor and
denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section 5.5, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section 5.5
shall constitute conclusive evidence of an undivided beneficial interest in the
assets of the Issuer Trust corresponding to that evidenced by the lost, stolen
or destroyed Trust Securities Certificate, as if originally issued, whether or
not the lost, stolen or destroyed Trust Securities Certificate shall be found at
any time.
SECTION 5.6. Persons Deemed Holders.
The Issuer Trustees and the Securities Registrar shall each treat the
Person in whose name any Trust Securities Certificate shall be registered in the
Securities Register as the owner of such Trust Securities Certificate for the
purpose of receiving Distributions and for all other purposes whatsoever, and
none of the Issuer Trustees and the Securities Registrar shall be bound by any
notice to the contrary.
SECTION 5.7. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor or the Issuer Trustees accountable by reason of the disclosure of
its name and address, regardless of the source from which such information was
derived.
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SECTION 5.8. Maintenance of Office or Agency.
The Administrative Trustees shall maintain an office or offices or
agency or agencies where Capital Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Issuer Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate HSB Group, Inc., One
State Street, Hartford, Connecticut 06102 as its office and agency for such
purposes. The Administrative Trustees shall give prompt written notice to the
Depositor, the Property Trustee and to the Holders of any change in the location
of the Securities Register or any such office or agency.
SECTION 5.9. Appointment of Paying Agents.
The Paying Agent or Agents shall make Distributions to Holders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account solely for the
purpose of making the Distributions referred to above. The Administrative
Trustees may revoke such power and remove the Paying Agent in its sole
discretion. The Paying Agent shall initially be the Bank and any co-paying agent
chosen by the Property Trustee and acceptable to the Administrative Trustees and
the Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees and the
Property Trustee. If the Bank shall no longer be the Paying Agent or a successor
Paying Agent shall resign or its authority to act be revoked, the Administrative
Trustees shall appoint a successor (which shall be a bank or trust company) that
is reasonably acceptable to the Depositor to act as Paying Agent. Such successor
Paying Agent or any additional Paying Agent shall execute and deliver to the
Issuer Trustees an instrument in which such successor Paying Agent or additional
Paying Agent shall agree with the Issuer Trustees that as Paying Agent, such
successor Paying Agent or additional Paying Agent will hold all sums, if any,
held by it for payment to the Holders in trust for the benefit of the Holders
entitled thereto until such sums shall be paid to such Holders. The Paying Agent
shall return all unclaimed funds to the Property Trustee and upon removal of a
Paying Agent such Paying Agent shall also return all funds in its possession to
the Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall
apply to the Bank also in its role as Paying Agent, for so long as the Bank
shall act as Paying Agent and, to the extent applicable, to any other paying
agent appointed hereunder. Any reference in this Agreement to the Paying Agent
shall include any co-paying agent unless the context requires otherwise.
SECTION 5.10. Ownership of Common Securities by Depositor.
On the Closing Date, the Depositor shall acquire, and thereafter shall
retain, beneficial and record ownership of the Common Securities. Neither the
Depositor nor any successor Holder of the Common Securities may transfer less
than all the Common Securities (except in connection with a redemption thereof),
and the Depositor or any such successor Holder may transfer the Common
Securities only (i) in connection with a consolidation or merger of the
30
Depositor into another corporation, or any conveyance, transfer or lease by the
Depositor of its properties and assets substantially as an entirety to any
Person, pursuant to Section 8.1 of the Indenture, or (ii) to the Depositor or an
Affiliate of the Depositor in compliance with applicable law (including the
Securities Act and applicable state securities and blue sky laws). To the
fullest extent permitted by law, any attempted transfer of the Common Securities
other than as set forth in the next proceeding sentence shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued to
the Depositor to contain a legend stating substantially "THIS CERTIFICATE IS NOT
TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN
COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.10 OF THE TRUST AGREEMENT."
SECTION 5.11. Restrictive Legends.
The Capital Securities Certificate shall bear the following legend (the
"Restricted Securities Legend") unless the Depositor determines otherwise in
accordance with applicable law:
"THE CAPITAL SECURITIES EVIDENCED HEREBY, ANY CONVERTIBLE
SUBORDINATED DEFERRABLE INTEREST DEBENTURES ISSUABLE HEREWITH AND THE
COMMON STOCK ISSUABLE UPON THEIR CONVERSION HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933 (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 5.12. Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Issuer Trust except as described below. The
Trust Securities shall be personal property giving only the rights specifically
set forth therein and in this Trust Agreement. The Trust Securities shall have
no preemptive or similar rights and when issued and delivered to Holders against
payment of the purchase price therefor will be fully paid and nonassessable by
the Issuer Trust. The Holders of the Trust Securities, in their capacities as
such, shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
(b) For so long as any Capital Securities remain Outstanding, if, upon
a Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount
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of the outstanding Debentures fail to declare the principal of all of the
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Capital Securities then Outstanding shall have the
right to make such declaration by a notice in writing to the Property Trustee,
the Depositor and the Debenture Trustee.
At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Property Trustee fails to annul any such declaration and waive
such default, the Holders of at least a Majority in Liquidation Amount of the
Capital Securities, by written notice to the Property Trustee, the Depositor and
the Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay:
(A) all overdue installments of interest on all of the
Debentures,
(B) the principal of (and premium, if any, on) any
Debentures that have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Debentures, and
(C) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture Trustee
and the Property Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Debentures,
other than the non-payment of the principal of the Debentures that has
become due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture.
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities may, on behalf of the Holders of all the Trust Securities, waive any
past default or Event of Default under the Indenture, except a default or Event
of Default in the payment of principal or interest (unless such default or Event
of Default has been cured and a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default or Event of Default in respect of a
covenant or provision that under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Debenture. No such
rescission shall affect any subsequent default or impair any right consequent
thereon.
Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of any part of
the Capital Securities, a record date shall be established for determining
Holders of Outstanding Capital Securities entitled to join in such notice, which
record date shall be at the close of business on the day the Property Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies,
32
and only such Persons, shall be entitled to join in such notice, whether or not
such Holders remain Holders after such record date; provided, that, unless such
declaration of acceleration, or rescission and annulment, as the case may be,
shall have become effective by virtue of the requisite percentage having joined
in such notice prior to the day that is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be canceled
and of no further effect. Nothing in this paragraph shall prevent a Holder, or a
proxy of a Holder, from giving, after expiration of such 90-day period, a new
written notice of declaration of acceleration, or rescission and annulment
thereof, as the case may be, that is identical to a written notice that has been
canceled pursuant to the proviso to the preceding sentence, in which event a new
record date shall be established pursuant to the provisions of this Section
5.12(b).
(c) For so long as any Capital Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Capital Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.9 of the Indenture, for enforcement of payment to such Holder of any
amounts payable in respect of Debentures having an aggregate principal amount
equal to the aggregate Liquidation Amount of the Capital Securities of such
Holder (a "Direct Action"). Except as set forth in Section 5.12(b) and this
Section 5.12(c), the Holders of Capital Securities shall have no right to
exercise directly any right or remedy available to the holders of, or in respect
of, the Debentures.
(d) Except as otherwise provided in paragraphs (a), (b) and (c) of this
Section 5.12, the Holders of at least a Majority in Liquidation Amount of the
Capital Securities may, on behalf of the Holders of all the Trust Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights.
(a) Except as expressly provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Capital Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Issuer Trust or the obligations
of the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Trust Securities Certificates, be construed so as to constitute the
Holders from time to time as partners or members of an association.
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(b) So long as any Debentures are held by the Property Trustee on
behalf of the Issuer Trust, the Property Trustee shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or execute any trust or power conferred on the Property
Trustee with respect to the Debentures, (ii) waive any past default that may be
waived under Section 5.13 of the Indenture, (iii) exercise any right to rescind
or annul a declaration that the principal of all the Debentures shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Indenture or the Debentures, where such consent shall be required, without, in
each case, obtaining the prior approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities, provided, however, that where a
consent under the Indenture would require the consent of each Holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior written consent of each Holder of Capital Securities.
The Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Capital Securities, except by a
subsequent vote of the Holders of the Capital Securities. The Property Trustee
shall notify all Holders of the Capital Securities of any notice of default
received with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Issuer Trustees shall, at the expense of the Depositor,
obtain an Opinion of Counsel experienced in such matters to the effect that such
action shall not cause the Issuer Trust to be taxable as a corporation or
classified as other than a grantor trust for United States Federal income tax
purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Capital Securities, whether by way of amendment to the Trust
Agreement or otherwise, or (ii) the dissolution, winding-up or termination of
the Issuer Trust, other than pursuant to the terms of this Trust Agreement, then
the Holders of Outstanding Capital Securities as a class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities. Notwithstanding any other
provision of this Trust Agreement, no amendment to this Trust Agreement may be
made if, as a result of such amendment, it would cause the Issuer Trust to be
taxable as a corporation or classified as other than a grantor trust for United
States Federal income tax purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders of the Capital Securities,
stating the time, place and purpose of the meeting, shall be given by the
Property Trustee pursuant to Section 10.8 to each Holder of Capital Securities,
at such Holder's registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further notice.
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SECTION 6.3. Meetings of Holders of the Capital Securities.
No annual meeting of Holders is required to be held. The Administrative
Trustees, however, shall call a meeting of the Holders of the Capital Securities
to vote on any matter upon the written request of the Holders of at least 25% in
aggregate Liquidation Amount of the Outstanding Capital Securities and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of the Capital Securities to vote on
any matters as to which such Holders are entitled to vote.
The Holders of at least a Majority in Liquidation Amount of the Capital
Securities, present in person or by proxy, shall constitute a quorum at any
meeting of the Holders of the Capital Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders
present, in person or by proxy, holding Capital Securities representing at least
a majority of the aggregate Liquidation Amount of the Capital Securities held by
the Holders present, either in person or by proxy, at such meeting shall
constitute the action of the Holders of the Capital Securities, unless this
Trust Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $1,000 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote
by proxy, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Administrative Trustees, or with such other
officer or agent of the Issuer Trust as the Administrative Trustees may direct,
for verification prior to the time at which such vote shall be taken. Pursuant
to a resolution of the Property Trustee, proxies may be solicited in the name of
the Property Trustee or one or more officers of the Property Trustee. Only
Holders of record shall be entitled to vote. When Trust Securities are held
jointly by several persons, any one of them may vote at any meeting in person or
by proxy in respect of such Trust Securities, but if more than one of them shall
be present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
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SECTION 6.6. Holder Action by Written Consent.
Any action that may be taken by Holders of Capital Securities at a
meeting may be taken without a meeting if Holders holding at least a Majority in
Liquidation Amount of the Capital Securities entitled to vote in respect of such
action (or such larger proportion thereof as shall be required by any other
provision of this Trust Agreement) shall consent to the action in writing. Any
action that may be taken by the Holder of all the Common Securities may be taken
if such Holder shall consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of Holders or the payment of a
distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
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 otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to an Administrative Trustee. 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 Trust Agreement and (subject to Section
8.1) conclusive in favor of the Issuer Trustees, if made in the manner provided
in this Section 6.8.
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 a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than such signer's individual capacity, such
certificate or affidavit shall also constitute sufficient proof of such signer's
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner that any Issuer Trustee receiving the same deems sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
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Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Issuer
Trustees, the Depositor or the Issuer Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust 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 Liquidation Amount.
If any dispute shall arise among the Holders or the Issuer Trustees
with respect to the authenticity, validity or binding nature of any request,
demand, authorization, direction, consent, waiver or other Act of such Holder or
Issuer Trustee under this Article VI, then the determination of such matter by
the Property Trustee shall be conclusive with respect to such matter.
SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by Holders
(and other Issuer Trustees) during normal business hours for any purpose
reasonably related to such Holder's interest as a Holder (or such Issuer
Trustee's service as a Trustee hereunder).
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf
of and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:
(a) the Property Trustee is a national banking association with trust
powers, duly organized, validly existing and in good standing under the laws of
the United States;
(b) the Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
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(c) the Delaware Trustee is a Delaware corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
and satisfies for the Issuer Trust the requirements of Section 3807(a) of the
Delaware Business Trust Act;
(d) the Delaware Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(e) this Trust Agreement has been duly authorized, executed and
delivered by the Property Trustee and the Delaware Trustee and constitutes the
valid and legally binding agreement of each of the Property Trustee and the
Delaware Trustee enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(f) the execution, delivery and performance of this Trust Agreement
have been duly authorized by all necessary corporate or other action on the part
of the Property Trustee and the Delaware Trustee and do not require any approval
of stockholders of the Property Trustee and the Delaware Trustee and such
execution, delivery and performance will not (i) violate the Charter or By-laws
of the Property Trustee or the Delaware Trustee, (ii) violate any provision of,
or constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of, any Lien on any properties included in
the Trust Property pursuant to the provisions of, any indenture, mortgage,
credit agreement, license or other agreement or instrument to which the Property
Trustee or the Delaware Trustee is a party or by which it is bound, or (iii)
violate any law, governmental rule or regulation of the United States or the
State of Delaware, as the case may be, governing the banking, trust or general
powers of the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property Trustee or
the Delaware Trustee;
(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee, as the
case may be, contemplated herein requires the consent or approval of, the giving
of notice to, the registration with or the taking of any other action with
respect to any governmental authority or agency under any existing law of the
United States or the State of Delaware governing the banking, trust or general
powers of the Property Trustee or the Delaware Trustee, appropriate in context;
and
(h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal that,
individually or in the aggregate, would materially and adversely affect the
Issuer Trust or would question the right, power and authority of the Property
Trustee or the Delaware Trustee, as the case may be, to enter into or perform
its obligations as one of the Issuer Trustees under this Trust Agreement.
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SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued on the Closing Date on
behalf of the Issuer Trust have been duly authorized and will have been duly and
validly executed, issued and delivered by the Issuer Trustees pursuant to the
terms and provisions of, and in accordance with the requirements of, this Trust
Agreement and the Holders will be, as of such date, entitled to the benefits of
this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either Issuer Trustee
of this Trust Agreement.
ARTICLE VIII
THE ISSUER TRUSTEES; PAYING AGENTS
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee,
subject to the Trust Indenture Act. Notwithstanding the foregoing, but subject
to Section 8.1(c) and 8.1(e), no provision of this Trust Agreement shall require
any of the Issuer Trustees to expend or risk its or their own funds or otherwise
incur any financial liability in the performance of any of its or their duties
hereunder, or in the exercise of any of its or their rights or powers, if it or
they shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it or them. Whether or not therein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Issuer Trustees shall be subject to the provisions
of this Section 8.1. Nothing in this Trust Agreement shall be construed to
release an Administrative Trustee from liability for his or her own gross
negligent action, his or her own gross negligent failure to act, or his or her
own wilful misconduct. To the extent that, at law or in equity, an Issuer
Trustee has duties and liabilities relating to the Issuer Trust or to the
Holders, such Issuer Trustee shall not be liable to the Issuer Trust or to any
Holder for such Issuer Trustee's good faith reliance on the provisions of this
Trust Agreement. The provisions of this Trust Agreement, to the extent that they
restrict the duties and liabilities of the Issuer Trustees otherwise existing at
law or in equity, are agreed by the Depositor and the Holders to replace such
other duties and liabilities of the Issuer Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only
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to the extent that there shall be sufficient revenue or proceeds from the Trust
Property to enable the Property Trustee or a Paying Agent to make payments in
accordance with the terms hereof. Each Holder, by its acceptance of a Trust
Security, agrees that it will look solely to the revenue and proceeds from the
Trust Property to the extent legally available for distribution to it as herein
provided and that the Issuer Trustees are not personally liable to it for any
amount distributable in respect of any Trust Security or for any other liability
in respect of any Trust Security. This Section 8.1(b) does not limit the
liability of the Issuer Trustees expressly set forth elsewhere in this Trust
Agreement or, in the case of the Property Trustee, in the Trust Indenture Act.
(c) If an Event of Default has occurred and is continuing, the Property
Trustee shall enforce this Trust Agreement for the benefit of the Holders.
(d) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Trust Agreement (including pursuant to Section 10.10), and no implied covenants
shall be read into this Trust Agreement against the Property Trustee. If an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 5.12), the Property Trustee shall exercise such of the rights and powers
vested in it by this Trust Agreement, and use the same degree of care and skill
in its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(e) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own wilful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Trust Agreement (including pursuant to Section 10.10),
and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Trust Agreement (including pursuant to
Section 10.10); and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Trust Agreement; but in the case of any
such certificates or opinions that by any provision hereof or
of the Trust Indenture Act are specifically required to be
furnished to the Property Trustee, the Property Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Trust Agreement.
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(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Payment Account shall be to deal with such Property in a similar
manner as the Property Trustee deals with similar property for its own
account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the
Trust Indenture Act;
(v) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to Section
3.1 and except to the extent otherwise required by law; and
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the default or misconduct of
any other Issuer Trustee or the Depositor;
(f) The Administrative Trustees shall not be responsible for monitoring
the compliance by the Issuer Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall either Administrative Trustee be
liable for the default or misconduct of any other Issuer Trustee or the
Depositor. The Delaware Trustee shall not be responsible for monitoring
compliance by the Property Trustee, the Administrative Trustees or the Depositor
with their respective duties under this Trust Agreement, nor shall the Delaware
Trustee be liable for the default or misconduct of any other Issuer Trustee or
the Depositor.
SECTION 8.2. Certain Notices.
Within thirty (30) days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such Event of
Default to the Holders and the Administrative Trustee, unless such Event of
Default shall have been cured or waived.
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Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures, the Property Trustee shall transmit, in the manner and to the extent
provided in Section 10.8, notice of such exercise to the Holders and the
Administrative Trustees, unless such exercise shall have been revoked.
The Property Trustee shall not be deemed to have knowledge of any Event
of Default unless the Property Trustee shall have received written notice, or a
Responsible Officer charged with the administration of this Trust Agreement
shall have obtained actual knowledge, of such Event of Default.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action,
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein, or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to which
the Holders of the Capital Securities are entitled to vote under the terms of
this Trust Agreement, the Property Trustee shall deliver a notice to the
Depositor requesting the Depositor's opinion as to the course of action to be
taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Holders, in which event
the Property Trustee shall have no liability except for its own bad faith,
negligence or wilful misconduct;
(c) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;
(d) any direction or act of an Administrative Trustee contemplated by
this Trust Agreement shall be sufficiently evidenced by a certificate executed
by such Administrative Trustee and setting forth such direction or act;
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(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or re-registration thereof;
(f) the Property Trustee may consult with counsel (which counsel may be
counsel to the Depositor or any of its Affiliates, and may include any of its
employees) and the advice of such 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 and in accordance with
such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction; provided that, nothing
contained in this Section 8.3(g) shall be taken to relieve the Property Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Trust Agreement;
(h) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall be responsible for
its own negligence, bad faith or wilful misconduct with respect to selection of
any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders (which instructions may
only be given by the Holders of the same proportion in Liquidation Amount of the
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in acting in
accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
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No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on any Issuer Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which it shall be unqualified or incompetent
in accordance with applicable law, to perform any such act or acts, or to
exercise any such right, power, duty or obligation. No permissive power or
authority available to any Issuer Trustee shall be construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Depositor and the Issuer Trust, and the
Issuer Trustees do not assume any responsibility for their correctness. The
Issuer Trustees shall not be accountable for the use or application by the
Depositor of the proceeds of the Debentures.
The Property Trustee may conclusively assume that any funds held by it
hereunder are legally available unless an officer of the Property Trustee
assigned to its Corporate Trust division shall have received written notice from
the Depositor, any Holder or any other Issuer Trustee that such funds are not
legally available.
SECTION 8.5. May Hold Securities.
Any Issuer Trustee or any agent of any Issuer Trustee or the Issuer
Trust, in its individual or any other capacity, may become the owner or pledgee
of Trust Securities and, subject to Sections 8.8 and 8.13 and, except as
provided in the definition of the term "Outstanding" in Article I, may otherwise
deal with the Issuer Trust with the same rights it would have if it were not an
Issuer Trustee or such agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to each Issuer Trustee and Paying Agent from time to time
such reasonable compensation for all services rendered by them hereunder as may
be agreed by the Depositor and such Issuer Trustee or Paying Agent, as the case
may be, 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);
(b) except as otherwise expressly provided herein, to reimburse each
Issuer Trustee and Paying Agent upon request for all reasonable expenses,
disbursements and advances incurred or made by each Issuer Trustee and Paying
Agent in accordance with any provision of this Trust Agreement (including the
reasonable compensation and the expenses and disbursements of their agents and
counsel), except any such expense, disbursement or advance as may be
attributable to their negligence, bad faith or wilful misconduct; and
44
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Paying Agent, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee or
agent of the Issuer Trust (referred to herein as an "Indemnified Person") from
and against any loss, damage, liability, tax, penalty, expense or claim of any
kind or nature whatsoever incurred by such Indemnified Person by reason of the
creation, operation or termination of the Issuer Trust or any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Issuer Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this Trust
Agreement, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified Person by
reason of negligence, bad faith or wilful misconduct with respect to such acts
or omissions.
(d) to the fullest extent permitted by applicable law, the parties
intend that Section 3561 of Title 12 of the Delaware Code shall not apply to the
Issuer Trust and that compensation payable to any Issuer Trustee pursuant to
this Section 8.6 not be subject to review by any court under Section 3560 of
Title 12 of the Delaware Code or otherwise.
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement and the resignation or removal of any Issuer Trustee.
No Issuer Trustee or Paying Agent may claim any Lien on any Trust
Property as a result of any amount due pursuant to this Section 8.6.
The Depositor, any Issuer Trustee (subject to Section 8.8(a)) and any
Paying Agent may engage in or possess an interest in other business ventures of
any nature or description, independently or with others, similar or dissimilar
to the business of the Issuer Trust, and the Issuer Trust and the Holders of
Trust Securities shall have no rights by virtue of this Trust Agreement in and
to such independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the Issuer
Trust, shall not be deemed wrongful or improper. Neither the Depositor, any
Paying Agent nor any Issuer Trustee shall be obligated to present any particular
investment or other opportunity to the Issuer Trust even if such opportunity is
of a character that, if presented to the Issuer Trust, could be taken by the
Issuer Trust, and the Depositor, any Issuer Trustee or any Paying Agent shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Issuer Trustee or Paying Agent may engage or be interested in
any financial or other transaction with the Depositor or any Affiliate of the
Depositor, or may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Issuer
Trustees.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national or state chartered bank and
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eligible pursuant to the Trust Indenture Act to act as such, and that has at the
time of such 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 any such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes of
this Section 8.7 and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section 8.7, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. At the time of appointment, the Property
Trustee must have securities rated in one of the three highest rating categories
by a nationally recognized statistical rating organization.
(b) There shall at all times be one or more Administrative Trustees
hereunder. Each Administrative Trustee shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
persons authorized to bind that entity.
(c) There shall at all times be a Delaware Trustee hereunder. The
Delaware Trustee shall either be (i) a natural person who is at least 21 years
of age and a resident of the State of Delaware, or (ii) a legal entity with its
principal place of business in the State of Delaware and that otherwise meets
the requirements of applicable Delaware law and that shall act through one or
more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, Depositor and the Administrative Trustees,
by agreed action of the majority of them shall have power to appoint, and upon
the written request of the Administrative Trustee and the Depositor shall for
such purpose join with the Administrative Trustees in the execution, delivery,
and performance of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Property Trustee either to act as
co-trustee, jointly with the Property Trustee, of all or
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any part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or Persons
in the capacity aforesaid, any property, title, right or power deemed necessary
or desirable, subject to the other provisions of this Section 8.9. Any
co-trustee or separate trustee appointed pursuant to this Section 8.9 shall
either be (i) a natural person who is at least 21 years of age and a resident of
the United States, or (ii) a legal entity with its principal place of business
in the United States that shall act through one or more persons authorized to
bind such entity. If an Event of Default under the Indenture shall have occurred
and be continuing, the Property Trustee alone shall have the power to make such
appointment.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed by one or more
Administrative Trustees, and the Trust Securities shall be delivered by the
Property Trustee, and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Property Trustee specified
hereunder shall be exercised solely by the Property Trustee and not by such
co-trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under this
Section 8.9, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigning or removed may be appointed in the manner provided in this Section
8.9.
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(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any other
trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
Article shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time by giving written notice thereof to the Holders. If the
instrument of acceptance by the successor Issuer Trustee required by Section
8.11 shall not have been delivered to the Relevant Trustee within 60 days after
the giving of such notice of resignation, the Relevant Trustee may petition, at
the expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by Act of the Holder
of the Common Securities. If a Debenture Event of Default shall have occurred
and be continuing, the Property Trustee or the Delaware Trustee, or both of
them, may be removed at such time by Act of the Holders of a Majority in
Liquidation Amount of the Capital Securities, delivered to the Relevant Trustee
(in its individual capacity and, in the case of the Property Trustee, on behalf
of the Issuer Trust). An Administrative Trustee may only be removed by the
Holder of the Common Securities and may be so removed at any time.
If any Issuer Trustee shall resign, be removed or become incapable of
acting as Issuer Trustee, or if a vacancy shall occur in the office of any
Issuer Trustee for any cause, at a time when no Debenture Event of Default shall
have occurred and be continuing, the Holder of the Common Securities, by Act
delivered to the retiring Issuer Trustee, shall promptly appoint a successor
Issuer Trustee or Issuer Trustees, and such successor Issuer Trustee shall
comply with the applicable requirements of Section 8.11. If the Property Trustee
or the Delaware Trustee shall resign, be removed or become incapable of
continuing to act as the Property Trustee or the Delaware Trustee, as the case
may be, at a time when a Debenture Event of Default shall have occurred and be
continuing, the Holders of Capital Securities, by Act of the Holders of a
Majority in Liquidation Amount of the Capital Securities delivered to the
retiring Relevant Trustee, shall promptly appoint a successor Relevant Trustee
or Trustees, and such successor Issuer Trustee shall comply with the applicable
requirements of Section 8.11. If an
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Administrative Trustee shall resign, be removed or become incapable of acting as
Administrative Trustee, at a time when a Debenture Event of Default shall have
occurred and be continuing, the Holder of the Common Securities by Act delivered
to the Administrative Trustee shall promptly appoint a successor Administrative
Trustee or Administrative Trustees and such successor Administrative Trustee or
Trustees shall comply with the applicable requirements of Section 8.11. If no
successor Relevant Trustee shall have been so appointed by the Holder of the
Common Securities or the Holders of a Majority in Liquidation Amount of the
Capital Securities, as the case may be, and accepted appointment in the manner
required by Section 8.11, any Holder who has been a Holder of Trust Securities
for at least six months may, on behalf of such Holder and all others similarly
situated, or any other Issuer Trustee, may petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each
removal of an Issuer Trustee and each appointment of a successor Issuer Trustee
to all Holders in the manner provided in Section 10.8 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, if any Delaware Trustee who is a natural person dies or becomes, in
the opinion of the Depositor, incompetent or incapacitated, the vacancy created
by such death, incompetence or incapacity may be filled by (a) the unanimous act
of the remaining Administrative Trustees if there are at least two of them or
(b) otherwise by the Depositor (with the successor in either case being a Person
who satisfies the eligibility requirement for the Delaware Trustee set forth in
Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee with respect
to the Trust Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which (a)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Issuer Trust, and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Issuer Trust by more than one Relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Relevant Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Relevant Trustee; but, on request of the Issuer Trust or any successor Relevant
Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver
to such successor Relevant
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Trustee all Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Trust Securities and the Issuer
Trust.
Upon request of any Issuer Trustee or any such successor Relevant
Trustee, the retiring Relevant Trustee or the Issuer Trust, as the case may be,
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person, succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided that such Person shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
SECTION 8.13. Preferential Collection of Claims Against Depositor or Issuer
Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor or the Issuer Trust (or any other obligor upon the Capital
Securities), the Property Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Depositor or
the Issuer Trust (or any such other obligor).
SECTION 8.14. Property Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable and irrespective of whether
the Property Trustee shall have made any demand on the Issuer Trust for the
payment of any past due Distributions) shall be entitled and empowered, to the
fullest extent permitted by law, by intervention in such proceeding or
otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Property Trustee (including any claim for the
50
reasonable compensation, expenses, disbursements and advances of the Property
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and 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 Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Not later than 60 days following May 15 of each year commencing
with May 15, 1998, the Property Trustee shall transmit to all Holders in
accordance with Section 10.8, and to the Depositor, a brief report dated as of
the immediately preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if
to the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the
twelve-month period (or, in the case of the initial report, the period
since the Closing Date) ending with such May 15 or, if the Property
Trustee has not complied in any material respect with such obligations,
a description of such noncompliance; and
(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
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(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with each national stock exchange,
the Nasdaq National Market or such other interdealer quotation system or
self-regulatory organization upon which the Trust Securities are listed or
traded, with the Commission and with the Depositor.
SECTION 8.16. Reports to the Property Trustee.
Each of the Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall provide to the Property Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act. The Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall annually file with the Property Trustee a certificate
specifying whether such Person is in compliance with all of the terms and
covenants applicable to such Person hereunder.
SECTION 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees on behalf of the
Issuer Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The initial number of Issuer Trustees shall be five, provided that
the Property Trustee and the Delaware Trustee may be the same Person if the
Property Trustee satisfies the applicable requirements.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to annul, dissolve or terminate the Issuer Trust.
SECTION 8.19. Delegation of Power.
(a) Any Administrative Trustee, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 such
Administrative Trustee's power for the purpose of executing any documents
contemplated in Section 2.7(a), including any
52
registration statement or amendment thereto filed with the Commission, or making
any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Issuer Trust or the
names of the Administrative Trustees or otherwise as the Administrative Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrative Trustees.
(a) The Administrative Trustees shall initially be Saul L. Basch,
Roberta O'Brien and Robert C. Walker, and their successors shall be appointed by
the Holder of all the Common Securities. The Administrative Trustees may resign
or be removed by the Holder of all the Common Securities at any time. Upon any
resignation or removal of an Administrative Trustee, the Depositor shall appoint
a successor Administrative Trustee. If at any time there is no Administrative
Trustee, the Property Trustee or any Holder who has been a Holder of Trust
Securities for at least six months may petition any court of competent
jurisdiction for the appointment of one or more Administrative Trustees.
(b) Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with this Section 8.20, the Administrative Trustees in
office, regardless of their number (and notwithstanding any other provision of
this Agreement), shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Trust Agreement.
(c) Notwithstanding the foregoing or any other provision of this Trust
Agreement, if any Administrative Trustee who is a natural person dies or
becomes, in the opinion of the Holder of all the Common Securities, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by the unanimous act of the remaining Administrative Trustees, if
there were at least two of them prior to such vacancy, and by the Depositor, if
there were not two such Administrative Trustees immediately prior to such
vacancy (with the successor being a Person who satisfies the eligibility
requirement for Administrative Trustees set forth in Section 8.7).
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
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Unless earlier dissolved, the Issuer Trust shall automatically dissolve
on December 31, 2017 (the "Expiration Date"), and shall thereafter be terminated
by filing a Certificate of Cancellation with the Secretary of State of the State
of Delaware, following the distribution of the Trust Property in accordance with
Section 9.4.
SECTION 9.2. Early Dissolution.
The first to occur of any of the following events is an "Early
Termination Event" upon the occurrence of which the Trust shall be dissolved:
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Holder of all the Common Securities;
(b) the written direction to the Property Trustee from the Holder of
all the Common Securities at any time to dissolve the Issuer Trust and to
distribute the Debentures to Holders in exchange for the Capital Securities
(which direction is optional and wholly within the discretion of the Holder of
all the Common Securities);
(c) the redemption or conversion of all of the Capital Securities in
connection with the redemption or conversion of all the Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a
court of competent jurisdiction.
SECTION 9.3. Termination.
The respective obligations and responsibilities of the Issuer Trustees
and the Issuer Trust created and continued hereby shall terminate upon the
latest to occur of the following: (a) the distribution by the Property Trustee
to Holders of all amounts required to be distributed hereunder upon the
liquidation of the Issuer Trust pursuant to Section 9.4, or upon the redemption
of all of the Trust Securities pursuant to Section 4.2; (b) the payment of any
expenses owed by the Issuer Trust; and (c) the discharge of all administrative
duties of the Administrative Trustees, including the performance of any tax
reporting obligations with respect to the Issuer Trust or the Holders.
SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d)
of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Issuer Trustees as expeditiously as the Issuer Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by Section 3808(e) of the Delaware
Business Trust Act and any other applicable law, to each Holder a Like Amount of
Debentures, subject to Section 9.4(d). Notice of liquidation shall be given by
the Property Trustee by first-class mail, postage prepaid mailed not less than
30 nor more than 60 days prior to the
54
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All such notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for
Debentures, or if Section 9.4(d) applies receive a Liquidation
Distribution, as the Property Trustee and the Administrative Trustees
shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Issuer Trust and distribution of the Debentures to
Holders, the Property Trustee, either itself acting as exchange agent or through
the appointment of a separate exchange agent, shall establish a record date for
such distribution (which shall be not more than 45 days prior to the Liquidation
Date) and establish such procedures as it shall deem appropriate to effect the
distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures will be
issued to Holders of Trust Securities Certificates, upon surrender of such Trust
Securities Certificates to the exchange agent for exchange, (iii) any Trust
Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Trust
Securities Certificates until such certificates are so surrendered (and until
such certificates are so surrendered, no payments of interest or principal will
be made to Holders of Trust Securities Certificates with respect to such
Debentures), and (iv) all rights of Holders holding Trust Securities will cease,
except the right of such Holders to receive Debentures upon surrender of Trust
Securities Certificates.
(d) If, upon dissolution of the Trust, notwithstanding the other
provisions of this Section 9.4, whether because of an order for dissolution
entered by a court of competent jurisdiction or otherwise, distribution of the
Debentures in the manner provided herein is determined by the Property Trustee
not to be practical, or if an Early Termination Event specified in clause (c) of
Section 9.2 occurs, the Trust Property shall be liquidated by the Property
Trustee in such manner as the Property Trustee determines. In such event, in
connection with the winding-up of the Issuer Trust, Holders will be entitled to
receive out of the assets of the Issuer Trust available for distribution to
Holders, after satisfaction of liabilities to creditors of the Issuer Trust as
provided by Section 3808(e) of the Delaware Business Trust Act and other
applicable law, an amount equal to the Liquidation Amount per Trust Security
plus accumulated and unpaid Distributions thereon to the date of payment (such
amount being the
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"Liquidation Distribution"). If, upon any such winding up, the Liquidation
Distribution can be paid only in part because the Issuer Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Issuer Trust
on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holder of all the Common Securities will be entitled
to receive Liquidation Distributions upon any such winding-up pro rata
(determined as aforesaid) with Holders of Capital Securities, except that, if a
Debenture Event of Default specified in Section 5.1(1) or 5.1(2) of the
Indenture has occurred and is continuing, the Capital Securities shall have a
priority over the Common Securities as provided in Section 4.4.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5. The Issuer Trust may, at the request of the Holder of all
the Common Securities and, with the consent of the Administrative Trustees, but
without the consent of the Holders of the Outstanding Trust Securities, the
Property Trustee or the Delaware Trustee, merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, that (i) such successor entity either (a) expressly
assumes all of the obligations of the Issuer Trust with respect to the Capital
Securities, or (b) substitutes for the Capital Securities other securities
having substantially the same terms as the Capital Securities (the "Successor
Securities") so long as the Successor Securities have the same priority as the
Capital Securities with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) a trustee of such successor entity possessing the
same powers and duties as the Property Trustee is appointed to hold the
Debentures, (iii) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization that then assigns a rating to the Capital
Securities, (iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect, (v) such successor entity has a purpose
substantially identical to that of the Issuer Trust, (vi) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Issuer Trust has received an opinion from independent counsel experienced in
such matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of the Capital Securities (including
any Successor Securities) in any material respect, and (b) following such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Issuer Trust nor such successor entity will be required to register
as an "investment company" under the Investment Company Act, and (vii) the
Depositor or its permitted successor or transferee owns all of the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee Agreement. Notwithstanding the foregoing, the Issuer Trust
56
shall not, except with the consent of holders of all of the Capital Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation or classified as other than a grantor
trust for United States Federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death, incapacity, dissolution,
termination or bankruptcy of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to annul, dissolve or terminate
this Trust Agreement, nor entitle the legal representatives, successors or heirs
of such Person or any Holder for such person, to claim an accounting, take any
action or bring any proceeding in any court for a partition or winding up of the
arrangements contemplated hereby, nor otherwise affect the rights, obligations
and liabilities of the parties hereto or any of them.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Administrative Trustees and the Holder of the Common
Securities, without the consent of the Delaware Trustee or any Holder of the
Capital Securities, (i) to cure any ambiguity, correct or supplement any
provision herein that may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Trust Agreement, which shall not be inconsistent with the other provisions
of this Trust Agreement, or (ii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Issuer Trust will not be taxable as a corporation or will be classified as a
grantor trust for United States Federal income tax purposes at all times that
any Trust Securities are Outstanding or to ensure that the Issuer Trust will not
be required to register as an "investment company" under the Investment Company
Act; provided, however, that in either case (i) or (ii) such action shall not
adversely affect in any material respect the interests of the Delaware Trustee
or any Holder.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Property Trustee, the Administrative
Trustees and the Holder of the Common Securities, without the consent of the
Delaware Trustee, and with (i) the consent of Holders of at least a Majority in
Liquidation Amount of the Capital Securities, and (ii) receipt by the Issuer
Trustees of an Opinion of Counsel to the effect that such amendment or the
57
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not cause the Issuer Trust to be taxable as a corporation or as
other than a grantor trust for United States Federal income tax purposes or
affect the Issuer Trust's exemption from status as an "investment company" under
the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder, this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date, or (ii) restrict the right of a Holder to institute suit for the
enforcement of any such payment on or after such date; and notwithstanding any
other provision herein, without the unanimous consent of the Holders, this
paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement that would cause the Issuer Trust to fail or cease to qualify for the
exemption from status as an "investment company" under the Investment Company
Act or to be taxable as a corporation or to be classified as other than a
grantor trust for United States Federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
(i) without the consent of the Depositor and the Administrative Trustees, this
Trust Agreement may not be amended in a manner that imposes any additional
obligation on the Depositor or the Administrative Trustees, and (ii) without the
consent of the Delaware Trustee, this Trust Agreement may not be amended in a
manner that imposes any additional obligation on the Delaware Trustee.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees or the Property Trustee shall promptly provide to
the Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement that affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates 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.
58
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR AND THE ISSUER TRUSTEES WITH RESPECT TO
THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS. THE PROVISIONS OF SECTION 3540 OF TITLE 12 OF THE
DELAWARE CODE SHALL NOT APPLY TO THIS TRUST.
To the fullest extent permitted by Delaware law, there shall not be
applicable to the Issuer Trust, the Issuer Trustees or this Trust Agreement any
provisions of law (whether statutory or common) of the State of Delaware
pertaining to trusts (other than the Delaware Business Trust Act) that relate to
or regulate in a manner inconsistent with the terms hereof (a) the filing with
any court or governmental body or agent of trustee accounts or schedules of
trustee fees and charges, (b) affirmative requirements to post bonds for
trustees, officers, agents or employees of a trust, (c) the acquisition, holding
or disposition of any property, (d) the allocation of receipts and expenditures
between income and principal, (e) restrictions or limitation on the permissible
nature, amount or concentration of trust investment or requirements relating to
the titling, storage or other manner of holding or investing trust assets, or
(f) the establishment of fiduciary or other standards of responsibility or
limitations on the acts or powers of trustees that are inconsistent (whether
more or less restrictive) with this provision.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.1(a) and 4.2(d)), with the same force and
effect as though made on the date fixed for such payment, and no Distributions
shall accumulate on such unpaid amount for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust and any Issuer
Trustee, including any successor by operation of law. Except in connection with
a consolidation, merger or sale involving the Depositor that is permitted under
Article VIII of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
59
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
(a) Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Holder or the Depositor may be given or served in writing by
deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case of
a Holder of Capital Securities, to such Holder as such Holder's name and address
may appear on the Securities Register; and (b) in the case of the Holder of the
Common Securities or the Depositor, to HSB Group, Inc., One State Street,
Hartford, Connecticut 06102, Attention: Corporate Secretary, facsimile no.:
(860) 493-1038, or to such other address as may be specified in a written notice
by the Holder of the Common Securities or the Depositor, as the case may be, to
the Property Trustee. Such notice, demand or other communication to or upon a
Holder shall be deemed to have been sufficiently given or made, for all
purposes, upon hand delivery, mailing or transmission. Such notice, demand or
other communication to or upon the Depositor shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the
Depositor.
(b) Any notice, demand or other communication that by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Issuer Trust or any Issuer Trustee may be given or served in writing by
deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case of
the Property Trustee to The First National Bank of Chicago, One First National
Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust
Services Division; (b) with respect to the Delaware Trustee, Attention: First
Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801, Attention:
Michael J. Majchrzak; (c) in the case of the Administrative Trustees, to them at
the address above for notices to the Depositor, marked "Attention:
Administrative Trustees of HSB Capital II"; and (d) in the case of the Issuer
Trust, to its principal executive office specified in Section 2.2, with a copy
to each of the Property Trustee, the Delaware Trustee and the Administrative
Trustees, or, in each such case, to such other address as may be specified in a
written notice by the applicable Person to the Property Trustee, the Depositor
and the Holders. Such notice, demand or other communication to or upon the
Property Trustee, the Delaware Trustee, the Administrative Trustees or the
Issuer Trust shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Property Trustee, the Delaware Trustee,
such Administrative Trustees or the Issuer Trust, as the case may be.
60
SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees and the Depositor agree for the benefit of
the Holders that, until at least one year and one day after the Issuer Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Issuer Trust under any bankruptcy,
insolvency, reorganization or other similar law (including the United States
Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the
commencement of any proceeding against the Issuer Trust under any Bankruptcy
Law. The Property Trustee and the Depositor agree, for the benefit of Holders,
that if the Depositor or any Issuer Trustee takes action in violation of this
Section 10.9, then at the expense of the Depositor, the Property Trustee or
Depositor, as the case may be, shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor against
the Issuer Trust or the commencement of such action and raise the defense that
the Depositor has agreed in writing not to take such action and should be
estopped and precluded therefrom and such other defenses, if any, as counsel for
the Issuer Trustees or the Issuer Trust may assert.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required or deemed to be part of this Trust Agreement
pursuant to the terms herein and shall, to the extent applicable, be governed by
such provisions.
(b) The Property Trustee shall be the only Issuer Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required or deemed to be included in this Trust
Agreement by any of the provisions of the Trust Indenture Act, such required or
deemed provision shall control. If any provision of this Trust Agreement
modifies or excludes any provision of the Trust Indenture Act which may be so
modified or excluded, the latter provision shall be deemed to apply to this
Trust Agreement as so modified or excluded, as the case may be.
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee Agreement
and Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT
AND THE INDENTURE, AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS
OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT
OF THE ISSUER TRUST,
61
SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE ISSUER TRUST
AND SUCH HOLDER AND SUCH OTHERS.
This Trust Agreement 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.
62
IN WITNESS WHEREOF, the parties hereto have executed this Trust
Agreement as of the day and year first above written.
HSB GROUP, INC.
as Depositor
By: /s/ Saul L. Basch
Name: Saul L. Basch
Title: Senior Vice President, Treasurer and
Chief Financial Officer
The First National Bank of Chicago
as Property Trustee
By: /s/ Melissa G. Weisman
Name: Melissa G. Weisman
Title: Vice President
First Chicago Delaware Inc.
as Delaware Trustee
By: /s/ Melissa G. Weisman
Name: Melissa G. Weisman
Title: Vice President
HSB Capital II
By: /s/ Saul L. Basch
Name: Saul L. Basch
as Administrative Trustee
By: /s/ Roberta O'Brien
Name: Roberta O'Brien
as Administrative Trustee
By: /s/ Robert C. Walker
Name: Robert C. Walker
as Administrative Trustee
64
Exhibit A
CERTIFICATE OF TRUST
OF HSB CAPITAL II
This Certificate of Trust of HSB Capital II (the "Trust"),
dated as of December 31, 1997, is being duly executed and filed by the
undersigned, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. C. (S) 3801 et seq.).
1. NAME. The name of the business trust being formed hereby is
HSB Capital II.
2. DELAWARE TRUSTEE. The name and business address of the
trustee of the Trust with a principal place of business in the State of Delaware
is: First Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801.
3. EFFECTIVE DATE. This Certificate of Trust shall be
affective upon the filing of this Certificate of Trust.
IN WITNESS WHEREOF, the undersigned trustee of the Trust, has
executed this Certificate of Trust as of the date first above written.
Name: Saul L. Basch
Title: Administrative Trustee
Name: Roberta O'Brien
Title: Administrative Trustee
Name: Robert C. Walker
Title: Administrative Trustee
FIRST CHICAGO DELAWARE INC.,
as Delaware Trustee
By:
Name: Melissa G. Weisman
Title: Vice President
A-1
Exhibit B
[Form of Common Securities Certificate]
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN
AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.10 OF THE TRUST AGREEMENT.
Certificate Number Aggregate Liquidation Amount
C-1 $9,300,000
Certificate Evidencing Common Securities
of
HSB Capital II
Convertible Common Securities
(liquidation amount $1,000 per Common Security)
HSB Capital II, a statutory business trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that HSB GROUP,
INC. (the "Holder") is the registered owner of Nine Thousand Three Hundred
(9,300) common securities (aggregate Liquidation Amount Nine Million Three
Hundred Thousand dollars ($9,300,000) of the Issuer Trust representing common
undivided beneficial interests in the assets of the Issuer Trust and designated
the Convertible Common Securities (liquidation amount $1,000 per Common
Security) (the "Common Securities"). Except in accordance with Section 5.10 of
the Trust Agreement (as defined below), the Common Securities are not
transferable and any attempted transfer hereof other than in accordance
therewith shall be void. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Trust Agreement of the Issuer Trust, dated as of December 31, 1997, as the same
may be amended from time to time (the "Trust Agreement"), among HSB Group, Inc.,
a Delaware corporation, as Depositor, The First National Bank of Chicago, as
Property Trustee, First Chicago Delaware, Inc., as Delaware Trustee, and the
Administrative Trustees named therein, including the designation of the terms of
the Common Securities as set forth therein. The Issuer Trust will furnish a copy
of the Trust Agreement to the Holder without charge upon written request to the
Issuer Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the
Trust Agreement.
B-1
IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer
Trust has executed this certificate this 31st day of December, 1997.
HSB CAPITAL II
By:
Name:
Administrative Trustee
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred to in the
within-mentioned Trust Agreement
THE FIRST NATIONAL BANK OF CHICAGO, as Property Trustee
By:
Name:
Title:
Exhibit C
[Form of Capital Securities Certificate]
THE CAPITAL SECURITIES EVIDENCED HEREBY, ANY CONVERTIBLE SUBORDINATED
DEFERRABLE INTEREST DEBENTURES ISSUABLE HEREWITH AND THE COMMON STOCK ISSUABLE
UPON THEIR CONVERSION HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933 (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.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THIS CAPITAL SECURITIES CERTIFICATE OR
ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING AND, IN THE CASE
OF ANY PURCHASER OR HOLDER RELYING ON ANY EXEMPTION OTHER THAN PTCE 96-23,
95-60, 91-38, 90-1 OR 84-14, HAS COMPLIED WITH ANY REQUEST BY THE DEPOSITOR OR
THE ISSUER TRUST FOR AN OPINION OF COUNSEL OR OTHER EVIDENCE WITH RESPECT TO THE
AVAILABILITY OF SUCH EXEMPTION. ANY PURCHASER OR HOLDER OF THIS CAPITAL
SECURITIES CERTIFICATE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED
BY ITS PURCHASE AND HOLDING HEREOF THAT IT EITHER (A) IS NOT A PLAN OR A PLAN
ASSET ENTITY AND IS NOT PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN
ASSETS" OF ANY PLAN, OR (B) IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER
PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH
RESPECT TO SUCH PURCHASE OR HOLDING.
C-1
Certificate Number Aggregate Liquidation Amount
P-___ $300,000,000
Certificate Evidencing Capital Securities
of
HSB Capital II
Convertible Capital Securities
(liquidation amount $1,000 per Capital Security)
HSB Capital II, a statutory business trust created under the laws of the
State of Delaware (the "Issuer Trust"), hereby certifies that [Name of Holder]
(the "Holder") is the registered owner of Three Hundred Thousand (300,000)
capital securities (aggregate Liquidation Amount Three Hundred Million dollars
($300,000,000)) of the Issuer Trust representing a preferred undivided
beneficial interest in the assets of the Issuer Trust and designated the
Convertible Capital Securities (liquidation amount $1,000 per Capital Security)
(the "Capital Securities"). The Capital Securities are transferable on the books
and records of the Issuer Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
as provided in Section 5.4 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and
the Capital Securities represented hereby are issued and shall in all respects
be subject to the terms and provisions of, the Trust Agreement of the Issuer
Trust, dated as of December 31, 1997, as the same may be amended from time to
time (the "Trust Agreement"), among HSB Group, Inc., a Delaware corporation, as
Depositor, The First National Bank of Chicago, as Property Trustee, First
Chicago Delaware, Inc., as Delaware Trustee, and the Administrative Trustees
named therein, including the designation of the terms of the Capital Securities
as set forth therein. The Holder is entitled to the benefits of the Guarantee
Agreement, dated as of December 31, 1997 (the "Guarantee Agreement"), entered
into by HSB Group, Inc. and The First National Bank of Chicago, as guarantee
trustee, to the extent provided therein. The Issuer Trust will furnish a copy of
the Trust Agreement and the Guarantee Agreement to the Holder without charge
upon written request to the Issuer Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
C-2
IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer Trust
has executed this certificate this 31st day of December, 1997.
HSB CAPITAL II
By:
Name:
Administrative Trustee
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred to in the
within-mentioned Trust Agreement
THE FIRST NATIONAL BANK OF CHICAGO, as Property Trustee
By:
Name:
Title:
C-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security to:
-------------------------------------------------------------
(Insert assignee's social security or tax identification number)
--------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------
agent to transfer this Capital Securities Certificate on the books of the Issuer
Trust. The agent may substitute another to act for him or her.
Date: ________________
Signature:________________________________________________________
(Sign exactly as your name appears on the other side of this Capital
Security Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
C-4
Exhibit D
[Form of Restricted Securities Certificate]
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Sections 5.4(b) of the Trust Agreement)
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
Re: Convertible Capital Securities
of HSB Capital II (the "Securities")
Reference is made to the Trust Agreement, dated as of December
31, 1997 (the "Trust Agreement"), among HSB Group, Inc. (the "Company"), The
First National Bank of Chicago as Property Trustee and the Administrative
Trustees named therein. Terms used herein and defined in the Trust Agreement or
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." 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 a 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 only in
compliance with the requirements of the Securities Act or pursuant to an
applicable exemption
D-1
therefrom. Such transfer is being effected in whole or in part, but if in part,
in amounts not less than $10,000,000 in principal amount. The Owner also hereby
certifies that it agrees to be bound by the terms and provisions of the Trust
Agreement, including Section 5.4(b), and the other documents mentioned therein.
This certificate and the statements contained herein are made for your
benefit and 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.)
D-2
Exhibit E
[Form of Unrestricted Securities Certificate]
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section 5.4(c))
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
Re: Convertible Capital Securities of HSB Group, Inc. (the "Securities")
Reference is made to the Trust Agreement, dated as of December 31, 1997
(the "Trust Agreement"), among HSB Group, Inc. (the "Company"), The First
National Bank of Chicago as Property Trustee and the Administrative Trustees
named therein. Terms used herein and defined in the Trust Agreement 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(c) of the
Trust Agreement. 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
E-1
Securities must comply with all applicable securities laws of the states of the
United States and other jurisdictions. The Owner also hereby certifies that it
agrees to be bound by the terms and provisions of the Trust Agreement, including
Section 5.4(b), and the other documents mentioned therein.
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.)
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Exhibit F
NOTICE OF CONVERSION
To: The First National Bank of Chicago
as Property Trustee of
HSB Capital II
The undersigned owner of these Capital Securities hereby
irrevocably exercises the option to convert these Capital Securities, or the
portion below designated, into Common Stock of HSB GROUP, INC. (the "HSB Common
Stock") in accordance with the terms of the Trust Agreement (the "Trust
Agreement"), dated as of December 31, 1997, by Saul L. Basch, Roberta O'Brien
and Robert C. Walker, as Administrative Trustees, First Chicago Delaware Inc.,
as Delaware Trustee, The First National Bank of Chicago, as Property Trustee,
HSB Group, Inc., as Depositor, and by the Holders, from time to time, of
individual beneficial interests in the Trust to be issued pursuant to the Trust
Agreement. Pursuant to the aforementioned exercise of the option to convert
these Capital Securities, the undersigned hereby directs the Conversion Agent
(as that term is defined in the Trust Agreement) to (i) exchange such Capital
Securities for a portion of the Debentures (as that term is defined in the Trust
Agreement) held by the Trust (at the rate of exchange specified in the terms of
the Capital Securities set forth in the Trust Agreement) and (ii) immediately
convert such Debentures on behalf of the undersigned, into HSB Common Stock (at
the conversion rate specified in the terms of the Capital Securities set forth
in the Trust Agreement).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the assignment
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Trust Agreement and the Capital Securities,
agrees to be bound by the terms of the Registration Rights Agreement relating to
the HSB Common Stock issuable upon conversion of the Capital Securities.
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Date: ____________, ____
in whole __ in part __
Number of Capital
Securities to be converted:
-------------------
If a name or names other
than the undersigned,
please indicate in the
spaces below the name or
names in which the shares
of HSB Common Stock are to
be issued, along with the
address or addresses of
such person or persons
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
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.)
0148490.06-01S7a
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